The company selected for this task is Santos Limited which is an oil and gas company with

operations in Australia and parts of Asia.

a) The objective is to comment on the corporate governance framework prevalent in the

company as is apparent from the latest annual report and draw a comparison with the
corresponding principles advocated in this regard by the ASX Corporate Governance
Council (ASXCGC) in 2007. The corporate governance practices at Santos seem to be in
line with expectation of ASXCGC. The three positive aspects in this regard are outlined
below.
The Board of Directors of Santos consists of majority of independent direction which
is in line with Recommendation 2.1 of ASXCGC. Also, Recommendation 2.2 is
adhered to since the head of Board of Directors is an independent director which
augers well to the protection of minority shareholders interest. As a result, the Board
of the company is structured in a manner which enhances the overall value.
The corporate governance practices at Santos tend to satisfy the principles relating to
financial reporting integrity. The company is complaint with Recommendation 4.2 as
the audit committee is composed of non-executive directors only with majority
directors being independent. Further, the committee contains four members (more
than prescribed number of three) and also the head of the committee is not the Board
chairman. This ensures a strong internal audit evaluation which is likely to decrease
the overall audit risk.
Also, the company is complying with the various recommendations regarding fair and
responsible remuneration for the management. The remuneration is determined by a
committee which tends to comply with the various compositional requirements
outlined in Recommendation 8.2. Further, the various guidelines in regards to
compensation structuring of both executive and non-executive directors is clearly
brought out in the remuneration report which enhances the overall transparency while
complying with sound corporate governance principles. This provides an opportunity
to the shareholders to understand the parameters on which the executive
compensation is based and hence enhance transparency while reducing the overall
agency cost.
Reference

ASX 2010, Corporate Governance Principles and Recommendations with 2010

Amendments, [Online] Available at http://www.asx.com.au/documents/asx-
compliance/cg_principles_recommendations_with_2010_amendments.pdf [Accessed March
28, 2017]