CONSULTATION REPORT

Consultation Report on Qantas Airways Corporate Governance

Consultation Report on Qantas Airways Corporate Governance

Introduction

Corporate Governance is defined as the institutional arrangements set that effects decision-making process of a corporate. The corporate governance deals with the relationship between different participants in order to determine the performance and direction of organizations. Qantas Airways Limited is one of the largest airlines of Australia domestically and internationally (Qantas, 2012, pp. 28-33). The company is considered to be one of the strongest brands in Australia, and is widely known and regarded as world's leading long distance airline. Qantas believes that corporate governance is core to make sure that value of shareholders is created, protected and enhanced therefore; purpose of this research paper is to perform an audit of corporate governance principles implemented in Qantas Airways. This paper will also provide recommendations which will help Qantas Airways to identify their weaknesses and enhance their overall corporate governance principles.

Audit of Corporate Governance Principle in Qantas Airways

Solid Board Foundation for Management and Oversight

The foundation of Qantas board for management and oversight is one of the key principles of the company's corporate governance because if there is no solid foundation of board related to management activities, then it is not possible to extract positive outcomes from them. According to Fernando (2009), corporate governance should endure strategic guidance of the company, accountability of boards to the shareholders and effective management monitoring. A formal charter has been adapted by Qantas board of governance and the board is responsible for reviewing and setting strategic direction of the company. Qantas board of governance monitors implementation of management's strategy that includes promoting responsible and ethical decision-making, overseeing control and accountability system, and monitoring compliance with relevant tax obligations, laws, accounting standards and corporate policies. The board of the airline approves annual operating budget and monitors financial and operating performance of the group. The capital management strategy is also approved and monitored by the board that includes major divestitures and acquisitions as well. Qantas board monitors the performance of CEO and CFO and has authority to remove and appoint new CEO according to the situation. The board makes sure that there is a clear association between executive remuneration and their performance, and share holders are completely informed regarding material developments.

Independence of Board's Director and structuring board to value

According to Burner (2011), practices and structures of the corporate governance should be transparent and it is important to follow transparency strictly more than any other specific best-practice recommendations set. Therefore; independence of organizations board of directors is an important principle of corporate governance. There are presently 12 Board of Directors in Qantas in which 11 Directors are elected by shareholders and they are working as independent non-executive Directors. It is important to note that independent Directors are considered those having ability to work without any pressure from external sources and they openly express their feelings and opinion regardless of their position and association with different people of the company. Qantas board do not believe that it is ...