Ardent Leisure Group: Ethics & Governance

This article discusses the corporate governance, board composition, and remuneration policies of Ardent Leisure Group. It also covers the company's structure, orientation, and diversity policy. Ardent Leisure Group is a leisure and entertainment company based in Australia that operates in other parts of the world as well.

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ARDENT LEISURE GROUP; ETHICS & GOVERNANCE 2
Executive summary
Corporate governance is a set of incentives and rules present in a company that should be
adhered to by the company’s board members and shareholders. These rules provide a leeway in
which the specific objectives of the company should be attained which helps to monitor the
general performance of the company. AAD Group offers unlisted securities to a number of its
investors and practitioners. However, it does not cover any investment recommendation or the
investment advice. Therefore, any individual who want to invest in the company, they are not
guaranteed or warranted that the information provided is accurate or complete. As such, the
practitioners and consultants of the AAD advises the public to take responsibility of the risk that
may accrue from them investing in the company. Due to the outstanding performance of AAD
Group, various investment funds and corporate accountants encourage companies to invest here.
For instance, companies such as FIL Limited, Investec Australia Limited, Portfolio Services Pty
Limited, Viburnum Funds Pty Ltd, and JCP Investment Management Limited are already
shareholders.
The AAD Group encourages investor participation in the company activities. The
information shared during the meetings is usually communicated to the investors. Business and
investments analysts record that AAD Group has implemented the investor Communications
policy that ensures that the investors are offered the necessary information regarding the
financial status of the company as well as the current market. The AAD auditor usually attends
the AGM to give the report concerning the conduct, preparation, and contents of the audit. The
auditor normally gives his or her views on the annual financial report, the functions of the
external and internal audit, and how the material business risks should be managed. For instance,

ARDENT LEISURE GROUP; ETHICS & GOVERNANCE 3
the AAD auditor ensures the company complies with all the required laws and regulations as
well as the business code of conduct.
Introduction
AAD Group is a company based in Australia but distributed in other parts of the world
such as the United States and New Zealand. It specializes in leisure and entertainment businesses
where it majorly invests heavily and operates. Some of the companies that the AAD Group
operates include the Dreamworld which is a program that deals with recycling of the mobile
phones all over the theme park as well as Goodlife Health Clubs. It also engages in reporting the
data generated from the Greenhouse gas and energy. The brands that the company offers are
categorized into Health Clubs such as HYPOXI and Goodlife Health Clubs (Ardent Leisure
Group, 2018). Some of its activities such as the WhiteWater World, SkyPoint theme parks and
Main Event offers attraction points as well as entertainment to various people all over the world.
Ardent Leisure Group is listed on the ASX (Australian Securities Exchange) under the
ticker code of AAD. It is also included in the benchmark index (S&P/ASX 200). It is grouped
among those companies that occupy a dominant position in Australia, New Zealand and the
United States of America offering family-friendly, affordable, entertainment, and leisure events
(Tallentire, 2013). Ardent Leisure Group serves over three million customers annually.
Therefore, it has developed great methods through which it interacts with the customers by
offering proper communication opportunities through which it transacts with them.
Ardent Leisure Group was founded in the year 1998 as Macquarie Leisure Trust, when it
acquired the Dreamworld theme park. In 2006, it created a WhiteWater World Company which
was rated as a world-class water park. Consequently, in 2009, it acquired QDeck. It, however,

ARDENT LEISURE GROUP; ETHICS & GOVERNANCE 4
split from the Macquarie Group in the year. The main headquarters of the company is located in
the Milsons Point-New South Wales in Australia. Deborah Thomas was appointed the Chief
Executive Officer (CEO) of the Group in April 2015. She was, however, replaced by Simon
Kelly on June 9th, 2017 when he was appointed the CEO and MD (Managing Director).
The official website is http://www.ardentleisure.com.au/ where the customers can assess
the company details and any other information concerning the Group. It can also be reached
through its mailing address (L 16 61 Lavender St. MILSONS POINT, NSW 2061, Australia) as
well as via the phone [phone]). AAD currently has a market capitalization of $892.69
million. Its shares go for A$1.77 per every share being purchased. Its outstanding shares are
presently 468, 350, 000 while the market Cap stands at $892.69 million (Reddy & Wong, 2016).
The Ardent Leisure Group faces competition from various companies such as Spin
Master (TOY & SNMSF), GYM Group, Thomas Cook Group (TCG), Escape Hunt (ESC),
Character Group (CCT), and Photo-Me International (PHTM) among others. However, it has
acquired several companies and products in recent years. For instance, eight of the best
performing health club markets with excellent modern facilities in Australia belongs to AAD
Group. The purchase price is normally A$32.5 million that represents 5.27x formal EBITDA.
Currently it has six Goodlife and eight Fitness First number of clubs.
Corporate governance at Ardent Leisure Group
Corporate governance refers to the manner through which the company is governed and
managed. It involves the processes and mechanisms through which the corporations are
managed, controlled, and directed. Proper governance principles and structures ensure
identification and equal distribution of rights as well as responsibilities between the various

ARDENT LEISURE GROUP; ETHICS & GOVERNANCE 5
participants of the company (Fooladi & Nikzad, 2011). These include the shareholders, board of
directors, regulators, managers, auditors, creditors, and other stakeholders. Through corporate
governance, the company is governed by procedures and rules that direct decision-making affairs
and how the company objectives are set and pursued regarding regulatory, social, and market
environment. Corporate governance, therefore, can be regarded as a system of oversight,
accountability, and control.
The composition of the board of directors
The Ardent Leisure Group is composed of several individuals that head various
departments. The Group Board members, for instance, include; Gary Weiss- the non-executive
chairman of the company currently (ASX Release, 2018). Before then he was serving as the
director of the company but currently he still also heads the Ariadne Australia Limited as the
Executive director. Randy Garfield, David Haslingden, Don Morris AO, Brad Richmond, and
Toni Korsanos are Directors of both the company and manager of various institutions. According
to the Ardent Leisure Group management, the number of the independent directors should
outweigh the dependent directors. For instance, Donald Morris, David Haslingden, Randy
Garfield, Carl Richmond, and Bronwyn Weir are all Independent Non-Executive Directors. As
per 2017, the number of Independent Directors and CEO were equal. The importance of this is
that when the board is comprised of a majority of independent directors, the investors have an
assurance that the board is working diligently to fulfill its role and the management is held
accountable for its performance (Bandsuch et al., 2008). The AAD Group assess the director’s
independence annually and discloses it during the annual report meeting. It takes into account
their contractual interests, security holdings, relationship with the customers, suppliers as well as
key advisers. Usually, the chair needs to be independent if not so; then the board appoints their

ARDENT LEISURE GROUP; ETHICS & GOVERNANCE 6
lead independent director. The chair of the Ardent Leisure Group, however, is an independent
director. However, he does not hold a dual position as CEO of the company.
Reports from Chairman and CEO
The report from the chairman indicated that the financial statement of 2017 of the AAD
Group, followed the Corporation Act 2001, under the Section 300A. The CEO and the
Chairperson believe that any debts held by the company will be payable when they become due.
The company’s immediate priorities include; determining the value of the assets, constructing
US Entertainment Centre assets, Revenue recognition, Dreamworld contingencies, and
divestment of Marinas and Health Clubs. To achieve the above; the Chairperson and CEO have
developed some strategies that will see the company sail through (Bloomberg, 2018). For
instance, the directors should aim at attaining a long-term growth rate concerning revenue as
compared to short-term. They should also employ fair value measurement methods when
carrying out the financial analysis.
Remuneration report
The Ardent Leisure Group remuneration report is set on standard regulations. It conforms
with the Corporations Act 2001 Section 300A. The directors prepare the remuneration report in
line with the set Australian Auditing Standards. The Remuneration and Nomination Committee
ensures the remuneration framework of the company attracts, retains, and motivates the directors
and executives to perform better (Carter & Zamora, 2007). The executive remuneration
framework of AAD has three components based on the financial year ended 30th June 2017.
There is the annual base salary-where it involves a combination of cash salary, non-financial
benefits, and superannuation contributions of the employer. Then there is a short-term incentive

ARDENT LEISURE GROUP; ETHICS & GOVERNANCE 7
(STI) that offers performance bonus against the personal and financial key performance
indicators (Deegan, 2002). Finally, the long-term incentive where the full grant relies on the
equity performance gateway. For instance, the remuneration of the key top directors at 2017 was;
FIXED At risk
Annual base
salary (cash)
Annual base
salary
(equity)
Target STI Target LTPI
Grant Value
Total Target
Remuneration
Simon Kelly $600 000 $500 000 $475 000 $475 000 $2 050 000
Nicole Noye $420 000 -------- $189 000 $189 000 $798 000
Charlie Keegan US$512 500 -------- US$281 875 US$358 750 $1 153 125
Craig Davidson $384 375 -------- $172 969 $172 969 $730 313
Board orientation of the Ardent Leisure Group
For a company to be able to discharge its duties effectively, the structure and orientation
of the board are vital. The composition, size, and orientation determine how the duties and
responsibilities of the company are discharged and hence the success of the company. Various
theories have been applied when discussing different forms of board orientation regarding
corporate governance. The criteria that a company uses to determine its board composition and
orientation play a massive role in defining the dispensation of its mandate. Board composition,

ARDENT LEISURE GROUP; ETHICS & GOVERNANCE 8
therefore, denotes the ratio of the independent and non-independent directors. The expected
reliance of the company on the external (independent) director versus the percentage of the
internal (non-independent) directors. The shareholder- agency orientation, has a majority of its
board members as independent directors as compared to the non-independent (Donaldson &
Davis, 1991). They have as well to be appointed by influential shareholders who have a more
significant influence on the company. However, if a company adopts the shareholder-
stewardship orientation, then the board will have a high composition of non-independent
directors as compared to independent ones (Muth & Donaldson, 1998). The internal directors,
therefore, will have a duty of ensuring that the company assets grow to the desired levels. The
board should as such determine its agenda and identify which ones to prioritize over the others.
For instance, the company board taking the agency approach will give the objectives of the
shareholders more attention such as the profits and dividends. On the contrary, that which adopts
the stewardship approach will prioritize the business growth at the expense of the shareholders.
As such the AAD Group has adopted the shareholder-agency board orientation since
many of its directors are independent. The board understands the importance of the independent
directors being the majority as it assures the investors that the board is working diligently in
fulfilling its role. Also, they have confidence that the management team is being held
accountable for its performance (Abdullah & Nasir, 2004). Therefore, the independence of the
directors at Ardent Leisure Group is usually evaluated every year. They put into consideration
several matters such as; tenure, their relationship with chief advisers, customers, and suppliers,
substantial security holdings, and contractual interests. In so doing, however, it has increased its
profits and dividends of the shareholders and the growth of the company as a whole.

ARDENT LEISURE GROUP; ETHICS & GOVERNANCE 9
The constitution of the company has set out the basic structure of the board in the Board
Charter of the company. In the Charter it is stated that; the independent directors should always
be the majority, those directors appointed should have qualifications and expertise that are
suitable to the task given, and in case the elected chair independence is seemed obsolete, then the
board should appoint a lead independent director (Setia‐Atmaja et al., 2009). The company has
adopted a diversity policy that seeks to promote a corporate culture and diversity. The plan aims
at achieving an almost equal percentage between the female and male workers in all positions.
Following the Workplace Gender Equity Act 2012, the company has increased the number of
women holding senior positions (Terjesen et al., 2016).
Interpretation of company communications using the legitimacy theory
Corporate governance calls for ethical disclosure of information to the stakeholders,
investors, customers, suppliers, and any other concerned party within the organization. If a
company needs to be able to manage its stakeholders efficiently together with their expectations,
then, it has to disclose the financial statements as well as other information regarding the daily
running of the company (Chauvey et al., 2015) Transparency, therefore, protects the right of the
stakeholders as it helps them make active and informed investment decisions. Many companies
opt to use the legitimacy theory in the communication of information to the stakeholders and
other clients as it outlines clearly the people whom (who) the data has to be disclosed to, what is
to be disclosed, and why it has to be disclosed (Deegan et al., 2002)
At AAD Group, all the investors are given material information concerning a specific
director when he or she is to be elected for a particular position. In doing so, the investors and
stakeholders can make appropriate and informed decisions regarding the election of the
candidate (Fernando & Lawrence, 2014). The information disclosed include; qualifications and

ARDENT LEISURE GROUP; ETHICS & GOVERNANCE 10
experience, the office they currently hold, former directorships held, roles they play in any Board
standing committee, and when he or she was first appointed in the organization or as a director.
Most of the information on the Ardent Leisure Group can be assessed at any time from their web
page http://www.ardentleisure.com. From here any person can view the information regarding
the company that is displayed on their website. Usually, the company history, its employees, the
sector in which it operates, and the manner in which the Group carries out its activities is given.
The financial statement as well for the previous years and the current year can be obtained from
their website. Usually, the financial statements are produced on 30th June of every year. From
here the stakeholders and other clients can view how the company has progressed during that
fiscal year. Profit, loss, and dividends obtained can be seen from the statement. The remuneration
report is as well given which gives detail on how directors and other executives are rewarded.
The company has chosen to disclose its information to the public as this creates a good
relationship between the company and the outsiders (Morsing & Schultz, 2006). The
stakeholders can assess all the information they need to make the right decisions on whether to
keep in investing on the company or to withdraw. They can also participate in electing the
directors or firing them as they can follow their performance. The company’s communication
methods used are transparent and does not selectively target specific individuals. It uses the
Investor Communication Policy that encourages productive and efficient communication
between the Group and the stakeholders, thereby facilitating a proper working environment
(Milne et al., 2002)
Conclusion
AAD Group is an established company in Australia and its registered under the
Australian Securities Exchange (ASX). The Group directors always work in establishing an

ARDENT LEISURE GROUP; ETHICS & GOVERNANCE 11
effective, efficient, and flexible corporate governance system that ensures smooth running of the
organization. It has stipulated the specific responsibilities, rules, and roles of each Board member
as well as the juniors in the Board Charter. The AAD Group Board of directors works in
promoting the investor’s confidence and creating a good relationship with the stakeholders and
shareholders. The Group has extended in various regions and sectors by acquiring several other
companies. Its trading trends keeps on improving which has seen it achieve a tremendous
revenue growth over the years. It has also experienced great investments in marketing resources
and this has seen it expand greatly. Through the discussion of this report, the significance of
corporate governance in AAD was evident. It was clear that the directors and the CEO have a
huge influence on the performance of the organization. They also determine the relationship of
the company with the shareholders and how many investors will be willing to invest in the
company. Therefore, it was shown that use of the legitimacy theory of communication in
business transactions enhances growth of the company.

ARDENT LEISURE GROUP; ETHICS & GOVERNANCE 12
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