Corporate Governance and Decision-Making at Auckland Airport

This essay explores the corporate governance and decision-making process at Auckland Airport, focusing on its charter, board composition, code of ethical behavior, risk management, auditors, and shareholder rights.

Running head: BUSINESS ETHICS
BUSINESS ETHICS
Name of the Student
Name of the University
Author Note

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Table of Contents
Part I: Corporate Governance and Decision-Making...................................................3
Introduction:..................................................................................................................3
System of Governance.................................................................................................3
Principle 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT 4
The framework of the Organisation:......................................................................6
Corporate Governance: (Principle 2-8)........................................................................7
Conclusion:...................................................................................................................8
Reference...................................................................................................................10

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Part I: Corporate Governance and Decision-Making
Introduction:
The Auckland Airport is maintained in a corporate structure and the Board of Directors
is responsible for the governance of the airport. The Board is responsible for and committed
to undertake and adopt the best practices according to international standards and work in a
constructive manner effectively that suits the business of Auckland Airport and develop it in an
overall manner. The board of directors is also responsible for the listing of the company in the
NZSX or the New Zealand Stock Exchange and in the ASX or the Australian Security
Exchange. The Auckland Airport Authority is committed in maintaining the ASX Corporate
governance standards and adheres to the Corporate Governance Principles and
recommendations of the ASX and the Corporate Governance Best practice Code of the NZX.
The Auckland Airport authority also follows the Financial Markets Authority handbook the
‘Corporate Governance in New Zealand- Principles and Guidelines’ also known as the FMA to
maintain it standard and work ethics. The Auckland authority aims to manage and maintain its
organisation like any other corporate organisation and aims to create the best practice of
corporate governance in Auckland (AIACorporate, 2019). This essay will outline in detail the
corporate governance and the decision making process that is followed by the Auckland
Airport authority. The company has laid its principles and governance policies in its Charter
which has been made available to the public. This essay will look deeply and analyse it to get
an understanding about the governance of the Auckland Airport. The company has a
constitution and each of the charter refers to the policies that are to be followed in the
company.
System of Governance.
The company through its Charter has laid out the framework for the governance of the
Auckland Airport and follows it in terms of reference while governing the issues related to the
management of the company. The following sections will delve deeper into the charter of the
company and will try to interpret them to understand how decision making and corporate
governance is maintained in the organisation.
Principle 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
The Charter of the Auckland Airport Authority underlines and recognises the roles of
the Board as well as the management. The strong policies and the strategic guidance that

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have been outlined in the charter reflects the strong foundation of the organisation and its
governance. The major roles and strategic goals have been clearly identified in the company’s
charter. These will be identified as follows:
 Ensuring smooth functioning of the organisation by collaborating with the management
and to outline clearly the goals, strategy and communicate them adequately to achieve
them.
 To regularly monitor the performance of the management by evaluating the strategy
implementation and
 The appointment of chief executives and reviewing their performance and looking over
their termination.
 Approving and appointment of the Corporate Secretary and looking over the
performance of the position.
 Approving and evaluating the remuneration and compensation policy of the senior
management.
 Evaluating and monitoring the company’s financial assets and financial reports along
with examining the reports that are to be sent to the shareholders and the stake
holders or the company.
 Ensuring that the company disclosures are met according to the obligations of the
company (AIACorporate, 2019).
 Ensuring and monitoring of the behavior and work culture and that high ethical
corporate behaviour standards are met.
 Guaranteeing the occupational health and safety of the company employees and
ensuring that the procedures and the systems are in order to deliver the obligations.
 Determining and ensuring the various measurable objectives that would allow diversity
within the business and the employees.
 Encouraging and promoting healthy work culture, remuneration and retention policies
that would allow for the development of the issues that would facilitate the growth and
the development of the company.
 Determining and setting the limits of the expenditure and entry into new contracts and
deals that are vested with the management to keep a check in the investments and
expenditures of the organisation.

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 The board is responsible for creating adequate risk management policies and other
regulatory frameworks to ensure that these policies are in place and effective when
required (AIACorporate. 2019).
Based on these foundations the company makes its decisions and is governed through the above
mentioned strategies and policies. The organisation based on these strategies in the Charter has further
developed separate sections where the governance is more detailed out to provide clarity to the
governance of the organisation. The board has established different committees to ensure efficient
decision making and they are entitled with responsibilities of the major sections of the organisation.
The committees are
 The Human resources committee
 The Audit and financial risks committee
 Nominations committee and
 Safety and operational risk committee.
The board takes review of the daily activities and delegates these committees to oversee the day to
day operations of the company. The daily activities are performed in accordance with the Board and it
also reviews the communication between the chief executive and the chair. The decision making
process of the board is based on this framework and every action is managed and evaluated through the
operational activities in the organisation.
Principle 2 - board composition and performance
The board manages the organisation according to the Charter and issues letters to the directors
by setting out the terms and conditions of their appointment. The other roles in the organisation has a
similar agreement that identifies the role of the concerned position and its duties. These are the
employment agreements which act as the main document of the agreement of the organisation
(Acfr.aut.ac.nz. 2019). The employees are reviewed through key performance indicators that
determine the major aspect of the employee performance and these are managed in a hierarchical
manner. The performance of the chief executive and the performance of the management is reviewed
through a committee which overlooks the performance of the employees and the review of the chief
executive is also conducted by the chair of the board. The current board comprises of Sir Henry van der
Heyden (Chair), John Brabazon, Richard Didsbury, Brett Godfrey October, Michelle Guthrie October,

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James Miller, Justine Smyth July and Christine Spring. The Board composition is determined by the
constitution of the company which ensures that it should have enough members from various
disciplines to constitute a diversified team. The diversified team ensures that there is a vast range of
knowledge in the team to efficiently manage the team relevant to the business of the company. The
constitution states that the company should have atleast three directors on the board and a maximum of
eight directors to manage the company (AIACorporate, 2019). The policy of the board also states that
the board should have an appropriate mix of skills, experiences and diversity along with gender
equality to manage the company efficiently. Since the industry relates to aviation and transport
communication, the board focuses on skills that focus on aviation industry, tourism, retail and sales and
international relations and businesses.
Code of ethical behaviour
The company focuses on the highest standards of ethics for the development of the organisation and is
committed to create an environment of integrity and honesty in the organisation and is outlined in the
company’s ethics policy and code of conduct. The ethics, policy and the code of conduct of the
company is applicable to all the employees including the director of the company and it recognises the
legal and other obligations of the employee.
Board committees
The organisation follows corporate governance in a structure that is in compliance according to the
international standards. The Chair, the Chief Executive and the general manager of corporate affairs are
the liaison to the media. The organisation has framed its formation based on the standards of the NZX
and the ASX and have complied with the best standards in the industry. The organisation have
developed the standards of the issues that follow the corporate standards of dealing with the stake
holders and the Share Holders and publishes the annual report, the interim report and the annual
meeting of the shareholders from time to time. The organisation provides information to analysts
during the regular meetings and also publishes disclosures to the NZX and the ASX in accordance with

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the disclosure and communication policy (Acfr.aut.ac.nz. 2019). In order to maintain such an
organisation the Auckland Airport Authority has developed strategies and policies to guide its
operation smoothly
Risk management
One of the major ethical issues related to airport operations involve maintaining the privacy of
passenger information and apart from security concerns. As the NZ Herald (2019) reports that it is time
for the Auckland airport to deliver adequate governance and the issue related to privacy is one of the
major issues that have been outlined in the report. The airport collects huge amount of private
information form the passenger as well as the employees to ensure security of the airport and it is the
obligation of the company to ensure that these information is adequately handled, managed and
addressed through the processes of the company. The company should ensure the right to privacy and
under no circumstances should allow the information to be leaked to share without adequate
permission. The sharing of information or private details should be only due to any concerned reason or
security purpose. This is one of the issues that needs to be handled effectively since any breach of
information would severely hamper the ethical obligations of the company or the organisation
(AIACorporate. 2019). The Auckland Airport authority needs to review the process of storing and
preventing passenger information and the needs to lay out a policy that protects the right of the
passenger privacy.
Auditors
The company has committed itself to safeguard the integrity in corporate reporting and the audit
and the financial risk committee is responsible for the management of financial risks and overviews
them. The committee is responsible for general assistance to the board regarding financial reporting and
audit functions. The organisation through its governance have ensured that timely and balanced
disclosures are made available from time to time and is made in accordance with the NZSX and the
ASX listing rules. One of the major aspects of the governance that the company is ensures is the

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recognition and management of risks. The company through its systems and committees have ensured
that the risks are adequately identified and managed thereafter depending on the intensity of the risk
either form operational or financial perspective. The company follows a systematic approach and
identifies the risk through a set of processes which include significant risk identification, risk impact
quantification, strategy development for risk mitigation and regular monitoring and examining of the
process to ensure that the compliance to these policies and strategies are maintained. The chief
Executive and the Chief financial Officer is responsible to look after the company and is responsible to
provide in written an annual report regarding the company’s operation and financial risks that are taken
by the company.
Shareholder rights and relations
The company has strong values and strongly promotes diversity in the organisation. The organisation
makes sure that that diversity is maintained in the organisation through the organisations employees,
managers and in the leadership. The organisation is committed to embrace diversity in the organisation
and ensures that all opportunities are made available to promote diversity and diverse cultures within
the organisation. This includes disability, ethnicity and cultural and gender diversity within the
organisation. The Auckland Airport Limited is committed to its shareholders and have its obligations to
inform the shareholders from time to time and the market participants with accordance with the NZX
listing rules. The Auckland Airport has framed a policy to that provides the commitment of the
Auckland Airport to deliver continuous disclosures according to the listing rules also set out the
framework and the policies that ensure the compliance according to the Listings rules.
Conclusion:
The company takes into account all the obligations and strategies that are of the best practice and the
decision making and corporate governance in the organisation is of the best standard in the industry.
The Auckland Airport Authority is managed through a board of directors which is the general norm
followed across all corporations and organisations globally. The company through its governance has

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ensured that there is diversity in the organisation with respect to communities, gender and ethnicity and
age groups. The company through its governance has ensured that diversity in the organisation is
maintained and that it is ensured in every aspect of the organisation. The company has also kept in
mind to safeguard the integrity in the corporate reporting of the organisation and ensures that this
integrity is not compromised at any cost and therefore the integrity of the business and that of the
organisation is maintained. The organisation also ensures that timely and balanced disclosures are made
from time to time to ensure investor confidence and these reports are provided accurately in regular
intervals as detailed in the charter that outlines the reporting intervals, outlines accurate information of
the reports in accordance with the NZX and the ASX. The company also ensures that the organisation
respects the rights of the security holders and this makes the governance fairer and ethical. The rights of
the security holders are managed and the communication framework is designed through the adequately
to manage the communication with the shareholders and all the other stakeholders of the company in
time. This ensures a smooth governance of the company at par with best practices in the organisation.
Part II: SOLUTIONS TO ETHICAL ISSUES
Introduction:
As we have discussed in the earlier section about the Auckland Airport authority and its corporate
governance, it has to be understood that the Auckland Airport Authority has a well-managed and
efficient governance and as per the reports of the Auckland Centre for Financial Research the Auckland
Airport Authority is ranked among the top 20 companies with respect to the non-Audit to Audit fee
ratios. The New Zealand Corporate Governance Index of the organisation is rated at 19 out of 28 in
2016 (Acfr.aut.ac.nz. 2019).
This report will determine the drawbacks of the Auckland Airport Authority and make
recommendations to address the issues in ethical issues of the organisation. The Auckland Airport
Authority has maintained high standards in its governance and have maintained it thoroughly. However
there had been issues that needs to be adequately addressed with regards to company ethics and its

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governance. One of the perceived ethical issues related to the Auckland Airport Authority is sharing of
information and managing stakeholder’s information. The Auckland airport authority was reported to
have increased their hidden costs and are believed that they charge a passenger service fee to every
passenger who passes through the airport and is slapped in their tickets. There are also high charges in
the retail outlets to ensure that the retailer cover their rents. The company has rewarded the
shareholders and its major stock holder the Auckland Council with lucrative dividend policy and this
strategies are not mentioned in their reports clearly (NZ Herald. 2019). The organisation is needs to
follow its policies strictly by managing the reports that are made public and it has to be managed
effectively to deliver the best standards of corporate governance and ethics.
Issues related to Ethics
Ethics in any organisation relates to the way an organisation is managed and the transparency and fair
practices that are followed in the organisation. The organisation is responsible for maintaining ethical
issues that needs to be monitored form time to time and any discrepancies or complaints must be
adequately addressed to. This essay will look into three potential ethical issues in the corporate
governance of the Auckland Airport Authority and it will be discussed in detail and thereafter
recommendations will be made through the development of the issues. The potential issues relating to
ethics in the Auckland Airport might be determined as issues relating to security and privacy of
passenger information. The ethical issues related to respecting the rights of security holders and issues
relating to the remuneration of the employees are some of the major ethical concern that might crop up
owing to the nature of operation in the Auckland Airport and these needs to be adequately managed.
The ethical issues includes understanding the privacy of the consumers, taking responsibility of the
organisation’s activities, meeting the obligations and marinating integrity in the organisations
(AIACorporate. 2019).

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Issues related to the rights of security holders:
The rights of security of holders is immensely important since this allows the transparency
within the organisation. The rights of security can be one of the major ethical issues in the governance
of the Auckland Airport Authority and therefore these needs to be adequately addressed. The company
reviews the security of the organisation in the annual meetings of the company and shares the
information related to the shareholdings, investments and stocks of the company. But this information
should be transferred adequately to ensure that the shareholders and the stakeholders do not remain in
darkness regarding the any transactions or policies of the company. The right to security of the holders
is therefore important and needs to be managed effectively within the organisation.
Issues related to Fair and responsible remuneration.
The issues that are related to the responsible and fair remuneration of the employees is again one of the
major ethical issues that might affect the organisation. The Auckland Airport authority employs several
people from time to time to discharge several duties. The company though lays out its policy of
maintaining a fair and responsible strategy of remuneration, yet there is no proper guideline relating to
the part time employees or employees that are engaged with contractual work. This is also one of the
major ethical issues that might affect the company’s employment policies and therefore affect the
growth and reputation of the company (AIACorporate. 2019)
Recommendations:
The recommendations that can be made with respect to the above mentioned issues of the organisation
the following recommendations can be made.
 Creating a process of evaluation that manages the way these should be evaluated and the
information should be passed and managed effectively to pass down the information to
the stake holders and the shareholders. The most important aspect of the issues that are
to be managed through the development of a certain framework that ensures that the
rights of the security holders should be maintained and managed through this
communication hierarchies and policies.

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 The issues relating to prevention and protection of sensitive data breach related to
information of the passenger and the employees should be ensured through disclosures
and a body should be formed to review the processes of how data is collected, handled
and managed.
 The managing of the issues related to fair and responsible remuneration should be
managed through a certain engagement policies that should be laid out by the airport
authority. The employment policies and remuneration strategies of the employees that
are involved in part time and contractual engagement should be managed through this
framework and clear instructions should be laid down through disclosures to ensure that
the company ethically compensates the part time or non-regular employees.
The ethical issues that have been identified are some of the probable issues that the airport authority of
Auckland needs to look into and review the policies related to these ethical issues. The ethics of any
organisation is extremely important in delivering a concrete organisational solution thereby allowing to
be fairer and transparent in its approach (AIACorporate. 2019).
Conclusion:
The issues that are to be kept in mind while understanding the ethical issues of the organisation we
have to understand that no organisation can be perfect but there can be an effort made to make it
perfect. The ethics in any organisation shapes the face of the organisation and creates the brand values
of any organisation. The ethics when followed adequately brings transparency to the organisation and
allows better management of resources and more efficient output is obtained in terms of productivity
and business. The ethics also ensures that a good work culture is sustained in the organisation which is
only derived through a transparent ethical practice.

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References
AIACorporate. (2019). Corporate governance. Retrieved from
https://corporate.aucklandairport.co.nz/about/corporate-governance
Arnot, J., & Donde, G. (2017). Setting the tone a New Zealand perspective on ethical business
leadership. Retrieved from
https://www.ibe.org.uk/userassets/publicationdownloads/ibe_report_setting_the_tone_a_new_z
ealand_perspective_on_ethical_business_leadership.pdf
NZ Herald. (2019). Grant Bradley: It's time for Auckland Airport to deliver. Retrieved from
https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12112724
Researchomatic.com. (2019). Ethics Of Airport Security | Researchomatic. Retrieved from
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Acfr.aut.ac.nz. (2019). Retrieved from https://acfr.aut.ac.nz/__data/assets/pdf_file/0012/123033/ACFR-
NZCGI-Report-v4-final.pdf
AIACorporate. (2019). Corporate governance. Retrieved from
https://corporate.aucklandairport.co.nz/about/corporate-governance
AIACorporate. (2019). Auckland Airport recognised for excellence in corporate governance. Retrieved
from https://corporate.aucklandairport.co.nz/news/latest-media/2013/auckland-airport-
recognised-for-excellence-in-corporate-governance
AIACorporate. (2019). Employment. Retrieved from
https://corporate.aucklandairport.co.nz/corporate-responsibility/employment