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ETHICS AND GOVERNANCE 0.

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Running Head: ETHICS AND GOVERNANCE
0
Corporate Governance
GUD- Holding limited
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ETHICS AND GOVERNANCE 1
Executive Summary
There is introduction of the GUD Holding Limited and explanation of the corporate
governance followed the company. In addition, there are different theories and concepts,
which are followed by this company. The research done in this report is all about these
theories and the communication. The theories, which have applied in this company, are
agency theory, stakeholder theory and resources dependency theory. These theories help the
companies as they have independent directors. In addition, there is an explanation of the
interpretation of company communication through legitimacy theory.
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ETHICS AND GOVERNANCE 2
Contents
Introduction....................................................................................................................3
GUD - Holdings Limited...............................................................................................3
Corporate governance at company GUD - Holdings Limited...................................4
Board Composition................................................................................................4
Independent: Board of Directors and Chairman of ‘GUD Holding Limited’........5
The Chairperson and the Chief Executive Officer Report.....................................5
The Remuneration Report......................................................................................6
Board orientation........................................................................................................7
Company Communications Interpretation Though Legitimacy Theory..................11
Conclusion....................................................................................................................12
Bibliography.................................................................................................................13
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ETHICS AND GOVERNANCE 3
Introduction
Over the period of 50 years, ‘GUD Holding Limited’ listed on the ‘Australian Stock
Exchange’. In addition, it is in the S&P ASX 200 index list. (ASX, 2019).
The main work of this company is to import, distribute, manufacture and sale the
automotive. The deals related to these tasks operated in Spain, New Zealand, France and
Australia. This company is consisting of segments such as Water and Automotive (GUD
Holding Limited , 2019). These two segments briefly explained in below paragraphs.
The Automotive segment includes the duty filters services for fuel pumps, gasket
kits, cars and trucks. In addition, this segment is associated with the products, which are
automotive aftermarket. The businesses acquired by the company in this segment are
automotive equipment’s such as replacement parts of Goss engine, Ryco, Wesfil air, oil
filters, fuel filters and cooper (GUD Holding Limited , 2019). The GUD holding limited
company’s automotive business deals with the number of leading aftermarket brands.
The Water segment consists of Davey water transfer pumps, products for, swimming
pool, pumps and pressure equipment’s for household, spa bath controllers, pumps and
pressure system for farms and water purification equipment. The businesses acquired by the
company in this segment are from ‘Davey’. This company is one of the leading suppliers
dealing with various ranges of products related to water. These products featured in farm,
community and domestic markets (GUD Holding Limited , 2019). The following paragraph
carries the further details of the company and the corporate governance in it.

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ETHICS AND GOVERNANCE 4
GUD - Holdings Limited
This company operates many of the leading and branded businesses on the market,
which actively manufactures the dynamic products in the market (GUD Holding Limited,
2019). It is consisted of the number of companies with dynamic products. These companies
situated in Australia. In addition, GUD Company is owner of brand portfolios of the Asia-
Pacific region. The brands that offered by this company are the market leaders in their
respective industries and product categories. This company effectively manages the offshore
sourcing, supply chain, product designing and product development. The values new product
development is the plan greatly welcomed by this company. Moreover, this group also value
the innovative ideas, as this company believes generating long-term relationships. The
primary objective of this company is to construct and produce the returns for the stakeholder
with the long-term durability. These returns must be above the cost of capital. Another
objective of this company is to maximise brand portfolio value for the shareholder.
Corporate governance at company GUD - Holdings Limited
Corporate governance is defined relations, processes and mechanism through which
the corporation is directed and controlled (GUD Holding Limited, 2019). This includes the
management of many interests of corporation’s stakeholders. It involves the rules and
practices framework through which BOD fortifies the company accountability, transparency
and fairness in the relationship with the company’s stakeholders such as employees,
financiers, customers, government and communities.
GUD Holding Limited considered the framework of corporate governance as per specified in
Principles mentioned by ASX Corporate Governance Council. The following points help to
understand the corporate governance at GUD.
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ETHICS AND GOVERNANCE 5
Board Composition
The following principle determines the board composition, which are as follows:
The Board comprises with the ten directors in the accordance of Constitution.
The Board’s Chairman must be Non-Executive Director is independent.
For the effective corporate governance, the board should have a diverse range of
knowledge, skills and experience (GUD Holding Limited , 2019). Nominations Committee
assists the Board, which works to ensure that it can avail the optimal composition as per the
need of the company (Board Apprentice, 2017). There should be the proper evaluation of the
individual before appointing the individual as a Board member. Another option is to put
forward the individual to the shareholder and conduct elections for the position of Director in
the company.
Independent: Board of Directors and Chairman of ‘GUD Holding Limited’
‘ASX Corporate Governance Council Guidelines’ is recommended, which specified
that all the Non-Executive Directors and the Chairman are independent (ASX, 2019). All the
Directors and Chairman have the authority of being free of interest, associations, positions or
relationships, which might influence the decision of the management and they have the power
to judge the issues independently.
The Chairperson and the Chief Executive Officer Report
The Board of GUD holding limited, currently comprises with the highly experienced
Directors. These Directors have an appropriate understanding of the issues emerging in the
current senior in the business environment. They are capable of reviewing and facing the
challenges effectively against the management decisions (GUD Holding Limited, 2019). In
addition, the Board also comprised with four Non-Executive Directors including the
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ETHICS AND GOVERNANCE 6
Chairmen of the company and an Executive Director that is Managing Director of the
company.
The Board of Directors role is to protect the group performance (Price, 2018). In
addition, they are accountable for approving strategies and provide guidance for strategic
directions. They are responsible for establishing policy, securing the financial position and
business affairs in monitoring terms.
Name Designation Year of appointment
M G Smith
Non-Executive Director 26 May 2009
Chairman 15 November 2017
G A Billings Non-Executive Director 20 December 2011
D.D Robinson Non-Executive Director 20 December 2011
A L Templeman-Jones Non-Executive Director 1 August 2015
Graeme Whickman
Managing Director
1 October 2018
Chief Executive Officer
Source: All the Non-Executive directors of GUD Holding Limited who are
independent (GUD Holding Limited, 2019)
The Remuneration Report
This is the part of Director Report and it has been audited, as it is required by the
Corporations Act 2001 under section 308 (3C). This report summarise the remuneration of
directors and executives (GUD Holding Limited , 2019). The remunerations committee GUD
holding limited have a responsibility to make recommendations to the Board of the company.
These recommendations relate to remuneration policies and applicable packaging for Senior
Executive and Managing Director. This committee has four Non- Executive Directors and

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ETHICS AND GOVERNANCE 7
their responsibility is to determine the framework of remuneration. This framework is a
mixture of fixed and variable kind of remuneration. It has five components explained below
and these following points summarise the total remuneration provided to the directors and the
Executives of the company.
a) Fixed Remuneration and Other Employment Benefits: It is comprised of basic
salary as well as superannuation fund contribution of the employer. The remuneration
of the directors is fixed, they are not based on their performance. These remunerations
are determined with accordance of Senior Executive positions, skills, knowledge and
experience for performing their functions in the organisation.
b) Short Term Incentives: The Short Term Incentive payments are based on
cash value added performances, which align the Senior Executives interests. In
addition, shareholders’ interests operated profitably in the businesses.
c) Long Term Incentives: These incentives based on the performance of companies and
Executives’ performance measured with reference to ‘Total Shareholder Return’.
d) Special Incentives: These incentives serves to the selected employees, aligned to
complete the particular result. It might be paid as per the performance rights and other
salary.
Board orientation
It is the process, which helps the new directors, contributes in their tenure and
specifies their role to provide governance to the board. The board orientations purpose is to
provide the significant information about the organisation and states the rule and
responsibility of the Board (Bloch & Shapiro , 2010, pp. 12-14). In addition, it also serves to
build the effective relationship among the Board members, which provides support and
promotes the agreement about their work.
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ETHICS AND GOVERNANCE 8
Analyse on the Board Orientation in GUD Holding Limited
The corporate governance committee is responsible for the Board Orientations. The
Board Orientation program provides the detail information of the company. There is an
explanation of some theories and concepts in below paragraphs, which are followed by the
‘GUD Holding Limited’ for the board orientation.
Agency Theory
The agency theory defines the separation and management of the ownership. In
addition, this theory states the assignment of the management from the owners to the
managers of the firm (Lopes, 2016, pp. 349-368). This separation helps in understanding the
agency relationship and driving the agency cost. In this theory, the manager of the firm works
for the self-interest and he is the wealth maximiser. In this, the manager undertakes those
activities, performed for their own interest rather than for the shareholder’s interest. The firm
requires corporate governance, as it reduces the agency cost with the help of accountability
and controlling the actions of the manager with transparency. The agency, board works to
identify the emphasis of the company annual report, based on the remuneration report. This
contains the scheme named as ‘senior executive remuneration schemes’. The board is fully
aware of the shareholder requirements and their importance. The firm, who follows the
agency theory, have a majority of independent directors.
In GUD-Holding Limited, have the orientation that follows the agency theory.
Currently, the board composition of this company has all the Non-Executive directors, which
are independent. This company Board follows the principle of good corporate governance,
where the directors do not receive the remuneration related to the performance. In addition,
they do not receive other benefits of retirement or termination, except superannuation. The
Board focus is to provide shareholder the profits, dividend and growth. Remuneration
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ETHICS AND GOVERNANCE 9
provided to the Directors and the Executives, mentioned in the remuneration report is in
detail and this report is the part of the director’s report. The key communications of this
company specify the Remuneration Report, Company Income Statement and Balance Sheet.
Stewardship theory
Stewardship theory is the opposite of agency theory. In this theory, the directors of the
company motivated by the non-economic activities such as doing a good job and being
corporation’s resources good steward (Schillemans & Bjurstrøm, 2019, pp. 2-10). They are
not stuck with the profit margin they are doing the right things for the organisations.
According to this theory, the independent directors not needed in the organisation as the
executive directors and managers already motivated to do their actions, which are in the
favour of organisation. Hence, there is the requirement to empower them instead of
monitoring their work.
In this theory, the board composition is majorly of non-independent. They have the
knowledge that how to run the company. In addition, they know how to have growth in
company’s assets. The board focus in this theory is to have internal growth in strategy and
there is an establishment of proper capital management. At the part of key communication,
organisation Chairperson’s report has been released in which the Balance Sheet and Cash
Flow statement is represented. In GUD-holding limited, there are the majority of independent
directors. Therefore, this company does not follow this theory.
Stakeholder Theory
This theory required to identify, respond and understand to its stakeholders groups. The
stakeholders group includes customers, creditors, communities and employees, where the
corporation must attend all the needs of stakeholders in this theory (Johansson, 2010, pp.

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ETHICS AND GOVERNANCE 10
737-744). The stakeholder theory is the wider concept divided into two branches, which are
as follows:
I. The Ethical Branch: This branch of the stakeholders states that the focus of the board
is on the stakeholder’s needs. There are the majority of independent directors in this
branch, which reflects the stakeholder’s diversity. The focus of the board is to manage
the stakeholders. In addition, the key communication is the use of voluntary
disclosures with some focus on the corporate social responsibility.
II. The Managerial Branch: This branch of the stakeholders, states that the focus of the
board and management is to be motivated to fulfil the needs of stakeholders, which
are powerful. In addition, the key communication is the use of voluntary disclosures
the board display their willingness to the stakeholders (Laan, 2009, pp. 15-29).
In GUD Holding Limited, there are both the branches of stakeholder theory and they
are effectively applicable to the organisation as per specified in the board orientation.
Resources Dependency Theory
This theory specifies that the organisation must control its external resources
efficiently. To maintain and create the links to the resources, the BOD plays an important
role. The board members of the organisation add the value to the organisation by their skills
and maintain their contacts with the groups such as educators, policy makers and lobby
groups. These group links help in reducing the uncertainty in future of accessing the
resources required in the organisation. In this theory, is the mix of skills and contacts ensures
the flow of vital resources. The focus of board in this theory is on the providers of the
resources. In addition, the board focus is no thee capital and resources flow management.
The key composition is depending on the company, which means they serve to secure the
vital resources of the company.
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ETHICS AND GOVERNANCE 11
GUD Holding limited, constructs the skilled matrix, this shows that the board has the
skills, experience and the knowledge. This helps in providing the corporation an effective
direction, which opens the door for the searching resources for the corporation. Hence, this
theory is applicable in this company.
Company Communications Interpretation Though Legitimacy Theory
Legitimacy theory defined as the mechanism, which supports the company in
implementing and developing the environmental disclosure and volunteering the social
aspects. This is done to fulfil the social contracts of the company. This ensures that the
company must operate within the norms and bounds of the respective community and society.
This theory helps the organisation to follow the rules and laws perceived by the society
(Fernando & Lawrence, 2014, pp. 149-178). This theory is based on the idea of social
contract, which establishes the link between the business and society.
Communication in corporate world plays an important role in the organisation. It
maintains the systematic structure of the organisation. It helps in increasing sales, retaining
the clients, implementation of strategies and corporate branding. The company design the
communication process to reveal the meaning and relationships of the society culture and
natural heritage, known as interpretation (Tropp, 2012, pp. 113-132). It involves the objects,
artefacts, sites and landscape of the business. ‘Interpretation of company communication’
means the combination of the communication principles. Every organisation has its own
interpreters. These interpreters should have the appropriate working knowledge.
Interpretation of GUD Holdings limited communications can be done by applied
legitimacy theory in the organisation. This encourages the company for constructive, candid
and open communications, which shows they are easily accessible. The company always try
to treat the employees and society with the fairness and equality. In addition, their
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ETHICS AND GOVERNANCE 12
communication helps them in maintaining the trustful relationships with the society and this
is only possible if the company is legitimates for the society interest. Moreover, this social
legitimacy in return provides capital and other essential resources to the company. Therefore,
legitimacy theory helps in maintaining the communication between the board, external and
internal individuals. In addition, this theory states that the company should design a
communication policy to support the communication with the shareholders and the
stakeholders of the company.
Conclusion
From the above discussion, it can be said that the GUD Holding Limited has applied
various theories and concepts to establish the effective corporate governance in the
organisation. In addition, there are the number of policies of corporate governance, which
adopted by the company.
In the above paragraphs, there are the introduction and summary of the company,
which explains the company corporate governance. Moreover, there is the detail explanation
of the board orientation with the help of various theories. In addition, the company
communication interpretation by applying the legitimacy theory, also explained in the above
paragraphs, which helps in understanding the importance of it in the company.

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ETHICS AND GOVERNANCE 13
Bibliography
ASX. (2019, May 7). Corporate Governance Council. Retrieved from ASX:
https://www.asx.com.au/regulation/corporate-governance-council.htm
ASX. (2019, May 7). G.U.D. HOLDINGS LIMITED. Retrieved from ASX:
https://www.asx.com.au/asx/share-price-research/company/GUD
Bloch , E., & Shapiro , D. (2010, July 13). How to Plan a Board Orientation that Works.
Hospital Topics, 61(6), 12-14. doi:10.1080/00185868.1983.9948326
Board Apprentice. (2017, November 28). Board Composition Is The Beating Heart Of Good
Corporate Governance And High Performance. Retrieved from Board Apprentice:
https://www.boardapprentice.com/2017/11/28/board-composition/
Fernando, S., & Lawrence, S. (2014). A theoretical framework for CSR practices: integrating
legitimacy theory, stakeholder theory and institutional theory. Journal of Theoretical
Accounting Research, 10(1), 149-178. Retrieved May 7, 2019
GUD Holding Limited . (2019, May 7). Annual Report. Retrieved from GUD Holding
Limited : https://gud.com.au/uploads/images/gallery/8/GUD%202018%20Annual
%20Report%20website-1537236028.pdf
GUD Holding Limited . (2019, May 2019). AUTOMOTIVE. Retrieved from GUD Holding
Limited : https://gud.com.au/businesses/automotive
GUD Holding Limited . (2019, May 7). BUSINESSES OVERVIEW. Retrieved from GUD
Holding Limited : https://gud.com.au/businesses
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ETHICS AND GOVERNANCE 14
GUD Holding Limited . (2019, May 7). Corporate Governance Statement. Retrieved from
GUD Holding Limited : https://gud.com.au/uploads/images/gallery/11/ASX
%202018%2007%2027%20Corporate%20Governance%20and%20Appendix%204G
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GUD Holding Limited . (2019, May 7). WATER. Retrieved from GUD Holding Limited :
https://gud.com.au/businesses/water
GUD Holding Limited. (2019, May 7). ANNUAL REPORTS & REVIEWS. Retrieved from
GUD Holding Limited: https://gud.com.au/annual-reports-reviews
GUD Holding Limited. (2019, May 7). CORPORATE GOVERNANCE. Retrieved from GUD
Holding Limited: https://gud.com.au/corporate-governance
GUD Holding Limited. (2019, May 7). DIRECTORS. Retrieved from GUD Holding Limited:
https://gud.com.au/directors
GUD Holding Limited. (2019, May 7). Welcome. Retrieved from GUD Holding Limited:
https://gud.com.au/
Johansson, R. G. (2010). Management for sustainability – A stakeholder theory. Total
Quality Management & Business Excellence, 21(7), 737-744.
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Laan, S. v. (2009, January ). The Role of Theory in Explaining Motivation for Corporate
Social Disclosures: Voluntary Disclosures vs ‘Solicited’ Disclosures. Australasian
Accounting, Business and Finance Journal, 3(4), 15-29. Retrieved May 7, 2019, from
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ETHICS AND GOVERNANCE 15
Lopes, H. (2016). Agency theory and social interactions at work. Review of Social Economy,
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Price, N. J. (2018, October 11). The Role of the Board of Directors in Corporate Governance.
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