ETHICS AND GOVERNANCE1 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.
ETHICS AND GOVERNANCE2 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
ETHICS AND GOVERNANCE3 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 segmentincludes 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 segmentconsists 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.
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
ETHICS AND GOVERNANCE4 GUD - Holdings Limited This company operates many of the leading and branded businesseson 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.
ETHICS AND GOVERNANCE5 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
ETHICS AND GOVERNANCE6 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 accountablefor approving strategies and provide guidance for strategic directions. They are responsible for establishing policy, securing the financial position and business affairs in monitoring terms. NameDesignationYear of appointment M G Smith Non-Executive Director26 May 2009 Chairman15 November 2017 G A BillingsNon-Executive Director20 December 2011 D.D RobinsonNon-Executive Director20 December 2011 A L Templeman-JonesNon-Executive Director1 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
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
ETHICS AND GOVERNANCE7 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 superannuationfund 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 SeniorExecutive positions, skills, knowledge and experience for performing their functions in the organisation. b)Short Term Incentives:The Short Term Incentive payments are based on cashvalueaddedperformances, which align the SeniorExecutivesinterests. In addition, shareholders’ interests operatedprofitably in the businesses. c)Long Term Incentives:These incentives based on the performanceofcompanies 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.
ETHICS AND GOVERNANCE8 Analyseon 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, exceptsuperannuation. The Board focus is to provide shareholder the profits, dividend and growth. Remuneration
ETHICS AND GOVERNANCE9 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 doingthe 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.
Paraphrase This Document
Need a fresh take? Get an instant paraphrase of this document with our AI Paraphraser
ETHICS AND GOVERNANCE10 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.
ETHICS AND GOVERNANCE11 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. Thisencourages 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
ETHICS AND GOVERNANCE12 communication helps them in maintaining the trustful relationships with the society and this is only possible if the company islegitimates 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.
Secure Best Marks with AI Grader
Need help grading? Try our AI Grader for instant feedback on your assignments.
ETHICS AND GOVERNANCE13 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
ETHICS AND GOVERNANCE14 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 %20website-1532645131.pdf 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. doi:10.1080/14783363.2010.483095 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 https://ro.uow.edu.au/cgi/viewcontent.cgi?article=1062&context=aabfj
ETHICS AND GOVERNANCE15 Lopes, H. (2016). Agency theory and social interactions at work.Review of Social Economy, 74(4), 349-368. doi:10.1080/00346764.2016.1171381 Price, N. J. (2018, October 11).The Role of the Board of Directors in Corporate Governance. Retrieved from Diligent insights: https://insights.diligent.com/corporate-governance/the-role-of-the-board-of-directors- in-corporate-governance/ Schillemans, T., & Bjurstrøm, K. H. (2019, Feb 8). Trust and Verification: Balancing Agency and Stewardship Theory in the Governance of Agencies.International Public Management Journal, 1(1), 2-10. doi:10.1080/10967494.2018.1553807 Tropp, T. R. (2012). Integrated marketing communications: How can we measure its effectiveness? .Journal of Marketing Communications, 18(2), 113-132. doi: 10.1080/13527266.2010.489334