Ethics and Governance

This report discusses the corporate governance and ethics within AUB Group Limited, a leading insurance company in Australia. It explores the company's board orientation, corporate communication, and sustainable business practices.

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ETHICS AND GOVERNANCE
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Executive summary
AUB Group Limited (AUB) is a well establish investment insurance organisation operates in
Australia. The company has its branch in New Zealand with a huge investment capital worth of
$950 million. One of the major reason behind such success can be identified in terms of the
engagement of the stakeholders. Therefore, the agency theory and legitimacy theories are
implemented in order to get perception regarding the organisational practice and sustainable
development.
In this regard, this report tries to put emphasis on the corporate governance, board
orientation and the organisational communication. The aim of this report is to deliver an
extensive research on the sustainable business practice of AUB Group Limited and tries to put
great thrust on the process of achieving the sustainable development effectively. The corporate
governance section encompasses an analysis on the board members of AUB and the way they
fosters a better measure of sustainability. On the other hand, the board orientation helps to
signify the corporate governance practice of AUB. In addition to this, company communication
illustrates the legitimacy of the company to ensure the sustainable organisational practice.

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Table of Contents
1.0 Introduction................................................................................................................................4
1.1 Company details....................................................................................................................4
1.2 Industry details.......................................................................................................................5
1.3 Company and industry history...............................................................................................5
2.0 Corporate governance................................................................................................................6
2.1 Independent and non-dependent actors.................................................................................6
2.2 CEO and chairperson.............................................................................................................6
2.3 Remuneration report..............................................................................................................7
3.0 Board orientation.......................................................................................................................8
3.1 Theoretical explanation.........................................................................................................8
3.2 Character of the stakeholder group........................................................................................9
3.3 Focus on the data.................................................................................................................10
3.4 Legitimacy of the company.................................................................................................11
4.0 Company communication........................................................................................................11
4.1 Legitimacy theory................................................................................................................11
4.2 Focus on the company.........................................................................................................12
Conclusion.....................................................................................................................................13
Reference.......................................................................................................................................14

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1.0 Introduction
This report is going to discuss the corporate governance and ethics within the business
organisations. For a better research, the report chooses AUB Group Limited as the case study
and intends to evaluate the corporate governance framework within the organisation. In this
regard, the agency theory is implemented in order to figure out the important stakeholder for the
organisation and legitimacy theory is also introduced in order to analyse the organisational
communication of AUB with its customers and employees.
1.1 Company details
AUB Group Limited (AUB) is a popular and one of the leading insurance company
currently operated in Australia (Asx.com.au., 2019). The organisation was originated in
Australia and gradually encapsulate the market with its rapid and aggressive marketing
strategy. In addition to this, focusing on the stakeholders especially the shareholders and the
clients is the key success factor that AUB Group Limited is following in course of
establishing and maintaining stable business orientation. The mission and vision statement of
the company is also emphasis on the clients by stating that a range of product, service and
solution are provided to the potential customers especially to the Australians who are really
facing problems due to financial burden. Therefore, AUB believes in the novel performance
with strong and transparent relationship with the customers. Therefore, quality of services
and fairness in dealing with the customers are considered to be the most pertinent aspect on
which AUB keeps a stern focus. As a result of that the organisation witnesses a steady
growth and announced that in the financial year of 2018 there would be 1.8% increase in the
net profit of the organisation (Asx.com.au., 2019). The growth in the organisational profit
reached at a peak of $17 million in 2018 whereas the previous profit was worth of $16.7

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million (Aubgroup.com.au, 2019). As far as the Code of Conduct of AUB is concerned, it
can be stated that AUB focuses on the ethical standards in terms of honesty and integrity.
Moreover, focusing on the conflicts of interests also and provides services and facilities in
this regard.
1.2 Industry details
The Australian insurance industry is divided into three segments such as general
insurance, life insurance and health insurance. The Australian insurance market is highly
dynamic and intense volatility of the market creates problem for the insurance companies to
check on their valued customers (Newson et al., 2017). High bargain power of the customers
compels the insurance organisations to establish business on the basis of the customer
behaviour and their preferences. Moreover, it can be stated that the role of the insurance
companies is also relied on the practice of establish direct and transparent relationship with
the clients so that a competitive advantage will be gain for the future sustainability of the
organisations (Muir&Salignac, 2017). Therefore, the legitimacy of the company relies on the
process of procuring huge emphasis on the clients and customers so that it will generate a
legitimate holding in the insurance and banking industry of Australia.
1.3 Company and industry history
AUB Group had started business in 1985 under the name of Austbrokers Holding
Limited. In 1995 the Company had 33 business partners with an investment worth of $13
million. Gradually AUB is settling down the business effectively and as a result in 2005 it
was enlisted on the ASX with 80 locations and 34 business partners (Aubgroup.com.au.,
2019). This was a huge achievement for the organisation as the ASX listing was the most
crucial success factor for AUB. Currently the company has more than 425 locations with a

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worth of more than $950 million market capital (Asx.com.au., 2019). All those achievements
become fulfilled due to emphatic reliance on the shareholders and clients.
2.0 Corporate governance
2.1 Independent and non-dependent actors
The corporate governance practice of an organisation is related to the practice of
identifying the non-independent and independent actors of the company’s Board of Directors
who are responsible to ensure the corporate governance practice of the company. The decision
making practice of the organisation with immense focus on the role of the Board of Directors
creates impetus to the process of securing the corporate governance framework of the company.
In the context of AUB Group Limited, Mark Searles is the CEO and the only non-dependent
actor of the organisation (Aubgroup.com.au, 2019). On the other hand, there are 5 independent
directors who are played crucial role in order to guide and influence the decision making of the
executive body. David Clark is the Chairman of Board of Directors who has prolonged 35 years’
experience in the investment banking field and also in funds management, property and retail
banking (Aubgroup.com.au, 2019). Moreover, the other non-executive directors are also
identified as the independent directors of the organisation who are responsible to facilitate a
better and strategic practice for the organisation in the long run.
2.2 CEO and chairperson
Mark Searles, the CEO and Managing Director of the organisation is responsible to
procure a better outline of establishing better corporate governance framework
(Aubgroup.com.au, 2019). Therefore, he tried to identify some of the key aspects on which the
company was intended to focus intensely. For instance, the business area performance,

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Australian broking, underwriting agencies, risk services, overseas branches and the outlook were
highlighted the most. One of the key facet on which the CEO put the most emphasis was its
implementation of advanced technology in the organisational activities. It was based on the
prospect of delivering quality services and effective means of shareholders engagement that were
significant for the progress of AUB Group Limited. Moreover, outlook was also identified as a
crucial part for the CEO where he tried to keep attach the image and values of the organisation
aligned with the organisational development and practice (Aubgroup.com.au, 2019). Based on
this understanding, it can be argued that from the end of the senior executives of AUB Group
Limited, the corporate governance measures were taken seriously.
On the other hand, the Board of Directors of this insurance company are always
concerned about developing effective means of corporate governance mechanism. Therefore,
some key components like the improvement of the environment, collaboration and value culture
and continuous focus on the business model for satisfying the clients and the shareholders.
2.3 Remuneration report
The remuneration report is required to be more transparent and impartial enough to
glorify the image and values of the organisation. In case of the remuneration policies of AUB
Group Limited, it can be found that there are different types of remuneration practices that the
organisation follows for the independent and non-independent directors. From the research of
Geiler and Renneboog (2016) it can be argued that it is essential for a good organisation to
facilitate effective remuneration mechanism for the Board of Directors where the independent
directors are entitled to get remuneration on the basis of their presence in the board meetings.
However, as the non-independent members of an organisation are referred as the permanent
staffs of the company so that they will get salary as per the organisational structure along with

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the incentives and other kind of rewards (Hary, Rious & Saguan,, 2016). The CEO of the
organisation is responsible to foster an effective remuneration practice. The Remuneration and
People Committee tries to check and review the compensation arrangements of the Directors,
Senior Executives and the key management personnel. In this context, AUB Group Limited also
follows the same path of setting better remuneration practice.
3.0 Board orientation
3.1 Theoretical explanation
For the identification of the stakeholders, this report is going to seek help from the
Agency theory in order to bring an effective means of business practice. According to Bose and
Phillips (2016) the agency theory is highly resembled with the corporate governance practice and
the role of the stakeholders to influence the mode of organisational practice. On a different
perception, it can be argued that the agency theory is associated with the agents and the
executive managers of the organisation in order to facilitate a clear identification of the
organisational practice. The principle of the agency theory connotes the shareholders as the
owner of the organisation and the executives are employees to meet the preferences of the
owners. Therefore, companies that are generally put emphasis on this theory witness a high
bargaining power of the stakeholders especially the people who invest financially. In response to
this, Pepper and Gore (2015) opined that in case of the investment banks or the financial
institutions, it is essential to retain the inflow of cash with the help of the investments. It is
associated with the notion of developing an effective measure where the shareholders influence
the organisation indirectly. Nevertheless, the influence is so intense that the management or the
governing body cannot overlook the interests of the shareholders.

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Apart from that role of the Agency theory is also put a great deal of emphasis on the
perception of corporate governance where it is essential for the business organisation to identify
and put great deal of emphasis on the stakeholders. It is a sustainable business approach and the
organisation consider the purpose of the stakeholders over their own interests. Therefore, it can
be argued that the interests of the stakeholders will be taken as the objective of the company and
the organisation pledges to maintain its good relationship with the organisational practice.
Henceforth, it is always been an important aspect for the business company to create better
practice in order to instigate the shareholders to invest more by ensuring their high opportunity to
earn high profit. Moreover, it is also a pertinent aspect for the business organisations to establish
an effective business orientation so that it also attracts new investors to invest for getting high
profitability. Fair and transparent policy making and business organisations are also referred as
pivotal for the private enterprises for shaping value and benevolent image of the organisation for
more appreciation.
3.2 Character of the stakeholder group
The Agency theory rightly points out the shareholders as the key stakeholder group for
AUB Group Limited. In fact, it is within the practice of AUB Group Limited to facilitate a better
practice of partnership with the shareholders. In addition to this, the company is also looking for
effective means of bringing new stakeholders into the organisational fold by encouraging and
providing aspirations to the stakeholders. The resourceful attitude and amicable relationship
provide competitive advantage for the business orientation of AUB Group Limited. As far as the
future business orientation of the organisation is concerned, it can be stated that the clients and
the partners are placed in the core of the business objectives of AUB (Pepper & Gore 2015).. The
company claims to ensure the growing return and growing business to safeguard the investment

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of the shareholders. Therefore, prioritizing on the strategic measures are the best part of AUB
Group Limited. For instance, maximise the partnership model and drive operational advantage
with value services are being made for attracting great number of the clients and investors. In
addition to this, putting a great deal of emphasis on strengthening the foundation of the
organisation will further provide better practice for the business organisation in order to ensure
quality of service to the clients and facilitates a fresh experience for the shareholders and
investors.
3.3 Focus on the data
There are some key aspects from which it can be proved that the increase in the volume
of investment and the shareholders has become a crucial part for the business initiatives of AUB
Group Limited. The Chair person’s report suggested that there is a huge development and
progress in the company in the financial year of 2018 proves the efficacy and good practice of
the organisation. It is resembled with the corporate governance framework that connotes good
business practice and stability around AUB Group Limited.
The net profit to the equity holders has been increase since 2017 where the profit amount
was $32,988 (Aubgroup.com.au, 2019). In 2018, it was increased at a rapid pace of $46,520
which was considered to be one of the major aspect for AUB Group Limited to climb up the
ladder of success. Moreover, revenue increase from the ordinary activities is also escalated at a
rapid pace with 5.3% hike in the financial year of 2018 (Aubgroup.com.au, 2019).
The dividend report is also highly optimistic that connotes an amount per security is 32%
whereas the interim dividend paid was calculated to 13.5%. Those promising achievements will

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cater a good deal of organisational financial development that can foster competitive advantage
for the organisational development.
3.4 Legitimacy of the company
The legitimacy and stability of the organisation is also identified as an important aspect
for the financial development and stability for AUB Group Limited. Based on the perception of
establishing an effective means of better relationship with the clients and the investors is also a
pertinent aspect. Focusing on the financial report of the organisation it can be stated that there
are huge the investors offers not only a process of establishing effective means of organisational
expansion but the current financial stability of AUB Group Limited can also be achieved by
implementing a better and amicable approach towards the investors. In this regard, the
organisational mission and vision also supports the strategic measure of the organisation directly
that will foster competitive advantage for the organisation in near future.
4.0 Company communication
4.1 Legitimacy theory
Communication is an important aspect for any business organisation in order to create
better contacts with the person. However, communication can be divided into organisational
communication where the communication process will be focused on the employees and the
customer centred communication practice (Deegan, 2002). In this regard, the customer centred
communication practice is of top priority for the companies because of creating an understanding
and mutual dependency on each other (Hummel&Schlick, 2016). In other words, it can be
argued that the role of communication is to create a value for the products or services that the
company offered so that the customers can feel the necessity of the product or service. On the

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other hand, it will also serve the purpose of the organisation by enhancing its profitability. In this
regard, it is important for the companies to an effective communication practice by relying on
theoretical framework (Deegan, Rankin and Tobin, 2002). The legitimacy theory is relevant in
this context.
As far as the legitimacy theory is concerned, it is directly linked with the paradigm of
sustainability. Corporate governance is an example of organisational sustainability. Therefore, it
is obvious for the company to use the legitimacy theory as a pragmatic approach to reconstruct
the corporate governance. According to BitektineandHaack (2015) legitimacy theory pays
attention to the behaviour and motive of the organisation while implementing and developing
voluntary. Those are the primary concern for procuring and safeguarding the ecological balances.
4.2 Focus on the company
The theoretical perceptive and the features of legitimacy theory can be used in course of
evaluating the communication with the consumers for AUB. In case of blending the
sustainability framework with the communication with the customers, it can be seen that the
AUB management is always looking for using advanced technology in every sphere of the
organisational activity to get more efficacy into the organisational practice. Transparency in the
organisational practice is also important for AUB to maintain. It will help the company to
formulate an effective business so that the stakeholders will get a clear and fair information
regarding AUB’s profit and investment. On the other hand, coping with the trend is also another
objective of AUB for maintaining a sustainable business (Aubgroup.com.au, 2019). Despite of
all those efforts, it can be argued that the company only focuses on the use of communication
purely for business purpose. No such measure like community engagement has been taken for a

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direct interaction with the clients. It is definitely a gap within the organisational practice of AUB
that has to be resolved in short span of time.
Conclusion
The above discussion tries to evaluate the corporate governance and sustainability
framework within the business activities of AUB Group Limited. One of the major aspects for
this report is to illustrate the discussion by emphasising on the executive management only. First
of all, in the corporate governance practice, AUB has performed well by harnessing the interest
of the Board of Directors with the executive managers. It is essential for AUB to get support
from its Board of Directors properly. The board orientation also portrays a clear image of the
intention of the AUB decision making boards properly. Finally, the lack of communication is
pointed out that can perturb the healthy business approach of AUB Group Limited. Henceforth, it
can be concluded that the report rightly figures out the strengths and weaknesses in the corporate
structure of AUB and the company should mitigate the sustainability issues as soon as possible.

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