ACCT20080 - WAM Leaders Limited: Ethics and Governance Case Study

This case study provides an analysis of WAM Leaders Limited's corporate governance and ethical practices. It begins with an introduction to WAM Leaders Limited, highlighting its business activities and investment objectives. The study then examines the company's corporate governance framework, focusing on board composition, independence, and remuneration policies. Key governance theories, including agency theory, stakeholder theory, and resource dependency theory, are applied to understand the company's approach to governance. The analysis also interprets the company's communications through the lens of legitimacy theory. The case study concludes by summarizing the key findings and outcomes related to corporate governance at WAM Leaders Limited, offering insights into its ethical outlook and governance effectiveness.

Running Head: ETHICS AND GOVERNANCE
0
Corporate Governance
WAM LEADERS LIMITED
Student Details

ETHICS AND GOVERNANCE 1
Executive Summary
There are an introduction and summarization of the WAM Leaders Limited is an
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 communication. The theories, which have applied in
this company, are agency theory, stakeholder theory and resources dependency theory from
which the agency theory is the most favourable for the organisation. These theories help
companies as they have independent directors. In addition, there is an explanation of the
interpretation of company communication through legitimacy theory.

ETHICS AND GOVERNANCE 2
Contents
Introduction....................................................................................................................3
WAM Leaders Limited..................................................................................................3
Corporate governance at company WAM Leaders Limited..........................................4
Board Composition....................................................................................................5
Independent and Non-Independent: Board of Directors and Chairman.....................6
The Chairperson and the Chief Executive Officer Report.........................................7
The Remuneration Report..........................................................................................7
Board orientation............................................................................................................8
Analyse on the Board Orientation of “Wilson Asset Management Limited”............8
Company Communications Interpretation Though Legitimacy Theory......................11
Conclusion....................................................................................................................12
Bibliography.................................................................................................................13

ETHICS AND GOVERNANCE 3
Introduction
Corporate Governance has includes the management of the company, from
proceeding various strategic planes and its control is on the measurement of the performance,
which is an internal activity of the company (Thomson, 2009).
Corporate ethics defined as the ethics that are specifically taking the examination of
the ethical problems. In also states the ethical principles of the business environment. It is
necessary for the organisation to follow entirely, all features applied to it, as it is the
businesses code of conduct (Reiss, 2017).
WAM Leaders Limited
“Wilson Asset Management Leader Limited” is the company, which provides the
investors with diversified exposure with the portfolio that contains the undervalued
company’s growth. It is listed on the “Australian Stock Exchange” within “S&P/ASX 200
Index” with the code name WLE (ASX, 2019). In addition, this company provide market
exposure to mispricing the large-cap company’s opportunities. The various objectives of the
Company’s investment are to provide growth of capital, preserves capital and hand the good
amount of dividend to the stakeholders of the company (WAM, 2019).
This company invest more than $ three billion in the undervalued global companies,
which is on the behalf of more than 80,000 shareholders. This company initiative includes the
new concept named as “Making the difference”, which is related to the difference in the
community as they advocate the retail investors and the supporters for the future generation
companies (WAM, 2019).

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WAM was established in 1997 and was founded by Geoff Wilson. This company has
a team of investment managers, which are based in Australia and Sydney. Recently, the
“Wilson Asset Management Leader Limited” includes the twelve professional specialised in
the investment who offers clients with experience. This company has the experience of more
than 160 years (WAM, 2019).
This company is managing the six LICs with more than $ three Billion capital of
shareholders on behalf of more than 80,000 retail investors. This company aim is to provide a
fully franked dividend, deep diversifications, experienced experts, superior structures, strong
performance, risk-adjusted returns and transparency (WAM, 2019).
The Company has unique plans in investment methodology, which is research driven
and market driven. In the case of a research-driven process, the company focus is on the
identification of the growth in undervalued companies. In the case of the market, driven
process the focus of the company is on taking advantage of the mispricing opportunities in
the market (WAM, 2019).
In this report, there is the introduction of “WAM Leaders Limited”. The purpose of
this report is to understand the concept of corporate governance of this company. In addition,
this report contains the description of board orientation of WAM Leaders Limited with the
help of agency theory, stewardship theory, stakeholder theory and Resource theory. In
addition, there is an explanation of the company communication interpretation through
legitimacy theory. At the end of the report, there are the essential results and outcomes of
corporate governance at WAM.

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Corporate governance at company WAM Leaders Limited
Corporate governance is defined as the system of practices, processes and rules
through which the organisation is directed and controlled. It includes the balancing of the
company’s stakeholder interests (Ethical Statement , 2019). It provides the framework to the
company for attaining the objectives. In “Wilson asset management leader limited”
considered the framework of corporate governance as per specified in Principles mentioned
by ASX Corporate Governance Council (WAM, 2018). The following points help to
understand the corporate governance at WAM.
Board Composition
The Board Composition refers to the board made of the chairperson and the directors of
the company with many parts according to the experience skills and qualification of the
Chairperson and the directors of the company (Board Apprentice, 2017). The following
principle determines the board composition of Wilson Asset Management limited, which is as
follows:
 The aim of the board is to make sure all the managers and the directors of the
company will act with the integrity objectivity and always work for the enhancement
of the company’s reputation.
 Before the appointment of the director, the board must check the background and the
aim of the board is an act in the designed manner, as it will help in creating and
building the sustainable value of the company in front of all the shareholders.
 The board have to appoint the experienced company secretary who is directly
accountable to the Board of directors

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 The company supports diversity so it follows the diversity policy. In addition, the
company has part-time employees so this policy is only applicable for the members of
the board of directors.
 The board composition must be reviewed on an annual basis
Independent and Non-Independent: Board of Directors and Chairman
The list of all the directors and Chairman of the company is given below which shows that
who is Independent or Non-independent among them:
A. Geoff Wilson is the Chairman of the company and he is the Non-independent
Executive who has 38 years of experience in the investment market. He has held
the experience of the various senior investment in the UK, US. and Australia. He
is also the founder of the company. He is the Chairperson of the company since
2016.
B. Lindsay Mann is the independent director of the company. He is the director of
the company since 2016. He has experience of more than 40 years of financial
services. Formerly, he was the Chairman of the company named “Premium
Investor Limited”. In addition, he is the regional head of Asia and CEO of “First
State Investments”.
C. Melinda Snowden is the independent director of the company. He has 24 years of
experience in the financial market in addition, he is the son executive director of
“MLC Limited”. Since 2016, he is also the director of WAM.
D. Kate Thorley is the Non-independent director of WAM and he was appointed in
July 2014. He is also a member of the audit and risk committee in WAM.

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Source: Chairman and all the directors of WAM Limited (WAM, 2019)
The Chairperson and the Chief Executive Officer Report
The Board of WAM 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 (Price, 2018). They are capable of reviewing and facing the
challenges effectively against management decisions. In addition, the Board also comprised
of two independent directors and two non-independent directors, including the Chairman of
the company (WAM, 2018).
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 summarises the remuneration of
directors and executives. This report specifies the details of nature and amount of
remuneration for all the directors of the company. All the directors of the company are non-
executive directors. The remuneration provided to them is on the maximum amount, which
has been approved by the shareholders at the annual meeting and they are not entitled to any
other remunerations. The value of maximum remuneration to be given to the directors of the

ETHICS AND GOVERNANCE 8
company is fixed and set at $ 90,000 per annum and there are no executives in the company
recently (WAM, 2018).
Board orientation
It is the process, which helps the new directors, contributes to their tenure and
specifies their role to provide governance to the board. The board orientations purpose is to
provide 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 an effective
relationship among the Board members, which provides support and promotes the agreement
about their work.
Analyse on the Board Orientation of “Wilson Asset Management Limited”
The corporate governance committee is responsible for the Board Orientations. The
Board Orientation program provides detail information about the company. There is an
explanation of some theories and concepts in below paragraphs, which are followed by the
“WAM Leaders 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

ETHICS AND GOVERNANCE 9
and controlling the actions of the manager with transparency (Çule & Fulton , 2013). The
firm, who follows the agency theory, have a majority of independent directors.
In WAM Leaders Limited, have the orientation that can follow the agency theory.
Currently, the board composition of these companies all the Non-Executive Directors, which
have both independent and non-independent directors. 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 a shareholder with the
profits, dividend and growth. Remuneration 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 a
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 favour
of the organisation. Hence, there is a requirement to empower them instead of monitoring
their work.
In this theory, the board composition is a major of non-independent. They have the
knowledge that how to run the company. In addition, they know how to have growth in the
company’s assets. The board focus in this theory is to have internal growth in strategy and

ETHICS AND GOVERNANCE 10
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 WAM Leaders Limited, there have both independent and
non-independent directors. Therefore, this company sightly follows this theory.
Stakeholder Theory
This theory required to identify, respond and understand its stakeholder's groups. The
stakeholder's group includes customers, creditors, communities and employees, where the
corporation must attend all the needs of stakeholders in this theory (Johansson, 2010, pp.
737-744). The stakeholder theory is the wider concept divided into two branches, which are
an ethical and managerial branch.
In WAM Leaders Limited, there are both the branches of stakeholder theory and they
are effectively applied 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 focus of the 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.
WAM Leaders Limited constructs the skilled matrix, this shows that the board has the
skills, experience and knowledge. This helps in providing the corporation in an effective
direction, which opens the door for the searching resources for the corporation. Hence, this
theory is applicable to this company.

ETHICS AND GOVERNANCE 11
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 society
(Fernando & Lawrence, 2014, pp. 149-178). This theory is based on the idea of the social
contract, which establishes the link between the business and society.
Communication in the 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 social 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 communication principles. Every organisation has its own
interpreters. These interpreters should have the appropriate working knowledge.
Interpretation of WAM Leaders 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 fairness and equality. In addition, their
communication helps them in maintaining the trustful relationships with society and this is
only possible if the company is legitimated for social 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

ETHICS AND GOVERNANCE 12
internal individuals. In addition, this theory states that the company should design a
communication policy to support communication with the shareholders and the stakeholders
of the company.
Conclusion
From the above discussion, it can be said that the WAM Leaders Limited have
effective corporate governance which has been explained in the above paragraphs with the
help of various theories and concepts in the organisation. All the theories can be applied to
the board but the most favourable theory is “Agency Theory” (WAM, 2018). In addition,
there is a number of policies of corporate governance, which adopted by the company
(WAM, 2018).
In the above paragraphs, there are the introduction and summary of the company,
which explains the company corporate governance. Moreover, there is a detailed explanation
of the board orientation with the help of various theories. In this report, there is a discussion
in the above paragraphs, which shows the remunerations committee of WAM Leaders
Limited has a responsibility to make recommendations to the Board of the company (WAM,
2018).
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.

ETHICS AND GOVERNANCE 13
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