ACCT20080: Analysis of Ingenia Group Ethics and Governance

This capstone project provides an executive summary and detailed analysis of the corporate governance and ethical practices of Ingenia Communities Group. The report explores the company's structure, including its board of directors, non-executive directors, and executive director, and examines the board's orientation and adherence to corporate governance principles. It covers the company's remuneration policy, detailing the components and variations involved in director compensation. The project also assesses Ingenia's approach to social responsibility and its application of legitimacy and stewardship theories to its communications and operations. The analysis includes insights into the company's market capitalization, its performance, and its commitment to stakeholders, offering a comprehensive understanding of Ingenia's governance and ethical outlook. The report also discusses the company's application of Stewardship theory and its commitment to social responsibility. The analysis is based on Ingenia's annual reports and other relevant documents.

Ethics & Governance: Individual
Capstone Project

EXECUTIVE SUMMARY
Corporate governance refers to the policies and processes through which corporation is
controlled as well as directed. It can be stated as a power and accountability flow between
shareholders, CEOs, and senior managers. Further, business ethics can be stated as study
business policies and practices relating to controversial subject which comprise insider trading,
bribery, fiduciary responsibilities as well as corporate social responsibility. Through ascertaining
ethics regarding corporate governance entails to explicit the moral responsibilities relating to
duties and obligations of corporations in society. Considering the above specification present
report emphasizes on corporate governance and incorporation of ethics at Ingenia Group
Communities. The market capitalization value of Ingenia’s group is approx. A$640.9 million.
Ingenia was documented as a principal group in the BDO A-REIT assessment 2012 for attaining
74% total security holder returns in the calendar year. Major aim of its authority is to grow
distributions in the close term. It can be accessed that the major considerations of the company
corporate governance are relating to enduring and tourism rental sites during growth and
investment in new cabins at existing properties. Disclosure concerned with environmental and
social responsibility has been provided in annual report appropriately. Even code of conduct
policy of the company has been drafted in an adequate manner in order to comply with corporate
governance provisions as well as the accomplishment of social responsibility in an adequate
manner. Overall it has been assessed that the company follows Stewardship theory which
emphasizes on requirements of shareholders but in a different manner.

Table of Contents
Introduction......................................................................................................................................6
Corporate governance report...........................................................................................................7
Board of directors........................................................................................................................7
Non-Executive Directors of Ingenia Communities Group are -..............................................7
Executive Director are.............................................................................................................7
Report from chairman and CEO..................................................................................................7
Remuneration Policy...................................................................................................................8
Board orientation...........................................................................................................................10
Interpretation of company communication using legitimacy theory.............................................13
References......................................................................................................................................15

List of Figures
Figure 1: Variants involved in remuneration of directors...............................................................8
Figure 2: Remuneration table of Non-Executives Directors...........................................................9

Introduction
Ingenia Communities Group is the foremost property groups in Australia that posse for
expansion of developing a portfolio of lifestyle societies and reasonable holiday parks. The
group portfolio is controlled by communities in major cities as well as coastal markets. Its main
objective is to provide quality reasonably priced housing and services which matched with
diverse lifestyles and search of older Australians. In terms of investors, they majorly concentrate
on operating, rising and obtaining a gainful senior living business with important opportunities
for expansion in earnings and distribution. Ingenia is an S&P/ASX 300 entity having a market
capitalization of roughly $640.9 million and programmed on the Australian Securities Exchange
beneath the stock market trading code ‘INA’ (INA Market Capitalization, 2018)). This portfolio
Group is maintained by more than 4,300 investors in the whole world. It is assured by their
investors that they will execute with honesty, encourage respect for all and construct a society by
improving its performance on a continuous basis. It has been estimated that approx 35oo
investors are committed with them, and more than 500 workers are providing their support for
creating a society for their guests and residents (Milne, and Patten, 2002).
As per the Latest annual report and the Security holder Review Operations it has been found that
INA at present has 44 seniors living communities in Australia, which consists of more than 3,200
units all around QLD, NSW, VIC, WA and TAS. It consists of 9 Settlers Lifestyle (DMF), 29
Garden Villages 1,520 units, 787 sites, 950 units, and 6 Active Lifestyle Estates. The Group is
also associated with the three student accommodation properties in New Zealand and
Wellington. Moreover, Ingenia employs more than 150 staff, with its head office in Sydney as
well as its service office based in Brisbane. Currently, growth has been observed in Ingenia
group is that it has successfully completed two capital raisings to accelerating its growth in the
Manufactured Home Estates (MHE) market. The present report emphasizes on corporate
governance of Ingenia Communities Group. Further, a detail discussion has been provided
relating to Board structure as well as Board orientation. Lastly, interpretations of
communications of the company have been assessed through the application of Legitimacy
theory in order to analyze the same in an adequate manner. The main objective of this theory is

to establish the connection among the company and its community. This theory suggests that,
while carrying out the operation, company has an obligation towards environmental and social
elements. It assist the company to carry out their activities in such a manner by which the
adverse impact on the society and environment can be minimized. Further steward theory is also
complied by the company as the corporate governance perspective of the company assets that
managers motivate the employees to act in best interest of organization.
Corporate governance report
Board of directors
As per the Accounting Standard AASB 3 Business Combinations, the stapling of the corporation
and the Trusts is considered as a business grouping. The Company is recognized as the parent
for arranged consolidated financial reports (Merkl-Davies, and Brennan, 2017). The directors of
the company are divided into two categories. Executive as well as non-executive directors
Non-Executive Directors of Ingenia Communities Group are -
Jim Hazel (Chairman)
Robert Morrison (Deputy Chairman)
Amanda Heyworth
Valerie Lyons
Andrew McEvoy
Philip Clark AM
Executive Director is
Simon Owen (Managing Director and Chief Executive Officer (MD and CEO)
The ratio of the non- executive and executive directors is 6:1. Yes, Chairperson (Jim Hazel) of
the board is an independent director.
Report from chairman and CEO

The aim of the company is to build a society on the basis of respect with the incorporation of an
environment where people feel a sense of belonging and connectivity. Executives and directors
of the group focusing on the improvement of their housing, services for visitors and guest as well
as making sure that they get whole attention, support and day to day experience (Towart, 2018).
The company’s strategy is to produce recurring revenue streams, expand lifestyle communities
and improve the operational presentation of its investment properties. They are applying a
disciplined investment system in which plans are made by the group for further growth in the
lifestyle of societies (Shimeld, Williams, and Shimeld, 2017).
Remuneration Policy
Company’s remuneration policy is drafted in a way to make sure that packages of remuneration
are planned according to the individual’s responsibility and duties. The remunerations should
influence, attract and motivate the employees of appropriate quality. Remuneration system
should be built on the basis of experience, capability and skills of the employees. There should
be a link between the Remuneration and Performance of employees. The Board has all the
knowledge regarding connection among the executive KMP remuneration strategy and the
company’s performance. Packages of Executive KMP remuneration are planned to support
remuneration results with the wellbeing of security holders (Hovhannes, 2016).
Remuneration is determined on the basis of Total Fixed Remuneration (TFR) and Short-Term
Incentive (STI) and Long-Term Incentive (LTI).Total fixed remuneration is based on executive
responsibilities, KMP’s role, as well as on their performance and remuneration level for a
comparable place in the marketplace. Short-Term Incentives are planned according to the KMP
accomplishment, performance and consideration towards meeting the business goals. Moreover,
the performance of individual Key Performance Indicators (KPIs) is based on the financial year
(Koop, et al., 2018).
Long-Term Incentive is provided to the executive KMP to bring their focus to the company’s
policy. The measurement of long- term incentive is based on the Total Shareholder Return
calculated on the basis of the above three financial years, performance calculated on Return on
Equity in the third year by considering the LTI grant, and Earnings before Interest and Tax

(EBIT) increasing yearly expansion rate more than the grant period (Hulse, Martin, James, and
Stone, 2018).
Figure 1: Variants involved in remuneration of directors
(Source: Annual Report, 2018. Ingenia. 2018)
On the other hand, it has been assessed that the maximum aggregate fee pool available to NEDs
(Non- Executive directors) is $1,000,000 as predetermined in the establishment which was
accepted as internalisation. Performance-Based Remuneration NEDs are remunerated on the
basis of money and authorized superannuation. It has been found that they do on agree upon the
performance-based remuneration practices except it is accepted by security holders. Presently
the company doesn’t mean to remunerate NEDs by any other way except cash benefits. On the
other hand, Equity-Based Remuneration Directors are appropriate for participating in the
obtainable Rights Plan, though there is no existing purpose for providing grant with any Rights
to NEDs within this plan (Westermann, Niblock, and Kortt, 2017).

Figure 2: Remuneration table of Non-Executives Directors
(Source: Annual Report, 2018. Ingenia. 2018)
Board Orientation
Corporate governance statement
In accordance with principles and recommendations relating to corporate governance specified
by ASX, corporate governance is a framework of rules, system and process through which
authority exercise and control the management. Effective approach of corporate governance
helps to reduce the possibilities of unethical behavior in the company. Suitable system assists
with formalized responsibilities towards investors and such stakeholder orientation must be
interfaced with the structure of the corporation’s governance. The corporate culture of the
company comprised of various elements from which corporate governance is one which
importantly helps to found the honesty of the relations among different group of investors.
As per the statement of the corporate governance of the company it has been observed that the
major corporate governance practices presently in place for Ingenia Communities Group and
deal with the 3rd Edition of the ASX Corporate Governance Council’s Corporate Governance
Principles and Recommendations (ASX Recommendations). It has been considered by the board
that the company accord with all of the values and recommendation of the ASX Corporate
Governance Council.

The board of the company is dedicated towards the promoting and efficiently representing the
company as well as helps to adds long-lasting value towards every security holders. It is the
responsibility of the board that they should hold security holders for the execution of the
business and actions of the company, however, which is completely based on the policy,
administration and performance of the Ingenia Communities Group. Furthermore, the group
should establish a governance system which helps to clarify the duties and responsibilities of
managers and directors, which helps the board in releasing its liability (Mele, and Armengou,
2016).
Moreover, it helps to plan the functions retained to the Board and provides the allocation of
operation towards the Committees of the board as well as to senior management. Operations of
the mentioned under an official contract, which can be originated from the company’s website. It
can be assessed that stewardship theory is applied by the company which influences executive to
act in accordance with interest of shareholder but with different perspective. The decisive
accountability for the mistake of the process of the Group rests with the company’s Board. On
the other hand, the Board might release any of its responsibilities by means of committees of the
Board in agreement with the instrument of government and the company’s Act. Thus,
stewardship theory is appropriately followed by the executives. Apart from this Board of
communities have recognized the below-listed standing committees that help in the
implementation of its responsibilities. The composition and efficiency of the communities such
as Remuneration and Nomination Committee, Audit and Risk Committee; Investment
Committee is measured on the yearly basis so that it could align with principles of corporate
governance on continue basis. The Board has a complete understanding and knowledge
regarding finance, funds management as well as capital markets. Mr Morrison is greatly
experienced within the sectors of portfolio management, property development, property
investment, institutional funds management capital raisings as well as capital raisings.
Furthermore, Mr Morrison’s investment experience comprised with management roles of the
senior portfolio by which both listed and unlisted property funds are managed by him on behalf
of institutional investors (Moon, et al., 2017). The above explanation reflects that the company
has followed the principals of corporate governance adequately.
Social Responsibility

For being lawful or to sustain in society, an organization is requiring considering the society’s
norms and principles appropriately. If the company believe principles from a perspective of the
social responsibility, then business principles should include the values, standards, norms and
ethics of stakeholder groups, as well as society (Towart, 2017).
Social responsibility I can be divided within four levels or steps like -
1. Economic in which wealth or value of stakeholder is maximized
2. Legal that is abiding by commandment and management system
3. Ethical in which stakeholders’ must follow the values of acceptable behaviour
4. Philanthropic which involves giving back to society by means of promotion of human welfare
and goodwill.
The Company use to focus on risk elements which can affect its business activities as well as can
be of general nature. Company’s exposure is considered by the board especially towards
environmental, economic as well as social sustainability threats and has resolute the following: -
Economic risks which include the business is uncovered with general economic conditions
(Caputo, Giudice, Evangelista, and Russo, 2016). Especially, it has been observed that there is a
material risk related to interest rates along with general housing market circumstances. However,
there is no present material experience to environmental risks as appropriate policies are formed
by the company in order to mitigate environmental risk and accomplish social responsibility.
(Eriksson, et al., 2017).
Code of conduct of Ingenia Communities Group
There is a need for high principles of corporate governance practice and moral behaviour by all
manager and workers of the company, and the same has been recognized by the board. The
Board has authorized a Code of Conduct that especially highlights suitable behaviour and
approach that is probable from all employees for promoting and balancing the assurance and
trust of all those lacking with the company . According to the Ingenia Communities Groups
Code of Conduct, provided on the website of the company is the subject matter of intermittent
evaluation which make sure that relevant issues are covered in it and standards that are

consistent with the Group’s commitment are placed towards moral and responsible attitude.
Different measures have been established by the company to make sure that every employee
experiences a high standard of moral business behavior. Apart from this various Policies and
procedures are made to help out in certain situations like supervising conflicts of interests;
individual security trading; Anti-bribery strategy Whistleblower actions; taking of gifts and
activity as an element of the Gifts, amusement and management of secret information (Gupta, et
al., 2017).
A formal diversity rule has been approved by the Board that highlights the Group’s obligation
towards diversity in the place of work and the stipulation of a work environment that is free from
favoritisms and biases moreover it encourages equivalent opportunity for everyone.
Comprehensive place of work has been promoted by the Ingenia group where worker
dissimilarity in sectors such as age, civilization, gender, lifestyle option, and disability are
appreciated. The strategy comprised of the following precise gender diversity targets: Board
includes 30% of every gender, and Executive Committee includes 30% of every gender. Because
at the time of this reporting, both of such gender diversity targets have been assembled(Ojasoo,
2016).
Interpretation of company communication using different
theories
As per the assumption followed by legitimacy theory, the survival of the company is totally
based on balancing and acquiring social approval. It is a liability of the company that it should
consider environmental as well as social elements within their daily operations and activities. In
case the company is not succeeded in meeting its customers and societies demand than risks of
legitimacy will occur, and consequently, the survival of the company get affected. For their
environmental performance, huge pressure towards public account has been faced by the
company. Working of the company can be improved by the lobby groups as well as active
stakeholders; however, those successfully force the corporation (Bundy, Pfarrer, Short, and
Coombs, (2017).
Stewardship Shareholder Theory
Board Composition Board Focus Key Communications