Corporate Governance and Ethical Analysis of Independent Group (IGO)

This project analyzes the corporate governance and ethical practices of Independent Group (IGO), a mining and exploration company listed on the Australian Stock Exchange (ASX). The report examines IGO's corporate governance policies, organizational structure, and the roles and responsibilities of its board of directors. It delves into board orientation, communication strategies, and the application of legitimacy theory to interpret company communications. The analysis includes a review of executive remuneration, financial performance, and stakeholder engagement. The report highlights IGO's commitment to ethical conduct, environmental and social responsibilities, and its strategic focus on sustainable competitive advantages within the mining industry. The project assesses IGO's financial health, including revenue, liabilities, net margin, return on assets, and financial leverage, providing a comprehensive overview of the company's governance and ethical framework.

Corporate Governance and Ethics
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Executive Summary
The report shed light on the strategic policies of Independent Group (IGO) one of the leading
mining and exploration companies in Australia. The company is listed with the Australian Stock
Exchange (ASX). The report has produced an effective discussion about the corporate
governance policies of IGO. The corporate governance policies are most important for the
organization as these policies help in providing important guidelines to perform essential
operational activities. Thus, the corporate governance policies support in gaining sustainable
competitive advantages to the Independent Group. The organization has adopted effective rules
and regulations to govern the organizational activities, which improve the efficiency and
effectiveness of the organization. The company has implemented an efficient organizational
structure, which is flatter than a hierarchical structure that allows the employees to establish
more efficient communication. The board of directors (BOD) is important for the organization
and the strategies and policies of the organization are devised by the BOD of the organization.
The report also shed light on the roles and responsibilities of the BOD of the organization. The
board orientation is vital for an organization as it determines the strategic direction of the
company. With the BOD of IGO, the roles and responsibilities are delegated most effectively and
each board member has specific roles in the organization. The board has adopted effective
communication strategies to communicate the strategic visions and missions of the organization
to the members of the organization. The report has presented effective interpretations of the
communication strategy of the organization.
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Table of Contents
Executive Summary.....................................................................................................................................1
Introduction.................................................................................................................................................3
Corporate Governance of IGO.....................................................................................................................3
Board Orientation........................................................................................................................................5
Interpretation of company communications using Legitimacy Theory........................................................8
Conclusion...................................................................................................................................................9
References.................................................................................................................................................10
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Introduction
IGO (Independent Group) is one of the most recognized explorations and mining organization in
Australia. Headquarters of the organization is situated in South Perth region of Australia. The
organization is founded on the financial year 2000. The organization has about 500 employees.
Apart from mining, the organization is also involved in producing gold, copper, and nickel. The
organization is providing a significant focus on its high-quality assets. The organization has
strong corporate governance policies and procedures (IGO, 2019). The management team
members and general employees' are following all the policies and procedures of corporate
governance to maintain work environment pleasant. The organization is listed on ASX. The
organization has implemented the recommendations and principles of the Corporate Governance
Council under ASX. The organization has included several standards under corporate
governance. Among all the standards, code of conduct, privacy standard, anti-bribery and
corruption standard, and many others are included. The management team of the organization is
maintaining the review of the financial reports. The organization has implemented significant
communication process to enhance the performance of the employees. The organization is
putting a useful focus on its environmental and social responsibilities. The organization has
adopted the legitimacy theory to maintain its responsibilities towards social and environmental
aspects (Zhou, 2019). In the report, the various aspects of corporate governance of IGO
(Independent Group) have been described. Moreover, the activities of board members and
financial aspects are evaluated in the report. Interpretation of the communication process of the
organization also has been elaborated in the report. The report will provide clear and precise
management capabilities of the organization IGO (Independent Group).
Corporate Governance of IGO
The IGO corporate governance statement has framed the company's present corporate
governance structure. The corporate governance framework helps people linked with the
company to deliver its strategy (Icaew, 2018). The board is committed to promoting the success
of the company. The success of the company is promoted in such a manner so that the interest of
both stakeholders' and shareholders are protected. The main aim is to set up such a corporate
strategy that will help the company to sustain in the market for the long run. It does not limit its
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tasks by framing a strong strategy but it involves the tasks such as approving of business plans
and annual budgets, approving of financial statements, monitoring of the policies and endorsing
ethical culture (Yaya & Wibowo, 2018). The company is comprised of responsible independent
and non-independent directors. It has one independent director and rests dependent directors.
Thus, it has 1:7 ratios of independent and non-independent directors. The chairman Peter Bilbe is
an independent director of the company.
The Chief Executive officer Peter Bradford and Chairman Peter Bilbe have continued to reshape
the strategy of IGO. They have focused on producing high-quality projects on a large scale and
for longer life. They have also focused on the ESG aspects (Environmental, Social and
Governance) while carrying out business activities. This has helped the business in maintaining a
strong process. Further, this has also supported the IGO to follow a properly structured approach
for better interactions with stakeholders. This approach will help the stakeholders to remain
update regarding business (Igo, 2018). According to Chairman and CEO of IGO the company
has improved from the past years. They had tried to resolve issues related to inclusion and
diversity. They have improved both from gender and indigenous diversity. In the year 2018,
they have more female candidates. They have also increased the number of indigenous
employees in the company. Further company has also considered that employees should feel free
to work in the company. The company also has tried to maintain a positive culture. Apart from
that they sometimes arranged for programs regarding engagement (Thulasivelu, 2018). The CEO
and Chairman of the company along with employees participate in the engagement survey. The
company aims to become a premium producer of the energy storage and distribution of minerals.
They will only achieve this by giving more focus on high-quality assets. In addition to this, they
believe in green energy (Donde & Somasundaram, 2018). In the coming future, they will be
focusing on producing metals that are required for modern batteries.
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Source: https://www.irmau.com/site/PDF/3489_1/2018AnnualReport
The remuneration and other related terms of employment for executives and directors are
formalized in a service agreement. The service agreement specifies the aspects of benefits, notice
period and remuneration. The CEO of the company receives about 982,000 of total
remuneration. The remuneration includes salary along with superannuation. The amount that is
presented over here is to be paid duly in September 2018 for the performance of the year 2018.
Board Orientation
The board members of IGO (Independent Group) mainly include Non-Executive Chairman,
Managing Director, Non-Executive Director, and Chief Executive officer. The Non-Executive
Chairman of the organization is identified to be Peter Bilbe. Peter Bilbe was appointed to be the
Non-executive Director of the company during 2009. He can operate independently within the
company. The Non-Executive Chairman approves the proposals and plans of the company that
has been presented by the Chief Executive officer. Peter Bradford is identified to be the
company's Managing Director and Chief Executive Officer. He was appointed during the year
2014. The Non –Executive Directors of the company were identified as Debra Bakker, Peter
Buck, Keith Spence, Geoffrey Clifford, and Neil Warburton. The Non-Executive Directors were
not engaged in management's day-to-day operations. They mainly get involved with the planning
exercises and policymaking. The responsibility of the non-executive director is to supervise the
executive directors. They are also required to act as per the interest of stakeholders of the
organization (Annualreports, 2017).
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The remuneration report in the financial year 2018, outlines the Executive and Director
Remuneration arrangement of the company as per the Corporations Act 2001 requirements. The
board of the company recognizes the business success that relies upon the engagement and
quality of people. For making sure that the company continues to develop, then it needs to
motivate, attract and retain most skilled Executives, Directors and employees. The remuneration
is earned during the financial period of 2018 for Key Management Personnel. This earned
remuneration includes fixed remuneration, cash components regarding earned STI. The STI
earned by the directors has been identified. Peter Bradford has earned Short term incentives of
$182000, and total fixed remuneration of $800,000. Keith Ashby has earned short term
incentives of $39,078 and total fixed remuneration of $350,000. Rob Dennis earned a short term
investment of $99,488 and total fixed remuneration of $416,667. Matt Dusci has earned STI of
$79,750 and TFA of $500,000. Andrew Eddowes has earned STI of $41,154 and TFR of
$152,150. Sam Ratallack has obtained the STI of $38,343 and TFR of $350,000. Ian Sandl has
earned STI of $34,830 and TFR of $152.500. The TFR and STI of Scott Steinkrug have been
identified as $450,000 and $34,830. Rob Dennis has resigned from the managerial position of the
organization on 30th of April 2018. The board has accepted the vesting of Dennis service rights
which were issued during 18th May 2018 at the market price of $4.85.
The organization believes that the risk elements were considered as important components of
remuneration for every member of the organization towards driving the key strategic
achievements. The component of risk also maintains alignment among employees and
sustainable value of shareholders. The integration of fixed and risk remuneration varies relying
upon the reward and role grading of Executives. This also relies upon the performance of
individual and company the integration of risk and fixed remuneration of executive key
management personnel during the fiscal period of 2018 has been portrayed. the managing
director and chief executive officer have long term investment of 39%, short term investment of
25% and total fixed remuneration of 36%. the chief financial officer and the chief operating
officer have a total mix of long term investment of 35%, short term investment of 22% and total
fixed remuneration of 43%. the other executive key management personnel has short term
investment of 19%, long term investment of 27% and total fixed remuneration of 54%.
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The total revenue of the IGO during the period 2018 and 2017 has been identified as $781
million and $422 million respectively. According to this data information, it can be determined
that the company has gone through a significant degree of profitability. The revenue of the
company has been increasing at an increasing rate. This portrays that the company has put its
more emphasis on the reduction in the liabilities. The liabilities of the company have been
declined from the year 2017 to 2018. During 2017 the total liabilities of the company was $476
million and during 2018 it was reduced to $396 million. The reason for this declining liability is
to minimize the company's debt obligations. The company has also reduced its payment of
dividends for every share. The dividend per share of the company to the shareholders has been
decreased from 3.0 cents to 2.0 cents from 2017 to 2018 respectively. Through this way, the
company has reduced its degree of debt obligations (Aminu, 2015).
The net margin of the IGO group has been also identified for the company's annual report. The
net margin of the company was identified as 4.06 % and 6.885 % from 2017 to 2018
respectively. From the data, it can be assumed that the company is increasing its net margin ratio.
But still, the ratio of net margin is considered to be moderate (SAHA, 2012). The main reasons
behind the lower net margin ratio are said to be a high level of competition, ineffective
marketing, and poor pricing approaches. These factors play the most important role in
decreasing the level of net revenue. The low net margin also signifies the company has an
ineffective management system. The return on assets of the company during 2017 and 2018 were
identified to be 0.81% and 2.40% respectively. It can be said that the company has enhanced its
capability to utilize its assets for gaining profit. On the other hand, the financial leverage of the
company has been identified as 1.27% and 1.22% during 2017 and 2018 respectively. This
represents financial weakness. This signifies that the company is incompetent to fulfill its
existing obligations (LI, 2016).
The organizational management team has the responsibility to maintain its voluntary disclosure.
The organization needs to undertake all the tax-related aspects. Without maintaining voluntary
disclosure, the organization may not be able to manage the taxes (kbs.edu, 2018). The
government of Australia has very strict laws related to taxation. Due to this reason, the
organization is following all the aspects of taxation laws to avoid penalties. The organization is
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paying governmental taxes at the right times. The overall tax management process of the
organization is very good (Peio, 2018).
Interpretation of company communications using Legitimacy Theory
Legitimacy theory is helping to understand the behavior of the organization in adopting,
developing, and communicating the policies of social and environmental policies. IGO
(Independent Group) has implemented legitimacy theory to fulfill social and environmental
responsibilities. The organization is mainly dealing with mining. In this case, the organization
requires significant areas of land. So, the organization needs to fulfill its responsibilities towards
society and the environment. Without the coordination of society, the organization may not be
able to continue its mining operations for long term purposes. The organization is fulfilling its
social responsibilities through several CSR programs. The organization has the responsibility to
provide significant support to the society. The main aim of organizing CSR activities by the
organization is to strengthen the relationship with the local communities. Community
development is a vital aspect of the CSR activities of the organization. The organization is
operating several health and wellness related programs for the enhancement of the local
communities. The organization is continuing these types of activities for long term sustainability.
The organization has taken several initiatives to reduce pollution levels. In the mining industry,
pollution is always being an issue (Crane & Glozer, 2016). Due to this reason, the organization is
trying to solve the pollution-related issues by adopting useful technologies. The organizational
senior management team has the main role to improve the communication process with the
society (ventureline, 2018). As per the CSR reports of the organization, it can be said that the
organization is performing very well in case of the social platform. The organization is using a
huge area of land for its mining purpose. So, it is obvious that the organization has to provide
useful support to the owners of the land. The organization has to maintain good relations with the
owners of the lands. IGO (Independent Group) is intending to organize some CSR activities for
the landowners. In this case, the organization will able to satisfy the landowners (Dyduch, 2017).
Similarly, the organization will also be able to enhance its organizational image. By
implementing Legitimacy theory, the organization can satisfy the employees along with the
management team members. Future growth is a very vital factor for the organization. Adopting
Legitimacy theory helps the organization in its future growth policies (Dâmaso, 2018). The
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communication process of the organization with the society can significantly be enhanced by
adopting Legitimacy theory. The environmental approach of the organization is also satisfying
the local communities. The overall business activities of the organization are extremely
improved by useful practices of Legitimacy theory (A. Mousa & Hassan, 2015).
Conclusion
IGO (Independent Group) is an Australian based mining organization. The board members of the
organization are doing their tasks very effectively (link.springer, 2018). The organization has
taken several initiatives for the betterment of the local communities through CSR programs. The
management team is focusing on social and environmental aspects for long term sustainability.
The organization is practicing Legitimacy theory to fulfilling its social responsibilities (Islam,
2017).
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References
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