AAD Group is a company based in Australia but distributed in other parts of the world such as the United States and New Zealand. It specializes in leisure and entertainment businesses where it majorly invests heavily and operates. Some of the companies that the AAD Group operates include the Dreamworld which is a program that deals with recycling of the mobile phones all over the theme park as well as Goodlife Health Clubs. It also engages in reporting the data generated from the Greenhouse gas and energy. The brands that the company offers are categorized into Health Clubs such as HYPOXI and Goodlife Health Clubs (Ardent Leisure Group, 2018). Some of its activities such as the WhiteWater World, SkyPoint theme parks and Main Event offers attraction points as well as entertainment to various people all over the world.
Ardent Leisure Group is listed on the ASX (Australian Securities Exchange) under the ticker code of AAD. It is also included in the benchmark index (S&P/ASX 200). It is grouped among those companies that occupy a dominant position in Australia, New Zealand and the United States of America offering family-friendly, affordable, entertainment, and leisure events (Tallentire, 2013). Ardent Leisure Group serves over three million customers annually. Therefore, it has developed great methods through which it interacts with the customers by offering proper communication opportunities through which it transacts with them.
Ardent Leisure Group was founded in the year 1998 as Macquarie Leisure Trust, when it acquired the Dreamworld theme park. In 2006, it created a WhiteWater World Company which was rated as a world-class water park. Consequently, in 2009, it acquired QDeck. It, however, split from the Macquarie Group in the year. The main headquarters of the company is located in the Milsons Point-New South Wales in Australia. Deborah Thomas was appointed the Chief Executive Officer (CEO) of the Group in April 2015. She was, however, replaced by Simon Kelly on June 9th, 2017 when he was appointed the CEO and MD (Managing Director).
The official website is https://www.ardentleisure.com.au/ where the customers can assess the company details and any other information concerning the Group. It can also be reached through its mailing address (L 16 61 Lavender St. MILSONS POINT, NSW 2061, Australia) as well as via the phone (+61-2-94093670). AAD currently has a market capitalization of $892.69 million. Its shares go for A$1.77 per every share being purchased. Its outstanding shares are presently 468, 350, 000 while the market Cap stands at $892.69 million (Reddy & Wong, 2016).
The Ardent Leisure Group faces competition from various companies such as Spin Master (TOY & SNMSF), GYM Group, Thomas Cook Group (TCG), Escape Hunt (ESC), Character Group (CCT), and Photo-Me International (PHTM) among others. However, it has acquired several companies and products in recent years. For instance, eight of the best performing health club markets with excellent modern facilities in Australia belongs to AAD Group. The purchase price is normally A$32.5 million that represents 5.27x formal EBITDA. Currently it has six Goodlife and eight Fitness First number of clubs.
Corporate governance refers to the manner through which the company is governed and managed. It involves the processes and mechanisms through which the corporations are managed, controlled, and directed. Proper governance principles and structures ensure identification and equal distribution of rights as well as responsibilities between the various participants of the company (Fooladi & Nikzad, 2011). These include the shareholders, board of directors, regulators, managers, auditors, creditors, and other stakeholders. Through corporate governance, the company is governed by procedures and rules that direct decision-making affairs and how the company objectives are set and pursued regarding regulatory, social, and market environment. Corporate governance, therefore, can be regarded as a system of oversight, accountability, and control.
The Ardent Leisure Group is composed of several individuals that head various departments. The Group Board members, for instance, include; Gary Weiss- the non-executive chairman of the company currently (ASX Release, 2018). Before then he was serving as the director of the company but currently he still also heads the Ariadne Australia Limited as the Executive director. Randy Garfield, David Haslingden, Don Morris AO, Brad Richmond, and Toni Korsanos are Directors of both the company and manager of various institutions. According to the Ardent Leisure Group management, the number of the independent directors should outweigh the dependent directors. For instance, Donald Morris, David Haslingden, Randy Garfield, Carl Richmond, and Bronwyn Weir are all Independent Non-Executive Directors. As per 2017, the number of Independent Directors and CEO were equal. The importance of this is that when the board is comprised of a majority of independent directors, the investors have an assurance that the board is working diligently to fulfill its role and the management is held accountable for its performance (Bandsuch et al., 2008). The AAD Group assess the director’s independence annually and discloses it during the annual report meeting. It takes into account their contractual interests, security holdings, relationship with the customers, suppliers as well as key advisers. Usually, the chair needs to be independent if not so; then the board appoints their lead independent director. The chair of the Ardent Leisure Group, however, is an independent director. However, he does not hold a dual position as CEO of the company.
The report from the chairman indicated that the financial statement of 2017 of the AAD Group, followed the Corporation Act 2001, under the Section 300A. The CEO and the Chairperson believe that any debts held by the company will be payable when they become due. The company’s immediate priorities include; determining the value of the assets, constructing US Entertainment Centre assets, Revenue recognition, Dreamworld contingencies, and divestment of Marinas and Health Clubs. To achieve the above; the Chairperson and CEO have developed some strategies that will see the company sail through (Bloomberg, 2018). For instance, the directors should aim at attaining a long-term growth rate concerning revenue as compared to short-term. They should also employ fair value measurement methods when carrying out the financial analysis.
The Ardent Leisure Group remuneration report is set on standard regulations. It conforms with the Corporations Act 2001 Section 300A. The directors prepare the remuneration report in line with the set Australian Auditing Standards. The Remuneration and Nomination Committee ensures the remuneration framework of the company attracts, retains, and motivates the directors and executives to perform better (Carter & Zamora, 2007). The executive remuneration framework of AAD has three components based on the financial year ended 30th June 2017. There is the annual base salary-where it involves a combination of cash salary, non-financial benefits, and superannuation contributions of the employer. Then there is a short-term incentive (STI) that offers performance bonus against the personal and financial key performance indicators (Deegan, 2002). Finally, the long-term incentive where the full grant relies on the equity performance gateway. For instance, the remuneration of the key top directors at 2017 was;
|
FIXED |
At risk |
||||
|
Annual base salary (cash) |
Annual base salary (equity) |
Target STI |
Target LTPI Grant Value |
Total Target Remuneration |
|
|
Simon Kelly |
$600 000 |
$500 000 |
$475 000 |
$475 000 |
$2 050 000 |
|
Nicole Noye |
$420 000 |
——– |
$189 000 |
$189 000 |
$798 000 |
|
Charlie Keegan |
US$512 500 |
——– |
US$281 875 |
US$358 750 |
$1 153 125 |
|
Craig Davidson |
$384 375 |
——– |
$172 969 |
$172 969 |
$730 313 |
For a company to be able to discharge its duties effectively, the structure and orientation of the board are vital. The composition, size, and orientation determine how the duties and responsibilities of the company are discharged and hence the success of the company. Various theories have been applied when discussing different forms of board orientation regarding corporate governance. The criteria that a company uses to determine its board composition and orientation play a massive role in defining the dispensation of its mandate. Board composition, therefore, denotes the ratio of the independent and non-independent directors. The expected reliance of the company on the external (independent) director versus the percentage of the internal (non-independent) directors. The shareholder- agency orientation, has a majority of its board members as independent directors as compared to the non-independent (Donaldson & Davis, 1991). They have as well to be appointed by influential shareholders who have a more significant influence on the company. However, if a company adopts the shareholder-stewardship orientation, then the board will have a high composition of non-independent directors as compared to independent ones (Muth & Donaldson, 1998). The internal directors, therefore, will have a duty of ensuring that the company assets grow to the desired levels. The board should as such determine its agenda and identify which ones to prioritize over the others. For instance, the company board taking the agency approach will give the objectives of the shareholders more attention such as the profits and dividends. On the contrary, that which adopts the stewardship approach will prioritize the business growth at the expense of the shareholders.
As such the AAD Group has adopted the shareholder-agency board orientation since many of its directors are independent. The board understands the importance of the independent directors being the majority as it assures the investors that the board is working diligently in fulfilling its role. Also, they have confidence that the management team is being held accountable for its performance (Abdullah & Nasir, 2004). Therefore, the independence of the directors at Ardent Leisure Group is usually evaluated every year. They put into consideration several matters such as; tenure, their relationship with chief advisers, customers, and suppliers, substantial security holdings, and contractual interests. In so doing, however, it has increased its profits and dividends of the shareholders and the growth of the company as a whole.
The constitution of the company has set out the basic structure of the board in the Board Charter of the company. In the Charter it is stated that; the independent directors should always be the majority, those directors appointed should have qualifications and expertise that are suitable to the task given, and in case the elected chair independence is seemed obsolete, then the board should appoint a lead independent director (Setia?Atmaja et al., 2009). The company has adopted a diversity policy that seeks to promote a corporate culture and diversity. The plan aims at achieving an almost equal percentage between the female and male workers in all positions. Following the Workplace Gender Equity Act 2012, the company has increased the number of women holding senior positions (Terjesen et al., 2016).
Corporate governance calls for ethical disclosure of information to the stakeholders, investors, customers, suppliers, and any other concerned party within the organization. If a company needs to be able to manage its stakeholders efficiently together with their expectations, then, it has to disclose the financial statements as well as other information regarding the daily running of the company (Chauvey et al., 2015) Transparency, therefore, protects the right of the stakeholders as it helps them make active and informed investment decisions. Many companies opt to use the legitimacy theory in the communication of information to the stakeholders and other clients as it outlines clearly the people whom (who) the data has to be disclosed to, what is to be disclosed, and why it has to be disclosed (Deegan et al., 2002)
At AAD Group, all the investors are given material information concerning a specific director when he or she is to be elected for a particular position. In doing so, the investors and stakeholders can make appropriate and informed decisions regarding the election of the candidate (Fernando & Lawrence, 2014). The information disclosed include; qualifications and experience, the office they currently hold, former directorships held, roles they play in any Board standing committee, and when he or she was first appointed in the organization or as a director. Most of the information on the Ardent Leisure Group can be assessed at any time from their web page https://www.ardentleisure.com. From here any person can view the information regarding the company that is displayed on their website. Usually, the company history, its employees, the sector in which it operates, and the manner in which the Group carries out its activities is given. The financial statement as well for the previous years and the current year can be obtained from their website. Usually, the financial statements are produced on 30th June of every year. From here the stakeholders and other clients can view how the company has progressed during that fiscal year. Profit, loss, and dividends obtained can be seen from the statement. The remuneration report is as well given which gives detail on how directors and other executives are rewarded. The company has chosen to disclose its information to the public as this creates a good relationship between the company and the outsiders (Morsing & Schultz, 2006). The stakeholders can assess all the information they need to make the right decisions on whether to keep in investing on the company or to withdraw. They can also participate in electing the directors or firing them as they can follow their performance. The company’s communication methods used are transparent and does not selectively target specific individuals. It uses the Investor Communication Policy that encourages productive and efficient communication between the Group and the stakeholders, thereby facilitating a proper working environment (Milne et al., 2002)
Conclusion:
AAD Group is an established company in Australia and its registered under the Australian Securities Exchange (ASX). The Group directors always work in establishing an effective, efficient, and flexible corporate governance system that ensures smooth running of the organization. It has stipulated the specific responsibilities, rules, and roles of each Board member as well as the juniors in the Board Charter. The AAD Group Board of directors works in promoting the investor’s confidence and creating a good relationship with the stakeholders and shareholders. The Group has extended in various regions and sectors by acquiring several other companies. Its trading trends keeps on improving which has seen it achieve a tremendous revenue growth over the years. It has also experienced great investments in marketing resources and this has seen it expand greatly. Through the discussion of this report, the significance of corporate governance in AAD was evident. It was clear that the directors and the CEO have a huge influence on the performance of the organization. They also determine the relationship of the company with the shareholders and how many investors will be willing to invest in the company. Therefore, it was shown that use of the legitimacy theory of communication in business transactions enhances growth of the company.
References:
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Ardent Leisure Group, (2018). AAD:ASX summary- FT.com
https://markets.ft.com/data/equities/tearsheet/summary?s=AAD:ASX
https://www.ardentleisure.com.au/
Bloomberg, (2018). Annual Reports-Ardent Leisure
https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=884372
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