Corporate
governance continued+

The Board

In February 2005, Goodman Limited (GL) and Goodman Industrial Trust (Trust) were stapled together to form Goodman, which is listed on the ASX under the ticker GMG. Goodman is governed by its constituent documents, applicable laws (including the Corporations Act 2001), the ASX Listing Rules and, in respect of the Trust, the compliance plan lodged with the Australian Securities and Investments Commission (ASIC). The Trust holds the majority of Goodman’s real property investments in Australia.

As a result of stapling, the Boards of GL and Goodman Funds Management Limited (GFM), as the Responsible Entity for the Trust, meet jointly as the Board of Goodman and comprise the same Directors. The term “Board” hereafter should be read as a reference to the Boards of GL and GFM as Responsible Entity of the Trust.

GFM as Responsible Entity of the Trust (a registered managed investment scheme) must perform its duties in accordance with the constitution of the Trust and the laws applicable to responsible entities of managed investment schemes, as prescribed by the Corporations Act 2001. These duties require GFM to:

(a) act honestly;
(b) exercise the degree of care and diligence that a reasonable person would exercise if they were in the Responsible Entity’s position;
(c) act in the best interests of members; and
(d) treat members of the same class equally.

The Board is comprised of eight Directors, the majority of whom are independent, and is currently chaired by Mr Ian Ferrier. Ian succeeded Mr David Clarke as Chairman on 28 July 2009, having been appointed as Acting Chairman on 28 November 2008. The Board believes its existing size and composition provides the broad base of skills and experience necessary to set the strategic direction of Goodman, oversee management’s implementation of strategy and enhance corporate performance.

The Directors bring a wide range of skills and experience to their respective roles and are committed to achieving a high standard of corporate governance. The diversity of each Director’s background strengthens the Board and enables it to bring critical judgement and independent assessment to the oversight of Goodman’s business. The Board is responsible for all aspects of the management of Goodman and has ultimate responsibility for its corporate governance practices.

The Board has adopted a charter that sets out the functions of the Board. The charter clearly establishes the role of the Board in setting Goodman’s objectives and its responsibilities in the implementation of such objectives. A copy of the charter is published on Goodman’s website at www.goodman.com.

To assist the Directors in exercising their responsibilities with critical judgement and independent thinking, comprehensive Board papers are issued in advance of meetings to enable full and informed participation.

The Board’s functions include:

(a) appointing the Group Chief Executive Officer;
(b) setting strategic direction;
(c) reviewing progress on strategy;
(d) developing key policies which impact on Goodman;
(e) approving strategic alliances;
(f) monitoring organisational performance against set targets;
(g) ensuring compliance with statutory, financial and social responsibilities; and
(h) ensuring business risks are appropriately identified and managed.

The Board has developed a statement of delegated authority to management. This delegated authority stipulates those matters to be dealt with by the Board and those matters which are delegated to management. The general statement of delegated authority governs areas such as finance, corporate matters and property transactions.

The composition of the Board as at 30 June 2009 is shown below.

Please refer to page 31 in the Directors’ report for details of each Director’s attendance at Board and Committee meetings during the year.

Directors’ obligations and rights
Goodman uses formal letters of appointment for Directors in order to ensure that the Directors clearly understand the expectations of them and their rights and benefits. Each letter outlines the terms of the Director’s appointment and includes matters such as their powers and duties, attendance at meetings, remuneration, appointment on committees, induction and continuing education, disclosure of interests and circumstances when their office becomes vacant. Please refer to pages 50 and 51 in the Directors’ report for the skills and experience of each Director.

In respect of tenure, Non-Executive Directors are subject to re-election by rotation at least every three years and new Directors appointed to the Board are required to seek election at the first Annual General Meeting (AGM) of Securityholders following their appointment. Together with letters of appointment, all new Directors undertake an induction process which includes meeting key executives and the provision of an information pack regarding the operations of Goodman, including key company policies and guidelines, constitutions for GL, GFM and the principal trusts and the relevant compliance plans.

Goodman stipulates the standards of ethical behaviour expected of Directors, key executives and employees in its Code of Conduct and requires the observance of those standards. The Code of Conduct is available on its website.

Goodman requires Directors to hold securities with a value equivalent to twice their base annual fees and to apply 25% of Directors’ remuneration to the acquisition of Goodman Securities until that value of securities is held. For the purpose of this policy, the value of each parcel acquired is the higher of the purchase price or market value at the end of the financial year.

Goodman has a formal policy allowing Directors to take independent professional advice at Goodman’s expense should they believe it necessary for the performance of their duties.

The Company Secretary and senior executives are always available to the Directors to provide them with information or clarification as required. These senior executives also present information at Board meetings in order to provide the Directors with unfettered access to all relevant information and the ability to candidly question senior management in relation to any matter they deem necessary.

Directors are provided with tours of Goodman’s properties, both within Australia and overseas. Tours may be conducted prior to the completion of key acquisitions.

Directors and senior executives are also encouraged to participate in further education relevant to their roles. Goodman reimburses the costs of further education which is relevant to a Director’s or executive’s role.

Independent decision making
The Board recognises the importance of independent decision making by Directors and has established policies which require the independence of Directors to be assessed annually and that Directors inform the Chairman prior to accepting any other board appointments offered to them. Each Director provides confirmation of their ability to adequately perform their role on an annual basis. The Directors bring independent thinking, high standards of corporate governance and good judgement to the Board.

The Independent Directors may elect to consider matters without the presence of executives or the Non-Independent Directors where they believe this would bring additional transparency to the conduct of Goodman's affairs.

Criteria for assessing independence
The Board has assessed individual Directors for independence using the definition of independence provided in the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations. Independence is assessed annually and was last confirmed in June 2009, having regard to the upcoming financial year.

The Board considers that a material professional advisor or material consultant is one that derives more than 5% of their revenue from Goodman. The Board also considers that a substantial Securityholder, for the purpose of assessing independence, holds more than 10% of Goodman’s securities but also has regard to other relationships that the Securityholder may have with Goodman. The table on page 18 sets out the Directors and their status.

Mr David Clarke was, and Mr James Hodgkinson is, not considered independent due to Goodman’s business relationships with Macquarie Group Limited, which include Macquarie Goodman Asia’s investment in Japan. Mr David Clarke is the Chairman of Macquarie Group Limited and Mr James Hodgkinson is an Executive Director (non‑voting) of Macquarie Group Limited within Real Estate, Macquarie Capital Advisers.

Mr Patrick Goodman is not considered to be independent due to his role as Managing Director of Goodman Holdings Group. Goodman Holdings Group has a significant holding in Goodman.

Mr Gregory Goodman is an Executive Director of Goodman.

The Directors consider the other Board members to be independent.

Chairman
Mr David Clarke was appointed as a Non-Executive Director and the Chairman of the Board in October 2000 and he retired from that position on 2 July 2009.

David brought extensive experience and in-depth knowledge to the role of Chairman as well as skills and experience in the fields of finance, corporate advisory and accounting.

The Board considered that during David’s tenure as Chairman, while not an Independent Director, David’s experience and skills provided a valuable contribution to his role as Chairman.

Following the announcement that David was receiving medical treatment, Ian Ferrier was appointed as Acting Chairman on 28 November 2008. He was appointed as Chairman on 28 July 2009.

Mr Ferrier is an Independent Director with over 44 years of experience in corporate recovery and turnaround practice.

Goodman adopted a number of practices to further strengthen corporate governance in recognition of David’s non-independent status. Such measures included the separation of the roles of Chairman and Group Chief Executive Officer, the delegation of some Board functions to committees in which the Chairman does not participate, and having a majority of Independent Directors on the Board. These measures have remained in place notwithstanding that Ian Ferrier is an Independent Director.

In his role as Chairman, Ian is responsible for ensuring that the Board functions as an effective and cohesive group, working with the Group Chief Executive Officer to determine the strategic direction for Goodman, establishing high standards of corporate governance and oversight of strategic development and leadership. The role also includes formulation of Board meeting agendas and papers and management of Board meetings to ensure the best performance of each participant. The Chairman acts as a representative of, and spokesperson for, the Board.

Group Chief Executive Officer
The Group Chief Executive Officer is Mr Gregory Goodman. The terms, conditions and responsibilities of his role are established in an agreement between Gregory and Goodman. His role as Group Chief Executive Officer is to support and encourage his management team to deliver the strategy developed by the Board and management. His role involves an intimate knowledge of all aspects of the business and communication of the strategy and operational results to the Board, management team and other stakeholders.

Company Secretary
The Company Secretary is Mr Carl Bicego. Carl is responsible for advising Directors on corporate governance matters, liaising with regulators, supervising market disclosures and investor interactions, maintenance of Goodman’s register and apprising the Board of governance issues. His biographical details appear on page 51 in the Directors’ report.

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