The Board of Directors has approved a Director Independence Policy establishing the standards and procedures determining the independence of Directors and proposed Directors as it relates to the Board of Directors and its committees, which are aligned with the requirements for independence set out in National Instrument 52-110 – Audit Committees.
A Director is independent if that Director, or an immediate family member, has no direct or indirect material relationship with the Company, its subsidiaries or its auditor, and is not a partner, officer or significant shareholder of an entity that has a material relationship with the Company.
The Compliance Review and Corporate Governance Committee (“CRCG Committee”) determines, at least annually, whether a Director is independent, based on information provided by each Director on a conflict of interest questionnaire that lists his/her personal business and other relationships and dealings with the Company or its affiliates and our External Auditor. The conflict of interest questionnaire also requires disclosure of all entities with which a Director is involved.
All members of the Board of Directors, except the Company’s CEO, qualify as unrelated and independent, as they are independent from Management and free from any interest, function, business or other relationship that could, or could reasonably be perceived to, materially interfere with the Director’s ability to act in the Company’s best interest.
Policy on External Positions and Interlocking
The Board of Directors has adopted a Policy on External Positions and Interlocking which sets out a procedure to be followed before a Director can be appointed to a high-profile position at another organization and includes a limitation on the number of public company board directorships that can be held by Directors of the Company at one time. The policy sets out that no Director may simultaneously sit on more than four (4) boards of publicly listed companies, including their service as a Director of the Company.
It is the Company’s view that Directors should be independent of Management but also of each other. If two (2) Directors sit on more than one (1) board of directors together, this is referred to as a “Director Interlock”. A Director Interlock results in a perceived risk of decisions being made in the interest of another company and suggests a degree of inter-related interests that might be detrimental to director independence. Interlocking relationships can also raise concerns when there is an imbalance of power between two Directors such as when one of the Directors is an executive on the first board and is evaluated and remunerated by his/ her fellow Director. In such a situation, on the second board where he/she is expected to serve as an independent non-related director, his/her independence may be compromised. The Chair of the Board of Directors or the Chair of the CRCG Committee will take into account any Director Interlocks before accepting that a Director be appointed to the board of another organization, whether a private or publicly listed company, or a not-for-profit organization. No Director Interlock will be accepted should there be a conflict of interest. The Secretary’s Office provides the CRCG Committee with a register of the existing interlocking relationships on an annual basis. The Board of Directors has also adopted a policy providing that no more than one-third of the members of the Human Resources and Compensation Committee shall be sitting chief executive officer(s) of another company.
As of the date of the Company’s 2022 Annual Meeting of Shareholders, there were no Director Interlocks among the candidates proposed for election.
Director Term Limits
The Board of Directors has determined that a mandatory retirement age is not appropriate for the Company; however, the CRCG Committee has established a planned retirement schedule for all Directors as part of the succession planning process for the Board of Directors.
In 2015, the Board of Directors implemented a tenure and term of office framework which states the maximum period of service for new Directors (excluding the CEO) as 12 years, to be served in successive one (1) year terms, though this term remains open to extension. However, term limits do not provide Directors with a guarantee of tenure. The Company is continuing to transition to the tenure and term of office framework and aims to fully comply with the maximum period of service of 12 years as new Directors are named and the Board of Directors is refreshed.
The CRCG Committee is responsible for reviewing the composition of the Board of Directors on an annual basis, proposing new Directors and administering the tenure limit and term of office framework. The CRCG Committee will exercise discretion judiciously to ensure that the Board of Directors remains composed of independent Directors possessing the required skills and in-depth knowledge of the Company.
For additional information regarding Director Independence, our Policy on External Positions and Interlocking, and Director term limits and other mechanisms of board renewal, please see our Management Proxy Circular.