Director Independence

The Company is subject to various disclosure rules, guidelines and requirements governing the independence of the Board of Directors and its committees.

A Director is considered to be 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 (“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.

Additional information relating to each Director standing for election, including the name(s) of any other reporting issuer(s) on whose Board the Director serves and the attendance record for each Director, may be found on pages 12 to 24 of the Management Proxy Circular.

Eleven (11) of the twelve (12) candidates proposed for election 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. Only the Company’s CEO is considered a non-independent Director.

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 situation, on the second board where he/she is expected to serve as an independent non-executive 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 an actual conflict of interest or appearance of a conflict of interest. The Secretary’s Office will provide the CRCG Committee with a registry of the existing interlock relationships on an annual basis. The Board of Directors has also adopted a policy providing that no more than 33,3% 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 2017 Management Proxy Circular, there were no Director Interlocks among the candidates proposed for election.

 Furthermore, the Board of Directors has determined that a mandatory retirement age is not appropriate in the context of the Company and instead, has implemented a tenure and term of office framework. In 2015, the Board of Directors agreed that, in principle, the maximum period of service for new Directors of the Company would be twelve (12) years, to be served in successive one (1) year terms. The CRCG Committee will see to Board of Directors renewal by reviewing its composition on a yearly basis and suggest to the Board of Directors to add a new Director or replace Directors who have attained maximum tenure, subject to the needs of the Company and its best interests. In this regard, the Board of Directors may extend such term where it determines that it is in the best interests of the Company to do so.