Statement of Corporate Governance Practices
The Company’s Board of Directors (“the Board”) believes that sound corporate governance practices are essential to the well-being of the Company and its Shareholders, and that these practices should be reviewed regularly to ensure that they are appropriate. In establishing corporate governance practices, the Board has reviewed, among other things, the guidelines for effective corporate governance contained in National Instrument 58–201 Corporate Governance Guidelines (the “NI 58–201″) issued by the Canadian securities regulators and other relevant documentation regarding corporate governance practices.
Board of Directors
The Board is comprised of a majority of independent directors, which facilitates its exercise of independent supervision over management. The composition of independent and non-independent directors is as follows:
- Gary Filmon — Chairman (independent)
– Donald Streuber (independent)
– Gary Buckley (independent)
– Duncan Jessiman — Executive Vice-Chairman (non-independent)
– Serena Kraayeveld (independent)
– Michael Pyle (non-independent)
– Edward Warkentin (independent)
– Brad Bennett (independent)
- Jeff Olin (independent)
– Alan Davis (independent)
Mandate of the Board
The by-laws of the Corporation provides that the Board must act honestly and in good faith with a view to the best interests of the Company and in connection therewith must exercise the degree of care, diligence and skill that a reasonably prudent director would exercise in comparable circumstances. The duties and standard of care of the Board are intended to be in line with those as outlined in The Canada Business Corporations Act. The Company is required to have a minimum of 3 Directors and a maximum of 10 Directors. The Directors are to supervise the activities and manage the affairs of the Company. Currently, the Board is comprised of nine Directors. The Company has six committees, an Audit Committee, a Compensation Committee, a Corporate Governance Committee, an Aviation Sector Committee, a Manufacturing Sector Committee, and a Disclosure and Competition Committee.
Relationship Between the Board and Management
The Board has in place appropriate structures to ensure that it can function independently of management. The responsibilities of the Chairman of the Board include overseeing the Directors’ discharge of their responsibilities. The Chairman of the Board is the Hon. Gary Filmon, P.C., O.M.
The President and Chief Executive Officer of the Company is responsible for the overall administration and management of the Company and its subsidiaries. All major policy decisions relating to the Company and its subsidiaries are made by the Board or a committee thereof. Each subsidiary of the Company has its own management team that is responsible for the day-to-day management of each respective subsidiary.
All members of the Audit Committee are required to be independent and financially literate as required by relevant stock exchange or securities commission governance policies. The Audit Committee consists of the following Directors: Gary Buckley, Alan Davis, Serena Kraayeveld, Jeff Olin and Don Streuber (chair), each of whom is independent and financially literate. The mandate of the Audit Committee is set forth in the Audit Committee Charter.
The purpose of the Compensation Committee is to assist the Board in fulfilling its responsibilities in relation to fixing the compensation of the Chief Executive Officer, officers that report directly to the Chief Executive Officer (“Senior Executives”) and overseeing the plans for (i) compensation, development and retention of employees, (ii) succession planning for Senior Executives, and (iii) general compensation and human resource policies and issues.
The Company has adopted a charter for the Compensation Committee which sets out the composition of the Compensation Committee as well as its responsibilities, duties, principles and procedures.
The members of the Compensation Committee are Gary Buckley (chair), Brad Bennet, Jeff Olin and Edward Warkentin.
The purpose of the Governance Committee is to assist the Board in fulfilling its responsibilities in relation to:
( a ) development of, and compliance with, corporate governance policies and procedures;
( b ) recommending candidates for election to the Board and its committees; and
( c ) assessing the management, development and effective performance of the Board, its committees, and its respective mandates and charters, and orientation, education and development of directors.
The Governance Committee performs the duties as set out in its charter, as well as such other duties as may be appropriate under governing law and stock exchange rules, or as may be delegated to the Governance Committee by the Board from time to time.
The Company has adopted a charter for the Governance Committee which sets out the composition of the Governance Committee as well as its responsibilities, duties, principles and procedures.
The members of the Governance Committee are Donald Streuber, Gary Filmon, Duncan Jessiman and Serena Kraayeveld (chair).
Aviation Sector Committee
The purpose of the Aviation Sector Committee is to act as a board of advisors to the Operating Subsidiaries in the aviation sector of the Company.
The Company has adopted a charter for the Aviation Sector Committee which sets out the composition of the Aviation Sector Committee as well as its responsibilities, duties, principles and procedures.
The members of the Aviation Sector Committee are Don Streuber (chair), Mike Pyle, Duncan Jessiman, Brad Bennett, Serena Kraayeveld, Jeff Olin, Arnold Ouskan and Polly Craik.
Manufacturing Sector Committee
The purpose of the Manufacturing Sector Committee is to act as a board of advisors to the Operating Subsidiaries in the manufacturing sector of the Company.
The Company has adopted a charter for the Manufacturing Sector Committee which sets out the composition of the Manufacturing Sector Committee as well as its responsibilities, duties, principles and procedures.
The members of the Manufacturing Sector Committee are Ed Warkentin (chair), Duncan Jessiman, Michael Pyle, Gary Filmon, Gary Buckley, Al Davis, Brad Bennett, Ray Moher and Bill Baines.
Disclosure and Competition Committee
The Disclosure and Competition Committee is currently comprised of two directors and the Chief Financial Officer: Duncan Jessiman, Michael Pyle and Adam Terwin. The composition of the Disclosure and Competition Committee is determined on an annual basis by the Chief Executive Officer. The purpose of the Disclosure and Competition Committee is to establish controls and procedures to ensure the Disclosure and Competition Policy of the Company is being followed throughout the organization. The Disclosure and Competition Committee meets as frequently as circumstances require, and as the members deem necessary or appropriate, to carry out its responsibilities.
The information which management provides to the Board is critical. The Board must have confidence in the data gathering, analysis and reporting functions of management. The Board members have stated that they are provided with all necessary information and with a sufficient amount of information to facilitate effective decision making. The Company continually monitors the nature of the information requested by and provided to the Board members in order to enable them to determine whether they can be more effective in identifying problems and opportunities for the Company and its Subsidiaries.
Insider Trading Policy
The Company has adopted an Insider Trading Policy that applies to all employees, Directors and officers of the Company, including the Company’s operating subsidiaries. The Insider Trading Policy aims to educate members of the organization on the legal obligations associated with being deemed an “insider” for the purposes of securities legislation. The policy goes further and establishes rules that help members of the organization avoid a situation where insider trading laws are inadvertently violated. These include rules regarding the disclosure of confidential information to outsiders, the imposition of regular and special trading blackouts around the time of the release of financial information and a general prohibition against speculative trading of the Company’s shares.
Anti-Bribery and Anti-Corruption Policy
The Company has adopted an Anti-Bribery and Anti-Corruption Policy that applies to all employees, Directors and officers of the Company, including the Company’s operating subsidiaries. The Anti-Bribery and Anti-Corruption Policy provides guidance aimed to ensure the Company and the Representatives conduct business in an honest and ethical manner, reflecting the highest standards of integrity and compliance with all applicable laws, rules and regulations, including Canada’s Corruption of Foreign Public Officials Act (the “CFPOA”), the U.S. Foreign Corrupt Practices Act (the “FCPA”), and any foreign anti-bribery or anti-corruption laws that may be applicable. The policy provides examples of incidents to be reported, the protocol for reporting such incidents, and a disciplinary position in the event that the policy is violated.
Securities Regulators in Canada have established rules requiring that the audit committees of public companies develop procedures to receive and address complaints regarding accounting, internal accounting controls or auditing matters, and for a confidential, anonymous submission procedure for employees who have concerns regarding questionable accounting or auditing matters. This policy has been developed to meet these requirements, as well as to discourage illegal activity and unethical business conduct and to promote a climate of accountability within Exchange Income Corporation and its subsidiaries. The policy provides examples of matters to be reported, reporting procedure, and the handling of reports.