Investor Centre

The Board of Directors (the “Board”) and management of the Company recognize that effective governance is central to the prudent direction and operation of the Company in a manner that ultimately enhances shareholder value. The following discussion outlines the Company’s system of corporate governance.

The business and affairs of the Company are managed under the supervision of the Board. Broadly, the Board approves overall corporate strategy and assesses management’s implementation of agreed strategies, and reviews the results achieved. The Board’s role consists of the approval of strategic plans, the review of corporate environmental and social risks identified by management and monitoring the Company’s practices and policies for dealing with these risks, management succession planning, the monitoring of business practices and the assessment of the integrity of the Company’s internal controls and information and governance systems.

The Board oversees the Company’s strategic planning process, reviews and approves strategies, and assesses management’s success in implementing the strategies. This is done regularly and through annual special purpose Board meetings held each year to advise, review and approve the Company’s strategic and annual business plan. The strategic plan is updated each year so that it always projects the next three-year period.

The corporate governance practices and policies of the Company have been developed under the general stewardship of the Nominating and Governance Committee. The Committee believes that the corporate governance practices of the Company are appropriate for the Company. As a result of evolving laws, policies and practices, the Nominating and Governance Committee regularly reviews the corporate governance practices and policies of the Company in order to facilitate compliance with applicable requirements and implements best practices appropriate to its operations. In recent years, the following steps have been taken by the Company as part of the ongoing process of enhancing its corporate governance:

Management reports to the Board quarterly, including highlighting and commenting upon divisional performance compared with annual business plan forecasts and prior year results. As part of the strategic plan review process, the Board identifies and evaluates the principal business, environmental and social opportunities and risks of the Company’s operations, and seeks to ensure that management puts in place appropriate systems to manage the principal risks. The Board also receives, reviews and discusses a quarterly risk management report from management which identifies the key risks facing the Company, their potential impact on operating income and mitigation actions which are being taken. In addition, the Audit Committee regularly reviews financial and health, safety and environmental (“HSE”) risk issues and the Compensation and Organizational Development Committee reviews compensation related and human resource risk issues on an annual basis. A discussion of the key risks facing the Company is set out in the Company’s Annual Information Form for the year ended December 31, 2020 and in the Management’s Discussion and Analysis accompanying the Company’s consolidated financial statements for the year ended December 31, 2020 and 2019, both of which are filed on SEDAR at www.sedar.com. For additional information concerning the Board’s oversight of sustainability and ESG (Environmental, Social and Governance) practices see Corporate Governance Practices – Sustainability.

The corporate governance practices and policies of the Company have been developed under the general stewardship of the Governance and Sustainability Committee. The Committee believes that the corporate governance practices of the Company are appropriate for the Company.

As a result of evolving laws, policies and practices, the Governance and Sustainability Committee regularly reviews the corporate governance practices and policies of the Company in order to facilitate compliance with applicable requirements and implements best practices appropriate to its operations. In recent years, the following steps have been taken by the Company as part of the ongoing process of enhancing its corporate governance:

• instituted and updated mandatory share ownership guidelines for all Directors, the Chief Executive Officer and other designated executives;
• reviewed and revised the mandate of the Board of Directors;
• reviewed and revised the charters for the Audit, Compensation and Organizational Development and Governance and Sustainability Committees, and appointed only independent directors to these Committees;
• completed evaluations of the Board’s performance as well as individual director peer performance reviews and developed a new Board/Committee/ Director performance assessment process and form;
• developed, maintained and updated a Board experience/skills matrix;
• reviewed and updated the Company’s Code of Conduct for directors, officers and employees, a copy of which may be found on SEDAR (www.sedar.com);
• instituted a whistleblower hotline to assist employees in reporting suspected violations of the Code of Conduct;
• reviewed and updated the Company’s Confidentiality, Insider Trading and Disclosure policies and developed Conflict of Interest Guidelines for directors which include formal disclosure mechanisms;
• eliminated the Company’s dual class share structure through a shareholder and court approved plan of arrangement;
• developed a Director Retirement and Tenure policy, Board and Senior Management Diversity policies, a Board Crisis Management plan and an Executive Compensation Clawback policy;
• enhanced Board continuing education by enrolling three directors in the Directors Education Program offered by the Institute of Corporate Directors (the “ICD”) and enrolling all directors as members of the ICD;
• improved Board processes and continuing education through site visits and in-depth presentations on specific risks facing the Company, which enhances risk identification and mitigation;
• amended its majority voting policy for directors and amended and restated its advance notice by-law;
• implemented “say on pay” in 2018;
• formalized a rotation process for Committee assignments and succession planning for Committee and Board Chairs;
• revised directors’ compensation in 2019 to promote greater alignment between individual directors and Shawcor’s shareholders and to reflect best practices;
• implemented a temporary reduction in directors compensation as a result of COVID-19 pandemic;
• formalized a protocol to enhance sustainability/ESG reporting and tracking;
• revised its Shareholder Engagement policy to make Board Chair available to speak to Shareholders;
• nominated two female directors (29% of those nominated) for election to the Board in 2021; and
• broadened the search for diversity in board candidates beyond gender diversity.