Board of Directors Mandates
Duties of Directors
The Board operates by delegating certain of its authorities, including spending authorizations, to management and by reserving certain powers to itself. Management's discharge of its responsibilities is subject to continuing oversight by the Board. Subject to the Articles and By-laws of the Corporation, the Board retains the responsibility for managing its own affairs, including planning its composition, selecting its Chairman, nominating candidates for election to the Board, appointing committees and determining director compensation. Its principal duties fall into six categories.
- Selection of the Management
- The Board is responsible for the appointment and replacement of a Chief Executive Officer (“CEO”), for monitoring CEO performance, approving the corporate goals and objectives of the CEO, determining CEO compensation and benefits policies and providing advice and counsel in the execution of the CEO's duties.
- The Board is responsible for approving the appointment and remuneration policies of all executive officers, taking into consideration the recommendation of the CEO.
- The Board is responsible for oversight of management succession.
- The Board is responsible, to the extent feasible, for satisfying itself as to the integrity of the CEO and other senior officers and for ensuring that such persons create a culture of integrity throughout the Corporation.
- Monitoring and Acting
- The Board is responsible for approving annual capital and operating plans, monitoring the Corporation's performance against these plans and revising and altering its direction through management in light of changing circumstances.
- The Board is responsible for taking action when performance falls short of its goal or when other special circumstances warrant (for example, mergers and acquisitions or changes in control).
- The Board is responsible for approving any payment of dividends to shareholders and other activities and transactions as specified by corporate law.
- The Board monitors on a periodic, regular basis management's identification and assessment of the principal business risks facing the Corporation and keeps informed of how these risks are being handled by management, including through the implementation of appropriate controls.
- The Board is responsible for overseeing the integrity of the Corporation's internal control and management information systems.
- Strategy Determination
The Board is responsible for overseeing the development by management of the mission of the business, its objectives and goals, and the strategy by which it proposes to reach those goals.
- Policies and Procedures
- The Board is responsible for approving and monitoring compliance with all significant policies and procedures by which the Corporation is operated.
- The Board has a particular responsibility to oversee the Corporation’s compliance with applicable laws and regulations, and the operation of its business in accordance with appropriate ethical standards. To this end the Corporation has adopted a Code of Conduct (the “Code”). Only the Board may grant waivers under the Code.
- The Board is responsible for developing the Corporation's approach to corporate governance, including developing a set of corporate governance principles and guidelines.
- Reporting to Shareholders
- The Board is responsible for adopting a communication policy including overseeing financial reporting to shareholders, other security holders and regulators on a timely and regular basis.
- The Board is responsible for ensuring the timely reporting of any other developments that have a significant and material impact on the value of the Corporation.
- The Board is responsible for reporting annually to shareholders on its stewardship for the preceding year, as required by law.
- Shareholders are entitled to provide feedback to the Corporation and the Board through mail addressed to the Chair, at the Corporation's head office, email through the Corporation’s website at www.enerflex.com or through the Corporation's Compliance Hotline.
- Legal Requirements
- The Board is responsible for overseeing compliance with legal requirements.
- Canadian law identifies the following as the standards for the proper discharge of the Board's responsibilities.
- to manage the business and affairs of the Corporation.
- to act honestly and in good faith with a view to the best interests of the Corporation.
- to exercise the care, diligence and skill that reasonable prudent people would exercise in comparable circumstances.
- to act in accordance with its obligations contained in the Canada Business Corporations Act, the Securities Act of each Province and territory of Canada, other relevant legislation and regulations, and the Corporation's articles and by-law.
- In particular, it should be noted that the following matters must be considered by the Board as a whole and may not be delegated to a Committee:
- any submission to the shareholders of a question or matter requiring the approval of the shareholders;
- the filling of a vacancy among the directors or in the office of the auditor;
- terms on which securities may be issued and the declaration of dividends;
- the purchase, redemption or any other form of acquisition of shares issued by the Corporation;
- the payment of a commission to any person in consideration of the purchase or agreement to purchase shares of the Corporation from the Corporation;
- the approval of management proxy circulars;
- the approval of any take-over bid circular or directors' circular;
- the approval of the financial statements of the Corporation to be submitted to shareholders; an
- the adoption, amendment or repeal of by-laws of the Corporation.
Additional Expectations of Board Members
In addition to the responsibilities and duties described above, there are additional expectations of the Corporation’s Directors including the following:
- Board members are expected to maintain the highest personal and professional values, integrity and ethics. This shall include compliance with the Code and certification on an annual basis.
- Board members are expected to bring a probing and objective perspective to the Board and be prepared to challenge management.
- Board members are expected to attend all Board and Committee meetings (as applicable) and devote the necessary time and attention to Board matters. This includes the advance review of materials, adequate preparation for Board meetings and keeping informed about the Corporation’s business and relevant developments outside the Corporation that affect its business.
- Independent Board members are expected to sit on at least one Board Committee.
- Directors are expected to own shares in the Corporation in compliance with the Share Ownership Guidelines.
Oversight Duties of the Board
This section is intended to provide some additional guidance to management and the Board as to approval levels expected by the Board. These guidelines are subject to regular review and may be changed whenever the Board considers it appropriate.
- Approves overall financing programs and policies, subject to authorization by shareholders when necessary and authorizes appropriate officers to take actions as may be required to implement such programs.
- Approves dividend actions.
- Approves actions involving disposal of significant capital assets, inclusive of subsidiaries, operating divisions and the closure of business operations and the sale of related facilities.
- Approves annual corporate donations budget and explicitly individual charitable contributions in excess of $50,000.
- Approves annual political and lobbying budget and explicitly any individual payments in excess of $10,000.
- Reviews and approves the annual capital expenditure budget and monitors spending on projects specifically itemized in the capital expenditure budget on a quarterly basis. For any of the following not specifically itemized in the (previously approved) annual capital expenditure budget:
Establishes regulations and controls concerning issue, transfer, and registration of company securities.
Approves the selection of the outside auditor for appointment by the shareholders.
Reviews all retirement and termination decisions of executive officers.
Determines and approves all incentive plans for executive officers.
Approves all allocations under the stock option plan and other incentive award plans, provided this is not specifically delegated to the Human Resources and Compensation Committee and any changes to such plans subject to shareholder approval where required.
Approves all Normal Course Issuer bids and approves purchasing guidelines.
- CEO can approve investments in capital assets (outside the expenditures itemized in the approved capital budgets) up to $5,000,000 with the threshold moving to $10,000,000 in connection with the acquisition of a business, provided that such investments would not exceed the overall limits of the approved capital budget.
- Approves all normal course transactions that individually might involve some residual liability in excess of $1 million.
- Authorizes all leases of more than 5 years duration, or involving payments over $500,000 per year.
- Reviews and approves all project bids in excess of $50,000,000