| | | | | | | | | | | | | | |
Board and Standing Committee Membership | | Meeting Attendance 2022 | | Public Company Directorships in the Past Five Years* |
Not currently a member of the board or any of its committees | | n/a | | –BHP Group Limited (2020 – present) |
| | | | –Newmont Corporation (previously Newmont Mining Corporation) (2013 – 2019) |
| | | | *no public board interlocks |
| | | | |
| | | | | | | | | | | | | | |
Voting Results of 2022 Annual General Meeting: | | Other Positions in the Past Five Years: (position, date office held, and status of employer) |
Votes in Favour: | | Votes Withheld: | | –Newmont Corporation, Executive advisor (2019 – 2020) |
n/a | | n/a | | –Newmont Corporation, Chief executive officer (2018 – 2019) |
| | | | –Newmont Corporation, President and chief executive officer (2013 – 2018) |
| | | | |
| | | | | | | | |
| | Miranda C. Hubbs Toronto, Ontario, Canada Nonemployee director (independent) Age: 56 Director since: July 26, 2018 Skills and experience: Global experience, Strategy development, Environment and sustainability, Audit committee financial expert, Financial expertise, Information technology/cybersecurity oversight, Executive compensation, Risk management |
| Ms. Hubbs is currently an independent director of Nutrien Ltd. and also serves as a director of PSP Investments (Public Sector |
Pension Investment Board), New Self-Regulatory Organization of Canada and serves as vice-chair of the board of the Canadian Red Cross. Prior to retirement in 2011, Ms. Hubbs was executive vice president and managing director of McLean Budden, one of Canada’s leading investment managers. Ms. Hubbs holds a BSc from Western University and an MBA from Schulich School of Business at York University and is a CFA charterholder. Ms. Hubbs serves on the ICD Climate Strategy Advisory Board and the Global Risk Institute Sustainable Finance Advisory Committee, holds the Fundamentals of Sustainability Accounting credential from the Sustainability Accounting Standards Board, and has received her CERT Certificate in Cybersecurity Oversight issued by the Software Engineering Institute at Carnegie Mellon University. |
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Imperial Oil Limited Ownership and Value of Equity (a) (b) (c) (d) |
| | IMO Common Shares (% of class) | | IMO Deferred Share Units (DSU) | | Total Vested Equity Holdings (Common + DSU) | | Restricted Stock Units (RSU) | | Total Holdings * (Common + DSU + RSU) |
Holdings as at February 8, 2023 (#) | | 0 | | 16,735 | | 16,735 | | 15,600 | | 32,335 |
Total market value as at February 8, 2023 ($) | | 0 | | 1,164,254 | | 1,164,254 | | 1,085,292 | | 2,249,546 |
Year over year change (#) | | 0 | | 2,352 | | 2,352 | | 3,300 | | 5,652 |
*Meets the necessary share ownership requirements
| | | | | | | | | | | | | | |
Board and Standing Committee Membership | | Meeting Attendance 2022 | | Public Company Directorships in the Past Five Years* |
Imperial Oil Limited board | | 8 of 8 (100%) | | –Nutrien Ltd. (2018 – present) |
Audit committee | | 5 of 5 (100%) | | –Agrium Inc. (2016 – 2018) |
Executive resources committee | | 7 of 7 (100%) | | *no public board interlocks |
Safety and sustainability committee | | 4 of 4 (100%) | | |
Nominations and corporate governance committee | | 6 of 6 (100%) | | |
Community collaboration and engagement committee (Chair) | | 1 of 1 (100%) | | |
| | | | | | | | | | | | | | |
Voting Results of 2022 Annual General Meeting: | | Other Positions in the Past Five Years: (position, date office held, and status of employer) |
Votes in Favour: | | Votes Withheld: | | None |
596,301,725 (99.06%) | | 5,630,456 (0.94%) | | |
Footnotes to director nominee tables on pages 112 through 115:
(a)The information includes the beneficial ownership of common shares of Imperial Oil Limited, which information not being within the knowledge of the company has been provided by the nominees individually.
(b)The company’s plan for restricted stock units for nonemployee directors is described on page 142. The company’s plan for deferred share units for nonemployee directors is described on page 141. The company’s plan for restricted stock units for selected employees is described on page 163. (c)The numbers for the company’s restricted stock units represent the total of the outstanding restricted stock units received in 2016 through 2022 and deferred share units received since directors’ appointment.
(d)The value for Imperial Oil Limited common shares, deferred share units and restricted stock units is based on the closing price for Imperial Oil Limited common shares on the Toronto Stock Exchange of $69.57 on February 8, 2023.
Director and nominee holdings in Exxon Mobil Corporation (a)
| | | | | | | | | | | | | | | | | | | | | | | | | | |
Director | | XOM Common Shares (#) | | XOM Restricted Stock (#) (b) | | Total Common Shares and Restricted Stock (#) | | Total Market Value of Common Shares and Restricted Stock ($) (c) |
| | | | | | | | |
B.W. Corson | | 120,676 | | 73,850 | | 194,526 | | 29,759,204 |
| | | | | | | | |
M.R. Crocker | | 15,534 | | 128,400 | | 143,934 | | 22,019,479 |
| | | | | | | | |
D.S. Sutherland | | 5,730 | | — | | 5,730 | | 876,594 |
(a)Holdings as at February 8, 2023. The information includes the beneficial ownership of common shares of Exxon Mobil Corporation, which information not being within the knowledge of the company has been provided by the nominees and directors individually. None of these individuals own more than 0.01 percent of the outstanding shares of Exxon Mobil Corporation. Current directors D.W. Cornhill, K.T. Hoeg, M.C. Hubbs and J.M. Mintz, and nominees S.R. Driscoll, J. Floren, G.J. Goldberg, do not own common shares or hold restricted stock of Exxon Mobil Corporation.
(b)The numbers for Exxon Mobil Corporation restricted stock include outstanding restricted stock and restricted stock units granted under its restricted stock plan which is similar to the company’s restricted stock unit plan.
(c)The value for Exxon Mobil Corporation common shares and restricted stock is based on the closing price for Exxon Mobil Corporation common shares on the New York Stock Exchange of $113.92 U.S., which is converted to Canadian dollars at the daily rate of exchange of $1.3429 provided by the Bank of Canada for February 8, 2023.
Majority voting policy
In 2022, amendments to the Canada Business Corporations Act came into force implementing majority voting requirements for uncontested director elections. These amendments provide for the election of a director only if the number of “for” votes represents a majority of the votes cast both “for” and “against” the director. Following the implementation of these amendments, the company’s existing majority voting policy was rendered redundant and was revoked by the board.
Corporate governance disclosure
| | | | | | | | | | | | | | |
2022 Corporate governance highlights |
•Five of seven of our directors and our director nominees are independent and meet the criteria for independence set by Canadian securities regulators, the SEC and the NYSE American LLC
•The directors are highly qualified with diversity of gender, background, experience and skill
•The company’s independent directors have significant stock ownership requirements, all of which have been met. The independent directors collectively have more than $23.3 million in shareholdings in the company
•The independent directors regularly meet in executive sessions without management present
•Shares of the company are listed on the TSX and trade on the NYSE American LLC and our corporate governance practices comply with applicable policies and practices of each exchange
•96% average vote in favour for the election of our directors at the 2022 annual meeting
•Two of seven or 29% of the directors and director nominees, and 11 of 24 or 46% of the executive officers of the company and its major subsidiaries are women
| | | | | | | | |
Corporate governance at a glance | | |
| | |
Controlled company | | Yes |
Size of board | | 7 |
Number of independent directors (board and nominees) | | 5 |
Women on board (board and nominees) | | 2 |
Average attendance of directors at board and committee meetings | | 99% |
Independent chair of the executive sessions | | Yes |
In camera sessions of independent directors at every board meeting | | Yes |
Independent status of audit committee | | 100% |
Audit committee members financially literate | | All |
Independent status of executive resources committee | | 83% |
Independent status of nominations and corporate governance committee | | 83% |
Majority of independent directors on all committees | | Yes |
Individual director elections | | Yes |
Average tenure of director nominees (approximate) | | 2 years |
Average age of director nominees (approximate) | | 60 years |
Mandatory retirement age | | 72 years |
Separate board chair and CEO | | No |
Number of board interlocks | | None |
No director serves on more than two boards of another reporting issuer | | Yes |
Share ownership requirements for independent directors | | Yes |
Share ownership requirements for chairman and chief executive officer | | Yes |
Board orientation and education program | | Yes |
Code of business conduct and ethics | | Yes |
Board and committee charters | | Yes |
Position descriptions for the chairman and chief executive officer and the chair of each committee | | Yes |
Skills matrix for directors | | Yes |
Annual board evaluation process | | Yes |
Annual advisory vote on executive compensation | | No |
Dual-class shares | | No |
Change of control agreements | | No |
Statement of corporate governance practice
| | |
The company continually reviews its governance practices and monitors regulatory changes. |
This section provides information pertaining to our board, the committees of the board, ethics, diversity and shareholder engagement. The company is committed to high corporate governance standards and best practices. The company’s corporate governance policies and practices comply with and in most cases exceed the requirements of National Instrument 52-110 Audit Committees (NI 52-110), National Policy 58-201 Corporate Governance Guidelines (NP 58-201) and National Instrument 58-101 Disclosure of Corporate Governance Practices (NI 58-101). The company’s common shares trade on the Toronto Stock Exchange and the NYSE American LLC and our corporate governance practices reflect the standards of these exchanges. In accordance with NYSE American LLC requirements for non-U.S. companies, the company is in compliance with NYSE American standards in all significant respects except as described on the company’s website at www.imperialoil.ca.
Composition of our board nominees
More information on diversity, including on the board and among executive officers of the company, can be found at page 148.
Tenure of our board nominees
The board charter provides that incumbent directors will not be re-nominated if they have attained the age of 72, except under exceptional circumstances and at the request of the chairman. The company does not have term limits for independent directors because it values the comprehensive knowledge of the company that long serving directors possess and independent directors are expected to remain qualified to serve for a minimum of five years.
K.T. Hoeg, J.M. Mintz and D.S. Sutherland are not standing for re-election in 2023 as they have reached the company’s mandatory retirement age for directors. In anticipation of these retirements, the board undertook an extensive director recruitment process resulting in S.R. Driscoll, J. Floren and G.J. Goldberg being nominated for election to the board for the first time.
The following chart shows the current years of service of the nominees for the board of directors and the year they would normally be expected to retire from the board.
| | | | | | | | | | | | | | |
Name of director nominee | | Years of service on the board | | Year of expected retirement from the board for independent directors |
D.W. Cornhill | | 5 years | | 2026 |
B.W. Corson | | 3 years | | - |
M.R. Crocker | | 2 years | | - |
S.R. Driscoll (a) | | - | | 2034 |
J. Floren (a) | | - | | 2031 |
G.J. Goldberg (a) | | - | | 2031 |
M.C. Hubbs | | 4 years | | 2039 |
(a)S.R. Driscoll, J. Floren, and G.J. Goldberg are being nominated for election as directors at the annual meeting of shareholders and are not currently directors.
Skills and experience of our board members and nominees
| | |
Our directors bring a wide range of skills, diversity and experience. |
The current directors and director nominees collectively have the experience and expertise required to ensure effective oversight, stewardship and governance of the company. The key areas of experience and skills for each of the nominees for election as directors can also be found in each of the nominees tables on pages 112 through 116 of this circular. The table below sets out the diverse skill set required of the board and identifies the particular experience, qualifications, attributes, and skills of each director and nominee that led the board to conclude that such person should serve as a director of the company.
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| | D.W. Cornhill | | B.W. Corson | | M.R. Crocker | | S.R. Driscoll (a) | | J. Floren (a) | | G.J. Goldberg (a) | | K.T. Hoeg (b) | | M.C. Hubbs | | J.M. Mintz (b) | | D.S. Sutherland (b) |
| | | | | | | | | | | | | | | | | | | | |
Leadership of large organizations | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | | | | | ü |
Operations / technical | | ü | | ü | | ü | | | | ü | | ü | | | | | | | | ü |
Project management | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | | | | | |
Global experience | | | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü |
Strategy development | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü |
Environment and sustainability | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü |
Audit committee financial expert | | ü | | | | | | ü | | | | | | ü | | ü | | | | ü |
Financial expertise | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü |
Government relations | | | | ü | | ü | | | | ü | | ü | | | | | | ü | | ü |
Information technology / cybersecurity oversight | | | | | | | | | | ü | | | | | | ü | | | | |
Executive compensation | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü |
Risk management | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü | | ü |
(a)S.R. Driscoll, J. Floren and G.J. Goldberg are being nominated for election as directors at the annual meeting of shareholders and are not currently directors.
(b)K.T. Hoeg, J.M. Mintz and D.S. Sutherland are currently directors but are not standing for re-election at the annual meeting of shareholders.
Independence of our board members and nominees
| | |
Five out of seven of the director nominees are independent. |
The board is currently composed of seven directors, four of whom will be standing for re-election at the annual meeting of shareholders on May 2, 2023. K.T. Hoeg, J.M. Mintz and D.S. Sutherland will not stand for re-election in 2023 as they have reached the company's mandatory retirement age for directors. S.R. Driscoll, J. Floren and G.J. Goldberg are being nominated for election as directors at the annual meeting of shareholders and are not currently directors. The majority of the board and nominees (five out of seven) are independent. The independent directors and nominees are not employees of the company.
The board determines independence on the basis of the standards specified by National Instrument 52-110 Audit Committees (NI 52-110), the U.S. Securities and Exchange Commission rules and the listing standards of the NYSE American LLC. The board has reviewed relevant relationships between the company and each nonemployee director and director nominee to determine compliance with these standards.
Based on the directors’ responses to an annual questionnaire, the board determined that none of the independent directors has any interest, business or other relationship that could or could reasonably be perceived to constitute a material relationship with the company. B.W. Corson is a director and chairman, president and chief executive officer of the company and not considered to be independent. The board believes that Mr. Corson’s extensive knowledge of the business of the company and Exxon Mobil Corporation is beneficial to the other directors and his participation enhances the effectiveness of the board.
M.R. Crocker is also a non-independent director as he is an employee of Exxon Mobil Corporation. The company believes that Mr. Crocker, although deemed non-independent under the relevant standards by virtue of his employment, can be viewed as independent of the company’s management and that his ability to reflect the perspective of the company’s shareholders enhances the effectiveness of the board.
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Name of director and nominee | | Management | | Independent | | Not independent | | Reason for non-independent status |
| | | | | | | | |
D.W. Cornhill | | | | ü | | | | |
B.W. Corson | | ü | | | | ü | | B.W. Corson is a director and chairman, president and chief executive officer of Imperial Oil Limited. |
M.R. Crocker | | | | | | ü | | M.R. Crocker is an employee of Exxon Mobil Corporation. |
S.R. Driscoll (a) | | | | ü | | | | |
J. Floren (a) | | | | ü | | | | |
G G.J. Goldberg (a) | | | | ü | | | | |
K.T. Hoeg (b) | | | | ü | | | | |
M.C. Hubbs | | | | ü | | | | |
J.M. Mintz (b) | | | | ü | | | | |
D.S. Sutherland (b) | | | | ü | | | | |
(a)S.R. Driscoll, J. Floren and G.J. Goldberg are being nominated for election as directors at the annual meeting of shareholders and are not currently directors.
(b)K.T. Hoeg, J.M. Mintz and D.S. Sutherland are current directors, but are not standing for re-election at the annual meeting of shareholders.
Committee membership of our board
| | |
Each standing committee is chaired by a different independent director and all of the independent directors are members of each committee. |
The chart below shows the company’s current standing committee memberships and the chair of each committee.
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Director | | Nominations and corporate governance committee | | Audit committee (b) | | Safety and sustainability committee | | Executive resources committee | | Community collaboration and engagement committee |
| | | | | | | | | | |
D.W. Cornhill (c) | | ü Chair | | ü | | ü | | ü | | ü |
B.W. Corson (a) | | — | | — | | — | | — | | ü |
M.R. Crocker (a) | | ü | | — | | ü | | ü | | ü |
K.T. Hoeg (c) | | ü | | ü Chair | | ü | | ü | | ü |
M.C. Hubbs (c) | | ü | | ü | | ü | | ü | | ü Chair |
J.M. Mintz | | ü | | ü | | ü Chair | | ü | | ü |
D.S. Sutherland (c) | | ü | | ü | | ü | | ü Chair | | ü |
(a)Not independent directors.
(b)All members of the audit committee are independent and financially literate within the meaning of National Instrument 52-110 Audit Committees and the listing standards of the NYSE American LLC.
(c)Audit committee financial experts under U.S. regulatory requirements.
In addition to its standing committees, the board may establish ad hoc committees or special committees from time to time. Two special committees of independent directors were active during 2022; one that was established in September, 2021, and one that was established in September, 2022, both for the purposes of considering certain matters. The special committees were chaired by D.W. Cornhill and consisted of the five independent directors.
Number of meetings
The chart below shows the number of board and standing committee meetings held in 2022. This includes seven regular meetings and one additional special meeting of the board. With restrictions related to COVID-19 easing throughout the year, the majority of the board meetings in 2022 returned to an in-person format. More information on the board’s activities in relation to COVID-19 can be found in the Risk oversight section starting on page 130. Meetings of the board and standing committees in 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | Board 8 | | | | |
Audit committee | | Executive resources committee | | Safety and sustainability committee | | Nominations and corporate governance committee | | Community collaboration and engagement committee |
5 | | 7 | | 4 | | 6 | | 1 |
Attendance of our board members in 2022
| | |
99% board and standing committee meeting attendance from all members. |
The following chart provides a summary of the attendance record of each of the directors in 2022. The attendance record of each director nominee is also set out in his or her biographical information on pages 112 through 116. The attendance chart also provides an overall view of the attendance per standing committee. Senior management directors and other members of management periodically attend standing committee meetings at the request of the committee chair.
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Director | | Board | | Audit committee | | Executive resources committee | | Safety and sustainability committee (a) | | Nominations and corporate governance committee | | Community collaboration and engagement committee | | Annual meeting | | Total | | Percentage by director | |
| | | | | | | | | | | | | | | | | | | |
D.W. Cornhill | | 8 of 8 | | 5 of 5 | | 6 of 7 | | 3 of 4 | | 6 of 6 (chair) | | 1 of 1 | | 1 of 1 | | 30 of 32 | | 94% | |
B.W. Corson | | 8 of 8 (chair) | | — | | — | | — | | — | | 1 of 1 | | 1 of 1 | | 10 of 10 | | 100% | |
M.R. Crocker | | 8 of 8 | | — | | 7 of 7 | | 4 of 4 | | 6 of 6 | | 1 of 1 | | 1 of 1 | | 27 of 27 | | 100% | |
K.T. Hoeg | | 8 of 8 | | 5 of 5 (chair) | | 7 of 7 | | 4 of 4 | | 6 of 6 | | 1 of 1 | | 1 of 1 | | 32 of 32 | | 100% | |
M.C. Hubbs | | 8 of 8 | | 5 of 5 | | 7 of 7 | | 4 of 4 | | 6 of 6 | | 1 of 1 (chair) | | 1 of 1 | | 32 of 32 | | 100% | |
J.M. Mintz | | 8 of 8 | | 5 of 5 | | 7 of 7 | | 4 of 4 (chair) | | 6 of 6 | | 1 of 1 | | 1 of 1 | | 32 of 32 | | 100% | |
D.S. Sutherland | | 8 of 8 | | 5 of 5 | | 7 of 7 (chair) | | 4 of 4 | | 6 of 6 | | 1 of 1 | | 1 of 1 | | 32 of 32 | | 100% | |
Percentage by committee | | 100% | | 100% | | 98% | | 96% | | 100% | | 100% | | 100% | | 195 of 197 | | Overall attendance 99% | |
(a)In 2023, the public policy and corporate responsibility committee was changed to the safety and sustainability committee.
Other public company directorships of our board members and nominees
| | |
No director or nominee serves on more than two boards of another reporting issuer. |
The following table shows which directors and nominees serve on the boards of other reporting issuers and the committee memberships in those companies.
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Name of director or nominee | | Other reporting issuers of which director or nominee is also a director | | Type of company | | Stock symbol: Exchange | | Committee appointments | |
| | | | | | | | | |
D.W. Cornhill | | AltaGas Ltd. | | Diversified energy company | | ALA:TSX | | No committees | |
B.W. Corson | | — | | — | | — | | — | |
M.R. Crocker | | — | | — | | — | | — | |
S.R. Driscoll | | Empire Company Limited | | Food retailing | | EMP.A:TSX | | Audit committee (chair), Nominating and governance committee, and Corporate governance and social responsibility committee | |
J. Floren | | West Fraser Timer Co. Ltd | | Basic Materials- Forest Products | | WFG:TSX | | Health, safety and environment committee (chair), and Human resources and compensation committee, and Governance and nominating committee | |
G.J. Goldberg | | BHP Group Limited | | Basic Materials- Other industrial Metals and mining | | BHP:ASX | | Sustainability committee (chair) and Nominations and governance committee | |
K.T. Hoeg | | New Flyer Industries Inc. | | Manufacturer of heavy duty transit buses | | NFI:TSX | | Audit committee | |
M.C. Hubbs | | Nutrien Ltd. | | Fertilizer manufacturing | | NTR:TSX, NYSE | | Human resources and compensation committee and Safety and sustainability committee (chair) | |
J.M. Mintz | | — | | — | | — | | — | |
D.S. Sutherland | | GATX Corporation | | Commercial rail vehicles and aircraft engines – shipping | | GMT:NYSE | | Compensation committee (chair) | |
| United States Steel Corporation | | Iron and steel | | X:NYSE | | Chairman of the board | |
Interlocking directorships of our board members
As of the date of this proxy circular, there are no interlocking public company directorships among the directors listed in this circular.
Director qualification and selection process
The nominations and corporate governance committee is responsible for identifying and recommending new candidates for board nomination. The committee identifies candidates from a number of sources, including executive search firms and referrals from existing directors. The process for selection is described in paragraph 10 (a) of the Board of Directors Charter found in Appendix A of this circular. The committee will consider potential future candidates as required.
In considering the qualifications of potential nominees for election as directors, the nominations and corporate governance committee considers the work experience and other areas of expertise of the potential nominees, with the objective of providing for diversity among the nonemployee directors. The following key criteria are considered to be relevant to the work of the board of directors and its committees:
Work experience
•Experience in leadership of businesses or other large organizations (Leadership of large organizations)
•Operations/technical experience (Operations / technical)
•Project management experience (Project management)
•Experience in working in a global work environment (Global experience)
•Experience in development of business strategy (Strategy development)
•Experience with environmental, health, community relations and/or safety policy, practices and management (Environment and sustainability)
Other expertise
•Audit committee financial expert (also see the financial expert section in the audit committee table starting on page 134) •Expertise in financial matters (Financial expertise)
•Expertise in managing relations with government (Government relations)
•Expertise in information technology and cybersecurity oversight (Information technology / cybersecurity oversight)
•Expertise in executive compensation policies and practices (Executive compensation)
•Expertise in oversight of risk management policies and practices (Risk management)
The nominations and corporate governance committee may consider the following additional factors in assessing potential nominees:
•possessing expertise in any of the following areas: law, science, marketing, administration, social/political environment or community and civic affairs;
•individual competencies in business and other areas of endeavour in contributing to the collective experience of the directors; and
•providing diversity of age, regional association, gender and other diversity elements (including Aboriginal peoples, persons with disabilities and members of visible minorities).
The nominations and corporate governance committee assesses the work experience and other expertise each existing director possesses and whether the candidate is able to fill any gaps in such experience, expertise and diversity of age, regional association, gender and other diversity elements. More detailed information on diversity of the board, including in connection with the director recruitment process in 2022, can be found at page 148. Consideration is also given to whether candidates possess the ability to contribute to the broad range of issues with which the board and its committees must deal, are able to devote the necessary amount of time to prepare for and attend board and committee meetings and are free of any potential legal impediment or conflict of interest. Candidates are expected to remain qualified to serve for a minimum of five years and independent directors are expected to achieve ownership of no less than 16,500 common shares, deferred share units and restricted share units within five years of becoming an independent director.
When the committee is recommending candidates for re-nomination, it assesses such candidates against the criteria for re-nomination as set out in paragraph 10 (b) of the Board of Directors Charter found in Appendix A of this circular. Candidates for re-nomination are expected not to change their principal position, the thrust of their involvement or their regional association in a way that would significantly detract from their value as a director of the corporation. They are also expected to continue to be compatible with the criteria that led to their selection as nominees. Under exceptional circumstances, the nominations and corporate governance committee, on the
request of the chairman, may continue to support the nomination of a director who has attained the mandatory retirement age.
In anticipation of K.T. Hoeg, J.M. Mintz and D.S. Sutherland reaching mandatory retirement age, the board and nominations and corporate governance committee began an extensive director recruitment process in 2021, including engaging executive search firms to cultivate a diverse selection of potential nominees. The board reviewed the recruitment process on a regular basis, including discussing numerous candidates, conducting extensive interviews and ensuring that all board members had the opportunity to meet the candidates to ensure a strong fit for the board. This process has resulted in three new nominees for the 2023 annual meeting, S.R. Driscoll, J. Floren and G.J. Goldberg, to replace Ms. Hoeg, Mr. Mintz and Mr. Sutherland upon their retirement.
Ms. Driscoll brings extensive chief financial officer, chief executive officer and board experience through various roles at Ritchie Bros. Auctioneers Incorporated, service as a director of Empire Company Limited and other corporate experience. Mr. Floren is the former president and chief executive officer of Methanex Corporation, with over 37 years experience in the chemicals industry and currently serving on the board of West Fraser Timber Co. Mr. Goldberg has more than 35 years of global experience including substantial chief executive officer experience in the mining industry, has served on various mining industry councils and organizations and is currently a nonemployee director of BHP Group Limited. The board is pleased to welcome these highly experienced and successful individuals as nominees, and looks forward to their leadership and oversight for the company.
Director orientation, education and development
| | |
The company regularly provides in-depth presentations to the directors on relevant and emerging issues and encourages continuing education opportunities. |
The corporate secretary organizes an orientation program for all new directors. In a series of meetings over several days, new directors are briefed by staff and functional managers on all significant areas of the company’s operations, industry specific topics, risk oversight and regulatory issues. New directors are also briefed on significant company policies, organizational structure, security, information technology management and on critical planning and reserves processes. They also receive key governance and disclosure documents and a comprehensive board manual which contains a record of historical information about the company, by-laws, company policies, the charters of the board and its committees, other relevant company business information, information on directors’ duties and additional board related activities and calendars. With S.R. Driscoll, J. Floren and G.J. Goldberg being nominated for election for the first time this year, the corporate secretary plans to commence an extensive orientation program shortly after their election to the board.
Continuing education is provided to board and committee members through regular presentations by management, which focus on providing more in-depth information about key aspects of the business. Subject to exceptional circumstances, each year the board has an extended meeting that focuses on a particular area of the company’s operations and includes a visit to one or more of the company’s operating sites or a site of relevance. These site visits help directors better understand the strengths and business opportunities unique to various operations and markets across the country, and enhance the board’s perspective of the integrated nature of the company’s business. In September 2022, the board visited the Sarnia refinery, chemical plant and research centre for a tour of the facilities and presentations specific to the operations and research at Sarnia.
Throughout 2022, the board and its committees received regular presentations and updates that focused on performance, strategy and opportunities for the business. Some of these presentations included ongoing reviews of upstream and downstream performance, plans and strategies, internal audit reviews, a pension management review, a review of harassment in workplace policy stewardship, community engagement strategy, litigation reviews, conflict of interest and ethics reviews and a competition and anti-corruption review. Recognizing the importance of cybersecurity oversight for the company, the board was also provided an information technology and cybersecurity update including strategic cybersecurity priorities, key security initiatives and mitigation efforts and system improvements throughout the year. The board continued to engage with management on pandemic specific topics throughout 2022, such as response and mitigation plans and actions, health and safety initiatives, strategic business actions and the company’s response to the gradual lessening of restrictions across Canada over the year.
With strong market conditions and business performance throughout the year, the board focused on strategic direction, operational priorities, capital allocation and prioritizing shareholder returns. This included reviews and approval of the acceleration of the company's normal course issuer bid and the completion of two substantial issuer bids during the year, as well as the sale of the company’s interests in XTO Energy Canada with proceeds used to reduce the company’s outstanding debt.
The board also reviewed and discussed the company’s various environmental, social and governance initiatives throughout the year, including the publication of the company’s advancing climate solutions and sustainability reports. There was a continued focus by the board on the company’s progress with emissions reduction initiatives, including the company’s founding membership in the Oil Sands Pathways to Net Zero initiative and setting and tracking emissions reduction goals. The board also undertook reviews of disclosure and emissions performance, safety performance and Canada climate policy updates. More information on the board’s role in relation to the environment can be found in the Risk oversight section starting on page 130. Members of ExxonMobil’s management also provide reviews of various aspects of ExxonMobil’s global business. In 2022, the directors received a presentation on ExxonMobil’s cybersecurity update, as well as an overview of ExxonMobil’s corporate strategy and the ExxonMobil Outlook for Energy.
Members of the board receive an extensive package of materials prior to each board meeting that provides a comprehensive summary on each agenda item to be discussed. Similarly, the committee members also receive a comprehensive summary on each agenda item to be discussed by that particular committee. Informational communications and other written publications or reports of interest to the directors are also forwarded routinely.
The board members are canvassed as to whether there are any additional topics relevant to the board or to a specific committee that they would like to see addressed, and management schedules presentations covering these areas. In addition, at every meeting the board receives an extensive update from the chairman, president and chief executive officer on business environment trends, relevant geopolitical activities, federal government priorities, key provincial issues and competitor activities, as appropriate. Directors are encouraged to participate in other continuing education programs and events to ensure their skills and knowledge remain current.
Board performance assessment
The board and its committees, as well as the performance of the directors, are assessed on an annual basis. For 2022, the directors engaged in a performance assessment with the chairman, president and chief executive officer, which includes discussion and evaluation of the board and each committee’s effectiveness in various areas. The chairman, president and chief executive officer also meets regularly with directors individually to discuss any outstanding issues. The nominations and corporate governance committee discuss a summary of these assessment outcomes in the first quarter of each year.
Board and committee structure
Leadership structure
The company has chosen to combine the positions of chairman, president and chief executive officer. The board believes the interests of all shareholders are best served at the present time through a leadership model with a combined chairman and chief executive officer position. Through more than 39 years of experience with ExxonMobil and Imperial, the current chief executive officer possesses an in-depth knowledge of the evolving energy industry supply and demand fundamentals and the array of challenges to be faced by the company. The board believes that the extensive experience and other insights put the chief executive officer in the best position to provide broad leadership for the board as it considers strategy and exercises its fiduciary responsibilities. Further, the board has demonstrated its commitment and ability to provide independent oversight of management.
The company does not have a lead director. While the chairman of the board is not an independent director, K.T. Hoeg, chair of the executive sessions of the board, provides leadership for the independent directors. The duties of the chair of the executive sessions include presiding at executive sessions, reviewing and modifying, if necessary, the agenda of the meetings of the board in advance to ensure that the board may successfully carry out its duties, and acting as a liaison with the chairman of the board, including the provision of feedback, as appropriate, from the executive sessions. The position description of the chair of the executive sessions, as well as the purpose of those executive sessions, are fully described in paragraphs 9 (c) and (d) of the Board of Directors Charter attached as Appendix A.
Independent director executive sessions
The executive sessions of the board are in camera meetings of the independent directors and are held in conjunction with every board meeting. These meetings are held in the absence of management. The independent directors held eight executive sessions in 2022. The purposes of the executive sessions of the board include the following:
•raising substantive issues that are more appropriately discussed in the absence of management;
•discussing the need to communicate to the chairman of the board any matter of concern raised by any committee or director;
•addressing issues raised but not resolved at meetings of the board and assessing any follow-up needs with the chairman of the board;
•discussing the quality, quantity, and timeliness of the flow of information from management that is necessary for the independent directors to effectively and responsibly perform their duties, and advising the chairman of the board of any changes required; and
•seeking feedback about board processes.
In camera sessions of the board committees
Various committees also regularly hold in camera sessions without management present. The audit committee regularly holds private sessions of the committee members as well as private meetings of the committee with each of the external auditor, the internal auditor and senior management as part of every regularly scheduled committee meeting.
Committee structure
The board has created five standing committees to help carry out its duties. Each committee is chaired by a different independent director and all of the independent directors are members of each committee. M.R. Crocker is also a member of each committee, with the exception of the audit committee, which is composed entirely of independent directors. B.W. Corson is also a member of the community collaboration and engagement committee. In 2023, the name of the public policy and corporate responsibility committee was changed to the safety and sustainability committee.
Board committees work on key issues in greater detail than would be possible at full board meetings, allowing directors to more effectively discharge their stewardship responsibilities. The independent chairs of the five committees are able to take a leadership role in executing the board’s responsibility with respect to a specific area of the company’s operations falling within the responsibility of the committee he or she chairs. The board and each committee have a written charter that can be found in Appendix A of this circular. The charters set out the purpose, structure, position description for the chair, and the responsibility and authority of that committee, and are reviewed and approved by the board annually.
In addition to its standing committees, the board may establish ad hoc committees or special committees from time to time.
Risk oversight
The company is governed by a comprehensive and well-established risk management system, and the company’s success in managing risk over time has been achieved through emphasis on execution of this disciplined management framework.
The company’s risk management system includes a process for identifying, prioritizing, measuring, and managing the principal risks across the company, as well as assessing the company’s response to these risks. The system is implemented at multiple levels of the business through various policies, guidelines, processes and systems, including:
•energy outlook scenarios;
•strategic planning;
•risk management guidelines;
•code of ethics and standards of business conduct;
•delegation of authority guidelines;
•credit risk assessment guidelines;
•controls and operations integrity management systems;
•capital project management systems;
•IT risk management (including information technology, systems and cybersecurity);
•guidelines for the management and protection of information; and
•business continuity plans.
For a discussion on the company’s risk management in relation to executive compensation, see the Compensation discussion and analysis section starting on page 156.
The chairman, president and chief executive officer is charged with identifying the company’s principal risks and ensuring appropriate systems are in place to manage these risks. The board of directors is responsible for reviewing the principal risks and overseeing the implementation of the risk management system, with the various committees assisting in risk oversight for issues that fall under their responsibility. This integrated risk management approach facilitates recognition and oversight of risk. For example, the audit committee oversees the company’s system of internal accounting and financial controls, and the executive resources committee oversees the compensation programs and practices in relation to risk management.
The safety and sustainability committee oversees the policies and practices that manage environment, health, safety and security risk. This includes reviews of compliance with legislation and the assessment of public policy impacts on corporate performance, health and safety systems and performance, and the risks, actions and disclosure associated with climate change and the energy transition. As part of this assessment, the committee reviews the company’s commitments to environmental sustainability priorities such as progressive reclamation, decommissioning and remediation, water conservation and use, air quality improvement, waste management and land use and biodiversity. Additionally, the committee and board provides oversight over the company's emission reduction goals, including the company's announcement in 2022 to reduce greenhouse gas emissions intensity (Scope 1, 2) for its operated oil sands facilities by 30 percent by 2030 relative to 2016 levels. As part of the company’s efforts to provide solutions that lower the greenhouse gas emissions intensity of its operations and to provide lower life-cycle emission products to its customers, Imperial has also implemented a company-wide goal to achieve net-zero emissions (Scope 1, 2) by 2050 in its operated assets through collaboration with government and other industry partners. The board of directors evaluates climate change risk in the context of overall enterprise risk, including other operational, strategic, and financial risks. Imperial's board is actively engaged and committed to overseeing the company's efforts as it pursues a strategy that is resilient to a wide range of potential pathways for society’s energy transition while continuing to grow shareholder value.
The COVID-19 pandemic and market conditions within the energy industry starting in 2020 has placed a significant emphasis on the board’s role in risk oversight. Throughout 2022, the board remained fully engaged on the company’s business and emergency response plans, health and safety protocols, market conditions and the company’s response to the gradual lessening of restrictions across Canada over the year.
The board and its committees carry out their risk oversight responsibility through regular reviews and assessments. Topic-specific assessments, such as for compliance programs, controls, stewardship of business performance, regulatory changes, the company’s energy outlook, and climate risk and sustainability are conducted regularly and as necessary. The board carefully considers various factors and risks in connection with specific proposals for capital expenditures, budget additions and strategic initiatives, as well as in evaluating strategic plans. Members of the board ask questions of management to ensure risks are identified, assessed, mitigated, and monitored. Each typical year, the board also visits one or more of the company’s operating sites or locations of importance for the company to better understand issues associated with the company’s business.
In the annual planning process, consideration is given to a diverse set of risks and other factors that may influence future energy supply and demand trends, including technological advancements, regulation and government policies, climate change, greenhouse gas restrictions, and other general economic conditions. It also takes into account emerging industry and economic conditions and market and government policy uncertainties in developing its strategic plans and longer-term price views. Further, the board is responsible for ensuring the company’s strategic planning process is effective, and in doing so regularly reviews the process, key issues and various alternatives for future strategy development to inform updates. Business plans and strategies are reviewed on an annual basis and approved by the board.
The tables on the following pages provides additional oversight and other information about the board and its five standing committees:
Board of directors
The board of directors is responsible for the stewardship of the corporation. The stewardship process is carried out by the board directly or through one or more of the committees of the board. The formal mandate of the board can be found within the Board of Directors Charter in Appendix A of this circular. The board is satisfied that its activities over the year have fulfilled its mandate.
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Directors | | ● B.W. Corson (chair) | | ● M.C. Hubbs | | |
| ● D.W. Cornhill | | ● J.M. Mintz | | |
| ● M.R. Crocker | | ● D.S. Sutherland | | |
| ● K.T. Hoeg | | | | |
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Number of meetings | | Eight meetings of the board of directors were held in 2022, which included one special meeting of the board. The independent directors hold executive sessions of the board in conjunction with every board meeting. These meetings are held in the absence of management. The independent directors held eight executive sessions in 2022. |
Board highlights in 2022 | | ● Regularly discussed industry activity, market updates and company initiatives. ● Regularly discussed operational and project updates. ● Regularly discussed risk management and business controls environment. ● Regularly reviewed information technology, systems and cybersecurity strategies (including trends, risks, preparedness, mitigation, response, system improvements and business continuity strategies) to assess the security and integrity of the company’s information, systems and assets. ● Discussed comprehensive company strategy for all business lines, including a focus on capital allocation and discipline. ● Implemented various mechanisms for enhancing shareholder returns, such as increasing the dividend, renewing and accelerating the company’s normal course issuer bid program, and two substantial issuer bids. ● Provided oversight in support of safety, environmental performance and sustainability. ● Regularly discussed climate change policies, risks, opportunities and the company’s climate strategy, including the company’s founding partnership in the Oil Sands Pathways to Net Zero initiative. ● Reviewed various stages of key projects such as Strathcona’s renewable diesel, Kearl in-pit tailings, Kearl autonomous haul vehicles and Cold Lake Grand Rapids Phase 1. ● Approved the sale of the company's interest in XTO Energy Canada. ● Conducted site visit to Sarnia including refinery, chemical plant and research centre. |
Role in risk oversight | | The company’s financial, execution and operational risk rests with management and the company is governed by well-established risk management systems. The board of directors are responsible for reviewing the company’s principal risks and overseeing the implementation of the appropriate systems to manage these risks. The board carefully considers these risks in evaluating the company’s strategic plans and specific proposals for capital expenditures and budget additions. It also approves and monitors compliance with the code of ethics and business conduct, and ensures that executive officers create a culture of integrity throughout the company. The board reviews the company’s information technology, systems and cybersecurity to ensure they adequately protect corporate information and assets. In 2022, the board’s role in risk oversight included the company’s continued response to the COVID-19 pandemic and adaptation to the gradual lessening of restrictions across Canada over the year. |
Disclosure policy | | The company is committed to full, true and plain public disclosure of all material information in a timely manner, in order to keep security holders and the investing public informed about the company’s operations. The full details of the corporate disclosure policy can be found on the company’s internet site at www.imperialoil.ca. |
Independence | | The current board of directors is composed of seven directors, the majority of whom (five of seven) are independent. The five independent directors are not employees of the company. |
Audit committee
The role of the audit committee includes selecting and overseeing the independent auditor, reviewing the scope and results of the audit conducted by the independent auditor, and assisting the board in overseeing the integrity of the company’s financial statements. In addition, the committee’s role includes overseeing the company’s compliance with legal and regulatory requirements and the quality and effectiveness of internal controls, approving any changes in accounting principles and practices, and reviewing the results of monitoring activity under the company’s business ethics compliance program. The formal mandate of the committee can be found within the Audit Committee Charter in Appendix A of this circular. The committee is satisfied that its activities over the year have fulfilled its mandate.
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Committee members | | ● K.T. Hoeg (chair) | | ● J.M. Mintz |
| ● M.C. Hubbs (vice-chair) | | ● D.S. Sutherland |
| ● D.W. Cornhill | | |
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Number of meetings | | Five meetings of the audit committee were held in 2022. The committee members met in camera without management present and separately with the internal auditor and the external auditor at all regularly scheduled meetings. A pre-audit meeting also occurs prior to every regularly scheduled audit committee meeting with the chair of the audit committee and the chief financial officer and both the internal and external auditors. |
Committee highlights in 2022 | | ● Reviewed and recommended for approval the interim and full year financial and operating results. ● Reviewed and assessed the company’s system of internal controls and auditing procedures, and the results of the internal auditor’s audit program. ● Reviewed and assessed the external auditor plan, performance and fees. ● Reviewed evolving regulations and reporting obligations. ● Reviewed the committee’s mandate and completed the committee self-assessment. ● Performed external auditor performance evaluation. ● Ensured the effectiveness of controls and procedures and integrity of financial statements was maintained. |
Financial expertise | | The company’s board of directors has determined that D.W. Cornhill, K.T. Hoeg, M.C. Hubbs and D.S. Sutherland meet the definition of “audit committee financial expert”. The U.S. Securities and Exchange Commission has indicated that the designation of an audit committee financial expert does not make that person an expert for any purpose, or impose any duties, obligations or liability on that person that are greater than those imposed on members of the audit committee and board of directors in the absence of such designation or identification. All members of the audit committee are financially literate within the meaning of National Instrument 52-110 Audit Committees and the listing standards of the NYSE American LLC. |
Role in risk oversight | | The audit committee also has an important role in risk oversight. The audit committee oversees risks associated with financial and accounting matters, including compliance with legal and regulatory requirements, and the company’s financial reporting and internal controls systems. In addition, it reviews the scope of PricewaterhouseCoopers’ audit in light of risks associated with the energy industry, the regulatory environment and company-specific financial audit risks. The committee also reviews financial statements and internal and external audit results, and any changes proposed to accounting principles and practices. |
Independence | | The audit committee is composed entirely of independent directors. All members met board approved independence standards, as that term is defined in National Instrument 52-110 Audit Committees, the U.S. Securities and Exchange Commission rules and the listing standards of the NYSE American LLC. |
Executive resources committee
The executive resources committee is responsible for corporate policy on compensation and for specific decisions on the compensation of the chief executive officer and key senior executives and officers reporting directly to that position. In addition to compensation matters, the committee is also responsible for succession plans and appointments to senior executive and officer positions, including the chief executive officer. The formal mandate of the committee can be found within the Executive Resources Committee Charter in Appendix A of this circular. The committee is satisfied that its activities over the year have fulfilled its mandate.
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Committee members | | ● D.S. Sutherland (chair) | | ● K.T. Hoeg | | |
| ● D.W. Cornhill (vice-chair) | | ● M.C. Hubbs | | |
| ● M.R. Crocker | | ● J.M. Mintz | | |
| None of the members of the executive resources committee currently serves as a chief executive officer of another company. |
Number of meetings | | Seven meetings of the executive resources committee were held in 2022. |
Committee highlights in 2022 | | ● Reviewed performance and approved compensation for CEO and other executive officers ● Approved overall compensation budget and incentive program for the company ● Approved changes to non-executive restricted stock unit program ● Reviewed a number of workforce and organizational changes ● Continued focus on succession planning for senior management positions. |
Committee members relevant skills and experience | | D.W. Cornhill, K.T. Hoeg, M.C. Hubbs and D.S. Sutherland had extensive and lengthy experience in managing and implementing their respective companies’ compensation policies and practices in their past role as chief executive officers or members of senior management. Mr. Cornhill, Ms. Hoeg, Dr. Mintz and Mr. Sutherland serve or have served on compensation committees of one or more public companies. Accordingly, committee members are able to use this experience and knowledge derived from their roles with other companies in judging the suitability of the company’s compensation policies and practices. |
Role in risk oversight | | The executive resources committee oversees the compensation programs and practices that are designed to encourage appropriate risk assessment and risk management. |
Independence | | The members of the executive resources committee are independent, with the exception of M.R. Crocker, who is not considered to be independent under the rules of the U.S. Securities and Exchange Commission, Canadian securities rules and the rules of the NYSE American LLC due to his employment with Exxon Mobil Corporation. However, the Canadian Coalition for Good Governance’s policy, “Governance Differences of Equity Controlled Corporations”, views Mr. Crocker as a related director and independent of management and who may participate as a member of the company’s executive resources committee. Mr. Crocker’s participation helps to ensure an objective process for determining compensation of the company’s officers and directors and assists the deliberations of this committee by bringing the views and perspectives of the majority shareholder. |
Safety and sustainability committee
The role of the safety and sustainability committee is to review and monitor the company’s policies and practices in matters of the environment, health, safety, security and sustainability. The committee monitors the company’s compliance with legislative, regulatory and corporate standards in these areas, and reviews trends and current and emerging public policy. It also assesses the potential impacts of public policy on corporate performance.
The committee reviews safety and environmental performance, incidents and trends on a regular basis to ensure the company’s focus on the safety of its employees, contractors and stakeholders and on operating in an environmentally responsible manner. It also provides oversight over sustainability and climate risk, including regular reviews and assessment of sustainability performance and initiatives, as well as climate risk within the company’s risk management system and the strategies to address these risks. The formal mandate of the committee can be found within the Safety and Sustainability Committee Charter in Appendix A of this circular. The committee is satisfied that its activities over the year have fulfilled its mandate.
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Committee members | | ● J.M. Mintz (chair) | | ● M.R. Crocker | | |
| ● D.S. Sutherland (vice-chair) | | ● K.T. Hoeg | | |
| ● D.W. Cornhill | | ● M.C. Hubbs | | |
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Number of meetings | | Four meetings of the safety and sustainability committee were held in 2022. |
Committee highlights in 2022 | | ● Personnel and process safety systems, performance and incident review. ● Environmental performance review (greenhouse gas, other air emissions, water consumption). ● Updates on Canadian policy, regulatory change, potential impacts and Imperial’s advocacy strategies (air quality, plastics, UN Declaration on the Rights of Indigenous Peoples). ● Review of climate change policies, risks, potential impacts and Imperial’s advocacy and climate strategies. ● Review of Imperial’s Advancing Climate Solutions and Sustainability Reports and related environmental, social and corporate governance disclosures and Imperial’s disclosure strategy and plans. |
Role in risk oversight | | The safety and sustainability committee reviews and monitors the company’s policies and practices in matters of environment, health, personnel and process safety and security, which policies and practices are intended to mitigate and manage risk in these areas. This includes specific reviews with respect to climate risk and the company’s strategies to address these risks. It also includes pandemic and emergency response and continuity planning, which is a significant focus of reviews and discussions in relation to the COVID-19 pandemic. The committee receives regular reports from management on these matters. |
Independence | | The members of the safety and sustainability committee are independent, with the exception of M.R. Crocker. |
Nominations and corporate governance committee
The role of the nominations and corporate governance committee is to oversee issues of corporate governance as they apply to the company, including the overall performance of the board, review potential nominees for directorship and review the charters of the board and any of its committees. The formal mandate of the committee can be found within the Nominations and Corporate Governance Committee Charter in Appendix A of this circular. The committee is satisfied that its activities over the year have fulfilled its mandate.
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Committee members | | ● D.W. Cornhill (chair) | | ● K.T. Hoeg |
| ● J.M. Mintz (vice-chair) | | ● M.C. Hubbs |
| ● M.R. Crocker | | ● D.S. Sutherland |
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Number of meetings | | Six meetings of the nominations and corporate governance committee were held in 2022. |
Committee highlights in 2022 | | ● Approval of the statement of corporate governance practices. ● Engagement in board and committee self-assessment. ● Recommendation of director compensation and increase to share ownership requirements. ● Continued oversight of director recruitment process. ● Recommendation for special committees to consider certain matters. |
Role in risk oversight | | The nominations and corporate governance committee oversees risk by implementing an effective program for corporate governance, including board composition and succession planning. |
Independence | | The members of the nominations and corporate governance committee are independent, with the exception of M.R. Crocker, who is not considered to be independent under the rules of the U.S. Securities and Exchange Commission, Canadian securities rules and the rules of the NYSE American LLC due to his employment with Exxon Mobil Corporation. However, the Canadian Coalition for Good Governance’s policy, “Governance Differences of Equity Controlled Corporations”, views Mr. Crocker as a related director and independent of management and who may participate as a member of the company’s nominations and corporate governance committee. Mr. Crocker’s participation helps to ensure an objective nominations process and assists the deliberations of this committee by bringing the views and perspectives of the majority shareholder. |
Community collaboration and engagement committee
The role of the community collaboration and engagement committee is to oversee all of the company’s community investment activities, including charitable donations. The formal mandate of the committee can be found within the Community Collaboration and Engagement Committee Charter in Appendix A of this circular. The committee is satisfied that its activities over the year have fulfilled its mandate.
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Committee members | | ● M.C. Hubbs (chair) | | ● M.R. Crocker | | |
| ● K.T. Hoeg (vice-chair) | | ● J.M. Mintz | | |
| ● D.W. Cornhill | | ● D.S. Sutherland | | |
| ● B.W. Corson | | | | |
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Number of meetings | | One meeting of the community collaboration and engagement committee was held in 2022. |
Committee highlights in 2022 | | ● Imperial invested more than $17M in Canadian communities in 2021 as reported using the London Benchmark Group model – a global standard for measuring and reporting community investment. |
| ● In 2022, Imperial paid more than $18M through community benefit agreements to Indigenous communities. |
| ● Imperial surpassed $4 billion in spending with Indigenous business since 2008 and achieved its highest annual Indigenous business spent in 2022. |
| ● In response to growing stakeholder expectations to demonstrate ESG in action and related reporting standards, we further focused our social investment strategy and relationships to align with our sustainability pillars: climate, Reconciliation, inclusion and diversity, mental health and land conservation and water protection. |
| ● Contributed $150K over three years to Quest Canada to support net-zero pathways for Indigenous communities in our operating areas. |
| ● Donated $300,000 to KidSport to improve access to sport and drive positive mental health as part of our Fuel What Matters 3.0 campaign. |
| ● Planted more than 25,000 trees in urban areas of Southern Ontario. |
| ● Grew employee giving and volunteer matching ImpACT program – more than $550,000 given to nearly 850 charities and non-profits across Canada in 2022. |
| ● Raised nearly $2.7M in United Way campaign from employee/annuitant and corporate donations. |
Independence | | The majority of the members of the community collaboration and engagement committee are independent (five out of seven) with the exception of B.W. Corson and M.R. Crocker. |
Director compensation
Director compensation discussion and analysis
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Directors’ compensation is intended to align the long-term financial interests of the directors with those of the shareholders. |
Nonemployee director compensation levels are reviewed by the nominations and corporate governance committee each year, and resulting recommendations are presented to the full board for approval. The committee relied on an internally-led assessment to provide competitive compensation and market data for directors’ compensation, which assisted the committee in making a compensation recommendation for the company’s directors. The internally-led assessment included a review of industry survey data, with this data being provided by an independent external consultant. The internal assessment maintained the compensation design philosophy, objectives and principles, and was consistent with previous methodology used in this analysis.
Employees of the company or Exxon Mobil Corporation receive no extra pay for serving as directors. Nonemployee directors receive compensation consisting of cash and restricted stock units. Since 1999, the nonemployee directors have been able to receive all or part of their cash directors’ fees in the form of deferred share units. The purpose of the deferred share unit plan for nonemployee directors is to provide them with additional motivation to promote sustained improvement in the company’s business performance and shareholder value by allowing them to have all or part of their directors’ fees tied to the future growth in value of the company’s common shares. The deferred share unit plan is described in more detail on page 141.
Compensation decision making process and considerations
The nominations and corporate governance committee relies on market comparisons with a group of major Canadian companies with national and international scope and complexity. The company draws its nonemployee directors from a wide variety of industrial sectors and, as such, a broad sample is appropriate for this purpose. The nominations and corporate governance committee does not target any specific percentile among comparator companies at which to align compensation for this group.
The comparator companies included in the benchmark sample are as follows:
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Energy | | Non-energy |
Canadian Natural Resources Limited | | Air Canada |
Cenovus Energy Inc. | | Bank of Nova Scotia |
Enbridge Inc. | | BCE Inc. |
Ovintiv Inc. | | Canadian National Railway Company |
Parkland Fuel Corporation | | Nutrien Ltd. |
Suncor Energy Inc. | | Royal Bank of Canada |
TC Energy Corporation | | Sun Life Financial Inc. |
| | Teck Resources Limited |
| | TELUS Corporation |
| | Thomson Reuters Corporation |
| | The Toronto-Dominion Bank |
Hedging policy
Company policy prohibits all employees, including executives, and directors, from being a party to derivative or similar financial instruments, including puts, calls, or other options, future or forward contracts, or equity swaps or collars, with respect to the company or Exxon Mobil Corporation stock.
For a discussion on the process by which the compensation of the company’s executive officers is determined, see the Compensation discussion and analysis section starting on page 156. Compensation details
Board retainer
The compensation of the nonemployee directors is assessed annually, and currently consists of a cash retainer for board membership and a grant of restricted stock units.
In 2021, the nominations and corporate governance committee reviewed and recommended a change to the annual grant of restricted stock units, increasing the grant from 3,000 to 3,300, with the annual retainer for board membership remaining at $110,000 per year. The board subsequently approved this recommendation. During 2022, the committee recommended and the board approved no changes to nonemployee director compensation.
The following table summarizes the compensation terms for the nonemployee directors in 2022:
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Director compensation |
Annual retainer terms: (a) | |
Cash retainer: | |
Board membership | $110,000 annually |
Committee chair | None |
Equity based compensation: | |
Restricted stock units | 3,300 units |
(50% vests on each of the 5th and 10th anniversary dates of the grant) |
(a)The nonemployee directors may elect to take all or a portion of the cash retainer in the form of deferred share units. Nonemployee directors who are appointed to the board during any given year receive the full restricted stock unit grant and a prorated cash retainer based on the date of appointment.
In addition to compensation for board membership, the board determines the compensation for special committee membership when the committee is established. For the special committee established in September, 2021, the board approved a 2022 cash retainer of $15,000 for the chair and $10,000 for members. There was no cash retainer in connection with the special committee established in September, 2022.
Equity based compensation
Deferred share units
In 1999, an additional form of long-term incentive compensation (“deferred share units”) was made available to nonemployee directors. Nonemployee directors may elect to receive all or a portion of their cash compensation in the form of deferred share units.
The following table shows the portion of the retainer each nonemployee director elected to receive in cash and deferred share units in 2022.
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Director | | Election for 2022 director’s fees in cash (%) | | Election for 2022 director’s fees in deferred share units (%) |
D.W. Cornhill | | 0 | | 100 |
K.T. Hoeg | | 0 | | 100 |
M.C. Hubbs | | 0 | | 100 |
J.M. Mintz | | 50 | | 50 |
D.S. Sutherland | | 0 | | 100 |
The number of deferred share units granted to a nonemployee director is determined at the end of each calendar quarter for that year, according to the following calculation:
(i)the dollar amount of the nonemployee director’s fees for that calendar quarter that the director elected to receive as deferred share units;
divided by
(ii)the average of the closing price of the company’s shares on the Toronto Stock Exchange for the five consecutive trading days (“average closing price”) immediately prior to the last day of that calendar quarter.
Those deferred share units are granted effective the last day of that calendar quarter.
A nonemployee director is also granted additional deferred share units to represent dividends on unexercised deferred share units. These additional units are granted on the dividend payment dates for the company’s common shares, according to the following calculation:
(i)the cash dividend payable for a common share of the company divided by the average closing price immediately prior to the payment date for that dividend;
multiplied by
(ii)the number of unexercised deferred share units held by the nonemployee directors on the dividend record date.
A nonemployee director may only exercise deferred share units by the end of the calendar year following the year of termination of service as a director of the company, including termination of service due to death. No deferred share units may be exercised unless all of the deferred share units are exercised on the same date. On the exercise date, the cash value to be received for the units is determined based on the company’s average closing price immediately prior to the date of exercise.
Restricted stock units
In addition to the cash fees described above, the company pays a significant portion of director compensation in restricted stock units to align director compensation with the long-term interests of shareholders. The restricted stock unit plan is described in more detail beginning on page 163. The number of restricted stock units granted annually was increased in 2016 from 2,000 units to 2,600 units, in 2018 to 3,000 units, and in 2021 to 3,300 units. Up until 2015, the vesting period for restricted stock units was 50 percent vesting on the third anniversary of the grant date (received in cash) and the remaining 50 percent vesting on the seventh anniversary of the grant date (with an option to receive in cash or common shares). In 2016, in order to better align the long-term financial interests of the directors with those of the shareholders, the vesting period was increased such that 50 percent vests on the fifth anniversary of the grant date and the remaining 50 percent vests on the tenth anniversary of the grant date. For all the units to be vested, directors may elect to receive one common share for each unit or a cash payment for the units. The vesting periods are not accelerated upon separation or retirement from the board, except in the event of death.
In contrast to the forfeiture provisions for restricted stock units held by employees of the company, the restricted stock units awarded to nonemployee directors are not subject to risk of forfeiture at the time a director leaves the company’s board. This provision is designed to reinforce the independence of these board members. However, while on the board and for a 24-month period after leaving the company’s board, restricted stock units may be forfeited if the nonemployee director engages in direct competition with the company or otherwise engages in any activity detrimental to the company. The board agreed that the word “detrimental” shall not include any actions taken by a nonemployee director or former nonemployee director who acted in good faith and in the best interest of the company.
Prior to vesting of the restricted stock units, the nonemployee directors receive amounts equivalent to the cash dividends paid to holders of common shares. The amount is determined for each cash dividend payment date by the following calculation:
(i)the cash dividend payable for a common share divided by the average closing price immediately prior to the payment date for that dividend;
multiplied by
(ii)the number of unvested restricted stock units held by the nonemployee directors on the dividend record date.
Other reimbursement
Nonemployee directors are also reimbursed for travel and other expenses incurred for attendance at board and committee meetings.
Components of director compensation
The following table sets out the details of compensation paid to the nonemployee directors in 2022.
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Director (a) | | Annual retainer for board membership and special committee ($) (b) | | Restricted stock units (RSU) (#) | | Total fees paid in cash ($) (c) | | Total value of deferred share units (DSU) ($) (d) | | Total value of restricted stock units (RSU) ($) (e) | | All other compen- sation ($) (f) | | Total compensation ($) |
D.W. Cornhill | | 125,000 | | 3,300 | | — | | 125,000 | | 239,646 | | 35,844 | | 400,490 |
K.T. Hoeg | | 120,000 | | 3,300 | | — | | 120,000 | | 239,646 | | 98,580 | | 458,226 |
M.C. Hubbs | | 120,000 | | 3,300 | | — | | 120,000 | | 239,646 | | 37,448 | | 397,094 |
J.M. Mintz | | 120,000 | | 3,300 | | 55,000 | | 65,000 | | 239,646 | | 91,213 | | 450,859 |
D.S. Sutherland | | 120,000 | | 3,300 | | — | | 120,000 | | 239,646 | | 87,492 | | 447,138 |
(a)As directors employed by the company or Exxon Mobil Corporation in 2022, B.W. Corson and M.R. Crocker did not receive compensation for acting as directors.
(b)D.W. Cornhill was chair of the special committees.
(c)“Total fees paid in cash” is the portion of the “Annual retainer for board membership and special committee” that the director elected to receive as cash. This amount is reported as “Fees earned” in the Director compensation table on page 144. (d)“Total value of deferred share units” is the portion of the “Annual retainer for board membership and special committee” that the director elected to receive as deferred share units, as set out in the previous table on page 141. This amount plus the “Total value of restricted stock units” amount is shown as “Share-based awards” in the Director compensation table on page 144. (e)The values of the restricted stock units shown are the number of units multiplied by the closing price of the company’s shares on the date of grant, December 5, 2022 ($72.62).
(f)Amounts under “All other compensation” consist of dividend equivalent payments on unvested restricted stock units and the value of additional deferred share units granted in lieu of dividends on unvested deferred share units. In 2022, D.W. Cornhill received $18,330 in dividend equivalent payments on restricted stock units and additional deferred share units valued at $17,514 in lieu of dividends on deferred share units. K.T. Hoeg received $21,918 in dividend equivalent payments on restricted stock units and additional deferred share units valued at $76,662 in lieu of dividends on deferred share units. M.C. Hubbs received $14,976 in dividend equivalent payments on restricted stock units and additional deferred share units valued at $22,472 in lieu of dividends on deferred share units. J.M. Mintz received $21,918 in dividend equivalent payments on restricted stock units and additional deferred share units valued at $69,295 in lieu of dividends on deferred share units. D.S. Sutherland received $21,918 in dividend equivalent payments on restricted stock units and additional deferred share units valued at $65,574 in lieu of dividends on deferred share units.
Director compensation table
The following table summarizes the compensation paid, payable, awarded or granted for 2022 to each of the nonemployee directors of the company.
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Name (a) | | Fees earned ($)(b) | | Share- based awards ($) (c) | | Option- based awards ($) | | Non-equity incentive plan compensation ($) | | Pension value ($) | | All other compensation ($) (d) | | Total ($) |
D.W. Cornhill | | — | | 364,646 | | — | | — | | — | | 35,844 | | 400,490 |
K.T. Hoeg | | — | | 359,646 | | — | | — | | — | | 98,580 | | 458,226 |
M.C. Hubbs | | — | | 359,646 | | — | | — | | — | | 37,448 | | 397,094 |
J.M. Mintz | | 55,000 | | 304,646 | | — | | — | | — | | 91,213 | | 450,859 |
D.S. Sutherland | | — | | 359,646 | | — | | — | | — | | 87,492 | | 447,138 |
(a)As directors employed by the company or Exxon Mobil Corporation in 2022, B.W. Corson and M.R. Crocker did not receive compensation for acting as directors.
(b)Represents all fees awarded, earned, paid or payable in cash for services as a director. The nonemployee directors are able to receive all or part of their directors’ fees in the form of deferred share units.
(c)Represents the value of the restricted stock units (calculated by multiplying the number of units by the closing price of the company’s shares on the date of grant), plus the value of deferred share units (calculated by the portion of the “Annual retainer for board membership and special committee” that the director elected to receive as deferred share units as noted on page 141). (d)Amounts under “All other compensation” consist of dividend equivalent payments on unvested restricted stock units and the value of additional deferred share units granted in lieu of dividends on unvested deferred share units. In 2022, D.W. Cornhill received $18,330 in dividend equivalent payments on restricted stock units and additional deferred share units valued at $17,514 in lieu of dividends on deferred share units. K.T. Hoeg received $21,918 in dividend equivalent payments on restricted stock units and additional deferred share units valued at $76,662 in lieu of dividends on deferred share units. M.C. Hubbs received $14,976 in dividend equivalent payments on restricted stock units and additional deferred share units valued at $22,472 in lieu of dividends on deferred share units. J.M. Mintz received $21,918 in dividend equivalent payments on restricted stock units and additional deferred share units valued at $69,295 in lieu of dividends on deferred share units. D.S. Sutherland received $21,918 in dividend equivalent payments on restricted stock units and additional deferred share units valued at $65,574 in lieu of dividends on deferred share units.
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Five-year look back at total compensation paid to nonemployee directors |
Year | | Amount ($) |
2018 | | 1,500,739 |
2019 | | 1,251,395 |
2020 | | 1,073,527 |
2021 | | 1,557,202 |
2022 | | 2,153,807 |
Outstanding share-based awards and option-based awards for directors
The following table sets forth all outstanding awards held by nonemployee directors of the company as at December 31, 2022 and does not include common shares owned by the director.
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| | | | Option-based awards | | | | Share-based awards |
Name (a) | | Number of securities underlying unexercised options (#) | | Option exercise price ($) | | Option expiration date | | Value of unexercised in-the- money options ($) | | Number of shares or units of shares that have not vested (#) (b) | | Market or payout value of share-based awards that have not vested ($) (c) |
D.W. Cornhill | | — | | — | | — | | — | | 30,208 | | 1,992,218 |
K.T. Hoeg | | — | | — | | — | | — | | 72,602 | | 4,788,102 |
M.C. Hubbs | | — | | — | | — | | — | | 32,335 | | 2,132,493 |
J.M. Mintz | | — | | — | | — | | — | | 66,945 | | 4,415,023 |
D.S. Sutherland | | — | | — | | — | | — | | 64,894 | | 4,279,759 |
(a)As directors employed by the company or Exxon Mobil Corporation in 2022, B.W. Corson and M.R. Crocker did not receive compensation for acting as directors.
(b)Represents restricted stock units and deferred share units held as of December 31, 2022.
(c)Value is based on the closing price of the company’s shares on December 31, 2022 ($65.95).
Incentive plan awards for directors – Value vested or earned during the year
The following table sets forth the value of the awards that vested or were earned by each nonemployee director of the company in 2022.
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Name (a) | | Option-based awards –Value vested during the year ($) | | Share-based awards – Value vested during the year ($) (b) | | Non-equity incentive plan compensation – Value earned during the year ($) |
D.W. Cornhill | | — | | 99,190 | | — |
K.T. Hoeg | | — | | 175,490 | | — |
M.C. Hubbs | | — | | — | | — |
J.M. Mintz | | — | | 175,490 | | — |
D.S. Sutherland | | — | | 175,490 | | — |
(a)As directors employed by the company or Exxon Mobil Corporation in 2022, B.W. Corson and M.R. Crocker did not receive compensation for acting as directors.
(b)Represents restricted stock units granted in 2015 and 2017, which vested in 2022. Value is based on the average of the weighted-average price (as determined by the Toronto Stock Exchange) of common shares of the company on the vesting date and the four consecutive trading days immediately prior to the vesting date.
Share ownership guidelines of independent directors and chairman, president and chief executive officer
Independent directors are required to hold the equivalent of at least 16,500 shares of Imperial Oil Limited, including common shares, deferred share units and restricted stock units within five years from the date of appointment to the board.
The chairman, president and chief executive officer has separate share ownership requirements and must, within three years of his appointment, acquire shares of the company, including common shares and restricted stock units, of a value of no less than five times his base salary.
The board of directors believes that these share ownership guidelines will result in an alignment of the interests of board members with the interests of all other shareholders. As of the date of this circular, the independent directors currently have holdings of 335,484 shares which is more than three times the required guideline.
| | | | | | | | | | | | | | |
| | Minimum share ownership requirement | | Time to fulfill |
Chairman, president and chief executive officer | | 5 x base salary | | Within 3 years of appointment |
Independent directors | | 16,500 shares | | Within 5 years of initial appointment |
The chart below shows the shareholdings of the independent directors and the chairman, president and chief executive officer of the company as of February 8, 2023, the record date of the management proxy circular.
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Director | | Director since | | Amount acquired since last report (February 16, 2022 to February 8, 2023) (#) | | Total holdings (includes common shares, deferred share units and restricted stock units) (#) | | Market value of total holdings (a) ($) | | Minimum shareholding requirement | | Minimum requirement met |
D.W. Cornhill | | November 29, 2017 | | 4,355 | | 42,708 | | 2,971,196 | | 16,500 | | Yes |
B.W. Corson | | September 17, 2019 | | 89,000 | | 323,600 | | 22,512,852 | | Five times base salary | | Yes |
K.T. Hoeg | | May 1, 2008 | | 4,241 | | 72,602 | | 5,050,921 | | 16,500 | | Yes |
M.C. Hubbs | | July 26, 2018 | | 5,652 | | 32,335 | | 2,249,546 | | 16,500 | | Yes |
J.M. Mintz | | April 21, 2005 | | 3,215 | | 67,945 | | 4,726,934 | | 16,500 | | Yes |
D.S. Sutherland | | April 29, 2010 | | 4,058 | | 119,894 | | 8,341,026 | | 16,500 | | Yes |
Total accumulated holdings (#) and value of directors’ holdings ($) | | | | 659,084 | | 45,852,475 | | | | |
(a)The amount shown in the column “Market value of total holdings” is equal to the “Total holdings” multiplied by the closing price of the company’s shares on the proxy circular record date February 8, 2023 ($69.57).
For information relating to compensation of the company’s named executive officers, see the Compensation discussion and analysis section starting on page 156.
Ethical business conduct
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The company is committed to high ethical standards through its policies and practices. |
The company’s directors, officers and employees are responsible for developing, approving and implementing plans and actions designed to achieve corporate objectives. In doing so, they are expected to observe the highest standards of integrity in the conduct of the company’s business, with the methods employed to attain results being as important as the results themselves.
The board has adopted a written code of ethics and business conduct (the “Code”) which can be found on the company’s website at www.imperialoil.ca/en-CA/Investors/Investor-relations, including any applicable amendments. The Code applies to each of the company’s directors, officers and employees, and consists of the ethics policy, the conflicts of interest policy, the corporate assets policy, the directorships policy and the procedures and open door communication. No person in the company has the authority to make exceptions or grant waivers with respect to its foundational policies. There have been no material change reports filed in the past 12 months pertaining to conduct of a director or executive officer that constitute a departure from the Code. In addition, the directors of the company must comply with the conflict of interest provisions of the Canada Business Corporations Act, as well as the relevant securities regulatory instruments, in order to ensure that the directors exercise independent judgment in considering transactions and agreements in respect of which such director has a material interest.
Under the company’s procedures and open door communication, employees are encouraged and expected to refer suspected violations of the law, company policy or internal controls and procedures by various means, including to their supervisors or the company’s ethics advisor, controller or general auditor. Imperial also has an ethics “hotline” that is operated by a third-party service provider and offers confidential, anonymous reporting 24 hours a day, seven days a week. Suspected violations involving a director or executive officer, as well as any concern regarding questionable accounting or auditing matters are to be referred directly to the internal auditor. The audit committee initially reviews all issues involving directors or executive officers, and then refers all issues to the board of directors. In the alternative, employees may also address concerns to individual nonemployee directors or to nonemployee directors as a group. No action may be taken or threatened against employees for asking questions, voicing concerns, or making complaints or suggestions in good faith.
Management provides the board of directors with a review of corporate ethics and conflicts of interest on an annual basis. The company’s internal auditors audit each business line’s compliance with the program and report to the audit committee. Directors, officers and employees review the company’s standards of business conduct (which includes the Code) on an annual basis, with independent directors and all employees being required to sign a declaration confirming that they have read and are familiar with the standards of business conduct. In addition, every four years a business practices review is conducted in which managers review the standards of business conduct with all employees in their respective work units.
The board, through its audit committee, examines the effectiveness of the company’s internal control processes and management information systems. The board consults with the external auditor, the internal auditor and the management of the company to ensure the integrity of the systems.
There are a number of structures and processes in place to facilitate the functioning of the board independently of management. The board has a majority of independent directors. Each committee is chaired by a different independent director and all of the independent directors are members of each committee. The audit committee is composed entirely of independent directors. Each other committee (except the community collaboration and engagement committee) is composed entirely of the independent directors and M.R. Crocker, who is an employee of Exxon Mobil Corporation and although deemed non-independent under the relevant standards by virtue of his employment, is viewed as independent of the company’s management. The agendas of each of the board and its committees are not set by management alone, but by the board as a whole and by each committee. A significant number of agenda items are mandatory and recurring. Board meetings are scheduled at least one full year in advance. Any director may call a meeting of the board or a meeting of a committee of which the director is a member. There is a board-prescribed flow of financial, operating and other corporate information to all directors. The board may also utilize ad hoc or special committees when considering various matters.
The independent directors conduct executive sessions in the absence of members of management. These meetings are chaired by K.T. Hoeg, the independent director designated by the independent directors to chair and lead these discussions. Eight executive sessions were held in 2022.
The company’s delegation of authority guide provides that certain matters of the company are reviewed by functional contacts within ExxonMobil. The company’s employees are regularly reminded that they are expected to act in the best interests of the company, and are reminded of their obligation to identify any instances where the company’s general interest may not be consistent with ExxonMobil’s priorities. If such situations occur, employees are expected to escalate such issues with successive levels of the company’s management. Final resolution of any such issues is made by the company’s chairman, president and chief executive officer.
Restrictions on insider trading
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Commitment to stringent safeguards with trading restrictions and reporting for company insiders. |
Structures and processes are in place to caution, track and monitor reporting insiders, nonemployee directors and key employees with access to sensitive information with respect to personal trading in the company’s shares. The company has guidelines regarding insider trading prohibitions and trading bans that are applicable to all directors, officers and employees.
Nonemployee directors are required to pre-clear any trades in the company’s shares. Reporting insiders are required to give advance notice to the company of any sale of the company’s shares and advise the company within five days of any purchase of the company’s shares. Reporting insiders are required, under securities regulations, to publically disclose all transactions in the company’s shares on the System for Electronic Disclosure by Insiders (SEDI).
From time to time, the company advises its directors and officers, and those of Exxon Mobil Corporation, and employees in certain positions not to trade in the company’s shares. Trading bans occur in connection with the directors’ pending consideration of the financial statements of the company, including the unaudited financial statements for each quarter, and in connection with undisclosed pending events that constitute material information about the business affairs of the company.
Diversity
| | |
The company has a long history of valuing diversity on the board and in its executive management. |
Board diversity
The company has a longstanding commitment to diversity amongst its directors. Imperial has had at least one woman on its board continuously since 1977, and 40 percent of the independent directors of the current board and nominees for election at the annual meeting are women.
The company does not have a formal written policy relating to the identification and nomination of directors who are women, Aboriginal peoples, persons with disabilities or members of visible minorities (the “designated groups”, as defined under the Canada Business Corporations Regulations, 2001), and has not adopted a target regarding members of the designated groups on its board. With the objective of fostering a diversity of expertise, viewpoint and competencies, the board charter provides that the nominations and corporate governance committee may consider a number of factors, including gender and membership in other designated groups, in assessing potential nominees.
The nominations and corporate governance committee assesses the work experience, other expertise, individual competencies and diversity of age, regional association and the designated groups that each existing director possesses and whether each nominee is able to fill any gaps amongst the existing directors. Additionally, the committee may consider any other factors that it believes to be relevant. The company does not believe that any one of these dimensions should be considered in isolation and without due regard to all of the other factors, in determining the ability of potential directors to contribute to the work of the board of directors.
The board considers diversity through the annual nomination process, board assessment and other discussions. The board and nominations and corporate governance committee also specifically consider diversity through targeted director recruitment processes. With three of the company’s current directors retiring in 2023, the board and nominations and corporate governance committee has been engaged in an extensive director recruitment process since 2021. Diversity and the composition of the board has been a key consideration throughout this process and the review of potential candidates, with the company instructing executive search firms to cultivate a diverse selection of potential nominees. The result of this process is the nomination of three new directors, S.R. Driscoll, J. Floren and G.J. Goldberg, bringing further experience and diverse perspectives to the board and maintaining 40 percent of the independent directors being women.
As of the date of this proxy circular, the number and percentage of directors and nominees who are members of the designated groups are:
| | | | | | | | | | | | | | |
Designated group (a) | | Number | | Percent (%) |
Women | | 2 of 7 (board and nominees) | | 29 |
| 2 of 5 (independent directors and nominees) | | 40 |
Aboriginal peoples | | 0 of 7 | | 0 |
Persons with disabilities | | 0 of 7 | | 0 |
Members of visible minorities | | 0 of 7 | | 0 |
(a)Defined under the Employment Equity Act (Canada)
The above diversity disclosure relies on voluntary self-identification by directors and nominees, and therefore only represents the information of individuals who have chosen to self-identify. The information has not been independently verified by the company. The board nominee composition charts on page 119 show the diversity of our board nominees with respect to gender, experience and regional association, but do not reflect membership in other designated groups. Executive officer diversity
The company believes inclusion and diversity are key competitive strengths that are critical to maintaining the company’s position as an industry leader. To ensure commitment at all levels of the company, inclusion and diversity, anti-harassment and equal employment opportunity performance is stewarded annually to the company’s senior management. There is an in-depth succession planning process, which includes the consideration of various aspects of diversity as well as plans to address gaps, if any, for key positions.
The company’s internal training programs emphasize the value of collaboration, appreciating differences and sustaining an inclusive work environment, keeping inclusion and diversity top-of-mind with all employees. Imperial also values external perspective and expertise. The company supports educational development and recruiting practices that facilitate the employment of Indigenous peoples, and in 2021 achieved Silver Certification in the Progressive Aboriginal Relations (PAR) program managed by the Canadian Council for Aboriginal Business. Imperial maintains a supportive work environment though a range of development and networking programs, including employee-led diversity networks that are focused on common interests. These programs are conducted in both virtual and in-person formats to reach a broad range of employees.
In considering potential nominees for executive officer appointments, the executive resources committee considers diversity of gender and the other designated groups, work experience, other expertise, individual competencies and other dimensions of diversity in addition to the other factors described on page 160. The company has not adopted a target regarding members of the designated groups in executive officer positions. The company does not believe that any one of these dimensions should be considered, without due regard to all of these other factors, in determining the ability of potential nominees to fill executive officers positions.
As of the date of this proxy circular, the number and percentage of executive officers of the company and its major subsidiaries who are members of the designated groups are:
| | | | | | | | | | | | | | |
Designated group (a) | | Number | | Percent (%) |
Women | | 11 of 24 | | 46 |
Aboriginal peoples | | 0 of 24 | | 0 |
Persons with disabilities | | 0 of 24 | | 0 |
Members of visible minorities | | 4 of 24 | | 17 |
(a)Defined under the Employment Equity Act (Canada)
The above diversity disclosure relies on voluntary self-identification by executive officers, and therefore only represents the information of individuals who have chosen to self-identify. The information has not been independently verified by the company.
Shareholder engagement
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Shareholder engagement strategy focuses on wide-ranging dialogue between shareholders and management. |
The company’s senior management regularly meet with institutional investors and shareholders through industry conferences, roadshows and company hosted investor events. In response to COVID-19 and to ensure the health and safety of our employees, investors and shareholders, these meetings were held predominantly in a virtual format for the balance of 2021. In 2022, these shifted in large part, back to in-person engagements. Pertinent materials from these conferences and hosted events are available on the company’s website.
Also in response to COVID-19 and to ensure the health and safety of its shareholders, directors, officers and stakeholders, the company took a number of steps to ensure active engagement through the annual meeting that was held in a virtual only format. Shareholders were given the opportunity to register a proxyholder to attend and ask questions in real time, and the company encouraged engagement from shareholders prior to the event. This format also allowed shareholders who may not otherwise have been able to attend in person to log in as a guest and follow the meeting. The webcast is available on the company website along with speeches and presentations from the annual general meeting and the outcome of the voting on each resolution.
The company also hosts regular quarterly earnings calls in connection with earnings releases, and archives of these calls (including transcripts) are available on Imperial’s website for one year after each call. These calls allow the company to provide more insight and context regarding the company’s performance, as well as directly address questions from the investment community.
The company annually solicits questions and comments from shareholders through the annual meeting of shareholders. The comments received are reviewed by senior management providing them with an indication of areas of interest to our shareholders, and those requiring a response are answered individually. In addition, the company’s Investor Relations team proactively reaches out to shareholders to obtain their views on matters identified broadly by shareholders, including with respect to environment, social and governance topics, as well as optimal engagement approaches. The Investor Relations team is available to respond to shareholder and investor queries throughout the year.
Communicating with the board
Shareholders, employees and others can contact the board directly by writing to:
Chair of the Board of Directors
c/o Corporate Secretary
Imperial Oil Limited
505 Quarry Park Blvd SE
Calgary, AB, Canada T2C 5N1
Largest shareholder
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Exxon Mobil Corporation is the majority shareholder of the company, holding 69.6% of the company’s shares. |
To the knowledge of the directors and executive officers of the company, the only shareholder who, as of February 8, 2023, owned beneficially, or exercised control or direction over, directly or indirectly, more than five percent of the outstanding common shares of the company is Exxon Mobil Corporation, 5959 Las Colinas Boulevard, Irving, Texas 75039-2298, which owns beneficially 406,569,870 common shares, representing approximately 69.6 percent of the outstanding voting shares of the company. As a consequence, the company is a “controlled company” for purposes of the listing standards of the NYSE American LLC and a “majority controlled company” for purposes of the TSX Company Manual.
Transactions with Exxon Mobil Corporation
The company has written procedures and controls that require any transactions between the company and ExxonMobil and its subsidiaries to be reviewed by controllers, tax, treasurers and legal to ensure that each agreement meets the company’s policies and procedures, is fair, and complies with legal and tax requirements. These agreements may also be subject to review by the chairman, president, and chief executive officer. Annual training is provided for key individuals to ensure awareness of the requirements for identifying related party transactions, and procedures are in place to ensure reporting of these transactions is complete and accurate. Related party transactions with ExxonMobil and its subsidiaries are analyzed and reviewed by management on a quarterly basis to understand any significant variances from period to period, and reviewed with the board of directors on an annual basis.
The company undertook a number of issuer bid transactions during 2022 that involved ExxonMobil. On June 29, 2021, the company implemented a 12-month “normal course” share purchase program, allowing the company to purchase up to five percent of its outstanding common shares as of June 15, 2021, or a maximum of 35,583,671 shares. The program ended on January 31, 2022 upon the company purchasing the maximum allowable number of shares, with 10,822,142 common shares purchased on the open market and a corresponding 24,761,529 common shares purchased from ExxonMobil concurrent with, but outside of the program to maintain its shareholding at approximately 69.6 percent.
On May 6, 2022, the company commenced a substantial issuer bid that offered to purchase up to $2.5 billion of its common shares through a modified Dutch auction and proportionate tender offer. The substantial issuer bid was completed on June 15, 2022, with the company purchasing 32,467,532 common shares at a price of $77.00 per share, for an aggregate purchase of $2.5 billion and 4.9 percent of Imperial’s issued and outstanding shares (as of the close of business on May 2, 2022). This included 22,597,379 shares purchased from ExxonMobil by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent.
On June 29, 2022, a further normal course issuer bid was implemented, enabling the company to purchase up to five percent of its outstanding common shares as of June 15, 2022, or a maximum of 31,833,809 common shares. Purchases under the program were accelerated and the program ended on October 21, 2022 upon the company purchasing the maximum allowable number of shares, with 9,677,500 common shares purchased on the open market and a corresponding 22,156,309 common shares purchased from ExxonMobil concurrent with, but outside of the program to maintain its shareholding at approximately 69.6 percent.
On November 4, 2022, the company commenced a second substantial issuer bid in 2022 which offered to purchase up to $1.5 billion of its common shares through a modified Dutch auction and proportionate tender offer. The substantial issuer bid was completed on December 14, 2022, with the company purchasing 20,689,655 common shares at a price of $72.50 per share, for an aggregate purchase of $1.5 billion and 3.4 percent of Imperial’s issued and outstanding shares (as of the close of business on October 31, 2022). This included 14,399,985 shares purchased from ExxonMobil by way of a proportionate tender to maintain its ownership percentage at approximately 69.6 percent.
The amounts of purchases and revenues by the company and its subsidiaries for other transactions in 2022 with ExxonMobil and its affiliates were $3,719 million and $17,042 million, respectively. These transactions were conducted on terms as favourable as they would have been with unrelated parties, and primarily consisted of the purchase and sale of crude oil, natural gas, petroleum and chemical products, as well as technical, engineering and research and development costs. Transactions with ExxonMobil also included amounts paid and received in connection with the company’s participation in a number of upstream activities conducted jointly in Canada. In addition, the company has existing agreements with affiliates of ExxonMobil to provide information technology and customer support services to the company and to share common business and operational support services to allow the companies to consolidate duplicate work and systems. The company has a contractual agreement with an affiliate of ExxonMobil in Canada to operate certain western Canada production properties owned by ExxonMobil. There are no asset ownership changes.
The company and that affiliate also have a contractual agreement to provide for equal participation in new upstream opportunities. The company had an existing agreement with ExxonMobil to provide for the delivery of management, business and technical services to Syncrude Canada Ltd. by ExxonMobil, which was terminated in connection with the transfer of operatorship of Syncrude on September 30, 2021.
As at December 31, 2022, the company had an outstanding loan of $3,447 million under an existing agreement with an affiliated company of ExxonMobil that provides for a long term, variable rate loan from ExxonMobil to the company of up to $7.75 billion (Canadian) at market interest rates. The agreement is effective until June 30, 2025, cancellable if ExxonMobil provides at least 370 days advance written notice.
Company executives and executive compensation
Named executive officers of the company
The named executive officers of the company at year end 2022 are listed below, all of whom remain in their positions as of February 8, 2023.
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Bradley W. Corson, 61 | | |
Calgary, Alberta, Canada | | |
| | Position held at the end of 2022 (date office held): Chairman, president and chief executive officer (2020 – Present) Other positions in the past five years (position, date office held and status of employer): President (2019 – Present) President, ExxonMobil Upstream Ventures (2015 – 2019) (Affiliate) |
Daniel E. Lyons, 60 | | |
Calgary, Alberta, Canada | | |
| | Position held at the end of 2022 (date office held): Senior vice-president, finance and administration, and controller (2018 – Present) Other positions in the past five years (position, date office held and status of employer): Vice-president, downstream business services and downstream treasurer, Exxon Mobil Corporation (2015 – 2018) (Affiliate) |
Simon P. Younger, 47 | | |
Calgary, Alberta, Canada | | |
| | Position held at the end of 2022 (date office held): Senior vice-president, upstream (2020 – Present) Other positions in the past five years (position, date office held and status of employer): Vice-president, production, upstream (2019 – 2020) Senior planning advisor, corporate strategic planning, upstream, Exxon Mobil Corporation (2017 – 2019) (Affiliate) |
Bruce A. Jolly, 55 | | |
Calgary, Alberta, Canada | | |
| | Position held at the end of 2022 (date office held): Assistant controller (2019 – Present) Other positions in the past five years (position, date office held and status of employer): Upstream controller (2018 – 2019) Controller, United States upstream production, Exxon Mobil Corporation (2016 – 2018) (Affiliate) |
Jonathan R. Wetmore, 50 |
Calgary, Alberta, Canada | | |
| | Position held at the end of 2022 (date office held): Vice-president, downstream, chemicals and Western Canada fuels manager (2022 – Present) Other positions in the past five years (position, date office held and status of employer): Vice-president, downstream and Western Canada fuels manager (2018 – 2022) |
Other executive officers of the company
In addition to the named executive officers listed on the previous page, the following individuals are executive officers of the company as of February 8, 2023.
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Sherri L. Evers, 46 | | Position held (date office held): Vice-president, commercial and corporate development (2021 – Present) Other positions in the past five years (position, date office held and status of employer): Fuels manager, Central and Eastern Canada, fuels and lubricants (2018 – 2020)
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Calgary, Alberta, Canada | |
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Kitty Lee, 46 | | Position held (date office held): Treasurer (2020 – Present) Other positions in the past five years (position, date office held and status of employer): Financial advisor, treasurer’s, Exxon Mobil Corporation (2019 – 2020) (Affiliate) Benefits finance manager, treasurer’s, Exxon Mobil Corporation (2018 – 2019) (Affiliate) Global coordination manager, controller’s, Exxon Mobil Corporation (2016 – 2018) (Affiliate) |
Calgary, Alberta, Canada | |
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Kristi L. Desjardins, 49 | |
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Calgary, Alberta, Canada | | Position held (date office held): Vice-president, human resources (2020 – Present) Other positions in the past five years (position, date office held and status of employer): Human resources services manager, global human resources operations, Exxon Mobil Corporation (2018 – 2020) (Affiliate) Manager, human resources services (2017 – 2018) |
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Constance D. Gemmell, 56 |
Calgary, Alberta, Canada | | Position held (date office held): Director, corporate tax (2018 – Present) Other positions in the past five years (position, date office held and status of employer): Manager, income tax planning and advice (2013 – 2018) |
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Ian R. Laing, 49 | | |
Calgary, Alberta, Canada | | Position held (date office held): Vice-president, general counsel and corporate secretary (2020 – Present) Other positions in the past five years (position, date office held and status of employer): Assistant general counsel, downstream and corporate departments and corporate secretary (2019 – 2020) Assistant general counsel, upstream (2017 – 2018) |
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Letter to shareholders from the executive resources committee on executive compensation
Dear fellow shareholders:
The executive resources committee (“committee”) continues to support the design of Imperial's executive compensation program in that it achieves the goal of maximizing long-term shareholder value, while positioning the company for long-term success in a lower-emissions future.
Business Perspective
Imperial's business involves investments that create shareholder value over long periods of time, requiring executives to maintain a long-term view when making decisions across a broad range of business investments.
In 2022, Imperial delivered exceptional business results across a wide range of performance dimensions. The company has remained focused on delivering long-term shareholder value and laying the foundation for future success with strong financial and operating performance, and a demonstrated commitment to sustainability. For more information on the 2022 key business results see page 167. Compensation Decisions
The committee exercises oversight of a compensation program that aligns executives' pay with the results of their decisions and the returns of our shareholders over the long term. The program design is aligned with the core elements of the majority shareholder's compensation program, and is designed to drive long-term accountability, reward the highest standard of performance, and promote retention.
The compensation discussion and analysis ("CD&A") section that follows describes the compensation program for the company's named executive officers and how the program supports the business goals of the company.
Key decisions approved by the committee, reflective of strong business results in 2022, are as follows:
•The committee granted base salary increases to named executive officers, consistent with the salary program for all executives.
•The 2022 bonus program awards were approved at higher levels than 2021, reflective of strong business performance.
•The committee granted restricted stock unit awards in keeping with program design, with the value of awards having increased year-over-year in line with increases in stock price.
The committee has reviewed and discussed the CD&A with management of the company and has recommended to the board that the CD&A be included in the company’s management proxy circular for the 2023 annual meeting of shareholders and annual report of Form 10-K. On behalf of the committee, I encourage you to read the comprehensive disclosure in the CD&A that follows. The committee is committed to overseeing all aspects of the executive compensation program in the best interests of the company and all shareholders.
Original signed by
D.S. Sutherland,
Chair, executive resources committee
D.W. Cornhill, Vice-chair
M.R. Crocker
K.T. Hoeg
M.C. Hubbs
J.M. Mintz
Compensation discussion and analysis
Table of contents
Overview
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The company takes a long-term view to managing its business. |
Our objective is to meet society’s needs with the products that are essential for modern life while playing a key role in addressing the challenges of climate change. The company takes a long-term view in managing its business rather than reacting to short-term business cycles. The company’s strategies provide the framework to deliver on its commitments, create shareholder value throughout the commodity price cycle, and address the dual challenge of meeting growing energy demand while reducing environmental impacts.
The compensation program design aligns with the long-term sustainability of the business and supports key business strategies to maximize shareholder value:
Canadian business environment
•Large, accessible upstream resources;
•Mature, competitive downstream markets;
•Evolving environmental, fiscal, and energy policies impacting global competitiveness; and
•Market access limitations and uncertainties.
Business model
•Long-life, competitively advantaged assets;
•Disciplined investment and cost management;
•Value-chain integration and synergies;
•High-impact technologies and innovation; and
•Operational excellence and responsible growth.
Key business strategies
•Deliver industry-leading performance in safety, emissions reductions, environmental performance and reliability;
•Grow profitable production and sales volumes;
•Disciplined and long-term focus on improving the productivity of the company’s asset mix; and
•Best-in-class cost structure to support industry-leading returns on capital and cash flow.
Key elements of the compensation program
The key elements of the company’s compensation program align with the business model and support key business strategies.
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Element | | Base salary | | Annual bonus | | Restricted stock units |
Percent of total direct compensation (a) | | • 10 to 30 percent | | •10 to 25 percent | | •50 percent or more |
Intent | | • Provide competitive base pay | | • Link pay to annual company earnings performance • Provide near-term performance payment | | • Link pay to returns of long-term shareholders •Encourages long-term view through commodity price cycle |
Key design features | | •Increase determined by individual performance, experience, and pay grade •Ties directly to long-term benefits (pension & savings plans) | | •Paid in year of grant •Bonus award pool reflective of business performance • Individual award determined by performance and pay grade • Full award subject to clawback | | • Granted in the form of stock units •CEO: 50 percent vests in 5 years from grant date; 50 percent in 10 years •All other executives: 50 percent vests in 3 years from grant date; 50 percent in 7 years • Long restriction periods coupled with performance considerations applied at grant • Significant portion of pay at risk of forfeiture for an extended period of time |
Pay at risk | | • Fixed pay | | •Variable pay at risk | | •Variable pay at risk |
(a)Total direct compensation includes salary, the annual bonus, and the grant date fair value of the restricted stock unit award which is equal to the price of the company’s common shares on the date of grant.
The above programs are underpinned by our pension and savings plans which provides for financial security after employment.
Risk and governance
The company is governed by a comprehensive and well-established risk management system, and the company’s success in managing risk over time has been achieved through emphasis on execution of this disciplined management framework. The company operates in an industry in which effective risk management is critical. The company’s risk management framework includes a process for identifying, prioritizing, measuring, and managing the principal risks across the company, as well as assessing the company’s response to these risks. For further discussion on the company’s risk management system and oversight, see “Risk oversight” within the “Statement of corporate governance practice” on page 130. The company’s long-term orientation and compensation program design encourage the highest performance standards and discourage inappropriate risk taking. The compensation program design features described below are designed to incent effective management of current and future operating and financial risks associated with the company’s business, including risks related to climate change, in order to:
•protect the safety and security of our employees, the communities, and the environment in which we operate;
•manage risk and operate the business with effective business controls;
•create sustainable value for shareholders by increasing shareholder return, net income, and return on average capital employed*; while positioning the company for long-term success in a lower-emission future; and
•advance the long-term strategic direction of the company.
*non-GAAP financial measure – see Frequently used terms section on page 171 for definition.
The table below outlines the design features of our compensation programs that discourage inappropriate risk taking:
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Design feature | | Risk management |
Common programs | | •All executives employed by the company, including the named executive officers, participate in common programs (the same salary, incentive, and retirement programs). Similar compensation design features and allocation of awards within the programs discourage inappropriate risk taking. Compensation is differentiated based on individual performance assessment, experience and pay grade. •All executives on assignment from an affiliate of the company, including the named executive officers on assignment from Exxon Mobil Corporation and Esso Australia Pty Ltd., also participate in common programs that are administered by Exxon Mobil Corporation or such affiliates. The named executive officers on assignment receive restricted stock units from Imperial. •The executive resources committee ("committee") reviews and approves annual compensation recommendations for each named executive officer prior to implementation. |
Executive stock ownership | | •Long holding periods on restricted stock units (RSUs) results in executives maintaining significant stock ownership during employment and for 7 years into retirement, with a longer holding period for the chairman, president and chief executive officer up to 10 years into retirement. |
Significant pay at risk | | •Uniquely long restriction periods on RSUs substantially increase the percentage of career compensation at risk well into retirement. •Unvested RSUs cannot be used as collateral for any purpose. |
Strong forfeiture provisions | | •Unvested RSUs are at risk of forfeiture for resignation or detrimental activity, even if such detrimental activity occurs or is discovered after resignation or retirement. |
Clawback policy | | •The entire annual bonus is subject to recoupment (clawback) in the event of a material negative restatement of the company's reported financial or operating results. This reinforces the importance of the company's financial controls and compliance programs. Clawback provisions also apply if an executive resigns or engages in detrimental activity. |
No guaranteed bonuses | | •Bonus is subject to year-on-year changes in business performance; remains at risk •Demonstrated by bonus program suspension in 2020; no award granted. |
No additional stock grants to balance losses in value | | •The committee does not support a practice of offsetting a loss or gain in the value of prior restricted share units by the value of current year grants. •Such a practice would minimize the risk/reward profile of stock-based awards and undermine the long-term view that executives are expected to adopt. |
No accelerated vesting at retirement | | •RSUs are not subject to acceleration, not even at retirement, except in the case of death. •Unvested RSUs cannot be used as collateral for any purpose. |
For more details about the aforementioned compensation components, see the “Compensation program design” section.
Other supporting compensation and staffing practices
•The company's defined benefit pension plan and supplemental pension arrangements are highly dependent on executives remaining with the company for a career and performing at the highest levels until retirement. This dimension of total compensation encourages executives to take a long-term view when making business decisions and to focus on achieving sustainable growth for shareholders.
•The use of perquisites at the company is very limited, and mainly composed of financial planning for senior executives and the selective use of club memberships which are largely tied to building business relationships.
•Tax assistance is provided for employees on expatriate assignment. This assistance consists primarily of a tax equalization component designed to maintain the employees’ overall income tax burden at approximately the same level had they remained in their home country. The expatriate relocation program is broad-based and applies to all executive, management, professional and technical transferred employees.
•The company does not have written employment contracts or any other agreement with its named executive officers providing for payments on change of control or termination of employment.
Hedging policy
Company policy prohibits all employees, including executives, and directors, from being a party to derivative or similar financial instruments, including puts, calls, or other options, future or forward contracts, or equity swaps or collars, with respect to the company or Exxon Mobil Corporation stock.
Business performance and basis for compensation
The assessment of employee performance is conducted through the company’s annual performance assessment program. The process assesses performance against relevant business performance measures and objectives, including the means by which performance is achieved. These business performance measures include:
•safety, health, and environmental performance;
•risk management;
•total shareholder return;
•net income;
•return on average capital employed*;
•cash flow from operations and asset sales*;
•operating performance of the upstream, downstream, and chemical businesses; and
•progress on advancing government relations and long-term strategic interests.
*non-GAAP financial measure – see Frequently used terms section on page 171 for definition. The performance assessment program includes a comparative assessment of employee performance using a standard approach throughout the organization and at all levels. It is integrated with the compensation program, which results in significant pay differentiation based on performance. The performance assessment program is also integrated with the executive development process. Both have been in place for many years and are the basis for planning individual development and succession for management positions.
Succession planning
A long established program of management development and succession planning is in place to reinforce a career orientation and ensure continuity of leadership. The committee is responsible for approving specific succession plans for the position of chairman, president and chief executive officer, and key senior executive positions, including all officers of the company. It considers candidates for these positions from within the company and certain candidates from Exxon Mobil Corporation and its affiliates. This in-depth review of succession plans includes the consideration of various aspects of diversity as well as plans to address gaps, if any, for key executives. The company has a long-standing practice of reviewing with senior management the diversity of the organization with focus on women, Indigenous people, persons with disabilities, and visible minorities. These reviews include recruitment, attrition, training and development. For more information regarding executive officer diversity see page 149. The chairman, president and chief executive officer also discusses the strengths, progress, and development needs of key succession candidates regularly. This provides the board an opportunity to confirm a pipeline of highly skilled and diverse talent exists to enable achievement of long-term strategic objectives. The committee makes recommendations to the board of directors for selection of all officers of the company, as well as other key senior executive positions reporting to the chairman, president and chief executive officer.
Compensation program design
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The company’s compensation program is designed to reward performance, promote retention, and encourage long-term business decisions. |
Approach to executive compensation
The decisions that the company’s executives make and the risks they manage play out over multi-year time horizons. Executives are required to carefully consider current and future risks, such as those related to climate change, and to make decisions across a broad range of business investments that generate sustainable shareholder value over the long term.
The company's executive compensation program design aligns executives' pay with the results of their decisions and shareholder returns over the long term. The program is designed to drive long-term accountability, reward the highest standard of performance, and promote retention.
Drive long-term accountability
The company's strategic objectives have been established to drive sustainable value while positioning the company for long-term success in a lower-emissions future. These objectives are translated into annual plan goals, which are reviewed and approved by the Board and provides the framework for the company's commitments.
Reward outstanding performance
Performance is foundational to the company's executive compensation program design. The extent to which executives achieve pre-established goals, assessed over near- and long-term horizons, is a key differentiating factor in executives' pay deliberations. Performance evaluation directly impacts level of base salary, bonus, and long-term incentive awards.
Promote retention
This long-term orientation also underpins how the company develops talent. It begins with recruiting exceptional people, and continues with individually planned experiences and training, which leads to broad development and a deep understanding of our business across the business cycle.
The compensation program is designed to attract and retain talent for a career through compensation that is market competitive, highly differentiated by individual performance, and with long restriction periods that promote retention. Career orientation among a dedicated and highly skilled workforce, combined with the highest performance standards, contributes to the company's leadership in the industry and serves the interests of shareholders in the long term. The average service of the named executive officers is 32 years which reflects this on-going career orientation strategy.
The company’s executive compensation program is composed of base salaries, as well as near-term cash bonus and long-term incentive compensation.
Base salary
Base salary represents 10 to 30 percent of total direct compensation, and is intended to provide competitive base pay. It also directly affects the level of retirement benefits.
The company’s overall salary program is determined by annual benchmarking. Individual salary increases are the result of individual performance, experience, and changes to pay grade, and reflects market analysis and competitiveness at the time of the decision.
2022 decisions
•For 2022, the executive resources committee ("committee") granted salary increases to named executive officers consistent with the salary program for all executives.
Annual bonus
The company’s annual bonus program represents 10 to 25 percent of total direct compensation, and is intended to link executive pay to annual company earnings performance. The bonus program is established annually by the committee based on earnings, and can be highly variable depending on these results.
In establishing the annual bonus program, the committee:
•considers input from the chairman, president and chief executive officer on performance of the company and from the company’s internal compensation advisors regarding compensation trends as obtained from external consultants;
•considers the linkage to the majority shareholder’s bonus program given the company’s working interest is included in Exxon Mobil Corporation earnings;
•considers annual net income of the company; and
•uses judgment to manage the overall size of the annual bonus program taking into consideration the cyclical nature and long-term orientation of the business.
2022 decisions
•2022 bonus program awards were approved at higher levels than 2021, reflective of strong business performance.
•This resulted in 53 executives receiving an annual bonus in 2022.
•The cost of the 2022 annual bonus program was $8.5 million versus $4.2 million in 2021 and $0 in 2020.
Starting in 2021, bonus awards are paid in full in the year of grant, rather than as a combination of cash and earnings bonus units, consistent with market practice and resulting in a stronger link to earnings performance and individual performance differentiation. While no earnings bonus units were granted in 2022, the company’s executives, including the named executive officers, had outstanding earnings bonus units that vested in 2022.
•Earnings bonus units are cash awards that are tied to future cumulative earnings per share.
•Earnings bonus units pay out when a specified level of cumulative earnings per share (or trigger) is achieved or in three years at a reduced level. The trigger is intentionally set at a level that is expected to be achieved within the three-year period and reinforces the company’s principle of sustained improvement in the company’s business performance and aligns the interests of executives with those of long-term shareholders; and
•If cumulative earnings per share do not reach the trigger within three years, the payment with respect to the earnings bonus units will be reduced to an amount equal to the number of units multiplied by the actual cumulative earnings per share over the three-year period. The amount of the award, once vested, will never exceed the original grant value. The delayed payout of the earnings bonus units puts part of the annual bonus at risk of forfeiture and thus reinforces the performance basis of the annual bonus grant.
Forfeiture and claw-back
The annual bonus, including earnings bonus units, are subject to forfeiture and claw-back if:
•An executive retires before normal retirement time.
•The company has indicated its intention not to forfeit outstanding awards of employees who retire at age 65. In other circumstances, where a recipient retires before age 65, the company may determine that awards shall not be forfeited.
•An executive’s employment with the company terminates (for any reason, whether at initiative of employee, the company or otherwise), with forfeiture and claw-back at the company's discretion.
•An executive, without the consent of the company, engages in any activity, during employment or after retirement or termination of employment, which is detrimental to the company, including working for a competitor; or
•There is a material negative restatement of the company’s reported financial or operating results. For executive officers of the company, some or all of any unvested earnings bonus units granted in the three years prior to the restatement are subject to forfeiture. In addition, any cash amounts received from bonus or earnings bonus units that were paid out up to five years prior to the restatement are subject to claw-back.
Restricted stock units
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The vesting periods of the company’s long-term incentive program are greater than those in use by comparator companies. |
Restricted stock units represent over 50 percent of total direct compensation, and are intended to link executive pay to the returns of long-term shareholders and encourage a long-term view through the commodity price cycle. Restricted stock units are granted to select employees of the company, select employees of a designated affiliate, and nonemployee directors of the company.
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Employee group | | Vesting On the anniversary of the date of grant |
For the chairman, president and chief executive officer | | 50 percent in 5 years and 50 percent in 10 years |
For all other executives | | 50 percent in 3 years and 50 percent in 7 years |
The vesting periods, which are typically greater than those in use by other companies, reinforce the company’s focus on growing shareholder value over the long term by linking a large percentage of executive compensation and the shareholding net worth of executives to the value of the company’s stock. The long vesting periods ensure that a substantial portion of the compensation received by the chairman, president and chief executive officer, as well as other key senior executives, will be received after retirement. The value of this compensation is at risk in the event that their decisions prior to retirement negatively impact share market value after retirement, with the objective to hold senior executives accountable for many years into the future, and even into retirement, for investment and operating decisions made today. The design of our program removes employee discretion in the timing of exercising restricted stock units, reinforces retention objectives, and supports alignment with the long-term interests of shareholders.
The basis for the grant includes an annual assessment of individual performance including a review of business performance results as noted on page 167. The amount granted is intended to provide an incentive to promote individual contribution to the company’s performance and to retain employees. Grants may be adjusted periodically based on an assessment of the program’s competitive orientation. An individual’s grant amount may be reduced at time of grant, if recent performance is deemed to have changed significantly at that time. As a matter of principle, the company does not offset losses on prior grants with higher share awards in subsequent grants, nor does the company re-price restricted stock units. Restricted stock units are not included in pension calculations. Restricted stock units cannot be assigned. The number of common shares of the company issuable under the plan to any insiders (as defined by the Toronto Stock Exchange) cannot exceed 10 percent of the issued and outstanding common shares, whether at any time or as issued in any one year.
The company’s directors and officers as a group hold approximately 16 percent of the unvested restricted stock units that give the recipient the right to receive common shares that represent about 0.05 percent of the company’s outstanding common shares. Currently, the maximum number of common shares that any one person may receive from the vesting of restricted stock units is 345,250 common shares, which is about 0.06 percent of the outstanding common shares.
Consistent with the program documentation, the board of directors may amend the plan without shareholder approval for RSUs previously issued or to be issued in the future, unless the amendment is with respect to:
•increasing the shares served for issuance;
•increasing the vesting price;
•extending eligibility to participate in the plan to persons not included in the plan;
•extending the right of a grantee to transfer or assign RSUs; or
•adjusting the vesting date for any RSUs previously granted.
2022 decisions
•The committee granted awards in keeping with program design.
•The value of long-term awards increased year-over-year, in line with increases in stock price; changes in award grants for named executive officers reflect individual performance and/or change in pay grade.
•In 2022, 1,020 recipients, including 62 executives, were granted 867,640 restricted stock units.
Exxon Mobil Corporation has a plan similar to the company’s restricted stock unit plan, under which grantees may receive restricted stock or restricted stock units, both of which are referred to herein as Exxon Mobil Corporation restricted stock. B.W. Corson holds Exxon Mobil Corporation restricted stock granted in 2018 and previous years, as well as the company’s restricted stock units granted since 2019. D.E. Lyons holds Exxon Mobil Corporation restricted stock granted in 2017 and previous years, as well as the company’s restricted stock units granted since 2018. S.P. Younger holds Exxon Mobil Corporation restricted stock granted in 2019 and previous years, as well as the company’s restricted stock units granted in 2020.
Forfeiture and claw-back
Restricted stock units are subject to forfeiture and claw-back if:
•A recipient retires before normal retirement time.
•The company has indicated its intention not to forfeit restricted stock units of employees who retire at age 65. In other circumstances where a recipient retires before age 65, the company may determine that restricted stock units shall not be forfeited.
•A recipient’s employment with the company terminates (for any reason, whether at initiative of employee, the company or otherwise), with forfeiture and claw-back at the company's discretion.
•A recipient, without the consent of the company, engages in any activity, during employment or after retirement or termination of employment, which is detrimental to the company, including working for a competitor.
•With respect to executives, at any time prior to vesting of the outstanding awards.
•With respect to all other employees, for a period of up to three years after retirement or the termination of employment.
Vesting of restricted stock units
The vesting period for restricted stock unit awards is not subject to acceleration, except in the case of death. Upon vesting, each restricted stock unit entitles the recipient the right to receive an amount equal to the value of one common share of the company, based on the five day average closing price of the company’s shares on the vesting date and the four preceding trading days. For units granted to senior executives other than the chairman, president and chief executive officer, 50 percent of the units vest as a cash payment on the third and seventh anniversary of the grant date, except that for units vesting on the seventh anniversary that were granted to Canadian residents, the recipient may receive one common share per unit or elect to receive a cash payment for the units. For all units granted to the chairman, president and chief executive officer, upon vesting, the recipient may receive one common share of the company per unit or elect to receive a cash payment for the units. During the restricted period, the recipient will also receive cash payments equivalent to the cash dividends paid to holders of regular common stock.
In the case of any subdivision, consolidation, or reclassification of the shares of the company or other relevant change in the capitalization of the company, the company, in its discretion, may make appropriate adjustments in the number of common shares to be issued and the calculation of the cash amount payable per restricted stock unit.
Amendments to the restricted stock unit plan
In 2016, the restricted stock unit plan was amended to update provisions regarding forfeiture of restricted stock units in the event of detrimental activity, extending the period from two years to the current periods noted above. Further, the amendments provided a new vesting option in addition to the existing vesting options previously described, such that the second 50 percent of the restricted stock units may vest on the tenth anniversary following the grant date.
In 2020, the restricted stock unit plan was amended to update provisions regarding the vesting periods for the units granted in 2020 and onwards to the chairman, president and chief executive officer such that 50 percent of restricted stock units vest on the fifth anniversary and remaining 50 percent on the tenth anniversary. For awards granted prior to 2020, the vesting of the tenth anniversary portion of the award is delayed until retirement if later than 10 years.
As a result of an employee stock program expansion implemented in 2022, the restricted stock unit plan was amended to include an additional vesting schedule, in which some new non-executive participants will be eligible for awards granted that vest 100 percent after 3 years.
Retirement plans
The company's approach to talent development stems from the need to develop future leaders broadly and deeply given the complexity and long-term nature of the business. Retirement plans support the company's talent management approach and are designed to attract and retain talent for a career. Retirement plans include:
•A company savings plan that is attractive to new hires who can begin building an account balance immediately upon achieving eligibility; and
•Defined benefit plans, such as the company's pension plans, that help retain mid- and late-career employees until retirement eligibility. These are viewed as the primary vehicle for retirement planning.
Named executive officers participate in the same pension plan, including supplemental pension arrangements outside the registered plan, as other employees, except for B.W. Corson, D.E. Lyons and S.P. Younger who participate in Exxon Mobil Corporation or respective affiliates’ pension plans.
Below are brief descriptions of the company's plans.
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Plan | | Description |
Savings plan | | •Employees with more than one year of service may contribute between 1 and 30 percent of normal earnings via payroll deductions. •The company provides matching contributions up to 6% which vary depending on the amount of employee contributions and which defined benefit pension arrangement the employee participates •Employee and company contributions can be allocated in any combination to a non-registered (tax-paid) account, or a registered (tax-deferred) group retirement savings plan (RRSP), subject to contribution limits under the Income Tax Act. |
Registered pension plan | | •The company provides a registered defined pension benefit when leaving the company if age, service, and other provisions under the plan are met. •Pension is subject to income tax regulations that impose limits on the amounts that can be paid from a registered plan. •The pension plan provides for pension benefits accrual only until December 1st in the year the employee reaches the age of 71. •The company does not grant additional pension service credit. |
Supplemental pension arrangement (SPA) | | •SPA addresses any portions of the defined benefit that cannot be paid from the registered plan due to income tax regulations. •For executive officers who receive an annual bonus, the company's SPA can also provide an annual benefit tied to annual bonus. •SPA may be taken as a lump sum or an annuity. •No SPA amounts are payable if an employee resigns or is terminated with cause before reaching retirement eligibility. |
The estimated benefits that would be payable upon retirement to each named executive officer under the company’s pension plan and the supplemental pension arrangements can be found in the pension plan benefits table starting on page 177.
B.A. Jolly and J.R. Wetmore participate in the 1.6 percent provision of the company’s pension plan. Key features of this plan for these executives include:
•An annual benefit equal to 1.6 percent multiplied by final average earnings multiplied by years of service, with a partial offset for applicable government pension benefits. Final average earnings consists of base salary over the highest 36 consecutive months in the 10 years of service prior to retirement.
•An option to forego a portion of the company’s matching contributions to the savings plan in order to receive an additional 0.4 percent of final average earnings.
Key features of the SPA plan for the 1.6 percent provision of the pension plan include:
•Executive officers who receive an annual bonus, and meet the criteria of the SPA, can also receive an annual benefit of 1.6 percent of final average bonus earnings multiplied by years of service.
•Final average bonus earnings include the average bonus for the three highest grants of the last five bonus years awarded prior to retirement for eligible executives.
•Annual bonus could include the cash amounts that are paid at grant and the maximum settlement value of any earnings bonus units received, as described starting on page 162. The value of the earnings bonus units is expected to pay out, subject to forfeiture provisions, and are therefore included for supplemental pension arrangement purposes in the year of grant rather than the year of payment.
B.W. Corson, D.E. Lyons and S.P. Younger are not participants in the company’s pension plan, but are participants in the Exxon Mobil Corporation or respective affiliates’ pension and savings plans:
•Mr. Corson and Mr. Lyons participate in the Exxon Mobil Pension Plan (EMPP). Under this plan, the pension is payable in U.S. dollars and is calculated based on final average base salary over the highest 36 consecutive months in the 10 years of service prior to retirement. They are also eligible for the ExxonMobil Supplemental Pension Plan (SPP) for pension benefits that cannot be paid from the EMPP due to IRS limitations. The ExxonMobil Additional Payment Plan (APP) provides a pension based on the average annual bonus for the three highest grants of the last five awarded prior to retirement. The SPP and APP are paid as a lump sum.
•Mr. Younger participates in the Esso Australia Pty Ltd. defined benefit plan. Under this plan, the pension is payable in Australian dollars and is calculated based on final average base salary over the highest 12 consecutive months in the 10 years of service prior to retirement.
Compensation decision making process and considerations for named executive officers
Benchmarking
In addition to the assessment of business and individual performance, the executive resources committee ("committee") relies on market comparisons to a group of major Canadian companies.
Comparator companies
The following criteria are used to select comparator companies:
•Canadian companies or Canadian affiliates;
•large operating scope and complexity;
•capital intensive; and
•proven sustainability over time.
List of comparator companies:
•Energy: Canadian Natural Resources Limited, Cenovus Energy Inc., CNOOC International, ConocoPhillips Canada, Crescent Point Energy, Enbridge Inc., Gibson Energy, Irving Oil Ltd., MEG Energy, NOVA Chemicals Corporation, Nutrien Ltd., Ovintiv Inc., Parkland Corporation, Repsol Oil & Gas Canada Inc., Shell Canada Limited, Suncor Energy Inc., TC Energy Corporation, Valero Energy
•Non-energy: BCE Inc., Canadian Pacific Railway Limited, Canadian Tire Corporation, Limited, General Electric Canada, IBM Canada Ltd., Proctor & Gamble Inc., Royal Bank of Canada, Teck Resources
The company is a national employer drawing from a wide range of disciplines. Compensation trends based on survey data are prepared annually by an independent external consultant with additional analysis and recommendation provided by the company’s internal compensation advisors. Rather than targeting a specific percentile, the committee applies well-informed judgment, using a broader and more flexible orientation, generally a range around the median of the comparator energy companies’ compensation. This approach applies to salaries and the annual incentive program that includes annual bonus and restricted stock units, which are also considered in relation to the majority shareholder program.
This overall approach provides the company with the ability to:
•better respond to changing business conditions;
•manage salaries based on a career orientation;
•minimize potential for automatic increasing of salaries, which could occur with an inflexible and narrow target among benchmarked companies; and
•differentiate executives’ salaries based on performance and experience levels.
The elements of Exxon Mobil Corporation and respective affiliates’ compensation programs for B.W. Corson, D.E. Lyons and S.P. Younger, including salary, annual bonus and restricted stock units (long-term) compensation considerations, are generally similar to those of the company.
Business performance results for consideration
The operating and financial performance results listed below and the company’s continued maintenance of sound business controls and a strong corporate governance environment formed the basis for the salary and incentive award decisions made by the committee in 2022. The committee considered the results over multiple years, relative to the company’s proven business model and strategies, to deliver long-term shareholder value.
2022 key business results
| | |
In 2022, Imperial delivered exceptional business results across a wide range of performance dimensions. |
•Delivered strong safety performance and effective enterprise risk management.
•Recognized as one of Canada’s top employers by Mediacorp Canada Inc. for the third consecutive year.
•Demonstrated clear commitment to sustainability:
◦Published Imperial’s Advancing Climate Solutions and Corporate Sustainability Reports.
◦Established the company's goal to reduce emissions intensity at its operated oil sands by 30% by 2030 compared with 2016 levels.
◦Progressed Pathways initiatives including technical design studies, field environmental studies and securing pore space for the Alliance to continue exploratory work to safely and permanently store CO2.
◦Entered into two of Imperial’s largest ever contracts with Indigenous-owned companies to provide large-scale earthwork, land reclamation and mining support at our Kearl asset.
◦Continued deployment of boiler flue gas emissions reduction technology at Kearl, starting up 1 additional boiler unit, and fully funding remaining additional units.
◦Entered into a strategic collaboration with E3 Lithium to advance a lithium extraction pilot in Alberta.
◦Signed agreement with Atura Power to study the potential for green hydrogen production in Nanticoke, Ontario.
◦Entered long-term contract with Air Products to supply low-carbon hydrogen for Imperial’s planned renewable diesel complex near Edmonton, Alberta.
◦Entered into a unique collaboration with FLO that will support Canada’s net-zero emissions goals by expanding FLO’s charging network for electric vehicles.
◦Progressed startup of world scale battery technology at Sarnia to optimize electricity consumption.
◦Continued to progress a feasibility study for advanced plastic recycling at our Sarnia site.
•Strong financial performance:
◦Record operating performance allowed Imperial to take advantage of high commodity prices to realize record earnings and cash flow from operating activities for the year.
◦Achieved net income of $7,340 million.
◦Generated robust cash flow from operating activities of $10.5 billion and free cash flow1 of about $9.9 billion, driven by portfolio optimization and disciplined capital spending.
◦Increased quarterly dividend declared to $0.34 per share in the first quarter, and to $0.44 per share in the fourth quarter of 2022, increasing the annual dividend paid for the 28th consecutive year. The quarterly dividend of $0.44 per share represents a 63% increase year over year.
◦Record shareholder returns of over $7.2 billion; including dividends of over $0.8 billion and share repurchases of about $6.4 billion under two substantial issuer bids of $2.5 billion and $1.5 billion respectively, and the accelerated completion of the company's normal course issuer bid.
◦Reduced outstanding debt by $1 billion, further enhanced by the company's industry leading balance sheet and improved financial flexibility.
•Strong Upstream operational performance:
◦Produced 416,000 gross oil-equivalent barrels per day of full-year upstream production; driven by strong operations and a continued focus on low capital high return investments.
◦Kearl’s second half production was the highest in the asset’s history, bringing full-year production to 242,000 gross oil-equivalent barrels per day.
◦Achieved best-ever single-day production at Kearl of 360,000 gross oil-equivalent barrels per day on December 29, 2022, and matched best-ever quarterly production in the fourth quarter.
◦Produced 144,000 gross oil-equivalent barrels per day of full-year production at Cold Lake, the highest full-year production since 2018, which was driven by higher reliability and production enhancement initiatives including field optimizations and drilling.
◦Progressed construction of the Cold Lake Grand Rapids expansion project and accelerated phase 1 start-up to year-end 2023.
◦Syncrude produced 77,000 gross oil-equivalent barrels per day (Imperial’s share) of full-year production, the highest annual production in its history, supported by the interconnect pipeline.
◦Optimized and focused portfolio by completing, together with ExxonMobil Canada, the sale of XTO Energy Canada for total cash consideration of approximately $1.9 billion ($0.9 billion Imperial’s share).
•Strong Downstream and Chemical operational performance:
◦Achieved highest full-year capacity utilization in company history, increasing refinery capacity utilization by 9 percent to 98 percent with monthly crude throughput records achieved at all three refineries.
◦Achieved highest ever distillate production as a percentage of our total refining crude capacity.
◦Completed the Sarnia Products Pipeline project increasing capacity, improving reliability of supply, lowering logistics costs, and increasing sales in the high-value Toronto market.
◦Continued to progress plans to construct a world-class renewable diesel complex at Strathcona refinery, with a final investment decision announced in January, 2023.
◦Reliable operational performance supported Chemicals net income of $204 million.
1non-GAAP financial measure – see Frequently used terms section on page 171 for definition.
Performance assessment considerations
The company's business results form the context in which the committee assesses the individual performance of each senior executive. Annually, the chairman, president, and chief executive officer reviews the performance of the senior executives with the committee. Performance is evaluated based on accomplishments versus plan goals and objectives, with performance results informing level of pay, including salary, bonus, and long-term incentive awards.
The same long-term key business strategies noted on page 157 and the company’s business performance results are key elements in the assessment of the chairman, president, and chief executive officer’s performance by the executive resources committee. In addition to the formal annual evaluation, the performance of all named executive officers is assessed by the board of directors throughout the year during specific business reviews and board committee meetings that provide information on strategy development, operating and financial results, safety, health, and environmental results, business controls, and other areas pertinent to the general performance of the company.
The committee does not use quantitative targets or formulae to assess individual executive performance or determine compensation. The committee does not assign weights to the factors considered. Formula-based performance assessments and compensation typically require emphasis on two or three business metrics. For the company to be an industry leader and effectively manage the technical complexity and integrated scope of
its operations, senior executives must advance multiple strategies and objectives in parallel, versus emphasizing one or two at the expense of others that require equal attention.
Senior executives and officers are expected to perform at the highest level or they are replaced. If it is determined that another executive is ready and would make a stronger contribution than one of the current incumbents, a replacement plan is implemented.
2022 chief executive officer compensation assessment
B.W. Corson was appointed to the board and as president of the company on September 17, 2019 and assumed the additional roles of chairman and chief executive officer on January 1, 2020. Mr. Corson worked for Exxon Mobil Corporation and its predecessor companies since 1983. His level of salary in 2022 was determined by the committee based on his individual performance and to align with that of his peers in ExxonMobil. For 2022, the committee approved an increase of $31,000 U.S. to $804,000 U.S. For 2023, the committee approved a salary increase of $80,000 U.S. to $884,000 U.S. effective January 1, 2023.
Mr. Corson’s 2022 annual bonus was based on his performance as assessed by the committee. His long-term incentive award was granted in the form of Imperial restricted stock units, not Exxon Mobil Corporation restricted stock, to reinforce alignment of his interests with that of the company’s shareholders. His company restricted stock units are subject to vesting periods longer than those applied by most companies. The purpose of these long vesting periods is to reinforce the long investment lead times in the business and to link a substantial portion of Mr. Corson’s shareholding net worth to the performance of the company. As such, the realized value of the long-term incentive grants may differ from the amounts shown in the summary compensation table, depending on company performance at time of future vesting. During these vesting periods, the awards are subject to risk of forfeiture based on detrimental activity even after retirement.
The committee has determined that the total compensation of Mr. Corson was appropriate based on the company’s financial and operating performance, and its assessment of his effectiveness in leading the organization relative to the business performance measures outlined on page 160. Taking all factors into consideration, the committee’s decisions on compensation of the chief executive officer reflect judgment, rather than the application of formulae or targets.
Pay awarded to other named executive officers
Within the context of the compensation program structure and performance assessment processes previously described, the value of 2022 incentive awards and salary adjustments align with:
•performance of the company;
•individual performance;
•long-term strategic plan of the business; and
•annual compensation of comparator companies.
Taking all factors into consideration, the committee’s decisions on pay awarded to other named executive officers reflect judgment, rather than the application of formulae or targets. The committee approved the individual elements of compensation and the total compensation as shown in the summary compensation table on page 172. Independent consultant
In fulfilling its responsibilities during 2022, the committee did not retain an independent consultant or advisor in determining compensation for any of the company’s officers or any other senior executives. The company’s management retained an independent consultant to provide an assessment of competitive compensation and market data for all salaried levels of employees of the company. While providing this data, they did not provide individual compensation recommendations or advice for the compensation of the chairman, president and chief executive officer or other senior executives.
Performance graph
The following graph shows changes over the past 5 years in the value of $100 invested in (i) Imperial Oil Limited common shares, (ii) the S&P/TSX Composite Index, and (iii) the S&P/TSX Composite Energy Index. The S&P/TSX Composite Energy Index is currently made up of share performance data for 39 oil and gas companies including integrated oil companies, oil and gas producers, and oil and gas service companies.
The year-end values in the graph represent appreciation in share price and the value of dividends paid and reinvested. The calculations exclude trading commissions and taxes. Total shareholder returns from each investment, whether measured in dollars or percent, can be calculated from the year-end investment values shown beneath the graph.
During the past 5 years, the company’s cumulative total shareholder return was 92 percent, for an average annual return of 14 percent. Total direct compensation for named executive officers generally reflects the trend in total shareholder returns as the largest single component of executive compensation is awarded in the form of restricted stock units with long holding periods. This design reinforces the long-term linkage between executive compensation and the shareholding net worth of executives to the return on the company’s stock realized by shareholders. Total direct compensation includes salary, the annual bonus grant, and the grant date fair value of the restricted stock unit award which is equal to the price of the company’s common shares on the date of grant.
Frequently used terms
The term total direct compensation is compensation granted during the year, including salary, the annual bonus, and the grant date fair value of the restricted stock unit award which is equal to the price of the company’s common shares on the date of grant.
The following definitions are used in the compensation discussion and analysis as several of Imperial’s business and financial performance measures. These measures are not prescribed by U.S. Generally Accepted Accounting Principles (GAAP). These measures constitute “non-GAAP financial measures” under Securities and Exchange Commission Regulation G, and “specified financial measures” under National Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure of the Canadian Securities Administrators. Non-GAAP financial measures and specified financial measures are not standardized financial measures under GAAP and do not have standardized definitions. As such, these measures may not be directly comparable to measures presented by other companies, and should not be considered a substitute for GAAP financial measures. For additional information and reconciliation with respect to the terms, see the “Frequently used terms” section of the company’s most recent Annual Report on Form 10-K.
•Cash flow from operating activities and asset sales is a non-GAAP financial measure that is the sum of the net cash provided by operating activities and proceeds from asset sales reported in the consolidated statement of cash flows.
•Return on average capital employed is a non-GAAP financial measure that is a measure of capital productivity, and equals net income excluding the after-tax cost of financing divided by total average capital employed. Capital employed is property, plant and equipment, and other assets, less liabilities, excluding both short-term and long-term debt, plus the company’s share of equity company debt.
•Free cash flow is a non-GAAP financial measure that is cash flows from operating activities less additions to property, plant and equipment and equity company investments plus proceeds from asset sales. The most directly comparable financial measure that is disclosed in the financial statements is cash flows from (used in) operating activities within the company’s consolidated statement of cash flows. This measure is used to evaluate cash available for financing activities (including but not limited to dividends and share purchases) after investment in the business.
Reconciliation of free cash flow
| | | | | |
millions of Canadian dollars | 2022 |
From the Consolidated statement of cash flows | |
Cash flows from (used in) operating activities | 10,482 | |
Cash flows from (used in) investing activities | |
Additions to property, plant and equipment | (1,526) | |
Proceeds from asset sales | 904 | |
Additional investments | (6) | |
Loans to equity companies - net | 10 | |
Free cash flow | 9,864 | |
| |
Executive compensation tables and narratives
Summary compensation table
The following table shows the compensation for the chairman and chief executive officer; the senior vice-president, finance and administration, and controller; and the three other most highly compensated executive officers of the company who were serving as of the end of 2022.
The information in the Summary compensation table includes the Canadian dollar value of base salaries, cash bonus awards and earnings bonus unit payments, long-term incentive compensation and certain other compensation. Amounts in the table pertain to the named executive officers’ respective periods of assignment with the company.
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Name and principal position at the end of 2022 | | Year | | Salary ($) (b) | | Share- based awards ($) (c) | | Option- based awards ($) (d) | | Non-equity incentive plan compensation ($) | | Pension value ($) (g) | | All other compensation ($) (h) | | Total compensation ($) (i) |
| Annual incentive plans (e) | | Long-term incentive plans (f) |
B.W. Corson (a) Chairman, president and chief executive officer (since September 17, 2019) | | 2022 | | 1,046,245 | | 6,463,180 | | — | | 2,223,922 | | 727,427 | | 4,905,567 | | 1,975,182 | | 17,341,523 |
| 2021 | | 968,956 | | 3,447,056 | | — | | 956,421 | | 0 | | 1,200,091 | | 2,178,025 | | 8,750,549 |
| 2020
| | 996,734 | | 1,897,132 | | — | | — | | 0 | | (340,046) | | 1,945,980 | | 4,499,800 |
D.E. Lyons (a) Senior vice-president, finance and administration, and controller (since May 1, 2018) | | 2022 | | 688,388 | | 1,917,168 | | — | | 890,089 | | 298,642 | | 1,850,528 | | 1,798,933 | | 7,443,748 |
| 2021 | | 646,806 | | 1,163,712 | | — | | 439,979 | | 0 | | 463,757 | | 784,104 | | 3,498,358 |
| 2020 | | 689,307 | | 553,128 | | — | | — | | 0 | | (207,474) | | 1,516,702 | | 2,551,663 |
S.P. Younger (a) Senior vice-president, upstream (since July 1, 2019) | | 2022 | | 574,345 | | 1,597,640 | | — | | 565,155 | | 170,133 | | 346,566 | | 709,862 | | 3,963,701 |
| 2021 | | 545,996 | | 714,096 | | — | | 250,449 | | 0 | | 81,762 | | 415,505 | | 2,007,808 |
| 2020
| | 527,126 | | 393,012 | | — | | — | | 0 | | (299,441) | | 555,097 | | 1,175,794 |
B.A. Jolly Assistant controller (since August 1, 2019) | | 2022 | | 472,500 | | 1,234,540 | | — | | 469,657 | | 140,448 | | 1,306,400 | | 118,315 | | 3,741,860 |
| 2021 | | 450,000 | | 749,360 | | — | | 237,332 | | 0 | | 268,900 | | 91,487 | | 1,797,079 |
| 2020 | | 444,500 | | 393,012 | | — | | — | | 0 | | 23,300 | | 76,767 | | 937,579 |
J.R. Wetmore Vice-president, downstream, chemicals and Western Canada fuels manager (since June 1, 2022) | | 2022 | | 453,700 | | 958,584 | | — | | 311,755 | | 93,370 | | 449,200 | | 80,057 | | 2,346,666 |
| 2021 | | 432,100 | | 581,856 | | — | | 157,555 | | 0 | | 56,200 | | 59,028 | | 1,286,739 |
| 2020 | | 427,100 | | 320,232 | | — | | — | | 0 | | 87,500 | | 50,885 | | 885,717 |
Footnotes to the Summary compensation table for named executive officers
(a)The compensation for B.W. Corson, D.E. Lyons, and S.P. Younger is paid directly by Exxon Mobil Corporation and respective affiliates, with the exception of the compensation related to the vesting of the company’s restricted stock units and dividend equivalents on outstanding restricted stock units. They also receive employee benefits under their respective affiliates’ employee benefit plans, and not under the company’s employee benefit plans. The company reimburses the respective affiliates for applicable compensation paid and employee benefits provided to them. The company does not reimburse Exxon Mobil Corporation for the cost of incentive awards granted by Exxon Mobil Corporation.
(b)The amounts listed in the “Salary” column for each named executive officer on expatriate assignment (B.W. Corson, D.E. Lyons and S.P. Younger) are paid in their local currency, but disclosed in Canadian dollars. Mr. Corson’s and Mr. Lyons’ salaries are paid in U.S. dollars and were converted to Canadian dollars at the average 2022 exchange rate of 1.3013. In 2021 and 2020, the average exchange rate was 1.2535 and 1.3415 respectively. Mr. Younger’s salary is paid in Australian dollars and was converted to Canadian dollars at the average 2022 exchange rate 0.9032. In 2021 and 2020, the average exchange rate was 0.9421 and 0.9247.
(c)The grant date fair value equals the number of restricted stock units multiplied by the closing price of the company’s shares on the date of grant. The closing price of the company’s shares on the grant date in 2022 was $72.62, which is the same as the accounting fair value for the restricted stock units on the date of grant. The closing price of the company’s shares on the grant date in 2021 was $44.08 and in 2020 was $24.26, which is the same as the accounting fair value for the restricted stock units on the date of grant. The company chose this method of valuation as it believes it results in the most accurate representation of fair value.
(d)The company has not granted stock options since 2002. The stock option plan expired in 2012.
(e)The amounts listed in the “Annual incentive plans” column for each named executive officer represent their cash bonus. In 2021 and 2022, the bonus award was paid in full as a cash bonus in the year of grant rather than a combination of cash and earnings bonus units. In 2020, the company suspended the annual cash bonus program, and therefore no cash payment was made. B.W. Corson, D.E. Lyons, and S.P. Younger participate in Exxon Mobil Corporation’s annual cash bonus program, which is similar to the company’s plan, and is paid in U.S. dollars, but disclosed in Canadian dollars. In 2021 and 2022, Exxon Mobil Corporation’s bonus award was also paid in full as a cash bonus in the year of grant rather than a combination of cash and earnings bonus units. In 2020, Exxon Mobil Corporation’s annual bonus program was also suspended. For amounts paid in 2022 and 2021 in U.S. dollars, they were converted to Canadian dollars at the average exchange rate of 1.3013 and 1.2535 respectively.
(f)The amounts listed in the “Long-term incentive plans” column represent earnings bonus units related to prior year grants that paid out in year. In 2020 and 2021, the maximum settlement value (trigger) or cumulative earnings per share was not achieved, therefore no payments were made. B.W. Corson, D.E. Lyons, and S.P. Younger participate in Exxon Mobil Corporation’s program, which is similar to the company’s program, and is paid in U.S. dollars, but disclosed in Canadian dollars. Under the Exxon Mobil Corporation’s program, the maximum settlement value (trigger) or cumulative earnings per share was not achieved, therefore no payments were made in 2020 and 2021. For amounts paid in 2022 in U.S. dollars, they were converted to Canadian dollars at the average exchange rate of 1.3013.
(g)“Pension value” is the “Compensatory change” in pensions as of December 31, 2022 as set out in the “Pension plan benefits” table on page 177. (h)The amounts listed in the “All other compensation” column include dividend equivalent payments on restricted stock units granted, savings plans contributions, expatriate assignment costs, parking and the cost of perquisites including financial planning and business club memberships, as well as security costs and costs associated with participation in Exxon Mobil Corporation’s executive life insurance benefit plan, as applicable.
•In 2022, B.W. Corson received $33,039 of senior executive life insurance premiums, $14,185 for financial planning services, and $3,372 for club membership. For all other named executive officers, the aggregate value of perquisites received in 2022 was not greater than $50,000 or 10 percent of the named executive officer’s base salary.
•It is noted that in 2022, the actual dividend equivalent payments on the company restricted stock units were $281,520 for B.W. Corson, $96,084 for D.E. Lyons, $37,422 for S.P. Younger, $87,023 for B.A. Jolly, and $72,578 for J.R. Wetmore. The dividend equivalent payments on Exxon Mobil Corporation’s restricted stock were $406,526 for Mr. Corson, $66,522 for Mr. Lyons and $91,930 for Mr. Younger; these amounts were paid in U.S. dollars and converted to Canadian dollars at the average 2022 exchange rate of 1.3013.
•For the named executive officers on expatriate assignment (B.W. Corson, D.E. Lyons and S.P. Younger), “All other compensation” also includes expatriate assignment costs which consist of expatriate allowances and the net effect of tax equalization costs in the year. Tax equalization costs include the net effect of taxes paid by the companies to local taxing authorities on behalf of the named executive officer offset by a withholding from their income that approximates the amount of tax they would pay if they had not gone on expatriate assignment. Tax equalization is an integral part of the expatriate relocation program and is designed to maintain an individual’s overall tax burden at approximately the same level it would have otherwise been, had they remained in their home country. Tax equalization amounts vary from one year to the next and the net impact may be positive or negative in the year.
(i)“Total compensation” consists of the total dollar value of “Salary”, “Share-based awards”, “Option-based awards”, “Non-equity incentive plan compensation”, “Pension value” and “All other compensation”.
Outstanding share-based awards and option-based awards for named executive officers
The following table sets forth all share-based and option-based awards outstanding for each named executive officer of the company as at December 31, 2022.
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| | Option-based awards | | Share-based awards |
Name | | Number of securities underlying unexercised options (#) | | Option exercise price ($) | | Option expiration date | | Value of unexercised in-the- money options ($) | | Number of shares or units of shares that have not vested (#) (d) | | Market or payout value of share- based awards that have not vested ($) (d) | | Market or payout value of vested share- based awards not paid out or distributed ($) |
B.W. Corson (a) | | — | | — | | — | | — | | 323,600 | | 21,341,420 | | — |
D.E. Lyons (b) | | — | | — | | — | | — | | 94,800 | | 6,252,060 | | — |
S.P. Younger (c) | | — | | — | | — | | — | | 54,400 | | 3,587,680 | | — |
B.A. Jolly | | — | | — | | — | | — | | 73,800 | | 4,867,110 | | — |
J.R. Wetmore | | — | | — | | — | | — | | 60,400 | | 3,983,380 | | — |
(a)B.W. Corson was granted restricted stock units from 2019 to 2022 under the company’s plan. With respect to previous years, Mr. Corson participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the company’s restricted stock unit plan. Under that plan, Mr. Corson held 73,850 Exxon Mobil Corporation restricted stock whose value on December 31, 2022 was $11,032,475 based on a closing price for Exxon Mobil Corporation shares on December 31, 2022 of $110.30 U.S., which was converted to Canadian dollars at the December 31, 2022 close rate of 1.3544 provided by the Bank of Canada.
(b)D.E. Lyons was granted restricted stock units from 2018 to 2022 under the company’s plan. With respect to previous years, Mr. Lyons participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the company’s restricted stock unit plan. Under that plan, Mr. Lyons held 9,600 Exxon Mobil Corporation restricted stock whose value on December 31, 2022 was $1,434,147 based on a closing price for Exxon Mobil Corporation shares on December 31, 2022 of $110.30 U.S., which was converted to Canadian dollars at the December 31, 2022 close rate of 1.3544 provided by the Bank of Canada.
(c)S.P. Younger was granted restricted stock units from 2020 to 2022 under the company’s plan. With respect to previous years, Mr. Younger participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the company’s restricted stock unit plan. Under that plan, Mr. Younger held 13,600 Exxon Mobil Corporation restricted stock whose value on December 31, 2022 was $2,031,708 based on a closing price for Exxon Mobil Corporation shares on December 31, 2022 of $110.30 U.S., which was converted to Canadian dollars at the December 31, 2022 close rate of 1.3544 provided by the Bank of Canada.
(d)Represents the total of the outstanding restricted stock units received from the company plan in 2015 through 2022. The value is based on the closing price of the company’s shares on December 31, 2022 of $65.95.
Incentive plan awards for named executive officers – Value vested or earned during the year
The following table sets forth the value of the incentive plan awards that vested in the year for each named executive officer of the company.
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Name | | Option-based awards – Value vested during the year ($) | | Share-based awards – Value vested during the year ($) (d) | | Non-equity incentive plan compensation – Value earned during the year ($) (e) |
B.W. Corson (a) | | — | | — | | — |
D.E. Lyons (b) | | — | | 732,480 | | — |
S.P. Younger (c) | | — | | — | | — |
B.A. Jolly | | — | | 900,340 | | 610,105 |
J.R. Wetmore | | — | | 740,110 | | 405,125 |
(a)Although B.W. Corson received restricted stock units under the company’s plan from 2019 to 2022, these restricted stock units have not vested. In previous years, Mr. Corson participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the company’s restricted stock unit plan. In 2022, restrictions were removed on 14,150 Exxon Mobil Corporation restricted stock having a value of $2,040,020 based on the average of the high and low sale prices of Exxon Mobil Corporation common shares on the NYSE on the date that the restrictions lapsed. B.W. Corson participates in Exxon Mobil Corporation’s annual bonus program, which is similar to the company’s annual bonus program. In 2022, B.W. Corson received $2,223,922 with respect to the annual cash bonus. B.W. Corson also received $727,427 for earnings bonus units granted in 2018 and 2019. All these amounts were paid in U.S. dollars and converted to Canadian dollars at the average 2022 exchange rate of 1.3013.
(b)Prior to 2018, Mr. Lyons participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the company’s restricted stock unit plan. In 2022, restrictions were removed on 4,800 Exxon Mobil Corporation restricted stock having a value of $706,887 based on the average of the high and low sale prices of Exxon Mobil Corporation common shares on the NYSE on the date that the restrictions lapsed. D.E. Lyons participates in Exxon Mobil Corporation’s annual bonus program, which is similar to the company’s annual bonus program. In 2022, D.E. Lyons received $890,089 with respect to the annual cash bonus. D.E. Lyons also received $298,642 for earnings bonus units granted 2018 and 2019. All these amounts were paid in U.S. dollars and converted to Canadian dollars at the average 2022 exchange rate of 1.3013.
(c)Although S.P. Younger received restricted stock units under the company’s plan from 2020 to 2022, these restricted stock units have not vested. In previous years, Mr. Younger participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the company’s restricted stock unit plan. In 2022, restrictions were removed on 6,300 Exxon Mobil Corporation restricted stock having a value of $930,991 based on the average of the high and low sale prices of Exxon Mobil Corporation common shares on the NYSE on the date that the restrictions lapsed. S.P. Younger participates in Exxon Mobil Corporation’s annual bonus program, which is similar to the company’s annual bonus program. In 2022, S.P. Younger received $565,155 with respect to the annual cash bonus. S.P. Younger also received $170,133 for earnings bonus units granted in 2018 and 2019. All these amounts were paid in U.S. dollars and converted to Canadian dollars at the average 2022 exchange rate of 1.3013.
(d)These values show restricted stock units granted by the company that vested in 2022. The value is based on the five day average closing price of the company’s shares, which includes the vesting date and the four preceding trading days. For D.E. Lyons, the values represent restricted stock units granted in 2019. For B.A. Jolly and J.R. Wetmore, the values represent restricted stock units granted in 2015 and 2019, which vested in 2022.
(e)This column represents amounts paid by the company with respect to the annual cash bonus and earnings bonus units granted in prior years that paid out in the current year. In 2022, the company granted an annual cash bonus and the maximum settlement value (trigger) or cumulative earnings per share was achieved for earnings bonus units granted in 2018 and 2019.
Equity compensation plan information
The following table provides information on the common shares of the company that may be issued as of the end of 2022 pursuant to compensation plans of the company.
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Plan category | | Number of securities to be issued upon exercise of outstanding options, warrants and rights (#) (c) | | Weighted-average exercise price of outstanding options, warrants and rights ($) | | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) (#) (c) |
Equity compensation plans approved by security holders (a) | | — | | — | | — |
Equity compensation plans not approved by security holders (b) | | 1,762,425 | | — | | 8,705,612 |
Total | | 1,762,425 | | — | | 8,705,612 |
(a)The company’s stock option plan expired in 2012.
(b)This is a restricted stock unit plan, which is described starting on page 163. (c)The Number of securities to be issued represents the total number of restricted stock units issued since 2012 and still outstanding (4,036,355) minus the outstanding restricted stock units that are only eligible for cash (and not common shares) upon vesting (2,273,930). The Number of securities remaining available for future issuance represents the restricted stock units not yet granted (6,431,682) plus the number of outstanding restricted stock units that are only eligible for cash (and not common shares) upon vesting (2,273,930).
Restricted stock units as a percentage of outstanding shares
The following table provides information on the restricted stock unit plan, expressed as a number and as a percentage of the common shares of the company as of the end of 2022.
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| | Maximum number of restricted stock units issuable under the plan (b) | | Total number of restricted stock units awarded and outstanding | | Total number of restricted stock units available for grant |
Number (#) | | 10,468,037 | | 4,036,355 | | 6,431,682 |
Percent of outstanding common shares (%) (a) | | 1.79 | | 0.69 | | 1.10 |
(a)As of December 31, 2022, the number of common shares outstanding was 584,152,718.
(b)The maximum number of restricted stock units issuable under the company plan is the number as of December 31, 2021 (10,468,037) minus the common shares issued in 2022 pursuant to the vesting of restricted stock units under the plan (0 common shares).
Annual burn rate
The following table provides the annual burn rate associated with the restricted stock unit plan for each of the company’s three most recent fiscal years. The annual burn rate is the number of restricted stock units granted as a percentage of the weighted-average number of outstanding shares of the company, which provides a measure of how quickly a company is using its available shares for incentive purposes.
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| | Number of restricted stock units granted under the plan (#) (a) | | Weighted-average number of securities outstanding (#) (b) | | Annual burn rate (%) (c) |
2022 | | 884,140 | | 640,160,028 | | 0.14 |
2021 | | 680,720 | | 711,602,150 | | 0.10 |
2020 | | 747,040 | | 735,285,422 | | 0.10 |
(a)The number of restricted stock units granted under the plan in the applicable fiscal year.
(b)The weighted-average number of securities outstanding during the period is the number of securities outstanding at the beginning of the period, adjusted by the number of securities bought back or issued during the period multiplied by a time-weighting factor.
(c)The annual burn rate percent is calculated as the number of restricted stock units granted under the plan divided by the weighted-average number of securities outstanding.
Status of prior long-term incentive compensation plans
The company’s only long-term incentive compensation plan is the restricted stock unit plan described starting on page 163. There are no units outstanding for any historical plan. Pension plan benefits
The following table provides information for each named executive officer of the company participating in a defined benefit pension plan. Information for named executive officers on assignment from affiliates of the company who participate in a plan provided by such affiliates is disclosed in the footnotes.
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Name | | Number of years credited service (as of December 31, 2022) (#) (a) | | Annual benefits payable ($) | | Opening present value of defined benefit obligation ($) (d) | | Compensatory change ($) (e) | | Non- compensatory change ($) (f) | | Closing present value of defined benefit obligation ($) (d) |
| At year- end (b) | | At age 65 (c) |
B.W. Corson | | — | | — | | — | | — | | — | | — | | — |
D.E. Lyons | | — | | — | | — | | — | | — | | — | | — |
S.P. Younger (g) | | — | | — | | — | | — | | — | | — | | — |
B.A. Jolly | | 31.5 | | 310,500 | | 409,400 | | 5,747,500 | | 1,306,400 | | (1,189,400) | | 5,864,500 |
J.R. Wetmore | | 28.5 | | 269,500 | | 426,100 | | 5,036,900 | | 449,200 | | (1,511,600) | | 3,974,500 |
Footnotes to the Pension plan benefits table for named executive officers
(a)B.W. Corson and D.E. Lyons participate in the Exxon Mobil Corporation defined benefit pension plan including tax-qualified and non-qualified plans. Benefits under this plan are payable in U.S. dollars and have been converted to Canadian dollars at the average 2022 exchange rate of 1.3013. Under this plan, Mr. Corson had 39.5 years of credited service and Mr. Lyons had 32.5 years of credited service. S.P. Younger participates in the Esso Australia Pty Ltd. defined benefit and defined contribution pension plans. Benefits under these plans are payable in Australian dollars and have been converted to Canadian dollars at the average 2022 exchange rate of 0.9032. Under these plans, Mr. Younger had 25.8 years of credited service.
(b)For members of the company’s pension plan, the annual benefits include the amount of the accrued annual lifetime pension from the company’s registered pension plan and supplemental pension arrangement. Benefits under the supplemental pension arrangement can be paid as a lump-sum equivalent upon retirement. For members of the Exxon Mobil Corporation’s pension plan, the annual benefits include the accrued annual lifetime pension from the tax-qualified and the annual amount calculated under the non-qualified plans. For B.W. Corson this value was $1,451,751. For D.E. Lyons this value was $624,804. Non-qualified plan benefits are payable only as a lump-sum equivalent upon retirement. For members of the Esso Australia Pty Ltd.defined benefit plan, benefits are payable as lump-sum equivalent or annual lifetime pension upon retirement for participants age 55 and older. For S.P Younger, this is not applicable as his age is under 55 years, and therefore he is not currently entitled to pension if leaving service.
(c)For members of the company’s pension plan, the annual benefits include the amount of the accrued annual lifetime pension from the company’s registered pension plan and supplemental pension arrangement that would be earned to age 65 assuming final average earnings as at December 31, 2022. Benefits under the supplemental pension arrangement can be paid as a lump-sum equivalent upon retirement. For members of the Exxon Mobil Corporation’s pension plan, the annual benefits include the annual lifetime pension from the tax-qualified and the annual amount calculated under the non-qualified plans that would be earned to age 65 assuming final average earnings as at December 31, 2022. For B.W. Corson, this value was $1,594,323. For D.E. Lyons, this value was $717,072. Non-qualified plan benefits are payable only as a lump-sum equivalent upon retirement. For members of the Esso Australia Pty. Ltd. defined benefit plan, benefits are payable as an annual lifetime pension or a lump-sum equivalent upon retirement or a combination of both, as elected by the participant upon leaving service. For S.P. Younger, the annual lifetime pension that would be earned to age 65, assuming final average earnings as of December 31, 2022 was $375,224.
(d)For members of the company’s pension plan, the opening and closing defined benefit obligation is defined under U.S. Generally Accepted Accounting Principles (GAAP) and values are calculated on a basis that is consistent with the valuation that was performed for accounting purposes for the company’s plans. The value is calculated based on estimated earnings eligible for pension as described previously and Yearly Maximum Pensionable Earnings (YMPE) as defined by the Canada Revenue Agency, projected to retirement and pro-rated on service to the date of valuation. The calculations assume that the Canada Pension Plan offset is based on the annual maximum benefit at retirement and the Old Age Security (OAS) offset is based on the OAS benefit at the date of valuation, projected to retirement. For members of the Exxon Mobil Corporation and Esso Australia Pty Ltd. pension plan respectively, the opening and closing defined benefit obligation is defined under GAAP and values are consistent with the valuation performed for accounting purposes for the applicable affiliate plan. The values are calculated based on estimated earnings eligible for pension as described previously. For B.W. Corson, the opening value was $16,009,185 and the closing value was $16,672,819. For D.E. Lyons the opening value was $7,460,087 the closing value was $7,313,921. For S.P. Younger, the opening value was $2,981,299 and the closing value was $2,592,841.
(e)The value for “Compensatory change” includes service cost for 2022 and the impact of change in earnings on the projected benefit obligation. For members of the company’s plan, these values are calculated using the individual’s additional pensionable service in 2022 and the actual salary and bonus received in 2022. For members of the Exxon Mobil Corporation and Esso Australia Pty Ltd. pension plans, these values are calculated using the individual’s additional pensionable service in 2022 and earnings as described previously. For B.W. Corson, this value was $4,905,567. For D.E. Lyons, this value was $1,850,528. For S.P. Younger, this value was $349,752.
(f)The value for “Non-compensatory change” includes the impact of experience not related to earnings, benefit payments and change in measurement assumptions. With respect to the company’s pension plan, the discount rate used to determine the closing present value of defined benefit obligation at the end of 2022 increased to 5.1 percent, from 3.0 percent at the end of 2021, which had a negative impact on the non-compensatory change element. For members of the Exxon Mobil Corporation and Esso Australia Pty Ltd., the value for “Non-compensatory change” includes the impact of experience not related to earnings or service. For the Exxon Mobil Corporation’s plan, this includes the effect of interest based on a discount rate of 5.6 percent at the end of 2022, up from 3.0 percent at the end of 2021. For the Esso Australia Pty Ltd. Plan, this includes the effect of interest based on a discount rate of 6.2 percent at the end of 2022, up from 3.0 percent at the end of 2021. For B.W. Corson, this value was $(4,241,933). For D.E. Lyons, this value was $(1,996,694). For S.P. Younger, this value was ($738,210).
(g)S.P. Younger participates in the Esso Australia Pty Ltd. defined contribution plan. Contribution limits under this plan have been reached. The “Accumulated value at start of year” was $45,903, the “Compensatory value” was ($3,186) reflecting affiliate contribution and investment earnings, and the “Accumulated value at year-end” was $42,717.
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Appendix A – Board of director and committee charters |
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Board of Directors Charter |
The structure, process and responsibilities of the board of directors of the corporation shall include the following items and matters:
1.Responsibility
The directors shall be responsible for the stewardship of the corporation.
2.Duty of care
The directors, in exercising their powers and discharging their duties, shall:
(a)act honestly and in good faith with a view to the best interests of the corporation; and
(b)exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances.
3.Stewardship process
In order to carry out their responsibility for stewardship within their duty of care, the directors shall, directly or through one or more committees of directors,
(a)contribute to the formulation of and approve strategic plans on at least an annual basis;
(b)identify the principal risks of the corporation’s business where identifiable and oversee the implementation of appropriate systems to manage such risks;
(c)oversee succession planning for senior management, including the appointing, training and monitoring thereof;
(d)approve the corporate disclosure guidelines and monitor the external communications of the corporation;
(e)monitor the integrity of the corporation’s internal control and management information systems;
(f)monitor the integrity of the corporation’s information technology and systems to ensure the security and integrity of the corporation’s electronic information, systems and assets;
(g)consider management’s recommendations regarding major corporation decisions and actions, which have significant societal implications;
(h)monitor compliance with major corporate policies;
(i)charge the chief executive officer of the corporation with the general management and direction of the business and affairs of the corporation;
(j)monitor the performance of the chief executive officer;
(k)satisfy itself as to the integrity of the chief executive officer and other executive officers and ensure that the chief executive officer and the other executive officers create a culture of integrity throughout the company;
(l)annually review and approve the corporation’s code of ethics and business conduct;
(m)monitor compliance with the code of ethics and business conduct, provided that any waivers from the code that are granted for the benefit of the issuer’s directors or executive officers should be granted by the board only;
(n)determine appropriate measures are in place for receiving feedback from stakeholders;
(o)by appropriate charter resolutions, establish the audit, executive resources, nominations and corporate governance, safety and sustainability and community collaboration and engagement committees of the board with specific duties defined and the corporation provide each board committee with sufficient funds to discharge its responsibilities in accordance with its charter;
(p)determine membership of each committee, including its chair and vice-chair, after receiving the recommendation of the nominations and corporate governance committee;
(q)direct the distribution to the board by management of information that will enhance their familiarity with the corporation’s activities and the environment in which it operates, as set out in section 5;
(r)review the corporation’s process in respect of employee conflicts of interest and directorships in non-affiliated commercial, financial and industrial organizations and the disclosures thereof;
(s)review the mandates of the board and of the committees and their effectiveness at least annually; and
(t)undertake such additional activities within the scope of its responsibilities as it may deem appropriate.
4.Range of items to be considered by the board
The following categories and specific items shall be referred to the board for information or decision on a regularly scheduled basis, to the extent appropriate:
Organization/legal
•fixing of the number of directors
•director appointments to fill interim vacancies
•director slate for election by the shareholders
•officer appointments
•board governance processes
•by-laws and administrative resolutions
•changes in fundamental structure of the corporation
•shareholder meeting notice and materials
•non-employee director compensation
•policies adopted by the board
•investigations and litigation of a material nature
Financial
•equity or debt financing
•dividend declarations
•financial statements and the related management discussion and analysis, annual and quarterly
•status of the corporation’s retirement plan and employee savings plan
Strategic/investment/operating plans/performance
•near-term and long-range outlooks
•capital, lease, loan and contributions budgets annually
•budget additions over $250 million individually
•quarterly updates of actual and projected capital expenditures
•capital expenditures or dispositions in excess of $250 million individually
•entering into any venture that is outside of the corporation’s existing businesses
•financial and operating results quarterly
•Canadian and world economic outlooks
•regional socio-economic reviews
•corporate reputation reviews
•risk management reviews
•environment and sustainability reviews
•personnel and process safety systems and performance reviews
•information technology, systems and cybersecurity
In addition to the items which are specific to the categories identified above, the chief executive officer shall refer to the board for information or decision all other items of corporate significance; and any member of the board may request a review of any such item. Items to be referred to the committees of the board are specified in their respective charters.
5.Information to be received by the board
Material shall be distributed to directors through the office of the corporate secretary. Corporate policies, board calendars, contact information and other company processes, are updated on the board portal site and accessible to all directors.
Material under the following general headings, including the specific items listed below and only other similar items, shall be distributed to directors on a regular basis:
Organization/legal
•articles of incorporation, by-laws and administrative resolutions
•corporate policies
•corporate data
•board and management processes
•financial and operating report
•organization outline
Social/political/economic environment
•public issues updates
•economic outlook
•external communications packages
•information technology, systems and cybersecurity updates
Major announcements
•press releases
•speeches by management
•organization changes
Communications to shareholders
Other significant submissions, studies and reports
6.Meetings of the board
(a)The board normally holds seven (7) regular meetings per year. Additional meetings may be scheduled as required to consider the range of items charged for consideration by the board.
(b)An agenda for each board meeting and briefing materials will, to the extent practicable in light of the timing of matters that require board attention, be distributed to each director approximately five to seven days prior to each meeting. The chairman, in consultation with the chair of the executive sessions will normally set the agenda for board meetings. Any director may request the inclusion of specific items.
(c)It is expected that each director will make every effort to attend each board meeting and each meeting of any committee on which he or she serves. Attendance in person is preferred but attendance by teleconference is permitted if necessary.
(d)Each director should be familiar with the agenda for each meeting, have carefully reviewed all other materials distributed in advance of the meeting, and be prepared to participate meaningfully in the meeting, and to discuss all scheduled items of business.
(e)The proceedings and deliberations of the board and its committees are confidential. Each director will maintain the confidentiality of information received in connection with his or her service as a director, and the chief executive officer, or those whom he or she has designated, will speak for the corporation.
7.Independent directors
(a)The board shall be composed of a majority of independent directors. The board may also include one or more directors who are not independent, but who, as officers of the majority shareholder, may be viewed as independent of the company’s management.
(b)In respect of each director to be appointed to fill a vacancy and each director to be nominated for election or re-election by the shareholders, the board shall make an express determination as to whether he or she is an independent director and, for a director who may become a member of the audit committee, whether he or she is an audit committee financial expert or financially literate.
(c)The term “independent”, shall have the meaning as set out in applicable law, including on the basis of the standards specified by National Instrument 52-110 Audit Committees, the US. Securities and Exchange Commission rules and the listing standards of the NYSE American LLC.
(d)Independent directors will have full access to senior management of the corporation and other employees on request to discuss the business and affairs of the corporation. The board expects that there will be regular opportunities for directors to meet with the chief executive officer, and other members of management in board and committee meetings and in other formal or informal settings.
(e)Compensation for independent directors will be determined by the board on the recommendation of the nominations and corporate governance committee and will be reviewed annually. Non-employee director compensation will be set at a level that is consistent with market practice, taking into account the size and scope of the corporation’s business and the responsibilities of its directors. A substantial portion of the compensation paid to independent directors for service on the board will be paid in restricted stock units of the corporation.
8.Independent legal or other advice
It is normally expected that information regarding the corporation’s business and affairs will be provided to the board by the corporation’s management and staff and by its independent auditors. However, the board and, with the approval of the board, any director, may engage independent counsel and other advisors at the expense of the corporation. The fees and expenses of any such advisor will be paid by the corporation.
9.Meetings of the independent directors in the absence of members of management
(a)Meetings of the independent directors (“executive sessions of the board”) shall be held in conjunction with all board meetings including unscheduled telephonic board meetings. Additional executive sessions may be convened by the chair or the executive sessions at his or her discretion and will be convened if requested by any other director. Any independent director may raise issues for discussion at an executive session.
(b)The chair of the executive sessions of the board shall be chosen by the independent directors.
(c)The chair of the executive sessions of the board, or in the chair’s absence an independent director chosen by the independent directors, shall
(i)preside at executive sessions of the board;
(ii)ensure that meetings of the independent directors are held in accordance with this charter;
(iii)review, and modify if necessary the agenda of the meetings of the board in advance to ensure that the board may successfully carry out its duties; and
(iv)act as a liaison with the chairman, including providing feedback from the executive sessions to the chairman, provided that each director will also be afforded direct and complete access to the chairman at any time as such director deems necessary or appropriate.
(d)The purposes of the executive sessions of the board shall include the following:
(i)to raise substantive issues that are more appropriately discussed in the absence of management;
(ii)to discuss the need to communicate to the chairman of the board any matter of concern raised by any committee or any director;
(iii)to address issues raised but not resolved at meetings of the board and assess any follow-up needs with the chairman of the board;
(iv)to discuss the quality, quantity, and timeliness of the flow of information from management that is necessary for the independent directors to effectively and responsibly perform their duties, and advise the chairman of the board of any changes required; and
(v)to seek feedback about board processes.
10.Selection and tenure of directors
The nominations and corporate governance committee shall recommend to the board a slate of director candidates for election at each annual meeting of shareholders and shall recommend to the board directors to fill vacancies, including vacancies created as a result of any increase of the size of the board.
The guidelines for selection and tenure of directors shall be as follows:
(a)Selection
In considering the qualifications of potential nominees for election as directors, the nominations and corporate governance committee considers the work experience and other areas of expertise of the potential nominees with the objective of providing for diversity among non-employee directors. The following key criteria are considered to be relevant to the work of the board of directors and its committees:
Work Experience
•Experience in leadership of businesses or other large organizations (Leadership of large organizations)
•Operations/technical experience (Operations / technical)
•Project management experience (Project management)
•Experience in working in a global work environment (Global experience)
•Experience in development of business strategy (Strategy development)
•Experience with environmental, health, community relations and/or safety policy, practices and management (Environment and sustainability)
Other Expertise
•Audit committee financial expert
•Expertise in financial matters (Financial expertise)
•Expertise in managing relations with government (Government relations)
•Expertise in information technology and cybersecurity oversight (Information technology / Cybersecurity oversight)
•Expertise in executive compensation policies and practices (Executive compensation)
•Expertise in oversight of risk management policies and practices (Risk management)
In addition, the nominations and corporate governance committee may consider the following additional factors:
•possessing expertise in any of the following areas: law, science, marketing, administration, social/political environment or community and civic affairs;
•individual competencies in business and other areas of endeavour in contributing to the collective experience of the directors; and
•providing diversity in age, regional association, gender and other diversity elements (including Aboriginal peoples, persons with disabilities and members of visible minorities).
The nominations and corporate governance committee shall then assess what work experience and other expertise each existing director possesses. The nominations and corporate governance committee shall identify individuals qualified to become new board members and recommend to the board the new director nominees. In making its recommendations, the nominations and corporate governance committee shall consider the work experience and other expertise that the board considers each existing director to possess and which each new nominee will bring. The nominations and corporate governance committee may also consider the additional factors noted above and any other factors which it believes to be relevant.
A candidate may be nominated for directorship after consideration has been given as to his or her degree of compatibility with the following criteria, i.e., as to whether he or she:
•will not adversely affect the requirements with respect to citizenship and residency for the directors imposed by the Canada Business Corporations Act;
•will not adversely affect the corporation’s status as a foreign private issuer under U.S. securities legislation;
•possesses the ability to contribute to the broad range of issues with which the directors and any one or all of the committees of directors must deal;
•will serve on the boards of other public companies only to the extent that such services do not detract from the director’s ability to devote the necessary time and attention as a director;
•is able to devote the necessary amount of time to prepare for and attend all meetings of the directors and committees of directors, and to keep abreast of significant corporate developments;
•is free of any present or apparent potential legal impediment or conflict of interest, such as:
◦serving as an employee or principal of any organization presently providing a significant level of service to the corporation or which might so provide to the corporation, for example, institutions engaged in commercial banking, underwriting, law, management consulting, insurance, or trust companies; or of any substantial customer or supplier of the corporation;
◦serving as an employee or director of a competitor of the corporation, such as petroleum or chemical businesses, or of a significant competitor of corporations represented by a director of this corporation;
◦serving as the chief executive officer or a top administrator of an organization that has the chief executive officer or a top administrator of this corporation serving as director;
•is expected to remain qualified to serve for a minimum of five years;
•will not, at the time that he or she stands for election or appointment, have attained the age of 72;
•if an independent director, is, or will become within a period of five years of becoming a director, the beneficial owner, directly or indirectly, of not less than 16,500 common shares, deferred share units or restricted stock units of the corporation.
(b)Tenure
(i) Re-nomination
An incumbent director shall be supported for re-nomination as long as he or she:
•does not suffer from any disability that would prevent the effective discharge of his or her responsibilities as a director;
•makes a positive contribution to the effective performance of the directors;
•regularly attends directors’ and committee meetings;
•has not made a change with respect to principal position or thrust of involvement or regional association that would significantly detract from his or her value as a director of the corporation;
•is not otherwise, to a significant degree, incompatible with the criteria established for use in the selection process;
•in a situation where it is known that a director will become incompatible with the criteria established for use in the selection process within a three-month period of election, such as retirement from principal position at age 65, this information would be included in the management proxy circular, and where possible, information regarding the proposed replacement would also be included;
•will not, at the time that he or she stands for re-election, have attained the age of 72; however, under exceptional circumstances, at the request of the chairman, the nominations and corporate governance committee may continue to support the nomination.
(ii) Resignation
An incumbent director will resign in the event that he or she:
•experiences a change in circumstances such as a change in his or her principal occupation, including an officer of the corporation ceasing to hold that position, but not merely a change in geographic location;
•displays a change in the exercise of his or her powers and in the discharge of duties that, in the opinion of at least 75 percent of the directors, is incompatible with the duty of care of a director as defined in the Canada Business Corporations Act;
•has made a change in citizenship or residency that will adversely affect the requirements for directors with respect to those areas imposed by the Canada Business Corporations Act;
•has made a change in citizenship or residency that adversely affects the corporation’s status as a foreign private issuer under U.S. securities legislation;
•develops a conflict of interest, such as
◦assuming a position as an employee or principal with any organization providing a significant level of service to the corporation, for example, institutions engaged in commercial banking, underwriting, law, management consulting, insurance, or trust companies; or with any substantial customer or supplier of the corporation;
◦assuming a position as an employee or director of any competitor of the corporation, such as petroleum or chemical businesses, or of a competitor of corporations represented by a director of this corporation;
◦assuming the position of chief executive officer or a top administrator of an organization that has the chief executive officer or a top administrator of this corporation serving as a director;
◦becomes unable to devote the necessary amount of time to prepare for and regularly attend meetings of the directors and committees of directors, and to keep abreast of significant corporate developments,
and the nominations and corporate governance committee will make a recommendation to the board as to whether to accept or reject such resignation.
11.Director Orientation and Continuing Education
(a)Orientation
New non-employee directors will receive a comprehensive orientation from appropriate executives regarding the corporation’s business and affairs.
(b)Continuing Education
Reviews of aspects of the corporation’s operations will be presented by appropriate employees from time to time as part of the agenda of regular board meetings. The board will also normally conduct an on-site visit to a location other than the corporation’s headquarters in conjunction with one or more regular board meetings every year.
12.Chairman and chief executive officer
The board currently believes that it is appropriate and efficient for the corporation’s chief executive officer to also act as chairman of the board. However, the board retains the authority to separate those functions if it deems such action appropriate in the future.
(a)Position description
The chairman and chief executive officer shall:
•plan and organize all activities of the board of directors;
•ensure that the board receives sufficient, timely information on all material aspects of the corporation’s operations and financial affairs;
•chair annual and special meetings of the shareholders;
•conduct the general management and direction of the business and affairs of the corporation;
•recommend to the board of directors a strategic plan for the corporation’s business and, when approved by the board of directors, implement this strategic plan and report to the board of directors on the implementation of this strategic plan;
•develop and implement operational policies to guide the corporation within the limits prescribed by the corporation’s by-laws and the directions adopted by the board of directors;
•identify, for review with the board of directors, the principal risks of the corporation’s business, where identifiable, and develop appropriate systems to manage such risks;
•under the oversight of the board of directors, develop plans for succession planning for senior management, including the appointing, training and monitoring thereof, and implement those plans;
•ensure compliance with the corporation’s code of ethics and business conduct so as to foster a culture of integrity throughout the company; and
•ensure effective internal controls and management information systems are in place.
(b)Minimum shareholding requirements
The chairman and chief executive officer shall hold, or shall, within three years after his appointment as chairman and chief executive officer, acquire shares of the corporation, including common shares and restricted stock units, of a value no less than five times his base salary.
1.Purpose of the Committee
The primary purpose of the audit committee (the “committee”) is oversight. The committee shall assist the board of directors (the “board”) in fulfilling its responsibility to oversee:
•management’s conduct of the corporation’s financial reporting process,
•the integrity of the financial statements and other financial information provided by the corporation to Canadian securities regulators, the United States Securities and Exchange Commission (the “SEC”) and the public,
•the corporation’s system of internal accounting and financial controls,
•the corporation’s compliance with legal and regulatory requirements,
•the performance of the corporation’s internal audit function,
•the independent auditors’ qualifications, performance, and independence, and
•the annual independent audit of the corporation’s financial statements.
The corporation’s management is responsible for preparing the corporation’s financial statements. The independent auditors are responsible for auditing those financial statements. Management, including the internal audit function, and the independent auditors, have more time, knowledge, and detailed information about the corporation than do committee members. Consequently, in carrying out its oversight responsibilities, the committee is not providing any expert or special assurance as to the corporation’s financial statements, or any professional certification as to the independent auditors’ work, including with respect to auditor independence. Each member of the committee shall be entitled to rely on the integrity of people and organizations from whom the committee receives information and the accuracy of such information, including representations by management and the independent auditors regarding non-audit services provided by the independent auditors.
2.Committee Membership
The committee shall consist of no fewer than three members. Committee members shall be appointed by the board from among its independent members who shall serve at the pleasure of the board, but only so long as he or she continues to be a director of the corporation and is independent. Each member of the committee must satisfy such criteria of independence as the board may establish and such additional regulatory or listing requirements as the board may determine to be applicable or appropriate. Each member of the committee shall serve only so long as he or she continues to be a director of the corporation and is independent. The actual number of members shall be determined from time to time by resolution of the board.
Accordingly, each member of the committee shall be financially literate within a reasonable period of time after appointment to the committee; must be “independent” as defined in the board charter; and may not serve on more than two other public company audit committees unless the board determines that such simultaneous service would not impair the ability of the member to serve effectively on the committee. In addition, at least one member of the committee shall be an “audit committee financial expert” as defined by applicable laws.
3.Committee Structure and Operation
The chair and vice-chair of the committee shall be designated by the board from among the members of the committee. The committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the committee. In addition to the regular meeting schedule established by the committee, the chair of the committee may call a special meeting at any time.
The chair, or in that person’s absence, the vice-chair or in the vice-chair’s absence, an alternate designated by the committee, shall:
(a)preside at committee meetings;
(b)ensure that meetings of the committee are held in accordance with this charter; and
(c)review, and modify if necessary the agenda of the meetings of this committee in advance to ensure that the committee may effectively carry out its duties.
A majority of the members of the committee shall constitute a quorum thereof. Every question shall be decided by a majority of the votes cast on the question and in the case of an equality of votes, the chair of the meeting shall be entitled to a second or casting vote.
The committee shall designate its secretary.
Meetings of the committee may be called by any member or by the external auditors of the corporation, and notice of every meeting shall be given to the external auditors.
The external auditors and the internal auditor of the corporation shall report directly to the audit committee.
The committee shall act only on the affirmative vote of a majority of the members at a meeting or by unanimous written consent.
The committee may establish sub-committees to carry out such duties as the committee may assign.
4.Committee Activities
The following shall be the common recurring activities of the committee in carrying out its purposes. These activities are set forth as a guide with the understanding that the committee may diverge from this guide as appropriate given the circumstances.
The committee shall:
(a)recommend the external auditors to be appointed by the shareholders, review and recommend their remuneration to the board, approve advances on such remuneration, which shall be paid by the corporation, and oversee their work, including the resolution of disagreements between management and the external auditor regarding financial reporting.
(b)approve the proposed current year audit program of the external auditors and assess the results of the program after the end of the program period.
(c)approve in advance any non-audit services that are permitted by applicable law to be performed by the external auditors after considering the effect of such services on their independence.
(d)receive from the external auditors a formal written statement delineating all relationships between the external auditor and the corporation consistent with Independence Standards Board Standard 1, and shall actively engage in a dialogue with the external auditor with respect to any disclosed relationships or services that may impact the objectivity and independence of the external auditor and shall recommend that the board take any appropriate action to oversee the independence of the external auditor.
(e)maintain hiring policies for employees and former employees of the independent auditors.
(f)establish procedures for the receipt, retention and treatment of complaints received by the corporation regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous submission by employees of the corporation of concerns regarding questionable accounting or auditing matters.
(g)approve the proposed current year audit program of the internal auditors and assess the results of the program after the end of each quarter.
(h)review the adequacy of the corporation’s system of internal controls and auditing procedures.
(i)review the accounting and financial reporting processes of the corporation.
(j)approve changes proposed by management in accounting principles and practices, and review changes proposed by the accounting profession or other regulatory bodies which impact directly on such principles and practices.
(k)review the quarterly news release of financial and operating results, the annual and quarterly financial statements of the corporation, any accounting items affecting the statements and the overall format and content of the statements, and the related management discussion and analysis, prior to approval of such news release and financial statements by the board of directors.
(l)review the results of the corporation’s business ethics compliance program.
(m)review annually a summary of senior management expense accounts.
(n)evaluate, along with the other members of the board, management, the controller, and the general auditor, the qualifications, performance and independence of the independent auditors, including the performance of the lead audit partner.
(o)require attendances at its meetings by members of management, as the committee may direct.
(p)undertake such additional activities within the scope of its responsibilities as it may deem appropriate.
5.Committee Evaluation
The committee will annually complete a self-evaluation of the committee’s own performance and effectiveness and will consider whether any changes to the committee’s charter are appropriate.
6.Resources and Authority of the Committee
The committee has exclusive authority with respect to the retention of the independent auditors described in section 4 of this charter. In discharging its oversight role, the committee is empowered to investigate any matter brought to its attention with full access to all books, records, facilities, and personnel of the corporation. The committee also has the authority to retain outside advisors, including legal counsel, auditors, or other experts, as it deems appropriate; to approve the fees and expenses of such advisors; and to incur such other ordinary administrative expenses as are necessary or appropriate in carrying out its duties.
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Safety and Sustainability Committee Charter |
1.Purpose of the Committee
The primary purpose of the safety and sustainability committee (the ‘committee’) is to review and provide advice, as the committee deems appropriate, regarding the corporation’s policies, programs and practices on public issues of significance including their effects on safety, security, health and the environment. This includes environmental, health, personnel and process safety, security and sustainability risks and performance, including the risks associated with climate change. It also includes compliance with legislation and the assessment of long term impacts of public policy, climate change and sustainable business practices on corporate performance.
2.Committee Membership
The committee shall consist of no fewer than three members, to be appointed by the board of directors from among (a) the independent directors; and (b) the non-independent directors who are not members of the corporation’s management, who shall serve at the pleasure of the board, but only so long as he or she continues to be a director of the corporation. The actual number of members shall be determined from time to time by resolution of the board. Members of the committee should be suitably knowledgeable in matters pertaining to public issues.
3.Committee Structure and Operation
The chair and vice-chair of the committee shall be designated by the board from among the members of the committee. The committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the committee.
The chair, or in that person’s absence, the vice-chair or in the vice-chair’s absence, an alternate designated by the committee, shall:
(a)preside at committee meetings;
(b)ensure that meetings of the committee are held in accordance with this charter; and
(c)review, and modify if necessary the agenda of the meetings of this committee in advance to ensure that the committee may effectively carry out its duties.
A majority of the members of the committee shall constitute a quorum thereof. Every question shall be decided by a majority of the votes cast on the question and in the case of an equality of votes, the chair of the meeting shall be entitled to a second or casting vote.
The committee shall designate its secretary.
Meetings of the committee may be called by any member.
The committee shall act only on the affirmative vote of a majority of the members at a meeting or by unanimous written consent.
The committee may establish subcommittees consisting of one or more members to carry out such duties as the committee may delegate.
4.Committee Activities
The following shall be the common recurring activities of the committee in carrying out its purpose. These activities are set forth as a guide with the understanding that the committee may diverge from this guide as appropriate given the circumstances.
The committee shall:
(a)review and monitor the effectiveness of the corporation’s policies, programs and practices on environment, health, safety, security and sustainability, including the impact, risks and disclosure associated with climate change and greenhouse gas emissions, and make such recommendations to the board with respect thereto as it may deem advisable.
(b)monitor the corporation’s compliance with legislative, regulatory and corporation standards for environmental, health, safety, security and sustainability practices and matters, including the impact, risks and disclosure associated with climate change and greenhouse gas emissions, and advise the directors on the results and adequacy thereof.
(c)monitor trends and review current and emerging public policy issues relating to matters of significance to the corporation, including environment, health, safety, security and sustainability issues and the impact, risks and disclosure associated with climate change and greenhouse gas emissions, as they may impact the corporation’s operations.
(d)review the impact of proposed legislation relating to matters of significance to the corporation, including the impact of the environment, health, safety and security on the operations of the corporation and to advise the directors and management as to the appropriate response of the corporation thereto.
(e)recommend to the directors and management desirable policies and actions arising from its review and monitoring activity.
(f)require attendances at its meetings by members of management, as the committee may direct.
(g)undertake such additional activities within the scope of its responsibilities as it may deem appropriate.
5.Committee Evaluation
The committee will annually complete a self-evaluation of the committee’s own performance and effectiveness and will consider whether any changes to the committee’s charter are appropriate.
6.Resources and Authority of the Committee
The committee has the authority to retain such outside advisors, including legal counsel or other experts, as it deems appropriate, and to approve the fees and expenses of such advisors.
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Executive Resources Committee Charter |
1.Purpose of the Committee
The primary purpose of the executive resources committee (the “committee”) is to discharge the board of directors’ (the “board”) responsibilities relating to the evaluation and compensation of the corporation’s chief executive officer (the “CEO”) and certain other key senior executive management positions reporting directly to the CEO, including all officers of the corporation, and to discharge the responsibilities of the committee under applicable rules and regulations. The committee also makes recommendations to the board regarding succession planning and development for senior executives and positions as needed.
2.Committee Membership
The committee shall consist of no fewer than three members, to be appointed by the board of directors from among (a) the independent directors; and (b) the non-independent directors who are not members of the corporation’s management, who shall serve at the pleasure of the board, but only so long as he or she continues to be a director of the corporation. The actual number of members shall be determined from time to time by resolution of the board. Members of the committee should be suitably knowledgeable in matters pertaining to executive compensation.
3.Committee Structure and Operation
The chair and vice-chair of the committee shall be designated by the board from among the members of the committee. The committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the committee.
The chair, or in that person’s absence, the vice-chair or in the vice-chair’s absence, an alternate designated by the committee, shall:
(a)preside at committee meetings;
(b)ensure that meetings of the committee are held in accordance with this charter; and
(c)review, and modify if necessary the agenda of the meetings of this committee in advance to ensure that the committee may effectively carry out its duties.
A majority of the members of the committee shall constitute a quorum thereof. Every question shall be decided by a majority of the votes cast on the question and in the case of an equality of votes, the chair of the meeting shall be entitled to a second or casting vote.
The committee shall designate its secretary.
Meetings of the committee may be called by any member.
The committee shall act only on the affirmative vote of a majority of the members at a meeting or by unanimous written consent.
The committee may establish subcommittees consisting of one or more members to carry out such duties as the committee may delegate.
4.Committee Activities
The following shall be the common recurring activities of the committee in carrying out its purposes. These activities are set forth as a guide with the understanding that the committee may diverge from this guide as appropriate given the circumstances.
The committee shall:
(a)review and approve the corporate goals and objectives relevant to the compensation of the CEO.
(b)review data on competitive compensation practices and review and evaluate policies and programs through which the corporation compensates its employees.
(c)at least annually evaluate the CEO’s performance as measured against the goals and objectives outlined above.
(d)approve salaries and other compensation (including supplemental compensation such as cash bonuses and incentive bonus units, long-term incentive compensation such as restricted stock units, and any other payments for service), for the CEO and other key senior executive management positions reporting directly to the CEO, including all officers of the corporation.
(e)at least annually review succession planning and development strategies for the CEO and key senior executive management positions reporting directly to the CEO, including all officers of the corporation.
(f)review the executive development system to ensure that it foresees the corporation’s senior management requirements and provides for early identification and development of key resources.
(g)review and approve an annual report on compensation for inclusion in the corporation’s management proxy circular in accordance with applicable legal requirements.
(h)make recommendations to the board with respect to incentive compensation plans and equity-based plans.
(i)review proposed terms of any new incentive program and any major amendment of an existing program, and make such recommendations to the board with respect thereto as it may deem advisable.
(j)review and report on risks arising from the corporation’s compensation policies and practices for employees as required by Canadian securities regulators and stock exchanges on which the corporation’s stock trades.
(k)consider factors that could affect the independence or represent a conflict of interest on the part of any compensation consultant, independent legal counsel, or other adviser the committee may retain and report thereon as required by Canadian securities regulators and stock exchanges on which the corporation’s stock trades.
(l)require attendances at its meetings by members of management, as the committee may direct.
(m)undertake such additional activities within the scope of its responsibilities as it may deem appropriate.
5.Committee Evaluation
The committee will annually complete a self-evaluation of the committee’s own performance and effectiveness and will consider whether any changes to the committee’s charter are appropriate.
6.Resources and Authority of the Committee
The committee and, with the approval of the committee, any member, may engage independent counsel, compensation consultants or other advisors at the expense of the corporation. The committee shall be directly responsible for the appointment, compensation and oversight of the work of any independent legal counsel, compensation consultant or other advisor retained by the committee. The committee may select outside legal counsel, a compensation consultant or other advisor (an “Advisor”) to the committee only after taking into consideration all factors relevant to the Advisor’s independence from management, including the following:
•the provision of other services to the corporation by the person that employs the Advisor;
•the amount of fees received from the corporation by the person that employs the Advisor as a percentage of such that person’s total revenue;
•the policies and procedures of the person that employs the Advisor that are designed to prevent conflicts of interest;
•any business or personal relationship of the Advisor with a member of the committee;
•any stock of the corporation owned by the Advisor; and
•any business or personal relationship of the Advisor or the person employing the Advisor with an executive officer of the corporation.
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Nominations and Corporate Governance Committee Charter |
1.Purpose of the Committee
The primary purpose of the nominations and corporate governance committee (the ‘committee’) is to monitor compliance with good corporate governance standards; to identify individuals qualified to become board members; to recommend to the board director nominees for election at the annual meeting of shareholders or for election by the board to fill open seats between annual meetings; to recommend to the board committee appointments for directors, including appointments as chair and vice chair of such committees; to review and make recommendations to the board regarding non-employee director compensation; and to develop and recommend to the board corporate governance guidelines applicable to the corporation.
2.Committee Membership
The committee shall consist of no fewer than three members, to be appointed by the board of directors from among (a) the independent directors; and (b) the non-independent directors who are not members of the corporation’s management, who shall serve at the pleasure of the board, but only so long as he or she continues to be a director of the corporation. The actual number of members shall be determined from time to time by resolution of the board. Members of the committee should be suitably knowledgeable in matters pertaining to corporate governance.
3.Committee Structure and Operation
The chair and vice-chair of the committee shall be designated by the board from among the members of the committee. The committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the committee.
The chair, or in that person’s absence, the vice-chair or in the vice-chair’s absence, an alternate designated by the committee, shall:
(a)preside at committee meetings;
(b)ensure that meetings of the committee are held in accordance with this charter; and
(c)review, and modify if necessary the agenda of the meetings of this committee in advance to ensure that the committee may effectively carry out its duties.
A majority of the members of the committee shall constitute a quorum thereof. Every question shall be decided by a majority of the votes cast on the question and in the case of an equality of votes, the chair of the meeting shall be entitled to a second or casting vote.
The committee shall designate its secretary.
Meetings of the committee may be called by any member.
The committee shall act only on the affirmative vote of a majority of the members at a meeting or by unanimous written consent.
The committee may establish subcommittees consisting of one or more members to carry out such duties as the committee may delegate.
4.Committee Activities
The following shall be the common recurring activities of the committee in carrying out its purpose. These activities are set forth as a guide with the understanding that the committee may diverge from this guide as appropriate given the circumstances.
The committee shall:
(a)oversee issues of corporate governance as they apply to the corporation, including the effectiveness of the system of corporate governance, and the board’s relationship with management, and report to the board on such matters.
(b)oversee the annual assessment of the effectiveness and contribution of the board, its committees and each individual director.
(c)make recommendations to the board as to the appropriate size of the board with a view to facilitating effective decision-making.
(d)review and recommend to the board of directors any modifications to the charters of the board or any of its committees.
(e)review qualifications of existing directors and individuals suggested as potential candidates for director of the corporation, including candidates suggested by shareholders, and consider for nomination any of such individuals who are deemed qualified pursuant to the provisions of the board charter.
(f)recommend to the board the nominees to be proposed by the board for election as directors of the corporation at the annual meeting of shareholders.
(g)recommend to the board candidates for election as directors of the corporation to fill open seats on the board between annual meetings, including vacancies created by an increase in the authorized number of directors.
(h)consider resignations tendered by directors in the event of a change of circumstance as described in section 10(b)(ii) of the board charter.
(i)review the remuneration of independent directors and make such recommendations to the board with respect thereto as it may deem advisable.
(j)review present plans, programs or arrangements, and any proposed terms of any new plans, programs or arrangements, for the benefit of independent directors, and make such recommendations to the board with respect thereto as it may deem advisable.
(k)review and recommend to the board guidelines to be adopted relating to tenure of independent directors.
(l)provide recommendations to the board concerning committee structure of the board, committee operations, committee member qualifications, and committee member appointment.
(m)review any allegation that an executive officer or director may have violated the corporation’s Standards of Business Conduct and report its findings to the board and the general auditor.
(n)require attendances at its meetings by members of management, as the committee may direct.
(o)undertake such additional activities within the scope of its responsibilities as it may deem appropriate.
5.Committee Evaluation
The committee will annually complete a self-evaluation of the committee’s own performance and effectiveness and will consider whether any changes to the committee’s charter are appropriate.
6.Resources and Authority of the Committee
The committee has the authority to retain such outside advisors, including legal counsel or other experts, as it deems appropriate, and to approve the fees and expenses of such advisors. Without limiting the foregoing, the committee will have sole authority to retain and terminate any search firm to be used by the committee to identify director candidates and any consultant used by the committee to evaluate non-employee director compensation.
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Community Collaboration and Engagement Committee Charter |
1.Purpose of the Committee
The primary purpose of the community collaboration and engagement committee (the ‘committee’) is to review and provide advice on the corporation’s guidelines, procedures and performance supporting public awareness and consultation efforts, government, community and Indigenous relations, and community partnership and investment programs.
2.Committee Membership
The committee shall consist of no fewer than three members to be appointed by the board from among its members who shall serve at the pleasure of the board, but only so long as he or she continues to be a director of the corporation. The actual number of members shall be determined from time to time by resolution of the board. Members of the committee should be suitably knowledgeable in matters pertaining to issues relating to corporate contributions and community investment.
3.Committee Structure and Operation
The chair and vice-chair of the committee shall be designated by the board from among the members of the committee. The committee shall fix its own rules of procedure and shall meet where and as provided by such rules or by resolution of the committee. In addition to the regular meeting schedule established by the committee, the chair of the committee may call a special meeting at any time.
The chair, or in that person’s absence, the vice-chair or in the vice-chair’s absence, an alternate designated by the committee, shall:
(a)preside at committee meetings;
(b)ensure that meetings of the committee are held in accordance with this charter; and
(c)review, and modify if necessary the agenda of the meetings of this committee in advance to ensure that the committee may effectively carry out its duties.
A majority of the members of the committee shall constitute a quorum thereof. Every question shall be decided by a majority of the votes cast on the question and in the case of an equality of votes, the chair of the meeting shall be entitled to a second or casting vote.
The committee shall designate its secretary.
Meetings of the committee may be called by any member.
The committee shall act only on the affirmative vote of a majority of the members at a meeting or by unanimous written consent.
The committee may establish subcommittees consisting of one or more members to carry out such duties as the committee may delegate.
4.Committee Activities
The following shall be the common recurring activities of the committee in carrying out its purpose. These activities are set forth as a guide with the understanding that the committee may diverge from this guide as appropriate given the circumstances.
The committee shall:
(a)review and monitor the effectiveness of the corporation’s programs and practices supporting public awareness and consultation activities.
(b)monitor trends and review current and emerging issues related to government, stakeholder and Indigenous relations.
(c)review and provide advice on the corporation’s overall community investment strategies and programs, which consists of:
(i)charitable contributions;
(ii)local community contributions by business units on community-serving projects that also benefit the corporation, which are charitable in nature;
(iii)funding for public policy groups;
(iv)university research awards;
(v)sponsorships whose primary purpose is to promote community support and corporate recognition; and
(vi)expenditures required under socio-economic agreements to support the development of mutually-beneficial long-term relationships.
(d)approve all grants or contributions for charitable contributions and local community contributions; as described in section 4(c)(i) above, in excess of $300,000.
(e)require attendances at its meetings by members of management, as the committee may direct.
(f)undertake such additional activities within the scope of its responsibilities as it may deem appropriate.
5.Committee Evaluation
The committee will annually complete a self-evaluation of the committee’s own performance and effectiveness and will consider whether any changes to the committee’s charter are appropriate.
6.Resources and Authority of the Committee
The committee has the authority to retain such outside advisors, including legal counsel or other experts, as it deems appropriate, and to approve the fees and expenses of such advisors.
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