Our Approach to Governance
The Board ensures that we operate in a manner consistent with good governance and recognized standards. Strong governance is in the best interest of our stakeholders and promotes effective decision-making at the Board level and throughout the company.
Our Board of Directors approves our corporate strategic plan, which takes into account the opportunities and risk to our business, including those related to ESG and sustainability.
Complete details related to Board governance can be found in our regulatory filings, particularly our annual Management Information Circular and Proxy Statement (Information Circular).
Key highlights include the following:
We define independence as the absence of relationships that could compromise the ability of a director to exercise judgment with a view to making an objective assessment of management and assessing the merits of management initiatives. We appoint an independent Chair of the Board, or if the Chair is not independent, an independent Lead Director. Our independence statement is publicly available via our Board Operating Guidelines, on our corporate website. 102-25
Our board structure is a one-tier system. Our directors oversee all matters related to performance, including our economic, environmental, social and governance impacts, through five committees (below), and a New Venture Working Team: 102-18
Vermilion practices good governance standards with its international subsidiary companies, and has appointed independent directors to the Boards of our various subsidiaries.102-25 International Board members are responsible for overall guidance of the subsidiaries and are knowledgeable in the country of operations, with backgrounds in a combination of legal, regulatory, executive leadership and operations. The Boards of our international subsidiaries are two-tier systems and include representation by non-executive directors and employees.
We communicate the individual compensation of our Board of Directors and our five highest paid executive officers via our annual Information Circular. We also publicly disclose the measures relevant for performance-based variable compensation.
The matrix is reviewed annually by the Board to ensure an appropriate mix of backgrounds, skills and experience to guide Vermilion’s long-term strategy and ongoing business operations.
All Directors skills are included within their bios in the Information Circular.
We recognize the importance of diversity as a component of board effectiveness and business performance, and have adopted a Board Diversity Policy. For the purposes of Board composition, diversity includes, but is not limited to, skills and experience, gender, age, ethnicity, national origin, sexual orientation, disability, Indigenous people, gender expression/identity, family status or religious beliefs, and "Diverse Persons" includes, but is not limited to, women, people of different race, Indigenous people, individuals who identify as LGBTQ2S+, and people with disabilities. We believe that by composing our Board of individuals that bring diverse backgrounds and skills, Vermilion has been and will continue to be successful in problem-solving, deliberating key issues and making quality decisions that deliver positive long-term results for our shareholders and stakeholders alike. Diversity and complementarity of skills are key criteria in Vermilion’s board nomination process.
In addition, we have a formal recruitment process for Board positions that includes a candidate screening step that addresses gender diversity. The candidate screening process should include reasonable efforts to secure at least 50% of qualified women applicants and the interview pool for every Board and Executive Officer position available. We have also set — and met — a target of at least 30% female board members. 102-24
Board members are elected and re-elected on an annual basis individually, as opposed to elected by slate. We have a retirement guideline at age 75 (which we can make exceptions for), but we do not have a director term limit. While term limits can help ensure the Board gains new perspectives, imposing this restriction means it would lose the contributions of longer serving directors who have developed a deeper knowledge and understanding of Vermilion and our industry over time. We also value new perspectives. See also Board Tenure on our Dashboard page.
The Governance and Human Resources Committee, whose members are all independent, ensures that each member of the Board, the Committees and the Chair are assessed annually in light of their relevant mandates and level of expertise within our skills matrix. The evaluations are completed via a confidential questionnaire, and one-one-one interviews:
Through these evaluations, directors assess the contributions of their peers, including the Chair of the Board, in order to provide performance feedback and suggestions for improved effectiveness or contributions. 102-28
Following the assessments, a summary of the results is compiled and presented to the Board with a recommended action plan. Throughout the year, a status update is provided to the Board.
The evaluations help assesses whether changes need to be made in the Board’s processes, composition or Committee structure. Our goal is to continuously develop a top performing Board with diverse skills and deep expertise that adds value to the business through governance oversight.
We monitor corporate governance best practice development on an ongoing basis, engage with key governance and proxy advisory services, and adjust our practices where we determine it to be beneficial for the company and our shareholders. We are proud to be consistently recognized for excellence in governance practices by a wide range of governance-related organizations, including the Globe and Mail Board Games report, the Canadian Coalition for Good Governance, and MSCI. For details, please see our Awards page.