Our Approach to Governance
Our Approach to Governance, and Why this Matters
Complete details related to Board governance can be found in our regulatory filings, particularly our annual Proxy Statement.
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, which are published on our corporate website. 102-23
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
financial information, risk management, internal control systems and audit processes
Governance and Human Resources
corporate governance and performance, including ethics; and People practices, including diversity, succession and development; and compensation philosophy and practices
Health, Safety and Environment (HSE):
reserves and production
reserves and production
energy transition, including emission reduction targets; and social impacts, including human rights, community investment, and government and other stakeholder relations.
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. 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 Proxy Statement. We also publicly disclose the measures relevant for performance-based variable compensation. As a publicly traded company, we believe our stakeholders have a right to know this information, and that this level of disclosure strengthens trust in Vermilion.
We maintain a skills matrix in which each Director rates their expertise in each area annually, including for sustainability, from limited to expert. The results are then evaluated for individuals and for the Board as a whole. Our most recent assessment determined that the majority of directors are skilled, or at expert/mastery levels.102-28
The matrix is reviewed regularly by the Board to ensure an appropriate mix of backgrounds, skills and experience to guide Vermilion’s long-term strategy and ongoing business operations. We previously employed a second matrix focused on sustainability; however, with all Directors now at an expert level in sustainability and details included within their bios in the Information Circular, the second matrix is no longer needed.
We recognize the importance of diversity as a component of board effectiveness and business performance, and have adopted a Board Diversity Policy that embraces a broad range of factors, including age, race, gender, personal attributes, skill, training, educational background and life experience. 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 2018, we adopted a formal recruitment process for the Board and Executive Officer vacant 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
Performance, Evaluation and Adjustment
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 term limit for directors. 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, the Chair and Lead Director are assessed annually in light of their relevant terms of reference and level of expertise within our skills matrix. Directors complete a number of confidential evaluations administered by our Corporate Secretary (who is a senior partner of our external legal counsel, and not an employee of Vermilion), including:
The Governance and Human Resources Committee analyzes the results and 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 who add 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.