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Corporate Governance
The allocation of the company’s financial and human resources is of high importance in order to ensure financial strength and future growth. Investor confidence is maintained and developed through open and accountable investor information. The Board and management are committed to ensuring transparency within the business, fair treatment of all stakeholders and accountability in all forms of communication.
Crew has a primary listing on Toronto Stock Exchange main board with a secondary listing on Oslo Stock Exchange. The Board has considered the guidelines for corporate governance currently adopted by the Canadian securities regulators and believes that, at the present time, its approach to corporate governance is appropriate (see Statement of corporate governance practices under).
Statement of Corporate Governance Practices
On June 30, 2005, the Canadian Securities Administrators adopted National Instrument 58-101 - Disclosure of Corporate Governance Practices (“NI 58-101”) which requires issuers to disclose their governance practices in accordance with that instrument. The table below outlines the Company’s governance practices within the context of NI 58- 101.
Audit Committee Charter
February, 2004
The Audit Committee (the “Committee”) is a standing committee of the Board of Directors. The primary function of the Committee is to assist the Board of Directors in fulfilling its oversight responsibilities with respect to monitoring the Corporation’s accounting and financial reporting and practices and procedures; the adequacy of the Corporation’s internal accounting controls and procedures; the quality and integrity of financial statements and other financial information provided by the Corporation to shareholders, unitholders of the Fund and others; and for liasing with the external auditors of the Corporation.
The Committee shall comprise three or more members of the Board of Directors, who all satisfy the “independence” and “financial literacy” requirements of Multilateral Instrument 52-110 – Audit Committees (“MI 52- 110”), as amended. No member of the Committee shall be an officer or employee of the Corporation, or any affiliate of the Corporation.
For the purposes of this Charter, a member of the Committee is “independent” if the member has no direct or indirect material relationship with the Corporation, as more fully defined in MI 52-110, and a member of the Committee is “financially literate” if he or she has the ability to read an understand a set of financial statements that present a breadth and level of complexity of the issues that can reasonably be expected to be raised by the financial statements of the Corporation.
The members of the Committee shall be annually appointed by the Board of Directors and shall serve until such member’s successor is duly elected and qualified or until such member’s earlier resignation or removal. The members of the Committee may be removed, with or without cause, by a majority of the Board of Directors.
Unless a Chair is elected by the full Board of Directors, the members of the Committee shall designate a Chair by the majority vote of the full Committee membership. The Chair shall be entitled to vote to resolve any ties. The Chair will chair all regular sessions of the Committee and set the agendas for Committee meetings.
The majority of the of the members of the of the Committee shall at all times be persons resident in Canada.
The Committee shall meet at least quarterly or more frequently as circumstances dictate. As part of its goal to foster open communication, the Committee shall periodically meet with management and the external auditors in separate sessions to discuss any matters that the Committee or each of these groups believes should be discussed privately. The Committee may meet privately with outside counsel of its choosing and the Chief Financial Officer, as necessary. In addition, the Committee shall meet with the external auditors and management quarterly to review the Corporation’s financial statements in a manner consistent with that outlined in Section IV of this Charter.
All non-management directors that are not members of the Committee may attend meetings of the Committee but may not vote. Additionally, the Committee may invite to its meetings any directors, trustees of the Fund, management of the Corporation and such other persons as it deems appropriate in order to carry out its responsibilities. The Committee may exclude from its meetings any persons it deems appropriate in order to carry out its responsibilities.
A majority of the Committee members, but not less than two, will constitute a quorum, A majority of members present at any meeting at which a quorum is present may act on behalf of the Committee. The Committee may meet by telephone or videoconference and may take action by unanimous written consent with respect to matters that may be acted upon without a formal meeting.
The Chair of the Committee shall designate a person who need not be a member thereof to act as Secretary, who shall record the proceedings of the meetings. The agenda of each meeting will be prepared by the Secretary and, whenever reasonably practicable, circulated to each member prior to each meeting. The Committee shall maintain minutes or other records of meetings and activities of the Committee.
IV. RESPONSIBILITIES, DUTIES, AUTHORITY
The following functions shall be the common recurring activities of the Committee in carrying out its responsibilities outlined in Section I of this Charter. These functions should serve as a guide with the understanding that the Committee may carry out additional functions and adopt additional policies and procedures as may be appropriate in light of changing business, legislative, regulatory, legal and other conditions. The Committee shall also carry out any other responsibilities and duties delegated to it by the Board of Directors from time to time related to the purposes of this Committee outlined in Section I.
The Committee in discharging its oversight role, is empowered to investigate any matter of interest or concern that the Committee deems appropriate. In this regard, the Committee shall have the authority to retain outside counsel, accounting, or other advisors for this purpose, including authority to approve the fees payable to such advisors and other terms of retention.
The Committee shall be given full access to the Board of Directors, management, employees of the Corporation, directly and indirectly responsible for financial reporting, and independent accountants, as necessary, to carry out these responsibilities. While acting within the scope of this stated purpose, the Committee shall have all the authority of the Board of Directors.
Notwithstanding the foregoing, the Committee is not responsible for certifying the financial statements of the Corporation or guaranteeing the external auditors’ report. The fundamental responsibility for the financial statements and disclosures rests with management and the external auditors.
Annual Financial Statements
- The Committee shall review with management and the external auditors, both together and separately, prior to public dissemination:
- the annual audited consolidated financial statements;
- the external auditor’s review of the annual consolidated financial statements and their report;
- any significant changes that were required in the external audit plan;
- any significant issues raised with management during the course of the audit, including any restrictions on the scope of activities or access to information; and
- those matters related to the conduct of the audit that are required to be discussed under generally accepted auditing standards applicable to the Corporation.
Following completion of the matters contemplated above, the Committee shall make a recommendation to the Board of Directors with respect to the approval of the annual financial statements with such changes contemplated and further recommended as the Committee considers necessary.
Interim Financial Statements
- The Committee shall review with management, prior to public dissemination, the interim unaudited consolidated financial statements of the Corporation, including a discussion with the external auditors of those matters required to be discussed under generally accepted auditing standards applicable to the Corporation.
Management’s Discussion and Analysis
- The Committee shall review with management, prior to public dissemination, the annual and interim Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).
Approval of Annual MD&A, Interim Financial Statements and Interim MD&A
- The Committee shall make a recommendation to the Board of Directors with respect to the approval of the annual MD&A with such changes contemplated and further recommended by the Committee as the Committee considers necessary. In addition, the Committee shall approve the interim financial statements and interim MD&A of the Corporation, if the Board of Directors has delegated such function to the Committee. If the Committee has not been delegated this function, the Committee shall make a recommendation to the Board of Directors with respect to the approval of the interim financial statements and interim MD&A with such changes contemplated and further recommended as the Committee considers necessary.
Press Releases
- The Committee shall review with management, prior to public dissemination, the annual and interim earnings press releases (paying particular attention to the use of any “pro forma” or “adjusted non-GAAP” information) as well as financial information and earnings guidance provided to analysts and rating agencies.
Reports and Regulatory Returns
- The Committee shall review and discuss with management, and the external auditors to the extent the Committee deems appropriate, such reports and regulatory returns of the Corporation as may be specified by law.
Other Financial Information
- The Committee shall review the financial information included in any prospectus, annual information form or information circular with management and the external auditors, together and separately, prior to public dissemination, and shall make a recommendation to the Board of Directors with respect to the approval of such prospectus, annual information form or information circular with such changes contemplated and further recommended as the Committee considers necessary.
Establishment and Assessment of Procedures
- The Committee shall satisfy itself that adequate procedures are in place for the review of the public disclosure of financial information extracted or derived from the financial statements of the Corporation and assess the adequacy of these procedures annually.
Application of GAAP
- The Committee shall assure itself that the external auditors are satisfied that the accounting estimates and judgements made by management, and management’s selection of accounting principles reflect an appropriate application of generally accepted accounting principles.
Practices and Policies
- The Committee shall review with management and the external auditors, together and separately, the principal accounting practices and policies of the Corporation.
Oversight and Responsibility
- The Committee is directly responsible for overseeing the work of the external auditors engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Corporation, including the resolution of disagreements between management and the external auditors regarding financial reporting.
Reporting
- The external auditors shall report directly to the Committee and are ultimately accountable to the Committee.
Performance and Review
- The Committee shall annually review the performance of the external auditors and recommend to the Board of Directors the appointment of the external auditors or approve any discharge of the external auditors when circumstances warrant, for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services for the Corporation.
Annual Audit Plan
- The Committee shall review with the external auditors and management, together and separately, the overall scope of the annual audit plan and the resources the external auditors will devote to the audit. The Committee shall annually review and approve the fees to be paid to the external auditors with respect to the annual audit.
Non-Audit Services
- “Non-audit services” means all services performed by the external auditors other than audit services. All “non-audit” services to be provided to the Corporation by the external auditors must either be approved explicitly in advance by the Committee, or pursuant to certain pre-approval policies and procedures established by the Committee that are detailed as to the particular services that may be pre-approved, do not permit the delegation of approval authority to the Corporation’s management, and require management to inform the Committee of each service approved and performed under the policies and procedures.
- The Committee may delegate to one or members of the Committee the authority to grant such pre-approvals. The decisions of such member(s) regarding approval of “non audit” services shall be reported by such member(s) to the full Committee at its first scheduled meeting following such pre-approval. Notwithstanding the foregoing, pre-approval is not necessary for certain de minimis non-audit services performed by the external auditors, as specified in Section 2.4 of MI 52-110.
Independence Review
- The Committee shall review and assess the qualifications, performance and independence of the external auditors, including the requirements relating to such independence of the law governing the Corporation. At least annually, the Committee shall receive from and review with the external auditors, their written statement delineating all relationships with the Corporation and, if necessary, recommend that the Board of Directors take appropriate action to satisfy itself of the external auditors’ independence and accountability to the Committee.
Reports
- In addition, to such specific reports contemplated elsewhere in this Charter, the Committee shall report regularly to the full Board of Directors regarding such matters, including:
- with respect to any issues that arise with respect to the quality or integrity of the financial statements of the Corporation, compliance with legal or regulatory requirements by the Corporation, the performance and independence of the external auditors of the Corporation;
- following meetings of the Committee; and
- with respect to such other matters as are relevant to the Committee’s discharge of its responsibilities.
Recommendations
- In addition, to such specific recommendations contemplated elsewhere in this Charter, the Committee shall provide such recommendations as the Committee may deem appropriate. The report to the Board of Directors may take the form of an oral report by the Chair or any other member of the Committee designated by the Committee to make such report.
Procedures
- The Committee shall establish procedures for:
- the receipt, retention and treatment of complaints received by the Corporation regarding questionable accounting, internal accounting controls, or auditing matters; and
- the confidential, anonymous submission by employees of the Corporation and of concerns regarding questionable accounting or auditing matters.
Notice to Employees
- To comply with the above, the Committee shall ensure the Corporation advises all employees of the Corporation, by way of a written code of business conduct and ethics (the “Code”), or if such Code has not yet been adopted by the Board of Directors, by way of a written or electronic notice, that any employee who reasonably believes that questionable accounting, internal accounting controls, or auditing matters have been employed by the Corporation or its external auditors is strongly encouraged to report such concerns by way of written communication directly to the Chair or any other member of the Audit Committee. Matters referred to a member of the Audit Committee, may be done so anonymously and in confidence.
- The Corporation shall not take or allow any reprisal against any employee for, in good faith, reporting questionable accounting, internal accounting, or auditing matters. Any such reprisal shall itself be considered a very serious breach of this policy.
- All reported violations shall be investigated by the Audit Committee following rules of procedure and process as shall be recommended by outside counsel.
Access to Counsel
- The Committee shall review, periodically, with outside counsel of its choosing, any legal matter that could have a significant impact on the financial statements of the Corporation.
Hiring of Partners and Employees of External Auditors
- The Committee shall annually review and approve the Corporation’s hiring policies regarding partners, employees and former partners and employees of the present and former external auditors of the Corporation.
General
- The Committee shall perform such other duties and exercise such powers as may, from time to time, be assigned or vested in the Committee by the Board of Directors, and such other functions as may be required of an audit committee by law, regulations or applicable stock exchange rules.
Evaluation
Annual Review
- The Committee shall perform a review and evaluation, annually, of the performance of the Committee and its members, including a review of the compliance of the Committee with this Charter. In addition, the Committee shall evaluate, annually, the adequacy of this Charter annually and recommend any proposed changes to the Board of Directors.
CORPORATE GOVERNANCE DISCLOSURE REQUIREMENT |
OUR CORPORATE GOVERNANCE PRACTICES |
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| 1. | Board of Directors | |
| (a) | Disclose the identity of directors who are independent. |
Simon Russell and Hans Christian Qvist are “independent” as the term is defined in NI 58-101. In addition, although Cameron G. Belsher and Brian C. Hosking performed consulting services for the Corporation as disclosed in the Management Information Circular and therefore may not be considered “independent” within the meaning of that term in Multilateral Instrument 52-110 Audit Committees (“MI 52-110”), Messrs. Russell and Qvist have concluded that Messrs. Belsher and Hosking are independent of management of the Corporation. |
| (b) | Disclose the identity of directors who are not independent, and describe the basis for that determination. | William LeClair, Executive Vice President and Chief Financial Officer of the Corporation, and Jan A. Vestrum, the Chief Executive Officer and President of the Corporation, are by virtue of their positions with the Corporation, not “independent” directors. In addition, Messrs. Belsher and Hosking may not be considered “independent” within the meaning of that term in MI 52-110. |
| (c) | Disclose whether or not a majority of directors are independent. If a majority of directors are not independent, describe what the board of directors (the board) does to facilitate its exercise of independent judgement in carrying out its responsibilities. | A majority of directors may not be “independent” within the meaning of that term in MI 52-110. Regular meetings are held among Messrs. Russell, Belsher, Hosking, and Qvist separate and apart from management to ensure that the Board of Directors exercises independent judgement. |
| (d) | If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer. | Mr. Belsher is presently the only director who holds a directorship of another reporting issuer. Mr. Belsher is a director of the following organizations: Pender Growth Fund (VCC) Inc., Pender NDI Life Sciences Fund (VCC) Inc. and KnightHawk Inc. |
| (e) | Disclose whether or not the independent directors hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. If the independent directors hold such meetings, disclose the number of meetings held since the beginning of the issuer’s most recently completed financial year. If the independent directors do not hold such meetings, describe what the board does to facilitate open and candid discussion among its independent directors. | At each quarterly meeting of the Board of Directors the independent directors meet in the absence of management. In addition, during fiscal year 2006, 2 additional meetings of this group by telephone were held, for a total of 6 during the year. |
| (f) | Disclose whether or not the chair of the board is an independent director. If the board has a chair or lead director who is an independent director, disclose the identity of the independent chair or lead director, and describe his or her role and responsibilities. If the board has neither a chair that is independent nor a lead director that is independent, describe what the board does to provide leadership for its independent directors. | The chair of the Board of Directors was an executive officer, but effective September 22, 2005 he reverted to the position of non-executive chair. Leadership among the independent directors is exercised collectively. |
| (g) | Disclose the attendance record of each director for all board meetings held since the beginning of the issuer’s most recently completed financial year. | All directors had 100% attendance at meetings of the Board of Directors held since the beginning of the Corporation’s 2006 financial year. |
| 2. | Board Mandate – Disclose the text of the board’s written mandate. If the board does not have a written mandate, describe how the board delineates its role and responsibilities. | The Board of Directors does not have a written mandate. The Board of Directors delineates its role and responsibilities through discussion at each meeting of the Board of Directors and through the adoption of the Audit Committee Charter and the Compensation and Corporate Governance Committee Charter. The Board of Directors believes that its current method of delineating its role and responsibilities provides a high level of flexibility for the effective and efficient stewardship of the Corporation. |
| 3. | Position Descriptions: | |
| (a) | Disclose whether or not the board has developed written position descriptions for the chair and the chair of each board committee. If the board has not developed written position descriptions for the chair and/or the chair of each board committee, briefly describe how the board delineates the role and responsibilities of each such position. | The Board of Directors has developed a written position description for the chair. While written position descriptions for the chair of the Audit Committee and Compensation and Corporate Governance Committee have not been developed, the role and responsibility of chairs of these committees is delineated in their respective Charters. |
| (b) | Disclose whether or not the board and CEO have developed a written position description for the CEO. If the board and CEO have not developed such a position description, briefly describe how the board delineates the role and responsibilities of the CEO. | The Board of Directors has not developed a written position description for the Chief Executive Officer, however the Board of Directors sets objectives for the Chief Executive Officer and reviews the Chief Executive Officer’s performance against those objectives at least annually. These objectives include the general mandate to implement the approved corporate objectives and the strategic business plan. |
| 4. | Orientation and Continuing Education | |
| (a) | Briefly describe what measures the board takes to orient new directors regarding: (i) the role of the board, its committees and its directors, and (ii) the nature and operation of the issuer’s business. |
It is the intention of the Board of Directors that as and when a new nominee is identified, it will ensure that a program of orientation and education is provided for the nominee, including (but not limited to) provision of a complete corporate history, including copies of past minutes of meetings of the Board of Directors, as well as information regarding the Corporation’s business and operations. In addition, the Corporation’s counsel briefs each new director on his or her role and responsibilities. |
| (b) | Briefly describe what measures, if any, the board takes to provide continuing education for its directors. If the board does not provide continuing education, describe how the board ensures that its directors maintain the skill and knowledge necessary for them to meet their obligations as directors. | The Board of Directors receives updates from experienced counsel with respect to corporate governance initiatives and corporate governance updates are a standing agenda item of the Compensation and Corporate Governance Committee. |
| 5. | Ethical Business Conduct | |
| (a) | Disclose whether or not the board has adopted a written code for the directors, officers and employees. If the board has adopted a written code: | The Board of Directors has adopted a Code of Ethics for the directors, officers and employees of the Corporation. |
| (i) disclose how an interested party may obtain a copy of the written code; | Interested parties may obtain a copy of the Code of Ethics by writing to the Corporation. View Code of Ethics online>> | |
(ii) describe how the board monitors compliance with its code, or if the board does not monitor compliance, explain whether and how the board ensures compliance with its code; and/p> |
The Corporation’s Chief Financial Officer is responsible for monitoring compliance with the Code of Ethics. | |
| (iii) provide a cross-reference to any material change report(s) filed since the beginning of the issuer’s most recently completed financial year that pertains to any conduct of a director or executive officer that constitutes a departure from the code. | The Corporation is not aware of any conduct of a director or executive officer that constitutes a departure from the Code of Ethics. | |
| (b) | Describe any steps the board takes to ensure directors exercise independent judgement in considering transactions and agreements in respect of which a director or executive officer has a material interest. | Where a director or executive officer has a material interest in a transaction or agreement being considered at a meeting of Board of Directors, the interested individual is asked to leave the meeting and abstain from any votes. |
| (c) | Describe any other steps the board takes to encourage and promote a culture of ethical business conduct. | The Board has taken steps to ensure that the Corporation’s Code of Ethics, Stock Trading Policy, Whistle Blower Policy and Corporate Disclosure Policy have been circulated Corporation wide. |
| 6. | Nomination of Directors | |
| (a) | Describe the process by which the board identifies new candidates for board nomination. | The process by which the Board of Directors identifies new candidates for board nomination is established by the Corporation’s Compensation and Corporate Governance Committee Charter. The Compensation and Corporate Governance Committee identifies individuals believed to be qualified as candidates to serve on the Board of Directors. In identifying candidates for membership on the Board of Directors, the committee takes into account all factors it considers appropriate, which may include strength of character, mature judgement, career specialization, relevant technical skills, diversity and the extent to which the candidate would fill a present need on the Board of Directors. The Committee conducts all necessary and appropriate inquiries into the backgrounds and qualifications of possible candidates, and has sole authority to retain and to terminate any search firm to be used to assist it in identifying candidates to serve as directors of the Corporation. |
| (b) | Disclose whether or not the board has a nominating committee composed entirely of independent directors. If the board does not have a nominating committee composed entirely of independent directors, describe what steps the board takes to encourage an objective nomination process. | The Corporation’s Compensation and Corporate Governance Committee nominates candidates for director. The Compensation and Corporate Governance Committee is comprised of Messrs. Belsher, Hosking and Qvist. Although the committee may not be composed entirely of directors who are “independent” within the meaning of that term in MI 52-110 as a result of Messrs. Belsher and Hosking performing consulting services for the Corporation as disclosed in the Management Information Circular, they are independent of management of the Corporation and encourage an objective nomination process. |
| (c) | If the board has a nominating committee, describe the responsibilities, powers and operation of the nominating committee. | The Corporation’s Compensation and Corporate Governance Committee nominates candidates for director. The Committee is responsible for, among other things, identifying candidates to serve on the Board of Directors. The Committee is empowered to study or investigate any matter of interest or concern that the Committee deems appropriate and has the sole authority to retain outside counsel or other experts for this purpose, including the authority to approve the fees payable to such counsel or experts and any other terms of retention. |
| 7. | Compensation | |
| (a) | Describe the process by which the board determines the compensation for your company’s directors and officers. | The amount and form of director and officer compensation is reviewed periodically by the Compensation and Corporate Governance Committee, with any resultant recommendations made to the full Board of Directors, to ensure that such compensation realistically reflects the responsibilities and risks of being an effective director or officer, as applicable. |
| (b) | Disclose whether or not the board has a compensation committee composed entirely of independent directors. If the board does not have a compensation committee composed entirely of independent directors, describe what steps the board takes to ensure an objective process for determining such compensation. | The Compensation and Corporate Governance Committee is comprised of Messrs. Belsher, Hosking and Qvist. Although the committee may not be composed entirely of directors who are “independent” within the meaning of that term in MI 52-110 as a result of Messrs. Belsher and Hosking performing consulting services for the Corporation as disclosed in the Management Information Circular, they are independent of management of the Corporation and encourage an objective compensation process. |
| (c) | If the board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee. | In addition to the responsibilities outlined on (a) above, the Committee is responsible for, among other things, establishing and reviewing the overall compensation philosophy of the Corporation, including annually reviewing and approving the President and Chief Executive Officer’s corporate goals and objectives and annually performing an appraisal on the performance of the President and Chief Executive Officer in light of the corporate goals and objectives and, based on such appraisal, reviewing and approving the annual salary, bonus, any awards under the Incentive Plan and other benefits of the President and Chief Executive Officer. The Committee is empowered to study or investigate any matter of interest or concern that the Committee deems appropriate and shall have the sole authority to retain outside counsel or other experts for this purpose, including the authority to approve the fees payable to such counsel or experts and any other terms of retention. |
| (d) | If a compensation consultant or advisor has, at any time since the beginning of the issuer’s most recently completed financial year, been retained to assist in determining compensation for any of the issuer’s directors and officers, disclose the identity of the consultant or advisor and briefly summarize the mandate for which they have been retained. If the consultant or advisor has been retained to perform any other work for the issuer, state that fact and briefly describe the nature of the work. | During fiscal year 2006, no such advisor was retained. |
| 8. | Other Board Committees - If the board has standing committees other than the audit, compensation and nominating committees identify the committees and describe their function. | There are no other committees of the Board of Directors. |
| 9. | Assessments – Disclose whether or not the board, its committees and individual directors are regularly assessed with respect to their effectiveness and contribution. If assessments are regularly conducted, describe the process used for the assessments. If assessments are not regularly conducted, describe how the board satisfies itself that it, its committees, and individual directors are performing effectively. | The chair of the Board of Directors and the chair of each of the committees of the Board of Directors are responsible for ensuring the effective administration and performance of the Board of Directors and its committees, and the Compensation and Corporate Governance Committee Charter provides for periodic review and evaluation of the effectiveness of the Board of Directors and the contribution of each director. |