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NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS April 29, 2005 MANAGEMENT PROXY CIRCULAR | ![]() |
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(1) | to receive the Annual Report and the comparative consolidated financial statements of the Corporation and its subsidiaries for the year ended December 31, 2004 and the report of the auditors thereon; |
(2) | to elect directors for the ensuing year; |
(3) | to appoint PricewaterhouseCoopers LLP as auditors for the ensuing year and to authorize the directors to fix the auditors’ remuneration; |
(4) | to consider and, if deemed advisable, pass a special resolution to authorize management of the Corporation to amend the Articles of the Corporation to effect a subdivision of the Corporation’s Common Shares on a 3:1 basis; |
(5) | to consider the shareholder proposal attached in Appendix 4 to the Management Proxy Circular of the Corporation dated March 10, 2005 (the “Management Proxy Circular”); and |
(6) | to transact such further or other business as may properly be brought before the meeting or any adjournment or adjournments thereof. |
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A. | Management of the Corporation is soliciting your proxy. The solicitation of proxies will be exercised primarily through mail, however proxy solicitation may also be conducted by telephone, e-mail, facsimile or other contact by employees or agents of the Corporation. The Corporation will bear the cost of such solicitation. |
A. | Each shareholder is entitled to one vote for each Common Share and 4% Cumulative Redeemable Preference Share of the Corporation owned as of March 10, 2005, the record date for the Meeting. |
The list of shareholders will be prepared as of the close of business on March 10, 2005. This list will be available for inspection after March 11, 2005 at the Corporation’s registered office and will be available at the Meeting. |
A. | The following matters will be voted on at the Meeting: |
(i) | the election of directors; | |
(ii) | the appointment of auditors; | |
(iii) | the amendment of the Articles of the Corporation to effect a subdivision of the Corporation’s Common Shares on a 3:1 basis; | |
(iv) | the shareholder proposal, as set out in Appendix 4 to the Management Proxy Circular; and | |
(v) | any other business that may be properly brought before the Meeting or any adjournment or adjournments thereof. |
A. | A simple majority of the votes cast in person or by proxy will constitute approval of each of the matters identified in (i), (ii) and (iv) above. The matter identified in item (iii) will require approval by two-thirds of the votes cast in person or by proxy. |
A. | If you are attending the Meeting and are eligible to vote, you have the authority to vote on the matters discussed during the Meeting as you choose. If you are not attending the Meeting, the person named in the enclosed form of proxy will have the discretionary authority to vote on any amendments or variations in any matters identified in the Notice of Meeting and with respect to other matters that may properly come before the Meeting. |
At the date of this Management Proxy Circular, management of the Corporation |
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knows of no such amendments, variations or other matters to come before the Meeting. |
A. | If you are aregistered shareholder, you can vote in person at the Meeting. If you are able to attend the Meeting, do not use the enclosed form of proxy. Rather, your vote will be taken and counted at the Meeting. If you are unable to attend the Meeting, please complete and return the enclosed form of proxy to our transfer agent, CIBC Mellon Trust Company, Attention: Proxy Department, P.O. Box 12005, Station Brm. B, Toronto, Ontario M7Y 2K5 so that it arrives no later than 11:00 a.m. (MST) on April 29, 2005. |
If you are abeneficial shareholder(if your shares are not registered in your own name, but are held in the name of a nominee (a bank, broker, trust company)), you should follow the instructions from your nominee with respect to voting procedures. Your nominee will provide you with a package including these Meeting materials and either a proxy or a voting instruction form. If you are attending the Meeting in person, you should appoint yourself as proxyholder by inserting your own name in the space provided on the proxy or voting instruction form sent to you by your nominee. If you appoint yourself as a proxyholder and are attending the Meeting in person, be sure to identify yourself at the registration desk. |
A. | A proxyholder is a person you appoint to act on your behalf to vote your shares on the matters to be voted upon at the Meeting. If you sign and return your proxy form, you will be providing authority to Ms. Cathy L. Williams and Mr. Simon A. Fish to vote your shares at the Meeting. These individuals are both officers of the Corporation. |
Q. | Can I appoint someone other than these officers to vote my shares? |
A. | Yes.You have the right to appoint a person to represent you at the Meeting other than the officers designated in the form of proxy.You may appoint another person to vote your shares as your proxyholder by drawing a line through the printed names and inserting the name of such person in the space provided on the proxy form. This person does not have to be a shareholder of the Corporation. |
If you appoint another person to vote your shares at the Meeting, it is important that this person attends the Meeting and identifies themselves as your proxyholder at the registration desk. |
Q. | How will my shares be voted if I return the proxy? |
A. | You can choose on your proxy how you want your shares voted. Alternatively, you can let your proxyholder decide for you. If you choose to specify how you want your shares voted on a particular matter, your proxyholder will vote your shares that way on any ballot that may be called for at the Meeting. If neither you nor your proxyholder gives specific instructions, your shares will be voted as follows: |
• | FOR the election of directors; | |
• | FOR the appointment of auditors; | |
• | FOR the special resolution to authorize management to amend the Articles of the Corporation to effect a subdivision of the Corporation’s Common Shares on a 3:1 basis; | |
• | FOR management’s proposals generally and AGAINST the shareholder proposal, as set out in Appendix 4 to the Management Proxy Circular. |
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A. | Please return your proxy to our transfer agent, CIBC Mellon Trust Company, in the postage-paid envelope provided. Alternatively, you may fax your completed proxy to (416) 368-2502. Your completed proxy must be received by CIBC Mellon Trust Company by 11:00 a.m. (MST) on April 29, 2005. |
Q. | What is the deadline for submitting my proxy? |
A. | To be effective your proxy must be received by CIBC Mellon Trust Company before the time of the Meeting. |
A. | CIBC Mellon Trust Company counts and tabulates the proxies, independently of the Corporation. |
Q. | Can I change my mind once I have submitted my proxy to the Corporation? |
A. | Yes. The procedure for revoking your proxy is dependent on whether or not you are a registered or a non-registered shareholder. If you are aregistered shareholder, you can revoke your proxy by stating clearly, in writing, that you want to revoke your proxy. This statement should be delivered: (i) to the Corporation’s Secretary by mail at 400 - 4th Avenue S.W., Calgary, Alberta, T2P 2H5, or by facsimile at (403) 691-3696 at any time up to and including the last business day preceding the day of the Meeting at which the proxy is to be used, or any adjournment thereof; (ii) to the Chairman of the Meeting prior to the commencement of the Meeting on the day of the Meeting, or any adjournment thereof; or (iii) in any other manner permitted by law. If you have completed and returned a proxy and attend the Meeting in person and vote, any such votes cast by you will be counted and your proxy will be disregarded. |
If you are anon-registered shareholder, you should contact your nominee for instructions to revoke your proxy. |
Q. | How many shareholders are required to constitute a quorum at the Meeting? |
A. | The Corporation’s by-laws provide that the quorum for the transaction of business at the Meeting will be two persons present in person, each being a shareholder entitled to vote, or a duly appointed proxyholder, and together representing not less than a majority of the outstanding shares of the Corporation entitled to vote at the meeting. |
A. | As of March 10, 2005, the Corporation’s outstanding voting shares, each of which carries the right to one vote per share, consist of 275,142,462 Common Shares and 100 4% Cumulative Redeemable Preference Shares. |
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Deferred | |||||||||||||||||||||
Common Shares | Share Units | Shares of | Ordinary | ||||||||||||||||||
of the | of the | Royal Dutch | Shares of | ||||||||||||||||||
Corporation | Corporation | Priority | Ordinary | Shell T&T | |||||||||||||||||
D.H. Burney | 3,282 | 2,959.59 | – | – | – | ||||||||||||||||
I.J. Goodreau | 939 | 756.45 | – | – | – | ||||||||||||||||
K.L. Hawkins | 4,313 | 3,227.70 | – | – | – | ||||||||||||||||
D.W. Kerr | 2,000 | 893.26 | – | – | 1,000 | ||||||||||||||||
W.A. Loader | – | – | – | – | 51,943 | ||||||||||||||||
C. Mather | 500 | 3,058.10 | – | – | 871 | ||||||||||||||||
R.W. Osborne | 2,594 | – | – | – | – | ||||||||||||||||
R.J. Routs | 500 | – | 6 | – | – | ||||||||||||||||
R. Royer | 8,690 | – | – | – | – | ||||||||||||||||
N.C. Southern | 3,638 | – | – | – | – | ||||||||||||||||
J. van der Veer | – | – | 6 | 10,512 | – | ||||||||||||||||
Directors and nominees as a group | 26,456 | 10,895.10 | 12 | 10,512 | 53,814 | ||||||||||||||||
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![]() | Derek H. Burney, O.C., 65, of Ottawa, Ontario, has served on the Board of Directors of the Corporation since April 25, 2001. Since 2004, Mr. Burney has been Chairman of New Brunswick Power Corporation, a Crown Corporation with the legislated mission to provide for the electricity needs of the Province of New Brunswick. New Brunswick Power Corporation is the largest electric utility in Atlantic Canada. Prior to that, Mr. Burney served as President and Chief Executive Officer of CAE Inc. from 1999 to 2004. CAE Inc. is the world’s premier provider of simulation and control technologies for training and optimization solutions for the aerospace and defense sectors. Mr. Burney also serves as a director of Quebecor World Inc. and is an Advisory Board Member of Idelix Software Inc. Mr. Burney is a Senior Distinguished Fellow and Adjunct Professor of Carleton University. | Lead Director. Chair of the Nominating and Governance Committee and member of the Management Resources and Compensation Committee and the Reserves Committee. | ||
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![]() | Ida J. Goodreau, 53, of Vancouver, British Columbia, has served on the Board of Directors of the Corporation since April 24, 2003. Ms. Goodreau has been President and Chief Executive Officer of Vancouver Coastal Health Authority since 2002. The Vancouver Coastal Health Authority shares responsibility with five other geographical health authorities and ministries of the British Columbia provincial government for planning, delivering, monitoring and evaluating health care programs in the province. Ms. Goodreau also serves as a director of Terasen Inc. From 2000 to 2002, Ms. Goodreau was Senior Vice-President of Global Optimization & Human Resources, Norske Skog Industries. | Member of the Audit Committee and the Management Resources and Compensation Committee. | ||
![]() | Kerry L. Hawkins, 64, of Winnipeg, Manitoba, has served on the Board of Directors of the Corporation since October 1, 1997. Mr. Hawkins has been President of Cargill Limited since 1982. Cargill Limited is a Canadian agricultural company. Mr. Hawkins also serves as a director of TransCanada PipeLines Limited, TransCanada Corporation, Hudson’s Bay Company and Nova Chemicals Corporation, and is Chairman of the Board of Saskferco Products Inc. | Chair of the Audit Committee and member of the Nominating and Governance Committee and the Reserves Committee. | ||
![]() | David W. Kerr, 61, of Toronto, Ontario, has served on the Board of Directors of the Corporation since April 24, 2003. Mr. Kerr has been Chairman and a director of Noranda Inc. since 2002. From 2001 to 2002 Mr. Kerr was Chairman and Chief Executive Officer of Noranda Inc., and from 1990 to 2001 Mr. Kerr served as President and Chief Executive Officer of Noranda Inc. Noranda Inc. is a leading international mining and metals company and is one of the world’s largest producers of zinc and nickel and a significant producer of copper, primary and fabricated aluminum, lead, silver, gold, sulphuric acid and cobalt. Mr. Kerr also serves as a director of Sun Life Financial Inc. and Brascan Corp. | Chair of the Reserves Committee and member of the Audit Committee and the Nominating and Governance Committee. | ||
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![]() | W. Adrian Loader, 56, of Guildford, England, has served on the Board of Directors of the Corporation since September 27, 2003. Mr. Loader has served as Director, Strategic Planning, Sustainable Development and External Affairs for Shell International Limited since June, 2003. Prior to that, Mr. Loader was President, Shell Oil Products Europe from 1999 to June, 2003. The principal businesses of all Shell and Royal Dutch companies are oil, natural gas, chemicals and renewable resources. Mr. Loader also serves as a director of other Royal Dutch/ Shell Group companies and Alliance Unichem plc. | |||
![]() | Clive Mather, 57, of Calgary, Alberta, has served on the Board of Directors of the Corporation since August 1, 2004. Mr. Mather has served as President and Chief Executive Officer of Shell Canada Limited since August 1, 2004. Shell Canada is one of the largest integrated petroleum companies in Canada. From 2002 to 2004, Mr. Mather served as Chairman of Shell UK Limited and Head of Global Learning of Shell International Limited. From 2001 to 2002, Mr. Mather served as Special Advisor to the Chairman of the Committee of Managing Directors of Shell International Limited. From 1999 to 2001, Mr. Mather served as Chief Executive Officer of Shell Services International Ltd. Prior to this, Mr. Mather served as Director International of Shell International Limited. Mr. Mather is currently a director and President of SIL and a director of Shell Chemicals Canada Ltd., Shell Canada Products Limited and Shell Canada OP Inc. | |||
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![]() | Ronald W. Osborne, 58, of Toronto, Ontario, has served on the Board of Directors of the Corporation since April 25, 2001. Mr. Osborne was President and Chief Executive Officer of Ontario Power Generation Inc. from 1999 to 2003. Ontario Power Generation Inc. owns the power generation assets supplying approximately 85 per cent of all electricity consumed in Ontario. Mr. Osborne also serves as a director of Sun Life Financial Inc., Torstar Corporation, St. Lawrence Cement Group Inc., Massachusetts Financial Services Company and Four Seasons Hotels Inc., and is a trustee of RioCan Real Estate Investment Trust. Mr. Osborne also served as a director of Air Canada from 1999 to 2004. Air Canada sought and received protection from bankruptcy on April 1, 2003 and exited from this protection on September 30, 2004 with a reorganized corporate structure. Mr. Osborne resigned as a director of Air Canada effective as of September 30, 2004. | Chair of the Management Resources and Compensation Committee and member of the Audit Committee and the Reserves Committee. | ||
![]() | Robert J. Routs, 58, of The Hague, The Netherlands, will be nominated for election to the Board of Directors of the Corporation on April 29, 2005. Mr. Routs is currently Managing Director of Royal Dutch Petroleum Company and a Group Managing Director of the Royal Dutch/ Shell Group (since 2003). From 2002 to 2003, Mr. Routs served as President and Chief Executive Officer of Shell Oil Products U.S., President of Shell Oil Company and Country Chair for Shell in the United States. From 2000 to 2002, Mr. Routs served as President and Chief Executive Officer of Equilon Enterprises LLC. Prior to that, Mr. Routs was Head of Shell International Resource and Technology Services Group (Shell Global Solutions). | |||
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![]() | Raymond Royer, O.C., 66, of Ile Bizard, Quebec, has served on the Board of Directors of the Corporation since April 26, 2000. Mr. Royer has been President and Chief Executive Officer of Domtar Inc. since 1996. Domtar Inc. is a North American manufacturer of fine papers, pulp and forest products and owns a 50 per cent interest in Norampac Inc., a manufacturer of containerboard and corrugated containers. Mr. Royer also serves as a director of Domtar Inc. and Power Financial Corporation. | Member of the Audit Committee and the Management Resources and Compensation Committee. | ||
![]() | Nancy C. Southern, 48, of Calgary, Alberta, has served on the Board of Directors of the Corporation since April 25, 2001. Ms. Southern has been President and Chief Executive Officer of ATCO Ltd. and Canadian Utilities Limited since January, 2003. Prior to that, Ms. Southern was Co-Chairman and Chief Executive Officer of ATCO Ltd. and Canadian Utilities Limited from 2000 to December, 2002. ATCO Ltd. is a management holding company with operating subsidiaries engaged in regulated natural gas and electric operations, power generation, manufacturing, sale and leasing of relocatable workforce shelter products and other businesses. Canadian Utilities Limited is a holding company with operating subsidiaries engaged in natural gas and electrical energy utility operations, and in related non-regulated operations. Ms. Southern also serves as a director and Chief Executive Officer of certain other subsidiaries of ATCO Ltd. and Canadian Utilities Limited. Ms. Southern is a director of the Bank of Montreal and Akita Drilling Ltd. and is Executive Vice President of Spruce Meadows. | Member of the Management Resources and Compensation Committee and the Nominating and Governance Committee. | ||
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• | attract and retain high quality senior management with the necessary experience to create long term value; | |
• | be consistent, fair and equitable across the business units of the Corporation; | |
• | be based on competitive levels of pay for responsibility and performance that contribute to objectives established for the Corporation, its business units and the executive; | |
• | align interests of senior management with the interests of the Corporation’s shareholders in creating value over the longer term; and | |
• | have a significant component linked to the achievement of specific financial and non-financial measures and results. |
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• | review the performance of the President and Chief Executive Officer (“CEO”) based upon agreed targets and objectives; | |
• | review and determine the compensation of the President and CEO; | |
• | review and approve the annual recommendations of the President and CEO with respect to adjustments, if any, in the base salaries of each Named Executive Officer (as identified on page 20 of this Management Proxy Circular) as well as all other senior management; | |
• | determine, annually, whether or not there will be any incentive awards for senior management; | |
• | administer and grant share options under the Corporation’s Long Term Incentive Plan; | |
• | administer the Corporation’s Deferred Share Unit Plan for Executive Officers; | |
• | review new pension and benefit plans and any significant changes to such plans; | |
• | review senior management succession plans; | |
• | recommend candidates to the Board for appointment as officers of the Corporation; and | |
• | engage, as required, independent consultants to provide input and advice on executive compensation matters. |
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• | changed the references in the LTIP from “Class “A” Common Shares” to “Common Shares”; | |
• | removed transition provisions that were included when the LTIP was introduced in 1984 to replace a predecessor option plan; | |
• | changed the method of determining the value of SARs such that the deemed fair market value of the Corporation’s Common Shares at the time of exercise of a SAR is the average of the daily high and low board lot trading prices on the last trading day in which a board lot of the Corporation’s Common Shares traded on the Toronto Stock Exchange; | |
• | sought amendments to all existing but unexercised Options to attach SARs; and | |
• | dissolved the Long Term Incentive Subcommittee and vesting the powers of that committee under the LTIP in the MRCC. |
• | clarified the definition of employees eligible to participate in the LTIP; | |
• | increased the aggregate number of Common Shares reserved for issuance under the LTIP by an additional 9,000,000 Common Shares; | |
• | permitted the return of Option shares to the LTIP upon the exercise of a SAR; and | |
• | deleted the time limitation period for SARs so that SARs are exercisable during the same time periods as Options. |
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• | the profitability of the Corporation as determined by ROACE compared to targets established at the beginning of the performance cycle; | |
• | the profitability and financial performance of the Corporation compared to other integrated oil companies as measured by ROACE Rank and TSR Rank; | |
• | the strategic positioning of the Corporation for profitable growth and future success; |
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• | the safety and environmental performance of the Corporation; | |
• | the operational performance of the business as measured by key performance metrics; and | |
• | the leadership of the Corporation and the strength of its people and succession plans. |
• | the profitability of the Corporation exceeded expectations in 2004, with a ROACE that was above the established target; | |
• | the profitability and financial performance of the Corporation compared to the integrated oil comparator group was met or exceeded; | |
• | the objectives set for strategic positioning of the Corporation for profitable growth and success exceeded target; | |
• | the Corporation’s safety and environmental performance was at or above target; | |
• | operational results varied by business unit and were reflected in the outcome of each business unit Scorecard but were primarily above target; and | |
• | progress in the area of succession planning and leadership development was on target. |
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Long-Term | |||||||||||||||||||||||||||
Annual Compensation | Incentives(1) | ||||||||||||||||||||||||||
Securities | |||||||||||||||||||||||||||
Annual | Under | ||||||||||||||||||||||||||
Incentive | Other Annual | Options/SARs | All Other | ||||||||||||||||||||||||
Name and | Salary | Pay | Compensation | Granted | Compensation | ||||||||||||||||||||||
Principal Position | Year | ($) | ($) | ($)(2) | (#) | ($) | |||||||||||||||||||||
C. Mather | 2004 | 347,917 | (3) | 320,000 | (4)(5) | 104,280 | (6) | Nil | 427,902(7)(8 | ) | |||||||||||||||||
President and CEO | |||||||||||||||||||||||||||
L.Z. Cook | 2004 | 581,409 | (9) | 470,000 | (10) | 338,085 | (12) | 120,000 | 161,484(13)( | 14) | |||||||||||||||||
President and CEO | 2003 | 421,250 | (9) | 350,000 | (11) | 230,374 | (12) | Nil | 147,520(13) | ||||||||||||||||||
T.W. Faithfull | 2003 | 716,449 | (15) | 475,000 | 57,672 | (16) | 180,000 | 130,656(17) | |||||||||||||||||||
President and CEO | 2002 | 875,000 | 575,000 | 112,487 | (16) | 180,000 | 78,610(18) | ||||||||||||||||||||
C.L. Williams | 2004 | 345,000 | (19) | 305,000 | – | 80,000 | Nil | ||||||||||||||||||||
Chief Financial Officer | 2003 | 266,353 | 195,000 | (20) | – | Nil | 74,350(21) | ||||||||||||||||||||
S. Støtvig | 2003 | 94,530 | (22) | 65,000 | 15,315 | (23) | 70,000 | 9,216(24) | |||||||||||||||||||
Chief Financial Officer | 2002 | 338,750 | 160,000 | 93,543 | 70,000 | 37,190(24) | |||||||||||||||||||||
D.M. Weston | 2004 | 515,661 | 410,816 | (25) | 71,290 | (26) | 22,000 | 307,951(27) | |||||||||||||||||||
Senior Vice President, Products | 2003 | 404,749 | 264,086 | (25) | 59,250 | (26) | Nil | 306,784(27) | |||||||||||||||||||
H.I. Kilgour | 2004 | 383,750 | 400,000 | – | 80,000 | Nil | |||||||||||||||||||||
Senior Vice | 2003 | 323,750 | 290,000 | – | 80,000 | Nil | |||||||||||||||||||||
President, E&P | 2002 | 251,000 | 165,000 | – | 20,000 | Nil | |||||||||||||||||||||
N.J. Camarta | 2004 | 403,750 | 275,000 | – | 80,000 | Nil | |||||||||||||||||||||
Senior Vice | 2003 | 378,750 | 215,000 | – | 80,000 | Nil | |||||||||||||||||||||
President, Oil Sands | 2002 | 348,750 | 140,000 | – | 80,000 | Nil | |||||||||||||||||||||
(1) | The Corporation has not issued any Restricted Shares or Restricted Share Units and does not have a “long-term incentive plan” as that term is described under applicable disclosure rules. |
(2) | Unless otherwise noted, perquisites and other personal benefits do not exceed the lesser of $50,000 and 10 per cent of the total annual salary and annual incentive pay. |
(3) | Mr. Mather is seconded from Shell International Limited and joined the Corporation on August 1, 2004. |
(4) | Mr. Mather’s annual incentive pay is based on the Corporation’s business performance and his salary for the period from August 1, 2004 to December 31, 2004. The Corporation paid for this amount. In April 2005, Mr. Mather will receive a bonus payment from Shell International Limited for the first seven months of 2004, and this amount is not included in the Summary Compensation Table. |
(5) | Mr. Mather elected to convert 75 per cent or $240,000 of his bonus to DSUs. |
(6) | Includes dependent education assistance and taxable benefits in the amount of $60,851, and $28,688 for housing assistance and taxable benefits. Other expenses and benefits in other Annual Compensation include vehicle, parking and tax equalization protection. |
(7) | Mr. Mather received a $50,000 relocation allowance as per the expatriate compensation programs of the Group Companies. |
(8) | Mr. Mather is seconded from Shell International Limited and participates in The Shell Overseas Contributory Pension Fund (the “SOCPF”). The Corporation’s cost of contribution to the SOCPF for Mr. Mather is $377,902, which includes a one-time special pension fund contribution in the amount of $280,228. See “Retirement and Savings Program”. |
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(9) | Ms. Cook joined the Corporation from Shell Expatriate Employment US Inc. (“SEEUS”) on July 1, 2003 and left her position as President and CEO effective July 31, 2004 to join Royal Dutch Petroleum Company. Her salary includes an amount of $52,536 for vacation pay that was outstanding as of the date of her departure. |
(10) | Ms. Cook’s 2004 bonus is based on the Corporation’s business performance and her salary for the period from January 1 to July 31, 2004. The Corporation paid for this amount. |
(11) | In April 2004, Ms. Cook received a payment in the amount of US$240,000 related to service prior to joining the Corporation in 2003. This amount was paid for by Shell International Limited and is not included in the Summary Compensation Table. |
(12) | Includes tax reimbursement and payments on income as per the expatriate compensation programs of the Group Companies in the amount of $258,218 for 2004 and $75,834 for 2003. Other expenses and benefits in Annual Compensation include housing, vehicle, parking and a commodities and services allowance including dependent education expenses in 2003 in the amount of $71,652 as per the expatriate compensation programs of the Group Companies. |
(13) | Ms. Cook was seconded from SEEUS. SEEUS is a participating company in retirement programs for Group Company employees such as Ms. Cook. The Corporation’s cost of contribution to two of the US pension plans for Ms. Cook was $111,098 in 2004 and $22,364 for 2003. Additional contributions of US $106,668 made to the retirement programs on behalf of Ms. Cook for the period July to December 2003 were not charged to the Corporation. These additional contributions are not represented in the Summary Compensation Table. |
(14) | A payment of $38,100 was made to Ms. Cook in recognition of the requirement to surrender her Shell Canada stock options upon her move to Royal Dutch Petroleum Company. The payment was based on the difference between the grant price and the price of the Common Shares on July 26, 2004 multiplied by 10,000 stock options (50 per cent of the number of stock options that would have vested after one year). |
(15) | Mr. Faithfull resigned from his position as President and CEO of the Corporation effective July 31, 2003. His salary includes an amount of $160,050 for vacation pay that was outstanding as of the date of his resignation. |
(16) | Includes housing and taxable benefits as per the expatriate compensation programs of the Group Companies for 2003 of $49,344 and for 2002 of $84,590. |
(17) | Mr. Faithfull was seconded from Shell International Limited and participated in the SOCPF. The amount of $130,656 represents the cost of contribution to the SOCPF for Mr. Faithfull. See “Retirement and Savings Program”. |
(18) | Mr. Faithfull received a special one-time retirement payment from Shell International Limited in the amount of $239,282 in 2003. This payment is not included in the Summary Compensation Table. |
(19) | Ms. Williams re-joined Shell Canada from an affiliate company as Chief Financial Officer effective April 1, 2003. |
(20) | Ms. William’s 2003 bonus was for performance from March 10, 2003 to December 31, 2003. |
(21) | Ms. Williams received a relocation allowance of $74,350. |
(22) | Mr. Støtvig retired from the Corporation effective March 31, 2003. His salary includes an amount of $8,280 for vacation pay that was outstanding as of the date of his retirement. |
(23) | Includes housing and taxable benefits as per the expatriate compensation programs of the Group Companies of $14,754 for 2003 and $59,016 for 2002. |
(24) | Mr. Støtvig was seconded from Shell International Limited and participated in Shell International Limited’s pension plan. This represents the Corporation’s cost of contribution to Shell International Limited’s pension plan for Mr. Støtvig. See “Retirement and Savings Program”. |
(25) | Mr. Weston is seconded from Shell International Limited and participates in Shell International Limited’s Variable Pay Program. In April 2004, Mr. Weston received a bonus of $264,086 for the 2003 performance year. The Corporation pays for amounts awarded under this program. |
(26) | Includes housing and taxable benefits as per the expatriate compensation program of the Group Companies for 2004 of $68,850 and for 2003 of $57,377. |
(27) | Mr. Weston is seconded from Shell International Limited and participates in the SOCPF. The Corporation’s cost of contribution to the SOCPF for Mr. Weston for 2004 is $307,951, which includes a one-time special pension fund contribution in the amount of $167,300, and for 2003 $280,555, which included a one-time special pension fund contribution in the amount of $186,896. See “Retirement and Savings Program”. |
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Market Value | ||||||||||||||||||||||||
of Securities | ||||||||||||||||||||||||
% of Total | Underlying | |||||||||||||||||||||||
Securities Under | Options/SARs | Options/SARs | ||||||||||||||||||||||
Options/SARs | Granted to | Exercise or | on the Date | |||||||||||||||||||||
Granted | Employees in | Base Price | of Grant | |||||||||||||||||||||
Name | (#) | Financial Year | ($/Security) | ($/Security) | Expiration Date | |||||||||||||||||||
C. Mather | Nil | Nil | Nil | Nil | N/A | |||||||||||||||||||
L.Z. Cook | 120,000 | (1) | 7.08 | 62.55 | 62.55 | N/A | ||||||||||||||||||
C.L. Williams | 40,000 | (2) | 2.36 | 62.55 | 62.55 | January 27, 2014 | ||||||||||||||||||
40,000 | (3) | 2.36 | 62.55 | 62.55 | January 27, 2014 | |||||||||||||||||||
D.M. Weston | 11,000 | (2)(4) | 0.65 | 62.55 | 62.55 | January 27, 2014 | ||||||||||||||||||
11,000 | (3)(4) | 0.65 | 62.55 | 62.55 | January 27, 2014 | |||||||||||||||||||
H.I. Kilgour | 40,000 | (2) | 2.36 | 62.55 | 62.55 | January 27, 2014 | ||||||||||||||||||
40,000 | (3) | 2.36 | 62.55 | 62.55 | January 27, 2014 | |||||||||||||||||||
N.J. Camarta | 40,000 | (2) | 2.36 | 62.55 | 62.55 | January 27, 2014 | ||||||||||||||||||
40,000 | (3) | 2.36 | 62.55 | 62.55 | January 27, 2014 | |||||||||||||||||||
(1) | All of Ms. Cook’s stock options granted in 2004 were cancelled when Ms. Cook returned to Royal Dutch Petroleum Company (see note 14 to the Summary Compensation Table). |
(2) | Time vested options/SARs. |
(3) | Performance-based options/SARs. |
(4) | Reflects expected value of award levels received by peers employed by the Group Companies. |
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Value of Unexercised in- | ||||||||||||||||||||||||||
Securities | Aggregate | Unexercised Options/SARs | the-Money Options/SARs at | |||||||||||||||||||||||
Acquired on | Value | at December 31, 2004 | December 31, 2004 | |||||||||||||||||||||||
Exercise | Realized | (#) | ($) | |||||||||||||||||||||||
Name | (#) | ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||||
C. Mather | Nil | Nil | Nil | Nil | Nil | Nil | ||||||||||||||||||||
L.Z. Cook | Nil | Nil | Nil | Nil | Nil | Nil | ||||||||||||||||||||
C. Williams | 8,000 | 402,140 | 54,100 | 80,000 | 2,849,646 | 1,395,200 | ||||||||||||||||||||
D.M. Weston | Nil | Nil | 0 | 22,000 | 0 | 383,680 | ||||||||||||||||||||
H.I. Kilgour | Nil | Nil | 76,764 | 153,336 | 3,495,555 | 3,896,559 | ||||||||||||||||||||
N.J. Camarta | 16,800 | 869,089 | 187,549 | 200,001 | 8,767,401 | 5,543,368 | ||||||||||||||||||||
Plan Category | (A) Number of Securities | (B) | (C) Number of Securities Remaining | |||
to be Issued Upon | Weighted - Average | Available for Future Issuance Under | ||||
Exercise of | Exercise Price of | Equity Compensation Plans | ||||
Outstanding Options | Outstanding Options | (excluding Securities in column (A)) | ||||
(#) | (#) | |||||
Equity Compensation | ||||||
Plans approved by | 6,110,000 | $45.35 | 9,991,000 | |||
Securityholders | ||||||
Equity Compensation | ||||||
Plans not approved by | Nil | Nil | Nil | |||
Securityholders | ||||||
Total | 6,110,000 | $45.35 | 9,991,000 | |||
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• | a lump-sum payment equal to final salary plus a three year rolling average of pensionable annual incentive pay received immediately prior to retirement date multiplied by two; or |
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• | a supplementary pension equivalent to the straight-life annuity that can be provided by final salary plus a three year rolling average of pensionable annual incentive pay received immediately prior to retirement date multiplied by 1.5 which provides benefits consistent with the Corporation’s Retirement and Savings Program. |
Years of Service | ||||||||||||||||||||||
Remuneration(2) | 15 | 20 | 25 | 30 | 35 | |||||||||||||||||
200,000 | $ | 60,000 | $ | 80,000 | $ | 100,000 | $ | 120,000 | $ | 140,000 | ||||||||||||
250,000 | 75,000 | 100,000 | 125,000 | 150,000 | 175,000 | |||||||||||||||||
300,000 | 90,000 | 120,000 | 150,000 | 180,000 | 210,000 | |||||||||||||||||
350,000 | 105,000 | 140,000 | 175,000 | 210,000 | 245,000 | |||||||||||||||||
400,000 | 120,000 | 160,000 | 200,000 | 240,000 | 280,000 | |||||||||||||||||
450,000 | 135,000 | 180,000 | 225,000 | 270,000 | 315,000 | |||||||||||||||||
500,000 | 150,000 | 200,000 | 250,000 | 300,000 | 350,000 | |||||||||||||||||
550,000 | 165,000 | 220,000 | 275,000 | 330,000 | 385,000 | |||||||||||||||||
(1) | Based on total Retirement and Savings Program entitlement, including bridge benefits, optional 0.25 per cent annuity and Shell Savings Fund annuity (see “Retirement and Savings Program”). |
(2) | Calculation based on remuneration being equal to average final earnings (see “Retirement and Savings Program”). Remuneration comprises salary and up to 20 per cent of basic salary (if age is 50 and age plus service equals at least 65). |
Named Executive Officer | Years of Accredited Service | |||||
C. Mather | Nil | |||||
L.Z. Cook | Nil | |||||
C.L. Williams | 20 years | |||||
D.M. Weston | Nil | |||||
H.I. Kilgour | 28 years | |||||
N.J. Camarta | 29 years |
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Board Member | $50,000 | |||
Lead Director | $10,000 | |||
Audit Committee Member | $7,000 | |||
Audit Committee Chair | $10,000 | |||
Management Resources and Compensation Committee Member | $5,000 | |||
Management Resources and Compensation Committee Chair | $7,000 | |||
Nominating and Governance Committee Member | $5,000 | |||
Nominating and Governance Committee Chair | $7,000 | |||
Reserves Committee Member | $5,000 | |||
Reserves Committee Chair | $7,000 | |||
Per-meeting fee for Board (personal attendance) | $2,000 | |||
Per-meeting fee for Board (conference call attendance) | $1,000 | |||
Per-meeting fee for Committees (personal attendance) | $1,500 | |||
Per-meeting fee for Committees (conference call attendance) | $750 | |||
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DSC Plan | DSU Plan | |||||
Participation – Each participating director in the DSC Plan: | Participation – Each participating director in the DSU Plan: | |||||
(a) receives 50 per cent of the fees payable to him or her for serving on the Board (excluding committee fees) in the form of Common Shares; and | (a) receives 50 per cent of Board fees (excluding committee fees) in the form of DSUs; and | |||||
(b) may elect to receive any additional percentage of Board fees and any percentage of committee fees in the form of Common Shares. | (b) may elect to receive any additional percentage of Board fees and any percentage of committee fees in the form of DSUs. | |||||
The Common Shares are purchased on the open market by CIBC Mellon Trust Company, who acts as custodian under the DSC Plan, after the end of each calendar quarter and are credited to each participating director’s account. | When fees are payable (on a quarterly basis), the percentage(s) of fees elected are converted to DSUs which have a value equal to the market price of the Corporation’s Common Shares at the end of such quarter. | |||||
Dividends – The Common Shares purchased under the DSC Plan attract dividends. | Dividends – The DSUs attract dividends in the form of additional DSUs at the same rate as dividends on the Common Shares. | |||||
Receipt of Compensation – Once per calendar year, a participating director may instruct the custodian to sell or transfer any or all of the Common Shares credited to his or her account. Upon termination of Board service, any Common Shares and dividends remaining in the participating director’s account are delivered to such director and the account is closed. | Receipt of Compensation – A participating director is not eligible to convert DSUs until his or her termination of Board service and, if applicable, cessation of employment with the Corporation or the Parent Companies or any affiliate thereof. Following such time, and in any event prior to December 31 of the next year, the DSUs credited to such director are converted to cash in an amount equivalent to the market value of the Common Shares when the conversion is effective. | |||||
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K.L. Hawkins | Mr. Hawkins holds a degree in Business Economics from North Dakota State University. | |
I.J. Goodreau | Ms. Goodreau holds a Masters of Business Administration and Bachelor of Commerce degree, with emphasis on accounting and finance, from the University of Windsor. | |
D.W. Kerr | Mr. Kerr is a chartered accountant. | |
R.W. Osborne | Mr. Osborne is a chartered accountant and is a Fellow of the Institute of Chartered Accountants. He was Chief Financial Officer of Maclean Hunter Limited for three years and BCE Inc. for one year and spent 13 years with a predecessor of Ernst & Young LLP auditing Canadian public companies. | |
R. Royer | Mr. Royer holds a Master of Commerce, Bachelor of Civil Law and a Master of Accountancy degree from the University of Sherbrooke. Mr. Royer is a chartered accountant and a member of the Quebec Order of Chartered Accountants and the Canadian Institute of Chartered Accountants. Mr. Royer is also a Fellow of the Quebec Order of Chartered Accountants. |
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• | Discussed with management and the external auditors current and emerging accounting principles and practices and significant disclosure matters and received reports from management on major accounting principles proposed for implementation by the Corporation in 2004 and 2005. | |
• | Reviewed the annual and interim financial statements, including Management’s Discussion and Analysis, and press releases containing material financial information prior to approval for publication and filing with the securities regulators. | |
• | Approved the interim financial statements and press releases, including Management’s Discussion and Analysis, for the three months ended March 31, 2004 and the nine months ended September 30, 2004 pursuant to a delegation from the Board of Directors. | |
• | Confirmed with management that there were no unresolved issues or difficulties between management and the external auditors that could affect the financial statements and reviewed with management the overall performance of the external auditors. | |
• | Received six reports from and met with the General Auditor to discuss business control and compliance audits conducted by internal audit, including compliance with the Corporation’s Statement of General Business Principles and Code of Ethics, and internal audit’s mandate, objectives, goals, budget and staffing. The Audit Committee met four times with the General Auditor separate from management and the external auditors. | |
• | Received a report from management on the Corporation’s disclosure controls and procedures and reviewed with management the financial reporting process and internal controls. | |
• | Received six reports from and met with the external auditors to discuss the scope, objectives and responsibilities of the annual audit, the results of the audit, their assessment of the Corporation’s accounting, financial and management controls and procedures and their statement on independence from the Corporation. The external auditors attended all meetings and met five times with the Audit Committee separate from management. | |
• | Reviewed and pre-approved the audit and permitted non-audit services to be provided by the external auditors. | |
• | Reviewed and approved the external auditors’ engagement letter and estimated fees. | |
• | Reviewed the Corporation’s procedures relating to the disclosure of reserves data for its oil and gas and oil sands mining activities, together with the appointment of the Chief Reservoir Engineer and Chief Mining Engineer as the Corporation’s internal qualified reserves evaluators for oil and gas and oil sands mining, respectively, and the procedures for providing information to these evaluators. | |
• | Met with management and the internal qualified reserves evaluators to review the reserves data, the reports of the internal qualified reserves evaluators and the related report of management and the Board. | |
• | Met with the internal qualified reserves evaluators separate from management and confirmed that there were no restrictions that affected their ability to report on reserves data without reservation. | |
• | Established a policy to regulate the hiring of former personnel of the external auditors by the Corporation. |
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• | Approved the 2003 expenses of the President. | |
• | Reviewed the current and emerging U.S. and Canadian disclosure requirements and the Audit Committee’s rules, procedures and responsibilities. |
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Year Ended | Year Ended | |||||||
December 31, | December 31, | |||||||
2004 | 2003 | |||||||
Audit Fees | $ | 804,000 | $ | 830,000 | ||||
Audit-related Fees | $ | 331,000 | (1) | $ | 121,000 | (2) | ||
Tax Fees | $ | 265,000 | (3) | $ | 234,000 | (3) | ||
All Other Fees | – | – | ||||||
Total | $ | 1,400,000 | $ | 1,185,000 | ||||
(1) | Legislative compliance advice, assurance due diligence for a transaction between the Corporation and an affiliate and ISO 14001 re-registration audit. |
(2) | Legislative compliance advice and ISO 14001 re-registration audit. |
(3) | Expatriate tax services and corporate tax compliance matters. |
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• | 2004 Annual Information Form | |
• | 2004 Annual Report to Shareholders containing the comparative consolidated financial statements for 2004 together with the auditors’ report thereon and Management’s Discussion and Analysis | |
• | Interim financial statements for periods subsequent to December 31, 2004 | |
• | 2005 Management Proxy Circular |
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• | Oversee the development and implementation of the annual strategic, financial and operating plans, including annual targets, and approve the annual Capital and Exploration budget. |
• | Ensure that management establishes an effective Health, Safety and Environment Management Plan and maintains it in conformity with current standards. |
• | Oversee the development and implementation by management of a strategic planning process to identify, manage and monitor the opportunities and principal risks of the Corporation’s business and ensure the implementation of appropriate systems to manage these risks. |
• | Ensure that management implements and maintains appropriate internal controls and management information systems. |
• | Oversee succession plans and relevant management development plans. |
• | Ensure that management maintains an effective shareholder communication program that provides for timely communication by the Corporation with its shareholders, including effective means to enable shareholders to communicate with senior management and the Board and conforms to current practices. |
• | Appoint the President and Chief Executive Officer and other officers of the Corporation. |
• | Appoint an Audit Committee comprised of independent directors. |
• | Appoint such other committees as the Board considers advisable to assist in carrying out its responsibilities effectively and to delegate to such committees any of the powers of the Board it is entitled to delegate pursuant to theCanada Business Corporations Act. |
• | Comply with the Corporation’s by-laws and the statutory and fiduciary obligations which generally exist for directors of publicly traded companies in Canada. |
• | Comply with and conduct periodic assessments of the Corporation’s Statement of General Business Principles and Code of Ethics and oversee compliance therewith within the Corporation. |
• | Satisfy itself as to the integrity of the Chief Executive Officer and other executive officers of the Corporation and ensure that senior management creates a culture of integrity throughout the Corporation. |
• | Establish and maintain a set of governance principles for the Corporation including practices that ensure that the Board functions independently of management. |
• | Review changes in accounting principles and practices followed by the Corporation, and discuss accounting and reporting rules and proposals of regulatory bodies with management and the external auditors. |
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• | Review the annual financial reports (including Management’s Discussion and Analysis) and other documents containing financial information including press releases that is likely to be material and recommend approval to the Board prior to submission to securities commissions as required by any regulatory authority. |
• | Review the interim financial statements (including Management’s Discussion and Analysis) for each interim period in a financial year prior to public announcement and filing with securities commissions. |
• | Approve the interim financial statements for the first nine months of a financial year prior to public announcement, filing with securities commissions and delivery to security holders, and for any other interim period in a financial year if a meeting of the Board will not be held prior to public announcement. |
• | Satisfy itself that there are no unresolved issues between management and the Corporation’s external auditors or other difficulties encountered by the external auditors that could affect the financial statements. |
• | Include in the Management Proxy Circular each year a copy of the Mandate of the Committee and a report to shareholders on the Committee’s activities in satisfying its responsibilities during the year in compliance with these terms of reference. |
• | Review with the internal auditors the objectives and goals, staffing plans and financial budget of the department. |
• | Review and approve the internal auditors’ mandate, including internal audit’s purpose, authority and responsibility. |
• | Review with management the quality and depth of staffing and, if appropriate, recommend the appointment or replacement of the General Auditor. |
• | Meet the General Auditor, either at the request of the General Auditor or on its own initiative, to discuss significant audit findings and management’s response. |
• | Receive from management an overview of the risks, policies, procedures and controls surrounding the integrity of financial reporting. |
• | Review the Corporation’s anti-fraud program. |
• | Review the effectiveness of the overall system of internal controls and the anti-fraud program and the process for identifying and managing principal business risks and provide its view to the Board. |
• | Review with management and external auditors compliance with the Corporation’s Statement of General Business Principles and Code of Ethics, and review any significant or unusual transactions or questionable payments which have come to their attention. |
• | Review the Corporation’s procedures for (a) the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters; and (b) the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters, and, if appropriate, recommend that an additional or replacement complaints procedure be established. |
• | Review annually the expenses of the President. |
• | Meet the external auditors independently of management, either at the request of the external auditors or on its own initiative, to consider matters, both qualitative and quantitative, which the external auditors believe should be brought to the attention of the Board or shareholders. |
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• | Review and approve the services to be provided by the external auditors, whether audit or non-audit, prior to the commencement of such services. |
• | Review the annual audit plan with the external auditors. |
• | Specify the categories of non-audit services that the external auditors are prohibited from providing to the Corporation. |
• | Review the external auditors’ evaluation of the Corporation’s internal control systems and procedures. |
• | Review the external auditors’ engagement letter and estimated and final compensation for each approved service. |
• | On an annual basis, review and discuss with the external auditors all significant relationships the external auditors have with the Corporation to establish independence. |
• | Require the external auditors to submit a formal written statement delineating all relationships between the external auditors and the Corporation. |
• | Review and approve the Corporation’s hiring policies regarding partners, employees and former partners and employees of any of its external auditors. |
• | Oversee and review the performance of the external auditors and if appropriate recommend the replacement of the external auditors. |
• | Recommend to the Board the selection of the external auditors, with special considerations for independence and effectiveness, and the compensation of the external auditors. |
• | Review and approve the annual targets and objectives of the President and CEO and evaluate his or her performance against such targets and objectives. |
• | Review and approve the annual compensation of the President and CEO, in consultation with the Chairman of the meetings of the Board. |
• | Based on the recommendation of the President and CEO, review and approve the annual compensation for senior management. “Senior management” means officers of the Corporation and other senior management as designated by the Board from time to time. |
• | Approve any changes to pension and other benefit plans that would significantly change the plan features or would have a significant cost to the Corporation, and approve any new pension or benefit plans. |
• | Review stock option plans and other equity related long term incentive plans to be administered by the Committee, or such other committee assigned the responsibility to administer the plans. |
• | Approve termination settlements for senior management, including any retirement income supplementary to existing pension plans. |
• | Review the senior management succession and development plans and report to the Board at least annually on such plans. |
• | Recommend candidates for appointment as officers of the Corporation to the Board. |
• | Review and approve any employment contracts and any other individual financial arrangements for senior management. |
• | Recommend to the Board for approval the Report on Compensation included in the Annual Management Proxy Circular. |
• | Review and recommend to the Board for approval any changes to the “Shell Canada Limited Deferred Share Unit Plan for Executive Officers”. |
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• | Review and determine the criteria for identifying potential nominees to the Board of Directors. |
• | Seek guidance from the President and Chief Executive Officer in identifying and assessing potential candidates to be nominated for election to the Board of Directors. |
• | Review and recommend to the Board of Directors criteria related to the tenure of Directors. |
• | Annually review the performance of the Board of Directors, the committees of the Board and individual directors, and the relationship between the Board and management. |
• | Annually review the membership of the committees of the Board and make recommendations to the Board on appointments to the committees, including the appointment of a Chairman for each committee. |
• | Periodically review and make recommendations to the Board on: |
(a) | the Board mandate; | |
(b) | the mandates and responsibilities of the committees of the Board; and | |
(c) | the position descriptions for: |
• | the Chief Executive Officer; | |
• | the Chairperson of the Board; | |
• | the Chairperson of committees of the Board; and | |
• | the directors. |
• | Regularly review and approve changes to the remuneration to be paid to the Directors of the Corporation and any special remuneration for members of Board Committees or the Chairman of the meetings of the Board. |
• | Review and recommend to the Board for approval any changes to the “Director Share Compensation Plan” and the “Shell Canada Limited Deferred Share Unit Plan for Non-employee Directors”. |
• | Review and recommend to the Board for approval a set of corporate governance principles applicable to the Corporation. |
• | Review the orientation and education program for new members of the Board and committees of the Board and oversee the continued development of existing members of the Board. |
• | Regularly review the corporate governance practices of the Corporation and, if appropriate, recommend changes to the Board. |
• | Review and recommend to the Board for approval the corporate governance disclosure statements required by the Toronto Stock Exchange or securities authorities for inclusion in the Annual Information Form and Management Proxy Circular. |
• | Review and make recommendations to the Board on any other matters related to the governance of the Corporation that the Committee considers appropriate. |
• | Annual review and assessment of the ongoing adequacy of these terms of reference, reporting any proposed changes to the Board for approval. |
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• | Consultation with the Corporation’s senior reserves evaluation personnel, considering, reviewing and reporting to the Board in respect of the following: |
(a) | appointment of, or any changes to, qualified reserves evaluator(s) or auditor(s); and | |
(b) | determination of reasons for any proposed change in appointment of the qualified reserves evaluator(s) or auditor(s) and, in particular, in the event there is a change of qualified reserves evaluator(s) or auditor(s), whether there have been any disputes between the qualified reserves evaluator(s) or auditor(s) and the Corporation’s management. |
• | Consideration and review, with reasonable frequency, of the Corporation’s internal procedures relating to the disclosure of oil, gas and mineable bitumen reserves data, with special attention given to the following: |
(a) | the adequacy of such procedures for fulfillment of applicable regulatory and disclosure requirements and restrictions; | |
(b) | the Corporation’s procedures for providing information to the qualified reserves evaluator(s) or auditor(s) who report on reserves data, and whether any restrictions affect the ability of the qualified reserves evaluator(s) or auditor(s) to report without reservation; and | |
(c) | the scope of the annual evaluation of the reserves by the qualified reserves evaluator(s) or auditor(s) having regard to applicable securities legislation, regulations and related requirements. |
• | Annual review, assessment, and approval of the fees for any independent reserves evaluator(s) or auditor(s). |
• | Review all reserve audit reports prepared by the Corporation’s reserves evaluation personnel or any independent reserves evaluator(s) or auditor(s) for the Corporation. |
• | Meeting with the Corporation’s management and each of the chief qualified reserves evaluators, prior to approval and filing of reserves data and the report of the qualified reserves evaluator(s) or auditor(s) thereon, to review the Corporation’s annual reserves data, including the following: |
(a) | review the scope of work of the qualified reserves evaluator(s) or auditor(s); | |
(b) | review the reserves estimates of the qualified reserves evaluator(s) or auditor(s); and | |
(c) | determine whether any restrictions affected the ability of the qualified reserves evaluator(s) or auditor(s) to report on the Corporation’s reserves data without reservation. |
• | Coordination of meetings with the Corporation’s management, qualified reserves evaluator(s) and auditor(s), as may be required, to address matters of mutual concern in respect of the Corporation’s evaluation of oil, gas and mineable bitumen reserves. |
• | Receive timely reports from management on the status of the Corporation’s response to matters of concern raised in reports prepared by the Corporation’s reserves evaluation personnel or any independent reserves evaluator(s) or auditor(s) for the Corporation. |
• | Meeting with the Corporation’s management, prior to public disclosure of the Corporation’s annual reserves data, to review and provide recommendations regarding approval of the content and filing of information as required under applicable securities legislation, regulations and related requirements, including the following: |
(a) | the content and filing of the statement of reserves data and related information; | |
(b) | the filing of the report of the qualified reserves evaluator(s) or auditor(s); and | |
(c) | the content and filing of the related report of management and the Board. |
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TSX guidelines with | Does | Shell Canada’s corporate governance practices | ||
cross-references to | Shell | |||
the CSA Proposals | Canada | |||
meet the | ||||
guidelines? | ||||
1. The board should explicitly assume responsibility forstewardship of the corporationand, as part of the overall stewardship responsibility, the board should assume responsibility for the following matters: (The CSA Proposals require disclosure of the board’s written mandate.) | ü | The mandate of the Board is to supervise the management of the business and affairs of the Corporation. The Board’s authority is exercised in accordance with: • theCanada Business Corporations Act; • the Corporation’s articles of incorporation and by-laws; • the Corporation’s Statement of General Business Principles and Code of Ethics; • the charters of the Board and the Board committees; and • other applicable laws and regulations including those imposed on the Corporation by Canadian Securities Administrators (“CSA”), the TSX (on which the Corporation’s Common Shares are listed) and the U.S. Securities and Exchange Commission (“SEC”). The Board approves all material decisions that affect the Corporation and its subsidiaries before they are implemented. The Board delegates to management the authority and responsibility for the day-to-day affairs of the Corporation and reviews management’s performance. The Board expects management to manage the Corporation in a manner that enhances shareholder value, is consistent with the highest level of integrity and within the law. | ||
Copies of the Corporation’s Statement of General Business Principles, Code of Ethics and the charters of the Board and its committees can be found on its website at www.shell.ca. Printed versions of these documents are also available upon request to the Corporation’s Secretary. |
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TSX guidelines with | Does | Shell Canada’s corporate governance practices | ||
cross-references to | Shell | |||
the CSA Proposals | Canada | |||
meet the | ||||
guidelines? | ||||
a. adoption of astrategic planning process; | ü | The Board oversees the Corporation’s strategic direction and is involved in the Corporation’s strategic planning process. During the course of the year the Board will review with management the individual business plans for each of the business units. The Board is responsible for reviewing and supporting the overall five-year strategic plan, including risks and opportunities. Throughout the year, the Board reviews business, segment and project-level strategies, as appropriate. At its last meeting of the year, the Board approves the capital and operating budget for the following year. The Board reviews the Corporation’s performance against the strategic plan at least quarterly. Management must seek the Board’s approval for any transaction that would have a significant impact on the strategic plan. | ||
b. identification of theprincipal risksof the corporation’s business and ensuring implementation of appropriate systems to manage those risks; (The CSA Proposals require disclosure on the subject of ethical business conduct, the adoption of a code of business conduct and compliance monitoring.) | ü | The Board is responsible for identifying the principal risks of the Corporation and ensuring that risk management systems are implemented. The systems for identifying and managing these risks include: • a risk based control assessment process to identify significant risks that the Board reviews annually; • risk assessments for all new projects on cost, schedule, technology, economics and the sustainable development aspects of the project; • peer reviews on major projects; • reviews of capital expenditures, economic premises, earnings projections and sensitivities, and the financing capabilities of the Corporation in the strategic planning process; • a management system for Health, Safety and Environment (“HSE”); | ||
• ISO 14001 registration of Environmental Management for all key operating facilities; | ||||
• audits on HSE and asset integrity; | ||||
• an “Assurance Committee” comprising the President and CEO and senior management that oversees a range of appraisal mechanisms including business control audits, HSE audits, asset integrity reviews, value assurance reviews and self-assessments; | ||||
• financial controls, business processes and management information systems monitored by internal audit, the external auditor and the Audit Committee; | ||||
• quarterly reports to the Board on HSE; | ||||
• reports to the Board on interest rate, currency risk and other risk management activities; and |
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• annual assurance letters on HSE, the Statement of General Business Principles and Code of Ethics and a wide range of business procedures, policies and practices provided to the Board by the President and CEO. | ||||
The Audit Committee meets regularly to review reports and discuss significant risk areas with the internal and external auditors. The Board, through the Audit Committee, ensures that the Corporation adopts appropriate risk management policies. | ||||
The Corporation has adopted a Statement of General Business Principles and a Code of Ethics for its directors, officers and employees which includes commentary and direction in the areas of business integrity and conflicts of interest. Copies of the Corporation’s Statement of General Business Principles, Code of Ethics and the charters of the Board and its committees can be found on its website at www.shell.ca. Printed versions of these documents are also available upon request to the Corporation’s Secretary. | ||||
In the ordinary course of business, the Corporation and its subsidiaries enter into transactions with which a director may have a relationship. If any such transactions are brought before the Board for discussion or approval, the director declares a conflict of interest and withdraws from any discussion or vote on the transaction. | ||||
c. succession planning, including appointing, training and monitoring senior management; | ü | The Board is responsible for appointing the President and CEO and senior management. The Board, through the Management Resources and Compensation Committee: • approves the President and CEO’s annual objectives and compensation and terms of employment; | ||
• assesses at least annually the performance of the President and CEO; | ||||
• determines compensation and terms of employment for senior executives; and | ||||
• approves pension and benefit plans of the Corporation. | ||||
The Management Resources and Compensation Committee, in consultation with the President and CEO, recommends candidates to the Board for appointment as officers. This committee ensures that processes are in place to recruit senior managers with the highest standards of integrity and competence, and to train, develop and retain them. It also oversees the implementation of succession and management development plans and reports to the Board at least annually. The Board supports management’s commitment to training and developing all employees. |
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d. communications policyfor the corporation; | ü | The Board has adopted a corporate disclosure policy based on the CSA’s National Policy 51-201Disclosure Standardsand the TSX’sPolicy Statement on Timely DisclosureandElectronic Communications Disclosure Guidelines. The policy provides direction on the accurate and timely disclosure of material information, confidentiality, equal dissemination of information to investors and analysts, electronic communications and employee trading. The policy is administered by a committee of senior management and is reviewed at least annually. A copy of the Corporation’s policy can be found on its website at www.shell.ca. | ||
The Board approves all major communications by the Corporation, including annual and quarterly financial reports to shareholders and reviews press releases involving financial information. The Corporation communicates with its stakeholders through a number of channels including its website. Shareholder communications are available in English and French. Inquiries from investors, media or the public are responded to by Investor Relations, Public Affairs, the Corporation’s Secretary or the appropriate members of senior management. The Corporation has a toll free number for customers and public inquiries. | ||||
e. integrity of internal controland management information systems. | ü | The Board, through its Audit Committee, examines the effectiveness of the Corporation’s internal control processes and management information systems. The Committee meets at least quarterly to receive reports and review the integrity of the systems with management and, independently of management, with the internal and external auditors. The internal auditor submits quarterly reports to the Audit Committee on the quality of the Corporation’s internal control processes and management information systems. The annual assurance letter to the Board from the President and CEO and the CFO includes a statement on the integrity of the internal control and management systems. The President and CEO and the CFO provide certificates prescribed by the Sarbanes-Oxley Act of 2002 and the CSA. | ||
2. A majority ofdirectors should be “unrelated”. | ü | Of the ten directors standing for election in 2005, only C. Mather, the President and CEO of the Corporation, is an inside director. All other directors and nominee directors are “unrelated directors” (as defined below). The Corporation has a significant shareholder and one unrelated director and one unrelated nominee director are related to the significant shareholder. |
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3. The board has responsibility for applying the definition of“unrelated director”to the circumstances of eachindividual directorand for disclosing annually whether the board has a majority of unrelated directors (the CSA Proposals require disclosure of the number of“independent directors”) and whether the board is constituted with the appropriate number of directors who are not related to either the corporation or the significant shareholder. | ü | An “unrelated director” is a director who is independent of management and is free from any interest and any business or other relationship which could materially interfere with his or her ability to act with a view to the best interests of the Corporation, other than interests and relationships arising from shareholding. An “outside director” is a director who is not a member of management. An “independent director” is a director who has no material relationship with the Corporation. A “material” relationship is one which could, in the view of the issuer’s Board, reasonably interfere with the exercise of a member’s independent judgement. The majority of directors standing for election in 2005 are unrelated to, and independent of, the Corporation. |
Nominees | Unrelated | Outside | Independent | |||||||
C. Mather | X | X | X | |||||||
D.H. Burney | ü | ü | ü | |||||||
I.J. Goodreau | ü | ü | ü | |||||||
K.L. Hawkins | ü | ü | ü | |||||||
D.W. Kerr | ü | ü | ü | |||||||
W.A. Loader | ü | ü | X | |||||||
R.W. Osborne | ü | ü | ü | |||||||
R.J. Routs | ü | ü | X | |||||||
R. Royer | ü | ü | ü | |||||||
N.C. Southern | ü | ü | ü | |||||||
The Board analyzes all the relationships of the directors and the nominee directors with the Corporation and its subsidiaries. | ||||||||||
C. Mather, W.A. Loader and R.J. Routs are not considered independent of the Corporation. | ||||||||||
C. Mather is a related director and not independent because of his position as President and CEO of the Corporation. None of the other directors work in the day-to-day operations of the Corporation, are party to any material contracts with the Corporation, or receive any fees from the Corporation other than as directors. | ||||||||||
W.A. Loader is Director, Strategic Planning, Sustainable Development and External Affairs of Shell International Limited. Mr. Loader also serves on the board of other Royal Dutch/ Shell Group companies. |
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R.J. Routs is Managing Director of Royal Dutch Petroleum Company and a Group Managing Director of the Royal Dutch/ Shell Group. Royal Dutch Petroleum Company is considered a significant shareholder of the Corporation and, along with The “Shell” Transport and Trading Company, p.l.c. and Shell Petroleum N.V., holds approximately 78 per cent of the equity and voting rights of the Corporation. | ||||
The Board believes the following relationships are not “material” (as that term is defined by the SEC) and do not affect the unrelated, outside or independent director status of any of the noted directors. None of these unrelated, outside or independent directors have received remuneration from the Corporation, other than directors’ fees. | ||||
I.J. Goodreau is a director of Terasen Inc. An affiliate of Terasen Inc. owns the pipeline that transports bitumen and diluent for the Athabasca Oil Sands Project (“AOSP”) between the Muskeg River Mine and the Scotford Upgrader. | ||||
K.L. Hawkins is an officer and director of Cargill Limited. The Corporation supplies sulphur to companies in which Cargill Limited or an affiliate thereof has an ownership interest. Mr. Hawkins is also a director of TransCanada Corporation and TransCanada PipeLines Limited. The Corporation has an agreement with an affiliate of TransCanada PipeLines Limited for the supply of electric power in connection with an Alberta power purchase arrangement. Mr. Hawkins is also a director of Nova Chemicals Corporation. The Corporation supplies benzene to an affiliate of Nova Chemicals Corporation. | ||||
D.W. Kerr and R.W. Osborne are directors of Sun Life Financial Inc. In 2002, the Corporation selected Sun Life Financial Inc. to provide administrative services together with a selection of investment funds for the defined contribution segment of the Corporation’s pension plan. The selection was based on a competitive bid process conducted by the Corporation’s benefit administration group and the trustees of the pension plan. | ||||
N.C. Southern is an officer and director of ATCO Companies. ATCO Companies own a natural gas pipeline that provides natural gas and two cogeneration plants that provide electricity to the AOSP. Ms. Southern is also a director of the Bank of Montreal. During 2004, the Corporation and its subsidiaries obtained services from a number of banking institutions including the Bank of Montreal. | ||||
Further information about each director, including other directorships, can be found on pages 7 through 11 of the 2005 Management Proxy Circular. |
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Except for C. Mather, W.A. Loader and R.J. Routs, all of the other seven directors and nominee directors are unrelated to and independent of both the Corporation and the significant shareholder. The Board believes this is an appropriate number to fairly reflect the minority shareholder investment in the Corporation. The significant shareholder holds approximately 78 per cent of the equity and voting rights of the Corporation. | ||||||||||
The independent directors meet without management at each Board meeting. In 2004 there were eight meetings of the Board. The directors’ attendance record at Board meetings during 2004 is set out in the table appearing at the end of this appendix. | ||||||||||
ü | Director | Reporting Issuer | ||||||||
(The CSA Proposals | ||||||||||
require disclosure of any | D.H. Burney | Quebecor World Inc. | ||||||||
directorships held by | I.J. Goodreau | Terasen Inc. | ||||||||
the directors in | K.L. Hawkins | TransCanada PipeLines Limited, TransCanada | ||||||||
other reporting issuers.) | Corporation, Hudson’s Bay Company, Nova Chemicals Corporation | |||||||||
D.W. Kerr | Noranda Inc., Brascan Corporation, Sun Life Financial Inc. | |||||||||
W.A. Loader | Alliance Unichem plc | |||||||||
R.W. Osborne | St. Lawrence Cement Group Inc., RioCan Real Estate Investment Trust, Sun Life Financial Inc., Torstar Corporation, Four Seasons Hotels Inc. | |||||||||
R. Royer | Domtar Inc., Power Financial Corporation | |||||||||
N.C. Southern | ATCO Ltd., Canadian Utilities Limited, Akita Drilling Ltd., Bank of Montreal |
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4. The board should appoint acommitteeof directors composed exclusively of outside directors, a majority of whom are unrelated directors,with responsibility for proposing new nomineesto the board and for assessing directors on an ongoing basis. | ü | The Nominating and Governance Committee is responsible for determining the selection criteria for new nominees and for assisting the President and CEO in proposing new nominees to the Board. All of its members are outside and unrelated directors. This committee is also responsible for the ongoing assessment of directors. New nominees must have a track record in general business management, expertise in an area of strategic interest to the Corporation, the ability to devote the time required and a willingness to serve. Other considerations include diversity, age, residency, other directorships, financial literacy and expertise and the absence of material conflicts of interest. The committee maintains a list of director candidates and reviews the list annually. Directors are elected by the shareholders at each annual meeting to serve for a term expiring on the date of the following annual meeting. | ||
5. The board should implement a process, to be carried out by an appropriate committee, forassessing the effectiveness of the board, its committees and the contribution of individual directors. (The CSA Proposals contain similar requirements.) | ü | The Nominating and Governance Committee’s mandate includes responsibility for evaluating the effectiveness of the Board, its committees and the contribution of individual directors. This committee: • annually reviews the performance of the Board and its committees; • annually reviews membership of the committees and makes recommendations to the Board on appointments to the committees; • reviews and makes recommendations to the Board on the mandates of the committees of the Board; • surveys all directors to assist in the assessment of the performance of the Board, its committees and individual directors, and to monitor the relationship between management and the Board; and | ||
• recommends changes to improve the effectiveness of the Board in light of the survey feedback. |
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6. The corporation should provide anorientation and education program for new directors. (The CSA Proposals require disclosure of the measures the board takes to orient new directors, and to continue the education of existing directors, regarding the role of the board, its committees and its directors and the nature and operation of the corporation’s business.) | ü | New Board members receive at least a two-day orientation program that includes a tour of some of the Corporation’s major operating facilities. Specific topics of interest are presented in more detail, upon request. All new directors receive a Board manual containing the charters of the Board and its committees, and other relevant corporate and business information. The Chairmen of the committees of the Board provide regular reports to the Board on activities completed by each committee. Senior management makes regular presentations to the Board on the main areas of the Corporation’s business. | ||
7. The board should examine its size and undertake to establisha board sizewhich facilitates effective decision making. | ü | The Board, through the Nominating and Governance Committee, reviews the composition and size of the Board once a year. The current size of the Board is ten directors. The Board believes this is an effective size to allow a diversity of business experience for the size of the Corporation and the range and complexity of its businesses as an integrated oil and gas corporation, while still achieving efficient and effective decision making. This number of directors permits the Board to operate in a prudent and efficient manner. | ||
8. The board of directors should review the adequacy and form ofcompensation of directorsin light of the risks and responsibilities involved in being a director. | ü | The Nominating and Governance Committee reviews the adequacy and form of directors’ compensation on an annual basis. In making its recommendations on directors’ compensation, the committee takes into account the time commitment, risks and responsibilities of directors as well as the types of compensation and the amounts paid to directors of comparable publicly traded Canadian companies. All independent directors must elect, on an annual basis, to participate in either the Director Share Compensation Plan (the “DSC Plan”) or the Non-Employee Directors’ Deferred Share Unit Plan (the “DSU Plan”). |
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Under the DSC Plan, each participating director receives 50 per cent of the fees payable to him or her for serving on the Board (excluding committee fees) in the form of Common Shares. A participating director may elect to receive any additional percentage of Board fees and any percentage of committee fees in the form of Common Shares. The Common Shares are purchased quarterly. | |||||
Under the DSU Plan, each participating director receives 50 per cent of Board fees (excluding committee fees) in the form of Deferred Share Units (“DSUs”). A participating director may elect to receive any additional percentage of the Board fees and any percentage of committee fees in the form of DSUs. These fees are converted to DSUs quarterly and have a value equal to the market price of the Corporation’s Common Shares at the end of such quarter. | |||||
All independent directors are also required to hold, after five years of service on the Board, a minimum number of Common Shares or DSUs equivalent in value to three years of Board retainer fees. The Committee last approved an increase in directors’ fees effective January 1, 2005. See pages 27 and 28 of the 2005 Management Proxy Circular for information about the compensation that is received by directors. | |||||
9. Committeesof the board should generally becomposed of outside directors, a majority of whom are unrelated. | ü | The Board has appointed four committees: • the Audit Committee; • the Management Resources and Compensation Committee; • the Nominating and Governance Committee; and • the Reserves Committee. | |||
(The CSA Proposals require disclosure of whether or not the board has a nominating committee and a compensation committee comprised entirely of independent directors and a description of the responsibilities and powers of the committees.) | All members of the committees of the Board are outside, unrelated and independent directors. The directors’ attendance record at committee meetings during 2004 is set out in the table appearing at the end of this appendix. A copy of each of the committee mandates can be found in Appendix 1 to the 2005 Management Proxy Circular and on the Corporation’s website at www.shell.ca. Audit Committee This committee has five members: Chair: K.L. Hawkins Other Members: I.J. Goodreau, D.W. Kerr, R.W. Osborne and R. Royer | ||||
This committee met nine times in 2004. |
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Management Resources and Compensation Committee | |||||
This committee has five members: Chair: R.W. Osborne Other Members: D.H. Burney, I.J. Goodreau, R. Royer and N.C. Southern | |||||
This committee held seven meetings in 2004. | |||||
Nominating and Governance Committee | |||||
This committee has four members: Chair: D.H. Burney Other Members: K.L. Hawkins, D.W. Kerr and N.C. Southern This committee met four times in 2004. | |||||
Reserves Committee This committee has four members: Chair: D.W. Kerr Other Members: D.H. Burney, K.L. Hawkins and R.W. Osborne This committee was appointed in September, 2004 and met once before the end of the year. With its appointment, this committee assumed oversight responsibility for the Corporation’s reserves disclosure from the Audit Committee. | |||||
10. The board should assume responsibility for, or assign to a committee of directors responsibility for, developing the approach tocorporate governanceissues. | ü | The Nominating and Governance Committee is responsible for reviewing the overall governance principles of the Corporation, recommending any changes to these principles and monitoring their disclosure. This committee monitors best practices among major Canadian companies to ensure the Corporation continues to carry out high standards of corporate governance. | |||
This committee would, among other things, be responsible for the response to the TSX guidelines. | ü | This committee is responsible for the statement of corporate governance practices included in the Corporation’s 2005 Management Proxy Circular. |
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11. The board of directors, together with the CEO, should developposition descriptionsfor the board (the CSA Proposals also require disclosure of written position descriptions for the chair of the board, the chair of each board committee) and the CEO. | ü | The mandate of the Board of Directors of the Corporation is to assume responsibility for the stewardship of the Corporation. All of the key elements recommended by the TSX guidelines and the CSA Proposals are included in the Board’s mandate. The Board monitors and supervises the business and affairs of the Corporation with a focus on what is in the best interests of the Corporation, and consistent with enhancing shareholder value. The Board has delegated authority (including financial) to the President and CEO, subject to specified limitations. Any action in excess of these limitations must be submitted to the Board for its approval. Any responsibility that has not been delegated to the President and CEO, or to a committee of the Board, remains with the Board. | |||
The Board expects management to: | |||||
• review the Corporation’s strategies and their implementation in all key areas of the Corporation’s activities; | |||||
• carry out a comprehensive budgeting process and monitor the Corporation’s financial performance against the budget; and | |||||
• identify opportunities and risks affecting the Corporation’s business and find ways of dealing with them. | |||||
There is a written position description for the Chairman of the meetings of the Board, the Lead Director, the Chair of each Board committee and the President and CEO. Copies of these position descriptions can be found on the Corporation’s website at www.shell.ca. | |||||
The board should approve or develop the corporate objectives which the CEO is responsible for meeting and assess the CEO against these objectives. | ü | The Management Resources and Compensation Committee has the mandate to determine the terms of employment and the compensation of the President and CEO, to approve annual corporate objectives for the President and CEO and to assess his or her performance against those objectives. |
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12. Theboardshould implement structures and procedures to ensure that it can functionindependently of management.An appropriate structure would be to (i) appoint a chair of the board who is not a member of management, or (ii) assign this responsibility to an outside director (the CSA Proposals require disclosure of whether or not the chair of the board is an independent director). | ü | An unrelated director acts as the Chairman of the meetings of the Board. The Chairman of the meetings of the Board is related to the significant shareholder. An unrelated, outside and independent director acts as Lead Director. There is a written position description for the Chairman of the meetings of the Board and the Lead Director. Copies of these position descriptions can be found on the Corporation’s website at www.shell.ca. | |||
The board should meet on a regular basis without management present (the CSA Proposals contain similar requirements). | ü | The directors meet without management at each Board meeting. The President and CEO is not present during those discussions. | |||
The board should assign responsibility for administering the board’s relationship with management to a committee of the board. | ü | The Nominating and Governance Committee is responsible for administering the Board’s relationship with management. | |||
13. TheAudit Committeeshould be composed of unrelated directors. | ü | There are five members of the Audit Committee: K.L. Hawkins, I.J. Goodreau, D.W. Kerr, R.W. Osborne and R. Royer. They are all outside, unrelated and independent directors. |
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The board should adopt a charter for the Audit Committee which sets out roles and responsibilities of the Audit Committee which should be specifically defined so as to provide appropriate guidance to Audit Committee members as to their duties. | ü | The Committee’s responsibilities are set out in its charter. The Committee’s mandate can be found in Appendix 1 to the 2005 Management Proxy Circular and on the Corporation’s website at www.shell.ca. | |||
The Audit Committee should have direct communication channels with the internal and the external auditors. | ü | The Corporation’s internal and external auditors have a direct line of communication with the committee at all times. The internal and external auditors meet with the committee without management present at least quarterly. Management gives the committee a report assessing the adequacy and effectiveness of the Corporation’s disclosure controls and systems of internal control. The committee pre-approves all audit and non-audit work performed by the external auditors. | |||
Members of the Audit Committee should be financially literate and one member should have accounting or financial expertise. | ü ü | All members of the Audit Committee have the ability to read and understand a balance sheet, an income statement and a cashflow statement. Three of the current members have accounting or related financial expertise – D.W. Kerr, R.W. Osborne and R. Royer are chartered accountants. Further information regarding the relevant education and experience of each member of the Audit Committee can be found on page 29 of the 2005 Management Proxy Circular. | |||
14. The board should implement a system to enable an individual director to engage anoutside advisor, at the corporation’s expense in appropriate circumstances. The engagement of the outside advisor should be subject to the approval of an appropriate committee of the board. | ü | Directors may hire outside advisers at the Corporation’s expense, subject to the approval of the Nominating and Governance Committee. Each committee is authorized to retain outside advisors. | |||
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Director | Committee Memberships | Board Meetings | Committee Meetings | |||||||||||
Attended | Attended | |||||||||||||
Derek H. Burney | MRCC, N&G (Chair), Reserves | 8 of 8 | 12 of 12 | |||||||||||
Linda Z. Cook(1) | 6 of 6 | |||||||||||||
Ida J. Goodreau | Audit, MRCC | 7 of 8 | 16 of 16 | |||||||||||
Kerry L. Hawkins | Audit (Chair), N&G, Reserves | 8 of 8 | 13 of 14 | |||||||||||
David W. Kerr | Audit, N&G, Reserves (Chair) | 8 of 8 | 14 of 14 | |||||||||||
W. Adrian Loader | 6 of 8 | |||||||||||||
Clive Mather(2) | 2 of 2 | |||||||||||||
John D. McNeil(3) | Audit, MRCC (Chair) | 4 of 4 | 6 of 6 | |||||||||||
Ronald W. Osborne | Audit, MRCC (Chair), Reserves | 8 of 8 | 15 of 17 | |||||||||||
Raymond Royer | Audit, MRCC | 6 of 8 | 14 of 16 | |||||||||||
Nancy C. Southern | MRCC, N&G | 6 of 8 | 5 of 11 | |||||||||||
Jeroen J. van der Veer | 7 of 8 | |||||||||||||
(1) | Resigned as a director and as President and CEO effective July 31, 2004. Six Board meetings were held in 2004 prior to Ms. Cook’s departure. |
(2) | Appointed as President and CEO effective August 1, 2004. Two Board meetings were held in 2004 following Mr. Mather’s appointment. |
(3) | Retired as a director on April 30, 2004. Four Board meetings were held in 2004 prior to Mr. McNeil’s retirement. |
(4) | The Board of Directors does not have an Executive Committee. |
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1. | The Corporation is hereby authorized to amend Item 3 of the Restated Articles of Incorporation of the Corporation to subdivide each authorized Common Share without par value, whether issued or unissued, into three (3) Common Shares without par value, so that after giving effect to the subdivision, the authorized capital of the Corporation shall consist of an unlimited number of Common Shares without par value, an unlimited number of 4% Cumulative Redeemable Preference Shares and an unlimited number of Preferred Shares without par value issuable in series. |
2. | The proper officers of the Corporation are hereby authorized to do all things and execute all documents necessary or desirable to carry out the foregoing, including the preparation, execution and filing of Articles of Amendment with the Director under theCanada Business Corporations Actand making application for a Certificate of Amendment in respect thereof. |
3. | The directors of the Corporation are hereby authorized to revoke this special resolution before it is acted upon, without further approval of the shareholders, if such revocation would, in the opinion of the directors, be in the best interests of the Corporation. |
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Canadian companies are quietly padding executive pension plans with millions of dollars of future obligations, a practice one expert describes as the ‘new stealth weapon’ in boosting pay. Critics say pension plan adjustments can be a low-profile way to enhance compensation for executives. | ||
That’s because compensation costs must be disclosed annually for top executives in a company’s shareholder proxy circular, but it is difficult for shareholders to calculate the value of any changes made to a CEO’s pension plan. |
1) | The Corporation does not have a separate Supplemental Executive Retirement Plan. The pension benefit entitlement for executives is determined on the same basis as for all other employees. |
2) | Disclosure provided in the Corporation’s 2005 Management Proxy Circular and in Note 9 to the comparative consolidated financial statements for 2004 contained in the 2004 Annual Report includes |
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3) | The Corporation complies with the requirements for executive compensation disclosure as contained in Form 51-102F6 – Statement of Executive Compensation of National Instrument 51-102Continuous Disclosure Obligations. |
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FOR INFORMATION:
Corporate Secretary’s Department
Shell Canada Limited
Shell Centre
400 – 4th Avenue S.W.
Calgary, Alberta T2P 0J4
www.shell.ca
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![]() | SHELL CANADA LIMITED FORM OF PROXY COMMON SHARES AND 4% CUMULATIVE REDEEMABLE PREFERENCE SHARES |
Solicited on behalf of the Management of Shell Canada Limited for the
2005 Annual and Special Meeting of Shareholders
The undersigned shareholder hereby appoints Cathy L. Williams, whom failing Simon A. Fish, or as proxy of the undersigned, with full power of substitution, to attend, act and vote, as designated below, all the shares of Shell Canada Limited (the “Corporation”) held on record by the undersigned on March 10, 2005, for and on behalf of the undersigned at the Annual and Special Meeting of Shareholders to be held on the 29th day of April, 2005 at 11:00 o’clock in the morning, and at any adjournment thereof.If no choice is specified, the shares represented by this proxy will be voted “FOR” those matters identified in 1, 2 and 3 and “AGAINST” the matter identified in 4, listed below.
1) | FORr or WITHHOLD AUTHORITY FROM VOTINGr as to the election of the following nominees as directors of the Corporation as a group (or line through those individual nominees as to whom authority to vote is withheld): D.H. Burney, I.J. Goodreau, K.L. Hawkins, D.W. Kerr, W.A. Loader, C. Mather, R.W. Osborne, R.J. Routs, R. Royer, N.C. Southern. | |||
2) | FORr or WITHHOLD AUTHORITY FROM VOTING r as to the appointment of PricewaterhouseCoopers LLP as auditors of the Corporation and the directors’ authorization to fix the auditors’ remuneration. | |||
3) | FORr or AGAINSTr or WITHHOLD AUTHORITY FROM VOTING r as to approval of a special resolution to authorize management of the Corporation to amend the Articles of the Corporation to effect a subdivision of the Corporation’s Common Shares on a 3:1 basis. | |||
4) | FORr or AGAINSTr or WITHHOLD AUTHORITY FROM VOTING r as to the Shareholder Proposal set out in Appendix 4 to the accompanying Management Proxy Circular. | |||
5) | In his or her discretion as to any amendments or variations to the matters identified in 1), 2), 3) or 4) above or any other matters which may properly come before the Meeting. |
If the shares are to be voted and neither the shareholder nor the shareholder’s attorney is able to be present personally at the Meeting, this form of proxy must be signed by the shareholder or the shareholder’s attorney duly authorized in writing, or, if the shareholder is a corporation, signed on its behalf by its duly authorized officer(s), dated and returned in the envelope provided for that purpose. | ||||||
A shareholder has the right to appoint a person (who need not be a shareholder) to represent the shareholder at the Meeting other than one of the persons designated in this form of proxy.To exercise this right, you should draw a line through the printed names and insert the name of your proxy in the space provided or complete another proper instrument of proxy. | ||||||
Receipt of the Management Proxy Circular is hereby acknowledged. DATED: , 2005 | Under applicable Canadian securities regulations, shareholders may elect annually to receive the interim financial statements and related MD&A by mail. If you would like to continue to receive the interim financial statements, please check the box. INTERIM FINANCIAL r STATEMENTS | |||||
Signature of Shareholder | ||||||
Notes: | |||
(1) | Signature should agree with the name on this form of proxy. Attorneys, executors, administrators, guardians, trustees and officers of a corporation should indicate their capacity when signing. If a partnership, an authorized person must sign in the partnership name. Where shares are held jointly, each owner must sign. | ||
(2) | If this form of proxy is not dated in the space provided, it is deemed to bear the date on which it is mailed by management. |