EXHIBIT 99.16
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V E R M I L I O N
ENERGY TRUST
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CORPORATE GOVERNANCE GUIDELINES
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DOES
VERMILION
CORPORATE GOVERNANCE GUIDELINES ALIGN COMMENTS
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1. The board should explicitly assume YES The board has adopted a formal mandate setting out the board's
responsibility for stewardship of the stewardship responsibilities. Among other things, the mandate
Company, and specifically for: describes the decisions of the Trust that require prior approval
of the board, measures for receiving shareholder feedback and
the board's expectations of management.
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a) Adoption of a strategic planning YES The board participates with management in the development and
process and approval of a strategic plan approval of the Trust's strategic plan, which takes into account
which takes into account (among other the Trust's opportunities and risks associated with its business.
things) the opportunities and risks of The board also approves all business plans, corporate policies,
the business. financings and capital and operating budgets. At regularly
scheduled meetings, members of the board and management discuss
a broad range of issues relevant to the Trust's strategy.
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b) Identification of principal risks, and YES The board's participation in the strategic planning process
implementing risk management systems. involves consideration of the principal risks inherent in the
Trust's business. The Audit Committee of the board of directors
addresses specific risks and risk management in its review of
the Trust's financial statements. The Environment, Health &
Safety Committee addresses specific risks and risk management
related to the Trust's environment, health and safety
activities, and compliance with applicable rules and
regulations.
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c) Succession, planning and monitoring YES The board of directors is responsible for succession planning
senior management. at the board and senior management levels. The Governance and
Human Resources Committee reviews compensation policies and
plans, assesses the performance of the Trust's senior management
compared with the Trust's goals, and approves the salary and
other remuneration of the Trust's executive officers.
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d) Communication policy. YES The Trust's communication policy provides for open and timely
disclosure of relevant information relating to the Trust and its
business and affairs. The board reviews the Trust's audited
consolidated financial statements and selected corporate
disclosure documents, including the annual information form,
information circulars and all prospectuses before they are
publicly released. The communication policy, which is reviewed
by the board annually, addresses how the Trust interacts with
analysts and the public, and contains measures for avoiding
selective disclosure.
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e) Integrity of internal control and YES The Audit Committee is specifically mandated to assist the board
by management information systems. reviewing the effectiveness
of financial reporting, management information and internal
control systems. The Audit Committee is mandated to meet at
least four times each year. The Audit Committee meets with the
auditors independent of management as required. The Independent
Reserves Committee was specifically mandated to assist the board
by reviewing the effectiveness of the engineering reserves'
reports and related significance of the reserves on the public
and financial reporting of the Trust.
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2. Majority of directors should be YES Two members of the board are "related" and the remaining four
"unrelated", (free from conflicting directors are "unrelated" to the Trust as those terms are defined
interests). in the TSX guidelines.
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3. Disclose for each director whether he YES Larry Macdonald, Jeffrey Boyce, Joseph Killi and James McFarland
or she is related, and how that are unrelated to the Trust as that term is used in the TSX
conclusion was reached. guidelines. Each of these directors is independent of management
and is free from any interest, business or other relationship that
could, or could reasonably be perceived to, materially interfere
with their ability to act in the Trust's best interests, and
none of them has received any material compensation from the
Trust, although each director is eligible to participate in the
Trust Unit Rights Incentive Plan. Claudio Ghersinisch and
Lorenzo Donadeo are related directors as both are senior
executive officers of the Trust.
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4. Appoint a committee:
a) Responsible for the appointment and YES The board has constituted a Governance and Human Resources
assessment of directors. Committee which is responsible for nominating new directors and
assessing the board as well as individual directors on an
ongoing basis. With respect to new directors, the full board
determines the competencies, skills and personal qualities that
the Governance and Human Resources Committee should seek in new
board members to add value to the Trust.
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DOES
VERMILION
CORPORATE GOVERNANCE GUIDELINES ALIGN COMMENTS
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b) Composed exclusively of outside (i.e. YES All of the members of the Governance and Human Resources
non-management) directors, the majority Committee are unrelated directors.
of whom are unrelated.
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5. Implement a process for assessing YES The Governance and Human Resources Committee has been mandated to
effectiveness of the board and its perform assessments of the board as a whole, the committees of the
committees and individual directors. board, the Lead Director and the other individual directors on an
ongoing basis. Individual director evaluations regarding the
effectiveness and contribution of the directors are completed by
the Governance and Human Resources Committee on an annual basis.
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6. Provide orientation and education YES New directors are provided with an orientation and education
programs for new directors. program which includes written information about the duties and
obligations of directors, the role of the board and its committees,
the expected contributions of individual directors, the business
and operations of the Trust, and opportunities for meetings and
discussion with senior management and other directors. The
details of the orientation of each new director are tailored to
that director's individual needs and areas of interests.
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7. Examine the size of the board with a YES The board of directors consists of 6 members. The board of
view to improving effectiveness. directors is committed to reviewing the number of directors
regularly and currently considers 6 directors to be appropriate
for the Trust's size and a number that facilitates effective
decision-making, as well as an appropriate mix of backgrounds
and skills for the stewardship of the Trust.
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8. Review compensation of directors in YES The Governance and Human Resources Committee reviews and reports
light of risks and responsibilities. to the board of directors on compensation issues. The board has
determined that the current compensation realistically reflects
the responsibilities of and risks involved in being a director.
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9. Committees should generally be composed YES All board committees are made up of unrelated directors.
of outside directors, a majority of whom
are unrelated.
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10. Appoint a committee responsible for YES The Governance and Human Resources Committee, which is comprised
approach to corporate governance issues. solely of unrelated directors, is responsible for governance
issues and the Trust's response to the TSX's governance
guidelines.
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11. a) Develop position descriptions and The board and the CEO develop position descriptions for the
mandates for the board and the Chief board and the CEO and define the limits to management's
Executive Officer (CEO), and define responsibilities.
limits to management's responsibilities.
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(i) the board. YES The board has ultimate responsibility for the stewardship of
the Trust.
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(ii) the Chief Executive Officer. YES Day-to-day leadership and management are the responsibility of
the President and CEO and other management, subject to the
board's stewardship. The CEO is responsible to lead and manage
the Trust within parameters established by the board of
directors and relevant committees. The CEO is also responsible
for developing and recommending strategic plans to the board of
directors and for involving the board of directors in the early
stages of strategy development. Additionally, the CEO is
expected to successfully implement capital and operating plans;
report regularly to the board of directors on the progress and
results compared with the operating and financial objectives,
and initiate courses of action for improvement; develop and
maintain a sound, effective organization structure; and ensure
progressive employee training and development programs.
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b) Board should approve the Chief YES The corporate objectives for which the CEO is responsible are set
Executive Officer's corporate objectives, by the board of directors, and assesses the CEO against such
and assess the Chief Executive Officer objectives.
against these objectives.
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12. Establish structures and procedures YES The board has appointed Larry Macdonald, an unrelated director,
to enable the board to function to act as the Lead Director of the board to ensure the board acts
independently of management. independently of management and properly discharges its
responsibilities, and the board has adopted terms of reference
with respect to the Lead Director's role. The Lead Director
ensures that the board meets on a regular basis without
management, emphasizes the boundaries between the board's and
management's responsibilities, ensures prospective board members
understand the role and contribution of directors, and ensures
the board addresses its responsibilities in relation to
corporate governance.
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DOES
VERMILION
CORPORATE GOVERNANCE GUIDELINES ALIGN COMMENTS
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13. a) Ensure an Audit Committee has a YES The Audit Committee reviews the Trust's audited consolidated
specifically defined mandate and direct financial statements and interim financial statements and selected
communication channels with internal and corporate disclosure documents before they are approved by the
external auditors. board of directors. It approves the public release of quarterly
financial results; monitors accounting, financial reporting,
control and audit functions; reviews risk management policies;
and reviews issues relating to legal and regulatory
responsibilities. The Audit Committee has direct communication
with the internal and external auditors and has oversight
responsibility for management's system of internal control
reporting on internal control. The Audit Committee reviews the
external audit plans for the external auditors and has
implemented procedures to ensure that it meets with the external
auditors on a regular basis independently of management. The
board has adopted a charter for the Audit Committee setting
forth the above responsibilities of the Audit Committee. The
Audit Committee charter details the Audit Committee's
relationship with and expectation of the internal and external
auditors, establishes the independence of the external auditors
and specifies that the external auditors are ultimately
accountable to the board and the Audit Committee as
representatives of the shareholders. The charter mandates that
the Audit Committee discuss the quality and acceptability of the
Trust's accounting principles with the external auditors. The
charter also sets out the Audit Committee's oversight of
internal control and responsibility for the disclosure of
financial information. The board assesses the Audit Committee
charter on an annual basis.
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b) All members of the Audit Committee YES All members of the audit committee are unrelated directors and
should be unrelated directors and should are financially literate. The chair of the Audit Committee,
be financially literate. At least one Joseph Killi, is a chartered accountant and has accounting and
member should have financial expertise. financial expertise.
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14. Implement a system to enable YES In addition to the authority of committees to retain external
individual directors to engage outside advisors in connection with their responsibilities, individual
advisors at the Company's expense. directors may engage outside advisors at any time (at the expense
of the Trust) to provide advice on a corporate decision or action.
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