| |
TSX Corporate Governance Guidelines
|
Does the Corporation
Align? |
Comments |
| 1. |
Board of Directors should explicitly assume responsibility
for the stewardship of the corporation and specifically
for: |
|
|
| a. |
Adoption of a strategic planning process |
Yes |
Board meetings from time to time focus on substantial
strategic planning matters. Each year the Board
reviews and approves a long range strategic plan
and one-year operating plan. |
| b. |
Identification of specific risks and implementing
risk management systems |
Yes |
The Board of Directors has put structures in place,
including the Audit Committee, the Human Resources,
Compensation and Pension Committee and the Environmental,
Health and Safety Committee for the identification
of principal risks, and is taking reasonable steps
to manage these risks. In addition, management has
implemented an Enterprise Risk Management program
and reports quarterly to the Audit Committee regarding
significant identified risks and the steps taken
to mitigate such risks. |
| c. |
Succession planning and monitoring senior management |
Yes |
The Human Resources, Compensation and Pension
Committee reviews succession and management development
plans on a regular basis. |
| d. |
Communications policy |
Yes |
The Board of Directors has developed a policy
to communicate effectively with all stakeholders
including shareholders, Caterpillar Inc., employees,
security holders and regulators. |
| e. |
Integrity of internal control and management information
systems |
Yes |
The Audit Committee reviews on a regular basis,
and makes recommendations for improvements to, the
adequacy of the corporation's internal controls
and management information systems. |
| 2. |
Majority of directors should be "unrelated"
(independent of management) |
Yes |
D.W.G. Whitehead, President and Chief Executive
Officer is the only Board member who is related
to the Corporation. |
| 3. |
Disclose for each director whether he or she is
related, and how that conclusion was reached |
Yes |
D.W.G. Whitehead - related - President and CEO
For the remainder of the directors, none of them
or their associates: have worked for the Corporation;
have material contracts with the Corporation;
or have received remuneration from the Corporation
in excess of directors fees, including stock options
and deferred share units. Accordingly, each such
director is unrelated. |
| 4a. |
Appoint a committee responsible for appointment/assessment
of directors |
Yes |
The Corporate Governance Committee has the mandate
to: recommend candidates for the Board of Directors;
annually review credentials and performance of nominees
for re-election; recommend candidates for filling
vacancies on the Board of Directors; and ensure
appropriate qualifications are maintained. |
| b. |
Composed exclusively of outside, non-management
directors, the majority of whom are unrelated |
Yes |
All members of the Corporate
Governance Committee are outside, non-management
and unrelated directors. |
| 5. |
Implement a process for assessing the effectiveness
of the Board of Directors, its committees and individual
directors |
Yes |
The Corporate Governance Committee conducts annual
assessments of the Board of Directors, each Board
Committee and individual directors. |
| 6. |
Provide orientation and education programs for
new directors |
Yes |
The Board policy manual prepared by the Corporate
Governance Committee is provided to new and existing
directors, and orientation programs are held from
time to time as required. Board meetings are held
at plant sites from time to time to give the directors
additional insight into the corporation's business.
In addition, education sessions are held from time
to time with respect to specific topics related
to the Corporation and its business. |
| 7. |
The Board of Directors should examine its size
and where appropriate reduce the number of directors,
with a view to improving effectiveness |
Yes |
The Board of Directors believes the appropriate
size for the Board of Directors is between eight
and twelve members. However, there may be more than
twelve members from time to time to facilitate member
succession. The Corporate Governance Committee reviews
Board size annually. |
| 8. |
Review compensation of directors to reflect risk
and responsibility |
Yes |
The Corporate Governance Committee reviews directors’
compensation annually. |
| 9. |
Committees should generally be composed of non-management
directors |
|
The Board Committees are composed of non-management
directors except that D.W.G. Whitehead, who is President
and Chief Executive Officer, is a member of the
Environmental, Health & Safety Committee. |
| 10. |
Assign a committee responsible for approach to
Corporate Governance |
Yes |
A Corporate Governance Committee is in place,
guidelines have been developed and a policy manual
has been completed and distributed. |
| 11. |
Define limits to management's responsibilities
by developing mandates for: |
|
|
| a. |
the Board of Directors |
Yes |
Terms of reference have been established for the
Board of Directors. |
| b. |
the Chief Executive Officer |
Yes |
Terms of reference have been established for the
Chief Executive Officer which include implementation
of strategic, business and operational plans. |
| c. |
Board of Directors should approve Chief Executive
Officer's corporate objectives |
Yes |
The Chief Executive Officer presents his business
and operational plans to the Board of Directors
annually. Those plans are linked to the Corporation’s
strategic goals. |
| 12. |
Establish structures and procedures to ensure
the Board of Directors can function independently
of management |
Yes |
There is a Corporate Governance Committee. In
addition, the Board of Directors meets without management
during each Board meeting. |
| 13a. |
Establish an Audit Committee with a specifically
defined mandate |
Yes |
The Audit Committee is mandated to: consider and
review audit services and the financial statements;
engage internal auditors and external auditors;
review matters that may have a material impact on
financial statements, compliance and key financial
policies and controls; review key risks affecting
the Corporation and its business; and meet with
the auditors independently of management. |
| b. |
All members should be non-management directors |
Yes |
All members are non-management and unrelated directors. |
| 14. |
Implement a system to enable individual directors
to engage outside advisors at corporation expense |
Yes |
This takes place within the context and terms
of reference of a Committee's responsibilities. |
