Corporate Governance

Governance Overview and Commitment

Upholding the highest governance standards is a key priority of the Finning Board of Directors. Finning has an established tradition of excellence in corporate governance and the Board is resolute in its commitment to fulfilling its duty of accountability. The Board is also committed to building on its best practices through continuous evaluation and improvement.

Our corporate culture of integrity and respect for the Company’s stakeholders is further reinforced by Finning’s Code of Conduct which guides the actions of our directors, officers and employees.

Board Mandate

The Board of Directors has overall responsibility for Finning’s business conduct and fostering our long-term success to maximize shareholder value. The Board oversees our strategy, risk management, corporate governance policies, succession planning, safety practices and community investment policy.

The Board is directly responsible for:

  • choosing Finning’s President and CEO, who is responsible for Finning’s day-to-day operations;
  • reviewing and approving the annual operating plan and the strategic plan, which take into account business opportunities and business risks;
  • overseeing and monitoring management’s systems for Finning’s operations;
  • monitoring and assessing Finning’s performance in meeting both short and long-term goals established by management and approved by the Board;
  • directly reviewing and approving major transactions proposed by management, including the payment of dividends and the terms for the issuance of securities and the repurchase of shares;
  • reviewing reports and recommendations from the Board committees and giving management the necessary direction;
  • reviewing the content of significant communications with shareholders and the investing public, including the management proxy circular, the annual information form, and quarterly and annual financial statements, management’s discussion and analysis and associated news releases;
  • reviewing and approving key corporate policies;
  • managing the Board’s affairs, including planning its composition, selecting the Board Chair, nominating candidates for election to the Board, appointing committees and committee chairs and determining director compensation; and
  • approving the appointment of all corporate officers and the compensation of the President and CEO.

Board Meetings

During 2021, the Board of Directors met on seven occasions, all of which were held by videoconference. At each Board meeting, the Board discusses the corporate strategy and annually has an in-depth discussion on strategy and the key strategic business risks to Finning. At every meeting, the Board holds independent sessions without management and without non-independent directors present.

Retirement and Term Limits

Pursuant to Finning’s retirement policy, when directors turn 72 years old, they are no longer eligible to stand for re-election at the next annual meeting and must retire from the Board. The Board can waive this requirement if a qualified replacement director has not been identified after a thorough search, or if the director’s retirement would have a material impact on Finning because it would mean losing a unique set of skills.

The Board has not adopted term limits because it would risk losing directors with a deep understanding of Finning and its business and strategic relationships. The Board believes that it has achieved healthy renewal through ordinary turnover and its retirement policy.

The average tenure of the proposed Board is six years and one month. Four of the thirteen nominees have served on our Board for less than four years.

2021 Inclusion and Diversity at Finning

In 2021, we continued to invest in organizational system and culture transformation to drive ongoing continued improvements to the diversity and inclusivity of teams. Below are just a few highlights from this year.

·     100% of executive management and more than 85% of senior leaders established a goal to ensure diverse and inclusive teams, demonstrating shared accountability and leadership commitment for our inclusion journey

·     84% of senior leaders and above completed Conscious Inclusion training to build leadership capability to visibly champion our inclusion journey with their teams and role model the way 

·     89% of front-line level leaders and above completed Building Respectful Teams training to build leadership capability to stand up for respect and lay the foundation for a healthier culture  

·     The members of our inclusion and diversity council, including our President and CEO, and other executives hosted Culture Conversations to listen and learn from diverse perspectives while championing topics ranging from psychological safety, respect, anti-racism, LGBT+ inclusion, Indigenous inclusion, and allyship 

·     Leaders are embedding Courage to Care programming into regular team meetings, reinforcing the interconnectedness of physical and psychological safety, respect, inclusion, and wellbeing 

·     We enabled confidential and voluntary self-disclosure of diverse identity information, including pronouns, gender identity and expression, sexual orientation, disability and ethnicity, in order to assist in the development of our programming and other initiatives to improve diversity and inclusion 

·     We established employee resource groups, including the Rainbow Inclusion Group (RIG), to support underrepresented talent and raise awareness with leaders about barriers and allyship   

·     Finning UK and Ireland became a Disability Confident Committed employer, equipping us with the knowledge, skills and confidence we need to attract, recruit, retain and develop persons with disabilities

·     Finning South America was recognized by the Human Rights Campaign as a best place to work for LGBT+ community and earned a category A+ company rating for the second year in a row  

·     Finning Canada continued our Truth and Reconciliation journey through cultural awareness training, Indigenous employee panel events, celebrating key dates, and sharing resources to support anti-racism and decolonization efforts   

·     Globally, our employees scored Finning above the high performing company benchmark on our Inclusive Culture index questions (see below for more information).

Director Nomination and Skills Matrix

The Governance and Risk Committee is responsible for board chair succession and recruiting new directors who will bring the appropriate skill set and diversity to our Board. Board recruitment activities are conducted with reference to our Board Inclusion and Diversity Policy, which sets out our approach for promoting and achieving diversity on our Board. Diversity in this context includes business experience, geography, age, gender, visible minorities, Indigenous peoples, persons with disabilities, sexual orientation and other personal characteristics.  When considering director nominees, the Board also assesses the individual candidate’s competencies and skills against those that the Board has identified in a skills matrix as desirable to enhance Board performance. As the Board composition changes and as Finning’s strategy evolves, the director skills matrix is reviewed to ensure that the current director skill sets align with Finning’s strategic goals. The skills matrix also helps the Board to prioritize and identify areas for future enhancement or gaps in the current skill sets and diversity of the Board and committees.

Director recruitment and renewal activities have been ongoing over the past several years. The Governance and Risk Committee retains the services of an external search firm or consultant for director recruitment as necessary.

Director Independence

This year thirteen directors will be elected to the Board. The Board has considered which of its members are “independent” for purposes of National Instrument 58-101 of the Canadian Securities Administrators and has concluded that all directors, other than L. Scott Thomson (who is the President and Chief Executive Officer of Finning) are independent. Details for determining director independence are further discussed in the management proxy circular.

Board and Committee Evaluations

The Board reviews its performance every year to assess its general performance and progress on its annual objectives. The Governance and Risk Committee is responsible for the evaluation process, which is conducted annually in-house through the Corporate Secretary’s office and at least every three years through an independent external consultant.

In 2021, the Governance and Risk Committee engaged Watson Advisors to conduct a comprehensive review of board and individual director effectiveness. The Board evaluation process included an online survey to identify areas for Board focus with Board member and key management participation. The Board evaluation covered a wide range of topics including Board composition and succession, alignment of the Board and executive on strategy and priorities, Board/management relationship, Board leadership, CEO succession plans, Board culture and dynamics, director recruitment and development, and shareholder and stakeholder engagement, among other topics. The Board evaluation also included a survey on committee and committee chair effectiveness, covering topics such as committee leadership and priorities for the coming year.

Individual director evaluations included an online survey to receive quantitative ratings and qualitative feedback on each director’s contributions through a peers and key management review. The evaluations also covered a wide range of issues including strategic perspective, key strengths relevant to the skills matrix, knowledge, business and financial acumen, communication and culture, and level of engagement. The evaluations included a “heat map” exercise, involving peer and self-assessment of skills relative to the skills matrix. The evaluations also included board chair surveys, covering topics such as leadership, effectiveness of meetings, board culture and relationship with directors, management and key stakeholders.

Watson Advisors compiled the results of the Board and committee evaluations, including the Board Chair assessment and the “heat map” exercise, discussed them with the Governance and Risk Committee Chair and the Board Chair, and delivered a report to the Governance and Risk Committee Chair and the Board Chair. Individual meetings between the Board Chair and each director to debrief individual directors on their results were held, and the Governance and Risk Committee Chair also met with the Board Chair to review the Board Chair’s individual results.

The conclusion of the evaluations is that our Board has a strong level of engagement and there continues to be close alignment between the directors and management on the Board’s effectiveness and on Board priorities. The committees are also working effectively, with good support from management. The observations and recommendations from this evaluation process will be considered in the development of Board and committee objectives for 2022.

Director Development

We design our director orientation and education programs to inform and educate our directors on a range of topics so they are better equipped to deal appropriately with issues that may arise during their tenure, make more informed decisions and perform their duties as a member of the Finning Board generally.

The Governance and Risk Committee oversees the program, which includes putting together materials, resources and sessions on corporate governance matters as well as our business, strategy, operations and current issues facing the business.

Director Orientation

The orientation process begins with prospective directors. As part of the on-boarding process, we provide information about Finning’s culture and strategy, director compensation and Board mandate, which outlines the key responsibilities of directors.

New directors receive training and access to the Board portal, which provides important orientation materials such as the Board policy manual, Board and committee meeting materials, key policies and communications materials. They also receive detailed information about Finning and our business, and new directors meet with senior management to receive briefings and materials on:

  • our business and strategic plans
  • key strategic risks and risk management
  • our operations
  • compliance programs
  • treasury (funding position, arrangements and policies)
  • financial reporting and auditing policies and procedures.

Director orientation also includes visits to plant sites and facilities where appropriate.

Continuing Education

Each director is responsible for staying informed about Finning's business and outside developments that could have an impact on Finning. Senior management provides regular updates to the Board about our business, including financial, business and strategic information, ESG and operations, as well as recent developments and other issues. Outside advisors may make presentations on specific topics or developing issues, and director may visit plant sites and facilities from time to time to gain additional insight into our business.

We provide information about emerging corporate governance trends and best practices and other related information through the Board portal, and directors receive paid memberships to professional organizations like the Institute of Corporate Directors. The Corporate Secretary also advises directors of educational opportunities from time to time.

Risk Oversight

Our business includes market, credit, liquidity and other risks. We have a strong risk management culture and an enterprise risk management process to manage our business activities and risks.

The Governance and Risk Committee is responsible for oversight of our processes for managing critical business risks. Each of our operations identifies the main risks that could have a negative effect on our business, and then develops a plan to mitigate those risks. Management reports critical business risks and mitigation plans at each quarterly Governance and Risk Committee meeting, which then reports to the Board. The role of the Governance and Risk Committee is to organize and expedite management of the enterprise risk process. The Governance and Risk Committee will delegate business risks that are within the mandate of one of the other committees to the relevant committee. Management provides an update on those delegated business risks, and management’s mitigation plans, at each quarterly meeting of the relevant committee, which then reports to the Board. Overall responsibility for risk oversight remains with the Board. Management provides a comprehensive annual report to the Board on enterprise risk management, major enterprise risks and mitigation plans, and emerging risks.

The Board and its committees are responsible for ensuring that management has taken all reasonable steps to identify and manage all key risks:

  • the Audit Committee receives quarterly updates from management at every regularly scheduled meeting on major financial risks and our processes for monitoring and controlling them
  • the Governance and Risk Committee receives quarterly updates from management at every regularly scheduled meeting on the top enterprise risks and any changes in the risks or their relative ranking and reviews our processes for assessing and managing enterprise risks. It also receives quarterly updates on regulatory matters relevant to governance, to ensure that Finning stays at the forefront in this area, and reviews our governance practices to make sure they align with regulatory requirements and best practice
  • the Human Resources Committee reviews our executive compensation policies and practices to make sure they align with our compensation principles and do not encourage inappropriate or excessive risk-taking, and receives quarterly updates from management on risks related to culture and people, including talent and employee wellbeing
  • the Safety, Environment and Social Responsibility Committee oversees our policies and systems to monitor safety, health and ESG risks, and receives quarterly updates from management on these risks.

Key Policies

As part of its oversight responsibilities, the Board has approved a number of policies to ensure our directors and employees at all levels maintain Finning’s high standards of governance. These are:

  • Code of Conduct
  • Whistleblower Policy
  • Corporate Disclosure Policy
  • Code of Ethics for Senior Executive and Financial Management
  • Policy on Share Trading, Hedging and Use of Material Information
  • Compensation Clawback Policy
  • Global Anti-Bribery and Anti-Corruption Policy
  • Majority Voting Policy
  • Board Inclusion and Diversity Policy
  • Global Political Contributions Policy
  • Global Sustainability Policy
  • Board Authority and Approvals Policy

Annually, Finning’s senior executives and financial management receive the Code of Ethics for Senior Executives and Financial Management, together with the Code of Conduct, Corporate Disclosure Policy, Whistleblower Policy, Global Anti-Bribery and Anti-Corruption Policy and the Policy on Share Trading, Hedging and Use of Material Information. These employees are required to acknowledge annually in writing that they are aware of these policies and that they agree to comply with their terms.

Ethical Business Conduct

Finning has earned a strong reputation for business integrity. For nearly 90 years, Finning’s rigorous standards of business conduct have been a key reason why employees work for us, customers and suppliers partner with us and shareholders invest in us.

Our Code of Conduct (Code) puts into practice our principles of transparency, ethics and professionalism. It covers areas including ambassadorship, shared commitment and accountability, ethical decision-making, corporate disclosure, conflicts of interest and confidentiality.

The Code applies to everyone at Finning, including our subsidiaries and affiliates, and we expect our agents, consultants and contractors to act consistently with our Code. New employees receive a copy of the Code when they are hired, and every year all directors, officers and employees must acknowledge their understanding of the Code and agree to comply with it. Our directors and our senior executives and financial management are also bound by a second Code of Ethics because they hold an important and elevated role in corporate governance. We have also adopted a Supplier Code of Conduct.

Our Global Ethics Committee oversees investigations of reports of suspected Code violations. It is a management committee comprised of our Compliance Officer (General Counsel), Chief Financial Officer, Chief Human Resources Officer, Senior Vice President, Corporate Controller and Head of Global Internal Audit. Our regional ethics committees investigate suspected violations of the Code in the regions and report on their investigations to the Global Ethics Committee. The regional ethics committees include senior executives from finance, legal, human resources and internal audit.

The Audit Committee monitors compliance with the Code. It receives quarterly reports from the Global Ethics Committee on the number and nature of complaints, and specific reports of any suspected violations of the Code that may constitute a material risk.

Everyone is responsible for reporting a suspected breach immediately, by contacting their supervisor, manager or local representative. They can also file a report in English or Spanish through our ethics and compliance website, call the ethics and compliance hotline or contact our Compliance Officer. All reports are treated impartially and confidentially, and there is no retaliation for anyone who speaks up and acts in good faith. In addition, our Compliance Officer can be contacted directly at Further information on the reporting of ethics violations or concerns is provided in Finning’s Whistleblower Policy.

Communications with the Board

The Board ensures systems are in place for our communication with our shareholders and other stakeholders. Such communication includes quarterly and annual financial statements and related management’s discussion and analysis, management proxy circulars, annual information forms and news releases containing significant new information. The Board also encourages shareholders to attend Finning’s annual meeting. The annual meeting provides a valuable opportunity to hear directly from management about the results of Finning’s business and operations. Members of the Board are in attendance at annual meetings and the Board and committee chairs are available to answer questions.

Those shareholders, employees and other interested parties wishing to communicate directly with the Board may do so through the Board Chair. Direct your written communication marked Private and Confidential, in writing to:

Board Chair
c/o Corporate Secretary
Finning International Inc.
19100 94 Avenue
Surrey, B.C. V4N 5C3

Advisory Vote on Executive Compensation

As part of Finning’s commitment to strong corporate governance practices, since 2011 the Board has given shareholders the opportunity to cast an advisory vote on the Board’s overall approach to executive compensation (Say on Pay) at its annual meeting. Last year, 91.9% of the votes cast were in favour  of our approach to executive compensation. We are holding another advisory vote on executive pay at our 2022 annual meeting of shareholders on May 10, 2022.

For further details on Finning’s Board of Directors or on its governance practices, please refer to Finning’s most recent Management Proxy Circular.