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.
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 and sustainability practices and community investment approach.
The Board is directly responsible for:
During 2022, the Board of Directors met on six occasions. 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.
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 five years and eight months. Five of our thirteen directors have served on our Board for less than four years.
In 2022, we continued to invest in organizational system and culture transformation to drive ongoing continued improvements in the diversity and inclusivity of teams. Below are 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
· 82% of senior leaders and above have completed Conscious Inclusion training to date to build leadership capability to visibly champion our inclusion journey with their teams and be role models
· The majority 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, LGBTQ+ inclusion, Indigenous inclusion, and allyship
· Leaders continued 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 continue to support employee resource groups (ERGs) in Canada, the United Kingdom and Ireland. In Canada, these exist for members and allies of the LGTBQ+, Indigenous and Women’s communities. In the United Kingdom and Ireland, ERGs exist for members and allies of the LGBTQ+, Women’s, persons with disabilities and members of the armed forces communities. We also established an Allies for Inclusion group for South America. These groups 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 LGBTQ+ community and earned a category A+ company rating for the second year in a row
· Finning South America is on track to meet our goal of 50% female worker representation at the Escondida mining project under Finning’s agreement with BHP
· 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
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.
The Board is currently comprised of thirteen directors. 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 Kevin Parkes (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.
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 2022, the Board evaluation process was overseen by the office of the Corporate Secretary . The Board evaluation process included an online survey to assess Board performance and 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, stakeholder engagement, and board priorities, among other topics. The Board evaluation also included a survey on committee and committee chair effectiveness, covering topics such as composition, committee reporting, 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 review by peers and key management. The evaluations also covered a wide range of issues including strategic perspective, key strengths relevant to the skills matrix, knowledge, leadership skills, business and financial acumen, communication and culture, and level of engagement. 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.
The office of the Corporate Secretary compiled the results of the evaluations, discussed them with the Governance and Risk Committee Chair and the Board Chair, and delivered a report to the Governance and Risk Committee, which was then reported to the Board. The results of the individual director assessments, including the Board Chair assessment, were also compiled and provided 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 is seen to have 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 seen to be 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 2023.
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 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.
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:
Director orientation also includes visits to plant sites and facilities where appropriate.
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, operational, and strategic information, ESG topics, 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 presentations to the Board, 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.
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 key 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 key 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 oversee management of the enterprise risk process. The Governance and Risk Committee will delegate oversight of 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:
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:
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, the Policy on Share Trading, Hedging and Use of Material Information, the Global Respect, Inclusion and Diversity Policy, Global Delegation of Management Authority Policy, and the Gifts and Hospitality Policy. 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.
Finning has earned a strong reputation for business integrity. For 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 made up of our Compliance Officer (General Counsel and Chief Human Resources Officer), Chief Financial 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. Alternatively, 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 by email. All reports are treated impartially and confidentially. Finning’s Code and Whistleblower Policy reinforce that there is no retaliation for anyone who speaks up and acts in good faith. In addition, our Compliance Officer can be contacted directly at complianceofficer@finning.com. Further information on the reporting of ethics violations or concerns is provided in Finning’s Whistleblower Policy.
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
We have held an advisory vote on executive pay every year since 2011 as part of our commitment to strong corporate governance practices and engaging with shareholders. Last year, 93.7% of our shareholders voted in support of our approach to executive compensation. The human resources committee, as part of its mandate, continuously reviews and adjusts, as appropriate, the executive compensation program to ensure alignment with objectives and support by shareholders.
For further details on Finning’s Board of Directors or on its governance practices, please refer to Finning’s most recent Management Proxy Circular.
