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 2024, the Board of Directors met on five 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. In the past eight years, nine new independent directors have been recruited to the board. More recently, in the last three years, five new independent directors were recruited to the board: Manjit Sharma and Nancy Tower in 2022, Charles Ruigrok in 2023, and John Rhind and Michael Putnam in 2024. This significant board renewal activity facilitated the board’s longer-term board succession plan to address the retirements of several longer-serving directors under our retirement policy, including Nicholas Hartery at our 2024 annual meeting and James Carter, Harold Kvisle and Stuart Levenick at the 2025 annual meeting.
With Mr. Kvisle’s decision to step down as Board Chair, on February 6, 2024, the board, on the recommendation of the governance and risk committee, extended Mr. Carter’s waiver of mandatory retirement for an additional one-year period and appointed Mr. Carter as successor Board Chair on April 1, 2024. The extension of Mr. Carter’s tenure for one year and appointment as Board Chair provided the continuity necessary to facilitate the board’s Board Chair transition plan while the board continued its Board Chair succession activities to identify a long-term Board Chair by the 2025 annual meeting. As a result of the Board Chair succession process, Charles Ruigrok will succeed Mr. Carter as Board Chair at the 2025 annual meeting at which time Mr. Carter will retire from the board.
The average tenure of the proposed board is three years and four months. Six of the nine director nominees have served on our Board for less than four years.
In 2024, we unveiled a new chapter of our Finning story: our culture aspiration and commitment to creating a positive impact. This is our promise and shared commitment to making a tangible difference every day. It aligns our culture and strategy to create meaningful change, ensuring Finning is a workplace where everyone feels valued, empowered, and inspired to contribute their best.
At Finning, we believe that inclusion and diversity broadens talent, drives better performance and increases innovation, leading to better outcomes for all of our stakeholders and making us a stronger company overall. To promote an inclusive culture and protect the physical and psychological safety of Finning’s employees, we are committed to ensuring all individuals enjoy respect and dignity in a safe work environment, free from discrimination, harassment and workplace violence.
Our priority is to build organizational capability (by empowering our employees, equipping and supporting our leaders and through our people practices) to drive continuous improvement in our efforts to recruit, develop, promote and lead diverse talent inclusively, measured by the demographic representation and employee experience across all levels of the organization, functions and geographies. You can find a list of the diversity disclosure requirements of the Canada Business Corporations Act and a discussion of how Finning meets those requirements in Appendix B of the Proxy Circular.
The Governance and Risk Committee is responsible for Board and Board Chair succession and recruiting new directors who will bring the appropriate competencies, skill set and diversity to our Board, given our corporate strategy and objectives.
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.
Board renewal has been a key area of focus for the Governance and Risk Committee, with nine independent directors recruited to the board over the last eight years, including five independent directors over the last three 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 nine 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 consideration of the retirements of Messrs. Carter, Kvisle and Levenick and the Board Chair succession at the 2025 annual meeting, in 2024, the board evaluation process was conducted by the office of the Corporate Secretary to allow the more comprehensive external evaluation to be conducted in 2025.
In 2024, 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 leadership, 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 directors retiring in 2025, Messrs. Carter, Kvisle and Levenick, were not evaluated. 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 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.
The conclusion of the evaluations is that our Board is seen to have a strong level of engagement and is performing well against its mandate. There continues to be good alignment between directors and management on the Board’s effectiveness and Board priorities. The committees are also seen to be working effectively, with good support from management. The observations from this evaluation process will be considered in the development of Board and committee objectives for 2025.
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.
The orientation process begins with prospective directors. As part of the on-boarding process, we provide information about Finning’s culture and strategy, Board composition, 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 external 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, Environment, Social and Governance (ESG) topics, cybersecurity, artificial intelligence (AI), operations, as well as recent developments and other issues. Outside advisors, key customers and suppliers may make presentations on specific topics or developing issues, and director 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 relevant information through presentations to the Board, advise directors of outside educational opportunities, and directors receive paid memberships to professional organizations like the Institute of Corporate Directors.
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 updates 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. Annually, management provides a comprehensive review of our enterprise risk management and major enterprise risks, including emerging risks, to the Board.
The Board and its committees are responsible for ensuring that management has taken all reasonable steps to identify and manage all key business 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, and the Global Delegation of Management Authority 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 over 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 conduct, inclusion and diversity, human rights, environmentally responsible practices, health and safety, anti-bribery and anti-corruption, business integrity, cybersecurity, 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 officers and employees must take training regarding our code, 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, which they are required to sign each year, because they hold an important and elevated role in corporate governance. We have also adopted a Supplier Code of Conduct which is available on our website (www.finning.com).
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), Head of Global Internal Audit, Chief Development Officer and Vice President, Corporate Controller. 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 helpline 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, news releases containing significant new information, most recent sustainability report, and modern slavery reports. 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, a total of 98,439,207 (97.43%) votes were cast in favor and 2,594,294 (2.57%) votes were cast against 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.
