The Corporation believes in the importance of good corporate governance and the central role played by directors in the governance process. The Corporation believes that sound corporate governance is essential to the well-being of the Corporation and its shareholders.
Power Corporation is an international management and holding company. It has had controlling shareholders since its beginnings in 1925. The Honourable Paul G. Desmarais held control of Power Corporation from 1968 until his death in October 2013, upon which control of the Corporation passed to the Desmarais Family Residuary Trust. As at March 17, 2023, the Desmarais Family Residuary Trust exercised, through holding entities, control over shares carrying approximately 51.34 per cent of the votes. Power Corporation is not an operating company and a substantial portion of its interests are located outside Canada, specifically in the United States, Europe and Asia.
The foregoing characteristics are important in any consideration of governance philosophy and practices as they apply to the Corporation.
In 2005, the Canadian Securities Administrators (the “CSA”) adopted National Policy 58-201 – Corporate Governance Guidelines (the “Policy”) which sets forth a number of suggested guidelines on corporate governance practices (the “CSA Guidelines”). Under the Policy, issuers are encouraged to consider the CSA Guidelines in developing their own corporate governance practices.
In the Board’s view, no single corporate governance model is superior or appropriate in all respects. The Board’s approach reflects its belief that governance must be focused on substance rather than the application of generic processes and standardized rules and guidelines that do not account for the particular context of the issuer. Rigid, externally generated checklists cannot replace real care, responsibility and personal engagement. Furthermore, any review of governance practices should include consideration of long‑term returns to shareholders, as the Board believes this to be an important indicator of the effectiveness of a governance system.
The Board believes that the Corporation’s governance system is effective and is appropriate to its circumstances, and that there are in place proper structures and procedures to ensure the Board’s independence from management and to ensure that actual or potential conflicts of interest between the Corporation and its controlling shareholder are dealt with appropriately.
The CSA Guidelines and National Instrument 52-110 – Audit Committees and National Instrument 58-101 – Disclosure of Corporate Governance Practices (the “Instruments”) currently provide that a director is “independent” of an issuer if he or she has no direct or indirect relationship with the issuer which could, in the view of the issuer’s board of directors, be reasonably expected to interfere with the exercise of the director’s independent judgment. The Corporation’s Board of Directors agrees with this approach to assessing director independence.
However, in the context of our majority holdings in Lifeco and IGM, the Instruments further provide that a director is deemed to have such a direct or indirect relationship with an issuer (and thus not to be independent) if, among other things, the director is, or has been within the last three years, an executive officer or an employee of the issuer’s parent corporation (i.e., the controlling shareholder). The determination of director independence is a question of fact that should be decided by the issuer’s board of directors on a case-by-case basis based on actual relationships with an issuer’s management (not relationships with an issuer’s controlling shareholder) and without reference to any presumptions such as those which are currently contained in the Instruments. The provisions in the Instruments concerning independence determinations are overly-broad, as they encompass directors who have no direct or indirect relationship with the issuer which could, in the view of the issuer’s board of directors, be reasonably expected to interfere with the exercise of the director’s independent judgment. The provisions deeming directors that are related to an issuer’s controlling shareholder to be non-independent are not an appropriate response to any potential governance concerns they are intended to address. Any concerns which may exist in a controlled company situation about conflicts of interest or self-dealing should be resolved directly through a committee of directors who are independent of the controlling shareholder. The governance model at the Corporation includes such a committee, the Related Party and Conduct Review Committee, which is discussed below in the section entitled “Resolution of Conflicts”. Each of our publicly traded subsidiaries also has such a committee.
The Board of the Corporation is currently composed of 14 Directors. In the Board’s view, 11 Directors (constituting a more than 78 per cent majority of the Board) are independent within the meaning of the Instruments and have no other relationships that could reasonably interfere with the exercise of their independent judgment in discharging their duties to the Corporation.
The following table shows which Directors are independent and which are non-independent within the meaning of the Instruments, and the reason for non-independence of individual Directors, as applicable.
The Chairman of the Board is responsible for ensuring that the Directors who are independent of management have opportunities to meet without management present. Such discussions are led by the Corporation’s Lead Director, Mr. Anthony R. Graham, who provides feedback subsequently to the Chairman and Deputy Chairman of the Board. All independent Directors are encouraged by the Chairman of the Board to have open and candid discussions with the Lead Director, the Chairman, the Deputy Chairman or with the Chief Executive Officer.
Pursuant to a policy relating to meetings of independent Directors at Board and Committee meetings, the Directors on the Board who are independent of management meet at every regularly scheduled Board meeting without members of management present. Accordingly, there were five such meetings held during 2022. The Audit Committee, the Related Party and Conduct Review Committee, and the Human Resources Committee are composed entirely of Directors who are independent while the Governance and Nominating Committee is entirely composed of Directors who are not members of management of the Corporation. Each of these committees have scheduled in-camera meetings without members of management at every meeting.
Since February 13, 2020, following the Reorganization, the positions of Chief Executive Officer and Chairman of the Board have been held by separate individuals. The role of the Chairman of the Board is to seek to ensure that the Board can fulfill its duties and responsibilities in an effective manner in accordance with the laws, regulations and policies governing the Corporation and, in doing so the Chairman shall (in consultation with the Deputy Chairman), among other things: provide leadership to foster the effectiveness of the Board; chair meetings of the Board and of shareholders; ensure that the quality and timeliness of information that goes to the Board is appropriate; ensure that delegated Committee functions are carried out and reported as necessary; facilitate, together with the Chairs of the Board Committees and the CEO, effective and transparent interaction between the Board and management; and ensure that the Corporation’s business is conducted with a view to the best interests of the Corporation. To that end, the Chairman and Deputy Chairman are invited to attend the meetings of Committees of which they are not members, except for meetings of the Audit Committee and of the Related Party and Conduct Review Committee. Should they attend meetings of Committees of which they are not members, the Chairman and Deputy Chairman do not attend the in-camera sessions of such meetings.
As the positions of Chairman and Deputy Chairman are held by former executive officers of the Corporation, the Board has implemented structures and procedures to provide assurance that the Board can act independently of management. In particular, the Board has a Lead Director and 78 per cent of the members of the Board are independent both within the meaning of the Instruments and in the Board’s view.
Mr. Anthony R. Graham serves as the Lead Director of the Corporation. In fulfilling his responsibilities, the Lead Director chairs the meetings of independent Directors, provides input to the Chairman and Deputy Chairman of the Board regarding the planning and organizing of the activities of the Board and provides input to the Chair of the Governance and Nominating Committee on the composition and structure of the Board and the formation and composition of Committees. The Lead Director is also responsible for reporting to the Chairman of the Board on the discussions of the independent Directors and facilitating the effective interaction between the independent Directors and management, in addition to any other functions as may be requested by the Chairman or Deputy Chairman of the Board.
It is the duty of the Board to supervise the management of the business and affairs of the Corporation with a view to the best interests of the Corporation, including its shareholders as a whole. In discharging this duty, the Board establishes procedures for the identification and resolution of conflicts that might arise between the interests of Power Corporation and the interests of its controlling shareholder.
Power Corporation has established a Related Party and Conduct Review Committee composed entirely of Directors who are independent of management and independent of the Corporation’s controlling shareholder. The mandate of the Related Party and Conduct Review Committee is to review proposed transactions, if any, with related parties of the Corporation (including the controlling shareholder) and to approve only those transactions that it deems appropriate. The Committee ensures that any transactions between the Corporation and a related party are done at least at market terms and conditions.
For a more detailed description of the Related Party and Conduct Review Committee’s mandate, see the Board Committees page of this Website.
Canada Life, a subsidiary of Lifeco, is a regulated financial institution. As such, Canada Life is prohibited from entering into any transaction with a related party unless the transaction is permitted under the Insurance Companies Act. Canada Life has therefore established a conduct review committee that has implemented procedures for the review of permitted related party transactions. In accordance with these procedures, Canada Life’s conduct review committee reviews certain permitted proposed related party transactions to ensure that any such transactions are on terms and conditions at least as favourable to Canada Life as market terms and conditions. Canada Life’s conduct review committee is composed of Directors who are independent of Canada Life’s management and who are neither officers nor employees of the Corporation, Power Financial or any of their affiliates. Similarly, Lifeco and IGM have also established their own conduct review committees composed entirely of Directors who are independent of management and who are neither directors, officers nor employees of the Corporation or Power Financial.
For a description of the Board’s procedures in respect of transactions involving Directors or officers of Power Corporation, see also Ethical Business Conduct.
The mandate of the Board, which it currently discharges directly or through one of the four Board Committees, is to supervise the management of the business and affairs of the Corporation, and includes responsibility for approving strategic goals and objectives, review of operations, disclosure and communication policies, oversight of financial reporting and other internal controls, corporate governance, Director orientation and education, senior management compensation and oversight, and Director nomination, compensation and assessment. The Board Charter is available on the Board of Directors Charter page of this Website.
The Board has also adopted a Charter of Expectations for Directors setting out the expectations towards Directors serving on the Board of the Corporation which includes a Director position description as well as provisions on minimum attendance (i.e., absent extraordinary reasons, such as health issues, to attend at least 75 per cent of regularly scheduled Board meetings and committee meetings on which they serve on a yearly basis), on overlaps on boards of directors outside the Power Group (i.e., without the consent of the Chair of the Governance and Nominating Committee, no more than two Directors may sit on the board of directors of the same publicly traded company outside the Power Group) and on minimum equity ownership requirements for Directors.
As part of the Directors position description, each Director is expected to: understand the Corporation’s vision, strategies, objectives and associated risks; be generally knowledgeable of the Corporation’s, and its subsidiaries’ and investees’, services and operations and the industries and regulatory environments within which they operate; act independently of management (for Directors who are not members of management) and work constructively and effectively with other Directors; apply their knowledge, skills, experience and business judgment to matters considered by the Board and its committees; prepare thoroughly for each Board and applicable committee meeting by reviewing the provided meeting material and requesting clarification or additional information as required to make informed decisions; devote the necessary time and attention to be able to participate in Board deliberations and make an informed decision on issues; attend Board and applicable committee meetings and participate fully in the deliberations and discussions of the Board and applicable committees, and be informed of significant matters discussed at meetings not attended; identify and disclose actual, potential or perceived conflicts of interest to allow appropriate review; respect confidentiality; act in the highest ethical manner and with integrity in all personal, business and professional dealings, and comply with the Corporation’s policies and applicable laws, including the Corporation’s Code of Business Conduct and Ethics and the Disclosure Policy; and when appropriate, communicate with, and be available as a resource to, the Chairman, the Deputy Chairman, the Chief Executive Officer and other members of management between formal meetings.
The mandates of the Board’s four standing committees are described in the section Board Committees, together with each committee’s membership and the number of meetings held during the year ended December 31, 2022.
As a holding company, the Corporation has the risks associated with being a significant shareholder in its subsidiary operating companies. The subsidiaries’ Boards are responsible for the risk oversight function at those companies. Some officers of the Corporation are members of these Boards and Board Committees and therefore participate in the risk oversight function at the operating company level in their role as directors of those companies. As an indirect shareholder of companies operating in the financial services sector (including subsidiaries regulated and supervised by the Office of the Superintendent of Financial Institutions and provincial regulators), the Corporation is well aware of the particular necessity for robust risk identification and risk management oversight.
As for risk oversight at the Corporation’s level, the Board considers identifying and managing risk, and taking a long-term view when making investments and managing the assets of the Corporation, to be of imperative importance. This approach is inextricably engrained within the culture of the Corporation and is supported by the Corporation’s controlling shareholder, which has placed a premium on enduring viability, stability, diversification and cash flow, rather than on quarterly results. The Corporation believes that value is best achieved through a prudent approach to risk and through a governance model that focuses on the active oversight of our investments. The Board has overall responsibility for monitoring the implementation and maintenance by management of appropriate policies and controls to manage the risks associated with the Corporation’s businesses as a holding company. Additionally, while risk management is a general responsibility of each Committee of the Board, specifically in performing their respective duties, the Audit Committee addresses risks related to financial reporting, the Human Resources Committee considers risks associated with the Corporation’s compensation policies and practices, the Governance and Nominating Committee oversees the Corporation’s approach to appropriately addressing potential risks related to governance matters, and the Related Party and Conduct Review Committee considers risks related to any proposed transactions with related parties of the Corporation.
The Board has also delegated to the Audit Committee the oversight of risks related to cybersecurity. The Vice-President and Controller is responsible for administering the Corporation’s Cybersecurity Policy. The Vice-President and Controller periodically updates the Audit Committee on cybersecurity matters, including on the Corporation’s cybersecurity systems’ robustness and related testing and auditing. The Corporation has established a comprehensive information and cybersecurity program, benchmarked its capabilities to sound industry practices and has implemented threat and vulnerability assessments and response capabilities, including an Information Technology Security Incident Response Protocol, which is administered and implemented by both the Vice-President and Controller and the Information Technology Director. Through an external specialist firm, the Corporation periodically conducts an assessment of the maturity of its cybersecurity. The Corporation’s information technology defences are continuously monitored and adapted to both prevent and detect cyber-attacks, and then recover and remediate. Through a continuous employee training program, the Corporation also provides cybersecurity awareness training and ensures that all employees are aware and comply with its policies and procedures related to cybersecurity. The Vice-President, General Counsel and Secretary is responsible for providing oversight of data privacy programs as well as training and compliance regarding the Corporation’s policies and procedures.
The Chief Executive Officer is responsible for developing the Corporation’s proposed strategic plans, in light of emerging opportunities and risks and with a view to the Corporation’s sustained profitable growth and long-term value creation, and for implementing the approved strategic plans. The Board of Directors is responsible for approving the long-term goals and objectives for the Corporation; and, after considering alternatives, approving the strategic plans developed by the Chief Executive Officer. The Board of Directors also monitors senior management’s implementation of the approved plans; assesses the achievement of the Corporation’s goals and objectives; reviews and approves on at least an annual basis management’s financial plan; and reviews and approves any significant transactions and strategic capital management decisions regarding the Corporation.
Additional information relating to Directors standing for election, including a list of all public companies, and certain private companies, for which they serve as board members, as well as their attendance records for all Board and Committee meetings for the year ended December 31, 2022, can be found in the Corporation's 2023 Management Proxy Circular.
Each Director is expected to attend a minimum of 75 per cent of the aggregate of all regularly scheduled Board meetings and meetings of committees on which they serve, held during the year. Those Directors who fail to meet this requirement must meet with the Chair of the Governance and Nominating Committee to discuss the reasons contributing to the Director’s attendance record and the Chair will make a recommendation to the Governance and Nominating Committee, as necessary, with respect to the Director’s continued service on the Board. In the absence of personal circumstances beyond the Director’s control having prevented the Director from attending the requisite minimum proportion of applicable meetings, such as health reasons, the Governance and Nominating Committee will not recommend the Director for re-election at the next meeting of shareholders of the Corporation at which Directors are to be elected.
Without the consent of the Governance and Nominating Committee, no more than two Directors may sit on the board of directors of the same publicly traded company (excluding the Corporation and any other companies in the Power Group). Outside of the Power Group, there is only one board of directors of a publicly traded company on which Directors of the Corporation serve together. Pierre Beaudoin and Anthony R. Graham both serve on the board of directors of Bombardier Inc.
The Board has established a Governance and Nominating Committee, which has a number of responsibilities relating to governance and the nomination of candidates for election as Directors. The Committee is responsible for identifying new candidates for Board nomination and, after considering the objectives of the Corporation’s Diversity Policy, for recommending to the Board those candidates who possess the qualifications, competencies, skills, business and financial experience, leadership roles, level of commitment and available time required of a Director to fulfill Board responsibilities.
Members of the Governance and Nominating Committee maintain an evergreen list of potential candidates and employ a skills matrix to assist with reviewing the skills and experience of director candidates and of the Board as a whole. The matrix, which is set forth below, outlines a complement of diverse qualifications, attributes, skills and experience that are viewed as being relevant to the proper functioning of the Board. This is not intended to be an exhaustive list of each Director’s skills. In addition to the skills below, all directors are financially literate and have expertise in governance.
The Committee recognizes that each Director will contribute differently to the Board and will each bring particular strengths in different areas of qualification. While the skills matrix is an important tool in assessing Board candidates, the Committee does not limit itself to considering only the specified areas of expertise or attributes in selecting Board members.
The Board also believes that diversity is important to ensure that Board members provide the necessary range of perspectives required to achieve effective stewardship of the Corporation.
The Corporation has a Diversity Policy, which includes provisions relating to diversity and the identification and nomination of directors. For purposes of the Diversity Policy, diversity includes, but is not limited to: age; experience; education; geography; gender; sexual orientation; disability; race, nationality, culture, language and other ethnic distinctions, including Indigenous people. The Diversity Policy further provides that in fulfilling its role in recommending to the Board candidates for Director nominations, members of the Governance and Nominating Committee consider candidates that are highly qualified based on their experience, education, expertise, judgment, personal qualities, and general and sector specific knowledge; consider diversity criteria (but not the level of representation of any particular Designated Group (as defined below) beyond women among other relevant criteria), when determining the optimum composition and balance for the Board; review potential candidates from a variety of backgrounds and perspectives, having in mind the Corporation’s diversity objectives; and, in order to support the specific objective of gender diversity, ensure that appropriate efforts are made to include women in the list of candidates being considered for a Board position.
The Board recognizes that gender diversity is a significant aspect of diversity and acknowledges the important role of women in contributing to diversity of perspective in the Boardroom. As such, the Corporation’s Diversity Policy includes an objective of having not less than 30 per cent of the seats on the Corporation’s Board of Directors held by women by the completion of the Corporation’s annual shareholder meeting to be held in 2025. The Corporation has not adopted an objective regarding the representation of members of the other Designated Groups on the Board.
There are currently four women (29 per cent), no “members of visible minorities” (0 per cent), no “persons with disabilities” (0 per cent) and no “Aboriginal peoples” (0 per cent) (each as defined in the Employment Equity Act (Canada), the “Designated Groups”) on the Board. The Diversity Policy provides that the Committee will assess the effectiveness of the Board nomination process at achieving the Corporation’s diversity objectives on an annual basis. The Corporation’s publicly traded subsidiaries, Lifeco and IGM, have publicly disclosed that there were six women (out of 19) and five women (out of 15) being nominated for election to their respective Board of Directors representing in total 32 per cent of their combined nominees.
The Governance and Nominating Committee and the Board believe that, in addition to the factors discussed above, continuity of membership is critical to the Board’s efficient operation. Accordingly, the Board has not adopted policies imposing an arbitrary term or retirement age limit in connection with individuals nominated for election as Directors of the Corporation, as it does not believe that such limits are in the best interests of the Corporation. Such limits fail to take into account the special characteristics of issuers such as Power Corporation and its group companies, that operate in a highly complex and technical environment. In such a context, the Corporation believes that a lengthy Board tenure, not limited by arbitrary determinations, is vital to the Directors’ understanding of the Corporation’s diverse businesses, and those of its group companies, and to their bringing a substantive contribution to the Board. The Corporation’s Governance and Nominating Committee annually reviews the composition of the Board, including the age and tenure of individual directors. The Board strives to achieve a balance between the desirability to have a depth of institutional experience from its members on the one hand, and the need for renewal and new perspectives on the other hand.
After considering the appropriate size of the Board and the qualifications and attributes that the existing Directors possess, including the level of representation on the Board by Directors who are independent, and after giving consideration to the Diversity Policy, the Governance and Nominating Committee may determine that it would be in the best interests of the Corporation to nominate an individual that is not already a director of the Corporation, for election to the Board. In such situations, the Governance and Nominating Committee identifies a list of targeted qualifications and attributes and conducts its own search by inviting suggestions for potential candidates from the Directors of the Corporation. The Committee also engages one or more external advisors to identify further qualified candidates, and requires that any such external advisor take account of the objectives of the Corporation’s Diversity Policy.
The Committee has recommended that the 14 individuals set out under “Election of Directors – Nominees for Election to the Board” in the Corporation’s 2023 Management Proxy Circular be nominated for election as Directors of the Corporation at the Annual Meeting of Shareholders.
Following amendments to the Canada Business Corporations Act effective August 31, 2022, shareholders will be asked to vote “for” or “against” each Director nominee and only nominees receiving a majority of the votes cast in their favour will be elected, subject to specific circumstances. However, if an incumbent director is not elected by a majority of “for” votes, such director will still be permitted to continue in office until the earlier of (a) the 90th day after the day of the election; and (b) the day on which their successor is appointed or elected.
Director orientation and education is conducted under the aegis of the Chairman of the Board. Newly elected Directors are provided with a comprehensive orientation as to the nature and operation of the business and affairs of the Corporation and the Corporation’s major operating subsidiaries, as to the role of the Board and its Committees, and as to the contributions that individual Directors are expected to make. In order to orient new Directors as to the nature and operation of the Corporation’s business, they are also given the opportunity to meet with members of the Corporation’s executive management team and with members of the executive management teams of the Corporation’s major operating subsidiaries to discuss the Corporation’s businesses and activities.
Directors are periodically updated in respect of these matters including by way of quarterly presentations to the Board (from time to time, these presentations are made by an operating subsidiary’s executive officer) at Board and Committee meetings, and working Board dinners (when public health requirements allow), regarding the Corporation’s major operating subsidiaries and operating segments thereof in addition to the presentations by the Corporation’s auditors and other speakers.
Throughout the year, Directors receive:
presentations by senior executives of the Corporation on different aspects of the Corporation and its subsidiaries or affiliated companies’ operations, strategic direction, capital management, finance, human capital, technology initiatives, cybersecurity and key risks; and
presentations and reports summarizing significant regulatory and market developments.
Specifically, throughout 2022, Directors participated in continuing education presentations that included, among other topics, updates and presentations on accounting standards, taxation rules, value creation, talent management, the Corporation’s operations and results and overviews, the Corporation’s and its subsidiaries’ priorities, merger and acquisition activity globally and in the Power Group and the Corporation’s investors relations program.
Also, Directors receive a comprehensive package of information prior to each Board and Committee meeting. The Corporation maintains a secure electronic platform that includes a comprehensive resource center for Directors. The resource center contains corporate governance documents, including the Corporation’s constituting documents, its policies and procedures, the Board and committee charters, position descriptions and the Corporation’s incentive plans documents. As noted above, certain of the Corporation’s Directors also serve as Directors of the Corporation’s public and private company investments. Finally, Directors have access to the Corporation’s senior management and employees on an ongoing basis throughout their mandate.
The Governance and Nominating Committee is responsible for assessing the performance and effectiveness of the Board, Board Committees, and individual Directors from time to time, with a view to ensuring that they are fulfilling their respective responsibilities and duties. An evaluation is conducted at least annually to assist in assessing the overall performance of the Board and the Board Committees. Although the scope and focus of such review may vary from year to year, the review conducted in early 2023 included a confidential Board effectiveness survey, which was administered by the Corporation’s external legal counsel and completed by each of the Directors, soliciting feedback from Directors on matters, that included the operation of the Board and its Committees, the effectiveness of Board processes and the Board’s relationship to management, the integration of Environmental, Social and Governance considerations into discussions and decisions, the oversight of risk management at the Corporation, including with respect to cybersecurity risk, the adherence by the Board and the Governance and Nominating Committee to the Diversity Policy in nominating individuals for election to the Board, the adequacy of information provided to Directors, the Board structure and agenda planning for the Board and Committee meetings. The aggregated, anonymous survey results are reviewed by the Governance and Nominating Committee. The Chair of the Committee reports the findings, including key recommendations, to the full Board for discussion.
In addition, the Board engages an independent consultant every few years to conduct an assessment of the effectiveness and performance of the Board and its standing committees, including through confidential interviews with each Director to discuss governance processes and practices. This was most recently done in early 2022.
The Board has approved written position descriptions for the Chairman of the Board and for the Chair of each Board Committee. In general terms, the Chairman of the Board, in consultation with the Deputy Chairman, and the Chairs of the Board Committees are responsible for ensuring that the Board or the Committee is able to fulfill its duties and responsibilities in an effective manner, for planning and organizing the activities of the Board or of the Committee, for ensuring that delegated Committee functions are carried out and reported as necessary, for facilitating effective interaction with management, and for engaging outside advisers where necessary.
The Board has approved a written position description for the Chief Executive Officer. In general terms, the Chief Executive Officer is responsible for managing the strategic and operational performance of the Corporation in accordance with the goals, policies and objectives set from time to time by the Board, including developing for the Board’s approval the Corporation’s strategic plans and initiatives with a view to the Corporation’s long-term profitable growth and success and presenting the Corporation’s annual financial plan to the Board. The Chief Executive Officer is also responsible for overseeing the Corporation’s investments in its subsidiaries and affiliates, facilitating, together with the Chairs of the Board and its Committees, effective and transparent interaction between management and the Board, for managing the operations of the Corporation, for assisting the Board with succession planning, and for representing the Corporation to its major stakeholders.
The Board has also approved a written position description for the Lead Director (see “Independence of Directors – Lead Director”) and a Charter of Expectations for Directors which includes a position description for Directors.
The Board is responsible for overseeing the succession planning processes of the Corporation with respect to senior management positions. The Corporation’s succession planning process, which is tailored to its particular circumstances as a holding company with a relatively small management team, includes the identification and consideration of suitable short- and long-term candidates to hold the applicable roles, on both an interim and permanent basis. The Board has mandated the Human Resources Committee to review at least annually, together with the Chief Executive Officer, and approve, the succession plans for the Chief Executive Officer and the other Named Executive Officers and certain other designated officers of the Corporation, with a view to ensuring the continuity of leadership required by the Corporation for the future, having in mind the Corporation’s diversity objectives. Candidates are considered based on various factors, including (where relevant) executive experience, market and industry expertise, geographic location, familiarity with the Corporation’s and its subsidiaries’ businesses, past performance with the Corporation, as well as past successes in achieving particular corporate goals. The Human Resources Committee also maintains a contingency plan for emergency situations related to illness, disability or other unplanned absences with respect to the Chief Executive Officer and other Named Executive Officer positions. In addition, the Human Resources Committee periodically reviews the Corporation’s talent management initiatives and monitors the development certain employees identified to the Human Resources Committee by the Board, in accordance with succession plans.
The Corporation has a Diversity Policy that outlines the Corporation’s approach to achieving and maintaining greater diversity on the Corporation’s senior management team. The policy provides that in fulfilling their roles of considering candidates for senior management appointments, the Chief Executive Officer of the Corporation considers candidates that are highly qualified based on their experience, education, expertise, judgment, personal qualities, and general and sector-specific knowledge; and review potential candidates from a variety of backgrounds and perspectives, having in mind the Corporation’s diversity objectives, including the specific objective of gender diversity. The Corporation’s Diversity Policy provides that the Chief Executive Officer of the Corporation will assess the effectiveness of the senior management appointment process at achieving the Corporation’s diversity objectives on an annual basis. Furthermore, the policy provides that the Corporation will engage, from time to time, with senior management of the Corporation’s publicly traded subsidiaries, through its representation on their boards, on the implementation of their respective diversity policies relating to the senior management appointment process.
The Corporation is committed to cultivating a diverse and inclusive culture, selecting the best person to fulfill senior management roles based on merit and suitability. The Corporation has not adopted a target regarding members of the Designated Groups in executive officer positions as such arbitrary targets are not in the best interests of the Corporation. The Board believes that diversity is important to ensure that the profiles of senior management provide the necessary range of perspectives, experience and expertise required to achieve effective management. The Board recognizes that gender diversity is a significant aspect of diversity and acknowledges the important role of women in contributing to diversity of perspective in senior management roles. Accordingly, the Corporation offers a variety of internal initiatives to its female employees such as career advancement counselling and sponsors the participation of its high performing female employees in external programs, including conferences and higher education programs, in order to prepare female employees for advancement to senior positions.
Women, “members of visible minorities”, “persons with disabilities” and “Aboriginal peoples” (each as defined in the Employment Equity Act (Canada)) do not currently occupy any of the executive officer positions with the Corporation, although the Corporation has three officers who are members of visible minorities. As at December 31, 2022, women did not occupy positions (0 per cent) of Executive Officers or Officers at the Corporation, however, 52 per cent of positions at the management level at the Corporation were held by women.
The Corporation’s publicly traded subsidiaries, Lifeco and IGM, have publicly disclosed that women currently hold five and six executive officer positions at such respective subsidiaries (including their respective principal subsidiaries). As a result, women hold a total of 11 executive officer positions within the Corporation’s group companies (including its publicly traded subsidiaries and their respective principal subsidiaries), representing 31 per cent of the total number of executive officer positions at such entities. Currently, there are four “members of visible minorities” (representing 11 per cent of the executive officers of the Corporation and its publicly traded subsidiaries), one “person with disabilities” (representing 3 per cent of the executive officers of the Corporation and its publicly traded subsidiaries and no “Aboriginal peoples” (each as defined in the Employment Equity Act (Canada)) in executive officer positions at the Corporation and its publicly traded subsidiaries.
The Board has adopted a written Code of Business Conduct and Ethics (the Code of Conduct) that governs the conduct of the Corporation’s and its wholly owned subsidiaries' Directors, officers and employees, including temporary, part-time and contractual employees. A copy of the Code of Conduct is available on SEDAR (www.sedar.com) and on the Corporation’s website, or may be obtained by contacting the Corporation’s General Counsel and Secretary.
The Board oversees compliance with the Code of Conduct through the Corporation’s General Counsel and Secretary who monitors compliance with the Code of Conduct. Directors, officers and employees who believe that a violation of the Code of Conduct or any law, rule or regulation has been or is likely to be committed have an obligation to promptly report the relevant information to an appropriate supervisor or, in the case of Directors and senior officers, to the General Counsel and Secretary. Alternatively, in any case, the violation or potential violation may be reported to the Chairman, the Chief Executive Officer or any member of the Audit Committee, as appropriate, in accordance with the Corporation’s procedures.
Directors of the Corporation are required to confirm annually, their understanding of, and agreement to comply with, the Code of Conduct (which contains the Corporation’s conflict of interest policy). All officers and employees of the Corporation are required to complete annually an online training course on the Code of Business Conduct and its related policies and procedures. The online training course contains testing to demonstrate that employees understand the Code and the other policies of the Corporation. There have been no material change reports filed that pertain to any conduct of a Director or executive officer that constitutes a departure from the Code of Conduct.
In order to ensure that Directors exercise independent judgment in considering transactions and agreements in respect of which a Director or an executive officer has a material interest, the Director or executive officer having a conflict of interest must declare his/her interest and, if requested by any other Director, excuse himself or herself from the meeting during the consideration of that particular matter. Such Director may not vote on such a matter.
There have been no material change reports filed that pertain to any conduct of a Director or executive officer that constitutes a departure from the Code of Conduct.
The Corporation has also a Third Party Code of Conduct to set forth its expectations of all third parties in their dealings with, or on behalf of the Corporation as well as a Corporate Social Responsibility Statement and an Environmental Policy, which, together with the Third Party Code of Conduct, are available on its dedicated Corporate Social Responsibility website. The Corporation has also adopted a Global Anti-Bribery Policy and a Lobbying Policy.
In addition, the Corporation has a Related Party and Conduct Review Committee, the role of which is described in the Board Committee Charters section.
As the Code of Conduct covers a broad range of topics, Power uses the mandatory annual training session on its Code of Conduct to raise awareness and educate all officers and employees on key ESG themes, with the training session also covering the application of the Corporation’s Respectful Workplace Policy, Global Anti-Bribery Policy, Cybersecurity Policy, Lobbying Policy, CSR Statement, Environmental Policy, Responsible Procurement Policy Statement and Third-Party Code of Conduct, among others. The online training course contains testing to demonstrate understanding of the Code of Conduct and the other policies of the Corporation. At the end of the training, all are required to certify their compliance with the Code of Conduct and key corporate policies. In 2022, all of the Corporation’s officers, directors and employees acknowledged compliance.
Sustainability and CSR are fundamental to the way the Corporation and the Power Group as a whole do business — what the Corporation refers to as responsible management. At the core of the Corporation’s investment philosophy, responsible management has enabled the Corporation to build a resilient and sustainable business through its roles as a long-term active shareholder, and as an employer and contributor to the communities in which it operates. The Corporation’s sustainability approach is rooted in this philosophy, as well as in its mission statement, CSR Statement and Code of Conduct and is supported by several key corporate policies and statements including the Respectful Workplace Policy, the Environmental Policy and the Responsible Procurement Policy Statement. In addition, Power is a signatory to the United Nations Global Compact (“UNGC”), formally adhering to the UNGC’s Ten Principles on human rights, labour, environment, and anti-corruption.
Each year, based on a series of factors listed on its sustainability microsite as well as on engagement with a broad range of stakeholders — which include the Power Group companies, shareholders, employees, local communities, responsible investment organizations as well as ESG and governance rating organizations — the Corporation conducts a review to ensure it is focusing on the right sustainability priorities within the five following themes: governance, investments, employees, environment, and society.
While nine out of 14 director nominees have corporate sustainability skills and experience, responsibility for CSR at the Board level, including ESG risks and opportunities, is assigned to the Governance and Nominating Committee. The Corporation’s executive compensation policy specifically includes ESG considerations in decision-making, and ESG objectives based on the Corporation’s ESG strategy are now a specific category of objectives that form part of the overall annual objectives of the NEOs.
At the executive level, while the CEO plays an active role in reviewing and approving the CSR strategy, performance and reporting, the Vice-President, General Counsel and Secretary has been appointed as the Corporation’s CSR Lead. CSR and ESG risks and opportunities are reviewed by the Governance and Nominating Committee through the updates and progress reports provided annually by the CSR Lead, or more frequently as appropriate.
The Corporation reports on its sustainability performance, including ESG factors, through its sustainability microsite and annual ESG Data Supplement, Communication on Progress to the UNGC and response to the CDP Climate questionnaire.
In 2022, the Corporation earned the score of A- (Leadership). This score demonstrates the Corporation’s commitment to environmental performance and reporting. The Corporation also continued to be a constituent of the FTSE4Good Index, and received rating of A (on a scale of AAA-CCC) in the MSCI ESG ratings assessment.
Guided by its CSR Statement, the Corporation incorporates the analysis of ESG factors into its investment process, investing in quality companies with sustainable franchises and attractive growth prospects that demonstrate they are managed in a responsible manner. As a long-term active shareholder, officers of the Corporation sit on the boards of its portfolio companies and engage with their management teams to discuss strategy and support the creation of sustainable, long-term value. The Corporation also holds an annual Power Group conference on sustainability. In 2022, the conference focused on the future of ESG, the scope of auditing in sustainability and human capital management trends.
The Corporation is proud of the achievements of its publicly traded operating companies and alternative asset investment platforms, all of which are signatories of the Principles for Responsible Investment, either directly or through their operating companies. Lifeco, IGM and GBL, as well as several of their own portfolio companies, are also supporters of the Task Force on Climate-Related Financial Disclosures. Furthermore, Lifeco, IGM and GBL are part of the global climate transition movement.
For supplementary information on our corporate governance practices: