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Notice of the Annual General Meeting
to be held May 7, 2015
Information Circular and
Proxy Statement
March 24, 2015
TABLE OF CONTENTS
KEY SECTIONS
PAGE
Notice of Meeting .......................................................................................................................................... iii
General Information ...................................................................................................................................... 1
Voting Information ......................................................................................................................................... 4
Business of the Meeting ................................................................................................................................ 8
Board of Directors ....................................................................................................................................... 11
Committee Reports ..................................................................................................................................... 25
Compensation Discussion and Analysis ..................................................................................................... 31
Executive Compensation ............................................................................................................................ 38
Schedule “A” ▪ Corporate Governance Disclosure ..................................................................................... 56
Schedule “B” ▪ Corporate Governance Policy ............................................................................................. 62
Schedule “C” ▪ Categorical Standards ........................................................................................................ 68
Schedule “D” ▪ Board Mandate ................................................................................................................... 70
Schedule “E” ▪ Stock Option Plan ............................................................................................................... 75
Glossary of Terms ....................................................................................................................................... 78
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2015 Information Circular and Proxy Statement
March 24, 2015
Dear Canexus Shareholder,
On behalf of your board of directors and management, you are cordially
invited to attend the Annual General Meeting of Shareholders to be held at
The Sun Life Plaza Conference Centre, 140 – 4th Avenue S.W. (+15 Level),
Calgary, Alberta, on Thursday, May 7, 2015 at 11:00 a.m.
It is important that your shares be represented at the meeting. We hope you can
join us, but should you be unable to attend the meeting in person, we encourage
you to vote by telephone, via the internet or by completing and returning the
enclosed form of proxy.
You will f ind information regarding the matters to be voted on at the meeting
in the enclosed notice and circular. In addition to the formal items of business
to be brought before the meeting, there will be a report on Canexus’
operations during 2014 and future plans, followed by a question and answer
period. Your interest in Canexus is appreciated. We look forward to seeing you
on May 7th.
Yours truly,
(Signed) “R. Douglas Wonnacott”
President and Chief Executive Officer
Canexus Corporation
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2015 Information Circular and Proxy Statement
CANEXUS CORPORATION
ANNUAL GENERAL MEETING OF SHAREHOLDERS
to be held on Thursday, May 7, 2015
NOTICE
The Annual General Meeting (the “Meeting”) of the holders of common shares (the “Shareholders”) of
Canexus Corporation (“Canexus” or the “Corporation”) will be held at The Sun Life Plaza Conference Centre,
140 – 4th Avenue S.W. (+15 Level), Calgary, Alberta, at 11:00 a.m. (Calgary Time) on Thursday, May 7, 2015.
The purpose of the Meeting is to consider and to take action on the following matters:
•
•
•
•
•
receive the audited financial statements of the Corporation for the year ended December 31, 2014,
and the auditor’s report on those statements;
elect directors of the Corporation to hold office for the following year;
appoint Deloitte LLP as independent auditors of the Corporation for 2015 and authorize the
Corporation’s Audit Committee to fix their pay;
approve the advisory vote (say-on-pay) on Canexus’ approach to executive compensation; and
transact any other business that may properly come before the meeting or any adjournment of the
meeting.
If you cannot attend the Meeting, you may vote by proxy, via telephone or on the internet. See pages 4 and 5
for information on how to vote. To be valid, your proxy must be received by Computershare Trust Company of
Canada no later than 11:00 am (Calgary time) on May 5, 2015 or, if the Meeting is adjourned, at least 48 hours
(excluding weekends and holidays) before the time set for the Meeting to resume. The chair of the Meeting has
the discretion to accept late proxies.
By order of the board of directors of Canexus Corporation,
(Signed) “Diane J. Pettie, Q.C.”
Vice President, General Counsel & Corporate Secretary
Canexus Corporation
Calgary, Alberta, Canada
March 24, 2015
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2015 Information Circular and Proxy Statement
GENERAL INFORMATION
This Circular is provided in regard to the solicitation of proxies by management of Canexus Corporation for use
at the Annual General Meeting of Shareholders to be held on May 7, 2015 and at all adjournments of that
Meeting.
Date of Information
Information in this Circular is as of March 24, 2015, unless otherwise noted.
Currency
All dollar figures are in Canadian currency, except as noted.
Record Date and Shares Outstanding
At the close of business on March 24, 2015, there were 186,032,692 Shares outstanding. Shareholders of
record at the close of business on March 23, 2015 are entitled to attend and vote at the Meeting on the basis of
one vote for each Share held as of that date. The Shares trade under the symbol CUS on the TSX.
Owners of 10% or More of the Issued Shares
Approximately 29,437,777 Shares (15.82%) were owned by Franklin Resources, Inc. (as at February 28, 2015)
and approximately 23,016,717 Shares (12.37%) were owned by 1832 Asset Management L.P. (as at
November 7, 2014). To the knowledge of the directors and officers, no other person beneficially owns, directly
or indirectly, or exercises control or direction over more than 10% of the Shares of the Corporation.
You are a Registered Shareholder if your Shares are held in your name. You are a Beneficial Shareholder if
your Shares are held in the name of a nominee. That is, your certificate was deposited with a bank, trust
company, securities broker, trustee or other institution.
Mailing of Circular
This Circular, a form of proxy and our 2014 annual report will be mailed to Shareholders on April 7, 2015. The
2014 annual report is being provided to:
•
•
All Registered Shareholders except those who asked not to receive it, and
Beneficial Shareholders who requested a copy.
We will provide proxy materials to brokers, custodians, nominees and fiduciaries and request that the materials
be forwarded promptly to our Beneficial Shareholders. The cost of all such proxy solicitation will be borne by
the Corporation.
Annual and Interim Reports
If you are a Registered Shareholder, a copy of our 2014 annual report is included in this package, unless
you asked not to receive it. If you do not wish to receive our annual report next year, or wish to receive our
interim reports, please fill out and return the card enclosed with this package.
Our annual report can be accessed at www.canexus.ca or you can request a copy in the manner set out under
the heading “Availability of Documents” on the following page.
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2015 Information Circular and Proxy Statement
Availability of Documents
A copy of the annual report, including the Corporation's financial information contained in the audited financial
statements and MD&A for the financial year ended December 31, 2014, will be sent free of charge to any
Shareholder on request. It can also be retrieved from SEDAR by accessing our public filings at
www.sedar.com. We also file an annual information form with the Canadian securities regulators. This
document, and additional information relating to the Corporation, can also be retrieved from the SEDAR system
by accessing our public filings at www.sedar.com.
All documents required to be filed may also be accessed at www.canexus.ca or obtained from our Corporate
Secretary by request in writing to:
By mail: Canexus Corporation
#2100, 144 – 4th Avenue, SW
Calgary, Alberta, Canada
T2P 3N4
Attention: Corporate Secretary
By email: [email protected]
Notice and Access
Under National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer,
a reporting issuer can deliver proxy-related materials by posting the relevant information circular on a website
that is not SEDAR, and by sending a notice informing Registered Shareholders and Beneficial Shareholders
that the proxy-related materials have been posted and explaining how to access them, along with other
prescribed information. The Corporation is not relying on these notice and access provisions in connection with
the Meeting.
Communicating with the Board
Shareholders may write to the Board or any member of the Board in care of the following address:
By mail: Canexus Corporation
#2100, 144 – 4th Avenue, SW
Calgary, Alberta, Canada
T2P 3N4
Attention: Corporate Secretary
By email: [email protected]
We receive a number of inquiries on a wide range of subjects. The Board has consulted with management to
develop a process to assist in managing inquiries directed to the Board or its members.
Letters and email addressed to the Board, any of its members or the independent directors, as a group, are
reviewed to determine if a response from the Board is appropriate. While the Board oversees management, it
does not participate in our day-to-day functions and operations and is not normally in the best position to
respond to inquiries on those matters. Those inquiries will be directed to the appropriate personnel for
response. The Board has instructed the Corporate Secretary to review all correspondence and, in her
discretion, not forward items that are:
•
•
•
Not relevant to Canexus’ operations, policies or philosophies;
Commercial in nature; or
Not appropriate for consideration by the Board.
All inquiries will receive a response from the Board or management. The Corporate Secretary maintains a log
of all correspondence sent to Board members. Directors may review the log at any time and request copies of
any correspondence received.
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2015 Information Circular and Proxy Statement
Dividend Reinvestment Plan
We have a dividend reinvestment plan which lets Shareholders elect to have cash dividends reinvested in
Shares. Plan information and an election form may be accessed at www.canexus.ca.
Loans to Directors and Officers
As set out in the corporate governance policy, attached as Schedule “B” on page 62, the Corporation does not
make loans to our directors and officers. There are no loans outstanding from Canexus to any of our directors
or officers.
Ethics Policy
Under our ethics policy, all directors, officers and employees must demonstrate a commitment to ethical
business practices and behaviour in all business relationships. Employees are not permitted to commit an
unethical, dishonest or illegal act or to instruct other employees to do so.
Any waivers of, or changes to, the ethics policy must be Board approved and disclosed. There has never been
a waiver. The ethics policy was amended on August 6, 2014. Our ethics policy provides for an external integrity
helpline, in place since June 2006. Canexus’ ethics policy is available at www.canexus.ca and we intend to
disclose any waivers of or changes to this policy online. Our ethics policy and any future amendments to it are
filed on SEDAR at www.sedar.com. To request a copy of the policy, contact the chief compliance officer by
emailing [email protected] or by calling 403.571.7335.
Reporting Concerns
Please direct any concerns about Canexus to EthicsPoint, as set out below. Any concerns related to our
financial statements, accounting practices or internal controls may be directed to the Chair of the Audit
Committee.
Employees, customers, suppliers, partners, Shareholders and other external stakeholders who have a concern
are encouraged to raise it with our chief compliance officer:
By mail: Canexus Corporation
#2100, 144 – 4th Avenue, SW
Calgary, Alberta, Canada
T2P 3N4
Attention: Compliance
By email: [email protected]
You may also report concerns through our integrity helpline - a secure reporting system, which is owned and
managed by EthicsPoint, an independent third-party service provider. To find out more about our integrity
helpline and for toll free numbers for other countries, visit www.canexus.ca and click on the “Integrity Helpline”
link at the top of the page or access the helpline directly:
Online:
By phone:
www.ethicspoint.com
1.866.384.4277 (toll-free in North America)
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2015 Information Circular and Proxy Statement
VOTING INFORMATION
BENEFICIAL SHAREHOLDER VOTING
You are a Beneficial Shareholder if your Shares are held in the name of a nominee, that is, your Shares are
represented by an account statement by your bank, trust company, securities broker, trustee or other nominee,
while the original certificate is lodged with CDS&Co., the nominee of CDS Clearing and Depository Services
Inc.
Subject to the following discussion in relation to NOBOs (as defined below), the Corporation does not know for
whose benefit the Shares registered in the name of CDS&Co., a broker or other nominee are held. If you are a
Beneficial Shareholder, your nominee must seek specific instructions from you to vote your Shares at the
Meeting or any adjournment(s) thereof. There are two categories of Beneficial Shareholders for purposes of
disseminating both proxy-related materials and other securityholder materials to Beneficial Shareholders and
the request for voting instructions from such Beneficial Shareholders. Non-objecting beneficial owners
(“NOBOs”) are Beneficial Shareholders who have advised their nominees that they do not object to their
nominee disclosing ownership information on their behalf to the Corporation. Such information consists of the
Beneficial Shareholder's name, address, email address, securities holdings and preferred language of
communication and can only be used for matters strictly relating to the affairs of the Corporation. Objecting
beneficial owners (“OBOs”) are Beneficial Shareholders who have advised their nominee that they object to
their nominee disclosing such ownership information on their behalf to the Corporation.
National Instrument 54-101 permits the Corporation, in its discretion, to obtain a list of its NOBOs from
nominees and use such NOBO list for the purpose of distributing proxy-related materials directly to, and
seeking voting instructions directly from, such NOBOs. As a result, the Corporation is entitled to deliver proxyrelated materials to Beneficial Shareholders in two manners: (a) directly to NOBOs and indirectly through
nominees to OBOs; or (b) indirectly to all Beneficial Shareholders through nominees. The Corporation has not
requested a NOBO list for purposes of the delivery of proxy-related materials to, and seeking voting instructions
from, Beneficial Shareholders in relation to the Meeting and will rely entirely on nominees for those purposes,
unless the Beneficial Shareholder requested a copy of proxy-related materials. The cost of the delivery of
proxy-related materials by nominees to both NOBOs and OBOs will be borne by the Corporation.
Applicable regulatory policy requires nominees, on receipt of proxy-related materials that seek voting
instructions from Beneficial Shareholders indirectly, to seek voting instructions from Beneficial Shareholders in
advance of Shareholders' meetings. Every nominee has its own mailing procedures and provides its own return
instructions, which you should carefully follow in order to ensure that your Shares are voted at the Meeting or
any adjournment(s) thereof.
Voting Options
•
In person at the Meeting (see below);
•
By voting instruction (see below and enclosed voting instruction form);
•
By telephone; or
•
By internet (see enclosed voting instruction form).
Voting in Person
If you plan to attend the Meeting and wish to vote your Shares in person, insert your own name in the space
provided on the enclosed voting instruction form. Then follow the signing and return instructions provided by
your nominee. Your vote will be taken and counted at the Meeting, so do not complete the voting instructions
on the form. Please register with the transfer agent, Computershare, when you arrive.
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2015 Information Circular and Proxy Statement
Voting Instructions
Whether or not you attend the Meeting you can appoint someone else to attend and vote as your proxyholder.
Use the enclosed voting instruction form to do this. The persons named in the enclosed voting instruction form
are directors. You can also choose another person to be your proxyholder by printing that person’s name in the
space provided. Then complete the rest of the voting instruction form, sign it and return it. Your votes can only
be counted if the person you appointed attends the Meeting and votes on your behalf. If you have sent in your
voting instruction form, you may not vote again at the Meeting unless you revoke your instructions.
Return your completed voting instruction form in the envelope provided or fax it to one of the numbers set out in
the form so that it arrives by 11:00 am (Calgary time) on May 5, 2015.
Revoking Voting Instructions
Follow the procedures provided by your nominee. Your nominee must receive your request to revoke the
instructions prior to 11:00 am (Calgary time) on May 5, 2015. This will give your nominee time to submit the
revocation to us.
REGISTERED SHAREHOLDER VOTING
You are a Registered Shareholder if your Shares are held in your name.
Voting Options
•
In person at the Meeting (see below);
•
By proxy (see below and instructions on form of proxy);
•
By telephone (see enclosed form of proxy); or
•
By internet (see enclosed form of proxy).
Voting in Person
If you plan to attend the Meeting and wish to vote your Shares in person, don’t complete or return the enclosed
proxy. Your vote will be taken and counted at the Meeting. Please register with the transfer agent,
Computershare, when you arrive.
Voting by Proxy
Whether or not you attend the Meeting, you can appoint someone else to attend and vote as your
proxyholder. You can use the enclosed form of proxy or any other proper form of proxy to do this. The
persons named in the enclosed form of proxy are directors. You can also choose another person to be
your proxyholder by printing that person’s name in the space provided. Then complete the rest of the
form of proxy, sign it and return it. Your votes can only be counted if the person you appointed attends
the Meeting and votes on your behalf. If you have voted by proxy, you may not vote in person at the
Meeting, unless you revoke your proxy.
Return your completed proxy in the envelope provided or by fax so that it arrives by 11:00 am (Calgary time) on
May 5, 2015 or, if the Meeting is adjourned at least 48 hours (excluding weekends and holidays) before the
time set for the Meeting to resume. As we do not typically accept late votes, we encourage you to vote on time.
Revoking Your Proxy
You may revoke your proxy at any time before it is acted on. You can do this by delivering a written statement
that you want to revoke your proxy to our Corporate Secretary by May 5, 2015, or to the Chair of the Meeting at
the Meeting.
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2015 Information Circular and Proxy Statement
GENERAL MATTERS
Voting
If you hold Shares at the close of business on March 23, 2015, you may vote on:
•
Election of directors;
•
Appointment of Auditors;
•
Advisory vote (say-on-pay) on Canexus’ approach to executive compensation; and
•
Any other business that may properly come before the Meeting or any adjournment of the Meeting.
Each Share is entitled to one vote. A simple majority of votes cast (50% plus one vote) is required to approve
all matters.
Quorum
Our by-laws state that a quorum for transacting business at a Shareholder meeting is as follows:
•
Two people present in person or represented by proxy;
•
Each Shareholder is entitled to vote at the Meeting; and
•
Together represent at least 10% of the Shares outstanding and entitled to vote at the Meeting.
Proxy Voting
You can indicate on your form of proxy how you want your proxyholder to vote your Shares or withhold
your Shares from voting on any ballot that may be called for, or you can let your proxyholder decide for
you. If you specify on your form of proxy how you want your Shares to be voted, then your proxyholder
must vote your Shares that way. If you don’t specify on your form of proxy how you want your Shares to
be voted, then your proxyholder can vote your Shares as he or she sees fit.
If you appoint Mr. Fergusson or Mr. Wonnacott, the directors set out in the enclosed form of proxy, and do not
specify how you want your Shares to be voted, your Shares will be voted as follows:
Election of Nominees as Directors
Appointment of Auditors
Advisory vote (Say-on-Pay) on Canexus’ approach to executive compensation
FOR
FOR
FOR
Interest of Informed Persons in Material Transactions
Other than as disclosed in this Circular, no "informed person" (as defined in National Instrument 51-102 Continuous Disclosure Obligations), and no proposed nominee for director of the Corporation, nor any of their
respective associates or affiliates, has had any material interest, direct or indirect, in any transaction of the
Corporation since January 1, 2014 or in any proposed transaction which has materially affected or would
materially affect the Corporation or any of its subsidiaries. Copies of public fillings of the Corporation may be
accessed through the internet via SEDAR at www.sedar.com.
Interest of Certain Persons or Companies in Matters to be Acted Upon
Except as disclosed in this Circular, no person who has been a director or executive officer of the Corporation
at any time since January 1, 2014, no proposed nominee as a director, and no associate or affiliate of any of
the foregoing, has had any material interest, direct or indirect, by way of beneficial ownership of securities or
otherwise, in any matter to be acted upon at the Meeting other than the election of directors or the appointment
of auditors.
Amendment of Other Matters
Management does not intend to present any other business at the Meeting. We are not aware of any
amendments to the proposed matters or any other matters which may be presented at the Meeting. If
amendments or other matters properly come before the Meeting, your proxyholder will vote on them using their
best judgment.
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2015 Information Circular and Proxy Statement
Vote Counting and Confidentiality
Votes by proxy are counted by Computershare. Your vote is confidential, unless you clearly intend to
communicate your position to management or as necessary to comply with legal requirements.
Voting Questions
Please contact Computershare by telephone:
Or by email:
North America: 1-800-564-6253
Other Locations: 1-514-982-7555
[email protected]
Business of the Meeting
If you appoint Mr. Fergusson or Mr. Wonnacott, the directors set out in the enclosed form of proxy, and do not
specify how you want your Shares to be voted, they will be voted as follows:
Election of Nominees as Directors
Appointment of Auditors
Advisory vote (Say-on-Pay) on Canexus’ approach to executive compensation
FOR
FOR
FOR
Financial Statements
The financial statements are presented to Shareholders each year and the independent chartered accountants
Deloitte LLP, will be available to answer appropriate questions at the Meeting.
Elections of Directors
Directors are elected each year at the annual meeting. The Board and management have concluded that each
nominee is well qualified to serve on Canexus' Board. The Articles of Incorporation of Canexus sets the
number of directors between three and 12. The Board has set the number of directors to be elected at eight.
The Board operates independently from management and seven of the eight nominees are independent. The
nominees have the relevant expertise essential to ensure appropriate strategic direction and oversight. See
page 18 for more details.
Appointment of Auditors
The Auditors review the financial statements of the Corporation and report to the Audit Committee. All auditors'
fees are pre-approved by the Audit Committee. See page 26 for more details.
Advisory Vote (Say-on-Pay) on Canexus’ approach to Executive Compensation
Our policies and practices for executive compensation are linked to strategy business objectives, which focus
on increasing shareholder returns in the long term. Our philosophy is to compensate executives:
•
•
•
Based on performance;
At a level competitive to our peers; and
In a manner designed to attract, engage and retain talented leadership focused on managing Canexus’
operations, finances and assets for long-term value creation.
All of our compensation programs are designed to meet pay-for-performance and strategic competitiveness
objectives. Actual rewards are directly linked to the results of Canexus. Shareholders will be asked at the
Meeting to vote “For” or “Against” an advisory resolution on Canexus’ approach to executive compensation.
Other Business
Management does not intend to present any other business at the Meeting and we are not aware of
amendments to proposed matters or any other matters calling for your action.
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2015 Information Circular and Proxy Statement
BUSINESS OF THE MEETING
KEY SECTIONS
PAGE
Financial Statements ..................................................................................................................................... 9
Election of Directors ...................................................................................................................................... 9
Appointment of Auditors ................................................................................................................................ 9
Advisory Vote (Say-on-Pay) on Canexus’ Approach to Executive Compensation ....................................... 9
Other Business ............................................................................................................................................ 10
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2015 Information Circular and Proxy Statement
Financial Statements
The consolidated financial statements for the Corporation for the year ended December 31, 2014, and the
Auditors' report thereon will be received at the AGM. The financial statements are in the 2014 annual report
which is being provided with this Circular to all Registered Shareholders, except those who asked not to
receive it, and to Beneficial Shareholders who requested it.
Election of Directors
We must have between three and 12 directors under Canexus’ Articles of Incorporation. On March 12, 2015,
the Board determined that there will be eight directors. Directors will be elected at the Meeting each year and
will hold office until the next meeting or until their successors are duly appointed or elected.
Shareholders will vote for each proposed director individually as opposed to voting for the directors as a
slate. In addition, Canexus has a majority voting policy which requires that any nominee for director who
receives a greater number of votes withheld than for his or her election shall tender his or her resignation
to the Chairman of the Board following the Corporation’s annual meeting. This policy applies only to
uncontested elections, meaning elections where the number of nominees for director is equal to the
number of directors to be elected. The Corporate Governance Committee and the Board shall consider
the resignation and whether or not it should be accepted. The nominee shall not participate in any
committee or Board deliberations on the resignation offer. Resignations are expected to be accepted
except in situations where circumstances warrant the applicable director continuing to serve as a Board
member. The Board shall disclose its election decision, via press release, within 90 days of the applicable
annual meeting. If a resignation is accepted, the Board may appoint a new director to fill the vacancy
created by the resignation. The director nominees are:
David R. Collyer
Douglas P. Hayhurst
Richard A. Ott
Stephanie L. Felesky, C.M.
Arthur N. Korpach
R. Douglas Wonnacott
Hugh A. Fergusson
William J. McAdam
The Board and management feel the nominees are well qualified to act as directors. Each one has confirmed
his or her eligibility and willingness to serve as a director if elected. We do not know of any reason why a
nominee is not available for election. However, if a nominee is not available to serve at the time of the Meeting,
the directors named in the enclosed proxy will vote for a substitute if one is chosen by the Board.
The nominees’ biographies begin on page 12.
Management and the Board recommend that you vote FOR these appointments. The directors named in the
enclosed form of proxy will vote FOR these nominees unless you indicate that authority to do so is withheld.
Appointment of Auditors
The Board recommends appointing Deloitte LLP as auditors for 2015. During the three financial years ended
December 31, 2012, 2013 and 2014, Deloitte LLP served as our auditor. Deloitte LLP was first appointed
auditor of Canexus’ predecessor, the Fund, effective June 28, 2005.
Representatives of the Auditor will be present at the Meeting. They will be given the opportunity to make a
statement if they wish to do so and will be available to answer appropriate questions. The Board recommends
that you vote FOR this appointment. The directors named in the enclosed proxy will vote FOR this appointment
unless you indicate that authority to do so is withheld.
Advisory Vote (Say-on-Pay) on Executive Compensation Approach
At the AGM this year, our Shareholders will have the opportunity to vote on our approach to executive
compensation. We encourage you to read the Compensation Discussion and Analysis (“CD&A”) for important
information on what we pay our executives, how we pay them and why. The Board Chair, Hugh Fergusson
and the Compensation Committee Chair, Stephanie Felesky, introduce the CD&A with a letter to shareholders
on page 30 and welcome your participation in the advisory vote on behalf of the Board and the Compensation
Committee.
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2015 Information Circular and Proxy Statement
Your vote is a non-binding advisory vote and will provide the Board and the Compensation Committee with
important feedback. As a shareholder, you will be able to vote “For” or “Against” Canexus’ approach to
executive compensation through the following resolution:
“BE IT RESOLVED, on an advisory basis, and not to diminish the role and responsibilities of the Board of
Directors, that the Shareholders accept the approach to executive compensation as disclosed in Canexus’
Information Circular delivered in advance of the 2015 Annual General Meeting of Shareholders.”
Voting results will be disclosed on SEDAR after the AGM in the Report of Voting Results. Last year’s advisory
vote was approved by 96.96% of Shareholders.
As this is an advisory vote, the results will not be binding upon the Board. However, the Board will consider the
outcome of the vote as part of its ongoing review of executive compensation. Following this year’s advisory
vote, the board will examine the level of participation, the nature of the comments received from shareholders
and evolving best practices in North America. We will continue to evolve and refine our processes, ensuring
that shareholders can provide effective and timely input on executive compensation.
Management and the Board recommend that you vote FOR the advisory resolution on Canexus’ approach to
executive compensation. The directors named in the enclosed proxy will vote FOR this matter unless you
instruct otherwise.
OTHER BUSINESS
Management does not intend to present any other business at the Meeting. We are not aware of any
amendments to the proposed matters or other matters which may be presented for action. If amendments or
other matters are properly brought before the Meeting and you have appointed a proxyholder, your proxyholder
will vote on such amendments or other matters using his or her best judgment.
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2015 Information Circular and Proxy Statement
BOARD OF DIRECTORS
KEY SECTIONS
PAGE
Nominees .................................................................................................................................................... 12
Other Public Company Directorships / Committee Appointments .............................................................. 16
Board Succession and Areas of Expertise.................................................................................................. 16
Independence and Board Committees ....................................................................................................... 18
Meeting Attendance .................................................................................................................................... 19
Sessions without Management and Meetings Held .................................................................................... 19
Director Compensation ............................................................................................................................... 19
Summary Compensation Table ............................................................................................................ 20
Retainers and Fees .............................................................................................................................. 20
DSU Plan .............................................................................................................................................. 21
DSU Grants .......................................................................................................................................... 21
Share Ownership Guidelines ................................................................................................................ 22
Equity Ownership and Changes from March 24, 2014 to March 24, 2015 .......................................... 22
Incentive Plan Awards .......................................................................................................................... 23
Director Education ....................................................................................................................................... 24
Committee Reports ..................................................................................................................................... 25
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2015 Information Circular and Proxy Statement
NOMINEES
The nominees for election to the Board include seven directors elected at last year’s Annual General and
Special Meeting of Shareholders, and one director appointed mid-year. Ms. Felesky and Messrs. Fergusson
and Hayhurst were appointed as directors of the Fund on August 18, 2005. At the Annual and Special meeting
of Unitholders held on May 5, 2011, the Arrangement Transaction was approved by Unitholders which resulted
in the Fund converting from an income trust to a corporation. The conversion took place on July 8, 2011 and
the Fund became Canexus Corporation. Mr. Korpach was appointed as a director of the Corporation on March
7, 2012, Mr. Ott was appointed as a director of the Corporation on December 12, 2012, Mr. McAdam was
elected as a director at the Annual General Meeting of Shareholders held on May 9, 2013, Mr. Collyer was
elected as a director at the Annual and Special Meeting of Shareholders held on May 8, 2014 and Mr.
Wonnacott was appointed as a director of the Corporation on July 2, 2014. The term of office of each of the
eight current directors will expire immediately prior to the AGM or any adjournment thereof.
David Collyer, 59, recently retired as President and CEO of the Canadian
Association of Petroleum Producers (CAPP), a position he held from
September 2008 until December 2014. He was responsible for leading
CAPP’s activities in education, communications and policy / regulatory
advocacy on behalf of its members representing over 90% of the upstream
petroleum production in Canada.
Independent
Director since May 8, 2014
Corporate Governance
Committee Member
Prior to being appointed President of CAPP, Mr. Collyer was President
and Country Chair for Shell in Canada. During his 30 year career with
Shell, Mr. Collyer held a broad range of technical, business, marketing and
senior leadership roles in the oil and gas industry. He also participated in
a two year Executive Exchange assignment with the federal government in
Ottawa.
Responsible Care®
Committee Member
David R. Collyer
Calgary, Alberta,
Canada
Shares Owned: 0
DSUs Owned: 33,205
Mr. Collyer recently joined the board of directors of AltaLink (100% owned
by Berkshire Hathaway Energy) and has held a number of not-for-profit
Board positions. Mr. Collyer received a Bachelor of Science in Mineral
Engineering (specializing in Petroleum) from the University of Alberta in
1977 and a Masters of Business Administration from the University of
Alberta in 1978. He is a member of the Association of Professional
Engineers, Geologists and Geophysicists of Alberta (APEGA) and the
Society of Petroleum Engineers (SPE).
2014 Voting Results:
For: 113,563,446 (98.17%)
Independent
Stephanie Felesky, 68, is a member of the national board of the Institute
of Corporate Directors (chair of the Governance and Human Resources
Committee), and a member of the Calgary Police Commission (chair of
the Governance Committee). In addition, she is a director of the West
Campus Development Corporation (Chair of the Governance Committee).
Ms. Felesky is a founding director of the Calgary Homeless Foundation.
She is a past director of the Canada Lands Company, Star Choice
Communications Ltd., the United Way of Calgary (Chair), Calgary Inc., the
Calgary Convention Authority as well as a past member of the Board of
Governors of the University of Calgary.
Director since August 18, 2005
Corporate Governance
Committee Member
Human Resources and
Compensation Committee Chair
since August 2014
Stephanie L. Felesky,
C.M.
Calgary, Alberta,
Canada
Responsible Care® Committee
Chair from May 2011 to May
2014
Shares Owned: 95,803
Withheld: 2,111,442 (1.83%)
Ms. Felesky received her Bachelor of Education with distinction from the
University of Calgary. In 2004, she was appointed as a member of the
Order of Canada and in 2009 she was awarded an Honorary Doctor of
Laws from the University of Calgary. In 2005, she received the ICD.D
designation from the Institute of Corporate Directors.
DSUs Owned: 62,559
(1)
Series III Debentures: $75,000
2014 Voting Results:
For: 113,525,956 (98.14%)
12
Withheld: 2,148,932 (1.86%)
2015 Information Circular and Proxy Statement
Hugh Fergusson, 67, is an independent businessman and corporate
director. He is an executive who had over 25 years of service with The
Dow Chemical Company, an international chemicals company listed on
numerous stock exchanges. In 2004, he retired as the Vice President,
Hydrocarbons and Energy, after holding several positions within the
organization from his original position as Staff Lawyer. Mr. Fergusson is
currently the President of Argyle Resources Inc. (a private energy
consulting organization). He is a director of AltaGas Ltd. (a TSX-listed
infrastructure company). He is a past board member of the Alberta Electric
System Operator (where he was Vice Chair), Provident Energy Ltd., Dow
Chemical Canada Inc., Union Carbide Canada Inc., Petromont Inc., the
Gas Processors Association of America and the Petrochemical Feedstock
Association of the Americas.
Independent
Director since August 18, 2005
Board Chair since May 2013
Corporate Governance
Committee Member
Hugh A. Fergusson
Calgary, Alberta,
Canada
Human Resources and
Compensation Committee
Member
Shares Owned: 63,439
DSUs Owned: 78,560
(1)
Series III Debentures: $20,000
2014 Voting Results:
For: 111,118,981 (96.06%)
Independent
Douglas Hayhurst, 68, is an independent Corporate Director. He was
previously an executive with IBM Canada Business Consulting Services
and a Partner with PricewaterhouseCoopers Management Consultants,
involved globally in consulting for a wide range of industries, including
chemicals; forest, paper and packaging; aerospace and defense; metals
and other manufacturing industries. Prior to those roles, he held various
senior executive management roles with Price Waterhouse including
National Deputy Managing Partner (Toronto) and Managing Partner for
British Columbia (Vancouver). Mr. Hayhurst serves on a number of boards
including Ballard Power Systems (member of Audit and of Corporate
Governance and Compensation Committees); Accend Capital Corporation
(member of Audit Committee); and Advisory Board of Layfield Group
Limited (member of Audit Committee). He is an Adjunct Professor at the
Segal Graduate School of Business at Simon Fraser University, and
previously served on the National Board of the Nature Conservancy of
Canada and on the Risk Oversight and Governance Board of CPA
Canada. He was previously Chair of the BC Chapter of the Institute of
Corporate Directors and the BC Region Board of the Nature Conservancy
of Canada.
Director since August 18, 2005
Audit Committee Chair since
August 2005
Human Resources and
Compensation
Committee Member
Douglas P. Hayhurst
(2)
North Vancouver,
British Columbia,
Canada
Mr. Fergusson received a Bachelor of Arts in Political Science in 1970
from McMaster University; a Juris Doctor from the University of Windsor in
1973 and in 2006 received the designation of ICD.D from the Institute of
Corporate Directors.
Shares Owned: 66,052
DSUs Owned: 62,559
(1)
Series III Debentures: $75,000
Withheld: 4,555,907 (3.94%)
Mr. Hayhurst received a Bachelor of Arts in Business Administration from
the Richard Ivey School of Business at the University of Western Ontario.
He received a Fellowship (FCA) from the Institute of Chartered
Accountants of British Columbia and of Ontario and the designation of
ICD.D from the Institute of Corporate Directors.
2014 Voting Results:
For: 111,256,304 (96.18%)
13
Withheld: 4,418,584 (3.82%)
2015 Information Circular and Proxy Statement
Independent
Director since March 7, 2012
Audit Committee Member
Corporate Governance
Committee Chair since May
2013
Shares Owned: 30,000
Arthur N. Korpach
Calgary, Alberta,
Canada
Art Korpach, 57, is a retired Vice Chairman of Investment Banking at
CIBC World Markets Inc. He has 27 years of investment banking
experience working with clients in Canada and globally. During his career,
he provided advice on numerous financing and merger and acquisition
transactions. Mr. Korpach is a director of Freehold Royalties Ltd. (member
of the Audit and Compensation Committees), a director of Canadian Oil
Sands Limited (member of the Audit and Reserves Committees), and
Chair of the Heart and Stroke Foundation of Alberta. He is Past Chair of
the Board of United Way of Calgary and Area and is a past director of
Mount Royal University and its Foundation. Mr. Korpach is a past chair of
the Canadian Institute of Chartered Accountants Accounting Standards
Board.
DSUs Owned: 62,308
Mr. Korpach received a Bachelor of Commerce from the University of
Saskatchewan and an MBA from Harvard Business School. He received a
Fellowship (FCA) from the Institute of Chartered Accountants of Alberta
and is a Chartered Business Valuator. In 2012, Mr. Korpach received the
designation of ICD.D from the Institute of Corporate Directors.
2014 Voting Results:
For: 109,937,535 (95.04%)
Independent
Bill McAdam, 63, was President and CEO of Aux Sable in the US and
Canada until his retirement in December 2013. Aux Sable is a midstream
gas processing company formed to extract natural gas liquids from gas
transported to Chicago by Alliance Pipeline.
Director since May 9, 2013
Withheld: 5,737,353 (4.96%)
Audit Committee Member
Responsible Care®
Committee Chair since May 2014
Shares Owned: 15,000
William J. McAdam
Naperville, Illinois,
U.S.A.
DSUs Owned: 45,210
Prior to joining Aux Sable, Mr. McAdam held progressively responsible
positions with Imperial Oil and Exxon Chemical over 1974 to 1994. He
began working with Alliance Pipeline/Aux Sable in 1995 during its
development phase until 1998 when he joined Mapco Canada Energy Inc.
as President. He re-joined Aux Sable in late 1999 and moved to Chicago
to lead the start-up and development of the Aux Sable business after the
$3.5 billion Alliance Pipeline/Aux Sable system was commissioned in
December, 2000.
Mr. McAdam graduated from Queens University in 1974 with a Bachelor of
Science degree in Chemical Engineering and earned his Masters of
Business Administration degree from McMaster University in 1980. He has
served on several industry association boards over his career. He joined
the board of Seven Generations Energy Ltd. in August 2014 and is Chair
of the HSE and Community Engagement Committee and a member of the
Reserves and Risk Management Committee.
2014 Voting Results:
For: 113,618,867 (98.22%)
14
Withheld: 2,056,021 (1.78%)
2015 Information Circular and Proxy Statement
Independent
Director since December 12,
2012
Human Resources and
Compensation
Committee Member
Richard A. Ott
Houston, Texas,
U.S.A.
Responsible Care®
Committee Member
Shares Owned: 5,000
Richard Ott, 60, is a retired Vice President, Human Resources and
Information Technology at Kraton Performance Polymers Inc., located in
Houston, Texas. He has 36 years of experience in the industrial and
specialty chemical businesses, both regionally and internationally. During
his tenure at Kraton, he previously held the position of Vice President of
Operations, with facilities in North America, Europe, South America, and
Asia. Mr. Ott served during the carveout of the Elastomers business from
Shell Chemical Company in 2001, private equity ownership, and the
subsequent IPO of the company in December 2009. As a public company
today, Kraton is a leading global producer of engineered polymers. As a
senior manager with Shell Chemical Company, Mr. Ott held various
positions in manufacturing and supply chain, organizational development,
sales, and strategic planning.
Mr. Ott was Interim President and CEO of Canexus from March 6, 2014
until July 2, 2014.
DSUs Owned: 49,504
Mr. Ott holds a Bachelor of Science degree in Industrial Engineering from
West Virginia University.
2014 Voting Results:
For: 113,612,969 (98.22%)
Not Independent
R. Douglas Wonnacott, 57, was appointed President, CEO and a director
of Canexus on July 2, 2014. Mr. Wonnacott has served in a variety of
senior executive positions and has over 30 years of experience in the
chemical industry. He is a results-oriented leader with extensive
experience in strategic planning, marketing, production, logistics and
supply chain management, and terminal operations. Prior to his
appointment at Canexus, Mr. Wonnacott was the Chief Operating Officer
of Agri-Products at Viterra Inc., a global agribusiness company. His career
began in the chemical industry and for over three decades he held
progressively more senior roles with CIL Inc., ICI Plc. (President ICI
Explosives USA Inc.), El Dorado Chemical Company (President), and
Agriliance LLC (Vice President of Supply and Logistics and Vice President
and Director, Crop Nutrients).
President and CEO since July 2,
2014
Director since July 2, 2014
Shares Owned: 10,627
R. Douglas
Wonnacott
Calgary, Alberta,
Canada
DSUs Owned: 0
Withheld: 2,061,919 (1.78%)
Mr. Wonnacott holds a Bachelor of Arts Degree in Economics from the
University of Western Ontario and an MBA in Marketing and International
Business from the Richard Ivey School of Business Administration at the
University of Western Ontario.
2014 Voting Results:
N/A
Notes:
1. The Fund issued $60 million aggregate principal amount of 5.75% Series III Convertible Unsecured Subordinated Debentures
on September 28, 2010. The Series III Convertible Unsecured Subordinated Debentures are convertible into Shares and are
listed and posted for trading on the TSX under symbol CUS.DBA.
2. Mr. Hayhurst was a director of Catalyst Paper Corporation (“Catalyst”) until September 2012. On January 31, 2012, Catalyst
was granted protection under the Companies’ Creditors Arrangement Act (“CCAA”). On September 13, 2012, Catalyst
completed a reorganization under the CCAA.
15
2015 Information Circular and Proxy Statement
OTHER PUBLIC COMPANY DIRECTORSHIPS / COMMITTEE APPOINTMENTS
Name
Other Public Company Directorships
Stock Exchange
Collyer
Felesky
Fergusson (1)
Hayhurst (2)
None
None
AltaGas Ltd.
Accend Capital Corporation
Ballard Power Systems Inc.
Freehold Royalties Ltd.
Canadian Oil Sands Limited
Seven Generations Energy Ltd.
None
None
------TSX
TSX-V
TSX
TSX
TSX
TSX
-------
Korpach (3)
McAdam(4)
Ott
Wonnacott
Notes:
1. Mr. Fergusson is a member of the Audit and Human Resources and Compensation Committees of AltaGas Ltd.
2. Mr. Hayhurst is a member of the Audit Committee of Accend Capital Corporation and a member of the Audit Committee and of
the Corporate Governance and Compensation Committee of Ballard Power Systems Inc.
3. Mr. Korpach is a member of the Audit Committee and Compensation Committee of Freehold Royalties Ltd., and is a member of
the Audit Committee and the Reserves Committee of Canadian Oil Sands Limited.
4. Mr. McAdam is Chair of the HSE and Community Engagement Committee and a member of the Reserves and Risk
Management Committee of Seven Generations Energy Ltd.
BOARD SUCCESSION AND AREAS OF EXPERTISE
The Board has determined that there are certain qualities associated with effective boardroom dynamics that
each of our directors should possess. They are integrity and accountability, diversity of thought and an
independent mind, sound business judgement, effective communication skills, the ability to work as part of a
team and to respect differing points of view, commitment to attending and contributing to the Board, and
problem-solving skills. The qualifications, skills and experience of Canexus' directors are annually evaluated to
ensure that the composition of the Board is appropriate and that key areas of expertise are adequately
represented.
Nomination Process
The selection process for new nominees for membership on the Board of Directors is conducted by the
Corporate Governance Committee. A skills matrix is maintained by the Corporate Governance Committee
which the directors use to review for capabilities, competencies, skills and qualities that are required to
implement Canexus’ strategic plan. The Corporate Governance Committee uses this assessment as a basis for
identifying the skills, experience, qualifications, diversity and personal qualities desired in potential new Board
members. Candidates are identified from a number of sources including referrals from existing directors or a
more formal search process. When a vacancy occurs or is pending, the Corporate Governance Committee
identifies a short list of potential candidates. It takes into account whether the candidates can devote sufficient
time and resources to Board obligations. The Corporate Governance Committee may also engage executive
search firms or third party experts to assist in the recruitment process.
Through the recruitment process, the Corporate Governance Committee provides updates to the Board and
solicits input on candidates. Candidates are interviewed by the Board Chair, members of the Committee or
other directors as deemed appropriate. The Corporate Governance Committee ultimately provides its
recommendation to the Board of Directors, which approves a nominee for submission to Shareholders for
election to the Board.
16
2015 Information Circular and Proxy Statement
Skills Matrix
Skills matrix results are analyzed and used to enhance development of the Board through education and
training, and to aid in the recruiting process.
# of Director Nominees
with Significant
Experience in this Area
Specific Skills and/or Experience
5
Global Chemicals Experience – Executive experience in the chemicals industry combined with a
strong knowledge of the Corporation’s strategy, markets, competitors, financials, operational issues,
regulatory concerns and technology.
8
Managing/Leading Growth – Executive experience driving strategic insight and direction to
encourage innovation and conceptualize key trends to challenge the organization to sharpen its vision
while achieving significant growth both organically and via targeted merger and acquisition activities.
7
International Experience – Executive experience working in a global organization in areas where the
Corporation is or may be active. Has a thorough understanding of different cultural, political and
regulatory requirements.
8
CEO/Senior Executive – Experience working as a CEO or Senior Executive for a major organization.
7
Human Resources Management – Executive experience or Board HR Committee participation with
an understanding of compensation, benefit and pension programs, legislation and agreements. This
includes specific expertise in executive compensation programs including base pay, incentives, equity
and perquisites.
7
Governance/Board – Prior or current experience as a board member for a significant organization
(public, private or non-private sectors).
7
Financial Acumen – Executive experience in financial accounting and reporting, and corporate
finance, including capital markets for both equity and debt. Familiarity with internal financial controls.
8
Safety, Environment and Corporate Responsibility – Understanding of industry regulations and
public policy related to workplace safety, environment and social responsibility. Demonstrated
commitment to the Corporation’s values and Responsible Care®.
7
Diversity – Contributes to the Board in a way that enhances perspectives and experiences through
diversity in thought, gender, age, ethnic background, geographic origin (public, private and non-profit
sectors).
6
Sales/Marketing Expertise – Experience in the chemical and/or industrial commodity sales/marketing
industries combined with a strong knowledge of the Corporation’s strategy, markets, competitors,
financials, operational issues and regulatory concerns.
8
Risk Management – Executive experience in dealing with and managing risk with a strong knowledge
of the Corporation’s strategy, markets, competitors, financials, operational issues and regulatory
concerns.
5
Project or Plant Operations Experience – Executive experience in chemical
manufacturing/engineering of both ongoing operations (preferably in both union and non-union
facilities) or major project planning and implementation.
17
2015 Information Circular and Proxy Statement
7








8






7


















8



6
7
Project or Plant
Operations Experience
7

Diversity







Safety, Environmental &
Corporate
Responsibility







Financial Acumen
CEO / Senior Executive
International Experience






7








8
Risk Management



5

Sales / Marketing
Expertise









8
Governance / Board

Human Resources
Management
Collyer
Felesky
Fergusson
Hayhurst
Korpach
McAdam
Ott
Wonnacott
Total
Managing / Leading
Growth
Name
Global Chemicals
Experience
Experience and Qualifications
The following chart shows the areas where our directors have assessed themselves as skilled or expert.





5
INDEPENDENCE AND BOARD COMMITTEES
The Board affirmed director independence under our Categorical Standards for director independence
("Categorical Standards"), attached as Schedule "C", which were adopted in 2007 and most recently affirmed
by the Board on March 12, 2015. Our Categorical Standards meet or exceed the requirements set out in
National Policy 58-201 – Corporate Governance Guidelines and National Instrument 52-110 – Audit
Committees. See page 68 for details on the process followed to determine director independence. The Board
continually monitors developments in corporate governance, as it relates to independence and otherwise, and
will ensure that it will continue to meet or exceed whatever standards are developed.
Mr. Wonnacott is not independent as he is President and CEO.
Audit (1),(2)
Committees
(# of Members)
Corporate
Governance (1)
(3)
Not Independent
R. Douglas Wonnacott
Independent Outside Directors
David R. Collyer
Stephanie L. Felesky
Hugh A. Fergusson
Douglas P. Hayhurst
Arthur N. Korpach
William J. McAdam
Richard A. Ott
(4)



Chair


Human
Resources &
Compensation (1)
(4)
Responsible
Care®
(1)
(3)

Chair


Chair

Chair

Notes:
1. All members are independent.
2. All Audit Committee members are independent under additional regulatory requirements applicable to them.
18
2015 Information Circular and Proxy Statement
MEETING ATTENDANCE
Directors are expected to attend the Corporation’s annual meeting of Shareholders and it is anticipated that all
directors will attend the AGM. All of the independent directors were at the 2014 Annual and Special Meeting of
Shareholders. In 2014, the Board and committee attendance rate was 98.6%.
Meetings Attended in 2014 (1)
Director
Collyer(2)
Felesky
Fergusson
Hayhurst
Korpach
Kubera (3)
McAdam
Ott (4)
Wonnacott (5)
Work(6)
Board
8 of 10
14 of 14
14 of 14
14 of 14
14 of 14
3 of 3
14 of 14
14 of 14
7 of 7
5 of 5
Audit
Committee
N/A
N/A
N/A
4 of 4
4 of 4
N/A
4 of 4
N/A
N/A
N/A
Audit
Committee
(related to
NATO project
oversight)
N/A
N/A
N/A
15 of 15
14 of 15
N/A
15 of 15
N/A
N/A
N/A
Responsible
Care®
Committee
2 of 2
3 of 3
N/A
N/A
N/A
N/A
4 of 4
2 of 2
N/A
2 of 2
Corporate
Governance
Committee
2 of 2
4 of 4
4 of 4
N/A
4 of 4
N/A
N/A
N/A
N/A
N/A
Human
Resources &
Compensation
Committee
N/A
3 of 3
4 of 4
4 of 4
N/A
N/A
N/A
2 of 2
N/A
2 of 2
Attended
86%
100%
100%
100%
97%
100%
100%
100%
100%
100%
Notes:
1. Following the retirement of a director and the election of a new director to the Board at the 2014 AGM, modifications were
made to the membership of the committees to ensure that each director’s skills, experience and expertise were maximized.
2. Mr. Collyer was elected to the Board at the Annual and Special Meeting of Shareholders held on May 8, 2014.
3. Mr. Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014. During 2014, he was not a
member of any committee of the Board.
4. Mr. Ott served as Interim President and CEO of the Corporation from March 6, until July 2, 2014. During this time, he did not
serve as a member of any Board Committees.
5. Mr. Wonnacott is not a member of any Committee of the Board.
6. Mr. Work retired from the Board at the Annual and Special Meeting of Shareholders held on May 8, 2014.
SESSIONS WITHOUT MANAGEMENT AND MEETINGS HELD
Sessions without management are held at every Board and committee meeting. The chair presides over these
sessions and, when required, informs management of the subjects discussed and any action required to be
taken. All Board and committee meetings held in 2014 had sessions without management.
Sessions Without Management in 2014 / Meetings Held
Board/Committee
Board
Audit Committee
Audit Committee (related to NATO project oversight)
Responsible Care® Committee
Corporate Governance Committee
Human Resources & Compensation Committee
Total
14/14
4/4
15/15
4/4
4/4
4/4
45/45
DIRECTOR COMPENSATION
The Corporation provides its directors with a comprehensive compensation package consisting of annual cash
retainers, meeting fees and long-term incentives in the form of DSUs. The total compensation package
provides a competitive level of remuneration for the increasing responsibilities, time commitments and
accountability of Board members. All elements of director compensation are reviewed regularly for
competitiveness against a peer group of companies by the Corporate Governance Committee and the Board.
Our compensation philosophy targets the 50th percentile, to attract and retain qualified talent to serve on our
Board.
Based on research conducted by the Corporate Governance Committee, the Committee determined that it
would not recommend any changes to director retainers and fees in 2014. In March 2015, the Corporate
Governance Committee recommended and the Board agreed to reduce cash retainer fees by 10%.
19
2015 Information Circular and Proxy Statement
2014 Summary Compensation Table
Director
Fees Earned (1)
($)
ShareBased
Awards (2)
($)
OptionBased
Awards
($)
NonEquity
Plan
Compensation
($)
Pension
Value (3)
($)
All Other
Compensation
($)
Total
($)
Collyer (4)
36,514
122,385
N/A
N/A
N/A
0
158,899
Felesky
70,500
92,250
N/A
N/A
N/A
0
162,750
Fergusson (5)
124,250
126,550
N/A
N/A
N/A
0
250,800
Hayhurst
105,000
92,250
N/A
N/A
N/A
0
197,250
Korpach
82,750
92,250
N/A
N/A
N/A
0
175,000
-
-
Kubera (6)
-
-
-
-
-
McAdam
81,750
92,250
N/A
N/A
N/A
0
174,000
Ott (7)
33,889
92,250
N/A
N/A
N/A
0
126,139
Wonnacott (8)
-
-
-
-
-
Work (5) (9)
19,879
1,879
N/A
0
21,758
N/A
N/A
Notes:
1. Includes all retainers and meeting fees. DSU value is not included.
2. The amounts recorded under Share-based Awards represent DSU awards and DSUs in lieu of fees for 2014.
3. None of the directors is provided with a pension (pension funding provided to Messrs. Wonnacott and Kubera was done so in
their roles as executives of Canexus, not as directors).
4. Mr. Collyer received a prorated DSU grant when he joined the Board in May 2014 and an annual DSU grant in November
2014.
5. Messrs. Fergusson and Work elected to receive a portion of their retainer fees as DSUs in 2014. For Mr. Fergusson, fees of
$6,625 were paid in DSUs and for Mr. Work, fees of $1,879 were paid in DSUs.
6. Mr. Kubera was not paid any director compensation in 2014. Mr. Kubera stepped down as President, CEO and a director of
the Corporation on March 6, 2014.
7. Mr. Ott served as Interim President and CEO from March 6, 2014 until July 2, 2014. During this time he did not receive any
fees as a director of the Corporation however, he was paid a salary of $275,962 for serving as an interim officer. See the NEO
Summary Compensation Table on page 42.
8. As an executive of Canexus, Mr. Wonnacott is not paid any director compensation.
9. Mr. Work retired from the Board at the Annual and Special Meeting of Shareholders held on May 8, 2014.
Retainers and Fees
Annual Board and committee retainers are paid quarterly and pro-rated for partial service. The same fees are
paid for attending meetings in person or by conference call.
Year
2012 ($)
Board Chair Retainer
Board Member Retainer
Audit Committee Chair Retainer
Other Committee Chair Retainer
Committee Member Retainer (excluding Special Committee)
Audit Committee Chair Retainer (related to NATO) (1)
Audit Committee Member Retainer (related to NATO) (1)
Board and Committee Member Fees (per meeting attended)
100,000
25,000
10,000
5,000
3,000
25,000
10,000
1,500
2013 ($)
2014 ($)
100,000
25,000
10,000
5,000
3,000
N/A
N/A
1,500
100,000
25,0000
10,000
5,000
3,000
N/A
N/A
1,500
Notes:
1. The Chair and Members of the Audit Committee received retainers for attending meetings and assuming the additional duties
associated with that committee’s oversight of the NATO unit train project. Of the 15 additional Audit Committee meetings that
took place over the course of 2014 relating to NATO project oversight, meeting fees were paid for five of the meetings.
20
2015 Information Circular and Proxy Statement
DSU Plan
Non-executive directors receive an annual grant of DSUs as part of their compensation, to align their interests
with those of Shareholders. The DSU Plan is an equity-linked compensation plan insofar as the value of the
DSUs issued to directors under the DSU Plan track the price of the Shares. The DSU Plan provides that DSUs
may only be settled in cash.
With the exception of grants in respect of retainer compensation, the timing and amounts of grants of DSUs
under the DSU Plan are determined by the directors, upon recommendation by the Corporate Governance
Committee. Under the DSU Plan, each director may elect to receive all or a portion of his or her retainer fee
compensation in DSUs, not including any fees paid to such director for attendance at meetings of the Board or
committees thereof. DSUs vest immediately upon grant and are paid out only when the director leaves the
Board. Dividend equivalents are earned at the same rate as cash dividends paid on the Shares.
Shareholders may obtain a copy of the DSU Plan by contacting the Corporate Secretary of the Corporation at
Suite 2100, 144 - 4th Avenue S.W., Calgary, Alberta, T2P 3N4 or by email at [email protected].
DSU Grants
Name
Grant Date
Collyer
Nov 10, 2014
May 9, 2014
Nov 10, 2014
Nov 8, 2013
Nov 7, 2012
Nov 4, 2011
Nov 10, 2014
Nov 8, 2013
Nov 7, 2012
Nov 4, 2011
Nov 10, 2014
Nov 8, 2013
Nov 7, 2012
Nov 4, 2011
Nov 10, 2014
Nov 8, 2013
Nov 7, 2012
Mar 7, 2012
N/A
Nov 10, 2014
Nov 8, 2013
May 9, 2013
Nov 10, 2014
Nov 8, 2013
Dec 12, 2012
N/A
Nov 8, 2013
Nov 7, 2012
Nov 4, 2011
Felesky
Fergusson (1)
Hayhurst
Korpach
Kubera (3)
McAdam
Ott
Wonnacott (4)
Work (1) (2)
Annual
DSU
Grant
Base Price ($)
25,000
6,667
25,000
10,000
10,000
10,000
32,500
12,500
10,000
10,000
25,000
10,000
10,000
10,000
25,000
10,000
10,000
10,000
N/A
25,000
10,000
6,667
25,000
10,000
10,000
N/A
10,000
10,000
10,000
3.69
4.52
3.69
7.16
8.50
6.10
3.69
7.16
8.50
6.10
3.69
7.16
8.50
6.10
3.69
7.16
8.50
7.85
N/A
3.69
7.16
8.96
3.69
7.16
8.03
N/A
7.16
8.50
6.10
Value of DSUs
($)
92,250
30,135
92,250
71,600
85,000
61,000
119,925
89,500
85,000
61,000
92,250
71,600
85,000
61,000
92,250
71,600
85,000
78,500
N/A
92,250
71,600
59,709
92,250
71,600
80,300
N/A
71,600
85,000
61,000
Notes:
1. In accordance with the DSU Plan, Messrs. Fergusson and Work elected to receive a portion of their retainer fees in DSUs.
Mr. Fergusson received 1,352 DSUs in lieu of retainer fees of $6,625 in 2014, 2,080 DSUs in lieu of retainer fees of $15,687
in 2013, 1,192 DSUs in lieu of retainer fees of $9,950 in 2012 and 369 DSUs in lieu retainer fees of $2,487 in 2011. Mr. Work
received 383 DSUs in lieu of retainer fees of $1,879 in 2014. 2,265 DSUs in lieu of retainer fees of $18,376 in 2013, 2,383
DSUs in lieu of retainer fees of $19,500 in 2012 and 738 DSUs in lieu retainer fees of $4,875 in 2011.
2. Mr. Work retired from the Board at the AGM held on May 8, 2014.
3. Only non-employee directors are eligible to participate in the DSU Plan. Mr. Kubera stepped down as President, CEO and a
21
2015 Information Circular and Proxy Statement
4.
director of the Corporation on March 6, 2014 and did not participate in any long-term incentive plans for employees in 2014.
Mr. Wonnacott participated in long-term incentive plans for employees during 2014.
Share Ownership Guidelines
Directors demonstrate their commitment to the Corporation’s success through the Share ownership guidelines
set in 2005 that set out that directors are expected to own or control Shares and/or DSUs at least four (4) times
the value of their annual retainers by the end of the fourth year after initial appointment. In 2014, all seven
independent, non-executive directors were in compliance with the Share ownership guidelines. Mr. Wonnacott
was appointed as President, CEO and a director on July 2, 2014. He will have until July 1, 2019 to comply with
share ownership guidelines set out for him as President and CEO. Until he stepped down on March 6, 2014,
Mr. Kubera was a director and an officer of the Corporation and was in compliance with the Share ownership
guidelines set out for him as President and CEO.
EQUITY OWNERSHIP AND CHANGES FROM MARCH 24, 2014 TO MARCH 24, 2015
Name
Collyer
Felesky
Fergusson
Hayhurst
Korpach
McAdam
Ott
Wonnacott
Total
March 24, 2014
Shares
DSUs
Owned
Owned
(#)
(#)
0
0
95,803
32,756
61,664
39,219
61,462
32,756
30,000
32,531
15,000
17,229
5,000
21,072
0
N/A
268,929
175,563
March 24, 2015
Shares
DSUs
Owned
Owned
(#)
(#)
0
33,205
95,803
62,559
63,439
78,560
66,052
62,559
30,000
62,308
15,000
45,210
5,000
49,504
10,627
N/A
285,921
393,905
Net Change
Shares
DSUs
Owned
Owned
(#)
(#)
0
33,205
0
29,803
1,775
39,341
4590
29,803
0
29,777
0
27,981
0
28,432
10,627
N/A
16,992
218,342
Equity at Risk(1)
Multiple of
Value
Annual
($)
Retainer
5.14
128,613
32.80
820,043
8.16
815,938
30.27
756,827
24.01
600,217
9.91
247,839
11.00
275,028
22,246
N/A
3,666,751
Note:
1. Equity at Risk is the greater of the acquisition cost or market value of Shares and DSUs owned by the directors on March 24,
2015, divided by the annual retainer. For the purposes of this table, 2014 annual Board Member retainer fees of $25,000 and
annual Board Chair retainer fees of $100,000 were used in the calculation. In March 2015, the Board agreed to reduce cash
retainer fees by 10%.
22
2015 Information Circular and Proxy Statement
Incentive Plan Awards
Option-Based Awards
(1)
Share-Based Awards
Market or
Payout
Value of
Share-based
Awards Not
Paid Out or
Distributed
Option
Expiration
Date
Value of
Unexercised
In-TheMoney
Options
Number of
Shares or
Units of
Shares that
have not
Vested
(#)
Market or
Payout
Value of
Share-based
Awards that
have not
Vested
($)
N/A
N/A
N/A
0
N/A
104,247
N/A
N/A
N/A
N/A
0
N/A
196,405
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
0
0
N/A
N/A
246,640
196,405
Korpach
N/A
N/A
N/A
N/A
0
N/A
195,616
Kubera (3)
-
-
-
-
-
-
-
McAdam
N/A
N/A
N/A
N/A
0
N/A
141,983
Ott
N/A
N/A
N/A
N/A
0
N/A
155,417
Work
Wonnacott(4)
N/A
-
N/A
-
N/A
-
N/A
-
0
-
N/A
-
136,914
-
Number of
Securities
Underlying
Unexercised
Options
(#)
Option
Exercise
Price
($)
Collyer
N/A
Felesky
Fergusson
Hayhurst
Name
(2)
($)
Notes:
1. The independent non-management directors are not eligible to participate in the Stock Option Plan.
2. The Market or Payout Value of Share-based Awards was calculated using the closing price of the Shares on the TSX on
December 31, 2014 of $3.26.
3. Mr. Kubera stepped down as President, CEO and a director of Canexus on March 6, 2014. He did not receive any optionbased or share-based awards in 2014.
4. Mr. Wonnacott is President and CEO of Canexus and is eligible to participate in the Stock Option Plan as an officer of the
Corporation. Details of Mr. Wonnacott’s incentive plan awards are reported in the tables on pages 47 and 48.
Incentive Plan Awards - Value Vested or Earned During the Year
Name
Collyer
Felesky
Fergusson
Hayhurst
Korpach
Kubera (5)
McAdam
Ott
Wonnacott (6)
Work
Option-Based Awards –
Value Vested During the
(1)
Year
($)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Share-Based Awards –
Value During the Year on
(2)
Vesting
($)
122,385
92,250
119,925
92,250
92,250
N/A
92,250
92,250
N/A
N/A
Non-Equity Incentive Plan
Compensation – Value
(3)
Earned During the Year
($)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Notes:
1. The independent non-executive directors are not eligible to participate in the Stock Option Plan.
2. Share-based awards reported above are DSUs awarded in 2014.
3. No non-equity incentive plan compensation was awarded in 2014.
4. Mr. Work retired from the Board at the Annual and Special Meeting of Shareholders held on May 8, 2014.
5. Mr. Kubera stepped down as President, CEO and a director of Canexus on March 6, 2014. He did not receive any Optionbased or Share-based Awards in 2014.
6. Mr. Wonnacott is President and CEO of Canexus and is eligible to participate in incentive plans for employees of the
Corporation. Details of Mr. Wonnacott’s incentive plan awards are reported in the tables on pages 47 and 48.
23
2015 Information Circular and Proxy Statement
DIRECTOR EDUCATION
Canexus’ directors participate in continuing education. Below is a list of presentations and Canexus site visits
in 2014.
Date
March 2014
Topic
Presented / Hosted By
Attended By
Shareholder Activism
Christopher Nixon, Stikeman Elliott
LLP
All directors
Corporate governance and securities regulatory update
Diane Pettie
All directors
Brandon Site Visit
Dale Bossons
Bruderheim Site Visit
Andy Lacara
Jamie Urquhart
Rick Danilkewich
Nanaimo Site Visit
Mike Shepherd
Ott
North Vancouver Site Visit
Rick Denton
Ott
April 2014
Beauharnois Site Visit
Sylvain Pagé
Ott
May 2014
Corporate governance and securities regulatory update
Diane Pettie
All directors
ICD Risk Course
John Caldwell
Collyer
Felesky
Fergusson
Hayhurst
Korpach
Ott
2014 Integrity Training Course – Using Company Assets
Wisely
Corpedia
All directors
June 2014
Bruderheim Site Visit
Rick Danilkewich
July 2014
North Vancouver Site Visit
Rick Denton
Hayhurst
Korpach
McAdam
Ott
August 2014
Corporate governance and securities regulatory update
Diane Pettie
All directors
Directors’ and Officers’ Liability Insurance
Oil by Rail
Frances Weeks, Iridium Risk
Services
Jacob Snell, Chubb Insurance
Company of Canada
All directors
Brazil Site Visit
Pericles dos Santos
Fergusson
Wonnacott
Corporate governance and securities regulatory update
Diane Pettie
All directors
Public Policy Issues related to Rail Transportation
Tom Jackson
All directors
Chemical Industry Market Update
Omar Abboud and John Hartke,
HSBC
All directors
November 2014
December 2014
24
Ott
Hayhurst
Korpach
McAdam
Ott
Ott
2015 Information Circular and Proxy Statement
AUDIT COMMITTEE REPORT
MEMBERS
100% INDEPENDENT
Douglas Hayhurst, CPA, FCA, Chair
Arthur Korpach, CFA, FCA
William McAdam, MBA
FINANCIAL
LITERACY
All members of the Audit Committee have been affirmatively determined to be financially literate
by the Board of Directors.
MANDATE
The Committee assists the Board in overseeing:
•
the integrity of annual and quarterly financial statements;
•
compliance with accounting and finance based legal and regulatory requirements;
•
the external auditor’s qualifications, independence and compensation;
•
communications with the external auditor;
•
the system of internal accounting and financial reporting controls that Management has
established;
•
performance of the internal and external auditors;
•
financial policies and strategies including capital structure;
•
financial risk management practices; and
•
transactions or circumstances which could materially affect the financial profile of the
Corporation.
KEY ACTIVITIES FOR
2014
•
Met with management and met separately with the internal auditor and the external auditors
to review the December 31, 2013 consolidated financial statements and MD&A;
•
Based on the reviews and discussions referred to above, approved and recommended to
the Board that the audited consolidated financial statements be included in Canexus’ annual
report for the year ended December 31, 2013;
•
Met with management and met separately with the internal auditor and the external auditors
to review interim financial statements, and based on the reviews and discussions,
recommended approval of the interim financial statements;
•
Reviewed the Corporation’s accounting and financial reporting practices and disclosure
controls and procedures;
•
Discussed with the external auditors that firm’s independence;
•
Oversaw the compliance activities undertaken by management to report on the
effectiveness of internal controls over financial reporting as at December 31, 2014;
•
Completed a performance review of the internal and the external auditor;
•
Completed a self-assessment of the performance of the Audit Committee;
•
Reviewed and approved changes to the Audit Committee mandate;
•
Reviewed the ethics policy in relation to financial matters;
•
Oversaw the Corporation’s pension plans; and
Reviewed financial policies and strategies, including capital structure, and financial risk
management practices.
KEY ACTIVITIES
FOR 2014
(RELATED TO NATO
PROJECT
OVERSIGHT)
Beginning in January 2014 , the Audit Committee assisted the Board in overseeing:
•
The construction and commissioning of the North American Terminal Operations (“NATO”)
unit train project following the announcement of the cost overrun on January 14, 2014;
The development of a project management protocol for the Corporation.
•
In January 2014, the Audit Committee engaged the services of PricewaterhouseCoopers LLP.
The scope of work for the engagement was: (1) to confirm the unit train project cost overrun
number, and (2) to improve future execution of the unit train project through to completion,
including the areas of project management, cost control and reporting.
The Audit Committee met with the caustic modernization project management team in North
Vancouver to ensure that the newly developed project management protocols had been
incorporated as appropriate in this project.
EXTERNAL
AUDITOR’S
ENGAGEMENT AND
FEES BILLED
Before Deloitte LLP, the external auditor, is engaged by Canexus or its subsidiaries to render
additional audit or non-audit services, the engagement is approved by the Audit Committee. All
audit, audit-related, tax and other services provided by Deloitte LLP since August 18, 2005 have
been approved by the Audit Committee.
The aggregate fees paid to Deloitte LLP (exclusive of GST) for the years ended December 31,
25
2015 Information Circular and Proxy Statement
2014 and December 31, 2013 were as follows:
Fee Description
Audit (1)
Audit-Related (2)
Tax (3)
All Other Fees (4)
Total
Year Ended
December 31, 2014
839,592
16,853
20,237
438
877,120
Year Ended
December 31, 2013
692,932
511,277
18,186
20,200
1,242,595
Notes:
1. Audit Fees is defined in Form 52-110F1 - Audit Committee Information Required in an AIF
(“Form 52-110F1”), as the aggregate fees billed by the issuer’s external Auditor in each of
the last two fiscal years for audit services Audit fees for the year ended December 31, 2014
include amounts billed for the review of quarterly consolidated financial statements and the
audit of the annual consolidated financial statements of the Corporation; review of the short
form prospectus for the Corporation dated January 29, 2014 relating to the issue of 26.8
million Common Shares for gross proceeds of $150.1 million; review of the short form
prospectus for the Corporation dated May 27, 2014 relating to the issue of $85.6 million of
6.50% convertible unsecured subordinated Series VI debentures; and the audit of certain
subsidiary entity financial statements. Audit fees for the year ended December 31, 2013
include amounts billed for the review of quarterly consolidated financial statements and the
audit of the annual consolidated financial statements of the Corporation; review of the short
form prospectus for the Corporation dated May 27, 2013 relating to the issue of 13.6 million
Common Shares for gross proceeds of $115.1 million; review of the short form prospectus for
the Corporation dated August 23, 2013 relating to the issue of $107.5 million of 6%
convertible unsecured subordinated Series V debentures; and the audit of certain subsidiary
entity financial statements.
AUDIT COMMITTEE
APPROVAL
2.
Audit-Related Fees is defined in Form 52-110F1, as the aggregate fees billed in each of the
last two fiscal years for assurance and related services by the issuer’s external Auditor that
are reasonably related to the performance of the audit or review of the issuer’s financial
statements and are not reported under Audit Fees. Audit-Related fees for the year ended
December 31, 2014 include amounts billed for the audit of the Corporation’s defined benefit
and defined contribution pension plans. Audit-Related fees for the year ended December 31,
2013 include amounts billed for the audit of the Corporation’s defined benefit and defined
contribution pension plans and for services related to the due diligence work performed
related to potential business opportunities of the Corporation.
3.
Tax Fees is defined in Form 52-110F1, as the aggregate fees billed in each of the last two
fiscal years for professional services rendered by the issuer’s external Auditor for tax
compliance, tax advice, and tax planning. Tax fees for the year ended December 31, 2014
and 2013 include amounts billed for the preparation of certain subsidiary entity tax returns
and related tax consulting.
4.
All Other Fees is defined in Form 52-110F1, as the aggregate fees billed in each of the last
two fiscal years for products and services provided by the issuer’s external Auditor, other
than the services reported under Audit Fees, Audit- Related Fees and Tax Fees. All Other
Fees for the year ended December 31, 2014 and 2013 were for other professional services
and employee training.
The Audit Committee is of the view that the provision of services by Deloitte LLP described in “All
Other Fees” above is compatible with maintaining that firm’s independence.
Based on the Audit Committee’s discussions with management and the external auditors, the
Audit Committee recommended to the Board that the audited consolidated financial statements
be approved and included in Canexus’ annual report for the year ended December 31, 2014.
ADDITIONAL
INFORMATION
The information regarding the Audit Committee required to be disclosed under Form 52-110 is
attached as Schedule “A” to Canexus’ Annual Information Form for the year ended December 31,
2014.
26
2015 Information Circular and Proxy Statement
CORPORATE GOVERNANCE COMMITTEE REPORT
MEMBERS
100% INDEPENDENT
Arthur Korpach, Chair
David Collyer
Stephanie Felesky
Hugh Fergusson
MANDATE
The Committee assists the Board in:
•
Implementing and overseeing corporate governance policies and programs;
•
Recommending nominees for director appointment;
•
Evaluating the Board, its Committees and all individual directors;
•
Recommending Board Committee appointments;
•
Reviewing directors’ and officers’ liability insurance; and
•
Recommending Director compensation to the Board.
KEY ACTIVITIES FOR
2014
•
•
•
•
•
•
•
•
CORPORATE
GOVERNANCE
PRACTICES
Our governance practices are reported in the table in Schedule “A” (page 56) which sets out our
compliance in regard to National Instrument 58-101 – Disclosure of Corporate Governance Practices.
THE BOARD AND
COMMITTEES
The Corporate Governance Committee reviews Board and committee memberships annually,
considering director independence and the skills and preferences of the directors. The Board is
comprised of eight directors, which is large enough to permit a diversity of views and run the
committees, without being so large as to detract from effectiveness. The Corporate Governance
Committee’s review of Board experience indicates that the current skills mix is appropriate.
CORPORATE
GOVERNANCE
COMMITTEE
APPROVAL
The Corporate Governance Committee has reviewed and discussed with management the corporate
governance and director compensation disclosure in this document, including the information in
Schedule “A” Corporate Governance Disclosure, and has recommended to the Board that it be
included in this Circular.
Oversaw CEO search process;
Recommended revisions to the corporate governance policy;
Oversaw Board evaluation process;
Recommended updated mandates for the Board, individual directors and the Board committees;
Oversaw orientation for new directors;
Reviewed the directors’ and officers’ liability insurance policy;
Recommended director compensation, including DSU grants; and
Reviewed succession planning for the Board.
27
2015 Information Circular and Proxy Statement
HUMAN RESOURCES AND COMPENSATION COMMITTEE REPORT
MEMBERS
100% INDEPENDENT
Stephanie Felesky (appointed to the Committee on March 13, 2014, appointed Chair on August
5, 2014)
Hugh Fergusson
Douglas Hayhurst
Richard Ott (was not a member of the Committee from March 6, 2014 until July 2, 2014 while he
served as Interim President and CEO)
MANDATE
The Committee assists the Board in overseeing:
•
Key compensation and human resources policies;
•
CEO and executive compensation; and
•
Executive management succession and development.
KEY ACTIVITIES FOR
2014
•
•
•
•
•
Recommended compensation programs for base salary, annual cash and long-term
incentives;
Recommended salaries and bonuses to the executives;
Assessed CEO performance on short-term and long-term corporate goals and objectives
and recommended CEO compensation, which was approved by the Board;
Reviewed the CEO’s annual objectives; and
Evaluated and approved organizational changes.
SUCCESSION PLAN
AND EXECUTIVE
DEVELOPMENT
The Compensation Committee leads our succession planning process in conjunction with the
CEO, identifying and developing talented individuals from within Canexus as succession
candidates for the positions deemed critical for the success of the Corporation. For key
positions, the Compensation Committee assists with the selection of candidates, development
and performance evaluation, as well as planning for illness, disability and other unscheduled
absences.
INDEPENDENT
CONSULTANTS
The Compensation Committee engaged Hugessen to provide a confidential report and technical
analysis of market data on the CEO’s compensation, in light of Canexus’ operations and
compensation programs. The report included competitive information from a list of peer
companies recommended by Hugessen. Hugessen also prepared or reviewed documents
pertaining to employment of the former CEO, the interim CEO and the current CEO. The
decisions of the Compensation Committee are its responsibility and may reflect factors other
than the information and recommendations provided by Hugessen and management.
Hugessen did not provide any compensation consulting services to management in 2014 and
was first appointed as a consultant in December of 2008. Fees billed by Hugessen in 2013 and
2014 were:
Type of Work
Assessment of Executive Compensation related fees
Billed in 2014
Billed in 2013
$52,187
$75,427
Canexus participated in compensation surveys in Canada and international locations and
purchased select published results. Management’s compensation consultant, Mercer, was paid
$15,122 for services rendered in 2014 related to executive compensation.
HUMAN RESOURCES
AND
COMPENSATION
COMMITTEE
APPROVAL
The Compensation Committee has reviewed and discussed with management the
compensation disclosure in this document, including the information in the Compensation
Discussion and Analysis section on pages 32 through 37, and in the Executive Compensation
section on pages 38 through 49, and has recommended to the Board that it be included in this
Circular.
28
2015 Information Circular and Proxy Statement
®
RESPONSIBLE CARE COMMITTEE REPORT
MEMBERS
100% INDEPENDENT
William McAdam, Chair
David Collyer
Richard Ott
MANDATE
The Responsible Care® ("RC") Committee assists the Board in overseeing the implementation of
programs for the management of Responsible Care®, health, safety, environment and corporate
responsibility. The RC Committee encourages, assists and counsels management in
maintaining and improving performance. The RC Committee reviewed and updated its mandate
in November 2014.
KEY ACTIVITIES FOR
2014
The Committee met quarterly with management to review:
RC performance and improvement opportunities;
•
RC related risk management and audit activities to ensure that key risks were being
•
mitigated and that there was follow-up on audit findings;
RC related public policy updates at both the company and industry level.
•
Overall Safety performance did not meet expectations in 2014. The Committee encouraged and
supported two key improvement areas:
Develop/implement a leading indicators process throughout the organization;
•
Develop a more systematic process for analyzing incident root causes to assist in setting
•
priorities and action plans.
Performance in the Environmental and Transportation areas improved in 2014. Greenhouse gas
emissions continue to trend downward.
Three of the Corporation’s operating sites achieved the following milestones:
Nanaimo: 3 years with zero reportable safety or environmental incidents
•
Beauharnois: 1 year with zero reportable safety incidents and 2 years with zero
•
environmental incidents
Brazil: 2 years with zero reportable environmental incidents.
•
Reviewed developments related to policy issues and regulations for rail transportation of crude
oil and chlorine in Canada and the U.S.
EXTERNAL
RECOGNITION
The Committee oversees the Corporation’s commitment to corporate responsibility. Canexus
continues to strive to be a recognized industry leader in Responsible Care®.
The Corporation was recognized in 2014 for its RC performance as follows:
•
CN’s Safe Handling Award (Gold)
•
Chemistry Industry Association of Canada Responsible Care® re-verification completed
•
North Vancouver and Nanaimo Plants achieved the Occupational Safety Standard of
Excellence (OSSE – formerly COR) certified status. OSSE is British Columbia’s solution for
manufacturers seeking a comprehensive health and safety management system. The
program promotes equally the concept of managing health and safety with other
components necessary for a sustainable business, such as profitability and productivity.
The Corporation maintains a robust emergency response team at all sites and joins local
authorities in emergency planning drills and training exercises.
RC COMMITTEE
APPROVAL
All members of the RC Committee are independent and knowledgeable about our corporate
Responsible Care®, health, safety, environmental, product stewardship and corporate
responsibility programs. The RC Committee has approved this report.
29
2015 Information Circular and Proxy Statement
Letter to Shareholders
A key responsibility of the Compensation Committee is to establish an executive
compensation program that attracts, engages, incents and retains the talent we need to
achieve our strategic objectives while at the same time is aligned with Canexus’ performance
and the interests of Shareholders. Our Compensation Discussion and Analysis beginning on
page 32 describes our compensation philosophy and the objectives of each component of
compensation for our NEOs.
Hugh Fergusson
Board Chair
Stephanie Felesky
Compensation
Committee Chair
2014 was a year of change for Canexus. In January, we reported a significant cost overrun for
the NATO unit train project. In March, Gary Kubera stepped down as President, CEO and
director and we appointed one of our directors, Richard Ott, as Interim President and CEO. In
addition to Mr. Ott’s increased responsibilities and commitment to Canexus, certain Board
members stepped up to oversee the project management of the construction, commissioning
and cost of the NATO facility (as described on page 25) while other Board members undertook
the responsibility of identifying and recommending a new President and CEO to the full Board.
On July 2, 2014, Canexus announced the appointment of R. Douglas Wonnacott as its new
President, CEO and director. Mr. Wonnacott’s biography on page 39 outlines his expertise
and experience, and the section titled “President and CEO Compensation and 2014 Goals”
beginning on page 44 provides details of his objectives and the Corporation’s performance
during 2014.
In developing an employment agreement and compensation package for the new CEO, the
Board considered evolving practices on various elements including payments on termination
without cause and perquisites – see the section titled “Employment Agreements and
Termination Arrangements” beginning on page 57 for more information.
Enhancing the connection between Executive Compensation and corporate performance was
a significant initiative undertaken by the Compensation Committee in 2014 including the
following actions:
•
•
•
•
•
•
Aligning a portion of Mr. Wonnacott’s compensation to Shareholder interests through
performance-based awards (consisting of PSUs and Options).
Recommending to the Board that the granting of all long-term incentives be moved from
November each year to the following March so that the previous year’s corporate
performance could be considered when determining awards.
Adding clawback features to the PSU and RSU Plans (see page 37 for details).
Setting short-term incentive awards for NEOs and employees to reflect 2014
performance.
Establishing the corporate performance factor well below the target of 100% for 2013
(20%) and below target for 2014 (60%) based on company performance and results.
Adopting the RSU Plan, a long-term incentive award, to serve as an additional retention
tool. Payout of the award is tied to the performance of the Corporation’s Shares traded
on the TSX.
Due to the economic climate in Calgary, the Board determined that base salaries for Mr.
Wonnacott and members of the executive team would be held at 2014 levels for 2015.
In 2014, Shareholders overwhelmingly passed our initial say-on-pay vote with an approval
rating of 96.96%. Again this year, we are asking for Shareholder feedback on our approach to
compensation through the second advisory say-on-pay vote at our AGM. We trust that the
material provided in the Compensation Discussion and Analysis and Executive Compensation
sections will provide you with transparent, easy-to-comprehend information. We appreciate the
time you spend understanding and voting on the business of our meeting.
On Behalf of the Board of Directors:
On Behalf of the Compensation Committee:
(Signed) “Hugh A. Fergusson”
(Signed) "Stephanie L. Felesky"
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2015 Information Circular and Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
KEY SECTIONS
PAGE
Compensation Philosophy .......................................................................................................................... 32
Compensation Objectives ........................................................................................................................... 32
Compensation Approval Process ................................................................................................................ 33
Long-Term Incentives ................................................................................................................................. 36
Executive Compensation ............................................................................................................................ 38
Named Executive Officers .................................................................................................................... 38
General Information .............................................................................................................................. 39
Compensation Governance .................................................................................................................. 40
Share performance Graph .................................................................................................................... 41
Summary Compensation Table ............................................................................................................ 42
All Other Compensation ....................................................................................................................... 43
President and CEO Compensation and 2014 Goals ............................................................................ 44
Other NEO Compensation .................................................................................................................... 46
Long-Term Incentive Plan Tables......................................................................................................... 47
Equity Ownership and Changes in 2014 .............................................................................................. 49
Benefit and Pension Plans ................................................................................................................... 49
Employment Agreements and Termination Arrangements ........................................................................ 53
31
2015 Information Circular and Proxy Statement
COMPENSATION DISCUSSION AND ANALYSIS
COMPENSATION PHILOSOPHY
Our policies and practices for executive compensation are linked to both short-term and long-term strategic
business objectives. Our executives’ variable compensation is based on the Corporation’s performance and
individual performance factors, with the weighting determined by the scope of their responsibilities and ability to
influence corporate performance. The overall goal is to target fixed salaried compensation for our executives at
the 50th percentile for North America as compared with compensation levels of peer companies, and variable
incentive compensation based on individual performance and the Corporation’s performance. For geographic
compensation practices, Canexus targets the 75th percentile for Brazil.
Canexus' compensation philosophy is to attract and retain qualified, motivated employees at all levels within
the organization by ensuring that compensation programs:
•
•
•
•
Provide market competitive compensation to foster the attraction and retention of high performing
employees;
Support the achievement of Canexus’ annual and long-term corporate objectives, and the enhancement of
shareholder value;
Reflect Canexus' pay for performance philosophy by delivering a meaningful proportion of total
compensation using variable pay tied to company and individual performance; and
Are consistent with Canexus’ vision, mission and core values, and are applied in a manner that is seen to
be fair and reasonable by employees and other stakeholders.
Executives are compensated in a manner to attract and retain talented leadership focused on managing the
Corporation’s operations, finances and assets. The executive compensation program is comprised of two
categories:
•
•
Base salary, at a level competitive with our comparator group; and
Variable incentive compensation, which consists of an annual cash incentive bonus based on the
individual’s and the Corporation’s performance, a grant of Options pursuant to the Stock Option Plan which
vest over three years and have a five year term, a grant of Performance Share Units pursuant to the
Performance Share Unit Plan which vest three years after the grant date, and a grant of Restricted Share
Units pursuant to the Restricted Share Unit Plan which vest annually over three years.
Individual performance is considered in determining the amount of variable annual incentive compensation
awards. In determining Option, PSU and RSU grants, in addition to individual performance elements, awards
reflect succession and retention priorities. The objective and subjective performance measures used to
evaluate individual performance are aligned with financial and non-financial goals and Shareholder interests.
COMPENSATION OBJECTIVES
The components of the compensation program include: base salary, annual cash incentive and long-term
incentive. At least once each year we assess the competitiveness of these individual components and the
overall compensation program. Our goal in regard to cash compensation is to reward employees in accordance
with our compensation philosophy and to evaluate against our comparator group. Our goal in regard to Option,
PSU and RSU grants is to ensure that such long-term compensation tracks financial performance while
reinforcing the Corporation's attraction and retention imperatives.
32
2015 Information Circular and Proxy Statement
COMPENSATION APPROVAL PROCESS
Management’s Analysis
Recommendations
Decision
The Compensation Committee reviews the various compensation elements both individually and in total to
ensure they align with the program objectives.
Key Elements of Compensation
Element
Base salary
Annual cash incentives
Long-term incentive
Long-term incentive
Long-term incentive
Component
Fixed
Variable
Variable
Variable
Variable
Form
Cash
Cash
Options
PSUs
RSUs
Performance Period
1 year
1 year
1 to 5 years
3 years
3 years
Target Weightings
The Corporation’s compensation programs are designed to meet both performance and competitiveness
objectives which results in actual compensation weighting varying from year to year. In general, the
Corporation’s compensation programs are designed to provide a significant component of executive
compensation in the form of at-risk pay to ensure alignment with Shareholders’ interests. Base salary provides
a competitive foundation considering both internal comparability and external market data. Annual cash
incentives reflect short-term performance of the Corporation as well as individual contribution. Stock Option
grants are intended to reward the executive through the Corporation’s share price performance. PSU grants
are intended to tie a portion of executive compensation to specific performance criteria. RSU grants were
introduced in 2014 to provide a balance of at-risk pay to eligible employees. The actual mix between
compensation elements varies, depending on the executive’s ability to influence short-term and long-term
business results, their level, and competitive local market practices.
Base Salaries
A framework of role levels based on internal comparability and external market data is used to determine
base salaries, considering the individual’s current and sustained performance, skills and potential.
Annual Cash Incentives
The program provides competitive bonus compensation that reflects the Corporation’s overall performance
and that of the individual, and provides cash compensation that is at-risk and dependent upon the
achievement of specific business and operating objectives within one year.
33
2015 Information Circular and Proxy Statement
Benchmark Review (CEO)
In assessing the relative positioning of the CEO, the Compensation Committee retains the services of its own
independent executive compensation consultant, Hugessen, to provide external market data and commentary.
Two peer groups (Canadian and U.S.) are considered in the evaluation of the CEO’s compensation. The peer
groups are a representative group of companies of comparable size, complexity and broad industry focus
balanced in terms of number of companies larger and smaller than Canexus based on market capitalization,
total enterprise value, total assets, and revenue. The groups also include organizations listed on US exchanges
within the chemical industry. Given the similar positions across the industry, the surveys effectively represent
competitive pay levels.
The composition of our peer groups is reviewed annually by Hugessen, Mercer and the Compensation
Committee for continued relevance. The CEO peer group, together with the NEO peer group, can be found
below.
2014 Canadian Peer Group
Ainsworth Lumber
Atrium Innovations Inc.
Canadian Energy Services & Tech
Canfor Pulp Limited
Canyon Services Group Inc.
Chemtrade Logistics
CCL Industries Inc.
Intertape Polymer Group Inc.
Newalta Corp
Norbord Inc.
Pason Systems Inc.
Savanna Energy Services Corp.
Secure Energy Services Inc.
Stella-Jones Inc.
Trinidad Drilling Ltd.
Veresen Inc.
Winpak Ltd.
CEO
●
●
●
●
●
●
●
●
Other
NEOs
●
●
●
●
●
●
●
●
●
●
●
●
●
●
2014 US Peer Group
Balchem Corp.
Calgon Carbon Corp.
Flotek Industries Inc.
Futurefuel Corp.
Hawkins Inc.
Innophos Holdings Inc.
Innospec Inc.
Koppers Holdings Inc.
Kraton Performance Polymers Inc.
LSB Industries Inc.
Omnova Solutions Inc.
Quaker Chemical Corp.
Tredegar Corp.
Zep Inc.
CEO
●
●
●
●
●
●
●
Other
NEOs
●
●
●
●
●
●
●
●
●
●
●
●
●
●
Market Data (Other NEOs)
In determining base salary, annual cash and long-term incentives for the Corporation’s other executives, the
Compensation Committee considers recommendations prepared by management.
Two peer groups
(Canadian and U.S.) are used to review the competitiveness of compensation levels for Canexus’ other NEOs.
The Compensation Committee then makes recommendations on all executive payments and grants to the
Board. Typically, this process begins in the fall and concludes with total compensation being approved the
following March.
The Compensation Committee reviews all compensation programs to ensure we continue to attract and retain
high-performing employees needed to achieve our business objectives, while demonstrating long-term fiscal
responsibility to Shareholders. The decisions made by the Compensation Committee are the responsibility of
that Committee and may reflect factors and considerations other than the information and recommendations
provided by the independent consultants.
34
2015 Information Circular and Proxy Statement
2014 Annual Incentive Measures
The Board, at the recommendation of the Compensation Committee, approves the corporate factor that
determines the cash pool available for annual cash incentives after reviewing objective and subjective
performance measures, and may increase or decrease the total cash available for these awards and their
distribution at its discretion. The corporate factor may range from 0 to 200%. The corporate factors used were
80% in 2012, 20% in 2013 and 60% in 2014 based on corporate performance in each year against corporate
objectives as well as individual performance.
The factor is determined by the Board after a thorough review of the Corporation's financial results and nonfinancial criteria, including Responsible Care® performance, cash dividends, gross margins, SG&A spending
and specific goals related to key strategic initiatives. For 2014, these objectives were weighted Responsible
Care® Performance (20%), Financial Performance (50%), and Strategy Implementation (30%).
2014 Objective Performance Measures (70%)
Measure
Target
Result
1. Responsible Care
(11.5% of 20%)
For the chemicals business, 0.70 annual RIR rate;
For the NATO Site, 3.5 annual RIR rate;
Progress on Mission Zero goals
Chemicals RIR = 2.22
NATO RIR = 3.41
Progress achieved on Mission Zero goals
2. Financial Metrics
(34.5% of 50%)
Meet target operating cash; and
distributable cash targets based on AOP assumptions;
SG&A at or below target before 1x costs
$94.0 million vs. a target of $107.6 million
$36.0 million vs. a target of $31.2 million
$43.0 million vs. a target of $46.0 million
2014 Subjective Performance Measures (30%)
The Compensation Committee subjectively considers business metrics commonly used in the chemicals
industry. They include, among other things, Share performance, production volumes, safety and environmental
incidents, transportation incidents, customer satisfaction, and strategy implementation to achieve strategic
growth of the Corporation. The Compensation Committee also assesses costs, including business
development, manufacturing and operating, and administrative. The business metrics are assessed against
objectives in light of the Corporation’s external environment and current business circumstances, including key
projects and initiatives critical to the Corporation’s success. Both absolute performance and performance
relative to peers are reviewed. The Compensation Committee also considers management’s assessment of the
Corporation’s performance and progress against the strategic plan. The Compensation Committee exercises its
discretion in assessing the Corporation’s overall performance and may increase or decrease the total cash
available for these awards, and may take into consideration additional factors, including how long the
incumbent executive has been in the position.
From an organizational development perspective, progress was made in 2014 to renew, advance and support
the ongoing requirements of the Corporation. Following a four-month search, on July 2, 2014, Mr. R. Douglas
Wonnacott was appointed as our new President, CEO and as a director. With over 30 years of chemicals
industry experience, Mr. Wonnacott is a seasoned industry leader with a proven track record in building strong
organizations similar in size and scope as Canexus. Additional changes to the management team were made
over the course of 2014 to streamline operations and to recognize individuals making valuable contributions
towards the success of strategic projects.
In January 2014, the Corporation reported a significant cost overrun for the NATO unit train project and
additional cost overruns were identified mid-year. The total cost overruns exceeded budget by over 50%. The
Corporation’s main focus in 2014 was completion of the project. Under the oversight of the Board and the
Audit Committee, management achieved its goal of substantial completion of the second and third phases of
the project by the end of August, 2014 and commissioning of the unit train facility commenced in September,
2014.
Positive steps were taken on several key projects in 2014, including the initiation of a project to modernize the
caustic manufacturing facility at the North Vancouver facility, and negotiation of commercial contracts for the
NATO unit train and manifest businesses.
Considering these and other factors, Strategy Implementation was determined to be 14% of 30%.
35
2015 Information Circular and Proxy Statement
For 2014, the Compensation Committee considered that the Corporation’s overall performance factor was 60%
of target.
The pool available for annual cash incentives is allocated to employees and executives based on individual
target levels and performance. The targets for individual awards rise as job responsibilities increase so that the
ratio of at-risk versus fixed compensation is higher for increased levels of responsibility. Individual NEO target
levels and their individual and corporate performance weightings used in the determination of their individual
awards are identified in the following table.
2014 Annual Incentive Targets Percentage of Salary(1) and Performance Weighting
Position
Minimum
Target
Maximum
Corporate
Performance (3)
Individual
Actual
(%)
Actual
($) (2)
75,000
Wonnacott (6)
0%
50%
100%
100%
0%
30
McLellan
0%
45%
90%
80%
20%
27
83,900
Bourgeois
0%
45%
90%
80%
20%
26
75,058(4)
dos Santos
0%
35%
70%
80%
20%
21
67,059(5)
Lacara
(7)
0%
45%
90%
80%
20%
0
0
Ott (8)
-
-
-
-
-
-
0
Kubera (9)
-
-
-
-
-
-
0
Notes:
1. Reflects percentage of base salary on December 31, 2014.
2. The Canexus Annual Incentive Plan payment is based on performance in the reporting year and paid in the following year.
3. Corporate Performance means how the business has performed overall, not a reference to the Share price.
4. The exchange rate used to convert US dollars to Canadian dollars at the end of the year is the December 31, 2014 rate of
$1.1601
5. The exchange rate used to convert Brazilian Reais to Canadian dollars at the end of the year is the December 31, 2014 rate of
$0.4363.
6. Mr. Wonnacott was appointed President, CEO and a director of the Corporation on July 2, 2014.
7. Mr. Lacara served as Senior Vice President, Operations until his departure on December 31, 2014.
8. Mr. Ott served as Interim President and CEO from March 6, 2014 until July 2, 2014. He did not participate in any incentive
plans for employees during this time.
9. Mr. Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014.
LONG-TERM INCENTIVES
The Long-Term Incentive Program is a key component of Canexus’ overall compensation strategy. Awards are
intended to provide eligible employees with an opportunity to participate in the company’s growth and
development through equity based incentives that are aligned with the interests of our Shareholders. Canexus
has three components to its long-term incentive program – the Stock Option Plan, Performance Share Unit
Plan and Restricted Share Unit Plan. Long-term incentives are granted to officers and employees whose
actions can most directly impact our business results. All long-term incentive awards are recommended by the
Compensation Committee and approved by the Board. In 2014, the Board determined that the granting of
long-term incentive awards would be moved from November each year to the following March so that the
previous year’s corporate performance could be considered when determining awards; except for on-hire
grants, no long-term incentive awards were granted in 2014. Now Canexus will determine NEO total
compensation decisions with a full understanding of the prior year results.
Stock Options
Under Canexus' Stock Option Plan, Options to acquire Shares are granted to officers, employees and other
eligible service providers as the Board of Directors determines. Directors are not entitled to participate in the
Stock Option Plan. In the past, the Board also granted dividend equivalents (known as Bonus Rights) at the
time of the grant of Options. Bonus Rights are accumulated at the same rate as cash dividends paid on the
Shares and may be redeemed on or after the date of exercise of Options for additional Shares. Bonus Rights
were not granted with Options in 2014 and it is the intent of the Board that Bonus Rights will not be granted in
the future.
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2015 Information Circular and Proxy Statement
In determining the number of Options to grant each year, the Compensation Committee considers the
program’s dilutive impact on issued Shares, market information on options and other forms of long-term
incentives, and previous grants awarded to employees. Market information also determines the extent
to which employees at different levels participate in the program.
Canexus has an “evergreen” Stock Option Plan whereby a maximum of 9% of the issued and outstanding
shares are reserved for issuance under the plan. The exercise price of the Options is set at the time of the
grant and must be no less than the five day weighted average trading price immediately preceding the date that
the Options were granted. The maximum term of the Option grant is five years. Specific details of Canexus'
Stock Option Plan can be found in Schedule “E” (page 75).
As at December 31, 2014 the year-end dilution level of Options as a percentage of Shares outstanding was
2.67%. The 2014 grant rate for Options as a percentage of Shares outstanding was 0.13% (240,000 Options
granted in 2014 and 184,415,367 Shares issued and outstanding as at December 31, 2014).
2014 Option Exercises
Total Options Exercised
Total Bonus Rights Exercised
Total Options Cancelled
346,696
145,511
1,579,344
Performance Share Units
Performance Share Units are an equity-based performance award typically granted to officers and employees
whose actions can most directly impact the Corporation’s business results. PSUs are settled in cash and are
therefore non-dilutive to Shareholders. PSUs vest and are paid three years after the grant date based on a
performance factor set by the Board. Awards granted in 2014 will pay out at a value between 50% and 150%
contingent upon Canexus’ performance relative to the S&P Chemical Index total shareholder return. Dividend
equivalents in the form of additional PSUs are accumulated at the same rate as cash dividends paid on the
Shares. The PSU Plan has a clawback feature where any incentive compensation paid under the plan to an
executive officer is subject to clawback when awards were based on the achievement of financial results that
were subsequently materially revised or restated. In determining the number of PSUs to grant each year, the
Compensation Committee considers other forms of long-term incentives and previous grants awarded to
officers and employees.
Restricted Share Units
On August 6, 2014, the Board approved a Restricted Share Unit Plan for use as another retention tool. RSUs
are equity-based awards intended to be offered to eligible employees at the managerial level and below.
Officers and senior management also receive a weighting of RSUs in their overall long-term incentive mix.
RSUs are non-dilutive to Shareholders as they are settled in either cash or market-bought Shares; the form of
settlement is determined at the time of grant. RSUs vest at a rate of one-third each year for three years and
are settled at each annual vest date. Dividend equivalents in the form of additional RSUs are accumulated at
the same rate as cash dividends paid on the Shares. The RSU Plan has a clawback feature where any
incentive compensation paid under the plan to an executive officer is subject to clawback when awards were
based on the achievement of financial results that were subsequently materially revised or restated. In
determining the number of RSUs to grant each year, the Compensation Committee plans to consider other
forms of long-term incentives and previous grants awarded to officers and employees.
37
2015 Information Circular and Proxy Statement
EXECUTIVE COMPENSATION
NAMED EXECUTIVE OFFICERS
Canexus’ named executive officers (executives or NEOs) include three individuals who served as the CEO in
2014, the CFO and the next three highest paid officers for the year ended December 31, 2014. See the
Summary Compensation Table on page 42 for details.
R. Douglas Wonnacott
President and Chief Executive
Officer
from July 2, 2014
Calgary, Alberta, Canada
R. Douglas Wonnacott was appointed President, CEO and as a director on
July 2, 2014. Doug Wonnacott has served in a variety of senior executive
positions and has over 30 years of experience in the chemical industry. He is a
results-oriented leader with extensive experience in strategic planning,
marketing, production, logistics and supply chain management, and terminal
operations. Prior to his appointment at Canexus, Doug was the Chief
Operating Officer of Agri-Products at Viterra Inc., a global agribusiness
company. His career began in the chemical industry and for over three
decades he held progressively more senior roles with CIL Inc., ICI Plc.
(President ICI Explosives USA Inc.), El Dorado Chemical Company
(President), and Agriliance LLC (Vice President of Supply and Logistics and
Vice President and Director, Crop Nutrients).
Doug holds a Bachelor of Arts Degree in Economics from the University of
Western Ontario and an MBA in Marketing and International Business from the
Richard Ivey School of Business Administration at the University of Western
Ontario.
Prior to joining Canexus (formerly the Fund and Nexen Chemicals) Rich
McLellan held several senior positions within Nexen including Controller within
Nexen’s International Division, Vice President of Finance in Yemen, and Vice
President of Business Development for the International Division. Prior to
1996, he was a partner with Arthur Anderson & Co.
Rich graduated from the University of Saskatchewan with a Bachelor of
Commerce in 1981 and is a Chartered Accountant.
Richard T. McLellan
Senior Vice President, Finance
and Chief Financial Officer
Calgary, Alberta, Canada
Brian Bourgeois was appointed Vice President Sales and Marketing of
Canexus (and its predecessor, the Fund) in September 2005, having started
with Nexen Chemicals in 2004. Brian was appointed Senior Vice President in
May 2010. Prior to Joining Nexen Chemicals, he worked for PPG Industries,
Chemicals Division as Director of Sales & Marketing Chlor-Alkali, as well as for
Iron Age Corporation as Vice President National Accounts.
Brian P. Bourgeois
Brian graduated from Tulane University with a Bachelor of Science degree in
Chemical Engineering and has extensive chemical industry experience in
manufacturing, and sales and marketing roles.
Senior Vice President,
Sales and Marketing
Houston, Texas, USA
38
2015 Information Circular and Proxy Statement
Péricles dos Santos was appointed Managing Director, South America in
August 2005 concurrent with Canexus’ (and its predecessor, the Fund’s) initial
public offering. He joined Nexen Chemicals in 2002 as Managing Director,
Nexen Quimica do Brasil Ltda. and is responsible for leading our South
American sodium chlorate and chlor-alkali businesses. Prior to joining Nexen
Chemicals, he worked for 20 years for Monsanto Company in various
assignments in Brazil and the US, including Director of Engineering, Director
of Competitive Strategy and Director of Manufacturing Operations.
Péricles dos Santos
Managing Director,
South America
Sao Paulo, Brazil
Angelo (Andy) Lacara, Jr.
Former Senior Vice
President, Operations until
December 31, 2014
Houston, Texas, U.S.A.
Richard A. Ott
Former Interim President and
Chief Executive Officer from
March 6, 2014 until
July 2, 2014
Houston, Texas, U.S.A.
Gary L. Kubera
Former President and Chief
Executive Officer until
March 6, 2014
Houston, Texas, U.S.A.
Péricles received a Bachelor of Science, Chemical Engineering from
Mackenzie University, a Masters degree in Industrial Administration from Sao
Paulo University, both in Sao Paulo, Brazil, and completed the Executive
Development Program at Kellogg Graduate School of Management,
Northwestern University, Illinois.
Andy Lacara joined Canexus (and its predecessor, the Fund) in February of
2009 as Vice President, Manufacturing. He was Senior Vice President,
Operations from May 6, 2010 until his departure on December 31, 2014.
Richard Ott, a director of the Corporation since December 2012, served as
Interim President and CEO of Canexus from March 6, 2014 until July 2, 2014.
Gary Kubera was President, CEO and a director of Canexus (and its
predecessor, the Fund) from June 24, 2005 until March 6, 2014.
GENERAL INFORMATION
Other Officers of the Corporation
Dean R. Beacon
Vice President, Strategy, Risk and Business Development
Karen D.W. Bost
Vice President, Corporate Services (until December 31, 2014)
Diane J. Pettie
Vice President, General Counsel and Corporate Secretary
J. Grant Van Shaik
Vice President, North American Terminal Operations
Compensation Exchange Rate
Unless otherwise noted, the exchange rate used to convert US dollars to Canadian dollars is the 2014 average
rate of $1.0971. The exchange rate used to convert Brazilian Reais to Canadian dollars is the 2014 average
rate of $0.4716. Unless otherwise noted, all figures are in Canadian dollars.
39
2015 Information Circular and Proxy Statement
COMPENSATION GOVERNANCE
Managing Compensation and Risk
Canexus’ compensation policies and practices encourage behaviors which align and support the long-term
interests of the Corporation and our Shareholders. Our programs and practices do not reward excessive risk
taking, however, we recognize that some level of risk taking is necessary to achieve outcomes that are in
Shareholders’ best interests. Our Compensation Committee oversees risk management on behalf of the
Board in the context of its compensation planning role. We have a number of mitigating strategies to limit
compensation related risks including:
•
•
•
•
•
•
A personal scorecard with multiple performance goals is used to determine short-term incentive payouts.
This balances the risks associated with relying on any one performance factor.
Senior management short-term incentive payouts are reviewed and approved by the Board. All other shortterm incentive payouts go through a detailed calibration process by the senior management team prior to
approval for payout. This mitigates the risk of inconsistencies within specific areas.
Greater weighting on long-term incentives mitigates the risk of achievement of short-term goals at the
expense of long-term sustainability and shareholder value. All long-term incentive awards are reviewed
and approved by the Board.
Both the PSU and RSU Plans have a clawback feature where any incentive compensation paid under the
plans to an executive officer is subject to clawback when awards were based on the achievement of
financial results that were subsequently materially revised or restated.
Mandatory share ownership requirements for senior management discourage the attainment of short-term
goals at the expense of long-term corporate objectives.
Our total annual short-term incentive pool is based on performance against a balanced scorecard of
corporate objectives relating to quantitative and qualitative measures in three categories. This
diversification mitigates the risk associated with any single performance factor. The three categories are:
Responsible Care® results, financial results and the implementation of strategy against initiatives defined in
our multi-year strategic plan.
Trading in Securities
Canexus’ Trading in Securities Policy, a copy of which can be accessed on our website at www.canexus.ca,
prohibits the Corporation’s directors, NEOs and any other insiders from taking any speculative positions in any
Canexus securities. Speculative positions include the use of puts or calls, collars, spread bets, and contracts
for difference, engaging in shortselling (i.e. selling securities not owned or not fully paid for), or taking any
other derivative positions of any kind which would give effect to the foregoing.
SHARE PERFORMANCE GRAPH
The graph below compares the performance of the Shares over the last five years (including the reinvestment
of distributions and/or dividends) to the performance of the S&P/TSX Composite Index. It shows what $100
invested in Fund Units/Shares beginning on January 1, 2010 would be worth at the end of each of the last five
years.
In 2014, the trend in executive compensation tracked lower than in previous years after excluding the 2014
one-time termination payments. This was due in part to the following reasons – during 2014, short-term
incentive awards were either not awarded or well below target and the awarding of long-term incentives was
deferred to 2015 so that corporate performance for all of 2014 could be considered when determining grants.
These decisions follow the executive compensation design objective that salaries and short-term and long-term
incentives paid or awarded to NEOs track the Corporation’s performance results for the related period.
40
2015 Information Circular and Proxy Statement
Executtive Compe
ensation vs.. Market Re
eturns
10.0
200.00
190.00
9.0
180.00
160.00
Executive Compensation in Millions
150.00
7.0
140.00
130.00
6.0
120.00
110.00
5.0
100.00
90.00
4.0
80.00
70.00
3.0
60.00
50.00
2.0
40.00
3.6
3.1
3.6
3.4
3
3.0
30.00
1.0
20.00
Value of $100 Invested on January 1, 2010
170.00
8.0
10.00
0.0
0.00
2009/12/31
2010/12/31
2011/12/31
Executive Comp
2012/12/31
2
20 13/12/31
Ca
anexus / Fund
2014
4/12/31
2015/03/06
S&P/TSX Co
omp Index
Total Shareholder
S
Return Com
mparison Ind
dex
(J
January 1, 20
010 to Decem
mber 31, 2014
4)
Comments
s:
1. The bar chart shows
s
the trend in total compens
sation paid to ourr NEOs over the same period.
c
as
s the Corporation
n (and the Fund prior to the Arran
ngement Transa
action) disclosed in prior
2. Includes total compensation
information circ
culars. Total com
mpensation inclu
udes salary, shorrt-term incentive bonus, stock op
ptions (valued ass of the
grant date usin
ng the Black-Sch
holes model), PS
SUs, RSUs, ann
nual pension serrvice costs and a
all other compen
nsation,
including any perquisites. Total compensatio
on for 2014 doess not include on
ne-time termination payments m
made to
former NEOs.
e five years the positions repres
sented by the N EOs have chan ged, due to cha
anges in the exe
ecutives
3. Throughout the
filling the execu
utive positions. The
T table therefore represents tottal compensation
n:
•
•
•
•
•
In 20
010, for Messrs. Kubera, McLella
an, Bourgeois, do
os Santos and La
acara.
In 20
011, for Messrs. Kubera, McLella
an, Bourgeois, do
os Santos and La
acara.
In 20
012, for Messrs. Kubera, McLella
an, Bourgeois, do
os Santos and La
acara.
In 20
013, for Messrs. Kubera, McLella
an, Bourgeois, do
os Santos and La
acara.
In 20
014, for Messrs. Wonnacott, McL
Lellan, Bourgeoiss, dos Santos, La
acara, Ott and Kubera.
SUMMAR
RY COMPENSATION TABLE
The follow
wing table setts forth inform
mation concerning the totall compensatio
on paid to thrree individualss who
served as the Presidentt and Chief Ex
xecutive Office
er during 2014
4, the Senior V
Vice President, Finance and
d Chief
t
other NEO
Os for the ye
ears ended D
December 31, 2012, Decem
mber 31, 2013 and
Financial Officer, and the
n dollars.
d in Canadian
Decemberr 31, 2014. All dollar amounts in the table are expressed
41
2015 Inform ation Circular a
and Proxy Stattement Non-Equity Incentive
Plan Compensation
($)
Name and Principal Position
R. DOUGLAS WONNACOTT
Year
(10)
President and CEO
(1)
Salary
($)
ShareBased
Award
(2)
2014
255,769
300,100
2013
N/A
N/A
N/A
OptionBased
(3)
Awards
($)
Annual
Incentive
(4)
Plans
LongTerm
Incentive
Plans
Pension
Value
All Other
Compensation
($)
($)
Total
Compensation
($)
110,948
75,000
N/A
17,151
13,846
772,814
N/A
N/A
N/A
N/A
N/A
N/A
(5)(6)(7)(8)
(9)
2012
N/A
N/A
N/A
N/A
N/A
N/A
N/A
RICHARD T. MCLELLAN
2014
321,133
0
0
83,900
N/A
59,000
38,468
502,501
Sr. VP, Finance and CFO
2013
300,818
49,887
116,466
0
N/A
92,000
37,249
596,420
2012
287,572
35,461
85,530
106,600
N/A
66,000
36,454
617,617
BRIAN P. BOURGEOIS
2014
272,051
0
0
75,058
N/A
51,664
21,942
420,715
Sr. VP, Sales and Marketing
2013
244,883
39,765
91,650
22,761
N/A
52,591
20,474
472,124
2012
227,646
35,461
85,530
80,288
N/A
46,454
20,046
495,425
PÉRICLES DOS SANTOS
2014
341,565
0
0
67,059
N/A
30,542
22,300
461,466
Managing Director
2013
332,683
39,765
81,921
22,609
N/A
33,316
38,767
549,061
2012
346,912
26,723
38,589
95,043
N/A
34,543
46,059
587,869
2014
295,336
0
0
0
N/A
41,105
373,833
710,274
2013
267,989
42,657
98,841
0
N/A
26,498
23,777
459,762
2012
248,769
44,324
85,530
89,000
N/A
17,414
34,126
519,163
RICHARD A. OTT (12)
2014
275,962
N/A
N/A
N/A
N/A
N/A
N/A
275,962
Former Interim President
2013
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
and CEO
2012
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
2014
113,719
0
0
0
N/A
88,050
1,745,419
1.947,188
2013
551,223
155,445
423,000
0
N/A
134,605
21,493
1,285,766
2012
493,286
149,940
384,215
258,674
N/A
107,695
21,545
1,415,355
South America
ANGELO (ANDY) LACARA JR.
Former Sr. VP, Operations
GARY L. KUBERA
(13)
Former President and CEO
(11)
Notes:
1.
2.
3.
4.
5.
6.
There were 27 bi-weekly pay periods in 2014 (26 bi-weekly pay periods in 2013 and 2012) which resulted in salaries for some of the NEOs
appearing higher than in previous years. Additionally, due to fluctuating foreign exchange rates year-to-year, the salaries for Messrs. Bourgeois
and Lacara, who were paid in US dollars, appear higher in 2014 than in the previous year. Messrs. Ott and Kubera were also paid in US dollars.
We calculate the grant date fair value of PSUs and RSUs using a 20 day volume weighted average of the Shares. The actual value realized will
depend on the Canexus share price at the time of vesting and the actual relative performance against a comparator group.
The grant date fair value (“GDFV”) reflects the estimated fair value calculated using the Black-Scholes option pricing model which is consistent
with the fair value determined in accordance with “IFRS 2 Share-Based Payment” issued by the International Accounting Standards Board. The
key inputs and assumptions required for this model include the current market price of the Shares, the exercise price of the Option, the expected
Option term, the risk-free interest rate, the expected annual dividend per Share and volatility of the Share price. The expected annual dividend
per Share is assumed to be zero as a result of an Option holder’s entitlement to receive dividend equivalents (notional “Bonus Shares”). The
actual value realized will depend on the Share price at the time of Option exercise. There were no amendments to the exercise price of Options
in 2014. The following outlines the assumptions used to calculate the GDFV using the Black-Scholes model for 2014, 2013 and 2012 option
grants:
Assumptions
Estimated Hold Period Prior to Exercise Year
2014
3.77
2013
3.78
2012
3.81
Expected Volatility in the Price of Shares
Expected Annual Dividend per Share
Risk-Free Interest Rate (%)
Exercise Price
29.3
8%
0.99
5.00
22.9
0
1.39
7.16
23.1
0
1.20
8.50
The Canexus Annual Incentive Plan payment is based on performance in the reporting year and paid in the following year. The exchange rate
used is the December 31, 2014 end of year rates for Brazilian Reais and US Dollars. The exchange rate to convert Brazilian Reais to Canadian
dollars is the rate of $ 0.4363. The exchange rate used to convert US dollars to Canadian dollars is the rate of $1.1601.
Mr. McLellan participated in the Canadian defined benefit pension plan.
Messrs. Bourgeois, Lacara and Kubera participated in U.S. qualified and non-qualified retirement plans.
42
2015 Information Circular and Proxy Statement
7.
8.
9.
10.
11.
12.
13.
Mr. dos Santos participated in a Brazilian defined contribution pension plan.
Mr. Lacara participated in the Canadian defined contribution plan until June 2013 when he relocated from the Calgary office to the U.S. office.
He participated in the U.S. qualified and non-qualified retirement plans for the balance of 2013 and 2014.
More detailed information is found in the “All Other Compensation” table below.
Mr. Wonnacott was appointed President, CEO and a director of the Corporation on July 2, 2014. None of Mr. Wonnacott’s compensation is
associated with his role as a director. Mr. Wonnacott was granted a combination of Stock Options, PSUs and RSUs in 2014. No other NEO was
granted any long-term incentive awards in 2014.
Mr. Lacara was Senior Vice President, Operations until his departure on December 31, 2014. Pursuant to his employment agreement with the
Corporation, Mr. Lacara received compensation in connection with his departure. See “All Other Compensation” and “Employment Agreements
and Termination Arrangements – 2014 Termination Arrangements” below.
Mr. Ott served as Interim President and CEO from March 6, 2014 until July 2, 2014. Mr. Ott did not participate in long-term incentive programs
for employees or receive pension benefits while he served in this interim role. Mr. Ott did not receive director’s fees while he served as Interim
President and CEO.
Mr. Kubera was a director of the Corporation until March 6, 2014. None of Mr. Kubera’s compensation is associated with his role as a director.
Mr. Kubera was paid in US dollars. Mr. Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014. Pursuant
to his employment agreement with the Corporation, Mr. Kubera received compensation in connection with his departure. See “All Other
Compensation” and “Employment Agreements and Termination Arrangements – 2014 Termination Arrangements” below
ALL OTHER COMPENSATION
The total value of perquisites provided to each executive is noted in the table below. In certain cases,
the value achieved at least 10% of the executive’s total annual salary, or exceeded $50,000.
All Other Compensation
Name
Wonnacott (4)
McLellan
Bourgeois
dos Santos
Lacara (5)
Ott (6)
Kubera (7)
2014
2013
2012
2014
2013
2012
2014
2013
2012
2014
2013
2012
2014
2013
2012
Car
Allowance
&/or
Expenses
$
N/A
N/A
N/A
19,200
19,200
19,200
15,798
14,741
14,433
18,861
35,315
37,150
15,798
16,985
19,200
Savings
Plan(2)
$
13,846
N/A
N/A
19,268
18,049
17,254
0
0
0
0
0
0
0
6,792
14,926
Postretirement
Benefits(3)
$
0
N/A
N/A
0
0
0
6,144
5,733
5,613
0
0
0
0
0
0
Termination
Payments (8)
$
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
358,035
N/A
N/A
Other
Perquisites
$
0
N/A
N/A
0
0
0
0
0
0
3,439
3,452
8,909
0
0
0
2014
2013
2012
2014
2013
2012
N/A
N/A
N/A
2,633
14,741
14,433
N/A
N/A
N/A
0
0
0
N/A
N/A
N/A
6,144
5,733
5,613
N/A
N/A
N/A
1,736,389
N/A
N/A
N/A
N/A
N/A
253
1,019
1,498
Year
Total all other
Compensation
$
13,846
N/A
N/A
38,468
37,249
36,454
21,942
20,474
20,046
22,300
38,767
46,059
373,833
23,777
34,126
N/A
N/A
N/A
1,745,419
21,493
21,545
Notes:
1. Mr. dos Santos is paid in Brazilian Reais. His salary fluctuates year-to-year as a result of differing foreign exchange rates.
2. Messrs. Wonnacott and McLellan participate in an employee savings plan available to all Canadian employees. Mr. Lacara
participated in the Canadian employee savings plan until July 2013.
3. Post-retirement benefits for specific U.S. employees and former employees, including Messrs. Bourgeois, Lacara and Kubera
were instituted at the time of the Fund’s initial public offering.
4. Mr. Wonnacott was appointed President, CEO and a director of the Corporation on July 2, 2014.
5. Mr. Lacara was Senior Vice President, Operations until his departure on December 31, 2014.
6. Mr. Ott served as Interim President and CEO from March 6, 2014 until July 2, 2014.
7. Mr. Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014.
8. More detailed information is found under “Employment Agreements and Termination Arrangements – 2014 Termination
Arrangements” below.
Changes in Compensation Arrangements in 2014
The Corporation introduced a Restricted Share Unit Plan in 2014. No additional compensation or benefit
programs were introduced in 2014 for Canexus' NEOs. The compensation paid to executives in 2014 is
consistent with our philosophy and objectives of targeting fixed compensation at or near the 50th percentile in
43
2015 Information Circular and Proxy Statement
North America and at or near the 75th percentile in Brazil as detailed on page 32. Variable compensation links
business results and the executives’ performance, consistent with our pay-for-performance philosophy.
In the years previous to 2014, long-term incentive awards were granted annually in the fourth quarter. In 2014,
the Board agreed to change the annual grant date of long-term incentives to the first quarter so that the
previous year’s corporate performance could be a factor in determining awards. The move also aligns longterm incentive awards with Canexus’ base pay program and short-term incentive awards, which are also
determined in the first quarter.
Changes in Pension Obligations
The Pension Value Tables beginning on page 51 show the year-to-year change in pension obligations. The
value reflects the employer service cost, plus any changes in obligations resulting from compensation
increases over actuarial assumptions. Actual compensation changes may vary from the assumed rate of
compensation increase and will vary for each executive from year-to-year. These values differ from the
Pension benefit reported on page 51, which discloses estimated values of annual pension benefits earned to
date, as well as at age 60 (the earliest unreduced retirement age). They also differ from the termination values
reported under the change of control agreements beginning on page 54, which include additional lump sum
pension benefits which would be provided if a change of control occurs.
PRESIDENT AND CEO COMPENSATION AND 2014 GOALS
Following a four-month search, on July 2, 2014, Mr. R. Douglas Wonnacott was appointed as our new
President, CEO and director. Proposed compensation arrangements for Mr. Wonnacott were developed by
members of the Board assisted by Hugessen, and were reviewed and approved by the entire Board. In
determining Mr. Wonnacott’s compensation, the Board set the following objectives that such compensation was
meant to achieve:
•
•
•
•
Supporting the successful transition of leadership to achieve business success for Canexus;
Aligning with shareholder interests and good compensation governance practices;
Targeting base compensation at the 50th percentile; and
Setting short and long-term incentives to foster the achievement of strategic goals.
The President and CEO has responsibility to provide leadership to the Corporation in setting and achieving
goals that create value for the Shareholders over the short and long term. Competitive compensation
information for the President and CEO is determined based on the independent compensation consulting firm
Hugessen, and assessments of the Canadian and U.S. peer comparator groups referred to on page 34, which
compare similar positions in chemicals and industrial companies. Target total cash compensation (base salary
plus incentive bonus) is competitive within the 50th percentile range of the peer reference comparator group.
CEO compensation is approved by the independent directors of the Board after reviewing and discussing the
recommendation from the Compensation Committee. In arriving at its recommendations, the Compensation
Committee reviews the Hugessen assessment, the performance of the Corporation and the CEO and the data
from the Canadian and U.S. peer reference comparator groups. Specifically, Mr. Wonnacott’s goals since his
appointment in mid-2014 were to:
•
•
•
•
For the Chemical business, achieve equal to or better than industry performance in Responsible Care®;
For the NATO facility, achieve an improved performance in Responsible Care® over 2013;
Meet target operating cash and distributable cash goals (based on plan assumptions); and
Achieve certain other key strategy implementation initiatives.
Under Mr. Wonnacott’s leadership, the Corporation completed a strategic review of its processes, portfolio and
business plan and identified opportunities for improvement. Based on the results of the review, Mr. Wonnacott
crafted a new vision for the Corporation and a detailed plan to improve operational, financial and safety
performance. Major initiatives that were completed in the last six months of 2014 under Mr. Wonnacott’s
leadership included commissioning the NATO facility, restructuring of the organization, initiating an asset sale
process, evaluating plant and head office operations and settling a dispute over pipeline connection
rights. Other significant programs were initiated that will be executed in 2015 and beyond.
44
2015 Information Circular and Proxy Statement
Responsible Care® Performance
In 2014, the Chemicals business reported a combined Recordable Injury Rate (“RIR”) of 2.22 (employees and
contractors combined) in Responsible Care® performance. We did not meet our goal of achieving equal to or
better than industry performance, which was targeted to be 0.70 RIR. There was improvement in Responsible
Care® performance at the NATO facility in 2014; the Corporation’s RIR combined rate for employees and
contractors was 3.41 RIR in 2014 versus 3.5 RIR in 2013.
The Mission Zero initiative, launched in 2007, continued in 2014 to focus on critical activities that support
improving the Corporation’s Responsible Care® performance. As part of its Mission Zero initiative, Canexus
held its first annual company-wide safety week in May of 2014. Canexus successfully completed its seventh
CIAC Responsible Care® re-verification and is one of the first companies to have completed seven. No
adverse findings were identified in the re-verification and six opportunities for improvement were noted. A key
Responsible Care® initiative in 2014 was the development of leading indicators, the intent of which was to
reduce the number and severity of incidents.
The Nanaimo facility achieved several milestones in 2014; it celebrated its 50th anniversary and completed
three years with no reportable environmental or safety incidents. The Beauharnois facility completed one year
without a reportable safety incident and two years without a reportable environmental incident. The Brazil
facility completed two years without a reportable environmental incident in 2014. Our North Vancouver and
Nanaimo facilities were audited and successfully certified under British Columbia’s Occupational Safety
Standard of Excellence.
Financial Performance
The North American Sodium Chlorate business unit generated $55.7MM operating cash flow versus a plan of
$60.7MM. Pricing was above plan, however, a volume shortfall produced the below plan performance. The
North American Chlor-Alkali business unit was effectively on plan at $24.2MM operating cash flow versus a
plan of $24.4MM. While pricing was ahead of plan, there were volume shortfalls in all three products (chlorine,
caustic and acid).
The North American Terminal Operations business unit lost $4.3MM operating cash flow versus a plan of
$23.8MM. The shutdown to increase capacity and tie-in to the Inter Pipeline Ltd. facilities was the main
contributor. Given the lack of operating history and the decision to divest the facility, there was limited progress
in the commercial area. A significant unit train contract was lost due to precedent conditions not being met with
the delay in the tie-in. An additional unit train was contracted starting in July 2015 with an option for an
additional one-half unit train.
Brazil had a record year. Operating cash flow was $24.9MM versus a plan of $22.2MM. Chlorate volumes were
up marginally and chlor-alkali volumes were effectively on plan.
SG&A performance in 2014 (excluding one-time costs) was better than plan by $3MM. This was achieved
through cost saving initiatives in the second half of the year. The Corporation will continue to look for every
opportunity to improve SG&A performance.
Distributable cash was enhanced through tight maintenance capital controls, lower interest payments and lower
pension contributions.
Achieve Certain Other Key Strategy Implementation Initiatives
In 2014, the Corporation made progress on several key projects including the initiation of a project to
modernize the caustic facility at the North Vancouver facility, and negotiation of commercial contracts for the
NATO unit train and manifest businesses.
The Corporation experienced project delays and overruns at the NATO unit train facility however, the project
was substantially completed in August 2014 and commissioning of the unit train facility commenced in
September, 2014. The Corporation is pursuing a strategy to improve operational performance and increase
financial flexibility to provide growth and stability for our Shareholders.
Interim CEO
One of the Corporation’s directors, Mr. Richard Ott, served as Interim President and CEO from March 6, 2014
until July 2, 2014. Compensation for his role as Interim President and CEO is disclosed in the Summary
45
2015 Information Circular and Proxy Statement
Compensation Table. No further compensation, including incentive compensation, benefits or perquisites was
awarded by the Board. Additionally, during his tenure as Interim President and CEO, Mr. Ott did not receive
any compensation for his role as a director of the Corporation.
Former CEO
Mr. Gary Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014. Based
on overall performance of the business prior to his departure, no annual compensation adjustments, bonuses
or short or long-term incentives were awarded to Mr. Kubera in 2014.
OTHER NEO COMPENSATION
For NEOs other than the CEO, competitive information is determined based on the annual assessment of
market competitiveness provided by Mercer based on similar positions among the established reference group.
Target total cash compensation (base salary plus incentive bonus) is competitive at a target of the 50th
percentile range for North America and the 75th percentile for Brazil of the relevant comparators. The other
NEOs compensation is presented by the CEO to the Compensation Committee and then recommendations are
made for the Board to review and approve the performance of the NEOs relative to corporate and individual
performance, and the Mercer comparator data. The Board may, at its discretion, increase or decrease any
component of executive compensation.
The annual cash incentive awards for the year 2014 which were approved by the Board in March 2015 based
on the Corporation’s results for 2014 and the individual contributions of each of the NEOs were as set out in the
following table:
Incentive Plan Awards - Value Vested or Earned During the Year
Option-Based Awards –
Value Vested During the Year
(1)
Name
Wonnacott (3)
McLellan
Bourgeois
dos Santos
Lacara (4)
Ott (5)
Kubera (6)
Share-Based Awards – Value
Vested During the Year
($)
($)
0
0
0
0
0
N/A
0
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Non- Equity Incentive Plan
Compensation – Value
(2)
Earned During the Year
($)
75,000
83,900
75,058
67,059
0
N/A
0
Notes:
1. Represents the value of Option based awards and accumulated Bonus Shares underlying the rights at time of vesting. Option
value is calculated by the difference in grant price and the Canexus share price on date of vesting. Bonus share value has
been calculated based on the corresponding vested option. For the purpose of this table the number of Bonus Shares
accumulated and vested on the corresponding option was calculated solely on the 2014 vesting tranche of option awards
granted in 2011, 2012 and 2013.
2. The Canexus Annual Incentive Plan payment is based on performance in the reporting year and paid in the following year. The
exchange rate used to convert Brazilian Reais to Canadian dollars at the end of the year is the December 31, 2014 rate of
$0.4363. The exchange rate used to convert US dollars to Canadian dollars at the end of the year is the December 31, 2014
rate of $1.1601.
3. Mr. Wonnacott was appointed President, CEO and a director of the Corporation on July 2, 2014.
4. Mr. Lacara was Senior Vice President, Operations until his departure on December 31, 2014.
5. Mr. Ott served as Interim President and CEO from March 6, 2014 until July 2, 2014.
6. Mr. Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014.
LONG-TERM INCENTIVE PLAN TABLES
To value Stock Option Plan grants, Canexus uses the Black-Scholes option pricing model, which is a generally
accepted method for measuring this type of long-term incentive compensation. The actual value realized on
exercises of Options may be higher or lower depending on the Share price at the time of exercise and the
accrual of Bonus Rights.
46
2015 Information Circular and Proxy Statement
Options Granted in 2014
Name
Wonnacott (3)
Grant Date
Options Granted
(#)
July 2, 2014
225,000
Exercise Price (
($)
5.00
1)
Expiry Date
July 1, 2019
Option Value
($)
(2)
110,948
McLellan
N/A
N/A
N/A
N/A
N/A
Bourgeois
N/A
N/A
N/A
N/A
N/A
dos Santos
N/A
N/A
N/A
N/A
N/A
Lacara (4)
N/A
N/A
N/A
N/A
N/A
Ott (5)
N/A
N/A
N/A
N/A
N/A
Kubera (6)
N/A
N/A
N/A
N/A
N/A
Notes:
1. Reflects the volume-weighted average market price for the 5 trading days preceding grant date.
2. Reflects the estimated fair value of the Options granted pursuant to the Stock Option Plan as at July 2, 2014 using the BlackScholes option pricing model.
3. Mr. Wonnacott was appointed President, CEO and a director of the Corporation on July 2, 2014.
4. Mr. Lacara was Senior Vice President, Operations until his departure on December 31, 2014.
5. Mr. Ott served as Interim President and CEO from March 6, 2014 until July 2, 2014.
6. Mr. Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014.
PSUs Granted in 2014
Name
Wonnacott (2)
Grant Date
PSUs Granted
(#)
Exercise Price
($)
Expiry Date
PSU Value
($)
150,000
July 2, 2014
30,550
4.91
July 1, 2017
McLellan
N/A
N/A
N/A
N/A
N/A
Bourgeois
N/A
N/A
N/A
N/A
N/A
dos Santos
N/A
N/A
N/A
N/A
N/A
N/A
Lacara
(3)
N/A
N/A
N/A
N/A
Ott (4)
N/A
N/A
N/A
N/A
N/A
Kubera (5)
N/A
N/A
N/A
N/A
N/A
(1)
Notes:
1. Reflects the estimated fair value of the PSUs granted pursuant to the PSU Plan as at July 2, 2014 using the 20-day volume
weighted average share price of the Shares.
2. Mr. Wonnacott was appointed President, CEO and a director of the Corporation on July 2, 2014.
3. Mr. Lacara was Senior Vice President, Operations until his departure on December 31, 2014.
4. Mr. Ott served as Interim President and CEO from March 6, 2014 until July 2, 2014.
5. Mr. Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014.
RSUs Granted in 2014
Name
Wonnacott (2)
Grant Date
RSUs Granted
(#)
Exercise Price
($)
Expiry Date
RSU Value
($)
150,000
August 8, 2014
30,550
4.91
July 1, 2017
McLellan
N/A
N/A
N/A
N/A
N/A
Bourgeois
N/A
N/A
N/A
N/A
N/A
dos Santos
N/A
N/A
N/A
N/A
N/A
Lacara (3)
N/A
N/A
N/A
N/A
N/A
Ott (4)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Kubera
(5)
(1)
Notes:
1. Reflects the estimated fair value of the RSUs granted pursuant to the RSU Plan as at August 8, 2014 using the 20-day volume
weighted average share price of the Shares.
2. Mr. Wonnacott was appointed President, CEO and a director of the Corporation on July 2, 2014.
3. Mr. Lacara was Senior Vice President, Operations until his departure on December 31, 2014.
4. Mr. Ott served as Interim President and CEO from March 6, 2014 until July 2, 2014.
5. Mr. Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014.
47
2015 Information Circular and Proxy Statement
Outstanding Option-Based and Share-Based Awards
Option-Based Awards
Name
Wonnacott
(4)
McLellan
Bourgeois
dos Santos
Share-Based Awards
(3)
Option Expiration
Date
Value of
Unexercised InThe-Money
(1)
Options
($)
Number of
Shares or Units
of Shares that
have not
Vested
(#)
Market or
Payout Value
of Share-Based
Awards that
have not
Vested
($)
Market or
Payout Value of
Vested ShareBased Awards
not Paid Out or
Distributed
($)
5.00
July 1, 2019
N/A
62,566
203,965
N/A
24,090
6.72
Nov. 4, 2015
0
N/A
N/A
N/A
24,750
6.10
Nov. 3, 2016
0
N/A
N/A
N/A
51,200
8.50
Nov. 6, 2017
0
4,981
16,238
N/A
82,600
7.16
Nov. 7, 2018
0
7,570
24,678
N/A
60,000
6.72
Nov. 4, 2015
0
N/A
N/A
N/A
70,000
6.10
Nov. 3, 2016
0
N/A
N/A
N/A
51,200
8.50
Nov. 6, 2017
0
4,981
16,238
N/A
Number of
Securities
Underlying
Unexercised
Options
(#)
Option
Exercise
(2)
Price
($)
225,000
65,000
7.16
Nov. 7, 2018
0
6,034
19,670
N/A
35,000
6.72
Nov. 4, 2015
0
N/A
N/A
N/A
40,000
6.10
Nov. 3, 2016
0
N/A
N/A
N/A
23,100
8.50
Nov. 6, 2017
0
3,753
12,235
N/A
58,100
7.16
Nov. 7, 2018
0
6,034
19,671
N/A
Lacara (5)
N/A
N/A
N/A
0
N/A
N/A
N/A
Ott (6)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Kubera
(7)
Notes:
1. The estimated value of unexercised in-the-money options above is based on the TSX closing price of the shares on December
31, 2014 of $3.26.
2. Options awarded prior to 2014 also have an attached Bonus Right. Each Bonus Right may be redeemed on, or in some cases
for a period after, the date of exercise of the corresponding Option, to receive Bonus Shares to reflect the notional
reinvestment of dividends that would have been paid on the Share underlying an Option from the date of grant of the Option,
effectively reducing the exercise price associated with total outstanding Options and Bonus Rights.
3. Share-based awards are granted in the form of PSUs and RSUs. Each PSU and RSU awarded above earns dividend
equivalents in the form of additional PSUs and RSUs, respectively.
4. Mr. Wonnacott was appointed President, CEO and a director of the Corporation on July 2, 2014.
5. Mr. Lacara was Senior Vice President, Operations until his departure on December 31, 2014.
6. Mr. Ott served as Interim President and CEO from March 6, 2014 until July 2, 2014.
7. Mr. Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014.
Option Exercise Value
The following table sets out the gains realized by NEOs on the exercise of Options in 2014.
Name
Wonnacott
McLellan
Bourgeois
dos Santos
Lacara
Ott
Kubera
No. of Options
Exercised
0
0
45,000
10,000
49,500
N/A
125,000
No. of Bonus
Rights Redeemed
0
0
22,378
4,972
25,598
Total Consideration
($)
N/A
N/A
233,550
51,900
206,085
N/A
53,831
N/A
648,750
48
Proceeds of Sale
($)
N/A
N/A
247,944
55,546
339,346
N/A
905,547
Gain Realized
($)
0
0
14,394
3,646
133,261
N/A
256,797
2015 Information Circular and Proxy Statement
EQUITY OWNERSHIP AND CHANGES IN 2014
According to our Share ownership guidelines, within five years of appointment, the CEO is required to hold
three (3) times the value of his annual salary in Shares, PSUs and RSUs. The other executives are required to
hold one times the value of their annual salary in Shares, PSUs and RSUs. In each case, the value is based
on the greater of the acquisition cost or the market value of the Shares, PSUs and RSUs.
Name
Wonnacott (3)
McLellan (4)
Bourgeois
dos Santos (5)
Lacara (6)
Ott (7)
Kubera (8)
December
31, 2013
Shares
December
31, 2014
Shares
Net
Change
Shares
N/A
53,054
56,000
68,742
31,146
6,100
439
56,000
68,742
47,895
6,100
(52,615)
0
0
16,749
N/A
190,000
N/A
N/A
N/A
N/A
December
31, 2013
PSUs and
RSUs
N/A
11,439
10,039
8,921
11,574
N/A
40,695
December
31, 2014
PSUs and
RSUs
62,566
12,551
11,015
9,787
12,938
N/A
N/A
Net
Change
PSUs and
RSUs
62,566
1,112
976
866
1,364
N/A
N/A
Total
Acquisition
or Market
Cost ($) (1)
331,480
94,709
445,167
461,554
383,263
N/A
N/A
Multiple
of Salary
(2)
.66
.30
1.78
1.35
1.15
N/A
N/A
Notes:
1. The greater of the total acquisition cost or market cost is used to calculate equity ownership. Acquisition Cost is the market
value paid for the Shares, PSUs or RSUs at the time the executive acquired them. Market Cost is $3.26, the closing price of
the Shares on December 31, 2014.
2. Reflects the Acquisition or Market Cost, divided by the executive's 2014 base salary.
3. Mr. Wonnacott was appointed President and CEO of the Corporation on July 2, 2014 and has until July 1, 2019 to meet the
Share ownership guidelines.
4. During 2014, Mr. McLellan sold Shares taking him below the mandatory threshold set for executives of the Corporation. Mr.
McLellan is expected to reacquire Shares to comply with Share ownership guidelines as soon as possible.
5. The exchange rate used to convert Brazilian Reais to Canadian dollars at the end of the year is the December 31, 2014 rate of
$0.4363.
6. Mr. Lacara was Senior Vice President, Operations until his departure on December 31, 2014.
7. Mr. Ott served as Interim President and CEO from March 6, 2014 until July 2, 2014. Mr. Ott is a director of the Corporation and
is required to meet the Share ownership guidelines set for directors.
8. Mr. Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014.
BENEFIT AND PENSION PLANS
Canexus' benefit and pension plans support the health and well-being of our employees, and encourage
employee retirement savings. The plans are reviewed periodically to ensure they remain competitive and
continue to meet our objectives. Market survey data is reviewed to ensure the plans provide benefits which are
geared to the 50th percentile of plans within our peer group of companies. Executives participate in the same
plans provided to all employees at the same location. Disclosure in this document is specific to the plans in the
locations in which the executives participate.
Health and Welfare Benefits
Our benefit plans are designed to assist employees and their dependents in matters related to health and wellbeing and provide a measure of financial security relative to certain life events (disability, death or retirement).
Employee Savings Plan
In the employee savings plan, all eligible Canadian employees may contribute, through payroll deduction, a
percentage of their base salary to purchase Shares. Canexus matches employee contributions at a rate of
100% of the employee contribution up to 6% of base salary. All contributions may be allocated to registered or
non-registered accounts, and all contributions vest immediately. Employees may vote the Shares they hold in
their employee savings plan.
In lieu of an employee savings plan, all eligible U.S. employees receive employer matching contributions equal
to 100% of employee contributions, to a maximum of 6% under the U.S. qualified defined contribution plan.
Refer to the "Defined Contribution Plans (U.S.)" section on page 52 for further details.
Defined Benefit Pension Plan (Canada)
Prior to September 1, 2006 for non-union employees and prior to September 1, 2007 for unionized employees,
Canadian employees of Canexus were entitled to elect, upon hire, to participate in either the defined
contribution pension plan or the defined benefit pension plan, both of which are registered under the Income Tax
49
2015 Information Circular and Proxy Statement
Act and the local provincial authority. Effective January 1, 2008, the defined benefit plan was closed to all new
employees. All new hires must participate in the defined contribution pension plan. One Canadian NEO, Mr.
McLellan, participated in the defined benefit pension plan in 2014. The defined benefit pension plan features:
•
•
•
•
•
participants may elect to contribute 3% of their pensionable earnings (up to an annual plan maximum);
retirement benefits at 1.8% (1.7% for years prior to 2005) of their average earnings for the 36 highest-paid
consecutive months during the 10 years before retirement, multiplied by the years of credited service;
integration with Canada Pension Plan (CPP) to provide a maximum offset of one-half of the current CPP
benefit, prorated by years of credited service to a maximum of 35 years;
benefits on retirement that are generally paid monthly for the life of the retiree, subject to payment elections;
and
an unreduced pension as early as age 60. Members who attain age 55 with ten years of service may retire
with a 4% per year reduction for each year the pension commences prior to age 60.
Plan participants may increase their defined benefit accrual formula on a go forward basis, from 1.8% to 2%.
Employees who choose this option must contribute an additional 2% of pensionable earnings up to an allowable
maximum under the Canadian Income Tax Act. The maximum employee contribution allowed under the defined
benefit pension plan in 2014 was $2,770.
The normal form of benefit paid is a joint life and survivor benefit with a five-year guarantee. It is payable for the
participant's lifetime and provides the spouse with a survivor benefit of 66⅔% of the monthly payment. If the
participant dies before receiving 60 monthly payments, the five-year guarantee allows the surviving spouse to
receive the balance of the 60 monthly payments first and then the reduced survivor pension of 66⅔%
Pension payments after December 31, 1992 will be indexed at an amount not greater than 5% and not less than
the greater of:
75% of the increase in the Canadian Consumer Price Index, less 1%; and
25% of the increase in the Canadian Consumer Price Index.
Defined Contribution Pension Plan (Canada)
Eligible Canadian employees participate in a registered defined contribution pension plan. Under the defined
contribution pension plan, Canexus contributes an amount equal to 7% of an employee’s pensionable earnings
and employees are required to contribute 5.5% of their pensionable earnings, up to legislated limits.
Contributions under this plan are deposited to an account managed by the member. Participants select among
various investment options under the plan and are responsible for individually managing their accounts. Mr.
Wonnacott participates in the Canadian Defined Contribution Pension Plan and Mr. Lacara participated in the
Canadian Defined Contribution Pension Plan up until June 2013 when he relocated to the U.S. office. He
continued to be considered a member of the plan up until his departure on December 31, 2014.
On August 5, 2014, the Board approved a proposed merger of the Canadian Defined Contribution Pension
Plan and the Canadian Defined Benefit Pension Plan. Upon regulatory approval received on November 4,
2014, the Canadian Defined Contribution Pension Plan was merged with the Canadian Defined Benefit
Pension Plan and the jurisdiction of the merged plan was moved from British Columbia to Alberta. Merging the
plans has streamlined administration and also reflects the Alberta membership plurality.
Executive Benefit Plan (Canada)
The Executive Benefit Plan is available to all Canadian employees, and provides supplemental retirement
benefits for participants who have earned a retirement benefit in excess of the statutory limits, which varies by
employees' pension plan participation. This allows employees to fully accrue a pension that is aligned with their
earnings level and is competitive within our market. Under this plan, benefits upon termination or retirement are
payable as a lump sum cash distribution. For supplemental retirement benefits accrued under the defined
benefit pension plan, the lump sum cash distribution is increased by 15% to reflect the accelerated treatment of
income tax. For supplemental retirement benefits accrued under the defined contribution pension plan, no
adjustment is made to the lump sum cash distribution to reflect the accelerated treatment of income tax.
50
2015 Information Circular and Proxy Statement
Pension Benefit Security
The pension expense for this supplemental plan is accounted for annually. Benefits are paid from the
Corporation's cash flows and reduce the related pension liability. As liabilities under this plan are not funded
outside of the Corporation, a level of protection is provided to participants through a letter of credit. The letter of
credit is intended to make participants secured creditors for the total value of the Corporation’s unfunded
pension obligation.
Pension Benefit Obligation
At December 31, 2014, as indicated in the notes to our financial statements, the supplemental pension plan's
obligation for defined benefit pension plan members, including future salary increases, under the Executive
Benefit Plan was $2,147,000. In addition, as at December 31, 2014, the supplemental pension plan’s obligation
for members of the Canadian defined contribution plan was $13,520 under the Executive Benefit Plan.
For the defined benefit pension plan, the projected benefit obligation is an accounting based on value of the
contractual entitlements that will change over time. The method used to determine this estimate will not be
identical to those used by others and, as a result, the estimate may not be directly comparable across
companies. The key assumptions used for the projected benefit obligation were:
•
•
•
a discount rate of 4.75% per year, as at December 31, 2013 and December 31, 2014;
a long-term compensation rate increase of 3% per year; and
an assumed rate of inflation of 2.25% per year.
Mr. McLellan is a member of Canexus' Canadian defined benefit pension plan and the Executive Benefit Plan.
Mr. Lacara was a member of Canexus' Canadian Defined Contribution Pension Plan and the Executive Benefit
Plan until his departure on December 31, 2014. Mr. Lacara became a member of the U.S. defined contribution
pension plan in June 2013 when he relocated from the Calgary office to the U.S. office; his contributions to the
Canadian plans ceased upon his relocation. Mr. Lacara had assets in the Canadian plans and was considered
to be a member up until December 31, 2014.
Estimated Pension Benefit (Canada)
Defined Benefit Plan
Annual
Benefits Payable
Number
of Years
Credited
Service
Name
McLellan
(1)
18.0833
At year
(2)
end
($)
93,014
At age 65
($)
143,166
(3)
Opening Present
Value of Defined
Benefit
Obligation
($)
1,278,000
Compensatory
Change
($)
59,000
NonCompensatory
Change
($)
425,000
Closing
Present
Value of
Defined
Benefit
Obligation
($)
1,762,000
Notes:
1. In respect of post 2004 credited service, Mr. McLellan participated in the 1.8% accrual formula for all years.
2. Accrued pension to December 31, 2014 payable at normal retirement age of 65 based on Final Average Earnings, CPP and
defined benefit pensionable service as at December 31, 2014. An unreduced pension is payable as early as age 60.
3. Amounts payable on retirement at age 65, assumes continued service accrual to age 65 and that the Final Average Earnings
and estimated CPP, at age 65, remain unchanged from December 31, 2014.
Comments:
The defined benefit obligation is based on management's best estimate assumptions. These assumptions are consistent with
•
the assumptions used to determine accounting information as at December 31, 2014 for retirement plans disclosed in Canexus'
financial statements.
The compensatory change includes the service cost for the year net of employee contributions, determined at the beginning of
•
the year, and any adjustments to the defined benefit obligation as a result of salary changes other than expected.
The non-compensatory change reflects all other changes in defined benefit obligation that are not included in the
•
compensatory changes.
51
2015 Information Circular and Proxy Statement
Defined Contribution Plan
Name
Wonnacott
Lacara
Accumulated value at start
of year
($)
0
105,205
Compensatory
(1)
($)
9,423
N/A
Accumulated value at year
end
($)
17,151
113,965
Note:
1. Represents employer contributions under the registered defined contribution pension plan and notional contributions under the
Executive Benefit Plan.
Defined Contribution Plans (U.S.)
Eligible U.S. employees participate in a defined contribution plan which is a tax qualified retirement plan.
Eligible employees may defer a percentage of their compensation into the Plan. In addition, the plan provides
for a discretionary profit sharing contribution. For 2014, Canexus made a profit sharing contribution equal to 6%
of each participant's eligible compensation up to the social security taxable wage base and 11.7% of such
participant’s eligible compensation that exceeded the social security taxable wage base up to a maximum of
US$23,000 for 2014. In addition, a matching contribution equal to 100% of employee contributions deferred into
the plan, not to exceed 6% of a participant’s eligible compensation each payroll period is also made under the
plan. The profit sharing contributions vest after two years of employment while the matching contributions vest
immediately. Investment decisions are made by the employee from a variety of mutual funds. This plan is
intended to be an Employee Retirement Income Security Act (ERISA) 404(c) plan. Three NEOs (Messrs.
Bourgeois, Lacara and Kubera) participated in the defined contribution pension plan for U.S. employees in
2014.
Non-Qualified Restoration Plan
Messrs. Bourgeois, Lacara and Kubera participated in a non-qualified restoration plan in 2014. This
supplemental plan is available to a designated group of U.S. management employees, and is an unfunded
arrangement that provides deferred compensation benefits to participants who have earned a retirement
benefit in excess of the statutory limits. The returns in this plan reflect the returns on the hypothetical
investments selected by the employees from among an available suite of investment funds that they are able to
re-allocate at any time. The plan complies with Section 409A of the Code. Under the terms of the plan, a
maximum of 50% of the base salary and 100% of annual cash incentives may be deferred. Elections for
distributions of benefits are entered into upon the date of plan participation. Any changes to such elections
must be in compliance with Section 409A of the Code. The benefit is paid in cash and commences thirty (30)
days following the participant’s death or separation from service for any reason other than death (the
“Separation from Service"). The benefit can be (1) a single, lump sum payment made thirty (30) days
following the Separation from Service; (2) a single, lump sum payment in January of the calendar year
immediately following or up to ten (10) years after the Separation from Service; or (3) paid in annual
installments over a period of time not to exceed ten (10) years. If the value of the benefit is less than $50,000, it
shall be paid in a single, lump sum thirty (30) days following the Separation from Service. A participant may
make application to the Corporation to withdraw funds from the plan due to financial hardship, however whether
or not a withdrawal is permitted and to what extent will be based on the facts and circumstances of the case as
determined by the Corporation. During 2014, there were no distributions of assets.
Estimated Pension Benefit (U.S.)
Bourgeois
Lacara
Accumulated value at start
of year
($)
1,469,967
46,755
Compensatory
($)
69,694
69,534
Accumulated value at year
end
($)
1,854,043
150,185
Kubera (1)
2,582,815
22,008
2,996,891
Name
Note:
1. Mr. Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014.
Comments:
The table above represents the value of accumulated pension assets, along with employer contributions, within the respective
•
qualified and non-qualified plans. Under these plans, there are no market or preferential earnings provisions.
The table does not break out investment gains or losses, or the amounts contributed by employees to their pensions.
•
The exchange rate used to convert U.S. dollars to Canadian dollars at the beginning of the year is the December 31, 2013 rate
•
52
2015 Information Circular and Proxy Statement
of $1.0636. The exchange rate used to convert U.S. dollars to Canadian dollars during the year is the 2014 average rate for the
year of $1.0971. The exchange rate used to convert U.S. dollars to Canadian dollars at the end of the year is the December
31, 2014 rate of $1.1601.
Defined Contribution Plans (Brazil)
All Brazil employees may participate in CanexusPrev (a private pension plan linked to HSBC Instituidor Fundo
Multiplo (HSBC Multiple Funds Institution) which is regulated by a federal institution) if they meet the earnings
threshold for participation of $1,177 (R$3,097) per month. Mr. dos Santos participated in the CanexusPrev
pension plan in 2014.
Canexus makes a matching contribution of 4.66% in the basic plan. In addition, employees may make further
voluntary contributions regardless of earnings. Under the basic plan, full vesting occurs after three years of
contribution. Vesting is immediate under the voluntary plan. The amount of the retirement benefit depends
exclusively on the funds accumulated. Investment decisions are not made by the employee. The following table
represents the value of accumulated pension assets, along with employer contributions, within the Brazilian
pension plan. The plan provides a basic core contribution along with a voluntary supplemental component. Mr.
dos Santos participates in the basic and voluntary plans (under the voluntary plan, Mr. dos Santos contributes
6% of pay with a 100% match by Canexus).
Estimated Pension Benefit (Brazil)
Name
dos Santos
Accumulated value at
start of year
($)
1,082,910
Compensatory
($)
30,542
Accumulated value at year end
($)
1,200,904
Comments:
The exchange rate used to convert Brazilian Reais to Canadian dollars at the beginning of the year is the December 31, 2013
•
rate of $0.4540. The exchange rate used to convert Brazilian Reais to Canadian dollars during the year is the 2014 average
rate for the year of $0.4716. The exchange rate used to convert Brazilian Reais to Canadian dollars at the end of the year is
the December 31, 2014 rate of $0.4363.
The table does not break out investment gains or losses, or the amount contributed by Mr. dos Santos to his pension.
•
EMPLOYMENT AGREEMENTS AND TERMINATION ARRANGEMENTS
The Corporation has entered into employment agreements with Mr. Wonnacott, President and CEO, Mr.
McLellan, Sr. Vice President Finance and Chief Financial Officer, Mr. Bourgeois, Sr. Vice President Sales and
Marketing, and Mr. dos Santos, Managing Director, South America. None of the employment agreements
provide incremental benefits in regard to resignation or retirement. If Canexus terminates Mr. Wonnacott’s
employment agreement at any time other than for cause, it will become obligated to pay him his annual base
salary and bonus, the amount of which is determined based on the number of years served and/or the average
of previous bonus payments. For the other NEOs, if Canexus terminates an employment agreement at any
time other than for cause, it will become obligated to pay to the affected executive a payment equal to: base
salary, bonus at target, car allowance, employer benefit and pension contributions, employer savings plan
contributions they would have enjoyed during the severance period, and in addition, an executive outplacement
counseling allowance. The Corporation also had employment agreements with Mr. Lacara and with Mr.
Kubera. Mr. Lacara was Senior Vice President, Operations until his departure on December 31, 2014 and Mr.
Kubera stepped down as President, CEO and a director of the Corporation on March 6, 2014.
At December 31, 2014, the severance periods for the NEOs under the employment agreements are:
NEO
Wonnacott
McLellan
Bourgeois
dos Santos
Severance Period (months)
12
18
18
18
53
2015 Information Circular and Proxy Statement
2014 Termination Arrangements
Under the terms of their employment agreements, both Mr. Lacara and Mr. Kubera were eligible for termination
payments upon leaving employment with Canexus. The table below breaks out these payments by category
according to Canexus’ contractual obligations.
Former NEO
Lacara
Kubera
Salary Continuance
($)
0
489,686
Share-Based Award
Settlement
($)
0
56,569
Lump Sum
(Bonus, Pension,
Benefits, Car
Allowance)
($)
358,035
1,190,134
Total
2014 Termination
Payments
($)
358,035
1,736,389
Change of Control Agreements
The Corporation has entered into change of control agreements with Messrs. Wonnacott, McLellan and
Bourgeois. The agreement with Mr. Wonnacott was effective July 2, 2014. The agreement with Mr. McLellan
was effective August 18, 2005. The agreement with Mr. Bourgeois was effective May 1, 2010. We recognize
that these executives are critical to ongoing business. Therefore, it is vital we work to retain the executives,
protect them from employment interruption caused by change of control and treat them in a fair and equitable
manner. Each year, the Compensation Committee reviews the estimated payment upon a change of control
including the termination value of pension benefits due under the Defined Benefit Pension Plan and Executive
Benefit Plan.
Under these agreements, a change of control includes the occurrence of (a) the purchase or acquisition of any
Shares by a Shareholder which results in such Shareholder (alone or with others) owning more than 50% of the
votes attached to all outstanding Shares, (b) the liquidation, dissolution or winding up of the Corporation, (c) the
sale, lease or other disposition of all or substantially all of the assets of the Corporation, (d) amalgamation,
arrangement or merger of the Corporation with another corporation resulting in a change in the majority of the
Board, or (e) a meeting of the Shareholders resulting in a change on the majority of the Board. For Mr.
Wonnacott, the agreement provides for an amount equal to two times the base salary and bonus payment
based on a schedule of when the termination occurs. For the other NEOs, these agreements also provide for
the payment of the salary benefits and bonus payments, and executive outplacement, if the executive
terminates his employment with Canexus within 180 days following a change of control of the Corporation for
"good reason" as defined in the agreements, including a consequential re-assignment or reduction in salary of
the executive, inconsistent duties, relocation, changes in the incentive plans of the Corporation, or
discontinuance of employee benefits or perquisites. Generally, a “change of control” is any event that results in
a new person or group exercising effective control of the Corporation.
The following table outlines the estimated incremental payments each of the executives would be entitled to
had a change of control occurred on December 31, 2014. For Mr. Wonnacott, the base salary amount is salary
for the severance period and the bonus target value is equal to the target annual bonus as defined in his
employment agreement. For the other NEOs, under their agreements, bonuses would be paid at target for the
full severance period. A benefit uplift, equal to 25% of base salary, would be provided in lieu of benefits and
pension, and an additional 6% of base salary would be provided in lieu of employee savings plan benefit. In
addition, the agreements for the NEOs other than Mr. Wonnacott provide for a payment for other employee
benefits, including car allowance and career transition services.
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2015 Information Circular and Proxy Statement
Estimated Incremental Payment on Change of Control at December 31, 2014
Name
Wonnacott
McLellan
Bourgeois
dos Santos
Severance
(1)
Period
(# of
months)
24
18
18
18
Base
(2)
Salary
($)
1,000,000
466,230
434,430
479,012
Bonus
Target
Value
($)
500,000
209,804
195,494
167,654
Benefits
Uplift
($)
0
116,558
108,608
119,753
Other
Employee
Benefits
($)
0
66,774
59,825
84,308
Additional
Lump Sum
Value of
Pension
($)
N/A
N/A
N/A
N/A
Accelerated
Option
(3)
Value
($)
0
0
0
0
Accelerated
Share Based
Award
(3)
Value
($)
203,965
40,916
35,909
31,906
Total
Incremental
(4)
Obligation
($)
1,703,965
900,282
834,266
882,633
Notes:
1. Includes severance for resignation within 180 days of a change of control and with “good reason”. The exchange rate used to
convert US dollars to Canadian dollars in the table is the December 31, 2014 rate of $1.1601. The exchange rate to convert
Brazilian Reais to Canadian dollars is the December 31, 2014 rate of $0.4363.
2. Calculations are based on actual salaries as of December 31, 2014.
3. Based on market value of the Options, PSUs and RSUs outstanding as at December 31, 2014.
4. Upon a change of control event, Canexus would be responsible for the amounts payable to the NEOs. The timing of payments
would be subject to legislative requirements and would occur over the course of the severance period.
Comment:
•
Mr. Lacara was Senior Vice President, Operations until his departure on December 31, 2014. Due to his departure, he was not
included in the above table.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets forth, as of December 31, 2014, the number of Shares (being the only current equity
securities of the Corporation) which are authorized for issuance pursuant to equity compensation plans. The
only compensation plan of the Corporation under which Shares are authorized for issuance is the Stock Option
Plan, as described above under “Stock Options”. The current Stock Option Plan was approved at the Annual
and Special Meeting of Unitholders of the Fund held on May 5, 2011 and unallocated options were approved at
the Annual and Special Meeting of Shareholders held on May 8, 2014.
Plan Category
Equity compensation plans
approved by securityholders
Equity compensation plans not
approved by securityholders (2)
Total
Number of securities to
be issued upon exercise
of outstanding Options,
warrants and rights
4,929,215
Weighted-average
exercise price of
outstanding Options,
warrants and rights
7.16
Number of securities
remaining available for future
issuance under equity
compensation plans (1)
11,668,168
N/A
N/A
N/A
4,929,215
7.16
11,668,168
Notes:
1. The Canexus’ Stock Option Plan is an “evergreen” plan where 9% of the issued and outstanding Shares of the Corporation (on
a non-diluted basis) are available for issuance under the plan.
2. As the DSU Plan, the PSU Plan and the RSU Plan are settled in cash, they have not been reported in this table. See page 21
for details of the DSU Plan, page 37 for details of the PSU Plan and the RSU Plan.
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2015 Information Circular and Proxy Statement
SCHEDULE “A”▪ Corporate Governance Disclosure
NATIONAL INSTRUMENT 58-101 CORPORATE GOVERNANCE DISCLOSURE
GOVERNANCE DISCLOSURE REQUIREMENT
1. Board of Directors
a) Disclose the identity of directors who are independent.
The seven Director nominees who are independent pursuant to our Categorical Standards are
identified in their respective biographies on pages 12 to 15.
b) Disclose the identity of directors who are not independent, and describe the basis for that
determination.
One Board member, Mr. Douglas Wonnacott, is not independent pursuant to our Categorical
Standards. Our Categorical Standards, attached as Schedule "C", specifically require analysis of the
nature and significance of relationships between the directors and Canexus in order to determine
independence. Mr. Wonnacott is President and CEO of Canexus and is therefore not independent.
c)
Disclose whether or not a majority of the directors are independent.
Seven of the eight nominees proposed for election to the Board are independent under our Categorical
Standards and the remaining director is the President and Chief Executive Officer. The Board is
currently comprised of eight directors.
d) If a director is presently a director of any other issuer that is a reporting issuer (or the
equivalent) in a jurisdiction or a foreign jurisdiction, identify both the other director and the
other issuer.
All directorships with other public entities for each Board member are disclosed in a table on page 16.
e)
Disclose whether or not the independent directors hold regularly scheduled meetings at which
non-independent directors and members of management are not in attendance. If the
independent directors hold such meetings, disclose the number of meetings held during the
most recently completed financial year. If the independent directors do not hold such
meetings, describe what the Board does to facilitate open and candid discussion among its
independent directors.
The independent directors of the Board and the Board committees meet without management at every
meeting. Details of the number of meetings held without management from January 1, 2014 to
December 31, 2014 are set out in the table on page 19.
All independent directors have an opportunity, through membership on one or more of the fullyindependent Board Committees (Audit, Corporate Governance and Human Resources &
Compensation) to participate in discussions without management and the non-independent director.
f)
Disclose whether or not the chair of the Board is an independent director, disclose the identity
of the independent chair, and describe his or her role and responsibilities. If the Board does
not have a chair that is independent, describe what the Board does to provide leadership for its
independent directors.
Mr. Hugh Fergusson, the Board Chair, is independent under our Categorical Standards. His
responsibilities are set out in the Board Chair Position Description, which is available on our website.
The description specifically addresses governance, corporate social responsibility, leadership, Board
and Shareholder meetings, Board and management relationships, director recruitment, retention,
evaluation, orientation and education.
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2015 Information Circular and Proxy Statement
g) Disclose the attendance record of each director for all Board meetings held since the
beginning of the issuer's most recently completed financial year.
The attendance of each director for all Board meetings held in 2014 is reported in a table on page 19.
In 2014, attendance at Board and Committee meetings was 98.6%.
2.
Board Mandate
a)
Disclose the text of the Board’s written mandate.
The Board Mandate is included as Schedule “D”.
3. Position Descriptions
a)
Disclose whether or not the Board has developed written position descriptions for the chair
and the chair of each Board committee.
The Position Descriptions for the Board Chair and the individual Committee Chairs are available on
our website. The descriptions specifically address Board and committee governance; corporate social
responsibility; leadership; ethics; Board, committee, and management relationships; committee
reporting; director recruitment and retention; evaluations; orientation and education; and advisors and
resources.
b) Disclose whether or not the Board and CEO have developed a written position description for
the CEO.
The CEO Position Description is available on our website. The description addresses leadership,
community, corporate social responsibility, ethics and integrity, governance, disclosure, strategic
planning, business management, risk management, organizational effectiveness, succession and CEO
performance.
4. Orientation and Continuing Education
a)
Briefly describe what measures the Board takes to orient new members regarding:
i.
The role of the Board, its committees and its directors
The Corporation has established an orientation program for new directors, which includes:
information on the role of the Board and each of its Committees; company and industry
information; and, the contribution individual directors are expected to make. As a part of its
mandate, the Corporate Governance Committee is responsible for developing and implementing
the orientation for all Board members.
ii.
The nature and operation of the issuer's business
The orientation includes specific information on operations, the strategic plan, risk and risk
management, governance, integrity and corporate values, and a least one plant site visit.
b) Briefly describe what measures, if any, the Board takes to provide continuing education for its
directors.
As part of its mandate, the Corporate Governance Committee is responsible for developing and
implementing the ongoing education program for all Board members. Presentations are regularly
made to the Board at scheduled meetings to educate and keep them informed of changes within
Canexus and in regulatory and industry requirements and standards. Specific information is provided
and discussed on risks, commodity pricing, supply and demand and the current business and
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2015 Information Circular and Proxy Statement
commercial environment.
Trips to various operating sites are also arranged for directors as part of continuing education.
The Corporate Governance Committee reviews information on available educational opportunities and
ensures directors are aware of those opportunities. In 2014, the Corporation paid for director education
and for membership in the Institute of Corporate Directors. 2014 director education topics are
described on page 24.
5.
Ethical Business Conduct
a)
Disclose whether or not the Board has adopted a written code for its directors, officers and
employees. If the Board has adopted a written code:
i.
ii.
iii.
disclose how a person or company may obtain a copy of the written code;
describe how the Board monitors compliance with its code; and
provide a cross-reference to any material change reports(s) filed within the preceding 12
months that pertains to any conduct of a director or executive officer that constitutes a
departure from the code.
Our Ethics Policy, adopted by the Board, is described on page 3 of this Circular and a copy is available
on our website or by request to the Corporate Secretary as set out on page 3.
The Board, through the Audit Committee and the Corporate Governance Committee, receives a report
at every regularly scheduled meeting on compliance with the Ethics Policy.
From January 1, 2014 to December 31, 2014 the Board did not grant any waiver of the Ethics Policy in
favor of a director or executive officer. Accordingly, no material change report has been required or
filed within the preceding 12 months.
b) Describe any steps the Board takes to ensure directors exercise independent judgment in
considering transactions and agreements in respect of which a director or executive officer
has a material interest.
Individual directors indicate a material interest in any transaction that the Corporation is considering.
The Board ensures that directors who have material interest in a transaction or agreement do not
participate in discussion and voting on the matter at Board meetings.
c)
Describe any other steps the Board takes to encourage and promote a culture of ethical
business conduct.
The Board encourages and promotes a culture of ethical business conduct and the Board Mandate
addresses corporate responsibility, ethics and integrity.
The Audit Committee and the Corporate Governance Committee Mandates also address ethics, and
the Ethics Policy and its compliance programs. These Committees receive a compliance report at
every regularly scheduled meeting setting out issues under the Ethics Policy reported through the
Integrity Helpline or by other means.
6.
Nomination of Directors
a)
Describe the process by which the Board identifies new candidates for Board nomination.
The Corporate Governance Committee has the responsibility for the identification of new candidates
for recommendation to the Board.
The Corporate Governance Committee has established an annual evaluation process for its directors
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2015 Information Circular and Proxy Statement
that evaluates the various skills and areas of expertise determined to be essential to ensure
appropriate strategic direction.
b) Disclose whether or not the Board has a nominating committee composed entirely of
independent directors.
The Corporate Governance Committee is responsible for the annual evaluation of the current directors
and the nomination of new directors. The Committee is comprised of four directors, all of whom have
been affirmatively determined by the Board to be independent pursuant to the Categorical Standards.
c)
If the Board has a nominating committee, describe the responsibilities, powers and operation
of the nominating committee.
The Corporate Governance Committee Mandate describes the responsibilities, powers and operation
of the Committee and is available on our website. The Mandate addresses governance leadership,
ethics policy, governance documents and disclosure, Board and committee evaluations, director
nominations, Share ownership policies, director orientation and education, committee meetings and
reporting activities to the Board, and advisors and resources. A report on the activities of the
Committee is located on page 27.
7.
Compensation
a) Describe the process by which the Board determines the compensation for your company's
directors and officers.
The Board delegated to the Corporate Governance Committee the responsibility for recommending
compensation for the Corporation’s directors to the Board. The Human Resources & Compensation
Committee has been delegated the responsibility for recommending compensation for the
Corporation's CEO and officers to the Board. CEO compensation is reviewed by the Human
Resources & Compensation Committee and recommended to the independent directors of the Board
for approval.
b) Disclose whether or not the Board has a compensation committee composed entirely of
independent directors.
The Corporate Governance Committee, which is responsible for director compensation, is comprised
of four directors, and the Human Resources & Compensation Committee, which is responsible for
executive compensation, is comprised of four directors. All have been affirmatively determined by the
Board to be independent pursuant to the Categorical Standards.
c)
If the Board has a compensation committee, describe the responsibilities, powers and
operation of the compensation committee.
The Human Resources & Compensation Committee Mandate describes the responsibilities, powers,
and operation of the Human Resources & Compensation Committee and is available on our website.
The Mandate addresses executive compensation and human resources leadership, CEO goals,
objectives and performance, CEO and overall compensation programs, succession and development,
committee meetings and reporting activities to the Board, committee governance, and advisors and
resources. A report on the activities of the Human Resources & Compensation Committee begins on
page 28.
The Corporate Governance Committee Mandate describes the responsibilities, powers, and operation
of the Corporate Governance Committee and is available on our website. In addition to the
Committee’s governance responsibilities, the Mandate addresses director compensation including
DSU grants, annual evaluation of directors and succession planning for the Board. A report on the
activities of the Corporate Governance Committee begins on page 27.
8.
Other Board Committees
If the Board has standing committees other than the audit, compensation and nominating
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2015 Information Circular and Proxy Statement
committees, identify the committees and describe their function.
There is one additional standing Board committee, the Responsible Care® Committee, whose Mandate
describes the responsibilities, powers and operation of the Committee and is available on our website. The
Mandate addresses responsible care leadership, performance, compliance, risk management, committee
meetings and reporting activities to the Board, committee governance and advisors and resources.
9.
Assessments
Disclose whether or not the Board, its committees and individual directors are regularly assessed
with respect to their effectiveness and contribution. If assessments are regularly conducted,
describe the process used for the assessments.
The Corporate Governance Committee has developed an effective and comprehensive evaluation
process. The process includes a biennial evaluation of the performance and effectiveness of the Board,
Board committees, the Board Chair and Committee Chairs and consists of: individual director selfevaluations; individual director independence; individual director and overall Board skills; and, individual
director financial literacy. In alternate years, the Corporate Governance Committee Chair conducts a
round table discussion on the effectiveness of the Canexus board and its processes and the Board Chair
conducts one-on-one interviews with each director.
10. Director Term Limits and Other Mechanisms of Board Renewal
Disclose whether or not the issuer has adopted term limits for the directors on its board or other
methods of board renewal.
Canexus’ Corporate Governance Policy specifies a mandatory retirement age of 75 for directors. Directors
who are 75 years of age will not be eligible for election at the next AGM. Directors who turn 75 during their
term are eligible to finish out that term.
The Board has not adopted term limits for its directors. While term limits ensure fresh viewpoints on the
Board, they also cause a company to lose the valuable contributions of those directors who best
understand the business of the company and the challenges it faces. The Board continues to implement
board renewal and currently has five of eight directors that have served less than three years on the Board.
11. Policies Regarding the Representation of Women on the Board
Disclose whether a written policy relating to the identification and nomination of women directors
has been adopted. If the issuer has not adopted such a policy, disclose why it has not done so.
Although Canexus does not have a formal policy on gender diversity, since inception, the Board has
considered diversity qualifications including gender when determining board composition or filling
vacancies on the board. It is the Corporation’s practice to nominate directors who are best qualified to
serve on the board and a skills matrix is used to identify optimal qualifications.
12. Consideration of the Representation of Women in the Director Identification and Selection Process
Disclose whether and, if so, how the board or nominating committee considers the level of
representation of women on the board in identifying and nominating candidates for election or reelection to the board.
Since its inception, Canexus has had female representation on its board; Ms. Stephanie Felesky has
served as a director since 2005. In the 2014 board nomination process, female candidates were
considered and interviewed to stand for election to the board. It is the Corporation’s practice to consider all
qualified candidates and to nominate directors who are best qualified to serve on the board.
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2015 Information Circular and Proxy Statement
13. Consideration Given to the Representation of Women in Executive Officer Appointments
Disclose whether and, if so, how the issuer considers the level of representation of women in
executive officer positions when making executive officer appointments
Canexus encourages diversity and the representation of women in executive officer positions, although it
does not have a formal policy related to diversity. The Corporation’s practice is to consider all qualified
candidates and to hire the best qualified candidate for any vacant position.
14. Issuer’s Targets Regarding the Representation of Women on the Board and in Executive Officer
Positions
Canexus encourages diversity and the representation of women in executive officer positions and on the
Board. Although Canexus currently does not have a formal policy on, or targets for, gender diversity,
gender, along with other diversity considerations are contemplated when determining board composition
and filling vacancies on the board or making appointments to executive officer positions.
15. Number of Women on the Board and in Executive Officer Positions
a)
Disclose the number and proportion of directors on the issuer’s board who are women.
As of the date of this Circular, Canexus has one woman, Ms. Stephanie Felesky, serving as a director
on its board (12.5%).
b) Disclose the number and proportion of executive officers of the issuer who are women.
As of the date of this Circular, Canexus has one woman, Ms. Diane Pettie, VP, General Counsel and
Corporate Secretary, serving as an executive officer (14.3%).
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2015 Information Circular and Proxy Statement
SCHEDULE “B” ▪ Corporate Governance Policy
CORPORATE GOVERNANCE POLICY
1.0
Policy
Canexus Corporation (the “Corporation”) is committed to transparency and responsible corporate governance
practices. The Corporate Governance Policy is a framework for the way in which corporate governance is
carried out within the Corporation. We believe that these practices add value, benefit all of our stakeholders,
and must be maintained as an essential part of our operations. The Corporation will review this policy annually
to ensure that it provides for a high level of corporate governance.
2.0
Definitions
Audit Committee
The Audit Committee of the Board of Directors of the Corporation.
Board
The Board of Directors of the Corporation.
Canexus
The Corporation and its subsidiaries.
CG Committee
The Corporate Governance Committee of the Board of Directors of the Corporation.
HR and Compensation Committee
The Human Resources and Compensation Committee of the Board of Directors of the Corporation.
RC Committee
The Responsible Care® Committee of the Board of Directors of the Corporation.
3.0
The Board
Duties and Responsibilities
The Board is responsible for the stewardship of Canexus, providing independent, effective leadership to
supervise the management of the business and affairs of Canexus and to grow shareholder value responsibly
and in a sustainable manner.
The Board annually reviews and confirms or updates its Mandate which sets out the duties and responsibilities
of the Board. The Board Mandate shall be publicly disclosed.
Independence from Management
The Board meets without management at every regularly scheduled meeting.
Overall Independence
The Board meets without management and without non-independent Directors at every regularly scheduled
meeting.
Size of Board and Selection Process
As required by the Corporation’s constating documents, the Board consists of between three and 12 directors
at all times, who are elected by the Corporation’s shareholders each year at the annual meeting (“AGM”). The
Board may from time to time appoint additional directors between AGMs, who will serve until the next AGM.
The CG Committee shall review and recommend all candidates for election or appointment to the Board.
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2015 Information Circular and Proxy Statement
4.0
Directors
Duties and Responsibilities
Each individual Director of the Corporation will contribute actively and collectively to the effective governance of
the Corporation. The Board annually reviews and confirms or updates the Individual Director Mandate which
sets out the duties and responsibilities of individual Directors. The Individual Director Mandate will be publicly
disclosed.
Independence
The Board annually reviews and confirms or updates the Categorical Standards for Director Independence
(“Categorical Standards”). The Categorical Standards set out the requirements for determining independence
of Directors and members of the Audit Committee. The Categorical Standards will be publicly disclosed.
The Board annually, and when circumstances require, reviews and makes a determination on the
independence of each Director in light of the Categorical Standards and applicable law. The independence
determinations will be disclosed publicly.
Attendance
Directors will strive for attendance at all Board and Board Committee meetings. The Corporation will publicly
disclose the Director attendance record annually.
Material Change in Status
The Board has determined that the CG Committee will assess the appropriateness of continued Board service
when any Director has a material change in status that could compromise his or her ability to act as a director
of the Corporation. Any Director who has a material change in employment or health status is required to
immediately notify the Chair of the Board, who will refer the matter to the CG Committee for review. The CG
Committee will advise the Board and provide recommendations on the Director’s continued service to the
Corporation. It is not intended that a Director who has a material change in employment or health status be
required to leave the Board, but the CG Committee has the responsibility to assess the continued
appropriateness of Board membership under the relevant circumstances.
Orientation
The Corporation has established and maintains an in-depth orientation program for new directors which
includes: information on the role of the Board and each of its Committees; company and industry information;
and, the contribution individual directors are expected to make. Each new Director receives up-to-date
information on the Corporation’s corporate and organizational structure, recent filings and financial information,
strategic plan, governance documents and important policies and procedures. Each new Director will attend an
orientation session detailing the values and strategy of the Corporation and reviewing its operations, internal
structure and processes. As well, regardless of which Committees a new Director is on or will be appointed to,
each new Director will be invited to attend one full set of Committee meetings.
Continuing Education
Presentations are made regularly to the Board and Committees to educate and keep them informed of changes
within the Corporation and in legal, regulatory and industry requirements and standards. Special presentations
on operations and issues of particular business units are provided to all Directors from time to time. Trips to
various operating sites are also arranged for Directors. The CG Committee reviews information on available
external educational opportunities and ensures Directors are aware of the opportunities. The Corporation pays
tuition and expenses for Directors to attend relevant external education sessions. The Corporation will pay for
membership dues for each of the Directors in an appropriate organization that provides relevant publications
and educational opportunities.
Performance Evaluation
Every Director participates in the annual performance evaluation review. The review consists of a
questionnaire and an interview process. The responses to the questionnaire, which explores the performance
of the Board as a whole, and of all Board Committees, are submitted to the Chair of the CG Committee for
analysis. A personal self-evaluation of individual Directors on their performance and skills is also conducted
annually. A report on the performance of the Board as a whole, and of all Board Committees, is provided to the
Board Chair who then holds one-on-one interviews with the Directors. The results of any questionnaire and the
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2015 Information Circular and Proxy Statement
interviews are presented to the Board Chair and the CG Committee. The CG Committee then reports to the
Board and recommends any changes or further actions to address issues that were identified.
Compensation
The Corporation reviews the compensation of Directors, the Board Chair and the Committee Chairs regularly.
The CG Committee makes recommendations to the Board with respect to compensation of Directors, the
Board Chair and Committee Chairs. All compensation paid to Directors will be publicly disclosed.
Equity-Based Compensation
Directors who are not officers of the Corporation are not eligible to receive stock options. Directors do not
currently receive equity-based compensation, however, any equity-based compensation granted to Directors in
the future will be publicly disclosed.
Retirement
The retirement age for Directors is 75, but performance evaluation is also considered annually. Directors who
are 75 years of age will not be eligible to stand for election at the next AGM. Directors who turn 75 during their
term are eligible to finish out that term.
Term Limit
The Corporation has not set a term limit for its Directors. While term limits ensure fresh viewpoints on the
Board, they also cause a company to lose the valuable contributions of those directors who best understand
the business of the company and the challenges it faces. As an alternative to strict term limits, annual
performance evaluations are conducted and the Corporation has a retirement age policy.
5.0
Board Committees
Independence from Management
Board Committees meet without management at each regularly scheduled meeting.
A Director who is an Officer of the Corporation will not be a member of any Board Committee.
Committees
The Corporation is required to have an audit committee, a compensation committee, and a
nominating/corporate governance committee. The Corporation has an Audit Committee, a CG Committee, and
a HR and Compensation Committee to meet these requirements. The Board has also authorized an RCPP
Committee. The Board may also authorize other committees, as it feels are appropriate.
The Audit Committee assists the Board in fulfilling its oversight responsibilities with respect to (i) the integrity
of annual and quarterly financial statements to be provided to shareholders and regulatory bodies; (ii)
compliance with accounting and finance based legal and regulatory requirements; (iii) the independent auditor’s
qualifications, independence and compensation, and communicating with the independent auditor; (iv) the
system of internal accounting and financial reporting controls that Management has established; (v)
performance of the internal and external audit process and of the independent auditor; (vi) financial policies and
strategies including capital structure; (vii) financial risk management practices; (viii) transactions or
circumstances which could materially affect the financial profile of the Corporation; and (ix) implementation and
effectiveness of the Ethics Policy and investigation and resolution of accounting-related complaints (as defined
in the Ethic Policy).
The CG Committee assists the Board in overseeing (i) the development and implementation of principles and
systems for the management of corporate governance; (ii) identifying qualified candidates and recommending
nominees for Director and Board Committee appointments; (iii) evaluations of the Board, Board Committees,
the Board Chair and Committee Chairs; (iv) implementation and effectiveness of the Ethics Policy, compliance
reporting and the compliance programs under the Ethics Policy.
The HR and Compensation Committee assists the Board in overseeing (i) key compensation and human
resources policies; (ii) Chief Executive Officer objectives, performance reviews and compensation; (iii)
executive Management compensation; (iv) oversight of executive compensation risks, (v) executive
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2015 Information Circular and Proxy Statement
Management succession and development; and (vi) reviewing executive compensation disclosure before its
release.
The RC Committee assists the Board in fulfilling its oversight responsibilities with respect to the development,
monitoring and effective implementation of systems, programs and initiatives for the management of health,
safety, security and environmental risks, and compliance with laws that may impact the operations of the
Corporation.
Risk Management
The Board will oversee the Corporation’s risk management objectives and commitment and will ensure a risk
management policy is in place to address the Corporation’s rationale for managing risks, to address what risks
are acceptable to the Corporation; and to ensure that appropriate systems are in place to manage the risks.
The Board will receive recommendations from the Audit Committee on financial risk management practices,
from the HR and Compensation Committee on human resource and executive compensation risks, and from
the RC Committee on health, safety, security and environmental risk management practices.
Mandates
Each current Board Committee has developed a Mandate, setting out its duties and responsibilities, which has
been approved by the Board. All Board Committee Mandates are reviewed annually by the CG Committee and
the relevant Board Committee. Any changes to Board Committee Mandates will be approved by the Board. All
Board Committee Mandates will be publicly disclosed.
Member Independence
All members of the Audit Committee, the CG Committee and the HR and Compensation Committee will be
independent pursuant to the Corporation’s Categorical Standards and applicable law. A majority of the
members of the RC Committee will be independent pursuant to the Corporation’s Categorical Standards and
applicable law. The Board annually reviews and makes a determination on the independence of each of the
members of the Committees in light of the Categorical Standards and applicable law. Independence of all
Committee members will publicly disclosed.
Audit Committee Financial Literacy
All members of the Audit Committee will be financially literate as defined under applicable law. The Board
annually reviews financial literacy.
Reporting
The Board receives reports from the Board Committees at each regular meeting. The Board Committees also
report to other Board Committees from time to time, as required.
6.0
Board, Board Committees and Individual Directors
Advisors
The Board and all Board Committees will have the authority to engage independent advisors, at the
Corporation’s expense, to assist them in carrying out their responsibilities. Individual Directors may engage
independent advisors at the Corporation’s expense in appropriate circumstances and with the approval of the
CG Committee.
7.0
Chairs
Duties and Responsibilities of the Chairs
The Board has adopted, maintains and annually reviews and updates or confirms the Position Descriptions for
the Board Chair and the Committee Chairs which set out the duties and responsibilities of the Chairs. The
Positions Descriptions for the Board and Committee Chairs will be publicly disclosed.
Term Guidelines for Chairs
The Board has determined that each of the Board Chair and Committee Chairs will serve for a term of no more
than five years unless, after review by the CG Committee, it is decided that circumstances exist that make
continuity of leadership desirable at the time.
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2015 Information Circular and Proxy Statement
8.0
Officers
Duties and Responsibilities of the Chief Executive Officer (“CEO”)
The Board has adopted and regularly reviews and updates or confirms the CEO Position Description which
sets out the duties and responsibilities of the CEO. The CEO Position Description will be publicly disclosed.
The Board also reviews and approves Annual Objectives for the CEO. The independent Directors, with
recommendations from the HR and Compensation Committee, annually approve CEO compensation in light of
the achievement of the Annual Objectives.
Duties and Responsibilities of Other Officers
The Board has adopted and regularly reviews and updates or confirms Position Descriptions which set out the
duties and responsibilities for each of the Chief Financial Officer (“CFO”) and the Corporate Secretary. The
CFO and Corporate Secretary Position Descriptions will be publicly disclosed.
Succession Planning
The HR and Compensation Committee reviews and reports to the Board annually on the succession plan for
the Corporation’s CEO and senior management.
9.0
Directors and Officers
Share Ownership
The Board regularly reviews its guidelines for shareholdings of Directors and Officers. The guidelines will be
publicly disclosed.
Loans
The Corporation will not make any loans to its Directors or Officers.
10.0 Ethics Policy
The CG Committee, the Audit Committee and the Board annually review and update or confirm the Ethics
Policy applicable to all directors, officers and employees. The Board, through the CG Committee and Audit
Committee, receives regular reports on compliance with the Ethics Policy. The Ethics Policy will be publicly
disclosed on SEDAR and the Corporation’s website. Any waivers of or changes to the Ethics Policy will be
approved by the Board and will be appropriately disclosed.
The Ethics Policy contains provisions for the submission of complaints by employees and others with respect to
financial reporting, internal accounting and audit matters. The Ethics Policy includes protection from retaliation
for employees who submit complaints in good faith.
11.0 Disclosure
Compensation Consultant/Advisor
If a compensation consultant or advisor has been retained to assist in determining compensation for any of the
Directors or Officers, Canexus will disclose: the identity of the consultant or advisor; the mandate for which they
were retained; and the nature of any other work the consultant or advisor was retained by Canexus to perform.
Annual Governance Reporting
The Corporation will annually publicly disclose its governance practices in compliance with relevant Canadian
laws and rules.
Ongoing Governance Disclosure
The Corporation will publicly disclose its Corporate Governance Policy; Categorical Standards; Mandates of the
Board, Individual Directors and all Board Committees; Position Descriptions for the Board Chair, Committee
Chairs, CEO, CFO and Corporate Secretary; its Ethics Policy; and the External Communications Policy, as
referred to in this Corporate Governance Policy.
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The Corporation will publicly disclose any waivers of any of the provisions of or any changes to any one of its
Corporate Governance Policy; Categorical Standards; Mandates of the Board, Individual Directors and all
Board Committees; Position Descriptions for the Board Chair, Committee Chairs, CEO, CFO and Corporate
Secretary; its Ethics Policy; and, the External Communications Policy, as referred to in this Corporate
Governance Policy.
Access to Disclosures
As required by law, certain information is included in the Corporation’s annual Management Information
Circular or its Annual Information Form.
12.0 Policy History
Approved: August 9, 2005.
Revision Approved: December 8, 2006; October 30, 2007; July 23, 2008; July 23, 2009; July 28, 2010; July 8,
2011, August 9, 2012, August 7, 2013, August 6, 2014.
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SCHEDULE “C” ▪ Categorical Standards
CATEGORICAL STANDARDS FOR DIRECTOR INDEPENDENCE
(the “Categorical Standards”)
General Information
The independence of all directors of Canexus Corporation (the “Corporation”) will be reviewed at least annually by the
Board in light of the specific requirements set out below and these Categorical Standards are the basis for the
independence determinations that will be made public in the Management Information Circular of the Corporation prior to
directors standing for election or re-election to the Board. Directors who meet the specific requirements of these Categorical
Standards will be considered independent.
Directors who do not meet these standards for independence also make valuable contributions to the Board and to the
Corporation by reason of their knowledge and experience.
These Categorical Standards meet or exceed the requirements set out in the applicable provisions of National Instrument
58-101- Disclosure of Corporate Governance Practices, National Policy 58- 201- Corporate Governance Guidelines and
Multilateral Instrument 52-110 Audit Committees. These Categorical Standards may be amended from time to time by the
Board and will be amended when necessary to comply with regulatory requirements. The current Categorical Standards will
be disclosed annually.
Definitions
An “Affiliate" of a specified person (which includes a corporate entity or partnership) is a person that directly or indirectly,
through one or more intermediary, controls, or is controlled by, or is under common control with, the specified person.
"Control” means the power to direct the management and policies of another person or company by virtue of the ownership
or direction of voting securities of another person or company or by a written agreement or otherwise. “Executive Officer”
means a chair, vice chair, president, any vice president in charge of a principal business unit, division or function (such as
sales, administration, production or finance) of a business enterprise, and any other officer or person who performs a policymaking function for such a business enterprise. Officers of subsidiaries of a business enterprise will be deemed to be
officers of the parent business enterprise if they perform policy-making functions for the parent business enterprise. The
term Executive Officer specifically excludes a director, including a chair or vice chair of a board of any corporation, where
that person is not otherwise an Executive Officer as defined above.
“Immediate Family Member” includes an individual’s spouse, parents, children, siblings, mothers and fathers-in- law, sons
and daughters-in-law, brothers and sisters-in-law, and anyone (other than domestic employees) who shares the individual’s
home.
“Spouse or Child” means an individual’s spouse, minor child, or stepchild, or child or stepchild who shares the individual’s
home.
Independence of Directors
(a)
To be considered independent, the Board must affirmatively determine that a director does not have any direct or
indirect material relationship with the Corporation. A material relationship is a relationship which could, in the view
of the Board, be reasonably expected to interfere with the exercise of a member’s independent judgment. In this
regard, the Categorical Standards set out in item (b) below have been established to determine when a director of
the Corporation is independent.
(b)
Without limiting paragraph (a), director will not be independent if:
(i)
The director is, or has been within the last three years, an employee or Executive Officer of
the Corporation, or an Immediate Family Member of the director is, or has been within the last
three years, an Executive Officer of the Corporation;
(ii)
The director has received, or an Immediate Family Member of the director who is currently
employed as an Executive Officer of the Corporation has received, during any twelve-month
period within the last three years, more than Cdn $75,000 in direct compensation from the
Corporation, other than director and committee fees and fixed pension or other forms of fixed
compensation under a retirement plan for prior service (provided such compensation is not
contingent in any way on continued service);
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(c)
(iii)
(A) the director or the director's Spouse or Child is a current partner of a firm that is the
internal or external auditor of the Corporation; (B) the director is a current employee of such a
firm; (C) the director's Spouse or Child is a current employee of such a firm and participates in
its audit, assurance or tax compliance (but not tax planning) practice; or (D) the director or the
director’s Spouse or Child was within the last three years (but is no longer) a partner or
employee of such firm and personally worked on the audit of the Corporation within that time;
or
(iv)
The director or an Immediate Family Member of the director is, or has been within the last
three years, employed as an Executive Officer of another entity where any of the present
Executive Officers of the Corporation at the same time serves or served on that entity’s
compensation committee (or its equivalent).
Despite the terms set out in paragraph (b), a director will not be considered to have a material relationship with the
Corporation solely because the director has previously acted as an interim Chief Executive Officer of the
Corporation.
Loans to Directors
The Corporation will not make or arrange any personal loans or extensions of credit to directors.
Committee Members
All members of the Audit Committee, the Corporate Governance Committee and the Human Resources and Compensation
Committee shall be independent pursuant to these Categorical Standards. A majority of the members of the Responsible
Care® Committee of the Board shall be independent pursuant to these Categorical Standards. Members of the
Corporation’s Audit Committee will also be required to meet the additional criteria set out below to be considered
independent for the purposes of membership on the Audit Committee.
Audit Committee Members
In addition to satisfying the specific requirements set out above, directors will not be considered independent for purposes of
membership on the Audit Committee if:
•
•
•
•
The director is an Affiliate of the Corporation or any subsidiary of the Corporation, apart from his or her capacity as a
member of the Board or of any other committee of the Board;
The director is both a director and an employee, or is an Executive Officer, general partner or managing member of an
Affiliate of the Corporation;
The director or a Spouse or Child of the director accepts any consulting advisory or other compensatory fee from the
Corporation or any subsidiary of the Corporation, apart from in his or her capacity as a member of the Board or of any
other committee, or as a part-time chair or vice chair of the Board or any Board Committee, and other fixed amounts of
compensation under a retirement plan (including deferred compensation) for prior service (provided such compensation
is not contingent in any way on continued service); or
The director is a partner, member, an officer such as managing director occupying a comparable position, or an
Executive Officer, or occupies a similar position (except limited partners, non-managing members and those occupying
similar positions who, in each case, have no active role in providing the services) of a consulting, legal, accounting,
investment banking or financial advisory services firm which provides services to the Corporation or any subsidiary of
the Corporation for fees, regardless of whether the director personally provided the services for which the fees are paid.
A partner does not include a fixed income partner whose interest in the firm that is the internal or external auditor is limited to
the receipt of fixed amounts of compensation (including deferred compensation) for prior service with that firm if the
compensation is not contingent in any way on continued service.
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SCHEDULE “D” ▪ Board Mandate
BOARD MANDATE
The Board of Directors (the Board) of Canexus Corporation (the Corporation), as steward of the organization,
has the responsibility to oversee the conduct of the business and affairs of the Corporation.
Composition
The Board will be composed of between three and twelve directors, as determined by the Board and subject to
the terms of the Governance Agreement.
At least two-thirds of the directors of the Corporation will be independent, pursuant to the Categorical
Standards adopted by the Board and applicable law.
All Board members will have the skills and abilities appropriate to their appointment as directors. It is
recognized that the right mix of experiences and competencies will ensure that the Board will carry out its
duties and responsibilities in the most effective manner.
Except as set out in the By-Laws, Board members will be elected at the annual meeting of the Corporation’s
shareholders each year and will serve until their successors are duly elected.
Responsibility
The Board is responsible for the stewardship of the Corporation and the Corporation’s strategy, and overseeing
compliance with laws/regulations as well as monitoring related public policy issues that may impact the
business of the Corporation, providing independent, effective leadership to supervise the management of the
Corporation’s business and affairs to grow shareholder value responsibly and in a sustainable manner.
Specific Duties
The Board will:
Leadership
1.
Provide leadership and vision to supervise the management of the Corporation in the best interests of
the Corporation.
2.
Provide leadership in the development of the mission, vision, principles, values, Strategic Plan and
Annual Operating Plan of the Corporation, in conjunction with the Chief Executive Officer (the CEO).
Strategy
3.
Approve the development of strategic direction.
4.
Adopt a strategic planning process and, at least annually, approve a Strategic Plan for the Corporation
to maximize shareholder value that takes into account, among other things, the opportunities and risks
of the Corporation’s business.
5.
Monitor the Corporation’s performance in light of the approved Strategic Plan.
CEO
6.
Select, appoint, evaluate and, if necessary, terminate the CEO.
7.
Receive and approve recommendations on appropriate or required CEO competencies and skills from
the Human Resources and Compensation Committee (HR Committee).
8.
Annually, approve or develop corporate objectives that the CEO is responsible for meeting, and
annually assess the CEO against the preceding year’s corporate objectives.
Succession and Compensation
9.
Approve the development of the succession plan for senior management, which includes appointment,
development training, if necessary, and performance monitoring.
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10.
With the advice of the HR Committee, approve the compensation of senior Management and approve
appropriate compensation programs for the Corporation’s employees.
Corporate Responsibility, Ethics and Integrity
11.
Provide leadership to the Corporation in support of its commitment to corporate responsibility.
12.
Foster ethical and responsible decision making by Management.
13.
Set the ethical tone for the Corporation and its Management.
14.
Take all reasonable steps to satisfy itself of the integrity of the CEO and Management and satisfy itself
that the CEO and Management create a culture of integrity throughout the organization.
15.
At the recommendation of the Corporate Governance Committee (CG Committee), approve the
Corporation’s Ethics Policy, and at least annually review the Ethics Policy and consider any
recommended changes.
16.
Monitor compliance with the Corporation’s Ethics Policy and grant and disclose, or decline, any
waivers of the Ethics Policy for officers and directors.
17.
With the CG Committee and / or the Audit Committee and the Board Chair, respond to potential
conflict of interest situations.
Governance
18.
With the CG Committee, develop the Corporation’s approach to corporate governance, including the
Corporate Governance Policy, and at least annually review the Corporate Governance Policy and
consider any recommended changes.
19.
Once or more annually, as the CG Committee decides, receive for consideration that Committee’s
evaluation and any recommended changes, together with the evaluation and any further
recommended changes of another Board Committee, if relevant, to each of the following:
i.
ii.
iii.
iv.
v.
vi.
vii.
viii.
ix.
x.
xi.
xii.
Categorical Standards for Director Independence;
Board Mandate;
Individual Director Mandate;
Chair of the Board Position Description;
Audit Committee Mandate;
Corporate Governance Committee Mandate;
Human Resources and Compensation Committee Mandate;
Responsible Care® Committee Mandate;
Committee Chair Position Description;
CEO Position Description;
Chief Financial Officer Position Description; and
Corporate Secretary Position Description.
20.
With the CG Committee, ensure that the Corporation’s governance practices and policies are
appropriately disclosed.
21.
At the recommendation of the CG Committee, annually determine those individual Directors proposed:
a.
b.
c.
to be nominated for election at the next annual meeting of shareholders;
to be designated as independent under the Categorical Standards and ensure appropriate
disclosures are made; and
as those individual Directors on the Audit Committee possessing “financial literacy” under
applicable law and ensure appropriate disclosures are made.
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22.
At the recommendation of the Board Chair, review the circumstances of any Director’s material change
in employment or health status and determine the appropriate action to be taken.
Communications, Disclosure and Compliance
23.
Adopt an External Communications Policy for the Corporation which addresses disclosure matters,
and at least annually review it and consider any recommended changes.
24.
Periodically assess and be satisfied with the adequacy of procedures in place for the review of public
disclosure of financial information extracted or derived from the applicable financial statements (other
than the annual and quarterly required filings) for the Corporation.
25.
Ensure policies and procedures are in place to ensure the Corporation’s compliance with applicable
law, including timely disclosure of relevant corporate information and regulatory reporting, monitor
pending changes in the laws/regulations and related public policy issues that may impact the
operations of the Corporation.
26.
Establish and disclose a process to permit stakeholders to directly contact the independent Directors
as a group.
Board Chair
27.
Annually appoint the Chair of the Board.
Committees
28.
Establish such committees as the Board deems necessary to assist the Board in carrying out its duties
and responsibilities, appoint Board committee members and approve the Committees’ respective
mandates and any amendments thereto, including but not limited to the following committees:
a.
b.
c.
d.
Audit Committee;
Corporate Governance Committee;
Human Resources and Compensation Committee; and
Responsible Care® Committee.
29.
In the Board’s discretion, appoint any other Board Committees that the Board decides are needed and
delegate to those Board Committees any appropriate powers of the Board.
30.
In the Board’s discretion, annually appoint the Chair of each Board Committee.
Delegations and Approval Authorities
31.
Annually delegate approval authorities to the CEO and review and revise them as appropriate.
32.
Consider and, in the Board’s discretion, approve financial commitments in excess of delegated
approval authorities.
33.
In the Board’s discretion, annually delegate to the Audit Committee to recommend to the Board for
consideration the quarterly results, financial statements, and MD&A prior to filing them with or
furnishing them to the applicable securities regulators and prior to any public announcement of
financial results for the periods covered.
34.
Receive a report from the Audit Committee on any management certificate in respect of proposed
dividends.
35.
Require the Audit Committee to annually review the Corporation’s pension plans and report to the
Board as required.
36.
Require the HR Committee to annually review the compensation disclosure analysis in the
Corporation’s continuous disclosure.
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37.
Require the HR Committee to annually recommend to the Board for consideration the appointment of
officers.
Annual Operating Plan
38.
At least annually, approve an Annual Operating Plan for the Corporation including business plans,
operational requirements, organizational structure, staffing and budgets, which support the Strategic
Plan.
39.
Monitor the Corporation’s performance in light of the approved Annual Operating Plan.
Risk Oversight
40.
Ensure policies and procedures are in place to: identify the Corporation’s principal business risks and
opportunities; address what risks are acceptable to the Corporation; and, ensure that appropriate
framework and systems are in place to manage the risks.
41.
Ensure policies and procedures designed to maintain the integrity of the Corporation’s disclosure
controls and procedures are in place.
42.
As required by applicable law, ensure policies and procedures designed to maintain the integrity of the
Corporation’s internal controls over financial reporting and management information systems are in
place.
43.
Ensure policies and procedures designed to maintain appropriate auditing and accounting principles
and practices are in place.
44.
Ensure policies and procedures designed to maintain appropriate safety, environment and corporate
responsibility principles and practices are in place.
Financial Leadership
45.
Review and approve the Corporation’s financial strategy considering current and future business
needs, capital markets and the Corporation’s credit rating.
46.
Review and approve the Corporation’s capital structure including debt and equity components, current
and expected financial leverage, and interest rate and foreign currency exposures.
47.
Review and approve the financing of the Corporation’s Annual Operating Plan.
48.
Periodically review and, in the Board’s discretion, approve changes to the Corporation’s dividend
policy.
Orientation / Education
49.
With the CG Committee, oversee the development and implementation of the Director orientation
program covering the role of the Board and its Committees, the contribution individual Directors are
expected to make and the nature and operation of the Corporation’s business.
50.
With the CG Committee, oversee the development and implementation of the ongoing Director
education program designed to maintain and enhance skills and abilities of the Directors and to ensure
their knowledge and understanding of the Corporation’s business remains current.
Board Performance
51.
Oversee the process of the CG Committee’s annual evaluation of the performance and effectiveness
of the Board, Board Committees, the Board Chair and Committee Chairs, in light of the applicable
Mandates and Position Descriptions.
52.
Participate in an annual evaluation of Board performance by the CG Committee.
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53.
Receive and consider a report and recommendations from the CG Committee on the results of the
annual evaluation of the performance and effectiveness of the Board, Board Committees, the Board
Chair and Committee Chairs.
Board Meetings
54.
Meet at least four times annually and as many additional times as needed to carry out its duties
effectively. The Board may, on occasion and in appropriate circumstances, hold a meeting by
telephone conference call.
55.
Meet in separate, non-management in camera sessions at each regularly scheduled meeting.
56.
Meet in separate, non-management closed sessions with any internal personnel or outside advisors,
as needed or appropriate.
Advisors / Resources
57.
Retain, oversee, compensate and terminate independent advisors to assist the Board in its activities.
58.
Other
59.
60.
Receive adequate funding for independent advisors and ordinary administrative expenses that are
needed or appropriate for the Board to carry out its duties.
In order to honour the spirit and intent of applicable law as it evolves, the authority to make minor
technical amendments to this Mandate has been delegated to the Corporate Secretary, who will report
any amendments to the CG Committee at its next meeting.
Once or more annually, as the CG Committee decides, this Mandate will be fully evaluated and
updates recommended to the Board for consideration.
Revised: November 6, 2014
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2015 Information Circular and Proxy Statement
SCHEDULE “E” ▪ Stock Option Plan
At the Annual and Special Meeting of Unitholders held on May 5, 2011, the Arrangement Transaction was
approved with the result that the Fund, which was an income trust, converted to a corporation and became
Canexus Corporation. The Stock Option Plan was adopted by Unitholders at the meeting.
Under the Stock Option Plan, Options to acquire Shares may be granted to officers, employees and other
eligible service providers as the directors of the Corporation determine. Directors are not entitled to participate
in the Stock Option Plan. Under the Stock Option Plan, at the time that Options are granted, corresponding
Bonus Rights may also be granted to the Option holder. Bonus Rights also accrue further Bonus Rights when
dividends are declared. These Bonus Rights may be redeemed on or after the date of exercise of the
corresponding Options to receive additional Shares. Bonus Rights were not granted with Options during 2014
and it is the intent of the Board that Bonus Rights will not be granted in the future.
The aggregate number of Shares reserved for issuance under the Stock Option Plan is nine percent (9%) of
the issued and outstanding shares of the Corporation (on a non-diluted basis). The nine percent maximum is
an “evergreen” provision. Upon the exercise (or in the case of Bonus Rights, redemption), expiration,
cancellation or other termination of any Option or Bonus Right under the Stock Option Plan, the number of
Shares equivalent to the number of Options and Bonus Rights that are exercised, terminated, cancelled or
expired automatically become reserved for issuance under the Stock Option Plan, and are available for future
grants.
The maximum number of Shares that may be reserved for issuance at any time to any one person (either
through the exercise of Options or the redemption of Bonus Rights) shall not exceed five percent (5%) of the
issued and outstanding Shares (on a non-diluted basis) less the aggregate number of Shares that may be
issued to the Option holder under any other security-based compensation arrangement.
The maximum number of Shares issuable at any time to insiders under the Stock Option Plan (either through
the exercise of Options or the redemption of Bonus Rights) shall be nine percent (9%) of the total issued and
outstanding Shares (on a non-diluted basis) less the aggregate number of Shares that may be issued to
insiders under any other security-based compensation arrangement.
The maximum number of Shares that may be issued to insiders under the Stock Option Plan (either through
the exercise of Options or the redemption of Bonus Rights) and under any other security-based compensation
arrangement within a one (1) year period shall be two percent (2%) of the issued and outstanding Shares (on a
non-diluted basis) excluding Shares issued under the Stock Option Plan and under any other security-based
compensation arrangement over the preceding one year period.
The maximum number of Shares that may be issued to any one insider and such insider’s associates under the
Stock Option Plan (either through the exercise of Options or the redemption of Bonus Rights) and under any
other security-based compensation arrangement within a one (1) year period shall be two percent (2%) of the
issued and outstanding Shares (on a non-diluted basis) excluding Shares issued to such insider and such
insider’s associates under the Stock Option Plan or any other security-based compensation arrangement over
the preceding one year period.
The exercise price of the Options is determined by the Board, subject to the requirement that the exercise price
of the Options at the time of grant must be no less than the weighted average trading price of the Shares on the
TSX on the five (5) trading days immediately preceding the date on which the Options were granted.
The average Annual Grant Rate during any three consecutive calendar years (a “Rolling Three Year Period”)
shall not exceed 2% (the initial Rolling Three Year Period being 2014, 2015 and 2016, the next Rolling Three
Year Period being 2015, 2016 and 2017 and so forth for each successive Rolling Three Year Period), where
the Annual Grant Rate shall be the percentage calculated in the following manner:
% = 100* (X/Y)
Where,
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2015 Information Circular and Proxy Statement
X
Y
= the number of Options in any calendar year; and
= the weighted average number of Shares that are outstanding (on a non-diluted basis) during
such calendar year.
The period, or portion thereof, during which an Option or a portion thereof shall be exercisable and any
corresponding Bonus Right shall be redeemed shall end no more than five (5) years from the date on which the
Option was granted.
An Option holder may elect to receive a cash payment or Shares in lieu of the right to exercise Options and
redeem any corresponding Bonus Rights (“Cashless Exercise”) provided that the Board may from time to
time, in its sole discretion, determine whether an Option holder is entitled to receive cash, Shares or a
combination thereof upon making an election to Cashless Exercise. In the event of a Cashless Exercise, the
cash payment to be paid or the number of Shares to be issued, as the case may be, will be determined by
reference to the closing price of the Shares on the TSX on the date the notice of Cashless Exercise was served
and the number of Shares or Bonus Rights in respect of which the election is made.
Options will vest and be exercisable as to one-third (1/3) of the number of Options granted on each of the first,
second and third anniversaries of the date of grant (computed to the nearest full share and subject to
acceleration of vesting at the discretion of the Board).
An Option and a Bonus Right are personal to the grantee and are non-transferable and non-assignable. The
Stock Option Plan does not provide for or contemplate the provision of financial assistance to facilitate the
exercise of Options and the issuance of Shares; however, at the Board’s discretion, it may facilitate the
cashless exercise of Options and Bonus Rights. If the employment or appointment of a holder of Options
ceases, then the Options and Bonus Rights terminate and may not be exercised or redeemed after the earliest
of the expiry date or the date that is:
•
•
•
18 months after termination of active employment or consulting relationship with the Corporation or any of
its direct or indirect subsidiaries by reason of death, permanent disability or retirement from active
employment for employees in Canada and Brazil and 6 months after termination of active employment or
consulting relationship with the Corporation or any of its direct or indirect subsidiaries by reason of death,
permanent disability or retirement from active employment for employees in the U.S.;
the date of termination for just cause; or
90 days after termination for reasons other than (a) or (b) above.
The Board may amend the Stock Option Plan or the terms of an Option and, as applicable, Bonus Rights
granted thereunder without Shareholder approval in respect of the following matters:
•
•
•
•
•
•
to correct a clerical or typographical error, cure any ambiguity, error or omission therein or to correct or
supplement any provision thereof that is inconsistent with any other provision of the Stock Option Plan;
the timing and terms of vesting of Options and Bonus Rights granted under the Stock Option Plan;
the termination provisions of an Option and Bonus Right granted pursuant to the Stock Option Plan which
does not entail an extension beyond the original expiry date of such Option and Bonus Right;
amendments necessary to comply with the provisions of applicable law (including without limitation to avoid
inconsistency with, or to amend provisions that would subject a holder of Options or Bonus Rights to
unfavourable tax treatment under the Tax Act or other applicable tax laws);
amendments respecting the administration of the Stock Option Plan; and
amendments necessary to suspend or discontinue the Stock Option Plan.
The Board may not amend the Stock Option Plan or the terms of an Option and, as applicable, Bonus Rights
granted under the Stock Option Plan in respect of any of the following matters without shareholder approval:
•
•
•
an increase in the percentage amount of Shares that may be issued on the exercise of Options or
redemption of Bonus Rights granted pursuant to the Stock Option Plan;
a reduction in the exercise price of an Option;
the cancellation of an Option and subsequent reissue to the holder of such Option of a new Option in
replacement thereof;
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2015 Information Circular and Proxy Statement
•
•
•
•
extend the term of an Option beyond its original expiry date or extend the redemption period of a Bonus
Right beyond the original redemption period end date;
any amendment that would add to the categories of persons eligible to participate in the Stock Option Plan,
including to permit non-employee director participation in the Stock Option Plan;
any amendment that would permit an Option holder to assign or transfer an Option to a new beneficial
Option holder, other than for normal estate settlement purposes; and
any amendment to the Stock Option Plan to remove or amend the amendment provisions thereof.
The Stock Option Plan also includes special provisions that apply to Option holders who are subject to certain
deferred compensation tax laws in the United States in order to avoid adverse and punitive consequences
under U.S. tax laws. These provisions impose different conditions on and different timing for the exercise of
Options and the redemption of Bonus Rights and substantially limit the periods when Options may be exercised
and Bonus Rights may be redeemed. The Stock Option Plan provides that these special provisions can be
amended by the Board in its sole discretion without the approval of Shareholders or individual Option holders.
Additionally, the Stock Option Plan also includes special provisions that apply to Option holders who work in
Brazil in order to ensure that Options and Bonus Rights granted to them do not constitute part of an Option
holder’s remuneration, to provide for an alternative Option and Bonus Rights termination schedule appropriate
to Brazil and to provide for the mechanics of exercise and/or redemption by the Brazil Option holders.
The Stock Option Plan is subject to such future approvals of the Shareholders and applicable stock exchanges
as may be required by the terms of the Stock Option Plan or such stock exchanges from time to time. As
required by the TSX, as a result of implementing an “evergreen” plan, approval of all unallocated Options and
Bonus Rights under the Stock Option Plan must be obtained by Canexus every three (3) years from the Board
and the Shareholders. Shareholder approval of all unallocated Options and Bonus Rights under the Stock
Option Plan was obtained at the Annual and Special Meeting of Shareholders held on May 8, 2014.
Shareholder approval will be requested again no later than the annual meeting in 2017.
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Glossary of Terms
AGM or Meeting – the Annual General Meeting of Shareholders to be held May 7, 2015
AOP – annual operating plan
Arrangement Transaction – the conversion of the Fund from an income trust to a corporate entity, completed on July 8, 2011
Audit Committee – audit committee of the Corporation (and prior to the completion of the Arrangement Transaction, the audit
committee of Canexus Limited, the administrator of the Fund)
Auditors – Deloitte LLP
Beneficial Shareholder – a Shareholder that holds Shares in the name of a nominee, that is, the Share certificate was deposited
with a bank, trust company, securities broker, trustee or other nominee
Board – the board of directors the Corporation (and prior to the completion of the Arrangement Transaction, the board of directors
of Canexus Limited, the administrator of the Fund)
Bonus Right – the right, under the Stock Option Plan, to receive a notional accumulation on an Option equivalent to quarterly cash
dividend, exercisable after the associated Option is exercised
Canexus or the Corporation – Canexus Corporation
Categorical Standards – the Corporation’s categorical standards for director independence adopted by the Corporation, as set out
in Schedule “C” to this Circular
CEO - chief executive officer of the Corporation
CFO - chief financial officer of the Corporation
CIAC – the Chemical Industry Association of Canada
Circular – this information circular, dated March 24, 2015
Code - Internal Revenue Code
Compensation Committee – the Human Resources and Compensation Committee of the Corporation
Computershare – Computershare Trust Company of Canada
DSUs – Deferred Share Units
DSU Plan - Deferred Share Unit Compensation Plan for Non- employee Directors adopted by the Corporation on July 8, 2011
Final Average Earnings – average base salary for the 36 highest paid consecutive months during the ten years before retirement;
plus annual cash incentive payments at the lesser of target bonus or actual bonus paid, averaged over the final three years of
participation
Financial Statements - the 2014 annual audited financial statements of the Corporation
Fund – Canexus Income Fund
Fund Unit – a trust unit of the Fund
Hugessen – Hugessen Consulting Inc., the independent compensation consultant to Compensation Committee
ICD – Institute of Corporate Directors
IFRS – International Financial Reporting Standards, the standards and interpretations adopted by the International Accounting
Standards Board, as amended from time to time
MD&A – management’s discussion and analysis
Mercer – Mercer Consulting Ltd., compensation consultant to Management
NATO – North American Terminal Operations
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2015 Information Circular and Proxy Statement
NEOs - our named executive officers, including all individuals who were the CEO or interim CEO in 2014, and the CFO
NOBO - a non-objecting beneficial owner, that is, a Beneficial Shareholder who has advised their intermediary that they do not
object to the intermediary disclosing ownership information about them to the Corporation
OBO - an objecting beneficial owner, that is, a Beneficial Shareholder who has advised their intermediary that they object to their
intermediary disclosing ownership information on their behalf to the Corporation
Options – Stock Options issued pursuant to the Stock Option Plan
PSUs – Performance Share Units
PSU Plan – the performance share unit plan of the Corporation approved by the Board of Directors on August 9, 2012
Registered Shareholder – a Shareholder that holds Shares in his or her own name
Responsible Care® – a system of safety, health and environmental management adopted by the chemical industry
RC Committee – Responsible Care® Committee, the committee responsible to oversee health, safety, environment and corporate
responsibility
RIR – Recordable Injury Rate
RSUs – Restricted Share Units
RSU Plan – the restricted share unit plan of the Corporation approved by the Board of Directors on August 6, 2014
Share – a common share in the capital of the Corporation
Shareholder – any person, company or other entity that owns at least one Share
SEDAR – the System for Electronic Document Analysis and Retrieval maintained by the Canadian Securities Administrators
Stock Option Plan – the stock option plan of the Corporation, effective as at July 8, 2011
TSX – Toronto Stock Exchange
TSX-V – TSX Venture Exchange
TUIP – Trust Unit Incentive Plan
Unitholder – a holder of Fund Units
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2015 Information Circular and Proxy Statement
TSX: CUS
Canexus Corporation
Suite 2100, 144 - 4th Avenue SW
Calgary, Alberta T2P 3N4
Telephone: 403-571-7300
Facsimile: 403-571-7800
www.canexus.ca