Good governance is about developing and sustaining a culture that guides expected behaviour and encourages our staff to stay on top of issues and manage risk with a focus on long-term value creation.
Our governance framework is focused on a number of elements, including:
A confidential employee survey conducted in 2014 showed that 99 percent of our employees agreed that leaders at Cenovus provide and demonstrate a culture of compliance and ethics.
Our Board of Directors oversees our governance framework of processes, controls, policies and practices to help make sure we live up to our purpose, promise and values, maintain our relationships and protect our ability to grow our business. Simply put, good governance is necessary to keep our business running legally, effectively and ethically.
To help ensure the long-term success of our business, we have a succession plan in place at the Board level. One of the Nominating and Corporate Governance Committee’s responsibilities is to identify individuals qualified to become Board members and recommend to the Board proposed nominees for election. The committee seeks to make sure there is a sufficient range of skills, expertise and experience on our Board. It also reviews and evaluates suggestions for candidates from individual Directors, the President & Chief Executive Officer and professional search organizations.
The skills matrix on page 60 of our 2015 Management Proxy Circular illustrates the breadth of skills and experience of our current Board members. These skills and experience were identified as being important to Cenovus following a review of recommended best practices, the Board’s mandate, Cenovus’s three-year business plan and peer group benchmarking.
Nine of our current Directors have been members of our Board since Cenovus was created in 2009. By next year, the majority will be 70 years of age and older. We believe that a diverse Board includes and makes use of differences in skills, expertise and industry experience, gender, ethnicity, age and other distinctions between Directors. In 2014, we embarked upon a renewal program, which included creating a Board Diversity Policy, focused on ensuring the Board continues to have the necessary skills and desirable balance of age and gender to discharge its ongoing responsibilities. We acknowledge we need more diversity on our Board, and we aspire to have women make up at least one-third of the independent members of the Board by 2020.
At our annual and special meeting of shareholders, held on April 29, 2015, we added new expertise in the areas of energy and transportation with the election of Steven F. Leer to our Board of Directors.
Our Code of Business Conduct & Ethics applies to all officers, employees, contractors, consultants and Board members of Cenovus. Our code addresses our position on a number of issues including fraud, conflict of interest, political activities, whistleblower protection, use of the company’s assets and harassment in the workplace. We update the code regularly to reflect societal changes as well as best practices in our business.
Every employee who works at Cenovus is required to complete an online training course to show their commitment to our key policies, including: Code of Business Conduct & Ethics; Corporate Responsibility; Records and Information Management; Non-Harassment; Alcohol & Drug; Disclosure, Confidentiality and Employee Trading; and Intellectual Property. The training is designed to enhance employee understanding of the policies and provide practical examples of how to apply them in everyday business situations.
“We take our commitment to safety and environmental stewardship, ethical business conduct and corporate responsibility seriously,” says Carmelle Hunka, Vice-President, Governance, Compliance & Security. “We measure our success through actions and behaviours as well as the bottom line, so it’s the responsibility of our employees to understand and comply with the principles in our policies and practices.”
Any concern associated with our oil and natural gas projects or with the behaviours of the people who work for us is something we take very seriously. Depending on the nature of the concern, it’s communicated either to our leaders or human resources, or through more formal channels like our Integrity Helpline or Investigations Committee.
The Integrity Helpline is an anonymous and confidential option for members of the public and our employees to let us know about potential ethical, financial or workplace issues related to how we conduct our business. We follow up on all inquiries either through the Investigations Committee or other appropriate channels across the company.
Investigations of business conduct can relate to compliance with laws and regulations, conflicts of interest, fraud, confidentiality and disclosure, and other potential breaches of our policies and practices. The Investigations Committee investigated 30 complaints in 2014. Those complaints included issues of potential harassment, conflict of interest and fraud. Twenty-eight of the complaints are closed and two remain ongoing. We encourage people to call the Integrity Helpline so we can address any concerns. In 2014, the number of calls we received increased to 161 calls, up from 131 in 2013. Based on review and follow-up, the rise in the number of call intakes from 2013 can be attributed to an increased awareness of the helpline and a reflection of confidence in it as a mechanism to report concerns and receive timely follow-up and action.
We do not tolerate disrespectful behaviour by our employees or contractors. When disrespectful behaviour is reported to us through the Integrity Helpline or other avenues, we take firm action – up to and including termination of employment or cancellation of contracts.
Our compensation program is designed to attract and retain high-performing employees, align Executive and employee interests with those of our shareholders and manage risks that could have an adverse effect on Cenovus.
Our compensation program considers risks that Cenovus could be exposed to in achieving our strategic objectives. Executive compensation is linked to managing our company-wide risk so that financial incentives reinforce a focus on safety, execution excellence, environmental responsibility and market access. One of the program components is our corporate award, which is determined based upon an assessment of a comprehensive set of performance measures. These measures support our Board-approved corporate strategy and include operational performance, environmental actions, consolidated financial performance, shareholder performance, strategic accomplishments and reputation and people, as outlined in our company-wide scorecard on page 32 of the 2015 Management Proxy Circular.
Our Human Resources and Compensation Committee provides oversight with respect to executive compensation with emphasis on compensation risk management, executive talent management, retention, corporate performance, pay for performance and say on pay.
To give our shareholders a say on pay, a non-binding advisory vote on our approach to executive compensation is held every year as part of our annual and special meeting of shareholders. It is intended to further enhance transparency regarding the Board’s philosophy, principles and approach to executive compensation.
As a publicly listed company, we’re required to disclose certain executive officers’ and Directors’ compensation. For more information on how we pay for performance and ensure compensation programs are appropriately risk-based, refer to the Compensation Discussion and Analysis section on page 23 in the 2015 Management Proxy Circular.
The performance measures we use to determine the corporate award element of our annual performance bonus include environmental, safety, people and reputational factors. Employee behaviour is considered in determining individual performance bonuses.
At Cenovus, we believe that to achieve excellence we need to execute on our strategy safely, consistently and reliably. That’s why in 2014, we focused on improving our Cenovus Operations Management System (COMS) and further embedding it in our operations. COMS provides a consistent framework for assessing, managing and optimizing business processes, operations risk, safety, environment and operating performance. It ensures we have processes and controls in place to grow as an organization in a controlled and deliberate manner.
To support the effectiveness of COMS by managing risk and continuously improving operational performance, we have an independent audit function at Cenovus, called COMS Assurance. This team is responsible for conducting audits of our operations against the requirements within the management system and providing independent and objective feedback.
One example of COMS in action is how we share knowledge. When one facility identifies a solution to a problem, it’s then communicated so that everyone across our operations can benefit. For example, our process safety function now helps to ensure that controls are assessed and implemented in the most effective way possible and not left up to individual teams.
|BOE/d||barrel of oil equivalent per day|
|CO2E||carbon dioxide equivalent|
|m³OE||cubic metres of oil equivalent|
|mg/L||milligrams per litre|
|MMcf/d||million cubic feet per day|
|SOR||steam to oil ratio|