The corporate governance disclosure at pages 66 through 73 in the Management Proxy Circular has been prepared in accordance with Form 58-101F1 - Corporate Governance Disclosure and has been reviewed with the nominations and corporate governance committee of the board of directors. The board of directors has determined that the company’s practices and procedures align with National Instrument 58-101 - Disclosure of Corporate Governance Practices.
Compliance with NYSE MKT Standards
The NYSE MKT Company Guide requires listed foreign private issuers to disclose any significant differences between their governance practices and those required by NYSE MKT standards for U.S. domestic issuers, of which only one difference exists with respect to Imperial. The NYSE MKT requires shareholder approval for all equity compensation plans and any material changes to such plans (with a few limited exceptions). This applies whether the securities in a plan are newly issued or bought on the open market.
By contrast, the TSX requires shareholder approval of equity compensation plans only if they involve newly-issued securities. Imperial maintains a savings plan into which career employees with more than one year of service may contribute between one and 30 percent of normal earnings. The company provides matching contributions which vary depending on the amount of employee contributions and in which defined-benefit pension arrangement the employee participates. One of the available options for investment by employees of their contribution and the company’s matching contribution is company shares. The company purchases these shares on the Toronto Stock Exchange; thus, no shareholder approval is required or was obtained under the TSX rules.
The company’s restricted stock unit plan provides for the grant of restricted stock units, half of which normally vest on each of the third and seventh anniversary date of grant. Half of those granted to the chairman, president and chief executive officer vest on each of the fifth anniversary date of grant and the tenth anniversary of the date of grant or the date of retirement, whichever is later. Grantees may take each vesting of units, except those which vest on the third anniversary date, in the form of the company’s shares. As a fixed number of shares are reserved for issue under the plan, the TSX requires shareholder approval only for any amendment or modification that:
- Increases the number of common shares reserved for issuance under the plan;
- Increases the exercise price;
- Extends eligibility to participate in the plan to any persons not currently contemplated;
- Extends the right of the grantee to transfer or assign restricted stock units;
- Adjusts the exercise date of any restricted stock units previously granted; or
- Amends the amending provisions.
In 2008, the company’s shareholders approved an amendment to the restricted stock unit plan to permit the directors to make future amendments to the plan without shareholder approval, and to provide that shareholder approval shall be required only for those amendments or modifications listed above for which the TSX requires shareholder approval.