The commitment of FirstService Corporation ("FirstService" or the "Company") to acting in a responsible manner stems from our firm belief that good governance is good business. It is the integrity of our dealings with our partners that has been the foundation for the success of FirstService and in that spirit, we continue to review and evaluate the Company`s business operations and practices so that we may continue to make decisions that are beneficial to our clients, shareholders and employees.
The board of directors (the "Board") of the Company considers good corporate governance practices to be an important factor in the overall success of the Company. Under National Instrument 58-101 - Disclosure of Corporate Governance Practices and National Policy 58-201 - Corporate Governance Guidelines Practices (collectively, the "Corporate Governance Rules"), the Corporate Governance Rules, the Company is required to disclose information relating to its corporate governance practices. The Company is committed to adopting and adhering to corporate governance practices that either meet or exceed applicable corporate governance standards. The Company believes that its corporate governance practices should be compared to the highest standards currently in force and applicable to it as well as to best market practices.
In addition, the Company believes that director, officer and employee honesty and integrity are important factors in ensuring good corporate governance, which in turn improves corporate performance and benefits all shareholders. To that end, the Board has adopted a Code of Ethics and Conduct, which code applies to all directors, officers and employees of the Company and its subsidiaries, and a Financial Management Code of Ethics and Conduct, which code applies to officers, senior management and senior financial and accounting personnel of the Company and its subsidiaries. Any deviations from the Code of Ethics and Conduct are required to be reported to an employee's supervisor and, if appropriate, the Company's Chief Financial Officer and the Board. Any deviations from the Financial Management Code of Ethics and Conduct are required to be reported to the Director, Compliance and Risk Management, the Chief Executive Officer (the "CEO") and/or the Chair of the Audit Committee of the Board.
The Board currently is comprised of seven members. A majority of the Board is comprised of independent directors. Brendan Calder, Bernard I. Ghert, Frederick F. Reichheld, Michael Stein and Erin J. Wallace are considered by the Board to be independent directors within the meaning of the Corporate Governance Rules as each has "no direct or indirect material relationship" with the Company. The other two Board members, Jay S. Hennick and D. Scott Patterson, will not be independent directors within the meaning of the Corporate Governance Rules as each will be a member of management of the Company. The Board has adopted a majority voting policy for the election of directors.
In order to ensure that the Board successfully carries out its duties and responsibilities, the Board has appointed an independent lead director of the Board. The lead director's duties include representing the independent directors in discussions with senior management on corporate governance issues and other matters, assisting in ensuring that the Board functions independently of its significant shareholder and performing such other duties and responsibilities as are delegated by the Board from time to time. Bernard I. Ghert has been appointed as the independent lead director of the Board.
In addition, the Board has adopted a policy relating to a director's tenure and priorities. Under this policy, upon a director reaching the age of 75, and on each anniversary thereafter for so long as such individual continues to serve as a director, such director must tender his or her written resignation from the Board to the Nominating and Corporate Governance Committee of the Board (the "Governance Committee"). The Governance Committee will, within 30 days, consider the resignation offer and will recommend to the Board whether or not to accept it. The Board will thereafter act on the Governance Committee's recommendation within 30 days. If a resignation is accepted, it will be effective either: (i) prior to the commencement of the next annual meeting of the Company's shareholders at which directors are to be elected; or (ii) upon acceptance of such offer of resignation by the Board, as determined by the Board. The foregoing applies to all directors of the Company as well as to all future directors of the Company, other than Bernard I. Ghert, who has been exempted by the Board having regard to his age and his past service. In addition, this policy provides that upon initially becoming a director of the Company, and at each annual Board meeting occurring immediately prior to the annual meeting of the Company's shareholders at which directors are to be elected, each director will represent to the Board that membership on the Board and the carrying out of such director's Board and committee duties is one of such director's "top three" priorities and that such director's personal or professional circumstances do not adversely affect such director's ability to effectively serve as a director of the Company.
Jay S. Hennick, who is not an independent director, has been appointed Chair of the Board and Bernard I. Ghert, an independent director, has been appointed as the independent lead director of the Board, thereby ensuring a separation of the roles of Chair and Chief Executive Officer (who is D. Scott Patterson) as well as appropriate independence. As Chair of the Board, Mr. Hennick provides leadership to directors in discharging their mandate, including by leading, managing and organizing the Board consistent with the approach to corporate governance adopted by the Board from time to time, promoting cohesiveness among the directors and being satisfied that the responsibilities of the Board and its committees are well understood by the directors. The Chair of the Board is responsible for taking all reasonable measures to ensure that the Board fully executes its responsibilities. The Board does not have a written mandate, but rather has developed a formal position description for the Chair of the Board. The position description for the Chair of the Board provides, among other things, that the Chair will: (i) ensure that all business required to come before the Board is brought before the Board such that the Board is able to carry out all of its duties to manage or supervise the management of the business and affairs of the Company; (ii) ensure the Board has the opportunity, at each regularly scheduled meeting, to meet separately without non-independent directors and management personnel present; and (iii) in conjunction with the relevant committee of the Board (and its Chair), review and assess the directors' meeting attendance records and the effectiveness and performance of the Board, its committees (and their Chairs) and individual directors.
Board and Committee Process
In addition to the Board being comprised of a majority of independent directors, the Company has adopted a variety of structures to allow for the independence of the Board from management. Those structures include the appointment of Bernard I. Ghert, an independent director, as lead director with a mandate to, among other things, assist the Board in fulfilling its duties independent of management, the practice of having the independent members of the Board or its committees meet as a group (with no members of management, present) regularly at Board and committee meetings, and members of the Board and its committees having the opportunity to initiate discussions with senior management without the CEO present so that they may freely discuss any concerns they may have, and the ongoing monitoring of the relationship between the Board and its committees and management by the Governance Committee, which is composed entirely of independent directors. The Board believes that it and its committees have functioned, and continue to function, independently of management.
The Company's CEO reports formally to the Board, and, where appropriate, to its committees, as well as less formally through discussions with members of the Board and its committees, to advise the Board and its committees on a timely basis of courses of action that are being considered by management and are being followed. The Board exercises its responsibility for oversight through the approval of all significant decisions and initiatives affecting the Company. The Board has developed a formal position description for the CEO. The position description for the CEO provides that the CEO has the primary responsibility for the management of the business and affairs of the Company. As such, the CEO establishes the strategic and operational orientation of the Company and, in so doing, provides leadership and vision for the effective overall management, profitability, increase in shareholder value and growth of the Company and for conformity with policies agreed upon by the Board. The CEO is directly accountable to the Board for all activities of the Company.
Management, working with the Board and the Governance Committee, provides an orientation program for new directors and a continuing education program for all directors to familiarize and update them with respect to the Company and its businesses. Prior to agreeing to join the Board, new directors are given a clear indication of the workload and time commitment required. The Chair of the Board ensures the orientation program is carried out as directed by the Governance Committee. New directors to the Company have generally been executives with extensive business experience. Orientation for these individuals is provided through a review of past Board materials and other private and public documents concerning the Company and visits to certain of the Company's businesses and offices. On a continuing basis, management of the Company and its divisions provide periodic presentations for the Board to ensure that directors are aware of Company operations, major business trends and industry practices, and directors are free to contact the CEO, the Chief Financial Officer and other members of management at any time to discuss any aspect of the Company's businesses.
The Board, either directly or through Board committees, is responsible for overseeing the business and affairs of the Company and for approving the overall direction of the Corporation, in a manner which is in the best interests of the Company and its shareholders. At least four regular meetings of the Board are scheduled each year at which the directors review in detail the financial statements, operating reports, forecasts, budgets and reports from the committees of the Board and from management. The frequency of meetings as well as the nature of agenda items changes depending upon the state of the Company's affairs and in light of opportunities or issues that the Company may face.
The Board has three standing committees: the Audit Committee, the Executive Compensation Committee and the Governance Committee. The roles of these committees are outlined. Each committee has a written mandate establishing the responsibilities of the committee, and each committee reviews and assesses its mandate at least annually and has the authority to retain special legal, accounting or other advisors. From time to time ad hoc committees of the Board may be appointed. As the Board has plenary power, any responsibility which is not delegated to management or a Board committee remains with the Board.