UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16 under the Securities Exchange Act of 1934
For March 2020 |
Commission File Number: 1-34513 |
CENOVUS ENERGY INC.
(Translation of registrants name into English)
4100, 225 6 Avenue S.W.
Calgary, Alberta, Canada T2P 1N2
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-For Form 40-F.
Form 20-F ☐ Form 40-F ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ______
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ______
DOCUMENTS FILED AS PART OF THIS FORM 6-K
See the Exhibit Index to this Form 6-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: March 25, 2020
CENOVUS ENERGY INC. | ||||||
(Registrant) | ||||||
By: |
/s/ Natasha L.S. Dhillon-Penner | |||||
Name: |
Natasha L.S. Dhillon-Penner | |||||
Title: |
Assistant Corporate Secretary |
Form 6-K Exhibit Index
Exhibit No. |
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99.1 |
Notice of Annual Meeting of Shareholders and Management Information Circular | |
99.2 |
Form of proxy | |
99.3 |
Registered Shareholders Notice of Annual Meeting and Notice of Availability of Meeting Materials | |
99.4 |
Non-Registered (Beneficial) Shareholders Notice of Annual Meeting and Notice of Availability of Meeting Materials | |
99.5 |
News Release dated March 25, 2020 | |
99.6 |
Cenovus Virtual Annual Meeting Guide |
Exhibit 99.1
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF CENOVUS ENERGY INC.
The Annual Meeting of Shareholders (the Meeting) of Cenovus Energy Inc. (the Corporation, we, us, or our) will be held on Wednesday, April 29, 2020 at 1:00 p.m. Calgary time in The Metropolitan Conference Centre, Metropolitan Ballroom, 333 4 Avenue S.W., Calgary, Alberta, Canada, T2P 0H9 for the following purposes (with reference to the relevant section of the management information circular (the Circular) for additional details):
1. | to receive the consolidated financial statements of the Corporation, together with the auditors report thereon, for the year ended December 31, 2019; |
2. | to appoint the auditor of the Corporation (see Appointment of Auditor); |
3. | to elect directors of the Corporation (see Election of Directors); |
4. | to consider, and if deemed fit, approve a non-binding advisory shareholder resolution on the Corporations approach to executive compensation (see Shareholder Advisory Vote on Executive Compensation); and |
5. | to transact such other business as may properly be brought before the Meeting or any adjournment(s) thereof. |
You are entitled to receive notice of and vote at the Meeting if you are a holder of common shares of the Corporation (a shareholder) at the close of business on March 2, 2020.
Notice and Access We are using the notice and access procedures adopted by the Canadian Securities Administrators for the delivery of the Circular. The principal benefit of the notice and access procedure is that it reduces costs and the environmental impact of producing and distributing large quantities of paper documents. Shareholders who have consented to delivery of materials are receiving this Notice of Meeting in an electronic format. For additional information, see Voting and Proxy Questions & Answers in the Circular. You should access and review all information contained in the Circular before voting.
Registered and Non-Registered (Beneficial) Shareholders If you are a registered shareholder, you have a choice of voting by proxy on the internet, by telephone, by mail or by fax using your proxy form to appoint another person to attend the Meeting and act for you, or voting in person by attending the Meeting. If you are a non-registered (beneficial) shareholder, you must vote using your voting instruction form, which typically allows you to vote by proxy on the internet, by telephone, by mail or by fax and, if you want to vote in person at the Meeting, you must appoint yourself as a proxyholder. If you vote by proxy on the internet, by telephone, by mail or by fax in advance of the Meeting, your vote will be counted, whether or not you attend the Meeting. Even if you attend the Meeting, you may find it convenient to vote in advance. Please refer to your proxy form or voting instruction form, as applicable, and to the Voting and Proxy Questions & Answers section in the Circular for assistance in determining whether you are a registered or non-registered (beneficial) shareholder and for more information on the voting methods available to you.
Completed proxy forms must be received by the transfer agent and registrar of the Corporation, Computershare Investor Services Inc., 8th Floor, 100 University Avenue, Toronto, Ontario, M5J 2Y1, no later than 1:00 p.m. Calgary time on April 27, 2020 or, in the case of any adjournment or postponement of the Meeting, not less than 48 hours (excluding Saturdays, Sundays and statutory holidays) before the time of any adjourned or postponed meeting. Completed voting instruction forms must be returned in accordance with the instructions on the form.
Your vote is important. Please read the enclosed materials carefully. If you have questions about any of the information or require assistance in completing your proxy form or voting instruction form, as the case may be, please contact our strategic shareholder advisor and proxy solicitation agent, Kingsdale Advisors, toll-free in North America at 1-866-851-4179 or by email at contactus@kingsdaleadvisors.com. A live webcast of the Meeting will be available on our website at cenovus.com.
Shareholders, proxyholders and guests will be required to present government-issued photo identification prior to being permitted to enter the Meeting. For the safety and security of all those in attendance, the Corporations authorized representatives may also inspect bags and shall be entitled to request that bags not be brought into the Meeting.
Only registered shareholders and proxyholders are entitled to participate and vote in the business of the Meeting. Persons who are not registered shareholders or proxyholders who wish to attend the Meeting as a registered guest should request permission to attend in advance of the Meeting via email to investor.relations@cenovus.com, by telephone at 1-403-766-7711 (toll-free in Canada at 1-877-766-2066) or by mail to Investor Relations, Cenovus Energy Inc., 225 6 Avenue S.W., P.O. Box 766, Calgary, Alberta, Canada, T2P 0M5. Persons not entitled or required to be present at the Meeting, including registered guests, may be admitted only with the consent of the Chair of the Meeting or with consent of the Meeting.
By order of the board of directors of Cenovus Energy Inc.
/s/ Gary F. Molnar
Gary F. Molnar
Corporate Secretary
Calgary, Alberta
March 2, 2020
Cenovus Energy Inc. | 2020 Management Information Circular |
INVITATION LETTER
Dear fellow shareholders:
On behalf of Cenovus Energy Inc.s board of directors, management and employees, we invite you to attend our 2020 Annual Meeting of Shareholders (the Meeting). The Meeting will be held on Wednesday, April 29, 2020 at 1:00 p.m. Calgary time in The Metropolitan Conference Centre, Metropolitan Ballroom, 333 4 Avenue S.W., Calgary, Alberta, Canada, T2P 0H9. The items of business to be considered and acted on at the Meeting are described in the Notice of Annual Meeting of Shareholders of Cenovus Energy Inc. and accompanying management information circular.
Following the formal portion of the Meeting, management will review our 2019 financial and operational performance, provide an overview of our priorities for 2020 and open the floor to questions from shareholders. If you cannot attend the Meeting you may submit questions in advance and we are pleased to offer a live webcast, available on our website at cenovus.com.
Your vote is important to us. Your vote will be counted, whether you vote in person at the Meeting or vote in advance of the Meeting by proxy on the internet, by telephone, by mail or by fax. Even if you attend the Meeting, you may find it convenient to vote in advance.
We have included a Voting and Proxy Questions & Answers section in the accompanying management information circular, or you can contact our strategic shareholder advisor and proxy solicitation agent, Kingsdale Advisors, toll-free in North America at 1-866-851-4179 or by email at contactus@kingsdaleadvisors.com, for assistance voting or if you have questions relating to the enclosed materials.
Our 2019 Annual Report is available on our website at cenovus.com. We encourage you to visit our website throughout the year for updated information and to find out more about our business.
Yours truly,
/s/ Patrick D. Daniel | /s/ Alexander J. Pourbaix | |
Patrick D. Daniel | Alexander J. Pourbaix | |
Board Chair | President & Chief Executive Officer |
Cenovus Energy Inc. | 2020 Management Information Circular |
Cenovus Energy Inc. | 2020 Management Information Circular |
- VOTING AND PROXY QUESTIONS & ANSWERS -
Cenovus Energy Inc. | 2 | 2020 Management Information Circular |
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Cenovus Energy Inc. | 3 | 2020 Management Information Circular |
- VOTING AND PROXY QUESTIONS & ANSWERS -
Cenovus Energy Inc. | 4 | 2020 Management Information Circular |
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Cenovus Energy Inc. | 6 | 2020 Management Information Circular |
INFORMATION ON DIRECTOR NOMINEES
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Keith M. Casey
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New Director Nominee Independent Age: 53 San Antonio, Texas U.S.
Share Ownership: Common Shares(1): Nil DSUs(2): N/A Meets Requirement: N/A(3) Share Ownership Multiple: N/A(3)
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Skills and Experience:
Senior Level Oil & Gas Industry Experience Executive Officer Experience Strategic Planning & Execution Refining Marketing & Transportation Financial, Accounting & Capital Markets Risk Management Human Resources, Compensation & Organizational Management Government & Stakeholder Relations Governance Safety, Environment & Health
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Mr. Casey is Chief Executive Officer of Tatanka Midstream LLC, a private midstream company. Mr. Casey spent five years with Andeavor Corporation (Andeavor), formerly known as Tesoro Corporation, an integrated petroleum refining, logistics, and marketing company. Mr. Casey was Executive Vice-President Commercial and Value Chain of Andeavor, from August 2016 to October 2018, and was responsible for overseeing the integrated commercial value chain focused on maximizing Andeavors asset base through its midstream, infrastructure and refining assets. Prior to that, Mr. Casey was Executive Vice-President, Operations of Andeavor from May 2014 to August 2016, and Senior Vice-President, Strategy and Business Development of Andeavor from April 2013 to May 2014.
Prior to joining Andeavor, Mr. Casey was Vice-President with BP Products North America Inc., from 2006 to 2013. Mr. Casey has worked in the refining industry since 1998 and prior to that, he held leadership and operational roles with Praxair Incorporated and Union Carbide Corp.
Mr. Casey served as a director of Andeavor Logistics LP, formerly Tesoro Logistics LP, a publicly traded midstream service company, from April 2014 to April 2015 and has served as a director of a number of private midstream companies.
Mr. Casey holds a Bachelor of Science degree in Metallurgical and Materials Engineering from California Polytechnic State University, San Luis Obispo.
Cenovus Energy Inc. | 7 | 2020 Management Information Circular |
- INFORMATION ON DIRECTOR NOMINEES -
Susan F. Dabarno
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Director since April 2017 Independent Age: 67 Bracebridge, Ontario, Canada
Share Ownership: Common Shares(1): 30,124 DSUs(2): 58,716 Meets Requirement: Yes Share Ownership Multiple: 4.2x
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Skills and Experience: Executive Officer Experience Strategic Planning & Execution Financial, Accounting & Capital Markets Risk Management Human Resources, Compensation & Organizational Management Government & Stakeholder Relations Governance
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Ms. Dabarno is a director of Manulife Financial Corporation, a publicly traded insurance and financial services company. She has extensive wealth management and financial expertise gained from her many years of experience building and leading some of the largest wealth management platforms in Canada. Ms. Dabarno served as Executive Chairman of Richardson Partners Financial Limited (Richardson), an independent wealth management services firm, from October 2009 to April 2010, and as President and Chief Executive Officer of Richardson from June 2003 to October 2009, during which time she was responsible for leading the firms growth strategy. Prior to joining Richardson, she was President and Chief Operating Officer at Merrill Lynch Canada Inc., and prior to that she held various increasingly senior roles with Canada Trust and later Midland Walwyn Inc., until it was acquired by Merrill Lynch in 1999. In each of these positions, Ms. Dabarno was progressively responsible for personal investment management, private equity and alternative investment strategies, while adhering to strict regulatory requirements and governance protocols applied to the industry.
Ms. Dabarno has chaired the boards of Meridian Securities, Canada Trust Insurance Company, Barbados and First Canada Securities International as well as serving as trustee of Canada Trust Investment Income. She served as a director of the Toronto Waterfront Revitalization Corporation (government-funded organization), Bridgepoint Health Foundation (not-for-profit) and People Corporation.
Ms. Dabarno has contributed to the investment industry as a member of the Council of Governors of the Investment Funds Institute of Canada and as a director of the Mutual Fund Dealers Association of Canada. She has been awarded the Queen Elizabeth II Diamond Jubilee Medal by the Investment Industry Association of Canada and honoured by the YWCA of New York City as a Woman of Distinction. Ms. Dabarno is a Fellow of the Chartered Professional Accountants of Ontario (FCPA) and holds a Class II Diploma from McGill University.
Cenovus Energy Inc. | 8 | 2020 Management Information Circular |
- INFORMATION ON DIRECTOR NOMINEES -
Jane E. Kinney
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Director since April 2019 Independent Age: 62 Toronto, Ontario, Canada
Share Ownership: Common Shares(1): 4,200 DSUs(2): 21,872 Meets Requirement: Yes Share Ownership Multiple: 1.4x
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Skills and Experience:
Strategic Planning & Execution Financial, Accounting & Capital Markets Risk Management Human Resources, Compensation & Organizational Management Government & Stakeholder Relations Governance
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Ms. Kinney is a director of Intact Financial Corporation, a publicly traded insurance company. She is a seasoned business leader with over 30 years of experience in providing advisory services to global financial institutions and has extensive experience in enterprise risk management, regulatory compliance, cyber and IT risk management, digital transformation and stakeholder relations. Ms. Kinney spent 25 years with Deloitte LLP Canada (Deloitte), and was admitted to the Partnership in 1997. She was appointed Vice Chair, Leadership Team Member of Deloitte in June 2010 and served in this role until her retirement in June 2019. Previous positions with Deloitte include Canadian Managing Partner, Quality & Risk from May 2010 to June 2015, Global Chief Risk Officer from June 2010 to May 2012, and Risk and Regulatory Practice Leader from June 1999 to May 2010. She has also served as a lecturer at the University of Manitoba, Dalhousie University and Saint Marys University.
She is a member of the Perimeter Institute for Theoretical Physics, a member of the board of directors of the Womens College Hospital Foundation, Board Chair of Toronto Finance International and Chair of the Patrons Council of the Alzheimer Society of Toronto.
Ms. Kinney is a leader of her profession and has been recognized as a Fellow of the Chartered Professional Accountants of Ontario. Ms. Kinney holds a Mathematics degree from the University of Waterloo. In 2013 she was awarded the Math Alumni Achievement Medal from the University of Waterloo and in 2014 was recognized as one of Canadas Most Powerful Women by the Womens Executive Network.
Cenovus Energy Inc. | 9 | 2020 Management Information Circular |
- INFORMATION ON DIRECTOR NOMINEES -
Harold (Hal) N. Kvisle
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Director since April 2018 Independent Age: 67 Calgary, Alberta, Canada
Share Ownership: Common Shares(1): 65,000 DSUs(2): 43,277 Meets Requirement: Yes Share Ownership Multiple: 5.3x
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Skills and Experience:
Senior Level Oil & Gas Industry Experience Executive Officer Experience Strategic Planning & Execution Operations & Resource Development Refining Marketing & Transportation Financial, Accounting & Capital Markets Risk Management Human Resources, Compensation & Organizational Management Government & Stakeholder Relations Governance Safety, Environment & Health
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Mr. Kvisle is a director and Chairman of ARC Resources Ltd., a publicly traded oil and gas company; and a director and Board Chair of Finning International Inc., a publicly traded heavy equipment company. Mr. Kvisle served as a director of Cona Resources Ltd. (Cona), a publicly traded heavy oil company, from November 2011 to May 2018 when Cona was acquired by Waterous Energy Fund (May 22, 2018); and as President and Chief Executive Officer of Talisman Energy Inc. (Talisman), a publicly traded oil and gas company, from September 2012 to May 2015 and as a director of Talisman from May 2010 to May 2015. From 2001 to 2010, Mr. Kvisle was President and Chief Executive Officer of TransCanada Corporation, now TC Energy Corporation (TC Energy), a publicly traded pipeline and power company. Prior to joining TC Energy in 1999, he was the President of Fletcher Challenge Energy Canada Inc. Previously, he held engineering, finance and management positions with Dome Petroleum Limited. Mr. Kvisle has worked in the oil and gas industry since 1975 and in the utilities and power industries since 1999.
Mr. Kvisle is the founding Chair of the Business Council of Alberta, the former Chair of the Interstate Natural Gas Association of America (INGAA), the former Chair of the Mount Royal College Board of Governors and the former Chair of the Nature Conservancy of Canada.
Mr. Kvisle holds a Bachelor of Science in Engineering degree from the University of Alberta, a Masters in Business Administration degree from the University of Calgary, an Honorary Bachelor of Arts degree from Mount Royal University and an Honorary Doctor of Laws degree from the University of Calgary.
Cenovus Energy Inc. | 10 | 2020 Management Information Circular |
- INFORMATION ON DIRECTOR NOMINEES -
Steven F. Leer
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Director since April 2015 Independent Age: 67 Boca Grande, Florida, U.S.
Share Ownership: Common Shares(1): 2,000 DSUs(2): 87,124 Meets Requirement: Yes Share Ownership Multiple: 4.1x
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Skills and Experience:
Executive Officer Experience Strategic Planning & Execution Marketing & Transportation Financial, Accounting & Capital Markets Risk Management Human Resources, Compensation & Organizational Management Government & Stakeholder Relations Governance Safety, Environment & Health | |||
Mr. Leer is lead director of Norfolk Southern Corporation, a publicly traded North American rail transportation provider and a director of Parsons Corporation, a publicly traded engineering, construction, technical, and management services firm. Mr. Leer served as a director and the non-executive Chairman of the Board of USG Corporation (USG), a publicly traded manufacturer and distributor of high performance building systems, from November 2016 to April 2019; lead director of USG from January 2012 to November 2016; and as a director of USG from June 2005 to January 2012, during which time he was a member and Chair of USGs Governance Committee and a member of its Compensation and Organization Committee. Mr. Leer served as Chairman of Arch Coal, Inc. (Arch Coal), a publicly traded coal producing company, from April 2006 to April 2014, and served as a director of Arch Coal and its predecessor company from 1992 until April 2014. During his tenure with Arch Coal and its predecessor company, he also served as Chief Executive Officer from July 1992 to April 2012 and President from July 1992 to April 2006.
Mr. Leer served on the boards of the Center for Energy and Economic Development, the National Coal Council, the National Mining Association, in each case Chairman, and was on the board of the Mineral Information Institute. Mr. Leer is a former member of the Board of Trustees of Washington University in St. Louis and he is a former director of the Business Roundtable and the National Association of Manufacturers. In addition, he is a former delegate to the Coal Industry Advisory Board of the International Energy Agency in Paris. Mr. Leer holds a Bachelor of Science degree in Electrical Engineering from the University of the Pacific and a Masters in Business Administration from Washington Universitys Olin School of Business. Mr. Leer was awarded an honorary doctorate by University of the Pacific in May 1993.
Cenovus Energy Inc. | 11 | 2020 Management Information Circular |
- INFORMATION ON DIRECTOR NOMINEES -
M. George Lewis
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Director since July 2019 Independent Age: 59 Toronto, Ontario, Canada
Share Ownership: Common Shares(1): 20,000 DSUs(2): 19,226 Meets Requirement: Yes Share Ownership Multiple: 2.5x
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Skills and Experience:
Executive Officer Experience Strategic Planning & Execution Financial, Accounting & Capital Markets Risk Management Human Resources, Compensation & Organizational Management Government & Stakeholder Relations Governance Safety, Environment & Health | |||
Mr. Lewis is a director of Legal & General Group plc, a publicly traded global asset and risk management company listed on the London Stock Exchange (LSE), a director of AOG Group, a private European-based capital investment firm, and a director of the Ontario Teachers Pension Plan. Mr. Lewis is a former director of and Chair of the Audit and Risk Committees at Ontario Power Generation, a government-owned energy company, and Enbridge Income Fund Holdings Inc., which was acquired by Enbridge Inc. in November 2018.
Mr. Lewis enjoyed a 30 year career as a professional and executive leader with Royal Bank of Canada (RBC), one of Canadas largest public companies and financial institutions, before retiring in 2016 to focus on serving as a corporate director. He was appointed as a member of RBCs Group Executive with responsibility for Wealth Management in 2007, adding Insurance in 2012.
He is a director of the Board of the Foundation for the Anglican Diocese of Toronto, a director of the Canadian Film Centre, a current member and past chair of the Bishops Company of the Anglican Diocese of Toronto, and a patron and member of the Cabinet of the United Way of Toronto and York Region. Mr. Lewis also served as the Honorary Colonel Commandant of the Royal Canadian Chaplain Service of the Canadian Armed Forces.
Mr. Lewis is a Chartered Financial Analyst, a Fellow of the Institute of Chartered Accountants of Ontario, a Fellow of the Chartered Accountants of Canada and is certified by the Institute of Corporate Directors. Mr. Lewis holds a Bachelor of Commerce degree with high distinction from Trinity College at the University of Toronto and a Masters of Business Administration degree with distinction from Harvard University.
Cenovus Energy Inc. | 12 | 2020 Management Information Circular |
- INFORMATION ON DIRECTOR NOMINEES -
Keith A. MacPhail
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Director since April 2018 Independent Age: 62 Calgary, Alberta, Canada
Share Ownership: Common Shares(1): 306,000 DSUs(2): 43,277 Meets Requirement: Yes Share Ownership Multiple: 17.2x
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Skills and Experience:
Senior Level Oil & Gas Industry Experience Executive Officer Experience Strategic Planning & Execution Operations & Resource Development Marketing & Transportation Risk Management Human Resources, Compensation & Organizational Management Government & Stakeholder Relations Governance Safety, Environment & Health
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Mr. MacPhail is a director and Chairman of Bonavista Energy Corporation, formerly Bonavista Petroleum Ltd. (Bonavista), a publicly traded oil and gas company; a director and Chairman of NuVista Energy Ltd., a publicly traded oil and gas company; and serves on the board of directors of a private oil and gas company. Mr. MacPhail served as Executive Chairman of Bonavista from 2012 to 2018; as Chairman and Chief Executive Officer from 2008 to 2012; and as President and Chief Executive Officer from 1997 to 2008. Prior to joining Bonavista Petroleum Ltd. in 1997, Mr. MacPhail held progressively more responsible positions with Canadian Natural Resources Limited, with his final position being Executive Vice President and Chief Operating Officer. Previously, he held the position of Production Manager with Poco Petroleums Ltd.
Mr. MacPhail holds a Bachelor of Science (Honours) degree in Petroleum Engineering from the Montana College of Mineral Science and is a member of the Association of Professional Engineers and Geoscientists of Alberta. Mr. MacPhail was appointed as a Member of the Order of Canada on June 27, 2019.
Cenovus Energy Inc. | 13 | 2020 Management Information Circular |
- INFORMATION ON DIRECTOR NOMINEES -
Richard J. Marcogliese
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Director since April 2016 Independent Age: 67 Alamo, California, U.S.
Share Ownership: Common Shares(1): 60,000 DSUs(2): 75,421 Meets Requirement: Yes Share Ownership Multiple: 6.5x
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Skills and Experience:
Senior Level Oil & Gas Industry Experience Executive Officer Experience Strategic Planning & Execution Operations & Resource Development Refining Financial, Accounting & Capital Markets Risk Management Human Resources, Compensation & Organizational Management Government & Stakeholder Relations Governance Safety, Environment & Health
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Mr. Marcogliese is the Principal of iRefine, LLC, a privately owned petroleum refining consulting company; Executive Advisor of Pilko & Associates L.P., a private chemical and energy advisory company; and a director of Delek US Holdings, Inc., a publicly traded downstream energy company. Mr. Marcogliese served as Operations Advisor to NTR Partners III LLC, a private investment company from October 2013 to December 2017, and as Operations Advisor to the Chief Executive Officer of Philadelphia Energy Solutions, a partnership between The Carlyle Group and a subsidiary of Energy Transfer Partners, L.P. that operates an oil refining complex on the U.S. Eastern seaboard, from September 2012 to January 2016. His more than 40-year career in the U.S. refining industry also includes over 25 years with Exxon Mobil Corporation (Exxon). In 2000, he joined Valero Energy Corporation (Valero), a publicly traded international manufacturer and marketer of transportation fuels, petrochemical products and power, as a result of an acquisition from Exxon, at which point he led an organizational transition from a major integrated oil company business model to Valeros independent refiner business model. Mr. Marcogliese held increasingly senior positions with Valero including Senior Vice President of Strategic Planning in 2001, Senior Vice President of Refining Operations from October 2001 to November 2005 and Executive Vice President, Operations of Valero from December 2005 to October 2007. He served as Executive Vice President and Chief Operating Officer of Valero from October 2007 to December 2010 during which time he was responsible for the operation of Valeros North American refinery system which processed three million barrels of oil per day.
Mr. Marcogliese is a past Chairman of the Western States Petroleum Association and holds a Bachelor of Engineering degree in Chemical Engineering from the New York University School of Engineering and Science.
Cenovus Energy Inc. | 14 | 2020 Management Information Circular |
- INFORMATION ON DIRECTOR NOMINEES -
Claude Mongeau
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Director since December 2016 Independent Age: 58 Montreal, Quebec, Canada
Share Ownership: Common Shares(1): 169,000 DSUs(2): 72,428 Meets Requirement: Yes Share Ownership Multiple: 10.8x
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Skills and Experience:
Executive Officer Experience Strategic Planning & Execution Marketing & Transportation Financial, Accounting & Capital Markets Risk Management Human Resources, Compensation & Organizational Management Government & Stakeholder Relations Governance Safety, Environment & Health
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Mr. Mongeau is a director of The Toronto-Dominion Bank, an international financial institution, and Norfolk Southern Corporation, a publicly traded North American rail transportation provider. He served as a director of TELUS Corporation, a publicly traded telecommunications company, from May 2017 to August 2019. He also served as a director of Canadian National Railway Company (CN), a publicly traded railroad and transportation company, from October 2009 to July 2016 and as President and Chief Executive Officer from January 2010 to June 2016. During his tenure with CN, he served as Executive Vice-President and Chief Financial Officer from October 2000 until December 2009 and from the time he joined CN in 1994 he held the titles of Vice-President, Strategic and Financial Planning and Assistant Vice-President, Corporate Development. Prior to joining CN, Mr. Mongeau was the Manager, Business Development for Imasco Inc. from 1993 to 1994, a partner with Groupe Secor Inc., a Montreal-based management consulting firm providing strategic advice to large Canadian corporations, from 1989 to 1993 and a consultant at Bain & Company from 1988 to 1989. Mr. Mongeau also served as a director of SNC-Lavalin Group Inc. from August 2003 to May 2015 and as a director of Nortel Networks Corporation and Nortel Networks Limited from June 2006 to August 2009.
Mr. Mongeau was Chairman of the Board of the Railway Association of Canada. He was named one of Canadas Top 40 under 40 in 1997 and selected as Canadas CFO of the Year in 2005 by an independent committee of prominent Canadian business leaders. Mr. Mongeau holds a Master of Business Administration degree from McGill University and has received honorary doctoral degrees from St. Marys and Windsor University.
Cenovus Energy Inc. | 15 | 2020 Management Information Circular |
- INFORMATION ON DIRECTOR NOMINEES -
Alexander J. Pourbaix
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Director since November 2017 Non-Independent, Management(13) Age: 54 Calgary, Alberta, Canada
Share Ownership: Common Shares(1): 638,081 DSUs(2): 72,879 Meets Requirement: Yes Share Ownership Multiple: 8.50x(14)
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Skills and Experience:
Senior Level Oil & Gas Industry Experience Executive Officer Experience Strategic Planning & Execution Marketing & Transportation Financial, Accounting & Capital Markets Risk Management Human Resources, Compensation & Organizational Management Government & Stakeholder Relations Safety, Environment & Health
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Mr. Pourbaix has served as President & Chief Executive Officer of Cenovus since November 6, 2017. Prior to leading Cenovus, Mr. Pourbaix spent 27 years with TC Energy and its affiliates in a broad range of leadership roles, including Chief Operating Officer from October 2015 to April 2017, during which time he was responsible for the companys commercial activity and overseeing major energy infrastructure projects and operations. Prior to his role as Chief Operating Officer, Mr. Pourbaix held increasingly senior positions with TC Energy including Executive Vice-President and President, Development from March 2014 to September 2015, when he was responsible for leadership and execution of all of TC Energys growth initiatives; President, Energy & Oil Pipelines from July 2010 to February 2014; and President, Energy from July 2006 to June 2010. During his tenure at TC Energy, he gained extensive experience in corporate strategy, business development, mergers, acquisitions and divestitures, as well as stakeholder relations. Mr. Pourbaix was appointed a director of Canadian Utilities Limited, a publicly traded diversified global energy infrastructure corporation, on November 1, 2019 and was a director of Trican Well Service Ltd., a publicly traded oilfield services provider, from May 2012 until December 31, 2019.
Mr. Pourbaix is a director of the Business Council of Canada, Vice-Chair of the Board of Governors of the Canadian Association of Petroleum Producers, Board Chair at Mount Royal University, a member of the Business Council of Alberta and previous Chair of the Board of Directors for the Canadian Energy Pipeline Association. Mr. Pourbaix holds a Bachelor of Law degree and a Bachelor of Arts degree from the University of Alberta.
Mr. Pourbaix is not an independent director of the Board due to his position as President & Chief Executive Officer of Cenovus.
Cenovus Energy Inc. | 16 | 2020 Management Information Circular |
- INFORMATION ON DIRECTOR NOMINEES -
Rhonda I. Zygocki
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Director since April 2016 Independent Age: 62 Friday Harbor, Washington, U.S.
Share Ownership: Common Shares(1): 40,034 DSUs(2): 74,625 Meets Requirement: Yes Share Ownership Multiple: 5.3x
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Skills and Experience:
Senior Level Oil & Gas Industry Experience Executive Officer Experience Strategic Planning & Execution Operations & Resource Development Financial, Accounting & Capital Markets Risk Management Human Resources, Compensation & Organizational Management Government & Stakeholder Relations Governance Safety, Environment & Health
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Ms. Zygocki spent 34 years with Chevron Corporation (Chevron), a publicly traded integrated energy company, including as Executive Vice President, Policy and Planning from March 2011 until her retirement in February 2015. In this role, she was responsible for global corporate functions overseeing strategy and planning, policy, government and public affairs, health, environment and safety, real estate and technology ventures, and served as Secretary to the Public Policy Committee of the board of directors. Prior to that, she held a number of senior management and executive leadership positions in international operations, public affairs, strategic planning, policy, government affairs and health, environment and safety, including Vice President, Policy, Government and Public Affairs from May 2007 to March 2011 and Vice President, Health, Environment and Safety from April 2003 to May 2007. During her tenure with Chevron, Ms. Zygocki represented Chevron in high profile external engagements on topics covering climate change policy, responsible development, shale gas and hydraulic fracturing, global gas flaring reduction, energy policy, corporate responsibility, public-private partnerships, development in Africa and the fight against HIV/AIDS.
She is a former advisory board member of the Woodrow Wilson International Center of Scholars Canada Institute and a past Management Committee Chair of the International Association of Oil and Gas Producers. Ms. Zygocki graduated from Memorial University of Newfoundland with a Bachelors degree in Civil Engineering. In 2014, she was named by the National Diversity Council as one of the Top 50 Most Powerful Women in Oil and Gas. In 2015, she received the Award for Leadership Development from the Washington, D.C. chapter of the Society of International Development.
Cenovus Energy Inc. | 17 | 2020 Management Information Circular |
- INFORMATION ON DIRECTOR NOMINEES -
Notes to Information on Director Nominees:
(1) | Common Shares refers to the number of Common Shares, excluding fractional Common Shares, beneficially owned, or controlled or directed, directly or indirectly, by the nominee (and the nominees associates or affiliates, if applicable) as at March 2, 2020. |
(2) | Deferred Share Units (DSUs) are not voting securities. See the Director Compensation section of this Circular for a description of DSUs. The number of DSUs is reported for each nominee as at March 2, 2020, including dividend equivalents earned, but excluding fractional units. DSUs held by Mr. Pourbaix were attained as an officer of Cenovus and not in his role as a director. On May 3, 2019, following her April 24, 2019 election to the Board, Ms. Kinney received an award of DSUs with a grant date fair value of $120,000, based on the volume weighted average trading price of the Common Shares on the Toronto Stock Exchange (TSX) of $13.0272, which converted to approximately 9,211 DSUs. On August 6, 2019, following his July 24, 2019 appointment to the Board, Mr. Lewis received an award of DSUs with a grant date fair value of $120,000, based on the volume weighted average trading price of the Common Shares on the TSX of $11.9579, which converted to approximately 10,035 DSUs. Mr. Casey is not currently eligible to hold DSUs as he is not a member of the Board or employee of Cenovus. |
(3) | This section is not applicable because Mr. Casey is not currently a member of the Board and was not a nominee elected at the 2019 annual meeting of shareholders. |
(4) | As of April 24, 2019, the mandate and responsibilities of the Reserves Committee were adopted and transferred to the Safety, Environment and Responsibility Committee, which was subsequently renamed the Safety, Environment, Responsibility and Reserves Committee (SERR Committee). |
(5) | Ms. Dabarno was a member of the Reserves Committee until April 24, 2019, when it was dissolved. |
(6) | Ms. Kinney was elected as a director on April 24, 2019 and was appointed a member of the Safety, Environment and Responsibility Committee (now the SERR Committee). She was subsequently appointed a member of the Audit Committee on June 1, 2019. |
(7) | Mr. Kvisle was a member of the Safety, Environment and Responsibility Committee until April 24, 2019. |
(8) | Mr. Leer was a member of the Reserves Committee until April 24, 2019, when it was dissolved. |
(9) | Mr. Lewis was appointed a director on July 24, 2019 and was appointed a member of the HRC Committee and NCG Committee as of the same date. |
(10) | This section is not applicable because Mr. Lewis was not a nominee elected at the 2019 annual meeting of shareholders. |
(11) | Mr. MacPhail was a member of the NCG Committee until April 24, 2019, the Reserves Committee until it was dissolved, and was appointed a member of the Safety, Environment and Responsibility Committee (now the SERR Committee) as of the same date. |
(12) | Mr. Mongeau was a member of the NCG Committee until April 24, 2019 and became Chair of the Audit Committee as of the same date, following Mr. Taylors retirement from the Board. |
(13) | See the Compensation Discussion and Analysis section of this Circular for detailed information relating to Mr. Pourbaixs compensation as an officer of Cenovus. |
(14) | As a member of Management, Mr. Pourbaix complies with the share ownership guidelines for Cenovuss executives. See the heading Executive Share Ownership Status in the Compensation Discussion and Analysis section for detailed information relating to Mr. Pourbaixs share ownership multiple. |
(15) | As a member of Management, Mr. Pourbaix does not serve on any standing committee of the Board. |
(16) | Ms. Zygocki was a member of the Safety, Environment and Responsibility Committee until April 24, 2019 and became a member of the NCG Committee as of the same date. |
Cenovus Energy Inc. | 18 | 2020 Management Information Circular |
|
Below are highlights of our communications and external engagement activities.
Shareholder Engagement Policy | Cenovus has adopted the Engagement Policy to reinforce our commitment to meaningful communication and engagement with our shareholders. The policy is available on our website at cenovus.com. | |
Conference Calls with Investment Community | Management engaged in quarterly conference calls and webcasts with the investment community to review financial and operating results. Webcasts and presentations are available at cenovus.com. | |
Investor Day | Cenovus holds an investor day periodically to provide an update on the Corporations strategy, outlook and operations. Cenovus most recently held an Investor Day on October 2, 2019 in Toronto. Webcasts of these events are also made available at cenovus.com. | |
Management Shareholder/Investor Engagement Program | Management held numerous meetings and conference calls with shareholders and investors over the course of the year. | |
Director-Shareholder Engagement Meetings | In December 2019, members of our Board engaged with five of our largest shareholders representing nearly 20 percent of Cenovuss Common Shares. |
Cenovus Energy Inc. | 19 | 2020 Management Information Circular |
- DIRECTOR COMPENSATION -
Director Compensation Structure
The following table sets out the compensation structure for our non-employee directors:
Board Chair(1)
|
|||||
Annual retainer(2)
|
$
|
190,000
|
| ||
Annual DSU Award(3)
|
$
|
140,000
|
| ||
Non-employee Directors (excluding Board Chair)
|
|||||
Annual retainer(2)
|
$
|
70,000
|
| ||
Annual DSU Award(3)
|
$
|
120,000
|
| ||
Annual Committee Chair Retainers(2)(4)
|
|||||
Audit Committee Chair
|
$
|
25,000
|
| ||
Human Resources and Compensation Committee Chair
|
$
|
15,000
|
| ||
Nominating and Corporate Governance Committee Chair
|
$
|
10,000
|
| ||
Other Committee Chairs (each)
|
$
|
12,500
|
| ||
Annual Committee Member Retainer(2)
|
$
|
5,000
|
| ||
All Non-employee Directors (where applicable)
|
|||||
Travel fee (per instance)(5)
|
$
|
1,500
|
|
Notes:
(1) | As an ex officio non-voting member of each of the Committees, the Board Chair did not receive any Committee Member Retainer. |
(2) | Annual retainers are pro-rated for periods of partial service. |
(3) | Each director shall, in accordance with the DSU Plan for Directors, receive an annual equity-based award value in the form of DSUs. |
(4) | There is no separate Committee Member retainer paid when the Committee Member is the Committee Chair. |
(5) | A travel fee of $1,500 is paid for each Board or Committee meeting where a director travels outside of the province or state of his or her normal residence, or outside the country of his or her normal residence in the case of a director who is not normally resident in either Canada or the U.S., to attend at the location of a meeting of the Board or a committee of the Board. |
Director Compensation Table
The following table summarizes the total compensation provided to our non-employee directors for the year ended December 31, 2019.
Name
|
Fees Earned ($)
|
Share-based Awards ($)
|
Total ($)
| ||||||||||||
Patrick D. Daniel (Board Chair)
|
|
190,000
|
|
|
140,000
|
|
|
330,000
|
| ||||||
Susan F. Dabarno
|
|
89,066
|
|
|
120,000
|
|
|
209,066
|
| ||||||
Jane E. Kinney(1)
|
|
58,924
|
|
|
120,000
|
|
|
178,924
|
| ||||||
Harold N. Kvisle
|
|
81,566
|
|
|
120,000
|
|
|
201,566
|
| ||||||
Steven F. Leer
|
|
94,066
|
|
|
120,000
|
|
|
214,066
|
| ||||||
M. George Lewis(2)
|
|
38,166
|
|
|
120,000
|
|
|
158,166
|
| ||||||
Keith A. MacPhail
|
|
81,566
|
|
|
120,000
|
|
|
201,566
|
| ||||||
Richard J. Marcogliese
|
|
87,500
|
|
|
120,000
|
|
|
207,500
|
| ||||||
Claude Mongeau
|
|
102,803
|
|
|
120,000
|
|
|
222,803
|
| ||||||
Charles M. Rampacek(3)
|
|
30,405
|
|
|
120,000
|
|
|
150,405
|
| ||||||
Colin Taylor(3)
|
|
34,320
|
|
|
120,000
|
|
|
154,320
|
| ||||||
Wayne G. Thomson
|
|
87,500
|
|
|
120,000
|
|
|
207,500
|
| ||||||
Rhonda I. Zygocki
|
|
96,000
|
|
|
120,000
|
|
|
216,000
|
| ||||||
Total:
|
|
1,071,882
|
|
|
1,580,000
|
|
|
2,651,882
|
|
Notes:
(1) | Ms. Kinney was first elected as a director on April 24, 2019. |
(2) | Mr. Lewis was first appointed as a director on July 24, 2019. |
(3) | Messrs. Rampacek and Taylor retired from the Board on April 24, 2019. |
Cenovus Energy Inc. | 21 | 2020 Management Information Circular |
- DIRECTOR COMPENSATION -
Director Detailed Fees
Below is a detailed breakdown of the fees earned by our non-employee directors for the year ended December 31, 2019, excluding share-based awards (i.e. the annual award of DSUs). A significant portion of our non-employee directors total compensation was elected by directors to be received in the form of DSUs, enhancing alignment of director interests with shareholders. See Board Committees in our Corporate Governance section of this Circular, attached as Schedule B, for additional information on Board Committee membership. |
Name
|
Board Retainer Fees ($)
|
Committee Chair Retainer Fees ($)
|
Committee Member Retainer Fees ($)
|
Travel Fees ($)
|
Total Fees Earned(1)
|
Fees Taken ($)
|
Fees Taken (%)
|
Fees Taken ($)
|
Fees Taken (%)
| ||||||||||||||||||||||||||||||||||||
Patrick D. Daniel (Board Chair)(2)
|
|
190,000
|
|
|
-
|
|
|
N/A
|
|
|
-
|
|
|
190,000
|
|
|
190,000
|
|
|
100
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||
Susan F. Dabarno(3)
|
|
70,000
|
|
|
-
|
|
|
11,566
|
|
|
7,500
|
|
|
89,066
|
|
|
89,066
|
|
|
100
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||
Jane E. Kinney(4)
|
|
48,077
|
|
|
-
|
|
|
6,347
|
|
|
4,500
|
|
|
58,924
|
|
|
44,500
|
|
|
76
|
|
|
14,424
|
|
|
24
|
| ||||||||||||||||||
Harold N. Kvisle(5)
|
|
70,000
|
|
|
-
|
|
|
11,566
|
|
|
-
|
|
|
81,566
|
|
|
81,566
|
|
|
100
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||
Steven F. Leer(6)
|
|
70,000
|
|
|
10,000
|
|
|
6,566
|
|
|
7,500
|
|
|
94,066
|
|
|
94,066
|
|
|
100
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||
M. George Lewis(7)
|
|
30,770
|
|
|
-
|
|
|
4,396
|
|
|
3,000
|
|
|
38,166
|
|
|
-
|
|
|
-
|
|
|
38,166
|
|
|
100
|
| ||||||||||||||||||
Keith A. MacPhail(8)
|
|
70,000
|
|
|
-
|
|
|
11,566
|
|
|
-
|
|
|
81,566
|
|
|
81,566
|
|
|
100
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||
Richard J. Marcogliese
|
|
70,000
|
|
|
-
|
|
|
10,000
|
|
|
7,500
|
|
|
87,500
|
|
|
87,500
|
|
|
100
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||
Claude Mongeau(9)
|
|
70,000
|
|
|
17,171
|
|
|
8,132
|
|
|
7,500
|
|
|
102,803
|
|
|
102,803
|
|
|
100
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||
Charles M. Rampacek(10)
|
|
21,924
|
|
|
3,915
|
|
|
1,566
|
|
|
3,000
|
|
|
30,405
|
|
|
-
|
|
|
-
|
|
|
30,405
|
|
|
100
|
| ||||||||||||||||||
Colin Taylor(10)
|
|
21,924
|
|
|
7,830
|
|
|
1,566
|
|
|
3,000
|
|
|
34,320
|
|
|
-
|
|
|
-
|
|
|
34,320
|
|
|
100
|
| ||||||||||||||||||
Wayne G. Thomson(11)
|
|
70,000
|
|
|
12,500
|
|
|
5,000
|
|
|
-
|
|
|
87,500
|
|
|
-
|
|
|
-
|
|
|
87,500
|
|
|
100
|
| ||||||||||||||||||
Rhonda I. Zygocki(12)
|
|
70,000
|
|
|
15,000
|
|
|
5,000
|
|
|
6,000
|
|
|
96,000
|
|
|
96,000
|
|
|
100
|
|
|
-
|
|
|
-
|
| ||||||||||||||||||
Total: |
872,695 | 66,416 | 83,271 | 49,500 | 1,071,882 | 867,067 | 81 | 204,815 | 19 |
Notes:
(1) | Amounts reflect aggregate value of fees and/or retainers earned, excluding the annual DSU award. |
(2) | As Board Chair, Mr. Daniel received the Board Chair annual retainer of $190,000 only. Mr. Daniel did not receive Committee Member Retainers. |
(3) | Ms. Dabarno was a member of the Reserves Committee until April 24, 2019, when it was dissolved. Ms. Dabarnos Reserves Committee Member retainer has been pro-rated accordingly. |
(4) | Ms. Kinney was first elected as a director on April 24, 2019 and was appointed a member of the Safety, Reserves and Environment Committee (now the SERR Committee) as of the same date. She was appointed to the Audit Committee as of June 1, 2019. Retainer fees have been pro-rated accordingly. |
(5) | Mr. Kvisle was a member of the Safety, Environment and Responsibility Committee until April 24, 2019. Mr. Kvisles Safety, Environment and Responsibility Committee retainer has been pro-rated accordingly. |
(6) | Mr. Leer was a member of the Reserves Committee until April 24, 2019, when it was dissolved. Mr. Leers Reserves Committee Member retainer has been pro-rated accordingly. |
(7) | Mr. Lewis was appointed to the Board on July 24, 2019 and was appointed a member of the HRC Committee and the NCG Committee as of the same date. Retainer fees have been pro-rated accordingly. |
(8) | Mr. MacPhail was a member of the NCG Committee until April 24, 2019 and the Reserves Committee until April 24, 2019, when it was dissolved, and was appointed a member of the Safety, Reserves and Environment Committee (now the SERR Committee) as of the same date. Mr. MacPhails committee retainers for the NCG Committee, Reserves Committee and SERR Committee have been pro-rated accordingly. |
(9) | Mr. Mongeau was a member of the NCG Committee until April 24, 2019. He was appointed Chair of the Audit Committee on April 24, 2019. Mr. Mongeaus NCG Committee and Audit Committee retainers have been pro-rated accordingly and he received the Audit Committee Chair retainer from his appointment date of April 24, 2019 to December 31, 2019. |
(10) | Messrs. Rampacek and Taylor retired from the Board on April 24, 2019, and their retainer fees have been pro-rated accordingly. |
(11) | Mr. Thomson was Chair of the Reserves Committee until its dissolution on April 24, 2019. He was appointed as Chair of the Safety, Reserves and Environment Committee (now the SERR Committee) as of April 24, 2019, following Mr. Rampaceks retirement from the Board. Mr. Thomsons Reserves Committee Chair retainer and SERR Committee Chair retainer has been pro-rated accordingly. |
(12) | Ms. Zygocki was a member of the Safety, Environment and Responsibility Committee until April 24, 2019 and became a member of the NCG Committee as of the same date. Her Safety, Environment and Responsibility Committee retainer and her NCG Committee retainers have been pro-rated accordingly. Ms. Zygocki attended the February Board and committee meetings via teleconference and therefore no travel fee was paid. |
Cenovus Energy Inc. | 22 | 2020 Management Information Circular |
- DIRECTOR COMPENSATION -
Outstanding Director Awards
The following table shows all share-based awards (i.e. DSUs) vested in 2019 for our non-employee directors and provides the value vested in relation to share-based awards during the year ended December 31, 2019, as well as the aggregate value of all share-based awards held by our non-employee directors as of December 31, 2019. Cenovus does not grant stock options to non-employee directors. For further details, see the Director Compensation Director Deferred Share Unit Plan section of this Circular.
Name
|
Total DSUs During 2019(1)
|
Value of DSUs
|
Total Value of DSUs Held at December 31, 2019(3) ($)
| ||||||||||||
Patrick D. Daniel (Board Chair)
|
|
35,162
|
|
|
464,139
|
|
|
3,593,753
|
| ||||||
Susan F. Dabarno
|
|
21,049
|
|
|
277,847
|
|
|
654,879
|
| ||||||
Jane E. Kinney
|
|
12,768
|
|
|
168,538
|
|
|
168,538
|
| ||||||
Harold N. Kvisle
|
|
20,188
|
|
|
266,482
|
|
|
451,084
|
| ||||||
Steven F. Leer
|
|
21,936
|
|
|
289,556
|
|
|
1,029,864
|
| ||||||
M. George Lewis
|
|
10,122
|
|
|
133,611
|
|
|
133,611
|
| ||||||
Keith A. MacPhail
|
|
20,188
|
|
|
266,482
|
|
|
451,084
|
| ||||||
Richard J. Marcogliese
|
|
21,199
|
|
|
279,827
|
|
|
875,385
|
| ||||||
Claude Mongeau
|
|
22,360
|
|
|
295,152
|
|
|
835,877
|
| ||||||
Wayne G. Thomson
|
|
15,287
|
|
|
201,789
|
|
|
1,762,517
|
| ||||||
Rhonda I. Zygocki
|
|
21,864
|
|
|
288,605
|
|
|
864,878
|
| ||||||
Total: |
222,123 | 2,932,028 | 10,821,470 |
Notes:
(1) | Includes DSUs awarded as an initial or annual grant of DSUs as part of the non-employee director compensation program; DSUs awarded as a result of the director electing to take all or a portion of their fees in the form of DSUs; and any dividend equivalents credited, in the form of additional DSUs, consistent with dividends declared on Common Shares during the year ending December 31, 2019. Fractional units are excluded. |
(2) | The value of DSUs awarded or accrued during 2019 was determined by multiplying the number of DSUs awarded to or accrued by each director during 2019, by the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20. |
(3) | The value of the total number of DSUs held by each director as at December 31, 2019, multiplied by the closing price of the Common Shares on the TSX on such date of $13.20. |
Director Share Ownership Guidelines
Each non-employee director is required to maintain minimum holdings of Common Shares (including DSUs) representing a value equal to at least three times that directors total compensation for the most recent year ended December 31. New directors are required to achieve the share ownership guidelines within five years of joining the Board. These requirements are intended to enhance alignment of director and shareholder interests. As of March 2, 2020, all of our directors were in compliance with the applicable share ownership guidelines. The following table illustrates the value of our non-employee directors holdings as at March 2, 2020.
Name
|
At-Risk Investment Beneficial Shareholdings(1)
|
As a Multiple of
|
Share ($)
|
Status
| ||||||||||||||||||||||||||
Common Shares ($)
|
DSUs ($)
|
Total ($)
| ||||||||||||||||||||||||||||
Patrick D. Daniel (Board Chair)
|
|
739,763
|
|
|
2,814,606
|
|
|
3,554,369
|
|
|
10.8
|
|
|
990,000
|
|
|
In compliance
|
| ||||||||||||
Susan F. Dabarno
|
|
299,734
|
|
|
584,224
|
|
|
883,958
|
|
|
4.2
|
|
|
627,198
|
|
|
In compliance
|
| ||||||||||||
Jane E. Kinney
|
|
41,790
|
|
|
217,626
|
|
|
259,416
|
|
|
1.4
|
|
|
536,772
|
|
|
In compliance
|
| ||||||||||||
Harold N. Kvisle
|
|
646,750
|
|
|
430,606
|
|
|
1,077,356
|
|
|
5.3
|
|
|
604,698
|
|
|
In compliance
|
| ||||||||||||
Steven F. Leer
|
|
19,900
|
|
|
866,884
|
|
|
886,784
|
|
|
4.1
|
|
|
642,198
|
|
|
In compliance
|
| ||||||||||||
M. George Lewis
|
|
199,000
|
|
|
191,299
|
|
|
390,299
|
|
|
2.5
|
|
|
474,498
|
|
|
In compliance
|
| ||||||||||||
Keith A. MacPhail
|
|
3,044,700
|
|
|
430,606
|
|
|
3,475,306
|
|
|
17.2
|
|
|
604,698
|
|
|
In compliance
|
| ||||||||||||
Richard J. Marcogliese
|
|
597,000
|
|
|
750,439
|
|
|
1,347,439
|
|
|
6.5
|
|
|
622,500
|
|
|
In compliance
|
| ||||||||||||
Claude Mongeau
|
|
1,681,550
|
|
|
720,659
|
|
|
2,402,209
|
|
|
10.8
|
|
|
668,409
|
|
|
In compliance
|
| ||||||||||||
Wayne G. Thomson
|
|
21,193
|
|
|
1,419,149
|
|
|
1,440,342
|
|
|
6.9
|
|
|
622,500
|
|
|
In compliance
|
| ||||||||||||
Rhonda I. Zygocki
|
|
398,338
|
|
|
742,519
|
|
|
1,140,857
|
|
|
5.3
|
|
|
648,000
|
|
|
In compliance
|
|
Notes:
(1) | The value of At-Risk Investment Beneficial Shareholdings was determined by multiplying the number of Common Shares and DSUs held by each director as of March 2, 2020, by the closing price of the Common Shares on the TSX on such date of $9.95. |
Cenovus Energy Inc. | 23 | 2020 Management Information Circular |
|
Dear Fellow Shareholders,
We are pleased to present the Compensation Discussion and Analysis, which explains the Companys executive compensation philosophy and practices, and how they were applied to reach our executive compensation decisions for 2019.
Strong Corporate Performance and Enhanced Disclosure The Company worked diligently to improve shareholder value, including continued cost leadership with maintenance of our Oil Sands low cost structure and a 20 percent reduction in Deep Basin absolute operating costs, further reduction of Net Debt to about $6.5 billion at year end, and a 25 percent dividend increase as of the fourth quarter.
We believe in paying for performance and in 2019 performance was strong. Cenovuss 2019 performance reflected one-year total shareholder return of 40 percent, outperforming most of the Executive Compensation Peer Group (as defined in the Compensation Discussion and Analysis section of this Circular) where median performance was 17 percent. Management continued to utilize a balanced corporate scorecard to focus employees on safety, environmental, operational and financial measures that contribute to shareholder value. The Company outperformed on multiple measures resulting in a corporate score of 164 percent. In the final determination of the 2019 corporate score, the Board supported adjusting performance measures impacted by production curtailment.
To improve transparency of our performance management, we have expanded the corporate scorecard presentation and discussion in this years circular, providing greater detail on the components, targets and payouts. We invite you to read more about our corporate scorecard results at page 36 of the Compensation Discussion and Analysis section of this Circular.
Strong Leadership Mr. Pourbaixs strong leadership of the Company contributed directly to the Companys 2019 results. To reflect growth and performance in the President & Chief Executive Officer role, Mr. Pourbaixs target total direct compensation was increased from $6.5 million to $8.0 million. In alignment with our pay for performance philosophy, the entire increase was in variable pay. In total, 89 percent of 2019 President & Chief Executive Officer compensation is variable compared to 11 percent being fixed. Mr. Pourbaixs target total direct compensation for 2019 was at the 39th percentile for comparable roles relative to the Executive Compensation Peer Group. As an additional reference, we reviewed chief executive officer compensation from a sample of Canadian industrial companies outside of the oil and gas sector (including: chemicals, mining, transportation and utilities) of similar size to Cenovus, as measured using enterprise value. Mr. Pourbaixs 2019 target total direct compensation was positioned at the 47th percentile relative to the Canadian industrial peers we reviewed, compared to our 55th percentile positioning on enterprise value.
Pay for Performance Achieving alignment with the long-term shareholder experience is a core objective of our executive compensation philosophy. From 2014 to 2019, average Named Executive Officers total direct compensation pay opportunity has remained essentially flat. Realizable total direct compensation over this same period is approximately 60 percent of the pay opportunity. This indicates that actualized compensation is strongly correlated to shareholder experience and the economic realities the industry has endured over this period.
Emphasis on Governance We emphasize strong governance supporting our compensation practices, and this year the Board approved a clawback policy that, starting in 2021, applies to all of our executive officers.
Please see the Compensation Discussion and Analysis section in this Circular for more detail on Cenovuss executive compensation philosophy, governance and outcomes for 2019 including for the other Named Executive Officers. As always, we welcome shareholder feedback on Cenovuss executive compensation and business practices; you can contact us directly at the address set out in the Corporate Governance section of this Circular.
/s/ Patrick D. Daniel | /s/ Rhonda I Zygocki | |
Patrick D. Daniel | Rhonda I. Zygocki | |
Board Chair | Chair of the HRC Committee |
Cenovus Energy Inc. | 24 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
COMPENSATION DISCUSSION AND ANALYSIS
|
26 | COMPENSATION GOVERNANCE | |||
26 | ||||
26 | ||||
26 | ||||
27 | ||||
27 | ||||
27 | ||||
29 | ||||
30 | ||||
31 | EXECUTIVE COMPENSATION PROGRAM DESIGN | |||
31 | ||||
31 | ||||
32 | ||||
33 | ||||
35 | ||||
35 | ||||
35 | 2019 EXECUTIVE COMPENSATION | |||
35 | ||||
36 | ||||
37 | ||||
38 | ||||
39 | ||||
40 | ||||
40 | ||||
41 | ||||
42 | Incentive Plan Awards Value Vested or Earned During the Year | |||
42 | ||||
43 | ||||
43 | ||||
45 |
Cenovus Energy Inc. | 25 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
Cenovus Energy Inc. | 27 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
Cenovus Energy Inc. | 28 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
The following outlines the timing and key responsibilities of the HRC Committee in the determination of annual compensation for the Corporations NEOs:
Cenovus Energy Inc. | 29 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
Executive Compensation Peer Group
Our Executive Compensation Peer Group is used to benchmark the compensation of the NEOs, representing companies with North American oil and gas or related operations of similar size and complexity, with which the Corporation competes for talent. The Executive Compensation Peer Group was determined by considering a number of factors including size, complexity of business, revenue, asset value, market capitalization, enterprise value, total employees, geographic scope of operations and ownership structure. In 2019, the HRC Committee reviewed the Executive Compensation Peer Group and determined it remains appropriate for 2020. The table below reflects Cenovuss positioning relative to the Executive Compensation Peer Group in terms of 2019 revenue and market capitalization at December 31, 2019.
Company
|
2019 Revenue
|
Market Capitalization ($Billion)
| ||||||||
Canadian Natural Resources Limited
|
|
22.9
|
|
|
49.7
|
| ||||
Crescent Point Energy Corp.
|
|
2.9
|
|
|
3.2
|
| ||||
Devon Energy Corporation
|
|
8.3
|
(1)
|
|
13.0
|
(2)
| ||||
Enbridge Inc.
|
|
50.1
|
|
|
104.5
|
| ||||
Husky Energy Inc.
|
|
20.0
|
|
|
10.5
|
| ||||
Imperial Oil Limited
|
|
34.1
|
|
|
25.6
|
| ||||
Marathon Oil Corporation
|
|
6.7
|
(1)
|
|
14.1
|
(2)
| ||||
Murphy Oil Corporation
|
|
3.7
|
(1)
|
|
5.5
|
(2)
| ||||
Ovintiv Inc.
|
|
8.9
|
(1)
|
|
7.9
|
| ||||
Pembina Pipeline Corporation
|
|
7.2
|
|
|
24.6
|
| ||||
Suncor Energy Inc.
|
|
38.3
|
|
|
65.7
|
| ||||
TC Energy Corporation
|
|
13.3
|
|
|
64.6
|
| ||||
50th percentile
|
|
11.1
|
|
|
19.4
|
| ||||
Cenovus Energy Inc.
|
|
20.2
|
|
|
16.2
|
|
Source: Bloomberg
Notes:
(1) U.S. | dollars converted to Canadian dollars at the 2019 average annual exchange rate of US $1.00 = CDN $1.33. |
(2) U.S. | dollar values converted to Canadian dollars at December 31, 2019 exchange rate of US $1.00 = CDN $1.30. |
Cenovus Energy Inc. | 30 | 2020 Management Information Circular |
EXECUTIVE COMPENSATION PROGRAM DESIGN
|
The following table illustrates the elements of our 2019 executive compensation program and how these elements work together to provide pay for performance and shareholder alignment.
Total Direct Compensation
|
Indirect Compensation
|
|||||||||||||||||||
Program |
Base Salary | Annual Performance Bonus
Maximum award level at two times target |
Long-term Incentives | |
Benefits & Perquisites |
| ||||||||||||||
Performance Share Units 50%
Performance multiplier of zero to two times |
Stock Options 50%(1) |
|||||||||||||||||||
Purpose |
Intended to reflect individual capability and sustained performance in executing day- to-day |
Intended to reward individual and corporate performance achieved in the year. | Intended to reward achievement of longer-term Company performance and align interests with shareholders. | |
Intended to promote retention and provide long- term financial security. |
| ||||||||||||||
Performance Period |
Annual reviews | 1 Year | 3 Years | 7 Year term | ||||||||||||||||
Increases based on performance and market data |
Payout at risk(2)
|
|
Low risk, financial security |
|
Notes:
(1) | For additional information on the Stock Option Plan, see Schedule A Summary of Stock Option Plan and Additional Compensation Plan Information of this Circular. |
(2) | The payout at risk for the President & Chief Executive Officer is 87.5 percent of the target total direct compensation, consisting of annual performance bonus and long-term incentives. 12.5 percent of total direct compensation consists of the base salary. |
We determine the base salary of our executive officers annually based upon comparisons to the most recently available market data. We consider experience, scope of responsibilities, individual performance and strategic leadership over the course of the year.
Cenovus Energy Inc. | 31 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
Annual Performance Bonus Award
The annual performance bonus rewards performance achieved in the year. It is made up of two components: corporate and individual. The target opportunity is aligned to the 50th percentile of the Executive Compensation Peer Group. The target annual performance bonus award opportunity, payout range, and weightings for the NEOs are as follows:
Name & Principal Position
|
Target Award
|
Award Range
|
Weighting
| |||||||||||||||||
Corporate
|
Individual
| |||||||||||||||||||
Alexander J. Pourbaix President & Chief Executive Officer
|
|
125%
|
|
80% | 20% | |||||||||||||||
Jonathan M. McKenzie Executive Vice-President & Chief Financial Officer
|
|
75%
|
|
|||||||||||||||||
Harbir S. Chhina Executive Vice-President & Chief Technology Officer
|
|
70%
|
|
0-200% | ||||||||||||||||
J. Drew Zieglgansberger Executive Vice-President, Strategy & Corporate Development(1)
|
|
70%
|
|
70% | 30% | |||||||||||||||
Alan C. Reid Executive Vice-President, Stakeholder Engagement, Safety, Legal & General Counsel
|
|
65%
|
|
Note:
(1) | Until December 31, 2019, Mr. Zieglgansberger held the role of Executive Vice-President, Upstream. He was appointed Executive Vice-President, Strategy & Corporate Development effective January 1, 2020. |
Cenovus Energy Inc. | 32 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
Key Terms
|
Stock Options (Options)(1)
|
Performance Share Units (PSUs)
| ||
Term | 7 years | 3 years | ||
Description | Options to acquire Common Shares | Whole share units subject to performance criteria | ||
Primary Objective | Align interests with share price performance | Aligns interests with share price performance and rewards performance of specific objectives | ||
Performance Measures | Value accrues when the Common Share price exceeds the exercise price | Vesting determined by relative total shareholder return (RTSR) performance for the 2017 and 2018 PSU grants. The 2019 PSU grant is based on RTSR and Net Debt | ||
Vesting | Three-year vesting: 30 percent on the first anniversary of the grant date, 30 percent on the second anniversary of the grant date and 40 percent on the third anniversary of the grant date | See Performance Share Units below for a further description of vesting for PSUs | ||
Payout | On exercise, the option to acquire Common Shares at the price determined at the time of grant or receive in cash the realized value accrued over the exercise price | Paid in cash or Common Shares based on the closing price of the Common Shares on the TSX on the last trading day immediately before December 31, 2019 for the 2017 PSU grant and the volume weighted average trading price of the Common Shares on the TSX for five trading days prior to the end of the performance period for the 2018 and 2019 PSU grants |
Note:
(1) | For additional information on the Stock Option Plan, see Schedule A Summary of Stock Option Plan and Additional Compensation Plan Information of this Circular. |
Performance Share Units
We grant performance-based long-term incentives in the form of Performance Share Units (PSUs), as described in the table above. PSUs granted in 2017 become eligible to vest after a single three-year performance period. PSUs granted in both 2018 and 2019 become eligible to vest after a combination of one-year and three-year performance periods. In all instances payout only occurs after three years, provided that all performance periods in a PSU grant that are eligible to vest become vested. Details of the performance measures and performance periods are outlined in the table below:
Grant
|
Measures
|
Performance Period
|
Weighting
|
Vesting Period
| |||||||
2017 | 3 Year RTSR | January 1, 2017 to December 31, 2019 | 100% | 3 Years | |||||||
2018 | 2018 RTSR | January 1, 2018 to December 31, 2018 | 20% | 3 Years | |||||||
2019 RTSR | January 1, 2019 to December 31, 2019 | 20% | |||||||||
2020 RTSR | January 1, 2020 to December 31, 2020 | 20% | |||||||||
3 Year RTSR | January 1, 2018 to December 31, 2020 | 40% | |||||||||
2019 | 2019 RTSR | January 1, 2019 to December 31, 2019 | 10% | 3 Years | |||||||
2020 RTSR | January 1, 2020 to December 31, 2020 | 10% | |||||||||
2021 RTSR | January 1, 2021 to December 31, 2021 | 10% | |||||||||
3 Year RTSR | January 1, 2019 to December 31, 2021 | 40% | |||||||||
Net Debt | As at December 31, 2021 | 30% |
Dividend equivalents are credited in the form of additional PSUs consistent with dividends declared on Common Shares. PSUs that do not vest at the end of the three-year performance period are not paid out and are cancelled.
Cenovus Energy Inc. | 33 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
2019 PSU Performance Criteria The number of PSUs that vest is determined by applying a score (the Performance Score) that reflects the Corporations RTSR and Net Debt performance.
TSR is calculated using the volume weighted average trading price of a Common Share on the TSX (the VWAP Share Price) for the last 30 days of the performance period, less the VWAP Share Price for the 30 trading days prior to the start of the three-year performance period, plus dividends paid during the performance period, divided by the VWAP Share Price for the 30 trading days prior to the start of the performance period.
RTSR is calculated based on the percentile ranking of the Corporations TSR to the PSU peer group below (the PSU Peer Group) over the applicable performance period. Cenovus identified the PSU Peer Group with some or all of the following characteristics:
| Upstream energy producers |
| Commodity price exposure |
| Market capitalization less than $50 billion |
| Canadian operations |
| Compete for the same investor dollars |
Based on these considerations, the Cenovus PSU Peer Group to determine RTSR is as follows:
Apache Corporation
Canadian Natural Resources Limited
Crescent Point Energy Corp.
Devon Energy Corporation
Husky Energy Inc.
Imperial Oil Limited
Marathon Oil Corporation
MEG Energy Corp.
Murphy Oil Corporation
Ovintiv Inc.
Suncor Energy Inc.
Net Debt is calculated as short-term borrowings and the current and long-term portions of long-term debt, net of cash and cash equivalents.
Payout on PSUs is determined by applying the Performance Score to the relevant performance period, as follows:
Performance |
Performance Criteria | Performance Score(1) | |||||||||||||
RTSR | Net Debt | ||||||||||||||
Minimum Performance | Less than 25th percentile | >$7.0 billion | 0.0 | ||||||||||||
Threshold Performance | 25th percentile or greater but less than 50th percentile |
$7.0 billon | 0.25 | ||||||||||||
Target Performance | 50th percentile or greater, but less than 75th percentile |
$6.5 billon | 1.0 | ||||||||||||
Maximum Performance | 75th percentile or greater | $5.5 billion | 2.0 |
Note: (1) Payout is based on interpolation between the 25th and the 75th percentile. |
Cenovus Energy Inc. | 34 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
The following are our Named Executive Officers (or NEOs) for 2019:
Alexander J. Pourbaix |
President & Chief Executive Officer | |
Jonathan M. McKenzie |
Executive Vice-President & Chief Financial Officer | |
Harbir S. Chhina |
Executive Vice-President & Chief Technology Officer | |
Alan C. Reid |
Executive Vice-President, Stakeholder Engagement, Safety, Legal & General Counsel | |
J. Drew Zieglgansberger |
Executive Vice-President, Strategy & Corporate Development(1) |
Note:
(1) | Until December 31, 2019, Mr. Zieglgansberger held the role of Executive Vice-President, Upstream. He was appointed Executive Vice-President, Strategy & Corporate Development effective January 1, 2020. |
Cenovus Energy Inc. | 35 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
2019 Corporate Scorecard
| |||||||||||||||||||||||||
Performance Measure
|
Weighting
|
Target
|
Actual Reported Results
|
2019 Corporate Scorecard Adjusted
|
Weighted
| ||||||||||||||||||||
Safety & Environment |
10% | ||||||||||||||||||||||||
Total recordable incident frequency |
2.5% | 0.22 | 0.30 | - | 0.0 | % | |||||||||||||||||||
Significant incident frequency |
2.5% | 0.16 | 0.13 | - | 5.0 | % | |||||||||||||||||||
Process safety performance (events)(1) |
2.5% | |
<2 Tier One £6 Tier Two |
|
1 7 |
- | 2.8 | % | |||||||||||||||||
Oil sands emissions intensity (CO2e/BOE) |
2.5% | 52.94 | 50.86 | 46.73 | (5) | 5.0 | % | ||||||||||||||||||
Operating |
50% | ||||||||||||||||||||||||
Production (MBOE/d) |
20% | 487 | 452 | 483 | (5) | 16.6 | % | ||||||||||||||||||
Upstream non-fuel operating costs ($/BOE) |
20% | 6.32 | 6.53 | 6.16 | (5) | 40.0 | % | ||||||||||||||||||
Capital spending ($ millions) |
10% | 1,341 | 1,176 | 1,191 | (5) | 20.0 | % | ||||||||||||||||||
Financial |
40% | ||||||||||||||||||||||||
Non-rent G&A ($/BOE)(2)(3) |
5% | 1.09 | 1.20 | 1.12 | (5) | 4.1 | % | ||||||||||||||||||
Free funds flow ($ millions)(2)(4) |
15% | 821 | 2,548 | 2,533 | (6) | 30.0 | % | ||||||||||||||||||
Net Debt to Adjusted EBITDA(2) |
20% | 2.8 | 1.6 | - | 40.0 | % | |||||||||||||||||||
2019 Corporate Score |
164 | % |
Notes:
(1) | Tier One Process Safety Event All major scale events that involve a process release that lead to a lost time injury, a fatality, a fire or an explosion resulting in damages greater than $100,000 or a highly toxic/combustible release above Tier One Threshold. |
Tier Two Process Safety Event All moderate scale events that involve a process release that lead to a medical treatment, a fire or an explosion resulting in damages greater than $2,500 or a highly toxic/combustible release above the Tier Two Threshold (and below Tier One Threshold). |
(2) | This is a non-GAAP measure and additional information is in the Advisory section at the end of this Circular. |
(3) | Excludes rent, severance, and LTI costs. |
(4) | For the purposes of the 2019 Corporate Scorecard, it was determined at the start of the year that free funds flow would include any actual acquisition and divestiture activity. |
(5) | Due to the uncertainty around the duration and level of the Alberta governments mandatory production curtailment program (which was proposed by the Government of Alberta to be revised monthly), the 2019 Corporate Scorecard intentionally did not account for the impacts of mandated production curtailment when approved. The Board used its discretion to adjust production results to the level that would have been attained but for the mandatory production |
Cenovus Energy Inc. | 36 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
curtailment program. The adjustment to actual reported production results for purposes of the 2019 Corporate Scorecard resulted in adjustments to other performance measures impacted by production: oil sands emissions intensity, upstream non-fuel operating costs, capital spending and non-rent G&A. |
(6) | Adjusted to reflect impact of mandatory production curtailment on capital spending. Capital spending was adjusted upwards and a correlated downward adjustment was made to free funds flow. |
The Corporate Scorecard results are reviewed by the HRC Committee and recommended to the Board for approval. The Corporate Scorecard calculation was 164 percent for 2019. In 2019, operations were significantly impacted by mandatory government enforced production curtailment. In assessing 2019 performance, the HRC Committee and the Board considered that the Corporate Scorecard and associated performance ranges were set prior to the start of the curtailment program without the ability to project curtailment impacts and that operations were executed with excellence under the curtailment protocols. The Board supported adjusting actual reported results for performance measures impacted by production curtailed volumes in the final determination of the 2019 corporate score. A discussion of the Corporations 2019 performance can be found in the Corporations year-end news release and associated disclosure available on cenovus.com.
The President & Chief Executive Officers annual performance bonus award is measured based on 80 percent of the corporate score and 20 percent on individual performance. Mr. Pourbaixs 2019 individual performance rating was 180 out of 200 percent, resulting in a bonus award of $2,090,000, or 167.2 percent of target
annual performance bonus award opportunity. No discretion was used for the President & Chief Executive Officers annual performance bonus award in 2019.
|
Mr. Pourbaixs 2019 Key Results
Achieved industry leading personal safety performance metrics for second year in a row and evaluated and developed recommendations on environmental, social and governance targets and ambitions (which were publicly disclosed in January 2020);
Optimized our assets, including pipelines, rail and storage and delivered 100,000 barrels per day crude by rail program as planned and within budget;
Realized $6.5 billion Net Debt position (1.6x Net Debt to Adjusted EBITDA), from $8.3 billion at the start of 2019 and formalized an investment framework around capital allocation; and
Introduced, delivered and progressed the new People Strategy and reduced attrition rates across the Company.
|
Individual ratings for the other NEOs ranged from 125 to 160 out of 200 percent, resulting in annual performance bonus awards of 102 percent to 122 percent of base salary. No discretion was used for the annual performance bonus award for any NEO in 2019.
Long-Term Incentives
Decisions about 2019 LTI grants were made in February 2019. Mr. Pourbaixs 2019 total grant value was $5.75 million and consisted of 50 percent Options and 50 percent PSUs (981,228 Options and 249,349 PSUs). Similarly, grants for the other NEOs consisted of 50 percent Options and 50 percent PSUs. The allocation has remained constant year-over-year. Aggregate values increased compared to 2018 however overall remain below the 50th percentile.
Cenovuss TSR over the three-year period of 2017 to 2019 was -37.6 percent, which was the 37.3 percentile of the PSU Peer Group resulting in a performance score of 0.75. 2017 PSUs will be paid in 2020.
CEO Pay Opportunity vs. Realizable Pay
Alignment of our President & Chief Executive Officers compensation experience to the TSR experience of our shareholders is illustrated in the following table, comparing the grant date pay opportunity of TDC (as reflected in the Summary Compensation Table in the Compensation Discussion and Analysis Compensation Tables section of this Circular) relative to the realizable TDC, which fluctuates based on the share price (measured as of December 31, 2019). The table also compares the realizable value of $100 of granted pay to the President & Chief Executive Officer in relation to the value of $100 invested in Common Shares over the same periods. Mr. Pourbaix was appointed President & Chief Executive Officer on November 6, 2017, and therefore the following table reflects Mr. Pourbaixs total direct compensation beginning in 2018, the first full year of his leadership with Cenovus.
Period |
CEO TDC Pay Opportunity(1) |
CEO Realizable Pay TDC(2) |
Performance Period | Value of $100 | |||||||||||||||||||||
President & CEO(3) | Shareholder Cumulative Value(4) | ||||||||||||||||||||||||
2019 | 8,839,992 | 8,077,118 | 2018-12-31 to 2019-12-31 | 91 | 140 | ||||||||||||||||||||
2018 | 6,379,993 | 8,795,880 | 2017-12-31 to 2019-12-31 | 138 | 119 | ||||||||||||||||||||
2018-2019 | 15,219,985 | 16,872,998 | 2017-12-31 to 2019-12-31 | 111 | 119 |
Cenovus Energy Inc. | 37 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
Notes:
(1) | Represents base salary, annual performance bonus and grant date fair value of LTIs granted in the referenced year, as reported in the Summary Compensation Table in the Compensation Discussion and Analysis Compensation Tables section of this Circular. |
(2) | The realizable TDC includes base salary and annual performance bonus earned in the referenced year (as reported in the Salary and the Non-Equity Incentive Plan Compensation Annual Incentive Plan columns of the Summary Compensation Table), and the LTIs granted in the referenced year valued as follows: (i) value (market price received less exercise price) of any Options that were granted in that year that were exercised as at or prior to December 31, 2019, if applicable; (ii) in-the-money attributed as at December 31, 2019 to Options that were granted in the referenced year that had not been exercised as at December 31, 2019, based on the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20; (iii) value attributed as at December 31, 2019 to PSUs granted in the referenced year that had not vested as at December 31, 2019, assuming performance at Target and related Performance Score of 1.0 times, and based on the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20; and (iv) value attributed as at December 31, 2019 to Restricted Share Units (RSUs) granted in the referenced year, which were not yet eligible for payout as at December 31, 2019, based on the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20. |
(3) | Represents the realizable value to the President & Chief Executive Officer for each $100 awarded in the Summary Compensation Table for the period as indicated, and ending December 31, 2019. |
(4) | Represents the cumulative value of a $100 investment in Common Shares made on the first trading day of the period indicated, assuming quarterly dividend reinvestment. |
Year |
NEO ($)
|
NEO ($) | ||||||||
2019 | 4,202,092 | 3,860,191 | ||||||||
2018(3) | 3,290,900 | 4,258,915 |
Notes:
(1) | Represents average TDC pay opportunity of the named executive officers for the referenced year as reported in the Summary Compensation Table in the Management Information Circular of the Corporation for the referenced year. TDC pay opportunity includes base salary, annual performance bonus and grant date fair value of LTIs granted in the respective year, as reported in the respective the Summary Compensation Table for the referenced year. |
Cenovus Energy Inc. | 38 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
(2) | Represents average realizable TDC of the named executive officers for the referenced year as reported in the Summary Compensation Table in the Management Information Circular of the Corporation for the referenced year. The realizable TDC includes base salary and annual performance bonus earned in the referenced year (as reported in the Salary and the Non-Equity Incentive Plan Compensation Annual Incentive Plan columns of the Summary Compensation Table, and the LTIs granted in the referenced year valued as follows: (i) value (market price received less exercise price) of any Options that were granted in that year that were exercised as at or prior to December 31, 2019, if applicable; (ii) in-the-money attributed as at December 31, 2019 to Options that were granted in the referenced year that had not been exercised as at December 31, 2019, based on the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20; (iii) value attributed as at December 31, 2019 to PSUs granted in the referenced year that had not vested as at December 31, 2019, assuming performance at Target and related Performance Score of 1.0 times, and based on the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20; and (iv) value attributed as at December 31, 2019 to RSUs granted in the referenced year, which were not yet eligible for payout as at December 31, 2019, based on the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20. |
(3) | Includes TDC for Mr. Ruste, who retired on April 30, 2018. Includes a one-time new-hire award of RSUs to Mr. McKenzie as described in footnote 8 to the Summary Compensation Table of this Circular. The weighted average of the combined TDC for Mr. McKenzie and Mr. Ruste is included in the average of the named executive officers. |
The following performance graph illustrates the cumulative TSR for Cenovus on the TSX of $100 invested in Common Shares of the Corporation over the period beginning January 1, 2014 and ending December 31, 2019 compared to $100 invested in the S&P/TSX Composite Index and the S&P/TSX Energy Index over the same period, assuming quarterly reinvestment of dividends. Over this period average NEO TDC Pay Opportunity has remained essentially flat. From 2014 to 2019 NEO realizable TDC is, on average, at approximately 60 percent of TDC Pay Opportunity reflecting general alignment with the shareholder experience over the five-year period. The trend in average TDC Opportunity and Realizable TDC is strongly aligned with the shareholder experience, primarily due to the significant portion of variable-based compensation delivered through LTIs and annual performance bonus.
2014 | 2015 | 2016 | 2017 | 2018 | 2019 |
Compounded Rate(2) |
||||||||||||||||||||||
Cenovus Common Shares (TSX) ($)* |
100 | 76 | 90 | 52 | 44 | 61 | -9.3 | % | ||||||||||||||||||||
S&P/TSX Composite Index ($)* |
100 | 92 | 111 | 121 | 110 | 135 | 6.3 | % | ||||||||||||||||||||
S&P/TSX Energy Index ($)* |
100 | 77 | 104 | 97 | 79 | 97 | -0.7 | % | ||||||||||||||||||||
Cenovus NEO Average TDC Pay Opportunity ($ thousands)(3)(4) |
4,139 | 4,000 | 4,071 | 3,179 | 3,291 | 4,202 | N/A | |||||||||||||||||||||
Cenovus NEO Average Realizable Pay TDC ($ thousands)(5)(6) |
1,450 | 1,433 | 1,517 | 1,870 | 4,259 | 3,860 | N/A |
Cenovus Energy Inc. | 39 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
Notes:
* | Source: Bloomberg |
(1) | In 2018 and 2019, our NEOs have only realized a portion of their pay opportunity; specifically, actual base salary paid, actual bonus paid, and Options that have vested for the 2018 grant only. What is yet to be realized are the share-based awards and unvested Options, granted in the referenced year. |
(2) | The compounded annual growth rate shown represents the time period from December 31, 2014 to December 31, 2019. |
(3) | Represents average, for the named executive officers reported by Cenovus in the respective year of disclosure, of the sum of amounts reported in the Salary, Share-based Awards, Option-based Awards, and Non-Equity Incentive Plan Compensation Annual Incentive Plans columns of the Summary Compensation Table of the management information circular or management proxy circular (as applicable) in respect of the annual meeting of shareholders of Cenovus held in the year immediately following the date indicated. |
(4) | The weighted average of the combined TDC for Mr. Pourbaix and Mr. Ferguson, our former President & Chief Executive Officer, is included in the average of the named executive officers for 2017. |
(5) | Represents average realizable TDC of the named executive officers for the referenced year as reported in the Summary Compensation Table in the Management Information Circular of the Corporation for the referenced year. The realizable TDC includes base salary and annual performance bonus earned in the referenced year (as reported in the Salary and the Non-Equity Incentive Plan Compensation Annual Incentive Plan columns of the Summary Compensation Table, and the LTIs granted in the referenced year valued as follows: (i) value (market price received less exercise price) of any Options that were granted in that year that were exercised as at or prior to December 31, 2019, if applicable; (ii) in-the-money attributed as at December 31, 2019 to Options that were granted in the referenced year that had not been exercised as at December 31, 2019, based on the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20; (iii) value attributed as at December 31, 2019 to PSUs granted in the referenced year that had not vested as at December 31, 2019, assuming performance at Target and related Performance Score of 1.0 times, and based on the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20; and (iv) value attributed as at December 31, 2019 to RSUs granted in the referenced year, which were not yet eligible for payout as at December 31, 2019, based on the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20. |
(6) | The weighted average of the combined TDC for Mr. McKenzie and Mr. Ruste, our former Executive Vice-President & Chief Financial Officer, is included in the average of the named executive officers for 2018. |
The following table sets out the compensation paid to our NEOs for the years ended December 31, 2017, 2018 and 2019.
Name and Principal Position |
Year | Salary ($) |
Share- based Awards(1) ($) |
Option- based Awards(2) ($) |
Non-Equity Incentive Plan Compensation |
Pension Value(4) ($) |
All Other Compensation(5) ($) |
Total Compensation ($) | ||||||||||||||||||||||||||||||||
Annual Incentive Plans(3) ($) | ||||||||||||||||||||||||||||||||||||||||
Alexander J. Pourbaix |
2019 | 1,000,000 | 2,874,994 | 2,874,998 | 2,090,000 | 112,000 | 94,325 | 9,046,317 | ||||||||||||||||||||||||||||||||
President & |
2018 | 1,000,000 | 2,249,993 | 2,250,000 | 880,000 | 82,667 | 95,825 | 6,558,485 | ||||||||||||||||||||||||||||||||
Chief Executive Officer |
2017 | (6) | 155,303 | 3,249,994 | (7) | 2,250,001 | 122,740 | 6,667 | 10,939 | 5,795,644 | ||||||||||||||||||||||||||||||
Jonathan M. McKenzie(8) |
2019 | 625,000 | 1,249,990 | 1,250,000 | 763,125 | 153,488 | 77,275 | 4,118,878 | ||||||||||||||||||||||||||||||||
Executive Vice-President & |
2018 | 460,938 | 2,249,998 | 1,249,999 | 402,324 | 33,334 | 1,059,185 | (9) | 5,455,778 | |||||||||||||||||||||||||||||||
Chief Financial Officer
|
|
2017
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
| ||||||||||||||||
Harbir S. Chhina |
2019 | 650,000 | 747,490 | 747,499 | 692,965 | 239,321 | 91,085 | 3,168,360 | ||||||||||||||||||||||||||||||||
Executive Vice-President & |
2018 | 650,000 | 747,498 | 747,498 | 444,080 | 261,925 | 91,085 | 2,942,086 | ||||||||||||||||||||||||||||||||
Chief Technology Officer
|
|
2017
|
|
|
650,000
|
|
|
725,344
|
|
|
759,309
|
|
|
391,300
|
|
|
243,929
|
|
|
91,085
|
|
|
2,860,967
|
| ||||||||||||||||
Alan C. Reid |
2019 | 516,667 | 769,996 | 769,998 | 524,914 | 217,808 | 77,268 | 2,876,651 | ||||||||||||||||||||||||||||||||
Executive Vice-President, Stakeholder |
2018 | 497,765 | 649,996 | 649,998 | 356,200 | 273,401 | 77,981 | 2,505,341 | ||||||||||||||||||||||||||||||||
Engagement, Safety, Legal & General Counsel
|
|
2017
|
|
|
437,500
|
|
|
447,214
|
|
|
476,314
|
|
|
259,308
|
|
|
184,615
|
|
|
74,979
|
|
|
1,879,930 |
| ||||||||||||||||
J. Drew Zieglgansberger |
2019 | 591,667 | 799,998 | 799,998 | 671,160 | 316,359 | 79,508 | 3,258,690 | ||||||||||||||||||||||||||||||||
Executive Vice-President, |
2018 | 547,144 | 599,999 | 599,998 | 413,270 | 346,608 | 77,268 | 2,584,287 | ||||||||||||||||||||||||||||||||
Strategy & Corporate Development(10)
|
|
2017
|
|
|
457,833
|
|
|
447,214
|
|
|
476,314
|
|
|
254,733
|
|
|
218,330
|
|
|
74,326
|
|
|
1,928,750
|
|
Notes:
(1) | The fair value of share-based awards on the grant date is calculated based on the market value of the Common Shares on the grant date for PSUs, RSUs and DSUs, as applicable. The methodology used to calculate the fair value of share-based awards is the same as the value reported for accounting purposes. |
(2) | The fair value of Option-based awards on the February 25, 2019 grant date is calculated using the Black-Scholes-Merton valuation model for Options. The assumptions and fair value for Options for the respective grant date is set out below. The methodology used to calculate the fair value of Option-based awards is the same as the value reported for accounting purposes. |
Grant Date
|
February 25, 2019
| ||||
Common Share Price
|
$11.53
| ||||
Volatility
|
31.01%
| ||||
Expected Life
|
4.5 years
| ||||
Risk-Free Rate
|
1.79%
| ||||
Grant Date Fair Value
|
$2.93
|
(3) | Reflects the annual performance bonus award earned by the NEO in the noted year. |
(4) | Pension value is the Compensatory Change shown in the Defined Benefit Pension Table or the Defined Contribution Pension Table. With respect to the DB Plan: the pension value includes the projected pension earned during the year adjusted by gains or losses on the NEOs entire defined benefit obligation when actual earnings differ from estimated; pension values reported annually vary due to underlying discount rate changes and other assumptions; and the amounts shown do not reflect payments made to the NEO during the applicable year. |
(5) | All Other Compensation represents an annual allowance of $39,600, parking, financial and retirement planning services, matching of personal contributions to an investment plan of up to five percent of base salary and health and wellness services. |
(6) | Mr. Pourbaix was appointed as Cenovuss President & Chief Executive Officer on November 6, 2017. Therefore, his 2017 compensation represents payment for approximately two months of the year. Mr. Pourbaix is not compensated for acting as a director of Cenovus. |
(7) | Mr. Pourbaixs share-based awards for 2017 include a one-time award of DSUs with a fair value on the grant date of approximately $1,000,000, which represented a special grant on Mr. Pourbaixs hire by Cenovus, and an award of PSUs with a fair value on the grant date of approximately $2,250,000. |
Cenovus Energy Inc. | 40 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
(8) | Mr. McKenzie joined Cenovus on April 5, 2018 and was appointed as Cenovuss Executive Vice-President & Chief Financial Officer on May 1, 2018. Therefore, his 2018 compensation represents payment for approximately nine months of the year. Mr. McKenzies share-based awards for 2018 include a one-time award of RSUs with a fair value on the grant date of approximately $1,000,000, which represented a special grant on Mr. McKenzies hire by Cenovus, and an award of PSUs with a fair value on the grant date of approximately $1,250,000. |
(9) | Mr. McKenzie received a one-time signing bonus of $1,000,000 on his hire by Cenovus. |
(10) | Until December 31, 2019, Mr. Zieglgansberger held the title of Executive Vice-President, Upstream. He was appointed Executive Vice-President, Strategy & Corporate Development effective January 1, 2020. |
Outstanding Option-based and Share-based Awards
The following table outlines certain information regarding all Option-based awards and share-based awards outstanding for the NEOs as at December 31, 2019. For further details, see Long-Term Incentives in the Executive Compensation Program Design section of this Circular.
OPTION-BASED AWARDS
|
SHARE-BASED AWARDS
| ||||||||||||||||||||||||||||||||||||||||||||
Name
|
Number of
|
Original Grant Date
|
Option Exercise Price ($)
|
Option Expiration Date
|
Value
of Money
|
Number of That Have Not Vested(3) (#)
|
Market or Awards That Vested(4) ($)
|
Market or Awards Not Distributed(5) ($)
| |||||||||||||||||||||||||||||||||||||
Alexander J. Pourbaix |
981,228 | 25-Feb-2019 | 11.53 | 25-Feb-2026 | 1,638,651 | ||||||||||||||||||||||||||||||||||||||||
986,842 | 27-Feb-2018 | 9.48 | 27-Feb-2025 | 3,671,052 | 663,466 | (7) | 8,757,753 | (7) | 962,016 | ||||||||||||||||||||||||||||||||||||
714,286 | 07-Nov-2017 | (6) | 14.27 | 07-Nov-2024 | - | ||||||||||||||||||||||||||||||||||||||||
Jonathan M. McKenzie |
|
426,621 398,089 |
|
25-Feb-2019 05-Apr-2018 |
(8) |
|
11.53 11.01 |
|
25-Feb-2026 05-Apr-2025 |
|
712,457 871,815 |
320,968 | (9) | 4,236,774 | (9) | - | |||||||||||||||||||||||||||||
Harbir S. Chhina |
255,119 | 25-Feb-2019 | 11.53 | 25-Feb-2026 | 426,049 | ||||||||||||||||||||||||||||||||||||||||
327,850 | 27-Feb-2018 | 9.48 | 27-Feb-2025 | 1,219,602 | |||||||||||||||||||||||||||||||||||||||||
245,731 | 04-Apr-2017 | 14.95 | 04-Apr-2024 | - | |||||||||||||||||||||||||||||||||||||||||
245,731 | 02-May-2016 | 19.89 | 02-May-2023 | - | 198,546 | 2,620,805 | - | ||||||||||||||||||||||||||||||||||||||
245,731 | 23-Feb-2015 | 22.22 | 23-Feb-2022 | - | |||||||||||||||||||||||||||||||||||||||||
245,731 | 19-Feb-2014 | 28.37 | 19-Feb-2021 | - | |||||||||||||||||||||||||||||||||||||||||
210,358 | 20-Feb-2013 | 32.76 | 20-Feb-2020 | - | |||||||||||||||||||||||||||||||||||||||||
Alan C. Reid |
262,798 | 25-Feb-2019 | 11.53 | 25-Feb-2026 | 438,873 | ||||||||||||||||||||||||||||||||||||||||
199,561 | 27-Feb-2018 | 9.48 | 27-Feb-2025 | 742,367 | |||||||||||||||||||||||||||||||||||||||||
154,147 | 04-Apr-2017 | 14.95 | 04-Apr-2024 | - | |||||||||||||||||||||||||||||||||||||||||
154,147 | 02-May-2016 | 19.89 | 02-May-2023 | - | 170,352 | 2,248,650 | 224,849 | ||||||||||||||||||||||||||||||||||||||
62,849 | 23-Feb-2015 | 22.22 | 23-Feb-2022 | - | |||||||||||||||||||||||||||||||||||||||||
96,158 | 19-Feb-2014 | 28.37 | 19-Feb-2021 | - | |||||||||||||||||||||||||||||||||||||||||
56,638 | 20-Feb-2013 | 32.76 | 20-Feb-2020 | - | |||||||||||||||||||||||||||||||||||||||||
J. Drew Zieglgansberger |
273,037 | 25-Feb-2019 | 11.53 | 25-Feb-2026 | 455,972 | ||||||||||||||||||||||||||||||||||||||||
263,157 | 27-Feb-2018 | 9.48 | 27-Feb-2025 | 978,944 | |||||||||||||||||||||||||||||||||||||||||
154,147 | 04-Apr-2017 | 14.95 | 04-Apr-2024 | - | |||||||||||||||||||||||||||||||||||||||||
154,147 | 02-May-2016 | 19.89 | 02-May-2023 | - | 167,537 | 2,211,488 | 211,768 | ||||||||||||||||||||||||||||||||||||||
62,849 | 23-Feb-2015 | 22.22 | 23-Feb-2022 | - | |||||||||||||||||||||||||||||||||||||||||
96,158 | 19-Feb-2014 | 28.37 | 19-Feb-2021 | - | |||||||||||||||||||||||||||||||||||||||||
72,816 | 20-Feb-2013 | 32.76 | 20-Feb-2020 | - |
Notes:
(1) | The number of securities underlying unexercised Options includes both vested and unvested Options. |
(2) | The value of unexercised in-the-money Options is based on the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20. |
(3) | The number of shares/units of shares that have not vested include the amount of PSUs granted to the NEOs in 2017, 2018 and 2019 plus the number of dividend equivalents credited in 2017, 2018 and 2019 associated with those PSUs granted, rounded to the next whole unit. The PSUs and associated dividend equivalents become eligible to vest based on achievement of RTSR for all outstanding PSU grants, and in the case of the 2019 PSU Grant, Net Debt, as discussed under Long-Term Incentives in the Executive Compensation Program Design section of this Circular and may not become eligible to vest and may be cancelled. The RSUs and associated dividend equivalents vest after three years in accordance with the provisions of the respective grant agreements. |
(4) | The market or payout value of share-based awards that have not yet vested assumes target performance is achieved and is based on the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20 and the actual number of units (not rounded). |
(5) | The market or payout value of vested share-based awards not paid out or distributed represents annual incentive plan amounts paid in the form of DSUs to Mr. Reid and Mr. Zieglgansberger upon promotion, and Mr. Pourbaix upon new hire, and is based on the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20. |
(6) | Mr. Pourbaix joined Cenovus on November 6, 2017. He received a stock option grant upon joining Cenovus. |
(7) | Mr. Pourbaixs share-based awards for 2017 include a one-time award of DSUs with a fair value on the grant date of approximately $1,000,000, which represented a special grant on Mr. Pourbaixs hire by Cenovus, and an award of PSUs with a fair value on the grant date of approximately $2,250,000. |
(8) | Mr. McKenzie joined Cenovus on April 5, 2018 and was appointed as Cenovuss Executive Vice-President & Chief Financial Officer on May 1, 2018. He received a stock option grant upon joining Cenovus. |
(9) | Mr. McKenzies share-based awards include a one-time new-hire award of RSUs with a fair value on the grant date of approximately $1,000,000, and an award of PSUs with a fair value on the grant date of approximately $1,250,000. |
Cenovus Energy Inc. | 41 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
Incentive Plan Awards Value Vested or Earned During the Year
This table provides the value of Option-based and share-based awards that vested during 2019 for each of the NEOs and the value of non-equity incentive plan compensation earned by each of the NEOs in 2019.
Name
|
Option-based Awards Value Vested During the Year(1) ($)
|
Share-based Awards Value Vested During the Year(2) ($)
|
Non-Equity Incentive Plan Compensation Value Earned During the Year(3) ($)
| ||||||||||||
Alexander J. Pourbaix |
754,933 | Nil | 2,090,000 | ||||||||||||
Jonathan M. McKenzie |
187,499 | Nil | 763,125 | ||||||||||||
Harbir S. Chhina |
250,805 | Nil | 692,965 | ||||||||||||
Alan C. Reid |
218,091 | Nil | 524,914 | ||||||||||||
J. Drew Zieglgansberger |
201,315 | Nil | 671,160 |
Notes:
(1) | The value vested during the year is calculated on the assumption that the NEO exercised the Option-based awards on the date they vested. |
(2) | The value vested during the year is calculated as the number of PSUs and RSUs vested, multiplied by the closing price of the Common Shares on the TSX on December 28, 2018 of $9.38. |
(3) | Includes the amount of the annual performance bonus awards earned by the NEOs in 2019, as paid in 2020. |
The following table outlines the estimated annual benefits, accrued pension obligations and compensatory and non-compensatory changes under the DB Plan.
Name
|
Number of Service
|
Annual Benefits Payable ($) |
Opening Present Value of Defined Benefit Obligation(1) ($)
|
Compensatory Change(2) ($)
|
Non- Compensatory Change(3) ($)
|
Closing Present
| |||||||||||||||||||||||||||||
At Year End
|
At Age 65
| ||||||||||||||||||||||||||||||||||
Alexander J. Pourbaix(4) |
- | - | - | - | - | - | - | ||||||||||||||||||||||||||||
Jonathan M. McKenzie |
0.50 | (5) | 7,250 | 186,083 | - | 115,155 | 19,723 | 134,878 | |||||||||||||||||||||||||||
Harbir S. Chhina |
10.0833 | (5) | 183,516 | 276,032 | 2,490,969 | 239,321 | 321,203 | 3,051,493 | |||||||||||||||||||||||||||
Alan C. Reid |
10.0833 | (5) | 114,937 | 159,582 | 1,778,748 | 217,808 | 322,165 | 2,318,721 | |||||||||||||||||||||||||||
J. Drew Zieglgansberger |
10.0833 | (5) | 125,021 | 380,229 | 1,702,930 | 316,359 | 432,321 | 2,451,610 |
Notes:
(1) | The DB Plan obligation (as defined by Form 51-102F6 Statement of Executive Compensation) on the date specified is determined using the same methodology and assumptions disclosed in the notes to Cenovuss consolidated financial statements for the year ended December 31, 2019. |
(2) | Represents the projected pension earned for service during the year (service cost) net of employee contributions adjusted by gains or losses on the NEOs entire DB Plan obligation when actual earnings differ from estimated. The amounts shown do not reflect payments made to the NEO during the year. |
(3) | Includes interest on the DB Plan obligation for the period, employee contributions plus changes in the discount rate, inflation rate and other net experience as at December 31, 2019. |
(4) | Mr. Pourbaix joined the DC Plan option effective December 1, 2017, therefore Mr. Pourbaix does not participate in the DB Plan, and his pension values are instead shown in the Defined Contribution Plan Table in this section. |
(5) | Represents DB Plan service effective December 1, 2019 for Messrs. Chhina, Reid and Zieglgansberger, and for Mr. McKenzie effective July 1, 2019. |
Cenovus Energy Inc. | 42 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
Defined Contribution Plan Table
The following table outlines the change in value of DC Plan holdings in 2019.
Name
|
Accumulated of Year ($)
|
Compensatory(1) ($)
|
Accumulated Value at Year End(2) ($)
| ||||||||||||
Alexander J. Pourbaix(3)
|
|
86,479
|
|
|
112,000
|
|
|
217,788
|
| ||||||
Jonathan M. McKenzie(4)
|
|
32,220
|
|
|
38,333
|
|
|
78,167
|
| ||||||
Harbir S. Chhina(4)
|
|
553,180
|
|
|
-
|
|
|
660,276
|
| ||||||
Alan C. Reid(4)
|
|
282,358
|
|
|
-
|
|
|
330,425
|
| ||||||
J. Drew Zieglgansberger(4)
|
|
234,170
|
|
|
-
|
|
|
290,343
|
|
Notes:
(1) | Employer contributions made during the year ended December 31, 2019. |
(2) | Includes investment performance during the year ended December 31, 2019. |
(3) | Mr. Pourbaix joined the DC Plan option effective December 1, 2017. |
(4) | Messrs. Chhina, Reid and Zieglgansberger are accruing benefits under the DB Plan and do not receive further contributions to the DC Plan. Mr. McKenzie received DC Plan contributions for the first six months of 2019 until he joined the DB Plan, effective July 1, 2019. |
Cenovus Energy Inc. | 43 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
In addition, the Board may exercise discretion in the event of a change of control to allow for payout to employees where the Price Condition or Time Condition, or both, have not been met. In all such scenarios, all employees, including the NEOs, other than the President & Chief Executive Officer, would be entitled to a one-time cash award equivalent to their respective Award Amount.
Long-Term Incentive Grant Agreements
For employees who are not party to a change of control agreement with the Corporation, the terms of the grant agreements applicable to each type of LTI on a change of control will apply such that Options will immediately vest and PSUs will become eligible and immediately vest based on target, meaning that the maximum number of PSUs will not vest but rather, one times the number of PSUs granted will vest in respect of any PSU grant for a performance period for which an achievement multiplier has not yet been determined.
Termination and Change of Control Benefits Table
The following table illustrates the estimated incremental payments, payables and benefits that would have been made to each of the NEOs pursuant to change of control agreements between the Corporation and each NEO, and pursuant to the Option Plan, our PSU Plan and our RSU Plan as a result of the triggering events identified below, in each case assuming that such event occurred on December 31, 2019.
The table does not include the value of payments, payables and benefits already available to the NEO at December 31, 2019, such as Options, PSUs and RSUs that had already vested at such date. As at December 31, 2019, there are no other agreements in place between the Corporation and any of our NEOs providing for incremental payments, payables or benefits on termination (whether voluntary, involuntary or constructive), resignation or retirement.
Name
|
Triggering Event
|
Payment ($)
|
Long-Term Incentives(1) ($)
|
Total
|
||||||||||
Alexander J. Pourbaix |
Termination Without Cause(2)(3) | - | - | - | ||||||||||
Termination With Cause(4) | - | - | - | |||||||||||
Change of Control | 4,323,200 | (5) | 12,966,141 | 17,289,341 | ||||||||||
Retirement/Resignation(6)
|
|
-
|
|
|
-
|
|
|
-
|
| |||||
Jonathan M. McKenzie
|
Termination Without Cause(2)(3) |
- | - | - | ||||||||||
Termination With Cause(4) | - | - | - | |||||||||||
Change of Control | 2,700,590 | (7) | 5,559,501 | 8,260,091 | ||||||||||
Retirement/Resignation(6)
|
|
-
|
|
|
-
|
|
|
-
|
| |||||
Harbir S. Chhina
|
Termination Without Cause(2)(3) |
- | - | - | ||||||||||
Termination With Cause(4) | - | - | - | |||||||||||
Change of Control | 3,762,468 | (7) | 3,900,575 | 7,663,043 | ||||||||||
Retirement/Resignation(6)
|
|
-
|
|
|
-
|
|
|
-
|
| |||||
Alan C. Reid
|
Termination Without Cause(2)(3) |
- | - | - | ||||||||||
Termination With Cause(4) | - | - | - | |||||||||||
Change of Control | 2,605,372 | (7) | 3,429,890 | 6,035,262 | ||||||||||
Retirement/Resignation(6)
|
|
-
|
|
|
-
|
|
|
-
|
| |||||
J. Drew Zieglgansberger
|
Termination Without Cause(2)(3) |
- | - | - | ||||||||||
Termination With Cause(4) | - | - | - | |||||||||||
Change of Control | 2,517,447 | (7) | 3,352,721 | 5,870,168 | ||||||||||
Retirement/Resignation(6)
|
|
-
|
|
|
-
|
|
|
-
|
|
Notes:
(1) | The value of Long-Term Incentives is calculated by multiplying the number of Options that would vest on a change of control by the difference between the grant price and the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20, and then adding the number of PSUs and RSUs that would vest on a change of control multiplied by the closing price of the Common Shares on the TSX on December 31, 2019 of $13.20. No accelerated vesting occurs under other triggering events listed. |
(2) | Represents termination of the employment of the NEO by Cenovus other than for cause. |
(3) | The Corporation has not entered into any agreements, other than the change of control agreements, with the NEOs providing for pre-determination of any payments in connection with termination of employment; any specific payments in connection with termination without cause would be determined at the time of termination, in accordance with common law principles. |
(4) | Represents termination of the employment of the NEO by Cenovus for cause. |
(5) | Includes the incremental value of pension benefits. Mr. Pourbaix would be compensated based on an additional 24 months of pensionable service in the DC Plan. The incremental lump sum pension value is equal to eight percent of annual base salary plus bonus (capped at 40 percent of base salary) over the 24 months of additional service. |
(6) | Represents voluntary retirement or voluntary resignation of the NEO. |
(7) | Includes the incremental value of pension benefits. Pensionable earnings during the 24 month period is based on annual base salary plus the average of the annual performance bonus (capped at 40 percent of salary) in the three-year period preceding the change of control and termination of employment. The early retirement reduction factor applicable under the Cenovus Energy Inc. Canadian Supplemental Pension Plan is calculated at the age the executive would have attained at December 31, 2021. This incremental lump sum pension value is equal to the difference between the actuarial present values of the executives pension, as modified, less the accrued pension, unmodified, using the commuted value basis for the DB Plan as of December 31, 2019. The discount rates used are 2.4 percent for ten years and 2.5 percent thereafter. |
Cenovus Energy Inc. | 44 | 2020 Management Information Circular |
- EXECUTIVE COMPENSATION -
In addition to the foregoing, under our 20 for 20 Incentive Program, each of the NEOs, except the President & Chief Executive Officer, would be entitled to receive their respective Award Amount: (i) in the event of a change of control that satisfies the Entitlement Conditions, or (ii) in the event of termination of their employment at any time after the Price Condition has been satisfied and prior to satisfaction of the Time Condition provided that the termination of such individuals employment was for reason(s) other than performance. In the event such circumstance occurred on December 31, 2019 and the applicable condition(s) had also been satisfied as of such date, the Award Amounts payable to each eligible NEO, respectively, would be as follows: Mr. McKenzie $625,000; Mr. Chhina $650,000; Mr. Reid $520,000; and Mr. Zieglgansberger $600,000.
Executive Share Ownership Status
Ownership guidelines for Cenovuss executives are discussed under the heading Executive Share Ownership Guidelines in the Compensation Discussion and Analysis Compensation Governance section of this Circular. The following table sets forth the share ownership guidelines and the value of the beneficial shareholdings of the Current Named Executives as at March 2, 2020, unless otherwise noted. The value used to calculate beneficial shareholdings is the average weighted purchase price in the case of share purchases, and the average weighted grant price in the case of DSU holdings. The use of purchase and/or grant price better reflects the value of each NEOs actual investment choice in Cenovus share ownership, as opposed to the current value of their prior investment. Stock options are not counted as shares owned in measuring share ownership. In the event that Cenovuss executives do not meet the share ownership guidelines, there is no requirement to hold the shares received upon exercise of stock options (after payment of exercise prices and after taxes) until the share ownership guidelines have been met.
Executive Share Ownership Summary | ||||||||||||||
Name
|
Share Ownership Guideline (times annual base
|
Value of Beneficial Shareholdings based on
|
Share Ownership
|
Status(2)
| ||||||||||
Alexander J. Pourbaix
|
6.0
|
$
|
9,359,667
|
|
|
(8.50)
|
|
In compliance
| ||||||
Jonathan M. McKenzie
|
3.0
|
$
|
1,202,999
|
|
|
(1.92)
|
|
In compliance
| ||||||
Harbir S. Chhina
|
3.0
|
$
|
12,649,529
|
|
|
(19.46)
|
|
In compliance
| ||||||
Alan C. Reid
|
3.0
|
$
|
1,499,758
|
|
|
(2.88)
|
|
In compliance
| ||||||
J. Drew Zieglgansberger
|
3.0
|
$
|
1,403,576
|
|
|
(2.30)
|
|
In compliance
|
Notes:
(1) | The value of beneficial shareholdings was determined using the average weighted purchase price in the case of Common Shares or the average weighted grant price in the case of DSUs. These values do not include Common Shares acquired since December 31, 2019 as a result of Cenovus matching of personal contributions pursuant to the Corporations investment plan. |
(2) | Messrs. McKenzie, Reid and Zieglgansberger have until April 5, 2023, September 1, 2021 and June 2, 2021, respectively to achieve the guideline of 3.0 times annual base salary. |
As at the date of this Circular, no current or proposed director, executive officer or employee of Cenovus, or any former director, executive officer or employee of Cenovus, or any associate of any of the foregoing, is, or has been at any time during 2019, indebted to Cenovus or any of its subsidiaries, either in connection with the purchase of Cenovuss securities or otherwise.
Cenovus Energy Inc. | 45 | 2020 Management Information Circular |
For those shareholders who cannot attend the Meeting in person, we have made arrangements to provide a live webcast of the Meeting. Details on how shareholders may access the proceedings on the webcast will be found on our website cenovus.com and will also be provided in a news release prior to the Meeting. Our financial information is contained in our audited consolidated financial statements and managements discussion and analysis for the year ended December 31, 2019.
According to Canadian law, shareholder proposals can only be considered for the annual meeting of Common shareholders if they are submitted by a specific date. The final date by which Cenovus must receive shareholder proposals for the annual meeting of shareholders of Cenovus to be held in 2021 is December 1, 2020. All proposals should be sent by registered mail to the Corporate Secretary, Cenovus Energy Inc., 225 6 Avenue S.W., P.O. Box 766, Calgary, Alberta, Canada, T2P 0M5.
Additional information concerning Cenovus, including financial information provided in our audited consolidated financial statements for the year ended December 31, 2019 and managements discussion and analysis thereon, is available on the Corporations profile on SEDAR at sedar.com and EDGAR at sec.gov, and on our website at cenovus.com. Information on or connected to our website, even if referred to in this Circular, does not constitute part of this Circular. You may also send your request for copies of our financial statements and managements discussion and analysis to the Corporate Secretary, Cenovus Energy Inc., 225 6 Avenue S.W., P.O. Box 766, Calgary, Alberta, Canada, T2P 0M5. Copies will be provided by the Corporation without charge to you.
If you have any questions about the information contained in this Circular or require assistance in completing your proxy form or voting instruction form, please contact our strategic shareholder advisors and proxy solicitation agent, Kingsdale Advisors, toll-free in North America at 1-866-851-4179 or by email at contactus@kingsdaleadvisors.com.
130 King Street West, Suite 2950, P.O. Box 361
Toronto, Ontario M5X 1E2
Call Toll-Free (within Canada): 1-866-851-4179
Call Collect (outside North America): 1-416-867-2272
E-mail: contactus@kingsdaleadvisors.com
The contents and the sending of this Circular have been approved by the Board.
/s/ Gary F. Molnar
Gary F. Molnar
Corporate Secretary
Calgary, Alberta
March 2, 2020
Cenovus Energy Inc. | 46 | 2020 Management Information Circular |
- SCHEDULE A -
Cenovus Energy Inc. | A-2 | 2020 Management Information Circular |
- SCHEDULE A -
ADDITIONAL INFORMATION REGARDING THE STOCK OPTION PLAN AND OUR EQUITY COMPENSATION PLANS
The following table provides certain details regarding Cenovuss equity compensation plans as at December 31, 2019:
Plan Category |
Number of securities to be issued upon exercise of (a)
|
Weighted-average (b)
|
Number of securities (c)
| ||||||||||||
Equity compensation plans approved by securityholders
|
|
31,527,591
|
|
|
22.61
|
|
|
25,836,807
|
| ||||||
Equity compensation plans not approved by securityholders
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
| ||||||
Total |
31,527,591 | 22.61 | 25,836,807 |
Cenovus Energy Inc. | A-3 | 2020 Management Information Circular |
- SCHEDULE B -
Cenovus Energy Inc. | B-2 | 2020 Management Information Circular |
- SCHEDULE B -
Cenovus Energy Inc. | B-3 | 2020 Management Information Circular |
- SCHEDULE B -
Cenovus Energy Inc. | B-4 | 2020 Management Information Circular |
- SCHEDULE B -
KEY SKILLS AND EXPERIENCE
The following table summarizes the key skills and experience of each director.
Notes:
(1) | Mr. Casey is not currently a member of the Board and therefore has not been appointed as a member of any committee of the Board. |
(2) | As Board Chair, Mr. Daniel serves as an ex officio non-voting member of the Audit Committee, the HRC Committee, the NCG Committee, and the SERR Committee, by standing invitation, and may vote when necessary to achieve quorum. |
(3) | Messrs. Daniel and Thomson are retiring from the Board and will not stand for re-election. |
(4) | As a member of Management, Mr. Pourbaix does not serve on any standing committee of the Board. |
Cenovus Energy Inc. | B-5 | 2020 Management Information Circular |
- SCHEDULE B -
DIVERSITY
Cenovus recognizes and embraces the benefits of having a diverse Board. A truly diverse Board will include and make good use of different skills, expertise, industry experience, and is one whose membership is inclusive of varying genders, visible minorities, Aboriginal peoples, persons with disabilities, varying ages and other distinctions between directors. The below graphs provide a snapshot of the diversity of our Board as of March 2, 2020:
Cenovus Energy Inc. | B-6 | 2020 Management Information Circular |
- SCHEDULE B -
Cenovus Energy Inc. | B-7 | 2020 Management Information Circular |
- SCHEDULE B -
Cenovus Energy Inc. | B-8 | 2020 Management Information Circular |
- SCHEDULE B -
OTHER PUBLIC COMPANY BOARD MEMBERSHIPS
Our Board has not adopted a formal policy limiting the number of outside directorships of our directors. However, our Audit Committee Mandate specifies that directors may not simultaneously serve on the audit committees of more than two other public companies unless the Board first determines such service will not impair the ability of the director to effectively serve on our Audit Committee.
The table below sets out the other reporting issuers for which Cenovus directors and director nominees serve as directors as at March 2, 2020, and the stock exchange on which such issuers are listed.
Director / Nominee |
Reporting Issuer | Stock Exchange(s) | ||
Keith M. Casey(1) |
None | - | ||
Susan F. Dabarno |
Manulife Financial Corporation | TSX, NYSE, Philippine Stock Exchange | ||
Patrick D. Daniel(2) |
Canadian Imperial Bank of Commerce | TSX, NYSE | ||
Jane E. Kinney |
Intact Financial Corporation | TSX | ||
Harold N. Kvisle |
ARC Resources Ltd. | TSX | ||
Finning International Inc. | TSX | |||
Steven F. Leer |
Norfolk Southern Corporation | NYSE | ||
Parsons Corporation | NYSE | |||
M. George Lewis |
Legal & General Group plc | London Stock Exchange | ||
Keith A. MacPhail |
Bonavista Energy Corporation | TSX | ||
NuVista Energy Ltd. | TSX | |||
Richard J. Marcogliese |
Delek US Holdings, Inc. | NYSE | ||
Claude Mongeau |
Norfolk Southern Corporation | NYSE | ||
The Toronto-Dominion Bank | TSX, NYSE | |||
Alexander J. Pourbaix |
Canadian Utilities Limited | TSX | ||
Wayne G. Thomson(2) |
None | - | ||
Rhonda I. Zygocki |
None | - |
Notes:
(1) | Mr. Casey is a new director nominee. |
(2) | Messrs. Daniel and Thomson will be retiring from the Board and will not stand for re-election at the Meeting. |
Interlocking Board Memberships
The Board considers it to be a good governance practice to avoid interlocking relationships, if possible. The Board examines each situation on its own merits with a view to examine material relationships which may affect independence. The following table shows the only interlocking board membership between our directors.
Company |
Interlocking Directorship | Interlocking Committee Membership | ||
Norfolk Southern Corporation |
Steven F. Leer | Compensation Committee | ||
Claude Mongeau | Compensation Committee |
Cenovus Energy Inc. | B-9 | 2020 Management Information Circular |
- SCHEDULE B -
As at March 2, 2020, Mr. Leer and Mr. Mongeau are both members of the board of directors and compensation committee of Norfolk Southern Corporation. The Board has determined that these interlocking memberships do not impair the ability of either of Mr. Leer or Mr. Mongeau to exercise independent judgment as members of the Board.
DIRECTOR MEETING ATTENDANCE
The attendance record of each individual who served as a member of the Board in 2019 for all Board meetings and meetings of standing committees of the Board held in 2019 is set out below.
Director
|
Board | Audit Committee |
Human and |
Nominating and Corporate Governance Committee |
Reserves Committee(1) |
Safety, Environment, Responsibility and Reserves Committee(1) |
Total | ||||||||||||||||||||||||||||
Susan F. Dabarno(2)
|
7/7 | 5/5 | N/A | 5/5 | 2/2 | N/A | 19/19 100%
| ||||||||||||||||||||||||||||
Patrick D. Daniel(3)
|
7/7 | 4/5 | 4/4 | 5/5 | 2/2 | 4/4 | 26/27 96%
| ||||||||||||||||||||||||||||
Jane E. Kinney (4)
|
4/4 | 3/3 | N/A | N/A | N/A | 3/3 | 10/10 100%
| ||||||||||||||||||||||||||||
Harold N. Kvisle(5)
|
7/7 | 5/5 | N/A | 5/5 | N/A | 1/1 | 18/18 100%
| ||||||||||||||||||||||||||||
Steven F. Leer(6)
|
7/7 | N/A | 4/4 | 5/5 | 2/2 | N/A | 18/18 100%
| ||||||||||||||||||||||||||||
M. George Lewis(7)
|
2/2 | N/A | 2/2 | 2/2 | N/A | N/A | 6/6 100%
| ||||||||||||||||||||||||||||
Keith A. MacPhail(8)
|
7/7 | N/A | 4/4 | 2/2 | 2/2 | 3/3 | 18/18 100%
| ||||||||||||||||||||||||||||
Richard J. Marcogliese
|
7/7 | N/A | 4/4 | N/A | N/A | 4/4 | 15/15 100%
| ||||||||||||||||||||||||||||
Claude Mongeau(9)
|
7/7 | 5/5 | N/A | 2/2 | N/A | 4/4 | 18/18 100%
| ||||||||||||||||||||||||||||
Alexander J. Pourbaix(10)
|
7/7 | N/A | N/A | N/A | N/A | N/A | 7/7 100%
| ||||||||||||||||||||||||||||
Charles M. Rampacek(11)
|
3/3 | N/A | 2/2 | N/A | N/A | 1/1 | 6/6 100%
| ||||||||||||||||||||||||||||
Colin Taylor(11)
|
3/3 | 2/2 | N/A | N/A | 2/2 | N/A | 7/7 100%
| ||||||||||||||||||||||||||||
Wayne G. Thomson(12)
|
7/7 | 5/5 | N/A | N/A | 2/2 | 3/3 | 17/17 100%
| ||||||||||||||||||||||||||||
Rhonda I. Zygocki(13)
|
7/7 | N/A | 4/4 | 3/3 | N/A | 1/1 | 15/15 100%
| ||||||||||||||||||||||||||||
Total Meeting Attendance (%)
|
|
100%
|
|
|
97%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
|
100%
|
|
-
| ||||||||||||||||
Board and Committee Overall Meeting Attendance: |
200/201 99%
|
Notes:
(1) | The Reserves Committee was dissolved by the Board as of April 24, 2019. The Safety, Environment and Responsibility Committee adopted the Reserves Committee mandate and any responsibilities thereunder as of the same date, and its name was subsequently changed to the Safety, Environment, Responsibility & Reserves Committee to reflect this change in responsibilities. |
(2) | Ms. Dabarno was a member of the Reserves Committee until April 24, 2019, when it was dissolved. |
(3) | As Board Chair, Mr. Daniel serves an ex officio non-voting member of the Audit Committee, the HRC Committee, the NCG Committee, the Reserves Committee (until its dissolution) and the SERR Committee, by standing invitation, and may vote when necessary to achieve quorum. Cenovus holds concurrent Board and committee meetings, and as a result Mr. Daniel was unable to attend one of the scheduled Audit Committee meetings as he was attending the HRC Committee meeting scheduled for the same time. |
(4) | Ms. Kinney was first elected as a director on April 24, 2019 and was appointed a member of the Safety, Reserves and Environment Committee (now the SERR Committee) as of the same date. Ms. Kinney was appointed a member of the Audit Committee on June 1, 2019. |
(5) | Mr. Kvisle was a member of the Safety, Environment and Responsibility Committee until April 24, 2019. |
(6) | Mr. Leer was a member of the Reserves Committee until April 24, 2019, when it was dissolved. |
(7) | Mr. Lewis was appointed a director on July 24, 2019. He was appointed a member of the HRC Committee and the NCG Committee as of the same date. Mr. Lewis attended the July 24, 2019 meetings of the Board and the NCG Committee as an invited guest (the HRC Committee did not meet on July 24, 2019). |
(8) | Mr. MacPhail was a member of the NCG Committee and the Reserves Committee (until its dissolution) until April 24, 2019 and was appointed a member of the Safety, Reserves and Environment Committee (now the SERR Committee) as of the same date. |
(9) | Mr. Mongeau was a member of the NCG Committee until April 24, 2019 and became Chair of the Audit Committee as of the same date, following Mr. Taylors retirement from the Board. |
(10) | As a member of Management, Mr. Pourbaix does not serve on any standing committee of the Board. |
(11) | Messrs. Rampacek and Taylor retired from the Board on April 24, 2019. |
(12) | Mr. Thomson was Chair of the Reserves Committee (until its dissolution) until April 24, 2019 and was appointed Chair of the Safety, Reserves and Environment Committee (now the SERR Committee) as of the same date, following Mr. Rampaceks retirement from the Board. |
(13) | Ms. Zygocki was a member of the Safety, Environment and Responsibility Committee until April 24, 2019 and became a member of the NCG Committee as of the same date. |
Cenovus Energy Inc. | B-10 | 2020 Management Information Circular |
- SCHEDULE B -
BOARD COMMITTEES
The standing committees assist the Board with fulfilling its fundamental responsibilities including oversight of management of the business with a view to maximizing shareholder value and ensuring corporate conduct in an ethical and legal manner via an appropriate system of corporate governance and internal control. Each of the standing committees are comprised exclusively of independent directors. A brief summary of the committees duties that support the Board in accomplishing its responsibilities follows.
Committee Memberships
The following table identifies the standing committees of the Board and the members of each committee as at March 2, 2020:
Standing Committees | ||||||||||||||||||||
Director | Audit Committee (6 members) |
Human Resources and Compensation Committee (6 members) |
Nominating and Corporate Governance Committee (6 members) |
Safety, (6 members) | ||||||||||||||||
Susan F. Dabarno
|
✓ | ✓ | ||||||||||||||||||
Patrick D. Daniel(1)
|
✓ | ✓ | ✓ | ✓ | ||||||||||||||||
Jane E. Kinney
|
✓ | ✓ | ||||||||||||||||||
Harold N. Kvisle
|
✓ | ✓ | ||||||||||||||||||
Steven F. Leer
|
✓ | Chair | ||||||||||||||||||
M. George Lewis
|
✓ | ✓ | ||||||||||||||||||
Keith A. MacPhail
|
✓ | ✓ | ||||||||||||||||||
Richard J. Marcogliese
|
✓ | ✓ | ||||||||||||||||||
Claude Mongeau
|
Chair(2) | ✓ | ||||||||||||||||||
Alexander J. Pourbaix(3)
|
- | - | - | - | ||||||||||||||||
Wayne G. Thomson
|
✓ | Chair | ||||||||||||||||||
Rhonda I. Zygocki
|
Chair | ✓ | ||||||||||||||||||
Number of Meetings in 2019: |
5 | 4 | 5 | 4 |
Notes:
(1) | As Board Chair, Mr. Daniel is an ex officio non-voting member of the Audit Committee, the HRC Committee, the NCG Committee and the SERR Committee, by standing invitation, and may vote when necessary to achieve quorum. |
(2) | Mr. Mongeau was appointed Chair of the Audit Committee on April 24, 2019, following Mr. Taylors retirement from the Board. |
(3) | As a member of Management, Mr. Pourbaix is not a member of any standing committee of the Board. |
Description of Committees and Mandates
Cenovus Energy Inc. | B-11 | 2020 Management Information Circular |
- SCHEDULE B -
Cenovus Energy Inc. | B-12 | 2020 Management Information Circular |
- SCHEDULE B -
Cenovus Energy Inc. | B-13 | 2020 Management Information Circular |
- SCHEDULE B -
Cenovus Energy Inc. | B-14 | 2020 Management Information Circular |
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