Corporate Governance
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PHX Energy Services Corp. ("Phoenix" or the "Company") believes that effective corporate governance is essential to creating long-term value for our unitholders. As such, has adopted certain structures and procedures to ensure that effective corporate governance practices are followed. The following describes our approach to corporate governance. The Board of Directors (the "Board") of Phoenix, a wholly owned subsidiary of the Company , is responsible for the overall governance of the Company. The Board oversees the Company's business and affairs and the day-to-day conduct of business by executive management, establishes or approves all corporate policies as required and involves itself jointly with management in ensuring the long-term creation of unitholder value and the preservation and protection of the Company's assets. In addition to prescribed legal obligations, the Board bears primary responsibility for the following: Corporate Code Of Conduct Corporate Disclosure, Confidentiality and Trading Policy Management The Board will take such actions as it deems appropriate to ensure: other members of the management of Phoenix; and affiliates and in particular, the management team involved with Phoenix.
Adoption of a Strategic Planning Process With respect to each fiscal year, the Board: future trends, opportunities and risks are jointly identified and discussed; and opportunities and risks. Management presents specific strategies and business plans to the Board which are then thoroughly discussed and considered by the Board. Capital expenditure projections for each fiscal year are reviewed and a budget is presented for approval. Updates on industry trends, product strategies and new technology developments, capital expenditures and specific problems are presented by management and discussed as part of a management report at each regular quarterly Board meeting. Identification and Management of Risks The Board will identify and review with management the principal business risks faced by the Company. In doing so, the Board may receive reports of management, and an assessment of, and proposed responses to, such risks as they develop. The Board will ensure the implementation of appropriate systems to manage these risks. The Board may delegate one or more Committees of the Board to receive management's assessment and responses and make recommendations and reports to the Board. Succession Planning and Appointment, and Monitoring Executive Management Through its review of all officer appointments, particularly that of the Chief Executive Officer, the Board is involved in management's succession and manpower planning. In reviewing and appointing executive officers, the Board will satisfy itself that candidates possess the necessary levels of integrity, skill and experience. The Board has delegated to the Compensation Committee the review with management of succession plans of the Chief Executive Officer and other key members of Corporate Management and to provide its reports and recommendations to the Board. Communications Policy The Board will ensure that the Company maintains a program to effectively communicate with its stakeholders, including unitholders, employees and the general public. As such the Company has in place a Corporate Communications and Disclosure Policy, which has been implemented to ensure compliance with applicable laws relating to corporate communications and disclosure by a public company. Integrity of Internal Controls The Board will ensure that effective systems are in place to monitor the integrity of the Company's internal control and management information systems. The Board may delegate to the Audit Committee responsibility to review the effectiveness of the systems and to monitor the Company's internal control and management information systems. Approach of Corporate Governance and Governance Guidelines The Board will develop the Company's system of an overall approach to corporate governance. The Board may delegate to the Corporate Governance and Compensation Committee responsibility to review and make recommendations to the Board regarding the content and implementation of Corporate Governance guidelines and other related governance matters and process. Board Size, Composition and Independence Size The Board shall consist of such number of directors within the range set forth in Phoenix's Articles of Incorporation as the Board deems appropriate in order to facilitate effective and efficient decision making. The Board may delegate to the Corporate Governance and Compensation Committee the responsibility of considering and making recommendations to the Board with respect to the size of the Board. Composition The Board shall consist of directors who represent a diversity of personal experience and background particularly amongst the outside directors. At a minimum, each director shall have demonstrated the highest personal and professional integrity; significant achievements in his or her field; experience and expertise relevant to the Company's business; reputation for sound and mature business judgment; the commitment to devote the necessary time and effort in order to conduct his or her duties effectively; and, where required, financial literacy. Independence A majority of Phoenix's directors must be individuals who are not officers or employees of the Company or any of its affiliates, or individuals who are related to officers or employees of the Company or any related entities or any of their affiliates. In addition, a majority of Phoenix's directors must be individuals who are free from any interests in any business or other relationship which could, or could reasonably be perceived to, materially interfere with the director's ability to act with a view to the best interests of the Company, other than interests and relationships arising from unitholding and otherwise meet the independence requirements prescribed under applicable laws, rules and regulations, including the stock exchanges on which the Company's units are listed. The Board shall annually determine the independence of each director and may establish definitive independence guidelines. The Board of Directors Currently, our Board is composed of six directors. Five of the directors are presently deemed to be "unrelated or independent" pursuant to the Toronto Stock Exchange ("TSX") guidelines. Throughout our disclosure of corporate governance practices, we will use the term "independent" to denote both independent and unrelated. As noted above, the Board is charged with the overall stewardship of the Company and manages or supervises the business of the Company and its management. Specifically the Board's responsibilities include:auditors; business risks and reviewing and approving risk management strategies; Officer and senior management; information systems. In addition, the Board has the responsibility at all times to act in the best interest of the Company and its unitholders. The Board meets a minimum of four times per year and each scheduled board meeting is followed by a discussion of the independent directors without the presence of management. Directors assist in preparing the agenda for Board and committee meetings and receive a comprehensive package of information in advance of each meeting. The Board continually reviews its practices and procedures to ensure it follows corporate governance best practices. The current structures, policies and practices of the Board and its committees have enabled the Board to conclude that the Company is in full compliance with the Guidelines of Corporate Governance established by the TSX. |
