CREDIT UNION CENTRAL OF CANADA NNUAL OVERNANCE REPORT

Transcription

1 CREDIT UNION CENTRAL OF CANADA NNUAL OVERNANCE REPORT

2 CREDIT UNION CENTRAL OF CANADA

3 The 2013 Board of Directors 2013 Annual Governance Report Daniel Burns, Chair Central 1 Credit Union Graham Wetter, First Vice Chair Credit Union Central Alberta Limited Scott Kennedy, Second Vice Chair Central 1 Credit Union Helen Blackburn Central 1 Credit Union Loretta Elford Credit Union Central of Saskatchewan Sean Jackson Central 1 Credit Union David MacLean Atlantic Central Paul MacNeill Atlantic Central Garth Manness Credit Union Central of Manitoba J. Philip Moore Central 1 Credit Union Don Rolfe Central 1 Credit Union Doug Stoddart Central 1 Credit Union Served a portion of the year 2013 Governance Highlights The Board of Directors of Credit Union Central of Canada (Canadian Central) believes that strong corporate governance is critical to Canadian Central s ability to fulfill its mission to be the national voice and national forum for the Canadian credit union system. In an effort to continually improve governance policies and practices at the Board level and throughout Canadian Central, the Board is pleased to report on the following achievements in 2013: OSFI Corporate Governance Self-Assessment In January 2013, the Office of the Superintendent of Financial Institutions (OSFI) released a revised Guideline on Corporate Governance. The Guideline sets out OSFI s expectations on corporate governance at federally regulated financial institutions, including Canadian Central. OSFI requires each financial institution to conduct a 3

4 CREDIT UNION CENTRAL OF CANADA self-assessment of compliance with the Corporate Governance Guideline and to establish a plan to address any deficiencies. As a result, Canadian Central assessed its policies, procedures and practices against the Guideline s expectations regarding the role of the board, risk governance and the role of the audit committee. The results of this self-assessment demonstrated that Canadian Central s corporate governance practices are appropriate for its size, complexity and risk profile. Two areas were identified as requiring further development; (i) enhancing Canadian Central s Enterprise Risk Management framework to include a risk appetite component, and (ii) development of a Director Independence Policy. Both of these items will be completed in Improved Policy Committee Procedures In July, the Board of Directors approved changes to the procedures relating to Canadian Central s policy committees. These changes which will be implemented throughout 2014 include; (i) changing the name of committees to standing committees, (ii) expanding credit union membership on standing committees with the objective of having at least five credit union representatives on each committee; (iii) expanding the process of committee member recruitment; (iv) establishing a Board Liaison position on each committee, and (v) allowing for committee chairs to be elected by committee members. CEO Recruitment In September, Canadian Central s Chief Executive Officer (CEO) announced his intention to retire in May The Board of Directors of Canadian Central appointed a Recruitment Committee to lead the search for the next CEO of Canadian Central and the committee retained a leading executive search firm. The Board is dedicated to a robust and fair recruitment process designed to select an outstanding CEO for Canadian Central in Canadian Central s Governance Principles The following governance principles, established by the Board in 2009, reflect the Board s sense of commitment and accountability for upholding credit union principles. These governance principles serve as a guide and a standard of conduct for all Board activity. 1 The Board is Committed to Upholding the Co-operative Principles As the national voice and national forum for the credit union system in Canada, the cooperative principles are the foundation of all activity undertaken by Canadian Central. The Board is committed to highlighting and promoting the co-operative principles for the credit union system:

5 2013 Annual Governance Report Voluntary and open membership Democratic member control Member economic participation Autonomy and independence Education, training, and information Co-operation among co-operatives Concern for community 2 The Board Provides a Framework for Oversight and Accountability The Board provides strategic guidance for the national credit union system through Canadian Central and oversees management in its efforts to implement this strategy. The Board s most significant responsibilities are: Determining national credit union system positions on important public policy matters of concern to the credit union system. Support of consistent and effective business performance through transparency and accountability. Reviewing and monitoring corporate governance. Reviewing, approving and monitoring Canadian Central s strategic plans. Reviewing and monitoring the processes, controls and procedures which help maintain the integrity of Canadian Central s accounting and financial records and statements. Monitoring and reviewing general risk management processes, Canadian Central s risk profile and processes for compliance with regulatory requirements. Approving the appointment of the CEO, as well as monitoring and reviewing succession planning. Reviewing and monitoring the performance of the CEO. Monitoring and influencing Canadian Central s culture, reputation and ethical standards. 5

6 CREDIT UNION CENTRAL OF CANADA The Board has delegated authority and responsibility to the CEO to manage the day-to-day affairs of Canadian Central including: Development and implementation of Board approved strategies. Achievement of operational plans within both a comprehensive risk management framework and corporate principles. Supporting effective relationships between members and other stakeholders. The Board has three committees that assist in the execution of its responsibilities: The Governance and Human Resources Committee. The Audit and Risk Management Committee. The Conduct Review Committee. Each committee has terms of reference and reports to the full Board at each meeting. The Conduct Review Committee and Audit and Risk Management Committee are mandatory committees under Canadian Central s governing legislation; these committees meet all statutory requirements. The mandate and terms of reference for each committee are reviewed annually by the Board. 3 The Board is Structured to Add Value The Board has been structured to ensure that it has an understanding of, and competence to deal with, current and emerging issues facing the national credit union system. The Board is of a size and composition that is conducive to effective decision making, with the benefit of a variety of perspectives and skills. One of the principal features of a well-governed organization is a high level of independent judgment exhibited by its board of directors. An effective board provides guidance for management and also holds management accountable for performance. This requires that the board function as a body distinct from management and capable of objective judgment regarding management performance. The Canadian Central Board is highly effective in reviewing and challenging the performance of management and is composed of strong, independently-minded individuals acting in the best interest of Canadian Central. Maintaining accountability, the Board regularly holds in camera sessions and, reinforcing its independence, executives of Canadian Central do not sit on the Board. Independence of mind of

7 2013 Annual Governance Report Canadian Central s Board of Directors has been fundamental to its effectiveness as the national forum and national voice of the credit union system. 4 The Board Attracts and Retains Effective Directors Directors on Canadian Central s Board are equipped with the knowledge and information needed to effectively fulfill their responsibilities. The consolidated competencies of the Board s directors enable the Board to inspire, guide, and oversee Canadian Central s development while diligently addressing and resolving the issues and problems occasionally faced by Canadian Central. The Board has developed a Competency Profile which sets out the desired skills, knowledge and experience required for membership on the Canadian Central Board. The Competency Profile also outlines the desired behavioral competencies and is shared with the provincial / regional central members to aid in their selection of candidates for the Board. As a general principle, all Board members are expected to have knowledge and expertise in the business of the Canadian credit union system. In order to meet its responsibilities, the Board requires a mix of both technical and behavioural competencies. All Board members are expected to demonstrate the personal characteristics of integrity, accountability, fairness, commitment and leadership. From a technical perspective, the experience base of the Board of Directors, as a whole, includes general management, financial management, strategic planning, communications planning, risk management and organizational development. 5 The Board Strives to Improve its Performance To function effectively, the Board must ensure that it is positioned to change in keeping with changes in the national credit union system. Board performance is dependent upon its directors being equipped with the knowledge and information needed to discharge responsibilities. With this objective, the Board has adopted several processes to monitor and improve performance. Management provides an orientation program for new directors. This program includes discussions with executives, provision of reading material, and policy review. The orientation program covers Canadian Central s strategic plan, significant financial and risk management issues, compliance programs, management structure, internal and external audit programs and directors rights, duties and responsibilities. Management periodically conducts additional presentations for directors regarding relevant legal and regulatory issues and the factors impacting, or likely to impact, Canadian Central s activities. 7

8 CREDIT UNION CENTRAL OF CANADA The Board has a policy and budget for director education which encourages directors to enhance their knowledge, skills and competence. Directors have the opportunity to access the full suite of educational products offered by CUSOURCE Credit Union Knowledge Network. To monitor effectiveness, the Board conducts a yearly self-assessment. 6 The Board Promotes Integrity The Board actively pursues ethical behaviour and responsible decision-making, reinforcing the set of ethical standards applicable to both the Board itself and Canadian Central staff. Canadian Central has implemented a Code of Conduct for employees and the Conduct Review Committee is charged with monitoring compliance with this Code. The Board also supports a Whistleblower Policy, which provides a process for any employee to report concerns to the Chair of the Conduct Review Committee on a confidential basis. The Board has established a Policy and processes for assessing the suitability and integrity of Canadian Central directors and senior management, as required by OSFI s Guideline B-17 Background Check on Directors and Senior Management of Federally Regulated Enterprises (FREs). 7 The Board Recognizes and Manages Conflicts of Interest Canadian Central directors are expected to avoid any action, position or interest that conflicts, or appears to conflict, with the interests of Canadian Central. The Board has procedures in place to identify, assess and resolve conflicts of interest. A director who has a material personal interest in a matter relating to Canadian Central s affairs is required to notify the other directors of that interest. At each board meeting, the Chairperson specifically reminds directors of their responsibility to disclose any conflicts. Further, the Board has a conflict of interest policy designed to ensure the disclosure of any personal activities of directors and employees that may be in conflict with the goals and activities of Canadian Central. The Conduct Review Committee receives reports on any conflicts of interest disclosed under the policy. Canadian Central s governing legislation prohibits Canadian Central from entering into material related party transactions on other than market terms and conditions. The Board has a policy to monitor for related party transactions. Prior to each meeting an inventory of related parties is compiled and a report is provided to the Conduct Review Committee. 8 The Board Recognizes and Manages Risk The Board has established a sound system of risk oversight and internal control that reflects Canadian Central s risk profile. Canadian Central has established an enterprise

9 2013 Annual Governance Report risk management program, through which, identified risks are assessed by management on a regular basis. The Board receives a risk management report at each meeting. The Audit and Risk Management Committee is responsible to monitor the effectiveness of risk management at Canadian Central. The Audit and Risk Management Committee is also responsible for the oversight of management in the preparation of Canadian Central s financial statements and for the oversight of the work of the external auditor. To assist in discharging these responsibilities, the Committee has adopted an Auditor Independence Policy, which requires, among other things, pre-approval of significant audit and non-audit services to be provided by the external auditor. The Audit and Risk Management Committee oversees the internal control systems that ensure the integrity of Canadian Central s financial reporting. The Audit and Risk Management Committee reviews financial reports at each meeting and provides additional assurance to the Board regarding the quality and reliability of financial information. 9 The Board Facilitates Appropriate Compensation The Board has established staff compensation policies and practices that are fair, responsible and which exhibit a clear relationship between performance and remuneration. Canadian Central s compensation program rewards individual contributions, reflects market competitiveness and is grounded in fiscal accountability and prudence. Employee compensation is tied to defined performance objectives that incorporate both personal and corporate targets. The Board annually reviews and approves an employee incentive pool. The Board is specifically responsible for reviewing the remuneration package of Canadian Central s CEO. The Board regularly and formally evaluates the performance of the CEO against specific performance objectives established by the Board. The Board periodically reviews the compensation of Canadian Central s senior management to ensure competitiveness. 10 The Board is Engaged with its Members The Board aims to be open and transparent with all members of Canadian Central. Information is regularly communicated to members through a range of forums, consultations and publications. More specifically, these communications include Canadian Central s Annual General Meeting, the Annual Report, and its corporate website which provides access to system announcements, media releases, publications and the event calendar. Members also receive communications from Canadian Central s standing committees and through attendance at Canadian Central national conferences and events. 9

10 Board Meeting Attendance /16 2/14 5/9 6/14 7/14 9/26 11/16 12/13 Daniel Burns (Chair) Helen Blackburn Loretta Elford Sean Jackson* Scott Kennedy David MacLean Paul MacNeill Garth Manness J. Philip Moore Don Rolfe Doug Stoddart Graham Wetter *Mr. Jackson left the Board in May Director Compensation 2013 Per Diems Paid to Directors Per Diems Paid to to Director s Organization Honorarium Paid to Director Honorarium Paid to Director s Organization Total Daniel Burns (Chair) 55,250 28,000 83,250 Helen Blackburn 2,250 2,250 Loretta Elford 19,500 9,000 28,500 Sean Jackson* 3,194 3,194 Scott Kennedy 30,500 9,000 39,500 David MacLean 12,250 9,000 21,250 Paul MacNeill 15,000 9,000 24,000 Garth Manness 15,000 9,000 24,000 J. Philip Moore 11,500 9,000 20,500 Don Rolfe 3,000 4,000 6,750 13,750 Doug Stoddart 9,000 5,806 14,806 Graham Wetter 9,000 9,000 18,000 TOTAL 156,000 28,000 82,000 27, ,000 * Directors are reimbursed for transportation, accommodation and other expenses incurred for attendance at Board and committee meetings. Per Diems for Directors Burns and Kennedy include WOCCU and IPC Board meeting attendance.

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