TORSTAR CORPORATION [ Printer Version ]
Corporate Governance Guidelines
The Torstar Board of Directors is charged with maintaining an effective system of governance for Torstar. The primary duty of the Board is to supervise the management of the business and affairs of Torstar and to act with a view to the best interests of Torstar and its stakeholders. The Board has adopted several governance guidelines and practices to enable it to perform its duties effectively.
1. Board of Directors
(a) Independence from Management
In order to assist the Board in functioning independently of management, the Board is led by a non-executive Chairman. The Chairman is appointed by the Board on the recommendation of the Nominating & Corporate Governance Committee. Management is represented on the Board by only the CEO. The Board, on the recommendation of the Nominating & Corporate Governance Committee, assesses the independence of each director on an annual basis. The majority of the Board members must be independent, as well as at least the majority of the members of each Committee. All of the members of the Audit Committee must be independent. The Chairman leads an executive session of the outside directors in the absence of management at the end of each regularly scheduled Board meeting.
(b) Board Composition
Size of the Board
The Articles of Torstar provide for a minimum of five and a maximum of 20 directors. The Board, through the Nominating & Corporate Governance Committee, regularly reviews the size and composition of the Board to ensure that both are appropriate to facilitate effective decision-making. The Committee has determined that the Board shall normally consist of 12 to 16 members, as this range is believed to provide for the most appropriate balance of expertise and experience while still allowing for effective operation and decision-making.
Retirement Age
Directors shall normally retire from the Board at the annual shareholder meeting immediately following their 70th birthday. Directors elected following their 70th birthday shall offer to retire six months prior to each subsequent annual shareholder meeting.
Change in Principal Occupation
An outside director who retires from his or her normal occupation, or who changes his or her position, shall offer to resign as a director. The Board shall decide, upon the recommendation of the Nominating & Corporate Governance Committee, whether or not to accept such resignation. The determination will be based on a review of the impact of the change on Torstar and the composition of the Board.
Directors who are members of management of Torstar shall offer their resignations when they retire as employees. If requested by the Board, such directors shall continue to serve until the next annual meeting of shareholders.
2. Board Mandate
The Board is responsible for supervising the management of the business and affairs of Torstar. The Board Mandate sets out various responsibilities to be discharged by the Board. A copy of the mandate is included as Schedule 6 to the Information Circular.
3. Position Descriptions
The Board has developed a written position description for the Chairman of the Board, and has developed position descriptions for the Chair of each committee. The committee Chair descriptions are incorporated into the various committee terms of reference. The position descriptions are reviewed at least annually by the Nominating & Corporate Governance Committee and the Board.
The Board, through its Salary & Organization Committee, has overseen the development of a position description for the CEO. The Board, through the Salary & Organization Committee, also oversees the development of corporate objectives which the CEO is responsible for meeting. The position description and corporate objectives are reviewed at least annually by the Salary & Organization Committee. The position description provides that the CEO has general responsibility for the overall management of Torstar, the planning and direction of the future growth of Torstar and executing the policies of the Board.
4. Director Orientation & Continuing Education
The Board oversees the orientation of new directors and continuing education of directors through the Nominating & Corporate Governance Committee. Directors are expected to be knowledgeable about their duties and responsibilities and the business of Torstar. New directors are given a clear indication of the role of the Board and its committees, the contribution individual directors are expected to make (including, in particular, the commitment of time and attention that Torstar expects from its directors), the duties of Torstar directors and the nature and operation of Torstar’s businesses. New directors are provided with in-depth orientation sessions including individual meetings with the head of each major operating company, the CEO, the CFO, the Chairman and the Corporate Secretary. New directors are also provided with a directors’ manual that includes written information about Torstar and their duties and responsibilities as directors, including a statement of directors’ duties and responsibilities, committee terms of reference, position descriptions, the Statement of Atkinson Principles, the CEO’s objectives for the most recent fiscal year, and various corporate policies and public disclosure documents from the most recent fiscal year. Directors are also provided with ongoing continuing education which includes periodic tours of Torstar’s major operating companies and regular presentations by senior management on various topics.
5. Ethical Conduct
Torstar has in place a Code of Business Conduct that governs the conduct of the directors, officers and employees of Torstar and its subsidiaries. The purpose of the Code is to ensure that employees act honestly, responsibly, legally and ethically and in the best interests of Torstar. All senior employees provide written confirmation of their compliance with the Code on an annual basis. The Code is reviewed annually by the Board. Any waivers granted to directors or executive officers must be approved by the Chairman of the Board.
Torstar has also adopted a Code of Ethics that applies to its senior financial officers, and a Whistleblower Policy to address the reporting, retention and treatment of complaints and concerns regarding questionable accounting, internal accounting controls or auditing matters. Senior financial officers provide written confirmation of their compliance with the Code of Ethics on an annual basis. The Audit Committee is responsible for monitoring compliance with the Code of Ethics and Whistleblower Policy and reviews them on an annual basis. Any complaints and concerns raised under the Whistleblower Policy are brought to the attention of the Chair of the Audit Committee.
In order to help ensure that directors exercise independent judgment in considering any transaction or agreement in which a director or executive officer has a material interest, any director or executive officer with such an interest is expected to declare the interest and would generally not be present for any discussion or vote regarding the matter.
6. Nomination of Directors
Torstar’s Nominating & Corporate Governance Committee is composed entirely of independent directors, with the exception of the Chairman of the Voting Trust who was a member of management until May 2004. The five remaining members of the Committee are independent. The Board believes that it is beneficial to include the director who is also Chairman of the Voting Trust on the Committee and also believes that the inclusion of this director does not interfere with the exercise of independent judgment by the Committee. The responsibilities of the Committee are described in Schedule 5 to the Information Circular.
The Committee is responsible for identifying, reviewing and recommending to the Board potential nominees. New nominees must be of good character and sound judgment and must subscribe to the Atkinson Principles applicable to the Toronto Star. In identifying nominees, consideration is given to ensuring an appropriate mix of business and professional experience on the Board. As a general practice, the Committee maintains a list of potential director candidates for future consideration. In making recommendations to the Board, the Committee considers the competencies and skills considered necessary for the Board, as a whole, to possess; the competencies and skills that each director is considered to possess; the competencies and skills each new nominee will bring to the board; whether or not each new nominee can devote sufficient time and attention to his or her duties as a Board member; and the appropriate size of the Board, with a view to facilitating effective decision-making.
7. Compensation
The Nominating & Corporate Governance Committee reviews the adequacy and form of directors’ compensation annually to ensure that it realistically reflects the responsibilities and risks involved in being an effective director.
Minimum shareholding guidelines for directors were adopted in December 2002. Each director is required to hold at least 8,000 shares, deferred share units, or a combination thereof within four years from the later of December 18, 2002 (the date of adoption of the requirement) and their date of election to the Board. Until this minimum share ownership level is reached, directors are required to take the cash portion of the annual base retainer in the form of deferred share units.
The Salary & Organization Committee is composed entirely of independent directors. This Committee is responsible for reviewing and approving compensation arrangements and plans for the CEO and other executive officers. Executive compensation details for 2006 are described under the heading "Executive Compensation Disclosure" in the Information Circular. The responsibilities of the Committee are described in Schedule5 to the Information Circular.
8. Board Assessments
The Nominating & Corporate Governance Committee, with the assistance of the Chairman and Corporate Secretary, is responsible for overseeing the review of the effectiveness of the Board, its Committees and individual directors at least annually. The Committee determines the most appropriate method of evaluation to be used each year. Recommendations arising from the review process are considered by the Committee and reviewed with the full Board. Changes are implemented as deemed appropriate by the Board.
For 2006, directors completed a comprehensive written evaluation in respect of the Board, its Committees and the Chairman. These evaluations were supplemented by individual interviews between the Chairman and each director, and an evaluation of the Committees by each Committee Chair. The evaluation of the Chairman is reviewed by the Committee and the Board in the absence of the Chairman.
9. Corporate Disclosure & Communication
The Board oversees Torstar’s continuous disclosure program, which is structured to ensure that relevant information is released in a timely fashion. Torstar has in effect a written Corporate Disclosure Policy. The policy is reviewed at least annually by the Board and contains guidelines for the timely dissemination of material information including how to determine what information is material, how and when the information is to be disclosed, and who the authorized spokespersons are. A copy of the policy is available on Torstar’s website. The Board approves communications with respect to major financial issues or developments, including annual and quarterly financial statements, MD&A and press releases.
10. Board Committees
To assist the Board in carrying out its duties, the Board has created committees with specific responsibilities. The committees currently in place are the Audit Committee, Toronto Star Advisory Committee (formerly the Editorial Advisory Committee), Pension Committee, Salary & Organization Committee, and Nominating & Corporate Governance Committee. Each Committee has its own written terms of reference which set out the responsibilities of the Committee as well as qualifications for committee membership. The majority of the members of each Committee must be independent directors and all members of the Audit Committee must be independent. Committee memberships are approved by the Board on the recommendation of the Nominating & Corporate Governance Committee. The Chair of each Committee, in consultation with appropriate members of the Committee and senior management, develops the agenda for each meeting. Each Committee reports to the Board on the results of each Committee meeting. The performance of each Committee is evaluated annually.
11. Strategic Planning
The Board is actively involved in Torstar’s strategic planning process. The Board oversees the adoption of a strategic planning process for Torstar; discusses, reviews and approves Torstar’s strategic plan each year, and monitors Torstar’s performance against the strategic plan on an ongoing basis. The Board holds a two-day off-site strategic planning and review session on an annual basis.
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