Stantec Inc · 40FR12B · On 8/3/05 · EX-99.55
Filed On 8/3/05 4:35pm ET · SEC File 1-32562 · Accession Number 909567-5-1221
As Of Filer Filing As/For/On Docs:Pgs Issuer Agent
8/03/05 Stantec Inc 40FR12B 84:624 909567
Annual Report of a Foreign Private Issuer -- '34 S.12(b) Reg. · Form 40-F
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 40FR12B Annual Report of a Foreign Private Issuer -- '34 7 59K
S.12(b) Reg.
2: EX-23.1 Consent of Experts or Counsel 1 18K
3: EX-23.2 Consent of Experts or Counsel 1 19K
4: EX-99.1 Miscellaneous Exhibit 2± 23K
5: EX-99.2 Miscellaneous Exhibit 3 28K
6: EX-99.3 Miscellaneous Exhibit 1 20K
7: EX-99.4 Miscellaneous Exhibit 34 198K
8: EX-99.5 Miscellaneous Exhibit 2± 23K
9: EX-99.6 Miscellaneous Exhibit 2± 22K
10: EX-99.7 Miscellaneous Exhibit 74 303K
11: EX-99.8 Miscellaneous Exhibit 2± 20K
12: EX-99.9 Miscellaneous Exhibit 20 128K
13: EX-99.10 Miscellaneous Exhibit 2 25K
14: EX-99.11 Miscellaneous Exhibit 2 22K
15: EX-99.12 Miscellaneous Exhibit 1 20K
16: EX-99.13 Miscellaneous Exhibit 29 116K
17: EX-99.14 Miscellaneous Exhibit 22 128K
18: EX-99.15 Miscellaneous Exhibit 1 19K
19: EX-99.16 Miscellaneous Exhibit 2 23K
20: EX-99.17 Miscellaneous Exhibit 1 19K
21: EX-99.18 Miscellaneous Exhibit 3 29K
22: EX-99.19 Miscellaneous Exhibit 20 117K
23: EX-99.20 Miscellaneous Exhibit 3 29K
24: EX-99.21 Miscellaneous Exhibit 2± 21K
25: EX-99.22 Miscellaneous Exhibit 10 70K
26: EX-99.23 Miscellaneous Exhibit 1 19K
27: EX-99.24 Miscellaneous Exhibit 1 19K
28: EX-99.25 Miscellaneous Exhibit 1 19K
29: EX-99.26 Miscellaneous Exhibit 15 80K
30: EX-99.27 Miscellaneous Exhibit 3 30K
31: EX-99.28 Miscellaneous Exhibit 2± 24K
32: EX-99.29 Miscellaneous Exhibit 1 19K
33: EX-99.30 Miscellaneous Exhibit 2 25K
34: EX-99.31 Miscellaneous Exhibit 5 39K
35: EX-99.32 Miscellaneous Exhibit 11 86K
36: EX-99.33 Miscellaneous Exhibit 1 19K
37: EX-99.34 Miscellaneous Exhibit 1 19K
38: EX-99.35 Miscellaneous Exhibit 17 92K
39: EX-99.36 Miscellaneous Exhibit 4 37K
40: EX-99.37 Miscellaneous Exhibit 2± 23K
41: EX-99.38 Miscellaneous Exhibit 2± 22K
42: EX-99.39 Miscellaneous Exhibit 12 88K
43: EX-99.40 Miscellaneous Exhibit 1 19K
44: EX-99.41 Miscellaneous Exhibit 1 19K
45: EX-99.42 Miscellaneous Exhibit 16 92K
46: EX-99.43 Miscellaneous Exhibit 5 41K
47: EX-99.44 Miscellaneous Exhibit 33 204K
48: EX-99.45 Miscellaneous Exhibit 2± 20K
49: EX-99.46 Miscellaneous Exhibit 1 19K
50: EX-99.47 Miscellaneous Exhibit 1 19K
51: EX-99.48 Miscellaneous Exhibit 32 143K
52: EX-99.50 Miscellaneous Exhibit 2± 22K
53: EX-99.51 Miscellaneous Exhibit 35 126K
54: EX-99.52 Miscellaneous Exhibit 2± 20K
55: EX-99.53 Miscellaneous Exhibit 2 24K
56: EX-99.54 Miscellaneous Exhibit 25 99K
57: EX-99.55 Miscellaneous Exhibit 39 178K
58: EX-99.56 Miscellaneous Exhibit 2± 21K
59: EX-99.57 Miscellaneous Exhibit 2 25K
60: EX-99.58 Miscellaneous Exhibit 4 32K
61: EX-99.59 Miscellaneous Exhibit 9 48K
62: EX-99.60 Miscellaneous Exhibit 1 20K
63: EX-99.61 Miscellaneous Exhibit 1 21K
64: EX-99.62 Miscellaneous Exhibit 2 24K
65: EX-99.66 Miscellaneous Exhibit 1 18K
66: EX-99.70 Miscellaneous Exhibit 1 19K
67: EX-99.71 Miscellaneous Exhibit 3 25K
68: EX-99.75 Miscellaneous Exhibit 3 25K
69: EX-99.76 Miscellaneous Exhibit 1 19K
70: EX-99.79 Miscellaneous Exhibit 1 19K
71: EX-99.80 Miscellaneous Exhibit 1 19K
72: EX-99.82 Miscellaneous Exhibit 6 47K
73: EX-99.84 Miscellaneous Exhibit 3 30K
74: EX-99.91 Miscellaneous Exhibit 3 31K
75: EX-99.92 Miscellaneous Exhibit 1 20K
76: EX-99.93 Miscellaneous Exhibit 2± 21K
77: EX-99.94 Miscellaneous Exhibit 32 145K
78: EX-99.95 Miscellaneous Exhibit 1 22K
79: EX-99.96 Miscellaneous Exhibit 2 26K
80: EX-99.97 Miscellaneous Exhibit 2 25K
81: EX-99.98 Miscellaneous Exhibit 1 20K
82: EX-99.99 Miscellaneous Exhibit 1 20K
83: EX-99.102 Miscellaneous Exhibit 2± 23K
84: EX-99.103 Miscellaneous Exhibit 11 55K
ANNUAL AND SPECIAL MEETING MAY 10, 2005
STANTEC
TSX:STN
NOTICE OF ANNUAL AND SPECIAL MEETING
OF SHAREHOLDERS
&
MANAGEMENT INFORMATION
CIRCULAR
[LOGO STANTEC]
TABLE OF CONTENTS
· Download Table
INVITATION TO SHAREHOLDERS 4
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS OF STANTEC 5
MANAGEMENT INFORMATION CIRCULAR
Solicitation of Proxies 6
Registered Shareholders 6
Registered Shareholders - Appointment and Revocation of Proxies 6
Non-Registered (Beneficial) Shareholders 7
Voting of Shares Represented by Management Proxies 7
PARTICULARS OF MATERS TO BE ACTED ON AT THE MEETING 8
Election of Directors 8
Appointment of Auditor 8
Amendment of the Employee Share Option Plan 8
Amendment of Stantec's By-Laws 11
Amendment of Stantec's Articles 11
Other Business 12
INFORMATION REGARDING STANTEC 13
Interest of Certain Persons in Matters to be Acted Upon 13
Voting Shares and Their Principal Holders 13
Normal Course Issuer Bid 13
Statement of Corporate Governance Practices 13
Mandate of the Board of Directors 14
Committee of the Board 14
Audit Committee 14
Corporate Governance and Compensation Committee 16
Election of Directors 17
Compensation of Directors 20
Executive Compensation 21
Summary Compensation Table 21
Option Grants During the Most Recently Completed Financial Year 22
Aggregated Option Exercises During the Most Recently Completed
Financial Year and Financial Year-End Option Values 22
Executive Compensation Plan Information 23
Indebtedness of any Directors, Executive Officers and Senior Officers 23
Employment Contracts 23
2
· Download Table
Anthony P. Franceschini 23
Donald W. Wilson 24
Raymond L. Alarie 24
Mark E. Jackson 25
W. Barry Lester 25
Report of Executive Compensation 26
Composition of Corporate Governance and Compensation Committee 26
Compensation Philosophy 26
Compensation of the Chief Executive Officer 27
Performance Graph 28
Directors' and Officers' Liability Insurance 28
2005 Shareholder Proposals 28
Additional Information 29
Directors' Approval 29
SCHEDULE "A" - TSX CORPORATE GOVERNANCE GUIDELINES 30
SCHEDULE "B" - OPTION RESOLUTION 37
SCHEDULE "C" - BY-LAW RESOLUTION 38
SCHEDULE "D" - ARTICLE RESOLUTION 39
3
STANTEC INC.
10160-112 street
Edmonton AB T5K 2L6
Tel: (780) 917-7000 Fax: (780) 917-7370
STANTEC.com
[LOGO STANTEC]
March 21, 2005
Dear Fellow Shareholder:
It gives me great pleasure to share with you the Stantec Inc. 2004 Annual Report
highlighting a year of record performance for our Company. In 2004 we
demonstrated that Stantec has the momentum to continue to succeed in a
challenging business environment. Our performance contributed to a 19.8%
increase in share price during the year.
I would also like to take this opportunity on behalf of the Board of Directors
to invite you to attend the annual meeting of shareholders of Stantec Inc.,
which will be held at 11:00 AM on Tuesday, May 10, 2005, at Stantec Centre in
Edmonton, 10160-112 Street, Edmonton, Alberta. Alternatively, you may choose to
attend the meeting through the Internet. The presentation will be broadcast live
and archived at stantec.com (under the Investor Relations section). During the
meeting, we will review the Company's 2004 operating and financial performance
and outline our strategy going forward.
Enclosed in this package you will find the Notice of Meeting, as well as a form
of proxy and the Management Information Circular. We would appreciate your
prompt return of the signed proxy in order to ensure that your vote is recorded
in due time.
Thank you for your continuing support.
Sincerely
/s/ TONY FRANCESCHINI
TONY FRANCESCHINI
President & CEO
STANTEC INC.
NOTICE OF ANNUAL AND SPECIAL
[LOGO STANTEC] MEETING OF SHAREHOLDERS
Stantec Inc. ("Stantec") will hold its annual and special meeting of
shareholders (the "Meeting") at Stantec Centre, 10160 - 112 Street, Edmonton,
Alberta on Tuesday, May 10, 2005 at 11:00 a.m. (Mountain Daylight Time) to:
1. receive Stantec's financial statements for the financial year ended
December 31, 2004, together with the auditor's report on those
statements;
2. elect the directors of Stantec;
3. appoint an auditor and to authorize the directors to fix the
auditor's remuneration;
4. to vote on an amendment of the Employee Share Option Plan (the
"Option Resolution") setting the number of common shares reserved
for issuance under that plan at a number equal to 10% of Stantec's
issued and outstanding common shares;
5. to vote on an amendment of Stantec's by-laws (the "By-Law
Resolution" ) relating to director residency and quorum at
directors' meetings;
6. to vote on an amendment to Stantec's articles (the "Articles
Resolution") relating to the appointment of directors in the period
between annual shareholder meetings; and
7. to transact any other business properly brought before the Meeting.
The accompanying management information circular contains more information
regarding these matters. Stantec's 2004 audited financial statements are
included in the Stantec annual report which is being mailed with the circular.
The Board of Directors has fixed the close of business on March 21, 2005 as the
record date for the determination of shareholders entitled to notice of and to
vote at the meeting and only shareholders of record on such date are entitled to
vote on these matters at the Meeting.
By Order of the Board of Directors
/s/ JEFFREY S. LLOYD
Edmonton, Alberta JEFFREY S. LLOYD
March 21, 2005 Secretary
If you are not able to attend the Meeting in person, please exercise your
right to vote by dating, signing and returning the enclosed form of proxy
to CIBC Mellon Trust Company, 600 The Dome Tower, 333 - 7th Avenue SW,
Calgary AB T2P 2Z1, so as to arrive no later than 5:00 PM (MDT) on May 6,
2005 or, if the Meeting is adjourned, 5:00 PM (MDT) on the second business
day before any adjournment.
5
STANTEC INC.
NOTICE OF ANNUAL AND SPECIAL
[LOGO STANTEC] MEETING OF SHAREHOLDERS
SOLICITATION OF PROXIES
This management information circular and the accompanying form of proxy are for
use at Stantec's annual and special shareholder meeting, and any adjournments or
postponements, for the purposes described in the accompanying notice of meeting.
The meeting is scheduled for 11:00 AM (Edmonton Time), Tuesday, May 10, 2005 at:
Stantec Center
10160 112 Street
Edmonton AB T5K 2L6
STANTEC'S MANAGEMENT IS SOLICITING PROXIES WITH THIS CIRCULAR. Proxies will be
primarily solicited by mail, but Stantec employees may also solicit proxies via
telephone or in person. Stantec is bearing the costs associated with this
solicitation. Unless otherwise noted, the information in this circular is
current to March 21, 2005.
REGISTERED SHAREHOLDERS
You are a registered shareholder if your shares are held in certificate form in
your name. If you are a registered shareholder you can vote you shares:
1. in person at the meeting; or
2. by signing the enclosed form of proxy (see "REGISTERED SHAREHOLDERS
- APPOINTMENT AND REVOCATION OF PROXIES" below).
If you are not a registered shareholder, in order to vote your shares, you must
follow the steps described below under the heading "NON-REGISTERED (BENEFICIAL)
SHAREHOLDERS"
REGISTERED SHAREHOLDERS - APPOINTMENT AND REVOCATION OF PROXIES
If you are a registered shareholder and you complete, date, sign and return the
enclosed proxy as described below, you give authority to the individuals named
in the proxy or an individual of your choosing, to attend, vote and act on your
behalf at the meeting.
The individuals named in the enclosed form of proxy are Stantec directors and/or
officers. YOU HAVE THE RIGHT TO APPOINT A PERSON OF YOUR CHOICE, WHO NEED NOT BE
A STANTEC SHAREHOLDER, TO REPRESENT YOU AND TO ATTEND AND ACT ON YOUR BEHALF AT
THE MEETING. IF YOU WISH TO APPOINT SOMEONE OTHER THAN INDIVIDUALS LISTED IN THE
ENCLOSED PROXY, PLEASE INSERT THE NAME OF THE PERSON YOU WISH TO APPOINT IN THE
SPACE PROVIDED FOR THAT PURPOSE.
To be valid, you must date and sign your proxy and it must be received by:
CIBC Mellon Trust Company
600 The Dome Tower, 333 - 7th Avenue SW
Calgary, AB T2P 2Z1
before 5:00 PM (Edmonton Time) on May 6, 2005. If the meeting is adjourned or
postponed, the proxy must be signed and received by CIBC Mellon before 5:00 PM
(Edmonton Time) on the second business day before the adjourned meeting.
6
If, after you or your attorney (duly authorized in writing) have signed and
returned a proxy to CIBC Mellon Trust Company, you may revoke your proxy:
(a) by you or your attorney (duly authorized in writing) completing,
dating and signing a new proxy or written statement with a date
later than the previous proxy and delivering it to:
(i) CIBC Mellon Trust Company in the manner described above; or
(ii) to Stantec's registered office before the end of business on
the day before the meeting or any subsequent adjournment or
postponement, or
(iii) the chairman of the meeting before the start of the meeting or
before any adjournment or postponement; or
(b) in any other manner permitted by law.
NON-REGISTERED (BENEFICIAL) SHAREHOLDERS
Only proxies deposited by registered shareholders can be recognized and acted
upon at the meeting. If your shares are held in the name of a nominee, such as a
bank, trust company, securities broker, trustee (including RRSP, RRIF or RESP
trustee) or other financial institution, you are considered a BENEFICIAL
SHAREHOLDER. In this event, your nominee, rather than you, appears on Stantec's
registered shareholder list.
Shares held by a nominee must be voted according to the beneficial shareholder's
instructions. Regulatory policy requires nominees to seek voting instructions
from beneficial shareholders in advance of shareholder meetings. IF YOU RECEIVE
A PROXY FROM YOUR NOMINEE, YOU CANNOT USE THAT PROXY TO VOTE YOUR SHARES
DIRECTLY AT THE MEETING.
If you are a beneficial shareholder, there are two ways that you can vote your
shares:
1. by providing, well in advance of the meeting, voting instructions to your
nominee who will have sent you either a request for voting instructions or
a form of proxy for the number of shares you hold. You should carefully
follow your nominee's procedures and return instructions to ensure that
your shares are voted at the meeting; or
2. by attending the meeting. However, Stantec does not have the names of
non-registered shareholders. Therefore, if you want to attend the meeting
in person, you must have your nominee appoint you as its proxyholder in
respect of your shares. Only after having been appointed as a proxyholder
will you be able vote your shares at the meeting. If you plan to vote in
this manner, contact your nominee to determine what documents you need to
complete to be appointed a proxyholder. You will also need to register
with Stantec's transfer agent at the meeting.
VOTING OF SHARES REPRESENTED BY MANAGEMENT PROXIES
Unless you specify another individual, the enclosed form of proxy authorizes the
two named individuals, who represent Stantec management, to vote your shares at
the meeting according to your instructions. IN THE ABSENCE OF SPECIFIC
INSTRUCTIONS, THE MANAGEMENT REPRESENTATIVES WILL VOTE FOR THE ELECTION OF THE
DIRECTORS, THE APPOINTMENT OF AUDITOR, AND IN FAVOR OF THE THREE RESOLUTIONS
INDICATED IN THIS CIRCULAR (THE AMENDMENT OF STANTEC'S EMPLOYEE SHARE OPTION
PLAN, THE AMENDMENTS TO STANTEC'S BY-LAWS, AND THE AMENDMENT TO STANTEC'S
ARTICLES).
7
The form of proxy also authorizes management representatives to use their
discretion for other matters that properly come before the meeting. As of the
date of this circular, Stantec management does not know of any matters to come
before the meeting other than the matters listed in the notice of meeting.
PARTICULARS OF MATTERS TO BE ACTED ON AT THE MEETING
To the knowledge of Stantec's management, the only matters to be placed before
the meeting are the matters set forth in the Notice of Meeting and as further
described below.
1. ELECTION OF DIRECTORS
Please see page 17 under the heading "ELECTION OF DIRECTORS".
2. APPOINTMENT OF AUDITOR
It is proposed that Ernst & Young, Chartered Accountants be appointed as
Stantec's auditor for the 2005 fiscal year.
Unless you specify otherwise by proxy or by voting at the meeting, the
management representatives designated in the form of proxy intend to vote FOR
the reappointment of Ernst & Young, Chartered Accountants as Stantec's auditor
to hold office until the close of the next annual shareholders' meeting and to
authorize Stantec's directors to set Ernst & Young's remuneration for the year.
Ernst & Young has served as Stantec's auditor since December 11, 1993.
3. AMENDMENT OF THE EMPLOYEE SHARE OPTION PLAN
At the meeting, shareholders will be asked to vote on a resolution approving an
amendment to Stantec's Employee Share Option Plan setting the number of shares
reserved for issuance as options pursuant to the plan at 1,892,718 which is
equal to10% of Stantec's current issued and outstanding common shares as at
March 21, 2005.
Please note that the figures referred to below and throughout this circular
relating to the plan account for the two for one stock split which occurred on
May 17, 2002.
BACKGROUND
Stantec's Employee Share Option Plan provides for the granting of options to
purchase common shares to directors, officers, employees, and consultants of
Stantec and its subsidiaries. The Board of Directors believes that issuing
options to key individuals is an effective means of aligning the interests of
these individuals with the interests of Stantec shareholders.
At the time of the last amendment to the plan in March of 2002, 1,754,938 shares
were reserved for issuance as options, which, together with certain individual
option agreements which existed at the time, totaled 1,814,938 common shares,
representing 10% of Stantec's issued and outstanding common shares at that time.
On February 24, 2005, the Board of Directors resolved to reset the number of
shares reserved for issuance as options. Subject to shareholder approval, the
Employee Share Option Plan has been amended to reserve 1,892,718 common shares,
being 10% of the current issued and
8
outstanding common shares as of the date of this circular. Stantec does not
issue any securities other than common shares.
TERMS OF THE PLAN
Each option granted has a maximum term of 10 years and is exercisable on terms
determined by the Board, including vesting and restrictions on sale or other
disposition of common shares acquired upon exercise of an option. The Board of
Directors establishes the exercise price for options when issued, which in all
cases cannot be less than:
1. the closing price of Stantec's common shares on the TSX on the
trading day immediately preceding the date of the grant; or
2. such lesser permissible amount under applicable legislation or the
rules and regulations of the TSX.
Any common shares subject to an option which is for whatever reason cancelled or
terminated without having been exercised, are again available for grant under
the plan.
The maximum number of common shares which may be reserved for issuance to
insiders under the plan is 10% of the common shares outstanding at the time of
the grant (on a non-diluted basis) less the aggregate number of common shares
reserved for issuance to insiders under any other share compensation
arrangement. In addition, the maximum number of common shares which may be
issued to insiders under the plan within a one year period is 10% of the common
shares outstanding at the time of the issuance (on a non-diluted basis),
excluding common shares issued under the plan or any other share compensation
arrangement over the preceding one year period. The maximum number of common
shares which may be issued to any one insider under the plan within a one year
period is 5% of the common shares outstanding at the time of the issuance (on a
non-diluted basis), excluding common shares issued to the insider in question
under the plan or any other share compensation arrangement over the preceding
one year period. However, any entitlement to acquire common shares granted
pursuant to the plan or any other share compensation arrangement prior to the
optionholder becoming an insider shall be excluded for the purposes of the
limits set out above.
In addition, the maximum number of common shares which may be reserved for
issuance to any one person is 5% of the common shares outstanding at the time of
the grant (on a non-diluted basis) less the aggregate number of common shares
reserved for issuance to such person under any other option to purchase common
shares from treasury granted as compensation or incentive mechanism.
Should the number of issued and outstanding Stantec common shares change due to
a stock dividend, split, consolidation, or other corporate change, the Board
would, with the approval of the TSX, make an appropriate adjustment to the terms
of previously issued options.
If an optionholder ceases to be eligible for the plan for any reason other than
death, each option held by that person ceases to be exercisable 30 days after
that person becomes ineligible and any option or portion of an option not vested
by the date of becoming ineligible cannot be exercised under any circumstances.
These provisions apply regardless of whether the person is dismissed with or
without cause.
Options are only assignable when an option holder dies and only by will or by
the laws of descent and distribution. Following death of an option holder, his
or her legal representative may exercise the options within six months after the
date of death, but only to the extent that the options were by their terms
exercisable on the date of death.
9
The Board of Directors may amend, suspend or terminate the plan or any portion
thereof at any time in accordance with applicable legislation and subject to any
required approval. With the consent of affected optionholders, the Board of
Directors may amend or modify any outstanding option in any manner to the extent
that the Board would have the authority to initially grant such award,
including, without limitation, to change the date or dates as of which an option
becomes exercisable, subject to the prior approval of the relevant stock
exchange. The Board of Directors also has the authority to adopt, amend and
rescind administrative guidelines and other rules and regulations relating to
the plan.
SHARES RESERVED AND OPTIONS GRANTED
The following shows shares reserved and options granted, exercised and available
for grant:
· Download Table
Options
Plan Options Options Available for
Maximum Outstanding Exercised Future Grant
--------- ----------- --------- -------------
Balance as of March 21, 2005 1,754,938 1,012,833 697,365 44,740
(prior to proposed change)
Percentage of common shares 9.27% 5.35% 3.68% 0.24%
outstanding as of March 21,
2005 (prior to proposed change)
Balance as of March 21, 2005
(after proposed change, based 1,892,718 1,012,833 0 879,885
upon number of issued and
outstanding common shares as
of March 21, 2005)
Percentage of common shares 10.00% 5.35% 0% 4.65%
outstanding as of March 21,
2005 (after proposed change)
RESOLUTION AND RECOMMENDATION
The Board of Directors recommends that shareholders vote FOR the proposed change
so that additional stock options are available as part of Stantec's compensation
structure to attract, retain and motivate key individuals.
The resolution attached as Schedule "B" to this circular confirms the amendment
to the number of common shares reserved for issuance pursuant to this plan to be
equal to 10% of Stantec's issued and outstanding common shares as of the date of
this circular. In order to be passed, this resolution requires the support of a
majority of the votes cast at the meeting, excluding votes attaching to the
common shares beneficially owned by Stantec insiders.
THE STANTEC MANAGEMENT REPRESENTATIVES INTEND TO VOTE FOR THIS RESOLUTION, OTHER
THAN IN RESPECT OF SHARE HELD BY SHAREHOLDERS WHO SPECIFY IN THEIR PROXIES THAT
THEIR SHARES ARE TO BE VOTED AGAINST THE RESOLUTION.
4. AMENDMENT OF STANTEC'S BY-LAWS
Prior to September 16, 2004, Stantec's by-laws required a majority of its
directors to be Canadian residents. The Board of Directors has resolved to amend
Stantec's by-law residency
10
requirement so that only 50% of Stantec's directors must be resident Canadians
and that should Stantec at any time have less than four directors, at least one
director must be a resident Canadian.
In conjunction with the change to director residency requirements, the directors
also resolved to amend the number of Canadian directors required to constitute
quorum at a directors' meeting. Previously, in order for quorum at a directors
meeting to be met (which is the number of directors present in order for
business to be conducted and voted upon) half of the directors present had to be
resident Canadians. The Board of Directors has resolved to amend the quorum
requirement so that only 25% of the directors at a meeting need be Canadian
residents.
The directors' resolution approving these amendments was effective on September
16, 2004 and copy of the proposed shareholder resolution is attached as Schedule
"C" to this circular.
These amendments comply with the residency and quorum requirements of the Canada
Business Corporations Act under which Stantec was incorporated. In addition, the
Board of Directors believes that the by-law amendment will give Stantec more
flexibility when choosing future directors.
These amendments to Stantec's by-laws are subject to shareholder approval. In
order to be passed, the By-law Resolution requires the support of a majority of
the votes cast at the meeting.
THE STANTEC MANAGEMENT REPRESENTATIVES INTEND TO VOTE FOR THIS RESOLUTION, OTHER
THAN IN RESPECT OF SHARES HELD BY SHAREHOLDERS WHO SPECIFY IN THEIR PROXIES THAT
THEIR SHARES ARE TO BE VOTED AGAINST THE RESOLUTION.
5. AMENDMENT OF STANTEC'S ARTICLES
From time to time, management and the Board of Directors may identify new areas
where additional expertise at the board level would benefit Stantec. As well,
from time to time, the Board may identify individuals who are desirable
candidates for director, generally or for their specific expertise.
Unfortunately these situations do not always occur in accordance with the
scheduling of annual shareholder meetings and, as a result, board candidates
cannot be appointed until the next annual shareholder meeting and sometimes, due
to timing conflicts, not at all.
If so authorized by the Articles of the corporation, the Canada Business
Corporations Act permits existing directors to appoint one or more additional
directors to serve until the next annual general meeting. However, the number of
directors appointed in this manner cannot at any time exceed 1/3 of the number
of directors who held office at the expiration of the last annual shareholder
meeting.
Stantec's current Articles do not provide for this flexibility. The Board of
Directors is proposing that Stantec's Articles be amended to permit the
appointment of additional directors between annual shareholder meetings in
accordance with the CBCA.
The directors' resolution approving this amendment was passed on February 24,
2005 and a copy of proposed shareholder resolution is attached as Schedule "D"
to this circular.
This amendment to Stantec's Articles is subject to shareholder approval. In
order to be passed, this special resolution requires the support of at least
two-thirds of the votes cast at the meeting in respect of the special
resolution.
11
THE STANTEC MANAGEMENT REPRESENTATIVES INTEND TO VOTE FOR THIS RESOLUTION, OTHER
THAN IN RESPECT OF SHARES HELD BY SHAREHOLDERS WHO SPECIFY IN THEIR PROXIES THAT
THEIR SHARES ARE TO BE VOTED AGAINST THE RESOLUTION.
6. OTHER BUSINESS
Stantec does not know of any other matter that will come before the meeting
other than the matters disclosed in the notice of meeting.
12
INFORMATION REGARDING STANTEC
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
To Stantec's knowledge, none of Stantec's directors or executive officers, or
any associate or affiliate of any such person, has any material interest, direct
or indirect, by way of securities or otherwise in any matter to be acted upon at
the meeting other than the election of directors or the appointment of auditor.
VOTING SHARES AND THEIR PRINCIPAL HOLDERS
As of the date of this circular, Stantec has 18,927,185 common shares issued and
outstanding. Each registered holder of common shares on the record date (March
21, 2005) will be entitled to one vote on all matters proposed to come before
the meeting for each common share held.
To the knowledge of Stantec's directors and officers, no person beneficially
owns, directly or indirectly, or controls or directs more than 10% of Stantec's
outstanding common shares.
NORMAL COURSE ISSUER BID
On May 27, 2004, Stantec announced its intention to make a normal course issuer
bid starting June 1, 2004 and expiring May 31, 2005. During this period, Stantec
may acquire up to 554,388 common shares, being approximately 3% of the issued
and outstanding common shares at the time of the issuer bid's announcement.
Stantec believes that, at certain times, the market price of its common shares
may not adequately reflect the value of its business and its future business
prospects. As a result, Stantec believes that its outstanding common shares may,
at such times, represent an attractive investment and an appropriate and
desirable use of its available funds. Stantec will purchase its common shares
for cancellation.
Purchases will be effected through the Toronto Stock Exchange's facilities, in
accordance with its by-laws, rules, and policies. Stantec will pay the market
price for any common shares it acquires.
You may contact Stantec at: 200 - 10160 - 112 Street, Edmonton AB T5K 2L6 to
obtain a copy of Stantec's Notice of Intention to Make a Normal Course Issuer
Bid that was filed with the Toronto Stock Exchange.
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
Stantec's Board of Directors believes in the importance of sound corporate
governance practices. Stantec's practices are described in Schedule "A" to this
circular.
The Toronto Stock Exchange requires that we compare our Corporate Governance
Practices to the "Guidelines for Improved Corporate Governance" contained in the
December 1994 Report of the TSX Committee on Corporate Governance in Canada. The
headings appearing in Schedule "A" address the principal matters relating to
corporate governance outlined in Section 474 of the TSX Company Manual.
In Schedule "A", the terms "unrelated director", "related director" and "outside
director" have the meanings given to them in the TSX Company Manual, namely:
13
- An "unrelated director" means a director who is independent of management
and is free from any interest and 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 shareholding.
- A "related director" means a director who is not an unrelated director or
is a member of management.
- An "outside director" means a director who is not a member of management.
Canadian corporate governance practice standards continue to be reviewed and
modified. At present, the TSX Company Manual guidelines are the benchmark to
which we must adhere. A number of revisions to these guidelines have been
proposed and are being considered. Stantec continues to monitor and adapt as
corporate governance standards evolve.
MANDATE OF THE BOARD OF DIRECTORS
The Board's mandate is to supervise Stantec's management with a view to
Stantec's best interests. The Board fulfils its mandate by:
- ensuring that Stantec adopts a strategic planning process;
- reviewing and monitoring Stantec's principal business risks, as
identified by management, and the system to manage such risks;
- ensuring that management provides for succession planning;
- ensuring that management maintains the integrity of Stantec's
internal control and management information systems.
There were five Board meetings and one strategic planning session in 2004. The
Board has met once in 2005 and five additional meetings of the Board are
scheduled. The agenda for these scheduled Board meetings, and whether additional
meetings are necessary, will depend on the state of Stantec's affairs, including
any opportunities or problems facing Stantec.
It is Stantec's current practice to hold at least one Board meeting each year at
a location other than the head office. Management feels that Stantec benefits
from giving directors broad exposure to Stantec's business and operations. At
these meetings, directors are given the opportunity to meet with senior
management in different regions. Last year, Board meetings were held in
Edmonton, Phoenix, and Toronto.
COMMITTEES OF THE BOARD
In 2004, there were two committees of the Board: (1) the Audit Committee and (2)
the Corporate Governance and Compensation Committee.
AUDIT COMMITTEE
The Audit Committee members are all unrelated directors. The committee members
are E. John (Jack) Finn, William D. Grace, and Robert R. Mesel. During the
financial year ended December 31, 2004, Stephen D. Lister (an unrelated
director) was a member of this committee until his retirement on November 4,
2004, when Robert R. Mesel was appointed to fill that vacancy.
14
In summary, the committee monitors, evaluates, approves and makes
recommendations on matters affecting Stantec's external audit, financial
reporting and accounting control policies. The committee's Terms of Reference
include:
- reviewing and recommending for approval to the Board, the annual
audited financial statements and other continuous disclosure
documents, including:
a) the financial content of the annual report,
b) the annual management information circular and proxy
materials,
c) the annual information form, and
d) the management discussion and analysis section of the annual
report;
- reviewing and authorizing the release of the quarterly unaudited
financial statements including management discussion and analysis,
quarterly interim report to shareholders and quarterly press release
of Stantec's earnings;
- reviewing and recommending for approval to the Board, all financial
statements, financial reports, and the financial content of
prospectuses, and any other reports requiring Board approval prior
to being submitted to any regulatory authority;
- reviewing and assessing, in conjunction with management and the
external auditor:
a) the appropriateness of Stantec's accounting policies and
financial reporting practices, and considering any available
alternatives;
b) any significant proposed changes in financial reporting and
accounting policies and practices to be adopted by Stantec;
c) any new or pending developments in accounting and reporting
standards that may affect or impact Stantec; and
d) the key estimates and judgments of management that may be
material to Stantec's financial reporting;
- assessing the performance of the external auditor and considering
whether to recommend its annual appointment to the Board for
ultimate recommendation to the shareholders;
- reviewing, approving and executing the annual engagement letter with
the external auditor;
- approving the engagement of the external auditor for all non-audit
services and the fees for such services, and considering whether any
non-audit service compromises the independence of the external audit
work;
- reviewing all fees paid to the external auditor for audit services
and, if appropriate, recommending the fees for Board approval; and
- reviewing with the external auditor the results of the annual audit
examination.
The Audit Committee met six times in 2004. In addition to formal meetings, the
members of the Audit Committee meet informally as required, either in person or
by telephone. The Chairman of the Audit Committee provides regular reports at
Stantec's Board meetings.
15
CORPORATE GOVERNANCE AND COMPENSATION COMMITTEE
The Corporate Governance and Compensation Committee members are all unrelated
directors. The committee members are Neilson A. "Dutch" Bertholf, Jr., Robert J.
Bradshaw, William D. Grace and Susan E. Hartman. During the financial year ended
December 31, 2004, Robert E. Flynn (an unrelated director) was a member of this
committee until his retirement on November 4, 2004 when Susan E. Hartman was
appointed to the committee to fill that vacancy.
This committee makes recommendations to the Board on:
Corporate Governance Matters
- developments in the area of corporate governance generally;
- composition and size of the Board;
- appropriate candidates for nomination to the Board;
- providing an orientation and education program for new directors;
- evaluating the performance of the Board, any committees, and
individual directors;
- considering and approving any requests by an individual director to
engage outside experts at Stantec's expense.
Compensation Matters
- compensation policies reflecting the rationale for each element of
executive pay, including the link between compensation and
performance and the level of competitiveness of the total
compensation package;
- administration of Stantec's Employee Share Option Plan;
- executive management compensation, including bonuses, stock options,
pensions, and benefits;
- compensation for the Chief Executive Officer;
- senior management performance reviews;
- Stantec's succession plans for executive management positions.
The Corporate Governance and Compensation Committee met once in 2004. In
addition to formal meetings, the members of the Corporate Governance and
Compensation Committee meet informally as required, either in person or by
telephone. The Chairman of the Corporate Governance and Compensation Committee
provides regular reports at Stantec Board meetings.
16
ELECTION OF DIRECTORS
Eight directors will be elected at the Meeting. The management representatives
named in the form of proxy intend to vote for the nominees listed below. All of
the listed nominees are currently directors. Stantec management believes that
each of the listed nominees will be able to serve as a director. If for any
reason before the meeting, a nominee is unable to serve as a director, the
persons named in the form of proxy have the discretion to vote for another
nominee at the meeting. Each elected director will hold office until the next
annual general meeting or until a successor is duly elected or appointed.
The members of Stantec's Audit Committee and Corporate Governance and
Compensation Committee are indicated below. The following biographies also
indicate the number of Stantec common shares currently beneficially owned,
directly or indirectly, or controlled or directed by the nominees.
RONALD P. TRIFFO - CHAIRMAN OF THE BOARD, STANTEC INC.
Edmonton, AB - Canada
[RONALD P. TRIFFO PHOTO]
Ronald P. Triffo has been associated with Stantec since 1977 and was appointed
President in 1983. In 1988, he was appointed Chairman of the Board. Ron is
currently the Director of TELUS Corporation and Chairman and Director of ATB
Financial. Ron is the private sector Co-Chair of the Alberta Economic
Development Authority and serves on the Board of the Alberta Ingenuity Fund,
Alberta's Promise, the Advisory Council of the Faculty of Medicine and Dentistry
at the University of Alberta, and the Board of Governors of Junior Achievement
of Northern Alberta.
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DIRECTOR SINCE COMMON SHARES OPTIONS DEFERRED SHARE UNITS 2004 ATTENDANCE
August 12, 1985 427,092 160,000 Not eligible Board Meetings 6 of 6
ANTHONY (TONY) P. FRANCESCHINI - PRESIDENT & CEO, STANTEC INC.
Edmonton, AB - Canada
[ANTHONY P. FRANCESCHINI PHOTO]
Anthony P. Franceschini has been with Stantec since 1978, where he has provided
consulting services, management, and leadership becoming CEO in 1998. Tony has
served as a director of Stantec Inc. since the Company became publicly traded in
March 1994 (TSX:STN). He also serves as a director of Esterline Technologies
Corporation, a leading manufacturer in the aerospace/defence markets and is a
director of privately held CCI Thermal Technologies Inc., an Edmonton-based
manufacturer of industrial heating products and custom-engineered process
heating equipment.
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DIRECTOR SINCE COMMON SHARES OPTIONS DEFERRED SHARE UNITS 2004 ATTENDANCE
February 3, 1994 211,396 202,000 Not eligible Board Meetings 6of 6
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NEILSON A. "DUTCH" BERTHOLF JR. - CORPORATE DIRECTOR
Phoenix, AZ - USA
[NEILSON A. "DUTCH" BERTHOLF JR. PHOTO]
Neilson A. "Dutch" Bertholf Jr. is a member Stantec Inc.'s Board of Directors
and serves on the Corporate Governance and Compensation Committee. He is retired
from a 40-year career in aviation. Mr. Bertholf Jr. is a lifetime board member
of the Arizona Sports Foundation Inc (Fiesta Bowl) and is a member on the
executive committee and a vice president of the Grand Canyon Council, Boy Scouts
of America. He is also a member of the Board of Directors for the Airline
Training Center, Arizona, a Division of Lufthansa Flight Training, Lufthansa
Airlines, Germany.
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DIRECTOR SINCE COMMON SHARES OPTIONS DEFERRED SHARE UNITS 2004 ATTENDANCE
December 16, 900 9,100 2,800 Board Meetings 6 of 6
1998 Corporate Governance
& Compensation 1 of 1
ROBERT J. BRADSHAW - CHAIRMAN, CONTOR INDUSTRIES LIMITED
Toronto, ON - Canada
[ROBERT J. BRADSHAW PHOTO]
Robert J. Bradshaw is a professional engineer with a diverse background in the
manufacturing, oil, consulting engineering, and nuclear industry, as well as in
power generation and government service. Mr. Bradshaw is currently chairman of
Contor Industries Limited, which acquires mature manufacturing companies
requiring significant turn-around activities. Contor companies and their
products range from nuclear and aerospace to hydro electric; gold mining; food
processing; aircraft leasing and waste disposal. Mr. Bradshaw acts as chairman
for Zircatec Precision Industries, Inc. and Bradcohill Inc. and is also a
director of Configuresoft, Inc.
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DIRECTOR SINCE COMMON SHARES OPTIONS DEFERRED SHARE UNITS 2004 ATTENDANCE
December 14, 55,000 0 2,800 Board Meetings 6 of 6
1993 Corporate Governance
& Compensation 1 of 1
E. JOHN (JACK) FINN - CORPORATE DIRECTOR
Madison, CI - USA
[E. JOHN (JACK) FINN PHOTO]
E. John (Jack) Finn joined the Stantec Board in 1995 and currently serves on the
Audit Committee. Jack is the retired Chairman of Dorr-Oliver, Inc. a process
engineering and equipment firm. An electrical engineering graduate of Carnegie
Mellon University, Jack's business experience has focused on operations and
general management. He held various executive positions with The Carborundum
Company, Kennecott Corporation and The Standard Oil Company. In addition to
Stantec, Jack is currently a director of Vodium of Washington, DC and Dairy
Delicious of New York, NY. Jack also is a Member of the National Association of
Corporate Directors.
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DIRECTOR SINCE COMMON SHARES OPTIONS DEFERRED SHARE UNITS 2004 ATTENDANCE
October 17, 1995 19,000 5,000 2,800 Board Meetings 6 of 6
Audit Committee 6 of 6
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WILLIAM D. GRACE - CORPORATE DIRECTOR
Edmonton, AB - Canada
[WILLIAM D. GRACE PHOTO]
Bill Grace is a graduate of the University of Alberta and a Fellow Chartered
Accountant (FCA). During his business career, he served as the chief financial
officer with several Alberta corporations including Chieftain Development Co.
Ltd., R. Angus (Alberta) Limited and Canadian Utilities Limited. From 1988 to
1994, he was a managing partner in the Edmonton office of Price Waterhouse. Bill
is the recipient of several awards including the Alberta Achievement Award by
the Province of Alberta, the Lifetime Achievement Award from the Alberta
Institute of Chartered Accountants and the University of Alberta Alumni Award of
Excellence. Bill currently holds a number of corporate directorships in addition
to Stantec, including the Forzani Group, Melcor Developments, Millar Western
Forest Products and several private companies. He is also the independent
chairman of the Edmonton Pipe Industry Pension and Health & Welfare Trust Funds,
a director of the Mutual Fund Dealers Association of Canada, and a public
Council member of the Association of Professional Engineers, Geologists and
Geophysicists of Alberta. Bill has been active over the past twenty-five years
in numerous community and professional activities.
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DIRECTOR SINCE COMMON SHARES OPTIONS DEFERRED SHARE UNITS 2004 ATTENDANCE
April 29, 1994 10,000 8,000 2,800 Board Meetings 6of 6
Audit Committee 6of 6
Corporate Governance
& Compensation 1of 1
SUSAN E. HARTMAN - PRESIDENT AND OWNER, THE HARTMAN GROUP
Rochester, NY - USA
[SUSAN E. HARTMAN PHOTO]
Susan E. Hartman holds a bachelor of science degree in chemistry and has diverse
experience in strategic planning, business management, mergers and acquisitions,
operations, and international business development. In 1993 she started her own
management consulting firm, the Hartman Group. Ms. Hartman continues as
president and owner of The Hartman Group, leading the company's consulting
services in the area of strategic and operational planning, overall business
assessment, process optimization, and project management. She currently serves
as a board member on QED Technologies and the SCORE Foundation.
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DIRECTOR SINCE COMMON SHARES OPTIONS DEFERRED SHARE UNITS 2004 ATTENDANCE
November 4, 2004 0 0 800 Board Meetings 0 of 0
Corporate Governance
& Compensation 0 of 0
ROBERT R. MESEL - CORPORATE DIRECTOR
Kiawah Island, SC - USA
[ROBERT R. MESEL PHOTO]
Robert R. Mesel is an experienced business professional with expertise in
business development, administration, accounting, and finance. Prior to his
retirement in 1998, Mr. Mesel was a director and/or trustee for many prestigious
organizations, including the Financial Executive Institute (Northeast Ohio
Chapter), Ohio Council for Economic Education, Greater Cleveland Salvation Army,
and Canisius College. Mr. Mesel completed his bachelor of business
administration in accounting at Canisius College, his masters of business
administration at State University of New York, and the advanced management
program at Harvard Business School. He is also the past president of BP
Chemicals Inc. and Chase Brass & Copper Company.
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DIRECTOR SINCE COMMON SHARES OPTIONS DEFERRED SHARE UNITS 2004 ATTENDANCE
November 4, 2004 2,500 0 800 Board Meetings 0 of 0
Audit Committee 1 of 1
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All the proposed nominees have been engaged for more than five years in their
present principal occupation or in other capacities with the company or
organization (or a predecessor thereof) in which they currently hold their
principal occupation.
COMPENSATION OF DIRECTORS
Mr. Triffo, the Chairman of the Board, receives $150,000 per year as a director
fee retainer pursuant to an agreement with Stantec. He is not paid any
additional amounts for attending Board committees, chairing Board meetings, or
attending meetings or events in support of the company. This agreement with Mr.
Triffo will end when he ceases to be the Chairman of the Board.
The President and CEO, Mr. Franceschini, is not compensated for acting as a
director.
The remaining six directors are paid according to Stantec's director
compensation program which is intended to:
1. encourage the directors to hold a continuing equity interest in
Stantec;
2. align the interests of directors with the interests of shareholders;
and
3. attract and retain qualified Canadian and U.S. directors.
The director compensation program includes deferred share units (DSUs) each of
which has the same value as one Stantec common share. However, DSUs carry no
voting rights and they cannot be transferred. DSUs cannot be exercised until
death or retirement of a director, upon which, the value of a director's DSUs
are paid in cash. Each DSU will be valued at the Stantec common share market
price on the last trading day of the month of the death or retirement of the
director. DSUs are granted on the last day of the previous quarter and once
granted, the number of DSUs will be adjusted even if the director dies or
retires in the quarter to which a grant of DSUs relates. The number of DSUs held
by directors and the number of DSUs to which directors are entitled will be
appropriately adjusted for any change in Stantec's outstanding common shares
that occurs by reason of any stock split, consolidation, or other corporate
change.
The directors, other than Mr. Triffo and Mr. Franceschini, receive:
- 1,600 DSUs a year (400 per quarter);
- an additional $1,500 per quarter if they chair a Board committee;
and
- $1,800 for every Board meeting or Board committee meeting they
attend.
During Stantec's financial year ending December 31, 2004, Stantec paid its
directors, other than Mr. Franceschini, approximately $522,440. This figure
includes the Chairman's compensation of $150,000 and compensation paid to
outside directors as follows:
- chair and meeting fees $ 114,600
- DSUs (valued at date of issue) $ 257,840
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table summarizes the compensation for Stantec's Chief Executive
Officer, Chief Financial Officer and the next three most highly compensated
executive officers.
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LONG-TERM
COMPENSATION
AWARDS
NAME AND PRINCIPAL ANNUAL COMPENSATION SECURITIES ALL OTHER
POSITION YEAR SALARY BONUS(1) UNDER OPTIONS(2) COMPENSATION
-------------------------- ---- ----------- ---------- ---------------- ------------
A.P. FRANCESCHINI 2004 $ 375,004 $ 844,350 nil $ 9,000(3)
President & CEO 2003 $ 367,793 $ 717,338 150,000 $ 11,250(4)
2002 $ 250,000 $ 748,705 nil $ 6,500(3)
D.W. WILSON 2004 $ 224,030 $ 250,000 5,000 $ 69,439(5)
Vice President & CFO 2003 $ 196,165 $ 195,000 6,500 $ 5,500(3)
2002 $ 183,787 $ 116,212 7,000 $ 5,176(3)
R.L. ALARIE 2004 $ 233,649 $ 350,000 5,000 $ 3,750(3)
Executive Vice 2003 $ 196,165 $ 230,000 6,000 $ 5,500(3)
President 2002 $ 175,013 $ 200,000 9,000 $ 200,631(6)
Stantec Consulting Ltd.
M.E. JACKSON 2004 $ 218,460 $ 250,000 5,000 $ 5,869(3)
Senior Vice President 2003 $ 176,542 $ 205,000 8,000 $ 5,100(3)
Stantec Consulting Ltd. 2002 $ 165,009 $ 135,000 8,000 $ 4,800(3)
W.B. LESTER 2004 $ 230,994 $ 350,000 5,000 $ 6,192(3)
Executive Vice 2003 $ 220,664 $ 350,000 7,000 $ 6,000(3)
President 2002 $ 225,000 $ 325,000 12,000 $ 5,500(3)
Stantec Consulting Ltd.
(1) Represents bonuses earned and calculated in respect of the indicated
financial year.
(2) Options for common shares of Stantec. See below for further information
regarding option grants and exercises during the most recently completed
financial year.
(3) Represents a payment to the executive officer's registered retirement
savings/employee share purchase plan.
(4) Represents a payment to the executive officer's registered retirement
savings/employee share purchase plan ($9,000) and a service award ($2,250)
(5) Represents a payment to Mr. Wilson's registered retirement
savings/employee share purchase plan ($5980) and a payout of vacation time
that Mr. Wilson had accrued but not taken during his time at Stantec
($63,459).
(6) Represents a payment to Mr. Alarie's registered retirement
savings/employee share purchase plan ($5,176) and a performance payment
arising in connection with the acquisition of PEL Group Inc. by Stantec
Consulting Ltd. [a wholly owned subsidiary of Stantec] in 1997 ($195,455).
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OPTION GRANTS DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR
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MARKET VALUE
% OF TOTAL OF
OPTIONS SECURITIES
GRANTED UNDERLYING
SECURITIES TO EMPLOYEES EXERCISE OR BASE OPTIONS ON THE
UNDER IN PRICE ($/COMMON DATE OF GRANT
NAME OPTIONS(1) FINANCIAL YEAR SHARE) ($/SECURITY) EXPIRATION DATE
------------ ---------- -------------- ---------------- -------------- ---------------
A.P. Nil 0.00% N/A N/A N/A
Franceschini
D.W. Wilson 5000(2) 2.99% $ 24.50 $ 24.50 December 14,
2011
R.L. Alarie 5000(2 2.99% $ 24.50 $ 24.50 December 14,
2011
M.E. Jackson 5000(2) 2.99% $ 24.50 $ 24.50 December 14,
2011
W.B. Lester 5000(2) 2.99% $ 24.50 $ 24.50 December 14,
2011
(1) Options granted under Stantec's Employee Share Option Plan to purchase
common shares of Stantec.
(2) 1,667 options are exercisable on December 14, 2005, 1,667 options are
exercisable on December 14, 2006, and 1,666 options are exercisable on
December 14, 2007
AGGREGATED OPTION EXERCISES DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR
AND FINANCIAL YEAR-END OPTION VALUES
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SECURITIES AGGREGATE UNEXERCISED OPTIONS AT VALUE OF UNEXERCISED
ACQUIRED VALUE FINANCIAL YEAR END IN-THE-MONEY OPTIONS
ON EXERCISE REALIZED (#) AT FINANCIAL YEAR END(1)
NAME (#) ($) EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
----------------- ----------- ----------- ------------------------- -------------------------
A.P. Franceschini 240,000 $ 4,214,000 112,000 / 90,000 $1,732,060/ $210,300
D.W. Wilson nil nil 26,335 / 11,665 $493,258/ $61,582
R.L. Alarie 4,700 $ 70,560 5000 / 12,000 $46,900/ $67,760
M.E. Jackson nil nil 8001 / 12,999 $78,516/ $71,064
W.B. Lester 39,000 $ 690,200 2334 / 13,666 $12,790/ $83,390
(1) The closing price of Stantec's Common Shares on the Toronto Stock Exchange
on December 31, 2004 was $26.48.
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EQUITY COMPENSATION PLAN INFORMATION
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NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
NUMBER OF SECURITIES TO FUTURE ISSUANCE UNDER EQUITY
BE ISSUED UPON WEIGHTED-AVERAGE COMPENSATION PLANS
EXERCISE OF EXERCISE PRICE OF (EXCLUDING SECURITIES
PLAN CATEGORY OUTSTANDING OPTIONS OUTSTANDING OPTIONS REFLECTED IN COLUMN (A))
(A) (B) (C)
------------------ ----------------------- ------------------- ----------------------------
EQUITY
COMPENSATION PLANS
APPROVED BY 1,033,833 $ 13.63 44,740(1)
SECURITYHOLDERS
(1) This number is equal to the maximum number of Stantec options authorized
to be issued under the Stantec Share Option Plan (1,754,938) less 676,365
Stantec options which have been exercised over the life the Stantec Stock
Option Plan less the 1,033,833 Stantec options outstanding as at December
31, 2004.
INDEBTEDNESS OF ANY DIRECTORS, EXECUTIVE OFFICERS AND SENIOR OFFICERS
Stantec's management is not aware of any:
(a) indebtedness outstanding to Stantec or any of its subsidiaries by; or
(b) guarantees, support agreements, letters of credit or other similar
arrangements provided by Stantec to;
any of Stantec's directors, executive officers, employees or former directors,
executive officers or employees or of any of Stantec's subsidiaries, at any time
since the commencement of the last completed fiscal year.
EMPLOYMENT CONTRACTS
ANTHONY P. FRANCESCHINI
Stantec has an employment contract with Mr. Franceschini, effective January 1,
2003, which provides that Mr. Franceschini will remain Stantec's President and
CEO until December 31, 2008. The contract provides for:
1. an annual base salary of $375,000,
2. an annual bonus of 1.5% of Stantec's annual income before deductions for
employee performance bonuses, executive bonuses and taxes, and
3. options for Stantec Common Shares as follows:
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NUMBER OF OPTIONS STRIKE PRICE VESTING DATE EXPIRY DATE
30,000 $16.10 January 3, 2004 January 3, 2010
30,000 $18.85 January 3, 2005 January 3, 2011
30,000 $21.60 January 3, 2006 January 3, 2012
30,000 $24.35 January 3, 2007 January 3, 2013
30,000 $27.10 January 3, 2008 January 3, 2013
If Mr. Franceschini is terminated without cause, he will receive a lump sum
payment of $750,000.
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Mr. Franceschini will also receive a $750,000 lump sum payment if he terminates
his employment within six-months of Stantec undergoing a change of control. A
change of control, for this purpose, is defined as a situation where a person
acquires more than 50% of Stantec's Common Shares. A change of control also
occurs when the nominees of a person holding at least 30% of Stantec's Common
Shares are elected as directors and comprise a majority of the Board.
In all other cases Mr. Franceschini may end his employment after giving three
months' notice.
Mr. Franceschini's contract also restricts Mr. Franceschini from competing with
Stantec, soliciting Stantec employees, and soliciting Stantec clients for a
period of two years following termination of his employment.
DONALD W. WILSON
Stantec Consulting has an employment contract with Donald W. Wilson effective
October 31, 2001. The contract provides Mr. Wilson with a bi-weekly salary and a
discretionary annual bonus. Mr. Wilson's bi-weekly salary was set at $8,913.00
effective January 1, 2005.
If Stantec Consulting terminates Mr. Wilson without cause, it must make a
$200,000 lump sum payment to him. Mr. Wilson will also receive a $200,000 lump
sum payment if he were to end his employment within six-months of Stantec
undergoing a change in control. A change of control, for this purpose, would
occur where a person acquires more than 50% of Stantec's common shares or where
the nominees of a person holding at least 30% of Stantec's common shares are
elected as directors and comprise a majority of the Board of Directors. In all
other cases, Mr. Wilson may end his employment after giving Stantec Consulting
three months' notice.
Mr. Wilson's agreement restricts Mr. Wilson from competing with Stantec,
soliciting Stantec employees, and soliciting Stantec clients for a period of two
years following termination of his employment.
RAYMOND L. ALARIE
Stantec Consulting also has an employment contract with Mr. Alarie effective
January 1, 2005. This contract provides Mr. Alarie with a bi-weekly salary and a
discretionary annual bonus. Mr. Alarie's bi-weekly salary was set at $9,308.25
effective January 1, 2005.
If Stantec Consulting terminates Mr. Alarie's employment without cause, it must
pay him his base salary earned to the termination date, a termination bonus, and
a one-year compensation payment.
The termination bonus that would be paid to Mr. Alarie would be equal to the
annual bonus earned by Mr. Alarie in respect of the previous fiscal year
pro-rated for that portion of the year which elapses from the end of the
previous fiscal year to the date of termination. If no bonus was paid to Mr.
Alarie in respect of the previous fiscal year, the termination bonus will be
based on the bonus paid, if any, to Mr. Alarie in respect of the fiscal year two
years prior to the year the termination occurs.
The one-year compensation payment is calculated as twenty-six (26) times Mr.
Alarie's biweekly salary at the time of termination plus an amount equal to the
bonus paid to Mr. Alarie in respect of the fiscal year prior to the year in
which termination occurs or, if no bonuses have been paid to Stantec's Canadian
employees generally in that year, an amount equal to the
24
bonus, if any, paid to Mr. Alarie in respect of the fiscal year two years prior
to the year in which termination occurs.
Mr. Alarie would also be paid his base salary earned to the termination date, a
termination bonus, and a one-year compensation payment if he were to end his
employment within six-months of Stantec undergoing a change in control. A change
of control, for this purpose, would occur where a person acquires more than 50%
of Stantec's common shares or where the nominees of a person holding at least
30% of Stantec's common shares are elected as directors and comprise a majority
of the Board of Directors. In all other cases, Mr. Alarie may end his employment
after giving Stantec Consulting three months' notice.
Mr. Alarie's contract also restricts Mr. Alarie from competing with Stantec,
soliciting Stantec employees, and soliciting Stantec clients for a period of two
years following termination of his employment.
MARK E. JACKSON
Stantec Consulting has an employment contract with Mr. Jackson effective October
31, 2001. The contract provides Mr. Jackson with a bi-weekly salary and a
discretionary annual bonus. Mr. Jackson's bi-weekly salary was set at $8,715.00
effective January 1, 2005.
If Stantec Consulting terminates Mr. Jackson without cause, it must make a
$100,000 lump sum payment to him, pay him a bonus equal to 35% of his base
salary the previous year if no bonus has been paid that year, and pay him a
bonus of 35% of his base salary in the termination year pro rated for that
portion of the year which has elapsed to the date of termination. Mr. Jackson
would also receive a $100,000 lump sum payment and his bonuses should he end his
employment within six-months of Stantec undergoing a change in control.
A change of control, for this purpose, would occur where a person acquires more
than 50% of Stantec's common shares or where the nominees of a person holding at
least 30% of Stantec's common shares are elected as directors and comprise a
majority of the Board of Directors. In all other cases, Mr. Jackson may end his
employment after giving Stantec Consulting three months' notice.
Mr. Jackson's contract also restricts Mr. Jackson from competing with Stantec,
soliciting Stantec employees, and soliciting Stantec clients for a period of two
years following termination of his employment.
W. BARRY LESTER
Stantec Consulting entered into an employment contract with W. Barry Lester
effective December 19, 2002. The contract provides Mr. Lester with a bi-weekly
salary and a discretionary annual bonus. Mr. Lester's bi-weekly salary was set
at $9,308.25 effective January 1, 2005.
If Stantec Consulting terminates Mr. Lester's employment without cause, Stantec
Consulting must pay him his base salary earned to the termination date, a
termination bonus, and a one-year compensation payment.
The termination bonus that would be paid to Mr. Lester would be equal to the
bonus earned by Mr. Lester in the previous fiscal year pro-rated for that
portion of the year which elapses from the end of the previous fiscal year to
the date of termination. If no bonus was paid to Mr. Lester
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in the previous fiscal year, the termination bonus will be based on the bonus
paid, if any, to Mr. Lester in the fiscal year two years prior to the year the
termination occurs.
The one-year compensation payment is calculated as twenty-six (26) times Mr.
Lester's biweekly salary at the time of termination plus an amount equal to the
bonus paid to Mr. Lester in respect of the fiscal year prior to the year in
which termination occurs or, if no bonuses have been paid to Stantec's Canadian
employees generally in that year, an amount equal to the bonus, if any, paid to
Mr. Lester in respect of the fiscal year two years prior to the year in which
termination occurs.
Mr. Lester would also be paid his base salary earned to the termination date, a
termination bonus, and a one-year compensation payment if he were to end his
employment within six-months of Stantec undergoing a change in control. A change
of control, for this purpose, would occur where a person acquires more than 50%
of Stantec's common shares or where the nominees of a person holding at least
30% of Stantec's common shares are elected as directors and comprise a majority
of the Board of Directors. In all other cases, Mr. Lester may end his employment
after giving Stantec Consulting three months' notice.
Mr. Lester's contract also restricts Mr. Lester from competing with Stantec,
soliciting Stantec employees, and soliciting Stantec clients for a period of two
years following termination of his employment.
REPORT ON EXECUTIVE COMPENSATION
COMPOSITION OF CORPORATE GOVERNANCE AND COMPENSATION COMMITTEE
As described above, the Corporate Governance and Compensation Committee is
currently comprised of Neilson A. "Dutch" Bertholf, Jr., Robert Bradshaw,
William D. Grace and Susan E. Hartman, none of which are officers of Stantec.
During the financial year ended December 31, 2004, Robert E. Flynn was a member
of this committee, however, upon his retirement on November 4, 2004, Susan E.
Hartman was appointed to this committee to fill that vacancy.
COMPENSATION PHILOSOPHY
Stantec's executive compensation program is designed to link executive
compensation to corporate performance. A successful program should ensure that
executives are motivated to achieve key corporate goals by appropriately
rewarding them for generating outstanding business results and contributing
exceptionally to Stantec's leadership and management. Stantec feels that its
compensation philosophy attracts, retains, and motivates top executives who will
contribute to Stantec's long-term success.
The base salary for each executive officer is determined by the position's
responsibility, the position's importance to Stantec, and industry standards.
Base salaries for executives other than the CEO are intended to provide a base
level of compensation at the low end of the range for comparable positions. The
amount of money available for executive bonuses is determined annually by the
Corporate Governance and Compensation Committee and depends on Stantec's annual
income before deductions for the CEO's bonus, employee performance bonuses,
executive bonuses, and taxes. Annual bonuses for executive officers are
discretionary and include a number of factors including individual performance
and corporate performance. There are no set weights for each factor and factor
weights may vary from year to year. In 2004, bonuses ranged from 111% to 225% of
base salary for the Named Executive Officers.
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Stantec also has an Employee Share Option Plan to provide long-term incentive to
key employees, including executive officers. The Employee Share Option Plan is
intended to
1. align the interests of employees and shareholders;
2. contribute to the growth of shareholder value;
3. constantly improve operating results;
4. retain key employees; and
5. encourage key employees to become Stantec shareholders.
Key employees are granted options to purchase shares at the Board's discretion
with the advice of the Corporate Governance and Compensation Committee. In
making its decision to award share options, the Board considers the following
criteria:
- the employee's ability to contribute to Stantec's long-term success;
- the value of recognizing employees who may influence Stantec's
future success;
- the amount and terms of any existing options which have been issued
to that employee;
- the recommendation of the CEO; and
- such other factors as the Board feels are relevant with respect to
any individual key employee.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Franceschini's compensation is determined according to his January 1, 2003
employment contract. (see "EMPLOYMENT CONTRACTS" above). Mr. Franceschini's
compensation is comprised of a base salary, an annual incentive bonus, and share
options.
Because there are limited direct comparables for the CEO position, Mr.
Franceschini's base salary was negotiated based on his overall experience,
responsibility, and performance. His annual incentive bonus is tied directly to
corporate performance. His share options, issued according to Stantec's Employee
Share Option Plan, are a long-term incentive tied directly to the creation of
shareholder value.
The Board believes that the overall CEO compensation package is appropriate as
it substantially incorporates short-term financial performance (annual incentive
bonuses) as well as long-term financial performance (share options).
During 2004, Mr. Franceschini's compensation was allocated as follows (based on
the terms of his employment agreement):
Base Salary: 31%
Annual Bonus: 69%
Submitted on behalf of the
Corporate Governance and Compensation Committee
Robert J. Bradshaw, Chair
Neilson A. "Dutch" Bertholf, Jr.
William D. Grace
Susan E. Hartman
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PERFORMANCE GRAPH
The following graph compares the total shareholder return for $100 invested in
Stantec common shares on December 31, 1999 against the total return of the
S&P/TSX Composite Index over the same period.
(PERFORMANCE GRAPH)
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE
Stantec carries a directors' and officers' liability insurance policy with a
maximum coverage of $40,000,000 a year and a $500,000 per claim deductible.
Under this policy, Stantec is reimbursed for paying directors and officers as
required, permitted by law, or permitted by Stantec's by-laws when claims are
made against a director or officer for an alleged or actual wrong committed by
him/her during the course of his/her duties to Stantec. Coverage also applies,
with no deductible, to a director or officer where Stantec does not indemnify
them. There are certain exclusions, including bodily injury, property damage,
and for acts resulting in personal advantage to which the director or officer
was not legally entitled. Some exclusions are covered under other insurance
policies. The coverage is in effect from May 1, 2004 to May 1, 2005 and its
total premium is $171,000.
2005 SHAREHOLDER PROPOSALS
Shareholder proposals must be submitted no later than December 15, 2005 to be
considered for inclusion in next year's management proxy circular for the
purposes of the Stantec's 2006 annual shareholder meeting.
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ADDITIONAL INFORMATION
Additional information relating to Stantec is available on SEDAR at
www.sedar.com.
Any person may request and receive the following from Stantec's Corporate
Secretary:
a) one copy of Stantec's Annual Information Form and one copy of
documentation containing information referenced by the Annual Information
Form;
b) one copy of Stantec's comparative financial statements for the most
recently completed financial year, the accompanying auditor's report, and
one copy of any of interim financial statements created after the latest
annual financial statements;
c) one copy of Stantec's most recent Management Proxy Circular in respect of
the most recent annual shareholder meeting that involved the election of
directors.
Stantec may require a non-shareholder to pay a reasonable charge for the
material requested.
Financial information about Stantec's financial year ended December 31, 2004 is
contained in Stantec's financial statements and MD&A, both of which can be found
in Stantec's Annual Report.
DIRECTORS' APPROVAL
Stantec's Board has approved the contents of this circular and the distribution
of the circular to Stantec shareholders.
/s/ JEFFERY S. LLOYD
JEFFERY S. LLOYD
Vice President and Secretary
March 21, 2005
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SCHEDULE "A"
TSX CORPORATE GOVERNANCE GUIDELINES
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1. The board of directors of every corporation The Board is responsible for Stantec's stewardship and
should explicitly assume responsibility for it oversees Stantec's conduct, direction, and results.
the stewardship of the corporation and, as It is required to act in Stantec's best interests. The
part of the overall stewardship Board is also required to establish proper business
responsibility, should assume responsibility practices and appropriate ethical standards for Stantec.
for the following matters: As part of this process, the board has adopted written
Corporate Governance Guidelines which specifically
provide for:
(a) Adoption of a Corporate Strategic Planning Process;
(b) Managing Risks and Protecting Shareholder Value;
(c) Appointing, Developing and Monitoring Senior
Management;
(d) Establishing a Communications Policy;
(e) Internal Corporate Controls and Management
Information Systems.
a. adoption of a strategic planning process; The Board is actively involved in Stantec's strategic
planning process. One Board meeting a year is devoted to
a comprehensive and interactive planning session with
senior management. The entire Board participates in this
meeting. This meeting discusses business risks and
opportunities. As well, goals and strategies are
reviewed and prepared. The Board must approve the
strategic plan recommended by management before the plan
can be implemented. On a quarterly basis, at minimum,
the Board reviews management's performance in relation
to strategic and operational objectives. Management must
also obtain Board approval for any transaction that
significantly impacts the strategic plan.
b. the identification of the principal risks of The Board identifies Stantec's principal risks based on
the corporation's business and ensuring the its knowledge of the consulting industry, the
implementation of appropriate systems to competitive environment, general economic conditions and
manage these risks; the information provided by management. For a detailed
list of Stantec's risks, see the MD&A section of the
annual report.
The Board and Audit Committee ensure that management
implements risk management systems. Every quarter, the
Board receives an integrated environment, health and
safety report. A Director of Risk Management has been
appointed to oversee
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Stantec's risk management processes.
The Audit Committee regularly reviews financial risk
management activities and holds discussions with
Stantec's auditors.
c. succession planning, including appointing, The Corporate Governance and Compensation Committee
training and monitoring senior management; periodically reviews Stantec's organizational plan and
structure and, in particular, reviews the CEO succession
plan. Appropriate recommendations are made to the Board
for approval.
Succession planning is one of the written objectives of
the President and CEO. Senior management performance is
annually measured against their written objectives.
d. a communications policy for the corporation; The Board ensures that necessary structures are in place
and so that Stantec, its shareholders, other stakeholders,
and the public can effectively communicate.
Stantec has approved policies on material and
nonmaterial disclosure and media relations. These
policies are available on Stantec's intranet to all
staff.
All public financial information and annual audited
financial statements are reviewed and recommended to the
Board for approval, through the Audit Committee. The
quarterly financial statements are reviewed and released
by the audit committee. Publicly disclosed information
is reviewed and approved by the CEO and Stantec's
Director of Communications, and then released as
appropriate through news wire services, the general
media, shareholder mailings, and Stantec's website.
Individual queries, comments, and suggestions can be
made at any time by contacting Stantec's head office in
Edmonton, Alberta. Dedicated communications and investor
relations staff are available to respond to inquiries
from shareholders, media, and the public.
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e. the integrity of the corporation's internal The Board ensures the integrity of internal control and
control and management information systems. management information systems through the work and
reporting of the Audit Committee.
The Audit Committee reviews how Stantec controls
corporate assets and information systems. It also
oversees the financial reporting according to Generally
Accepted Accounting Principles (GAAP) on an annual or
quarterly basis where appropriate or required.
2. The board of directors of every corporation The Board consists of 7 outside/unrelated directors and
should be constituted with a majority of Anthony P. Franceschini, Stantec's President and CEO,
individuals who qualify as unrelated who is an inside/related director. Stantec does not have
directors. An unrelated director is a a significant shareholder.
director who is independent of management
and is free from any interest and 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 corporation, other than
interests and relationships arising from
shareholding. A related director is a
director who is not an unrelated director.
If the corporation has a significant
shareholder, in addition to a majority of
unrelated directors, the board should
include a number of directors who do not
have interests in or relationships with
either the corporation or the significant
shareholder and which fairly reflects the
investment in the corporation by
shareholders other than the significant
shareholder. A significant shareholder is a
shareholder with the ability to exercise a
majority of the votes for the election of
the board of directors.
3. The application of the definition of The Board, through the Corporate Governance and
"unrelated director" to the circumstances of Compensation Committee, reviews and determines which
each individual director should be the directors are "unrelated" according to the TSX
responsibility of the board which will be guidelines. Anthony P. Franceschini is a related
required to disclose on an annual basis director due to his position as President and CEO. All
whether the board has a majority of other directors are unrelated. Additional information
unrelated directors or, in the case of a about directors may be found in the Election of
corporation with a significant shareholder, Directors section of this information circular.
whether the board is constituted with the
appropriate number of directors which are
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not related to either the corporation or the
significant shareholder. Management
directors are related directors. The board
will also be required to disclose on an
annual basis the analysis of the application
of the principles supporting this
conclusion.
4. The board of directors of every corporation The Corporate Governance and Compensation Committee is
should appoint a committee of directors responsible for recommending new members for election to
composed exclusively of outside, i.e., non- the Board. This committee is composed entirely of
management directors, a majority of whom are outside and unrelated members.
unrelated directors, with the responsibility
for proposing to the full board new nominees The Corporate Governance and Compensation Committee is
to the board and for assessing directors on responsible for annually assessing how the Board and
an ongoing basis. Board committees perform. The Committee assesses
appropriate director skills and characteristics based on
the Board's current makeup and Stantec's current
affairs. This assessment considers skills, judgment,
integrity, experience, profile, business prospects and
other appropriate factors in the context of the
perceived needs of Stantec and the Board at that time.
5. Every board of directors should implement a As required and annually at minimum, the Corporate
process to be carried out by the nominating Governance and Compensation Committee reviews and
committee or other appropriate committee for recommends to the Board the need for new committees, how
assessing the effectiveness of the board as committees should be composed, and who should chair
a whole, the committees of the board and the committees. The Committee is guided by the opinion that
contribution of individual directors. Board committees should generally be composed of
unrelated directors and that committee membership should
be rotated periodically. Every year, the Committee
surveys directors who provide feedback on the Board's
effectiveness as a whole and or individual Board
members. The Committee recommends changes based on these
survey results.
6. Every corporation, as an integral element of Stantec continually updates its directors' reference
the process for appointing new directors, manual. The directors can obtain current information by
should provide an orientation and education accessing Stantec's intranet including special secured
program for new recruits to the board. content. As well, during the year, senior managers
appear at Board meetings to make presentations about
particular aspects of Stantec's business.
At least one meeting a year is held at a location other
than Stantec's head office This gives the
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Board the opportunity to meet with local managers in
various areas where Stantec operates.
Two new board members were appointed in November 2004.
These new directors will undergo an orientation and
education program that details Stantec's business,
current issues, corporate strategies, and director
responsibilities.
7. Every board of directors should examine its The Board presently has eight members. The Board thinks
size and, with a view to determining the that this size is appropriate for its members to
impact of the number upon effectiveness, effectively and responsibly manage Stantec's business.
undertake where appropriate, a program to The Board recognizes that the demands on directors may
reduce the number of directors to a number evolve as Stantec develops. Stantec's geographic
which facilitates more effective decision- presence and the individual expertise of current members
making. is considered when the Board's size and composition is
reviewed annually.
8. The board of directors should review the The Corporate Governance and Compensation Committee
adequacy and form of the compensation of reviews and recommends to the Board how Board members
directors and ensure the compensation should be compensated. To do this, the Committee
realistically reflects the responsibilities analyzes time commitments, fees payable in similar
and risk involved in being an effective organizations, and the responsibility of directors.
director.
9. Committees of the board of directors should All Board committees are composed entirely of unrelated
generally be composed of outside directors, directors. The Board has appointed two committees: the
a majority of whom are unrelated directors, Audit Committee and the Corporate Governance and
although some board committees, such as the Compensation Committee.
executive committee, may include one or more
inside directors. For further information about the scope and membership
of each committee, please see pages 13-16 of this
information circular.
10. Every board of directors should expressly The Corporate Governance and Compensation Committee is
assume responsibility for, or assign to a responsible for corporate governance issues. The
committee of directors the general Committee is composed entirely of unrelated directors
responsibility for, developing the and it has a detailed written mandate approved by the
corporation's approach to governance issues. Board which specifies its responsibility for corporate
This committee would, amongst other things, governance issues.
be responsible for the corporation's
response to these governance guidelines.
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11. The board of directors, together with the The Board's Corporate Governance Guidelines, , specify
CEO, should develop position descriptions the Board's duties and responsibilities. The Guidelines
for the board and the CEO, involving the are updated annually, as appropriate.
definition of the limits to management's
responsibilities. In addition, the board The CEO's mandate is to conduct Stantec's day-today
should approve or develop the corporate business and affairs and he is responsible for
objectives which the CEO is responsible for implementing the Board's strategies, goals, and
meeting. directions.
The CEO's written mandate is reviewed and approved by
the Board annually.
12. Every board of directors should have in The Corporate Governance and Compensation Committee is
place appropriate structures and procedures responsible for administering the Board's relationship
to ensure that the board can function with CEO and the rest of management, ensuring that the
independently of management. An appropriate Board is able to function independently of management.
structure would be to (i) appoint a chair of The Board holds an executive session without management
the board who is not a member of management presence at the end of each Board meeting. Standing
with responsibility to ensure the board items of the executive session's agenda are CEO
discharges its responsibilities or (ii) performance and succession planning.
adopt alternative means such as assigning
this responsibility to a committee of the The Board's independence is further enabled by the
board or to a director, sometimes referred separation of the positions of Chairman and President &
to as the "lead director". Appropriate CEO. The Chairman of the Board is an outside, unrelated
procedures may involve the board meeting on director.
a regular basis without management present
or may involve expressly assigning the Directors can retain external advisors with the
responsibility for administering the board's Corporate Governance and Compensation Committee's
relationship to management to a committee of approval.
the board.
13. The audit committee of every board of The Audit Committee is comprised entirely of unrelated
directors should be composed only of outside directors. Its Terms of Reference are reviewed and
directors. The roles and responsibilities of approved by the Board annually.
the audit committee should be specifically
defined so as to provide appropriate The Board believes all Audit Committee members are
guidance to audit committee members as to "financially literate" and have "accounting or related
their duties. The audit committee should financial experience" as defined by the TSX Guidelines.
have direct communication channels with the
internal and external auditors to discuss According to its terms of reference, the Committee
and review specific issues as appropriate. monitors, evaluates, advises, approves, and makes
The audit committee duties should include recommendations on matters affecting Stantec's external
oversight responsibility for management audits, internal audits, risk management matters, and
reporting on internal control. While it is financial reporting and accounting control policies and
management's responsibility to design and practices.
implement an effective system of internal
control, it is the responsibility of the The Audit Committee meets with the external
audit committee to
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ensure that management has done so. auditors at least twice a year without management. A
quality assessment discussion regarding Stantec's annual
and interim financial reporting and accounting
principles is held at least once a year.
The Committee is responsible for assessing the external
auditor's performance. The Committee also considers
whether to reappoint the external auditor and how to
compensate the external auditor. The Committees
recommendations are passed to the Board.
The Audit Committee must approve, before the fact, all
non-audit services performed by the external auditor.
The Committee considers how the non-audit work will
affect the external auditor's independence.
14. The board of directors should implement a Individual directors may engage outside advisers at any
system which enables an individual director time with the approval of the Corporate Governance and
to engage an outside advisor at the expense Compensation Committee.
of the corporation in appropriate
circumstances. The engagement of the outside
advisor should be subject to the approval of
an appropriate committee of the board.
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SCHEDULE "B"
OPTION RESOLUTION
WHEREAS the Board of Directors has amended Stantec's Employment Share Option
Plan to set the number of Common Shares reserved for issuance pursuant thereto;
AND WHEREAS shareholder approval is required to confirm such amendments.
BE IT RESOLVED THAT:
1. Stantec's Employee Share Option Plan (the "Plan") be amended to provide
that the maximum number of Common Shares which may be reserved for
issuance for all purposes under the Plan shall be equal to 1,892,718
Common Shares, being 10% of the issued and outstanding Common Shares on
March 21, 2005 (on a non-diluted basis) and further subject to the
applicable rules and regulations of all regulatory authorities to which
the Corporation is subject, including the Toronto Stock Exchange.
2. any of Stantec's officers is hereby authorized to execute and deliver, for
and on Stantec's behalf, all such documents and to do all such other acts
and things as may be considered necessary or desirable to give effect to
this resolution.
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SCHEDULE "C"
BY-LAW RESOLUTION
WHEREAS effective September 16, 2004, the board of directors amended Stantec
Inc.'s bylaws to change director residency requirements and change the quorum
requirements as described in the following resolution;
AND WHEREAS shareholder approval is required to confirm such amendments.
BE IT RESOLVED THAT:
1. The amendment of By-law No. 1 of the Corporation
(i) deleting existing section 3.3 of the By-law in its entirety and by
inserting the following text in replacement thereof:
"3.3. Residency. - At least fifty (50%) percent of the directors of
the Corporation shall be resident Canadians; provided that if the
Corporation has less than four (4) directors, at least two (2)
directors must be a resident Canadians."; and
(ii) deleting existing section 4.8 of the By-law in its entirety and by
inserting the following text in replacement thereof:
"4.8. Quorum. - Six directors or such greater or lesser number as
the directors may from time to time determine shall constitute a
quorum for the transaction of business at any meeting of directors.
The Board shall not transact business at a meeting unless
twenty-five (25%) percent of the directors present at such meeting
are resident Canadians, unless
(a) a resident Canadian director who is unable to be present
approves in writing, or by telephonic, electronic or other
communication facility, the business transacted at the
meeting; and
(b) the required number of resident Canadian directors would have
been present had that director been present at the meeting."
is hereby confirmed with effect from September 16, 2004 and any director or
officer is directed to certify that confirmation by the amendment to By-law No.
1.
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SCHEDULE "D"
ARTICLE RESOLUTION
WHEREAS on February 24, 2005, the Board of Directors resolved to amend Stantec's
articles relating to the appointment of new directors in the period between
annual shareholder meetings;
AND WHEREAS shareholder approval is required to confirm such amendments.
BE IT RESOLVED AS A SPECIAL RESOLUTION THAT:
1. the following amendment to the Articles of the Corporation be and is
hereby approved: Pursuant to section 173(1)(m) of the Canada Business
Corporations Act, the Articles of the Corporation be amended by adding the
following provision to the end of item 5 of the Articles:
"Subject to the foregoing, the directors may, between annual general
meetings of the shareholders, appoint one or more additional directors,
who shall hold office for a term expiring not later than the close of the
next annual general meeting of shareholders, but the total number of
additional directors so appointed shall not at any time exceed one- third
of the number of directors who held office at the conclusion of the last
annual general meeting of shareholders."
2. any director or officer of the Corporation alone is hereby authorized on
behalf of the Corporation to execute articles of amendment containing the
amendment as set out herein and to submit such articles of amendment to
Industry Canada for filing.
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