|
|
 |
CORPORATE GOVERNANCE
At Enbridge, corporate governance means ensuring a comprehensive
system of stewardship and accountability is in place and functioning
among directors, management and our employees. We employ a
variety of policies, programs and practices to manage corporate
governance. A few highlights include:
- The Board of Directors functions independently of management
and is accountable to shareholders. Currently, 11 of the 12
directors are independent and have no relationship with the
company or its management that could affect their freedom of
judgment. The Board assesses this independence each year.
- Every employee and director must comply with our company's
Statement on Business Conduct.
- Directors are committed to owning shares and/or deferred stock
units equivalent to two times their annual retainer.
- In 2004, the Board met 11 times with an average attendance rate
of 96%.
- The Board has four standing committees: the Audit, Finance and
Risk Committee, the Corporate Social Responsibility Committee,
the Governance Committee and the Human Resources and
Compensation Committee.
The Board has established corporate governance guidelines that
are published at www.enbridge.com.
NEW CSR COMMITTEE OF THE BOARD
In 2004, the mandate of the Board's Environment, Health and
Safety (EH&S) Committee was broadened to include responsibility
for human rights, community investment and stakeholder relations.
Renamed the Corporate Social Responsibility (CSR) Committee, this
committee oversees EH&S and CSR guidelines, policies, proceduresand practices of Enbridge and its subsidiaries. In 2004, the CSR
Committee met five times and consisted of four independent directors.
It now consists of five independent directors.
MANAGING CORPORATE RISKS
Enbridge's approach to risk management is incorporated in our corporate
governance framework. This framework requires management
teams in each business unit to review and regularly report on the risks
they face and the controls in place to manage them. The Board and
the Audit, Finance and Risk Committee oversee the annual review of
risks to the company, monitor Enbridge's risk management program
and oversee the review of risks in consultation with internal and
external auditors.
Other Board committees also oversee the implementation and
monitoring of risk management systems. For example, our CSR
Committee has authorized establishment of a Global Reporting
Initiative guideline and an environmental risk management system, and
monitors their operation. Results of this process and comprehensive
EH&S reports from our business units are presented each year to
the CSR Committee.
EXECUTIVE COMPENSATION
Enbridge's top five executives collectively earned $5 million in salary
and annual bonuses in 2004. These executives received 141,000
stock options. These numbers are publicly available in Enbridge's
Management Information Circular.
Besides performance against financial, operations and strategic
objectives, which are key determinants of incentive payments under
our company's executive compensation program, Enbridge senior
executives must also meet non-financial standards that reflect EH&S
performance and CSR commitments.
MEETING SARBANES-OXLEY
The Sarbanes-Oxley Act, enacted by U.S. Congress in 2002, was
created to restore public trust in capital markets after several high profile
business scandals. As a result of Sarbanes-Oxley, the U.S. Securities
and Exchange Commission and the stock exchanges have established
new rules that govern how boards and committees are structured to
carry out governance disclosures, company processes and internal
control systems.
In 2004 Enbridge carried out various activities to ensure
Enbridge Inc. and our U.S. businesses comply with Sarbanes-Oxley.
In ensuring compliance, Enbridge's CEO and Chief Financial
Officer sign certificates attesting to the fair representation of the
company's financial position. Under the new rules, the company
met Sarbanes-Oxley's requirement for effective internal control over
financial reporting under Sarbanes-Oxley for 2004, and will do so for
2007 under proposed new Canadian rules.
In 2004, we spent significant management resources (24,000
internal audit hours) and financial resources ($6 million) to verify
compliance, and will continue these initiatives in the future to provide
investors with assurance that our corporate reporting is accurate and
complete. We have also introduced a "whistle-blower" hotline, managed
by an independent third-party service provider, to give employees
the opportunity to come forward confidentially with concerns about
internal accounting or auditing matters.
RATINGS FOR CORPORATE GOVERNANCE
Our corporate governance practices have been evaluated and rated by
several corporate governance organizations and business publications.
For example, in 2004, GovernanceMetrics International (GMI),
a corporate governance research and ratings agency, rated Enbridge
9.5 out of a possible 10, in a survey of 2,100 companies. In a letter to
Enbridge, Gavin Anderson, GMI President and CEO, stated: "GMI
considers all companies that score nine or higher well above average
in their governance profiles. Your rating places Enbridge Inc. in the
top 7% of 2,121 companies we reviewed on this occasion." To rate the
different companies, GMI considered a broad range of factors: board
accountability, financial disclosure and internal controls, executive
compensation, shareholder rights, ownership base, takeover provisions,
plus corporate behavior and social responsibility.
Also, Canadian Business Magazine in its July-August issue ranked
Enbridge 4th best overall in its annual list of Canada's best-governed
companies. In October, The Globe and Mail published its annual list
of corporate governance rankings for Canadian companies, and
Enbridge tied for 5th best overall. The annual rankings rate companies
on criteria such as best practices advocated by securities regulators and
stock exchanges for such things as disclosure, board composition and
independence, and accountability to shareholders.
^ top of page |