Instilling a high level of trust and confidence in all areas of our business is of the utmost importance to Indigo. We believe that strong corporate governance practices are vital to both achieving and maintaining this level of trust and confidence with our employees, customers, and investors. Our corporate governance practices have been reviewed to ensure that they meet the Ontario Securities Commission requirements and also reflect our dedication to conducting business with the integrity our employees, customers, and investors demand.
The Board of Directors (the “Board”) is responsible for the supervision of the management of the business and affairs of the Corporation, including the approval of its overall direction. Pursuant to its mandate, the Board assesses and approves all major strategic decisions, including any shift in strategic direction, as well as acquisitions and divestitures of a material nature. To assist in discharging its duties, the Board has established two committees of the Board, namely the Audit Committee and the Human Resources, Compensation and Governance Committee. Effective July 6, 2016, the former Human Resources and Compensation Committee merged with the Corporate Governance Committee to establish the new Human Resources, Compensation and Governance Committee (the “HRCG Committee”)
The Board currently consists of ten members. Indigo endeavours to have a sufficient number of directors with the appropriate balance of skills, experience, expertise, industry knowledge and diversity to effectively carry out the Board’s mandate. The HRCG Committee regularly assesses whether the Board possesses the appropriate mix of qualifications to function effectively. Directors make recommendations of new individuals to serve on the Board for consideration by the HRCG Committee as they become aware of suitable, available candidates. The HRCG Committee considers those candidates who are highly qualified based on their professional experience, functional expertise, personal skills and qualities.
As a practice, the Board approves significant corporate communications with shareholders.
The Board currently consists of ten members. Indigo endeavours to have a sufficient number of directors with the appropriate balance of skills, experience, expertise, industry knowledge and diversity to effectively carry out the Board’s mandate. The Corporate Governance Committee regularly assesses whether the Board possesses the appropriate mix of qualifications to function effectively. Directors make recommendations of new individuals to serve on the Board for consideration by the Corporate Governance Committee as they become aware of suitable, available candidates. The Corporate Governance Committee considers those candidates who are highly qualified based on their professional experience, functional expertise, personal skills and qualities.
The HRCG Committee regularly assesses the composition of the Board, including director tenure. This evaluation enables the HRCG Committee to solicit feedback regarding the effectiveness of the Board, whether Board members have the appropriate skills and expertise required, and whether mandatory term limits for directors should be adopted. The Board has not adopted term limits for its directors as it feels that setting a term limit may force certain directors possessing the necessary experience, expertise and industry knowledge to not stand for re-election, depriving the Board of such acquired wisdom and skills.
Indigo has not adopted a written policy relating to the identification and nomination of women on the Board. The HRCG reviews and assesses Board composition and oversees the review of Board effectiveness. Board candidates are considered based on merit, in the context of skills, qualifications, experience and knowledge required for an effective board, with due regard to the benefits of diversity. The Board recognizes the benefits of diversity among its members, including diversity of experience, viewpoints, gender, etc. A specific target or quota of women on the Board has not been adopted at this time. Currently, two of ten Indigo directors (or 20%) are women.
The Corporation has not adopted a specific target or quota of women in executive officer positions. Currently, four of ten executive officers (or 40%) are women. Indigo believes that hiring and retaining executive officers should be primarily based on individual merits, with consideration given to gender diversity. Management feels that gender diversity has always been a significant part of the corporate culture at Indigo, which is one of the few Canadian public companies with a female Chair of the Board and Chief Executive Officer.
A number of Indigo’s directors sit on the boards of other reporting issuers. For each such director, the following table lists the name of the reporting issuer on whose board of directors the director currently serves.
SmartREIT (formally Calloway Real Estate Investment Trust) (since 2005)
Anne Marie O’Donovan
Onex Corporation (since 2003)
Onex Corporation (since 1987)
As stipulated in its Mandate, the Board is comprised of a majority of “independent directors” as defined by National Instrument 52-110 - Audit Committees (“NI 52-110”). Of its members, Ms. O’Donovan, and Messrs. Clegg, Deitcher, Goldhar, Grosfield, Haft, and Kirby are considered by the Board to be “independent directors”. Three members of the Board are non-independent within the meaning of the NI 52-110, namely Ms. Reisman being a member of management, Mr. Schwartz being Ms. Reisman’s spouse, and Mr. Silver being a former Indigo employee who is currently the Managing Partner of Trilogy Growth, a partnership with Trilogy Retail Enterprises L.P., the majority shareholder of Indigo.
The Board believes that these seven independent directors are free from any interests in or relationships with the significant shareholder or any of its affiliates. The Board also believes that these independent directors as members of the Board, including an independent lead director, fairly reflect the investment in Indigo by minority shareholders.
Indigo is controlled by Trilogy which, directly or indirectly, holds approximately 50% of the Corporation’s outstanding Shares and is a “significant security holder” within the meaning of National Instrument 58-101 – Disclosure of Corporate Governance Practices. Mr. Schwartz controls Trilogy.
Ms. Reisman is Chair of the Board and Chief Executive Officer of Indigo. In the view of the Board, the fact that Ms. Reisman occupies both offices does not impair the ability of the Board to act independently of management. The Board has reached this conclusion for the following reasons:
The Board has also adopted the following governance practices:
Meetings of exclusively independent directors may be held if such a meeting is deemed necessary to allow for open and candid discussion among the independent directors. It is the general practice for the full Board to meet without management, but with the Chief Executive Officer present, following all regularly scheduled in-person Board meetings. Four such Board meetings were held in fiscal 2016.
All Committees of the Board are comprised solely of independent directors. In fiscal 2016, there were a total of 14 meetings of independent directors meeting in their capacity as Audit, Human Resources and Compensation, and Corporate Governance Committee members. The Committee members meet in camera, without the presence of management, when necessary, at the conclusion of the Committee meeting. The Board feels that such regularly scheduled Committee meetings allow for candid discussion among independent directors.
A formal position description for the office of the Chair and Chief Executive Officer has been developed and approved by the Board. The Board has also approved formal corporate objectives which the Chief Executive Officer is responsible for achieving. The Board, the HRCG and the Chief Executive Officer engage in regular ongoing dialogue regarding the performance of the senior management team in achieving Indigo’s strategic objectives as recommended by management and approved by the Board.
The Board has two standing Committees, namely the Audit Committee and the Human Resources, Compensation and Governance Committee. . As mentioned earlier, the former Human Resources and Compensation Committee and the Corporate Governance Committee merged into the new HRGC Committee effective July 6, 2016. Each committee has a formal mandate outlining its responsibilities and its obligations to report its recommendations and decisions to the Board, as well as a written position description of each committee chair.
The Audit Committee is comprised of three Outside Directors, all of whom are independent. The Audit Committee is responsible for the oversight of Indigo’s internal accounting and control systems. It reviews the financial statements, annual and special meeting materials and other public disclosure documents of Indigo and makes recommendations to the Board before such statements, materials and documents are approved by the Board. The Audit Committee communicates directly with Indigo’s auditors in order to discuss audit and related matters whenever appropriate.
The HRCG Committee is comprised of four Outside Directors, all of whom are independent. The HRGC Committee has been entrusted by the Board with the responsibility of reviewing and making recommendations to the Board regarding compensation policies and practices. Specifically, the HRGC Committee’s charter provides that the Committee shall, among other things,: obtain appropriate information about compensation policies and payments by Canadian companies, and as deemed relevant, U.S.-based companies, of a comparable size to Indigo; establish objectives, evaluate performance, recommend compensation, and develop a process for succession planning; recommend overall compensation philosophy and quantum and design of all compensation arrangements, review and approve appointments, promotions, terminations of executive management; and recommend payouts under short- and long-term incentive plans subject to Board approval. The Board has delegated the approval of stock option grants to the HRCG Committee. In addition to the above, the new HRCG Committee is responsible for assisting the Board in its oversight of Indigo’s corporate governance practices and making recommendations with respect to Board and Committee membership. The HRCG Committee annually reviews Board committee memberships and chair appointments, recommending such appointments to the Board, with consideration for each director’s competencies and the time commitment involved. The HRCG Committee regularly performs an assessment of the Board, its Committees and its members through the use of an annual questionnaire of Board members on corporate governance matters and the effectiveness of the Board. Annual reviews of the Board mandate, Committee charters and position descriptions are also performed by the HRCG Committee. The HRCG Committee is responsible for establishing qualifications for new directors, and evaluating proposed directors against this criteria. Director candidates are selected and recommended by the HRCG Committee based on the candidate’s availability, expertise, experience, competencies and skills as required by the Board. The HRCG Committee is also responsible for the oversight of new director orientation and continuing education for all Board members. New Board members are provided with an information package of all relevant governance material and continuing education for Board members is provided with informative material being sent to the Board in advance of Board meetings and regular business update presentations from key business units. These educational sessions, which coincide with regular Board meetings, cover one or more aspects of the business, and typically follow an informal presentation and open discussion format.
Each Committees has the authority to engage, or to request that management engage, outside advisors at the Corporation’s expense. The Board would also consider any such request by an individual member of the Board on its merits at the time it was made
The Corporation’s code of conduct (the “Code”) reflects its high standards in ethical business conduct and is applicable to all directors and employees of Indigo. A copy of the Code is available in the Corporate Governance Policies section of the Indigo web site. The Corporation has also adopted a whistleblower policy pursuant to which directors, officers and employees are encouraged to report violations of the Code. Employee hotlines have also been established to enable employees to seek support and to report violations of the Code. The Corporation provides annual training with respect to ethical and compliance issues and ensures that each director and employee annually reviews and acknowledges, in writing, their understanding and acceptance of the Code. The Board has concluded that such measures are appropriate and sufficient to ensure compliance with the Code.
The Board encourages and expects directors to disclose any perceived conflicts and to abstain from voting on any such matters.
Indigo endeavours to keep all shareholders well informed as to its financial performance, primarily by means of its annual and quarterly reports.
Upon request, Indigo will provide you with a copy of: (i) its current Annual Information Form; (ii) the comparative financial statements for its most recently completed financial year together with the accompanying auditors’ report and related management’s discussion and analysis (“MD&A”); and (iii) its interim financial statements and related MD&A for any subsequent fiscal periods, provided that Indigo may require payment of a reasonable charge if the request is made by a person who is not an Indigo shareholder.
With the approval of the Board, management has appointed Ms. Heather Reisman, Indigo’s Chief Executive Officer, as the individual responsible for receiving shareholder inquiries and dealing with shareholder concerns. While being guided by regulatory requirements and Indigo’s policies with respect to confidentiality and disclosure, Ms. Reisman is available for interviews by stakeholders, including analysts, the media, and investors. Ms. Reisman endeavours to respond promptly and appropriately to all such requests and/or inquiries.
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