GWO |

 

Corporate governance

Corporate governance practices

Great-West Lifeco believes in the importance of good corporate governance and the central role played by Directors in the governance process. Great-West Lifeco believes that sound corporate governance is essential to the well being of Great-West Lifeco and its shareholders.

Great-West Lifeco is an international financial services holding company with interests in life insurance, health insurance, asset management, investment and retirement savings and reinsurance businesses.

Great-West Lifeco has operations in Canada and internationally through its subsidiaries:

  • The Great-West Life Assurance Company (“Great-West Life”)
  • London Life Insurance Company (“London Life”)
  • The Canada Life Assurance Company (“Canada Life”)
  • Great-West Life & Annuity Insurance Company (“Great-West Financial”)
  • Putnam Investments, LLC (“Putnam”)

Corporate governance practices are aligned between Great-West Lifeco and Great-West Life, London Life, Canada Life and Great-West Financial. All of the directors of Great-West Lifeco are also directors of Great-West Life, London Life and Canada Life and most of the directors of Great-West Financial are also directors of Great-West Lifeco.

Each of Great-West Life, London Life, Canada Life and Great-West Financial has adopted essentially the same Board and Committee mandates and other governance structures, processes and practices as Great-West Lifeco, and the Board of Great-West Lifeco monitors whether the mandates and other governance structures, processes and practices have been implemented and/or followed by these subsidiaries.

In 2005, the Canadian Securities Administrators (the "CSA") adopted National Policy 58-201 - Corporate Governance Guidelines (the "Policy") which sets forth a number of suggested guidelines on corporate governance practices (the "CSA Guidelines"). Under the Policy, issuers are encouraged to consider the CSA Guidelines in developing their own corporate governance practices.

In the Board’s view, no single corporate governance model is superior or appropriate in all respects. The Board believes that Great-West Lifeco’s governance system is effective and is appropriate to its circumstances, and that there are in place appropriate structures and procedures to ensure the Board’s independence from management and to ensure that actual or potential conflicts of interest between Great-West Lifeco and any of its affiliates are dealt with appropriately.

Furthermore, any review of governance practices should include consideration of long-term returns to shareholders, as the Board believes this to be an important indicator of the effectiveness of a governance system.

Independence of directors

The CSA Guidelines provide that a director is "independent" of an issuer if he or she has no direct or indirect relationship with the issuer which could, in the view of the issuer’s board of directors, be reasonably expected to interfere with the exercise of the director’s independent judgment. The Board of Directors of Great-West Lifeco agrees with this approach to assessing director independence.

However, the CSA Guidelines go on to provide that a director is considered to have such a direct or indirect relationship with an issuer (and thus not to be independent) if, among other things, the director is, or has been within the last three years, an executive officer or an employee of the issuer’s parent corporation.

In the view of the Board, the determination of director independence should be based upon whether or not the director is independent of the issuer’s management, and whether or not the director has any other relationships with the issuer which could reasonably be expected to interfere with the exercise of the director’s independent judgment. In the Board’s view, that is a question of fact that should be determined by the issuer's board of directors on a case-by-case basis without reference to any presumptions such as those currently contained in the CSA Guidelines.

The most important function of a board of directors is to oversee management in the drive to achieve long-term shareholder returns. A financially strong and long-term oriented controlling shareholder can have a significant positive impact on a corporation’s long-term returns, benefiting all shareholders and the corporation as a whole. The benefits can include the ability to encourage and support management in the pursuit of long-term strategies and the provision of directors who are experienced and knowledgeable about the business of the corporation. In the case of Great-West Lifeco, many of these attributes are provided through a governance model which has been developed over many years, and which includes a group of directors who are also officers of its controlling shareholder. The full-time job of a number of these directors is to focus on and become knowledgeable about the affairs of the controlling shareholder’s subsidiaries, such as Great-West Lifeco. They have no other relationship with Great-West Lifeco other than as directors and shareholders.

The effect of the CSA’s ‘deeming provision’ regarding director independence, if followed, would be to deny Great-West Lifeco and all of its shareholders the benefit of this governance model and to prevent the controlling shareholder from participating fully in the oversight function of Great-West Lifeco.

Any concerns which may exist in a controlled company situation about conflicts of interest or self-dealing should, in the view of the Board, be resolved directly through a committee of directors who are independent of the controlling shareholder. The governance model at Great-West Lifeco includes such a committee, the Conduct Review Committee, which is discussed below in the section entitled ‘Resolution of Conflicts’.

Additional information relating to the Board, the Board Committees and the Chair of Great-West Lifeco can be found in the section entitled “Corporate Governance” in Great-West Lifeco's most recent Management Proxy Circular (PDF).

Resolution of conflicts

It is the duty of the Board to supervise the management of the business and affairs of Great-West Lifeco for the benefit of all shareholders. In discharging this duty, the Board identifies and resolves any conflicts that might arise between the interests of Great-West Lifeco and the interests of Power Financial Corporation (“Power Financial”) and its affiliates.

It has been a long-standing policy of Great-West Lifeco to have transactions between Great-West Lifeco and Power Financial (or its affiliates) reviewed by Directors who are neither officers nor employees of Power Financial or any of its affiliates. Great-West Lifeco is a holding company, and to the extent that transactions that may present a conflict arise they are more likely to arise at Great-West Life, London Life, Canada Life or Great-West Financial.

Each of Great-West Life, London Life and Canada Life is a regulated financial institution that is required by law to have a conduct review committee that establishes procedures for the review of proposed related party transactions to ensure that any such transactions are on terms and conditions at least as favourable to those companies as market terms and conditions. These conduct review committees are composed of directors who are independent of the management of Great-West Life, London Life and Canada Life and who are neither officers nor employees of Power Financial or any of its affiliates.

Great-West Lifeco and Great-West Financial have also established their own Conduct Review Committees composed entirely of Directors who are independent of management and who are neither officers nor employees of Power Financial or any of its affiliates. Great-West Lifeco’s and Great-West Financial’s Conduct Review Committees review proposed transactions with related parties and approve only those transactions that they deem appropriate.

Board of directors and board committees

The mandate of the Board, which it discharges directly or through one of the seven Board Committees, is to supervise the management of the business and affairs of Great-West Lifeco, and includes responsibility for strategic planning, review of operations and the risks associated with Great-West Lifeco’s diverse businesses, disclosure policies, oversight of financial reporting and other internal controls, corporate governance, director orientation and education, senior management compensation and oversight, and Director compensation and assessment.

Executive Committee

The primary mandate of the Executive Committee is, on an ongoing basis, to approve strategic goals and objectives for Great-West Lifeco, to review and approve, and to monitor the implementation of, Great-West Lifeco’s annual business, financial and capital plans, to review the risks associated with Great-West Lifeco’s diverse businesses, to approve disclosure policies, and to supervise the management of the business and affairs of Great-West Lifeco when the Board is not in session.

  • R. Jeffrey Orr, Chair
  • Marcel R. Coutu
  • André Desmarais
  • Paul Desmarais, Jr.
  • Gary A. Doer
  • Claude Généreux
  • J. David A. Jackson
  • Paul A. Mahon
  • Susan J. McArthur
  • Rima Qureshi
  • Henri-Paul Rousseau
  • T. Timothy Ryan
  • Jerome J. Selitto
  • James M. Singh
  • Emőke J.E. Szathmáry
  • Gregory D. Tretiak
  • Siim A. Vanaselja
  • Brian E. Walsh

Audit Committee

The primary mandate of the Audit Committee is to review the financial statements of Great-West Lifeco and public disclosure documents containing financial information and to report on such review to the Board, to be satisfied that adequate procedures are in place for the review of Great-West Lifeco’s public disclosure documents that contain financial information and to oversee the work and review the independence of the external auditor. The mandate also includes the responsibility to recommend to the Board the appointment and/or removal of the Chief Internal Auditor, the Chief Financial Officer and the Chief Compliance Officer, to review and approve their mandates, to assess their performance, to review the independence and assess the effectiveness of each of the oversight functions and to review and approve their organizational structures and resources. The Audit Committee is also responsible for reviewing, evaluating and approving the internal control procedures that are implemented and maintained by management. The Audit Committee is required to meet, at least annually, with the Risk Committee.

  • Raymond Royer, Chair
  • Chaviva M. Hošek
  • James M. Singh
  • Siim A. Vanaselja

Risk Committee

The primary mandate of the Risk Committee is to recommend to the Board the appointment and/or removal of the Chief Risk Officer and to approve the mandate of the Chief Risk Officer, to assess the performance of the Chief Risk Officer and the effectiveness of the risk management oversight function, to  review and approve the organizational structure and resources of the risk management oversight function, to review the Enterprise Risk Management Policy and Risk Appetite Framework, to review and approve policies and controls to identify and manage Great-West Lifeco’s principal risks, to review compliance with, and the effectiveness of, Great-West Lifeco’s Enterprise Risk Management Policy and Risk Appetite Framework, risk management policies and controls, and to review the risk impact of business strategies, capital plans, financial plans and new business initiatives. The Risk Committee is required to meet, at least annually, with the Audit Committee and with Great-West Lifeco’s Chief Internal Auditor.

  • Gregory D. Tretiak, Chair
  • Marcel R. Coutu
  • André Desmarais
  • Paul Desmarais, Jr.
  • Gary A. Doer
  • Claude Généreux
  • J. David A. Jackson
  • Susan J. McArthur
  • R. Jeffrey Orr
  • Rima Qureshi
  • Henri-Paul Rousseau
  • T. Timothy Ryan
  • Jerome J. Selitto
  • James M. Singh
  • Siim A. Vanaselja
  • Brian E. Walsh

Human Resources Committee

The primary mandate of the Human Resources Committee is to support the Board in its oversight of compensation, talent management and succession planning. This includes responsibility to approve compensation policies, to review the designs of major compensation programs, to approve compensation arrangements for senior executives of Great-West Lifeco and to recommend to the Board compensation arrangements for the Directors and for the President and Chief Executive Officer. The mandate also includes the responsibility to review succession plans for the President and Chief Executive Officer and other senior executives, to review talent management programs and initiatives and to review the leadership capabilities required to support the advancement of Great-West Lifeco’s strategic objectives.

  • Claude Généreux, Chair
  • Marcel R. Coutu
  • André Desmarais
  • Paul Desmarais, Jr.
  • J. David A. Jackson
  • Susan J. McArthur
  • R. Jeffrey Orr
  • T. Timothy Ryan
  • Brian E. Walsh

Governance and Nominating Committee

The primary mandate of the Governance and Nominating Committee is to oversee Great-West Lifeco’s approach to governance matters, to recommend to the Board effective corporate governance policies and processes, to assess the effectiveness of the Board of Directors, of Committees of the Board and of the Directors, and to recommend to the Board candidates for election as directors and candidates for appointment to Board Committees.

  • R. Jeffrey Orr, Chair
  • Marcel R. Coutu
  • André Desmarais
  • Paul Desmarais, Jr.
  • J. David A. Jackson
  • T. Timothy Ryan
  • Brian E. Walsh

Conduct Review Committee

The primary mandate of the Conduct Review Committee is to require management to establish satisfactory procedures for the consideration and approval of transactions with related parties and to review and, if deemed appropriate, to approve related party transactions, and to recommend to the Board a code of business conduct and ethics applicable to directors, officers and employees of Great-West Lifeco.

  • Chaviva M. Hošek, Chair
  • Jerome J. Selitto
  • James M. Singh

Investment Committee

The primary mandate of the Investment Committee is to oversee Great-West Lifeco’s global investment strategy and activities, including reviewing and approving Great-West Lifeco’s investment policy and related investment procedures, guidelines and limits. It also monitors Great-West Lifeco’s compliance with the investment policy and ensures that it aligns with Great-West Lifeco’s Risk Appetite Framework. The mandate also includes reviewing and approving Great-West Lifeco’s annual investment plan and monitoring Great-West Lifeco’s consolidated performance and results against the annual investment plan, reviewing and approving the authority, mandate and effectiveness of Great-West Lifeco's Chief Investment Officer, and reviewing emerging risks, market trends and performance, investment regulatory issues and any other matters relevant to the oversight of the Great-West Lifeco’s global investment function.

  • R. Jeffrey Orr, Chair
  • Marcel R. Coutu
  • André Desmarais
  • Paul Desmarais, Jr.
  • Gary A. Doer
  • Claude Généreux
  • J. David A. Jackson
  • Paul A. Mahon
  • Susan J. McArthur
  • Rima Qureshi
  • Henri-Paul Rousseau
  • Timothy Ryan
  • Jerome J. Selitto
  • James M. Singh
  • Gregory D. Tretiak
  • Siim A. Vanaselja
  • Brian E. Walsh

Subsidiary Boards and Board committees

The Great-West Life, London Life, Canada Life and Great-West Financial Boards and Committees have similar mandates except for their Investment Committees whose primary mandates are to review the investment of their respective funds and to monitor adherence to the investing and lending policies, standards, procedures and guidelines that have been approved by the Boards or by the appropriate Board Committees of those companies.

Director affiliations and attendance

All of the Directors of Great-West Lifeco are also Directors of Great-West Life, London Life and Canada Life.

Information as to other public company boards on which Great-West Lifeco Directors serve, as well as their current attendance records for all Board and Committee meetings, can be found in Great-West Lifeco’s most recent Management Proxy Circular (PDF).

Chair and CEO position descriptions

The Board has approved written position descriptions for the Chair of the Board and for the Chair of each of the Board Committees.

In general terms, the Chair of the Board and the Chairs of the Board Committees are responsible for:

  • Ensuring that the Board or Committee is able to fulfill its duties and responsibilities in an effective manner
  • Planning and organizing the activities of the Board or of the Committee
  • Ensuring that delegated Committee functions are carried out and reported as necessary
  • Facilitating effective interaction with management
  • Engaging outside advisors where necessary

The Board has approved a written position description for the President and Chief Executive Officer (the “CEO”). In general terms the CEO is responsible for:

  • Managing the strategic and operational performance of Great-West Lifeco in accordance with the goals, policies and objectives set from time to time by the Board, including developing for the Board’s approval Great-West Lifeco’s strategic plans and initiatives and developing sound operating strategies to implement such plans
  • Managing the day-to-day operations of Great-West Lifeco
  • Developing and implementing policies to identify and manage the risks inherent in Great-West Lifeco’s businesses
  • Creating an operational environment that is performance driven
  • Assisting the Board with succession planning
  • Representing Great-West Lifeco to its major stakeholders

Orientation and continuing education

The Governance and Nominating Committee is responsible for Director orientation and education. All newly elected Directors are provided with a comprehensive orientation as to the nature and operation of the business and affairs of Great-West Lifeco and as to the role of the Board and its Committees. New Directors are provided with information concerning:

  • The structure of the Board and its Committees, including Charters and position descriptions
  • The legal framework of the organization, including By-Laws and Articles of Incorporation
  • Information on the management organization structure
  • Current strategic, financial and capital plans
  • The responsibilities of the oversight functions (Compliance, Finance, Internal Audit and Risk)
  • Board-approved policies, including the Code of Business Conduct and Ethics and the Insider Trading Policy
  • Public disclosure documents including the Annual Report, Management Proxy Circular and Annual Information Form

In order to orient new Directors as to the nature and operation of the Great West Lifeco’s business, they are also given the opportunity to meet with the Chair of the Board, the Chairs of Board Committees, the Chief Executive Officer and each of the Chief Operating Officers, members of the Corporation’s executive management team and members of the executive management teams of the Corporation’s major operating subsidiaries to discuss their businesses and activities.

The orientation and continuing education program is designed to assist the Directors in fully understanding the nature and operation of Great-West Lifeco’s business (and the businesses of its major operating subsidiaries), the role of the Board and its Committees and the contributions that individual Directors are expected to make.

Great-West Lifeco’s continuing education program is designed to ensure that Directors have opportunities to update their knowledge of regulatory developments, business initiatives, risk and risk management, new products and any matters affecting Great-West Lifeco’s operations.

To enhance the effectiveness of the Board, Directors participate in ongoing continuing education, which includes the following:

  • Regulatory development updates on governance matters and emerging governance trends globally.
  • At Board and Committee meetings Directors receive presentations on, among other matters, Great-West Lifeco’s risk appetite framework and risk management, key business segments, International Financial Reporting Standards, capital management, technology initiatives and cyber security, oversight function effectiveness, reinsurance, and change management.
  • For prompt dissemination of information to Directors, Great-West Lifeco maintains a secure electronic delivery system that includes a comprehensive Resource Centre. The Resource Centre contains corporate governance documents including By-Laws, Articles of Incorporation, Board and Committee meeting minutes, Board and Committee Charters and position descriptions, an overview of principal business units, Board approved policies and publications of interest.
  • A sub-set of the Board attends education sessions in the United Kingdom and Ireland.

Strategic planning

The Board sets the overall strategic direction, oversees progress against strategy and reviews and approves strategic plans developed by management. One component of that strategic development process is an annual two-day meeting of the Board with management to review matters across the Corporation and its three divisions (Canada, U.S. and Europe & Reinsurance).

The Board regularly discusses key strategic issues, opportunities and challenges, reviews execution against the Corporation’s strategic agenda and provides guidance on priorities. The Corporation’s Risk Appetite Framework is integrated into its strategic plans and guides the development of strategy at the annual strategy session. The Board’s feedback and input are incorporated into the Corporation’s long-term strategic plan, an updated version of which is reviewed and approved by the Board annually.

Ethical business conduct

The Board has adopted a written Code of Business Conduct and Ethics (the “Code of Conduct”) that governs the conduct of Great-West Lifeco’s Directors, officers and employees. A copy of the Code of Conduct is available on the SEDAR website or you can download a printable version.

The Board oversees compliance with the Code of Conduct through Great-West Lifeco’s Chief Compliance Officer who monitors compliance with the Code of Conduct and reports to the Audit Committee on such compliance at least annually. Officers and employees must report known and suspected breaches of the Code of Conduct to their local Compliance Officer or to the Chief Compliance Officer, and Directors must report known and suspected breaches to Great-West Lifeco’s senior legal officer or to the Chair of the Board. All reported breaches and results of investigations are reported to the Audit Committee by the Chief Compliance Officer.

All Directors, officers and employees of Great-West Lifeco (and of Great-West Lifeco’s subsidiaries) are required to confirm annually their understanding of, and agreement to comply with, the Code of Conduct (which contains standards of business conduct regarding conflicts of interest), and pursuant to the Code of Conduct all employees must disclose any actual or potential conflicts of interest to their local Compliance Officer or to the Chief Compliance Officer and Directors must disclose any actual or potential conflicts to Great-West Lifeco’s senior legal officer or the Chair of the Board.