CORPORATE FINANCE ESSAY

EVALUATION OF THE CORPORATE GOVERNANCE OF

CANADIAN OIL SANDS

SKEMA BUSINESS SCHOOL

M1 PGE
CORPORATE FINANCE

RITOIT Kvin
RIVOLLIER Roxane
ROQAI- CHAOUI Karim
SCHERTENLEIB Laetitia

EVALUATION OF THE CORPORATE GOVERNANCE OF

Introduction
A few words about the company: In which business is the Company?
Canadian Oil Sands (or COS) is a Canadian company founded in 1964 which started its
operations by producing its first barrel of oil via Syncrudes in 1978. The Company has been
investing more and more money into the Syncrude joint venture in order to own as much
interest of Syncrudes production as possible.
Concretely, Syncrudes produces high quality light and low sulphur crude oil. Today,
Syncrudes has a capacity of producing 350,000 barrels of oil per day; which makes
Syncrudes as one of the biggest exploitation around the world. Despite the increasing levels
of production, the process of extraction and processing of oil sands can still be considered to
be in its infancy; with new technologies and stakeholders oversight providing an ever-lower
environmental footprint. (cf Graph 1).
Consequently, COS managed to own the biggest part of Syncrudes project over the years
and with the increasing investment into the joint venture, and it actually owns no less than
36,74% of the venture. (cf Graph 2)
Moreover, it can be notified that COS holds some interests of a gas venture in the arctic as
well, but its primary business stands into Syncrude company interests in Canada.
At a first sight, we may think that investing into COS could be a great deal, but any cautious
investor would do a corporate governance analysis before doing anything.

What are their

main Rights and
Duties?

Business
Environement

What are their

main Rights and
Duties?

Executive
Managers

What are the main

investors? Public
or private
investors?

Board of
directors

Shareholders

Through this report, the Company will be evaluated at its different levels so that an insight of
the company will be demonstrated. Finally, this insight of the company will gives us an idea
of
what
could
be
the
potential
growth
of
this
stock.
What are the
actors, and factors
that may influence
the company? And
how may it infer
and interfere with
it ?

We are going to look up at the situation of the companys stakeholders in four different
parts:
PART I An analysis of the shareholder structure / Shareholders, Debt holders
PART II An analysis of the board independence / Board of directors,
PART III A study of the management compensation / Executive compensation
PART IV Comments on the business environment
1

PART I An analysis of the shareholder structure / Shareholders, Debt holders

A The shareholder statistics : What kind of investors?
The company has a market capitalisation of 7,05 billion Canadian Dollars. It is a big cap.
Moreover, according to the website finance.yahoo, its actual value may be of 8,79 billion.
This may indicate that the stock could grow significantly if the conditions will be fulfilled.
Furthermore, as we may see on the graph on the side,
almost 20% of the activity is financed by debt, and
shareholders are financing the rest, which represents
almost 70% of the company capitalisation.
We can see that the Debt to Equity ratio of the company
(0,4049) accounts for 1,62 of the Debt to equity ratio of
the industry (0,6458). The fact that the company has a
low ratio of debt to equity may imply two things:
- The company has now a less aggressive mentality regarding its way of financing its
activity. So the company is probably more balanced. Lower debt means lower interests
to pay off to the bank.
- The shareholders are more likely to get a bigger slice of the profits made by the company
(ie ROE and ROI).
On the table beside, we can see that there are as
many Institutions as Mutual funds and no Insiders.
First of all, the company doesnt have any director
or senior of the company (insiders) that are
financing the company, because insider trading is
always restricted, and in this case totally
prohibited. Insider trading may lead to very big
sentence from jurisdictions and the SEC.
However, governments and regulators allow
mutual funds (trust) and institutional funds to buy
shares and finance companies like COS.
Before going any further, lets have a look at the table on the
left side. This table demonstrates that most shareholders are
willing to invest in the project in the long run (Long term
investment: 5 to 10 years), which is a great plan because it
gives stability and balance to the company financial funds.
The fact that the institutions which are likely to make
acknowledged investment hold the venture is a sign of
financial health position for the company.
Even though there is no guarantee for the stock price to
increase, once mutual funds and institutional have built a
strong position in a firm, their next move is to try to drive the
value of the stock up. Financial institutional and investors are
regarded as the big fish and have a big influence on the market. It is then, a mark of
insurance for the company that institutions and mutual funds are holding the stock.
2

B What problem is raised by the nationality of the investors?

Among the main investors, we can mention Franklin funds that held 4,12% as Mutual funds
or 4,67% as Institutional shareholders. These two investors are actually American.
The fact that COS is an oil exploitation company makes it very particular. Actually, the oil
industry financing access to foreign funds in Canada has always been controversial; and
lately, Bloomberg researchers reported that foreigners owned about 72% of the company.
This is considered as an issue for the government considering that energy is an essential
resource for any economic activity.
The increase in foreign funds into COS capital may have helped the company to grow and
make some investment, but for some people, it is a mistake to let foreigners buy this kind of
National security as it is a vital one. However, without this money, would the company have
been able to grow and achieve all the projects they have started? We may ask ourselves
We can still understand that it might be a growing concern for Canadian that most of capital
and voting rights are actually held by American (see recapitulative table of ownership
structure), who are as well the main consumers of their products. In other words, the fact
that the stocks/bonds are issued with voting rights is not appealing for the Canadian
government, which doesnt want foreigners to decide the faith of a national resource as
important as this one.
Finally, the voting rights are relatively diluted among shareholders (even if we can point out
that Franklin advising holds more than 8% of the voting rights.)
C Shareholders Interest
As we have seen in the last paragraph, when investors hold a part of the company, they may
hold voting rights, and that may be of interest for shareholders (or the country in which the
investor is living, particularly if the country that financed the fund and hold itself the fund
rights: cf Oil Sands Deals dive as state firms scrutinized - Sources)
However, the voting rights are not the only (and primarily) things that most investors are
(necessarily) looking for. Profitability and finding promising securities is something
preponderant.
So, lets have a look to very important financial ratios and data that reveal financial health of
the stock:

First of all, we can see that investors dont want to pay too much for one dollar of companys
earning compared with the industrys one. Either the investors dont see any future growth
(not a growth stock) of the company, the stock price or the company might be undervalued.

Here considering the growth rate of sales, we can imagine that investors are not optimistic
about the future of the company price, and that might explain the low P/E ratio.


The Price to sales (Sales = Number of Sales*Price sales) ratio is above the one of the
industry. It may infer that the company is a bit overvalued compared with the industry
valuation. But we have to consider that there is a quantity and a price effect. Then, a big
profit margin could compensate the negative effect of number of sales.

The P/B of the company is way higher than the one of the industry. It goes as well in the
sense of overvaluation. But it may also be interpreted as a sign that investors have all
confidence in the company and particularly in the fact that it cant go to bankruptcy.

Here is one reason why investors buy the stock. The net profit margin of the company is
almost 5 times bigger than the one of the industry. This is the margin that the company gets
by selling one single unity of its product. This indicator of profitability is a very important one
for businesses that want to get sustainable competitive advantages.
To sum up, the company has a low P/E that may actually indicates that the company is just
not a growth stock. So, is the valuation of the stock coming from the dividend policy (other
part of shareholder return)? We can actually see that COS has constantly increases its
dividend over the years.

We can see that the companys dividend yield is way higher than the one of the industry.
This comes to corroborate the theory that the stock has become a yield stock (cf graph3 and
Graph 4). However, the negative growth rate of the dividend might be a threat for these
kinds of stocks.
Conclusion:
We can highlight that the company uses the investors money greatly. The different return
indicators (ROA compared with ROI and ROE: cf appendices) are all indicating that the
company is using money of investors in an efficient way so that the company can pay back
investors gratefully (see table of dividend policy).
It can be referred as a virtuous circle: Shareholders bring money to the firm The firm
gives them money through an efficient business model reinvestment (as they are long
term investor) The firm improves efficiency it brings more money on the long run,
and so fourth
Even though, the industry has been having trouble lately with the decrease of the oil price
on the market, still the results of COS have been among the strongest of the industry.

PART II Analysis of the Board of directors

A Presentation of the Board
The Board of Directors is elected annually and counts three to fifteen directors. There are
currently eleven directors involved on the Board which has the three following committees: Audit committee; - Reserves, Marketing Operations and Environmental, - Health and Safety
Committee; and - Corporate Governance and Compensation (CGC) committee.
The company encourages diversity (such as different ages and genders) concerning the
members of the Board. Indeed, one female board member called Sarah E.Raiss is involved in
Canadian Oil Sandss Board of Directors and ages are comprised between 46 (Ryan M. Kubik)
and 74 (C.E. (Chuck) Shultz).
The primary role of the Board is to create shareholder value, protect and reinforce the value
of the Corporations assets by making sure that the business operations are conducted with
integrity and honesty, while developing long-term profitability.
For more details, see the list of the Board members including their characteristics.
B A majority of outsiders
After analyzing the activities of the Board members (see the appendix), we can deduce that
directors are all outsiders because they are not involved with day-to-day operations, and
they do not have direct relationships with the firm. Indeed, the directors are involved in
activities of other companies than the one of Canadian Oil Sands.
However, Ryan M. Kubik proves to be the Chief Executive Officer of the company in addition
to be a corporate director of this one. Consequently, Ryan M. Kubik differentiates himself
from the other directors because he is not an outsider but an insider.
C Main characteristics of the Board of Directors
a) An independent Board
As mentioned before, all the directors with the exception of Ryan M.Kubik are outsiders
because they do not have relationships with the firm and they are uninvolved with day-today operations. Consequently, the Board is independent from the firm except Ryan M.Kubik.
Moreover, the Board of Directors consists of a limited number of former executives. Only
two directors were former executives of the company who are Donald J. Lowry (Executive
advisor until July 2013) and Brant Sangster (Senior executive until 2006.) Consequently, the
majority of the Board members can be regarded as independent.
Finally, using honesty and integrity to conduct the business operations is one part of the role
of the Board. The Board members also have to pay attention to how they conduct the
business operations; they have to act with honesty. As a result, we can conclude acting with
honesty is very important for the directors and that they are independent thus.
b) A competent Board
Several directors were a Chief Executive Officer of a similar sized company such as Donald J.
Lowry (CEO of EPCOR Utilities Inc. until 2013), Gerald W. Grandey (CEO of Cameco
Corporation until June 2011), and John K.Read (CEO of Colt Engineering Corporation).
5

Consequently, they can be considered as competent because they had huge responsibilities
in other companies.
Furthermore, many of them have experience in Finance, Accounting and Audit; which
demonstrates their competencies as well. For instance, Ian A. Bourne is the Director of the
Canadian Public Accountability Board and Ryan M. Kubik holds senior finance positions with
EnCana Corporation and was the Chief Financial Officer of Canadian Oil Sands in 2007.
The directors can also be regarded as competent because they have a good communication
with the shareholders of the firm. Indeed, many communication ways can be used such as a
person holding a meeting, videoconferences, the telephone or other communication
facilities, which enable everyone participating to hear each other. Furthermore, the directors
provide accurate and efficient information to all the shareholders in time.
Finally, themselves provide the directors a self-assessment matrix, which demonstrates their
competences that they evaluate.
c) An available Board
Despite many directors sit on another boards like Gerald W. Grandey (Member on the
boards of Potash Corporation of Saskatchewan and Sandspring Resources Ltd, and the
member of the National Board of the Institute of Corporate Directors) for example, all the
directors attended at least 75% of the meetings in 2013 which is a requirement established
in the company through a director attendance policy. To be more precise, they attended at
least 90% of the Board and Board committee meetings during this year, which is a good
attendance score compared to the requirement of attending at least 75% of the firms
meetings. They can be regarded as available for the Board meetings thus in spite of their
attendance for another companies Boards.
Moreover, directors meet six times a year at the occasion of regularly scheduled meetings
and special Board meetings can be implemented when necessary. For instance, the directors
attended additional meetings in 2013, which demonstrates the availability and involvement
of the directors in the company.
Consequently, the directors of Canadian Oil Sandss company can be considered as available.
d) A responsible Board for the shareholders equity stake
The independent directors of the Board have responsibilities concerning the equity stake of
the shareholders because they are required to hold $465,000 in Common Shares or DSUs
(which are an equivalent of the common shares) and the chairman of the Board (Donald J.
Lowry) has to hold $961,500 in these shares, accounting for three times the combined value
of the annual Board retainer and the annual Common Share purchase and, or DSU award.
Furthermore, all the directors of the Canadian Oil Sandss company currently hold the equity
units.
Conclusion
Despite a few limits such as the presence of an insider in the company and the fact that
many directors sit on another boards, the Canadian Oil Sandss Board of Directors can be
regarded as a good Board because this one consists of a majority of outsiders, is
independent, competent, available and responsible for the shareholders equity stake.
6

PART III A study of the management compensation / Executive compensation

Executive compensation is a government mechanism providing several types of
compensation such as short-term incentives (Base salary, annual incentive, short term cash
bonuses), long-term incentives (Stock options, stock awards), benefits, insurance,
pension and other non-monetary compensation. It aims at motivating managers, and
enhancing company performance.
The conflict of interest between corporate manager and corporate shareholders may rises
when managers have other objectives than maximizing the value of the equity entrusted to
them (increase the size of the group at the expense of profitability etc.). The compensention
are as well aiming at lowering the risk of conflict of interest by giving incentives to managers.
In other word, to resolve the problem of the underdiversification of managers, interest of
shareholders and executives should be aligned. For Canadian Oil sands there is a risk in the
remuneration. Indeed, the risk of created high return for his investors is that COS is
concentrated on the investment for Syncrude. Fortunately, the compensation committee of
Canadian Oil Sands is independent so there is normally no risk of manipulation of the pay by
the managers. Moreover COS demand to maintain a precise level of ownership. Canadian Oil
Sands has different pay for performance and competitiveness objectives defined through
their strategy of compensation programs in 2013 to avoid or minimize the conflict of interest
between corporate manager and corporate shareholders:
- Foster the implementation of the business strategy
- Pay for performance: Executives are rewarded when they achieve corporate and
individual goals such as operations, finances, and strategy objectives.
- Attracting, retaining and motivating the most qualified candidates: Its very
difficult to enter this market and there are several rules to respect, so to stay
competitive its important to motivate and retain talent.
- Motivate executive to create shareholders value by: rewarding the achievement
of objectives related to the individual performance in short medium and long term
and ensure that the major part of their compensation is at risk.
- Align with Shareholder interests: The firm wants that the one of the most
important goals of the executive is to focus their efforts on increasing long term
shareholder returns so to motivate them to create shareholders value.
A Components of executive compensation
Between 2013 and 2014, the named executives officers have a little bit changed (appendix
1 part III). The total executive compensation received included different components:
(Appendix 2 and appendix 3 part III)
- Fixed compensation: Base Salary, Savings plans (that replaced pension), Benefit and
perquisites such as dental and medical plan, life insurance and disability benefits, pad
family assistance program, employee paid premium for long term disability, paid
parking, paid financial counselling.
- Variable compensation: Short-term incentive (STIP), Long-term incentives
(LTIP: Stock options (annual award) and equity incentives such as Performance
Common Share Award PSUs, Restricted Share Unit Award RSUs, dividends,
bonus based on performance).

In term of compensation risk we can observe (appendix 2 part III) that the repartition
between the different members of the executive board differ. The CEO has the biggest part
of variable compensation (LTPIs 73% at risk) and the lowest fixed compensation (27%).
C.O.S. makes attention on the management risk because their activities are complex so the
process of compensation is complex too. Here the factors that determine the executive
compensation are: achievement of individual objectives for each executive member
depending on their role and responsibility and company's performance. The major part of
the compensation is variable or at risk (60% on average) because it is not guarantee and it
measures the individual ability of the managers to impact business and finance outcomes.
COS has a secure program because they dont encourage excessive risk taking through
ownership requirement and control agreements. However there are fluctuations in
commodity for stock option values, but according to the COS report, The options are
granted annually at the prevailing market price and therefore option values track the value
that Shareholders receive over time.
B - Movement over the years?
In the executive compensation appendix (appendix 3 part III) we can observe that every
member of the executive board has seen a significant increase of the salary base between
2011 and 2013. It is also the case for the other form of compensation. To reward the
executive board for the return obtained and performance achievement, the CGC committee
had taken several decisions since 2008 for the executive compensation:
- Salaries had increased for the executive board: based on the individual return but
also on the role and responsibility of each member. Moreover, COS observed the
wages of the concurrent and try to be at the same level to retain talented candidates.
- Annual bonus funding increased (STIP): through the good financial and operational
performance and individual objectives achievements. These bonuses reflected a
good evolution of the executive board effectiveness.
- Award of grant (long-term incentive) and acquisition of Performance Common
Share award: enabled the alignment of shareholders interests and executive
interests.
C For what impact on the company?
Sectors of oil and gas and mining are very competitive in terms of capital investment and
recruitment of qualified managers. Thats why the strategic policy chosen helped the firm by
recruiting qualified executives; highlight the valuation of Syncrude and petroleum products
are one of the key success factors. COS knows how to retain qualified executives and how
much important is the human capital to develop. Canadian Oil sand has made an exceptional
return performance and it attract other talented candidates. Through the participation of
COS (36,75%) in the Syncrude project, COS is today one of the most important producers of
oil in Canada.
Conclusion
COS government mechanism looks effective. Indeed, this company resolves the conflicts
interests between shareholders and executive because they manage the risk by being
proactive in their strategic plan and try to maximize the total return of COS.
8

PART IV Analysis of the business environment (PESTEL)

Every company has a specific environment in which it evolves. However, strategically, it is
always important to consider and analyse the macro-environment, and the key factors that
can influence the corporate operations. So, in this last part, we are going to raise 3 particular
points that may have a huge impact on the operations of the company. Following are three
key issues.
A Politics & Economics: OPEC and its large influence oil prices: Oil prices have hit the
lowest prices since 2009
Today more than ever, we have to consider
oil prices on macroeconomic scale.
Effectively, as we can see on the graph
beside, prices of Crude oil have fallen down
(and it is the same for other comparable
energies such as Brent and other oils).
The Oil price issues (as the Brent price) have
been everywhere on the news lately. In a
few words, the falling prices can be
explained by different reasons:
- Firstly, the over supply compared with the demand of oil has conduct prices down.
- Secondly, the OPEC organisation decided for some reasons (probably political) to keep
high the offer (cf sources Vox article).
- In parallel, demands in Europe, Asia and America have decreased because countries try
to enhance the efficiency of resources usage and particularly energy consumption.
- Finally conflict with Libya being eased, the supply of the oil producing country has
entered the market leading down oil price again.
Revenues of corporate from oil industry have been reduced too along with price being lead
down, which brings our company in a certain context where it is harder to be highly
profitable.
B Technology & Environment: How the company is actually trying to reduce its footprint?
The concerns about environment have been always linked with gas emission, and oil
production (and usage) is in the front line of the environmental sustainability issues.
Furthermore, the growth of operating in the oil sand exploitation raises concerns among
people. The company is well aware about that and try to do its best to build a sustainable
model of production by:
- Using new practices and techniques for reducing the amount of water required per
barrel (as well as increasing recycling and usage of non potable water as sources),
- Mitigating impact on lands and trying to maintain ecosystem and bio diversity,
- Working on new technologies to lower the emission of dioxide while producing oil.
Comparison with other sectors and general concern
On the graph bellow, we can see that even though oil sand exploitation produces large
amount of Greenhouse Gas (GHG), we can point out that it is not the sector that produces
the largest emission of GHG, and is actually one of the sectors that have the lowest GHG
emission (in absolute value).
9

Still, we may have concerns about the

environmental viability on the long run of
using gas and oil as main energies supplies
for our economies. No matter how well and
efficient the technology is used to produce
it, the environmental footprint is undeniable
and new and cleaner energies are waited.
Finally, we can link the environmental issues
with politics and lobbying forces. For
instance, since 2012, European emission
rules are making oil sands less and less
appealing (more costly for importing
companies) as the EU FQU (Fuel Quality Directive) has rated the Albertas oil sands dirtier
than other more conventional energies. A fight between lobbying has started.
C Socio-Laws: Increasing health problem for Indigenous living around the sites of COS
The last but definitely not the least, is about aboriginal
(and other environmentalists) contestations on
Alberta crude oil operations expansion. Many
contestations against TAR sands have arisen for years.
It has been found that the ecosystem around the areas
of exploitation (which can be seen from space) has a
huge impact on wildlife as the process implies
dejecting large amount of toxic products all around
the places. It has been found by Canadian Polls that more than 50% of Canadians believe
that the Tar sands exploitations are dangerous for people. Searchers found tumours in
fishes, as well as other physical abnormalities and deformations on wildlife all around the
areas. The impact on human living not far from extraction sites seemed to be proved: rare
and virulent cancers have affected many of the Indigenous Community members. Virulent
contestations have risen against TAR exploitations, and there are understandable reasons.
Conclusion
To summarize, COS is a relatively young company in the sector of oil sands. It has
experienced a big expansion of its production since its creation, but more importantly, it has
developed a big complex of assets on which to rely.
To develop itself and make the necessary investment, the company had to raise money, and
to bring quality investors (the long term investors), the company opted for dividend growth
(even during the crises). Furthermore, the interests of shareholders are supported by the
good performance of the board of directors, notably because they are responsible for the
shareholders equity stake. In addition, COS government is effective through their strategic
plan, their risk management and their proactivity; and constantly tries to resolve the
potential conflict of interest between shareholders and managers. So, Internally speaking
the company is experiencing what look like a virtuous.
However it has to be pointed out that there are growing and burning issues concerning oil
exploitation that make the activity risky. Among these risks we can list: - the OPEC influence
on oil prices that are then totally uncontrollable by the company, - and of course, the
environmental and health issues that are very controversial and polemical matters.
10

Appendices

PART I
Graph 1 : Production of oil sands for different ventures and companies

Graph 2 : Syncrude Ownership structure COS leadership in the venture

Ownership structure table and voting rights

11

Commentary: Lord Abbet hold almost 25% of the bonds. And we have to point out that this particular investor
is a high yield investor. So the fact that it holds a lot of the fund corroborate that the security is a yield security.

Graph 3: Annual dividend Policy summarised in a graph

12

 Dividend policy between 2011 and 2014

13

 Different ratios of returns

So lets look at the return for the firm and return for the investor:

Return on Assets (how much an investor is ready to pay for 1 dollars of assets of the
company)

Return Equity (how much profit a company generates with the money shareholders
have invested)
Correlation stock price index (S&P500)
We can see that the beta is higher than 1 so the volatility of the stock is higher than the
index volatility. When the market moves of 1%, the security moves of 1,33%. So it means
that the stock is more risky than the market. So the expected return (dividend yield+capital
gain) of the stock should be bigger of 33% compared with the index stock price.

14

PART II
Board members characteristics:

Donald J. Lowry, Chairman of the Board

Age: 62; Edmonton, Alberta, Canada, Corporate Director since 2007, Independent
President and Chief Executive Officer of EPCOR Utilities Inc. until 2013
Executive advisor until July 2013
Chairman of Capital Power Corporation in July of 2009.
Director of Hydrogenics Corporation, Melcor Real Estate Investment Trust, and Stantec Inc
30 years of industry experience in the utilities, telecommunications and power generation
sectors
Ian A. Bourne, Corporate Director
Age: 66, Calgary, Alberta, Canada, Corporate Director since 2007, Independent
Chairman of Ballard Power Systems Inc
Director of the Canada Pension Plan Investment Board
Director and Chair of SNC-Lavalin Group Inc
Director of the Canadian Public Accountability Board
Interim Chief Executive Officer of SNC Lavalin Group Inc. until October 2012
Experience in risk management and finance, manufacturing operations and corporate
governance
Gerald W. Grandey, Corporate Director
Age: 67, Saskatoon, Saskatchewan, Canada, Corporate Director since 2011, Independent
Former Chief Executive Officer of Cameco Corporation until June 2011.
Vice-Chairman of the Concord Business Group and President of Energy Fuels Nuclear
Member on the boards of Potash Corporation of Saskatchewan and Sandspring Resources
Ltd
Member of the National Board of the Institute of Corporate Directors
Experience in business development, finance, human resources and government, media and
investor relations
Arthur N. Korpach, Corporate Director
Age: 56, Calgary, Alberta, Canada, Corporate Director since 2013, Independent
Retired Vice Chairman of Investment Banking at CIBC World Markets Inc
Member on the boards of Canexus Corporation and Freehold Royalties Ltd.
Past Chair of the Board of United Way of Calgary and Area
Past director of Mount Royal University and its Foundation
Experience in capital markets, finance and corporate governance
Ryan M. Kubik, Corporate Director, President & Chief Executive
15

Age: 46, Calgary, Alberta, Canada, Director since January 1, 2014, Not Independent
Director and Chair of the Board of Syncrude Canada Ltd and Chairs the Syncrude Joint
Venture CEO
COS Treasurer in 2002 and Chief Financial Officer in 2007, holding that position until January
2014
Senior finance positions with EnCana Corporation, PanCanadian Energy and
PricewaterhouseCoopers. Experience in capital markets, finance, risk management, strategic
planning and investor relations
Sarah E. Raiss, Corporate Director
Age: 56, Calgary, Alberta, Canada, Corporate Director since 2012, Independent
Executive Vice President for TransCanada Corporation
Director of Loblaw Companies Limited, Commercial Metals Company, and Vermillion
Energy Inc
Chair of the Alberta Electric System
Past director of Shoppers Drug Mart and the Calgary Petroleum Club
Experience in human resources and compensation matters, corporate governance and oil
and gas
John K. Read, Corporate Director
Age: 65, Calgary, Alberta, Canada, Corporate Director since 2010, Independent
Founding partner and CEO of Colt Engineering Corporation until 2006
Member on the boards of Axia NetMedia Corporation and PFB Corporation
Chairman of the Ernest C. Manning Awards Foundation
Experience in oil and gas, capital project management and construction
Brant Sangster, Corporate Director
Age: 67, Calgary, Alberta, Canada, Corporate Director since 2006, Independent
Senior executive of COS until 2006
Director of Titanium Corporation Inc. and Inter Pipeline Fund.
Experience in the energy industry, with experience specific to oil sands mining and SAGD as
well as marketing
C.E. (Chuck) Shultz, Corporate Director
Age: 74, Calgary, Alberta, Canada, Director since 1996, Independent
Chairman and Chief Executive Officer of Dauntless Energy Inc
Director of Enbridge Inc and Newfield Exploration Company
Experience in capital project management, corporate governance, human resources and
government relations
Wesley R. Twiss, Corporate Director
Age: 68, Calgary, Alberta, Canada, Corporate Director since 2001, Independent
16

Executive Vice President and Chief Financial Officer of PanCanadian Energy Corporation until
2002
Member of the Institute of Corporate Directors, Directors Education program before
Member on the Advisory Committee of the Alberta Securities Commission
Experience in the areas of oil and gas, capital markets, finance, human resources and
pipelines
John B. Zaozirny, Corporate Director
Age: 66, Calgary, Alberta, Canada, Corporate Director since 1996, Independent
Vice Chairman of Canaccord Genuity Corporation
Director of Bankers Petroleum Inc and director of PetroAmerica Oil Corp
Chair of Pengrowth Energy Corporation In addition
Former Minister of Energy for the Province of Alberta
Experience in oil and gas, capital markets, corporate governance, human resources and
government relations
After analysing the Board members characteristics, we can deduce what kind of Directors
they are and whether they represent a good Board of Directors or not.

Director Independence

Director Self Assessment Matrix

17

18

Director Attendance

19

Part III
Appendix 1: Compensation Comitee

20

Appendix 2: Executive compensation Canadian Oil Sands overview

21

Appendix 3: Executive compensation

22

SOURCES
http://www.cdnoilsands.com/about-COS/governance/terms-of-reference/default.aspx
http://quote.morningstar.ca/Quicktakes/owners/OwnersOverview.aspx?t=COS&region=CAN&culture=en-CA
http://www.reuters.com/finance/stocks/overview?symbol=COS.TO
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