The Board has a policy of having an independent, non-management Chair. At every Board meeting, the directors meet without management present and the Independent Directors meet in camera.
The Board is comprised of a majority of Independent Directors and will continue to be comprised of a majority of Independent Directors if all of the proposed nominees for election are elected at the Meeting.
For a director to be considered independent, the Board must determine that the director does not have any material relationship with the Company, either directly or indirectly.
The Board is responsible for applying the definition of “Independent Director” to the circumstances of each individual director, and for disclosing annually whether the Board has a majority of Independent Directors and completing an analysis of the application of the principles supporting this conclusion. The Board has adopted independence standards to assist with the independence determination. The independence standards fall within the meaning of the guidelines adopted by Canadian securities regulators in National Instrument 58-101, “Disclosure of Corporate Governance Practices” and Multilateral Instrument 52-110, “Audit Committees”.
Directors and proposed directors must fully disclose their relationships with the Company and provide other pertinent information on an annual basis. The Board reviews such relationships to identify impact on director independence having regard to the criteria in the independence standards and whether any relationships between a director and the Company could reasonably be expected to interfere with the exercise of the director’s independent judgment.
The Board has determined that Paul D. Sobey, Bill McEwan, Frank C. Sobey, Rob G.C. Sobey, David F. Sobey, Donald R. Sobey and Karl R. Sobey are not independent. Paul D. Sobey is the President and CEO of Empire Company Limited,
Bill McEwan is the President and CEO of Empire’s wholly-owned subsidiary, Sobeys Inc. (“Sobeys”), Frank C. Sobey is Vice President, Real Estate for Empire and Rob G.C. Sobey is President and CEO of Lawton’s Drug Stores Limited (an operating division of Sobeys) and as such are considered not to be independent. David F. Sobey is the Chair Emeritus of Sobeys and the father of Paul D. Sobey. Donald R. Sobey is the Chair Emeritus of the Company and the father of Rob G.C. Sobey. Karl R. Sobey is the brother of Frank C. Sobey. They are also considered not to be independent.
The Board has determined that Christine Cross, David S. Ferguson, David A. Leslie, Malen Ng, Mel Rhinelander and Stephen J. Savidant have no relationships with the Company (other than as directors) and are therefore considered to be independent.
Edward C. Harsant, in his capacity as a director of Empire, has agreed to serve as Chair of the Advisory Board of Lawton’s Drug Stores Limited (an operating division of Sobeys) and receives annual compensation of $32,000 in this regard. Mr. Harsant was appointed to this position because he is an Independent Director and the Board considers him to retain his independence notwithstanding this appointment.
Marcel Côté is a senior partner of Secor Inc., which provides consulting services to Sobeys and to some of its retail affiliates. Mr. Côté is not involved in the business relationship between Secor and Sobeys or in the provision of the consulting services. His remuneration from Secor is not connected in any way with the Sobeys relationship and the services provided to Sobeys are not material to Secor. The Board considers Mr. Côté to be independent.
John R. Sobey is not an immediate family member to any member of the Board or senior management (he is a first cousin to David F. Sobey and Donald R. Sobey and consequently a first cousin once removed to Paul D. Sobey, Frank C. Sobey and Rob G.C. Sobey) and retired from his management position at Sobeys in 2001. The Board considers Mr. Sobey to be independent.
Robert P. Dexter’s primary occupation is Chair and CEO of Maritime Travel Inc. He is also counsel to a law firm that provides legal services to Empire and its subsidiaries; however, he does not practise law nor is he involved in the provision of legal services to Empire or any of its subsidiaries. He receives an honorarium, unrelated to services provided to the Company, from the law firm. The Board considers Mr. Dexter to be independent.