UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-

16 OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2021

Commission File Number: 001-35563

 

 

Pembina Pipeline Corporation

(Translation of registrant’s name into English)

4000, 585 – 8th Avenue S.W.

Calgary, Alberta, Canada T2P 1G1

(Address of principal executive offices)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F ☐                                         Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1)  ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7)  ☐

 

 

 


INCORPORATION BY REFERENCE

Exhibit 99.1 to this Report on Form 6-K is hereby incorporated by reference (i) as an exhibit to the Registration Statement on Form F-10 (File No. 333-219338) of Pembina Pipeline Corporation and (ii) into the Registration Statement on Form F-3 (File No: 333-187938) of Pembina Pipeline Corporation.

DOCUMENTS FILED AS PART OF THIS FORM 6-K

 

Exhibit

  

Description

 99.1    Notices of Meeting and Management Information Circular for Annual Meeting of Shareholders, to be held on May 7, 2021

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 29, 2021.

 

PEMBINA PIPELINE CORPORATION
By:  

/s/ Janet C. Loduca

Name:   Janet C. Loduca
Title:   General Counsel, VP Legal and
  Sustainability


EXHIBIT INDEX

 

Exhibit

  

Description

 99.1    Notices of Meeting and Management Information Circular for Annual Meeting of Shareholders, to be held on May 7, 2021
Table of Contents

LOGO

 

LOGO

 

Management Information Circular

 

LOGO

 

Notice of 2021 annual meeting of shareholders

 

March 19, 2021

 

    

  
WHAT’S INSIDE   
Message from the Chairman      2  
Notice of our 2021 annual meeting of shareholders      4  
Management information circular      5  
About voting      6  
Business of the meeting      10  
About the nominated directors      13  
Governance      25  
Compensation discussion and analysis      51  
Other information      100  
 


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Message from the Chairman

Dear Fellow Shareholders,

I am pleased to invite you to Pembina’s 2021 annual meeting of shareholders to be held on Friday, May 7, 2021 at 2:00 p.m. (Mountain time). To mitigate the risks to the health and safety of our communities, shareholders, employees and other stakeholders in light of the COVID-19 pandemic, we are holding a virtual-only meeting. The meeting will be held by live audio webcast. Every shareholder and duly appointed proxyholder, regardless of geographic location and ownership, will have an equal opportunity to participate at the meeting and vote on the matters to be considered at the meeting. Information about how to join, vote, and ask questions at the meeting can be found in this document.

This past year has been one of the most challenging in history and the ultimate test of our resilience, both at Pembina and across society as a whole.

Strong communication and collaboration between management and the board was the foundation of Pembina’s response to the COVID-19 pandemic. Our first priorities were to protect the health and safety of Pembina’s staff and communities, ensure critical infrastructure continued to operate safely and reliably, and maintain our strong financial position. Working together, we took immediate proactive steps to protect the interests of Pembina’s stakeholders – our customers, investors, employees and communities. Many decisions were difficult, not the least of which included deferring billions of dollars of growth projects and ultimately suspending development of our petrochemical facility. Yet we did not shy away from taking decisive action where it was required to protect the long- term interests of Pembina and its stakeholders.

Resilience

Our focus over the past decade has been to build a business capable of withstanding volatile and uncertain markets, and Pembina’s financial results in 2020 proved this was the right approach. The board has worked diligently alongside the management team to establish and execute our long-term strategy, including growing and integrating Pembina’s value chain, protecting the cash flow stream through strong contractual underpinnings, and achieving greater diversification across commodities, currencies and counterparties. Approximately five years ago, the board approved a set of financial guardrails to guide our decision making. Pembina’s steadfast commitment to these guardrails has allowed it to manage through the headwinds that came as a result of the pandemic and to enter 2021 in a position of strength.

Sustainability

While Pembina has always strived to have our communities welcome us and recognize the net positive impact of our social and environmental commitments, environmental, social and governance (ESG) issues are playing an increasingly significant role in all areas of our business and strategy. The board recognizes that ESG is directly linked to Pembina’s long-term value, and we are fully engaged in management’s continuing integration of ESG strategies into the business.

In 2020, we oversaw several significant developments:

 

 

Pembina appointed a new vice president responsible for sustainability, and introduced an ESG management steering committee focused on ESG risks and opportunities.

 

 

The board approved changes to Pembina’s short-term incentive plan to include ESG metrics as a significant component. We believe that linking compensation to corporate performance on ESG factors aligns with long-term value creation and our stakeholders’ interests.

 

 

The board is very supportive of management’s ongoing development of a strategy to reduce greenhouse gas emissions intensity and set related targets.

 

 

Pembina published its second full-length sustainability report, which includes enhanced disclosure on emissions, water, waste management and workforce, as well as a listing of top ESG risks. The board is pleased with the enhanced disclosure, which aligns with our commitment to continuous improvement, transparency and engagement.

 

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In keeping with continuous improvement, the board routinely takes part in educational sessions at both an individual and group level to enhance our knowledge and understanding of our business, corporate governance trends and issues that impact the industry we operate in.

 

Diversity   

The board strongly believes that diversity at the board level and across the organization is key to delivering sustained, long-term value to stakeholders.

 

Diversity on the board is critical to good governance. Having directors with a range of perspectives allows for more fulsome discussion and improves decision-making. With the appointment of Cynthia Carroll to the board this year, women now represent 36% of our directors. While we are proud of the progress we have made, we recognize that we can do better, and in 2020 approved specific board diversity targets for gender representation and

  

 

Diversity targets

  

 

The board approved specific diversity targets under its board diversity policy.

 

  

The board and management have committed to increasing diversity at the executive level by 2025.

 

additional targets for representation of other minority groups on the board. We are also actively overseeing Pembina’s progress on inclusion and diversity throughout the organization.

The board made other changes in 2020 to support good governance, including adding more formality to board assessments, and working on succession planning as we approach my retirement as chair of the board. When the time comes for my transition, I look forward to continuing to work with the board to make sure the new chair has the right characteristics to lead the board as Pembina evolves in the coming years.

In closing, let me assure you that your board will continue to provide management with sound guidance and oversight, while fostering robust two-way communication. Throughout the coming year, the world will continue to face challenges and address impacts from the COVID-19 pandemic. Pembina has proven its resilience and enters 2021 strong and ready to adapt as needed.

On behalf of the board, I want to express my ongoing gratitude to the executive leadership team and all of Pembina’s employees for their tireless work in service of our many stakeholders. To our shareholders, thank you for your ongoing support. Our health and the health of our stakeholders, family, friends and community remains our top priority.

Sincerely,

(signed) “Randall (Randy) Findlay”

Randall (Randy) Findlay

 

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  Notice of our 2021 annual meeting of common shareholders

 

You are invited to our 2021 annual meeting (the meeting) of common shareholders:

  

 

Where to get a copy of the 2021 management information circular

 

When     May 7, 2021

 

                2:00 p.m. (Mountain time)

  

If you are a registered common shareholder or you have given us instructions to send you printed documents, your management information circular is attached to this notice.

 

Where    Virtual-only meeting

               live audio webcast online at

                https://web.lumiagm.com/475399186

 

We will cover five items of business – see Business of the meeting in our 2021 management information circular:

 

1.  Receive our 2020 audited consolidated financial statements and the auditors’ report thereon.

 

2.  Vote on electing the directors.

 

3.  Vote on appointing the auditors.

 

4.  Vote on our approach to executive compensation.

 

5.  Vote on any other business that properly comes before the meeting.

 

Your vote is important

 

Our 2021 management information circular includes important information about the meeting and the voting process. Please read it carefully before you vote.

 

We mailed you a copy of our 2020 audited consolidated financial statements and the auditors’ report if you asked us to (in accordance with applicable corporate and securities laws). You can also find a copy of our financial statements on our website (www.pembina.com), on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov).

 

To mitigate the risks to the health and safety of our communities, shareholders, employees and other stakeholders in light of the COVID-19 pandemic, we are holding a virtual-only meeting. The meeting will be held by live audio webcast. Every shareholder and duly appointed proxyholder, regardless of geographic location and ownership, will have an equal opportunity to participate at the meeting and vote on the matters to be considered at the meeting. You will find detailed instructions about how to participate in the meeting in this notice and in the management information circular starting on page 6. There are different processes if you are a registered shareholder or a beneficial shareholder. Most of our shareholders are beneficial shareholders, meaning that you hold your shares through a bank, broker or other such institution. Closely follow the instructions in this notice, and in your voting information form.

 

By order of the board,

 

(signed) “Brenda Rawcliffe”

 

Brenda Rawcliffe

 

Corporate Secretary

 

Pembina Pipeline Corporation

 

Calgary, Alberta

 

March 19, 2021

  

We use the notice and access procedures to deliver meeting materials (this notice and the management information circular) to beneficial holders of our common shares. Notice and access are a set of rules developed by the Canadian Securities Administrators that allows companies to post meeting materials online, reducing paper and mailing costs.

 

If you are a beneficial common shareholder, you can view the management information circular at: www.sedar.com or

www.pembina.com/Investor-Centre/shareholder- information/

 

If you would like us to mail you a paper copy of the management information circular instead, please contact us:

 

·online:    www.pembina.com/Investor-

 

                      Centre/Shareholder-information

·by phone: 1-855-880-7404

 

·by email:   investor-relations@pembina.com

 

We will send it free of charge, but we need your request at least five days before the proxy deposit date listed on the enclosed voting instruction form, and within one year of filing the management information circular on SEDAR.

 

How to vote

 

If you are a beneficial common shareholder, complete and return your voting instruction form at least one business day before the proxy deposit date of May 5, 2021 at 2:00 p.m. (Mountain time), or as listed on the attached voting instruction form.

You cannot vote by returning this notice. If you want to attend the virtual meeting and vote your shares, you must appoint yourself as a proxyholder.

 

Send your voting instructions to us:

 

·online :      www.proxyvote.com

 

·by phone: 1-800-474-7493 (English)

 

                      1-800-474-7501 (French)

 

                      1-800-454-8683 (United States)

 

·by fax:       905-507-7793

 

·by mail:     Data Processing Centre

 

                       PO Box 2800 STN LCD Malton

 

                       Mississauga, Ontario L5T 2T7

 

If you have questions about notice and access, call us toll-free at 1-855-880-7404.

    

 

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Management information circular

 

You have received this document because you owned Pembina shares on March 19, 2021 (the record date) and are entitled to vote at our 2021 annual meeting of common shareholders, which will be held on May 7, 2021, or at a reconvened meeting if the meeting is postponed or adjourned. The meeting will be held in a virtual-only format, as a live audio webcast. All shareholders and duly appointed proxyholders can participate. You cannot attend the meeting in person.

 

The full webcast of the meeting will be available on our website after the event, including any questions we receive during the meeting and our answers.

 

All information in this circular is provided as of March 19, 2021 and all dollar amounts are in Canadian dollars, unless we note otherwise.

 

You will find financial information about Pembina in our annual audited consolidated financial statements and management’s discussion and analysis of our financial and operating results (MD&A) for the year ended December 31, 2020. Contact us for a copy of these documents. You can also find these documents and other important information about Pembina on our website (www.pembina.com), on SEDAR

(www.sedar.com) and on EDGAR (www.sec.gov).

  

 

In this document

 

·meeting means the annual meeting of common shareholders to be held as a virtual-only meeting on May 7, 2021

·you, your and shareholders mean holders of Pembina shares

·we, us, our, Pembina and the company mean Pembina Pipeline Corporation and our consolidated subsidiaries

·common shares, shares and Pembina shares mean common shares in the capital of Pembina

·circular means this management information circular

·board means Pembina’s board of directors

 

Our principal corporate and registered office

Pembina Pipeline Corporation

4000, 585 – 8th Avenue S.W.

Calgary, Alberta

T2P 1G1

T. 403-231-7500

F. 403-237-0254

 

    
    
    

This circular contains forward-looking statements that are based on our current expectations, estimates, projections and assumptions in light of our experience and perception of historic trends. This circular contains forward-looking statements about succession plans, corporate strategy and projects. Forward-looking statements involve known and unknown risks and actual results may differ materially from those expressed or implied by these forward-looking statements. Please see Forward-Looking Statements & Information in the MD&A for more information about the assumptions and risks involved in making the forward-looking statements. These forward-looking statements are made only as of the date of this circular. Pembina does not undertake any obligation to publicly update or revise the forward-looking statements contained in this document, except as required by law.

In this circular, we also use certain financial measures that are not defined by generally accepted accounting practices (GAAP). Please see About non-GAAP measures on page 100 for more information about these measures and why they are used.

 

 

2020 awards and achievements

 

· 2020 Canada’s Top 100 Employers by Canada’s Top 100

· 2020 Alberta’s Top 75 Employers

· $5.3 million invested in our communities through charitable contributions, including flagship partnerships with Breakfast Club of Canada and Ducks Unlimited Canada

· $3.3 million raised for United Way and other charities across Canada through employee donations and company matching

 

 

 

 

Pembina Pipeline Corporation 2021 Management Information Circular    5


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About voting

Who can vote?

 

You can vote at our annual meeting of common shareholders if you held our common shares at the close of business on March 19, 2021, even if you sold your common shares after this date.

 

You are not allowed to vote at the meeting if you acquired your shares after the record date, unless you ask us to include your name in the list of voting shareholders at least two days before the meeting, and provide adequate evidence that you own the shares.

 

About Pembina shares

 

Common shares

 

We are authorized to issue an unlimited number of common shares. As at March 18, 2021, we had 549,957,892 common shares issued and outstanding. Our common shares are listed and trade on the Toronto Stock Exchange (TSX) (TSX: PPL) and the New York Stock Exchange (NYSE) (NYSE: PBA).

 

To the best of the knowledge of the company’s directors and officers, no person beneficially owns, or controls or directs, directly or indirectly, more than 10% of our common shares.

  

 

Quorum

According to our articles and by-laws, at least two persons holding or representing at least 25% of our outstanding common shares must be present for the annual meeting to take place, or the meeting will be adjourned to a set time and place and no business will be transacted until the adjourned meeting.

 

About voting results

We will post the voting results on our website (www.pembina.com) and file them on SEDAR (www.sedar.com) and EDGAR (www.sec.gov) as soon as possible following the meeting.

  
  

 

Where to go with questions

If you have any questions about the meeting or need help voting your shares, please contact our investor relations group at:

· 1-855-880-7404

 

· investor-relations@pembina.com

    

 

Proxy solicitation

Management is soliciting your proxy for the meeting. Management may use the service of external proxy solicitors and you may be contacted by Pembina employees or Kingsdale Advisors, our strategic shareholder advisor and proxy solicitation agent, by mail, by telephone or by personal interview. This year, Kingsdale Advisors is providing governance, strategic shareholder advisory and potential proxy solicitation services. We have paid them approximately $42,000 for this work and we may also pay them customary fees for contacting shareholders in connection with voting at the meeting. Pembina pays all costs related to producing and mailing this circular and other meeting materials, and for soliciting your proxy.

About the virtual meeting

To continue to mitigate the risks to the health and safety of our communities, shareholders, employees and other stakeholders in light of the COVID-19 pandemic, we are holding a virtual-only meeting this year as a live audio webcast. Every shareholder and duly appointed proxyholder, regardless of geographic location and ownership, will have an equal opportunity to participate at the meeting and vote on the matters to be considered at the meeting. You cannot attend the meeting in person. The full webcast will be available on our website after the event, including any questions we receive from shareholders and their answers.

Attending as a guest

All shareholders can attend the meeting as a guest by logging in online at https://web.lumiagm.com/475399186, selecting “I am a guest” and completing the required form. If you attend the meeting as a guest, you will not be permitted to vote during the meeting. Guests can, however, ask questions after the formal part of the meeting is over, during the live question and answer session.

Asking questions at the virtual meeting

Questions may be submitted at any time through the chat thread on the live webcast; however, during the formal part of the meeting, only questions from registered shareholders and duly appointed proxyholders that relate to the business of the meeting will be addressed.

Pembina will host a live question and answer session after the meeting, where we will answer other questions submitted during the meeting. Registered shareholders, duly appointed proxyholders (including beneficial

 

Pembina Pipeline Corporation 2021 Management Information Circular    6


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shareholders that have duly appointed themselves as proxy holders) and guests can submit questions during the live question and answer session.

To ensure the meeting is conducted in a manner that is fair to all shareholders, the chair of the meeting may exercise broad discretion in responding to the questions, including the order in which the questions are answered, the grouping or editing of the questions and the amount of time devoted to any question.

Technical difficulties

If you participate in the virtual meeting, it is important that you stay connected to the internet at all times during the meeting in order to vote. It is your responsibility to ensure connectivity for the duration of the virtual meeting. You should allow ample time to log into the virtual meeting and complete the above procedure.

All meeting participants must use the latest versions of Chrome, Safari, Microsoft Edge, or Firefox. Please do not use Internet Explorer. We recommend that you log in at least 30-60 minutes before the meeting starts as this will allow you to check compatibility and complete the related procedures required to log in to the meeting.

Caution: Internal network security protocols including firewalls and virtual private network (VPN) connections may block your access to the meeting. If you are experiencing any difficulty connecting to or watching the meeting, ensure your VPN setting is disabled or use a computer or other device on a network that is not restricted by any particular security settings.

If you have any questions about the virtual meeting portal or requiring assistance accessing the meeting website, please go to https://www.lumiglobal.com/faq for information.

How to vote

You can vote your shares by proxy (by appointing someone – a proxyholder – to represent you), or by attending the virtual meeting and voting. The rules for voting depend on whether you are a registered shareholder or a beneficial shareholder.

Beneficial shareholders

You are a beneficial shareholder if your shares are registered in the name of a nominee, such as a bank, trust company, securities broker, trustee or other institution. The majority of our shares are held by beneficial shareholders. Beneficial shareholders can vote their shares during the virtual meeting, or by proxy before the meeting:

Vote during the virtual meeting:

Before the meeting:

1.

Appoint yourself as the duly appointed proxyholder by printing your own name in the blank space provided for the proxyholder on the proxy or voting instruction form. Then return the form in the envelope provided (or by following the instruction on the form). Do not complete the rest of the form or mark your voting instructions on the form, because your vote will be taken at the meeting.

2.

Register online with Computershare online by going to www.computershare.com/pembina before 2:00 p.m. (Mountain Time) on May 5, 2021 and input your name and contact information.

Computershare will email you a username. You will need it to log in to the meeting and vote. Without a username, you will not be able to vote at the meeting but will be able to participate as a guest.

On the day of the meeting:

1.

Log in online at https://web.lumiagm.com/475399186. We recommend visiting the site before the meeting starts to make sure it works on your computer or device. You must stay connected to the internet for the entire meeting.

2.

Select “I have a Control Number/Username” and enter the username Computershare provided by email.

3.

Enter the password (case sensitive): pembina2021

4.

Complete the ballot online during the meeting.

 

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Vote by proxy before the meeting by following the instructions on your proxy or voting instruction form

If you are a beneficial shareholder, you must send your voting instructions to your nominee who will vote for you. You will receive a request for voting instructions for the number of shares held for your benefit. Follow the instructions on the voting instruction form and send your voting instructions to your nominee. You likely have an earlier deadline for returning your voting instruction form to your nominee, so be sure to send the form early, to allow enough time for your nominee to receive your voting instructions and then send them to Pembina before the proxy cut-off time.

Most nominees delegate responsibility for obtaining voting instructions from their clients to Broadridge Financial Solutions Inc. (Broadridge). Broadridge usually mails a scannable voting instruction form that is to be completed and returned to them by mail or fax. You can also call a toll-free phone number or access Broadridge’s dedicated voting website to submit your voting instructions. Broadridge tabulates the results of all the instructions it receives and presents this information at the meeting. Kingsdale Advisors may contact beneficial shareholders to help you vote your shares directly over the phone, using the Broadridge QuickVoteTM service, if available.

If you received voting materials from a company other than Broadridge, you need to complete and return the form following the instructions they have provided.

We use Broadridge to send proxy-related materials to non-objecting beneficial owners of our shares. We intend to pay for intermediaries to deliver proxy-related materials to objecting beneficial owners of our shares.

Registered shareholders

You are a registered shareholder if you hold your shares in certificate form through the Direct Registration System (DRS). Registered holders can vote their shares during the virtual meeting, or by proxy before the meeting.

Vote during the virtual meeting

On the day of the meeting:

1.

Log in online at https://web.lumiagm.com/475399186. We recommend visiting the site before the meeting starts to make sure it works on your computer or device. You must stay connected to the internet during the meeting.

2.

Select “I have a Control Number/Username” and enter your 15-digit control number (this is your username and you will find it on the bottom left corner of the first page of the enclosed proxy form).

3.

Enter the password (case sensitive): pembina2021

4.

Complete the ballot online during the meeting.

Vote by proxy before the meeting in one of the following three ways

1.

Online: Go to www.investorvote.com. You will need to enter your 15-digit control number (located on the bottom left corner of the first page of the enclosed proxy form) to identify yourself as a shareholder on the voting website

2.

By phone: Call 1-866-732-VOTE (8683) toll-free and follow the instructions. You will need to enter your 15-digit control number (located on the bottom left corner of the first page of the enclosed proxy form) to identify yourself as a shareholder on the telephone voting system;

3.

By mail: Complete the enclosed proxy form, sign and date it and return it in the enclosed envelope.

Computershare Trust Company of Canada (Computershare) is our transfer agent. Computershare must receive your completed proxy form at least 48 hours before the meeting (not including Saturdays, Sundays or holidays). The chair of the meeting can waive or extend the time limit for receiving proxy forms without notice, at his or her discretion.

About your proxyholder

The officers named on the proxy form and voting instruction form have agreed to serve as your proxyholder and will vote your shares according to your instructions. If you do not specify your voting instructions, they will vote your shares for each item of business at the meeting. If there are changes to the items of business or other matters that are properly brought before the meeting, your proxyholder can use their discretion and vote as they see fit. As of

 

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the date of this circular, we do not anticipate any changes to the items of business or other matters to be brought before the meeting.

Choosing someone else to be your proxyholder

You have the right to appoint someone else to be your proxyholder and act on your behalf at the virtual meeting. The person you appoint does not have to be a Pembina shareholder. Make sure this person knows he or she has been appointed to attend the virtual meeting and vote on your behalf. Your proxyholder must vote (or withhold from voting) your shares according to your instructions. If you appoint someone else to be your proxyholder and do not give them specific voting instructions, your proxyholder has the discretion to vote as they see fit.

To nominate someone other than the officers named in the form as your proxyholder:

 

1.

Appoint your proxyholder as a duly appointed proxyholder by printing his or her name in the blank space provided on your proxy or voting instruction form. Then return the form in the envelope provided (or by following the instructions on the form).

2.

Register your proxyholder online with Computershare by going to www.computershare.com/pembina before 2:00 p.m. (Mountain time) on May 5, 2021 and inputting their name and contact information.

Computershare will email your proxyholder a username, which they will need to log in to the meeting and vote. Without a username, your proxyholder will not be able to vote at the meeting but will be able to participate as a guest.

On the day of the meeting, your proxyholder will:

1.

Log in online at https://web.lumiagm.com/475399186. We recommend visiting the site before the meeting starts to make sure it works on the computer or device the proxyholder is using. Your proxyholder must stay connected to the internet for the entire meeting.

2.

Select “I have a Control Number/Username” and enter the username Computershare provided by email.

3.

Enter the password (case sensitive): pembina2021

4.

Complete the ballot online during the meeting.

Changing your vote

If you are a registered shareholder, you can revoke a proxy form you previously submitted by sending us a revocation notice in writing from you, or an attorney you have given written authorization to. If the shareholder is a corporation, the change must be made under the corporation’s corporate seal or by an authorized officer or attorney. The written notice must be delivered to our head office before 4:30 p.m. (Mountain time) on the last business day before the meeting.

If you are a beneficial shareholder, you can revoke voting instructions you previously submitted by contacting your nominee.

 

 

Shareholder proposals

 

If you want to present a shareholder proposal at our 2022 annual meeting, you must submit it by February 4, 2022 to be considered for inclusion in next year’s management information circular.

 
 

Send your shareholder proposals to:

 

Corporate Secretary

 

 

Pembina Pipeline Corporation

 

4000, 585 – 8 Avenue SW

 

Calgary, AB T2P 1G1

 

    

 

 

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Business of the meeting

Our 2021 annual meeting of common shareholders will cover the five items of business listed below.

1. Receive our 2020 audited consolidated financial statements and auditors’ report

You have received our audited consolidated financial statements for the year ended December 31, 2020 and the auditors’ report thereon, which are included in our 2020 annual report, if you requested a copy. Copies are available on our website (www.pembina.com), on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov), or you can request a copy from our Investor Relations department.

2. Elect the directors

 

 

Our articles state that the board must have between five and 13 directors. This year, eleven directors are nominated for election to the board.

  

 

Our policy on majority voting

· Randall J. Findlay (chair)

  

· Gordon J. Kerr

  

Each director must receive a majority of the votes cast for their election, or they must resign immediately following the meeting.

 

 

· Anne-Marie N. Ainsworth

  

 

· David M.B. LeGresley

  

The governance, nominating and corporate social responsibility committee will consider the resignation and recommend to the board the action to be taken. The director who resigned does not participate in these discussions.

 

The board will consider the committee’s recommendation and, within 90 days of the meeting, will accept the resignation unless there are exceptional circumstances. The resignation will be effective when it is accepted by the board. The board will announce its decision in a news release.

 

If the board accepts the resignation, it can appoint a new director, call a meeting of shareholders to vote for other candidates or leave the position vacant until the next annual meeting.

 

Our majority voting policy does not apply if a director election is contested.

 

· Cynthia Carroll

  

 

· Leslie A. O’Donoghue

 

· Michael H. Dilger

  

 

· Bruce D. Rubin

 

· Robert G. Gwin

  

 

· Henry W. Sykes

 

· Maureen E. Howe

 

  

All the nominated directors currently serve on our board. Ms. Carroll was appointed to the board on May 8, 2020 by the board of directors to stand for election at the 2021 annual meeting. Turn to the director profiles starting on page 13 for detailed information about each director.

 

Directors will serve until the next annual meeting of common shareholders, or until their successors are elected or appointed.

 

The proxy form allows you to vote for all the nominated directors, vote for some of them and withhold your vote for others, or withhold your vote for all of them. Unless instructed otherwise, the Pembina officers named in the proxy form will vote for all our nominated directors.

 

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3. Appoint our auditors

You will vote on appointing our external auditors. The audit committee and the board propose that KPMG LLP (KPMG), Chartered Professional Accountants be appointed as auditors and serve until the next annual meeting of common shareholders. The audit committee will recommend KPMG’s compensation to the board for its review and approval.

KPMG have been Pembina’s auditors since September 1997. Pembina’s audit committee and management conduct a comprehensive review of the external auditor at least every five years. A comprehensive review was last completed in 2020 for the five-year period from 2015 to 2019. In 2021, the audit committee and management conducted an annual review of KPMG’s services as the external auditor for 2020. The results of both reviews supported the continuation of the audit engagement. The following table shows the fees paid or payable to KPMG for the fiscal years ended December 31, 2019 and 2020.

 

 

Fee category

  

 

2019

($)

 

   

 

2020

($)

 

 
 

 

Audit fees

  

 

 

 

2,969,500

 

     

 

 

 

 

2,197,500

 

   

 

Fees for auditing our annual financial statements, reviewing our quarterly financial statements, and services related to statutory and regulatory filings or engagements.

    
 

· 2019 fees also include expenses for: pricing supplements related to the issue and sale of Medium Term Notes, Series 12 and 13 in March of 2019; the short form base shelf prospectus related to the offer and issue from time to time of medium term notes; the short form base shelf prospectus related to the offer and issue from time to time of common shares, Class A preferred shares, warrants, subscription receipts and units comprising any combination of the foregoing; pricing supplements related to the issue and sale of Medium Term Notes, Series 13, 14 and 15 in September 2019; and pricing supplements relating to the issue and sale of Medium Term Notes, Series 10, 11 and 12 in January 2020.

    
 

· 2020 fees also include expenses for: pricing supplements related to the issue and sale of the Medium Term Notes, Series 7 and 16 in May 2020; the short form base shelf prospectus related to the offer and issue from time to time of debt securities and Class A preferred shares; and prospectus supplements relating to the issue and sale of 4.80% Fixed-to-Fixed Rate Subordinated Notes, Series 1 in January 2021.

 

                
 
Audit-related fees      134,000       128,500  
 

Fees for assurance and related services that are not related to the audit or review of our financial statements, and not reported under “Audit fees” above.

    
 

· Fees in both years include French translations for statutory and regulatory filings, and audit fees ($30,000 for the pension plan and $20,000 for the pension plan at the Younger facility).

 

                
 
Tax fees      120,086       95,000  
 

Fees for non-audit tax services provided by KPMG’s tax division, including $2,700 (2019: $39,925) for tax compliance and $92,300 (2019: $80,161) for tax advice and tax planning. Fees in both years also include tax consultation and compliance fees for preparing and filing tax returns for our subsidiaries.

 

                
 
All other fees      -       31,750  
 

Fees for other products and services provided by the auditors not described above.

 

    

 

Total fees

 

  

 

 

 

3,223,586

 

 

 

 

 

 

2,452,750

 

 

The board recommends you vote for appointing KPMG as our auditors until the close of our next annual meeting of common shareholders. Unless instructed otherwise, the Pembina officers named in the proxy form will vote for the appointment of KPMG LLP as our auditors.

 

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4. Vote on our approach to executive compensation

You will vote on our approach to executive compensation.

 

A key principle underlying executive compensation at Pembina is ‘pay for performance’. We believe that linking compensation to strategy and corporate performance helps us attract and retain excellent people and motivates them to focus on our success. You will find a detailed discussion of our executive

  

 

Say on pay votes

 

In 2020, our executive compensation approach was supported by 92.08% of our shareholders votes on our say on pay resolution.

compensation program beginning on page 51 of this circular.

  

The board gives common shareholders the opportunity every year to vote for or against our approach to executive compensation (to have a say on pay). This is an advisory vote, so the results will not be binding on the board. The board will, however, consider the outcome of the vote as part of its ongoing review of executive compensation.

You will be asked to consider and, if deemed advisable, approve the following non-binding resolution:

RESOLVED, on an advisory basis and not to diminish the role and responsibilities of the board of directors of Pembina Pipeline Corporation (Pembina), that the common shareholders of Pembina (shareholders) accept the approach to executive compensation disclosed in Pembina’s management information circular delivered in advance of the 2021 annual meeting of shareholders.

This resolution conforms to the language of the resolution recommended by the Canadian Coalition for Good Governance. The board recommends you vote for this resolution. Unless instructed otherwise, the Pembina officers named in the proxy form will vote for our approach to executive compensation as described in this circular.

5. Other business

You (or your proxyholder) will vote on any other items of business that may be properly brought before the meeting. As of the date of this circular, we are not aware of any other matters to be brought before the meeting.

 

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About the nominated directors

To ensure strong stewardship, the board needs to operate independently, have a prudent mix of relevant skills and experience, including industry knowledge and experience, a mix of age ranges and tenure, sufficiently diverse backgrounds and opinions to support balanced discussion and debate, and a manageable board size to facilitate productive discussion and decision-making.

We believe this year’s group of eleven nominated directors meets all of these requirements. Ms. Carroll is being nominated for election to the board for the first time. Ms. Carroll was appointed by the directors following last year’s annual meeting of shareholders. We believe that her experience, skills and qualifications have added depth and knowledgeable perspectives to the board.

The profiles on the following pages tell you about each nominated director’s background and experience, independence, meeting attendance, share ownership, other public company boards they serve on, and voting results from our 2020 annual meeting. In light of the COVID-19 pandemic, starting in March 2020, all board and committee meetings were held virtually using an online video conference service. The board also continued its formal education program and informal networking events by video conference.

All director information is provided as of March 19, 2021, unless indicated otherwise. Each of the nominated directors is willing and able to serve on the board until the next annual meeting of common shareholders.

All of the nominated directors are independent except Mr. Dilger, who is our President and Chief Executive Officer (CEO). The board has reviewed the independence and qualifications of the non-management directors and has recommended their nomination.

An overview of the nominated directors

 

LOGO

 

LOGO

 

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LOGO

 

Chair

 

Director since March 2007

 

Calgary, Alberta

Canada

 

Randall J. Findlay (70) | Independent

2020 voting results: 97.65% for, 2.35% withheld

 

Mr. Findlay was the President of Provident Energy Trust (Provident) from 2001 until his retirement in 2006. He was a director of Provident from 2001 to 2012. Before that he held various executive positions in the oil and gas industry over 30 years, including senior positions at NOVA Corporation and TransCanada Pipelines Limited.

 

Mr. Findlay has been a director of over 15 public and private companies. He has also chaired the board of a number of not-for-profit organizations and campaigns. He is the past chair of the Alberta Children’s Hospital Foundation and the current chair of the Alberta Children’s Hospital Research Institute Strategic Advisory Board.

 

Mr. Findlay is a professional engineer and has a Bachelor of Applied Science in chemical engineering from the University of British Columbia. He is a graduate of the Institute of Corporate Directors Education Program and holds the ICD.D designation.

 

 
    Board and committee membership and attendance
    Board of directors (chair)    10 of 10 meetings    100%
      Governance, nominating and corporate social responsibility committee    5 of 5 meetings    100%
               
    Other public company boards and committee memberships 1
   
    Superior Plus Corp. | TSX    Governance and nominating; audit
 

 

1  Mr. Findlay was a director of Spyglass Resources Corp. (a TSX listed company) from March 2013 until May 13, 2015. Spyglass Resources Corp., an intermediate oil and gas exploration and production company, was placed into receivership by a syndicate of its lenders on November 26, 2015.

 

 
  Securities held as of March 19, 2021

  Common          

 

  shares

    

Deferred

 

share units        

     Total value2                   

Meets share ownership guidelines

 

(including 50% common shares)

  140,821      34,942      $6,459,290      yes      
                           
 
  Class A preferred shares   
  Series 1     

                             5,000

  

 

2  Based on $36.75, the closing price of our common shares on the TSX on March 18, 2021. Deferred share units for directors include units issued under our deferred share unit plan and units accrued as dividend equivalents (see Director compensation on page 62 for more information).

 

Pembina Pipeline Corporation 2021 Management Information Circular    14


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LOGO

 

Director since October 2014

 

Houston, Texas

 

U.S.

 

Anne-Marie N. Ainsworth (64) | Independent

2020 voting results: 97.00% for, 3.00% withheld

 

Ms. Ainsworth served as President and Chief Executive Officer of Oiltanking Partners, L.P. and Oiltanking Holding Americas, Inc. from November 2012 to March 2014. She is currently on the boards of Kirby Corporation, HollyFrontier Corporation and Archrock, Inc. Ms. Ainsworth has extensive experience in the oil industry and has held several senior management positions throughout her career.

 

Ms. Ainsworth was Senior Vice President of Refining at Sunoco Inc. (2009 to 2012) and previously was the General Manager of the Motiva Enterprises, LLC (Motiva) refinery in Norco, Louisiana (2006 to 2009). Before she joined Motiva, Ms. Ainsworth was director of process safety management systems and business improvement leader at Shell Oil Products U.S. (2003 to 2006) and Vice President of Technical Assurance at Shell Deer Park Refining Company (2000 to 2003).

 

 

Ms. Ainsworth graduated cum laude from the University of Toledo with a Bachelor of Science in chemical engineering. She holds a Master of Business Administration from Rice University, where she also served as an adjunct professor (2000 to 2009). She is a graduate of the Institute of Corporate Directors Education Program and holds the ICD.D designation.

 

 
      Board and committee membership and attendance
    Board of directors    10 of 10 meetings    100%
    Human resources, health and compensation committee    4 of 4 meetings    100%
    Safety and environment committee (chair)    4 of 4 meetings    100%
               
      Other public company boards and committee memberships
    Archrock, Inc. | NYSE    Governance and nominating (chair); audit
    HollyFrontier Corporation | NYSE    Health, safety and environment; finance
    Kirby Corporation | NYSE    Audit     
         
 
  Securities held as of March 19, 2021
  Common shares              Deferred

 

share units        

     Total value1               

Meets share ownership guidelines

 

(including 50% common shares)

  22,749      23,698      $1,700,733   yes

 

1  Based on US$29.33, the closing price of our common shares on the NYSE on March 18, 2021 and the Reuters noon U.S. Canadian dollar foreign exchange rate of 1.2437 as at March 18, 2021. Deferred share units for directors include units issued under our deferred share unit plan and units accrued as dividend equivalents (see Director compensation on page 62 for more information) and their value is based on $36.75, the closing price of our common shares on the TSX on March 18, 2021.

 

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LOGO

 

Director since May 2020

 

Naples, Florida

U.S.

 

Cynthia Carroll (64) | Independent

2020 voting results: N/A

 

Ms. Carroll began her career as an exploration geologist at Amoco Production Company in Denver, Colorado before joining Alcan Aluminum Corporation (Alcan). She held various executive roles at the company including President of Bauxite, Alumina and Specialty Chemicals and Chief Executive Officer of the Primary Metal Group, Alcan’s core business. From 2007 to 2013, Ms. Carroll served as the Chief Executive Officer of Anglo American plc, which was, at the time, one of the largest and most diversified mining companies in the world.

 

Ms. Carroll sits on the boards of Hitachi Ltd., American Securities LLC, Prince International Corporation (a private company), Baker Hughes Company, and Glencore plc. She previously chaired the boards of Anglo American Platinum Ltd., De Beers Société Anonyme and the World Economic Forum, Mining and Metals Industry group. She has also served on the boards of BP, the International Council on Mining and Metals, the International Aluminum Institute, The American Aluminum Association, Sara Lee Corporation and Century Aluminum Company

 

Ms. Carroll holds a bachelor’s degree in Geology from Skidmore College, a Master of Science degree in Geology from the University of Kansas, and a Master of Business Administration from Harvard University. She was awarded an Honorary Doctorate of Science from the University of Exeter, Honorary Doctorate of Laws from Skidmore College and an Honorary Doctorate of Economics from the University of Limerick. She is a fellow of the Royal Academy of Engineers and a Fellow of the Institute of Materials, Minerals and Mining. Ms. Carroll is a member of the Institute of Corporate Directors.

 

     
       Board and committee membership and attendance          
    Board of directors1    5 of 5 meetings    100%
    Human resources, health and compensation committee1    3 of 3 meetings    100%
    Safety and environment committee1    1 of 1 meeting    100%
 

 

1  Ms. Carroll was appointed to the board of directors, the human resources, health and compensation committee and the safety and environment committee on May 8, 2020 and attended all meetings after her appointments.

   
          Other public company boards and committee memberships     
    Baker Hughes Company | NYSE    Audit; compensation   
     
    Hitachi Ltd. | TYO    Nominations     
    Glencore plc | LON    Health, Safety, and Environment     
         
     
                    Securities held as of March 19, 2021         
    Common        

 

shares

     Deferred share        

 

units

     Total value2              

Meets share ownership guidelines

 

(including 50% common shares)

    -      4,578      $168,242   On track3
 

 

2  Deferred share units for directors include units issued under our deferred share unit plan and units accrued as dividend equivalents (see Director compensation on page 62 for more information) and their value is based on $36.75, the closing price of our common shares on the TSX on March 18, 2021.

 

 

3  Ms. Carroll has five years from the date of her appointment on May 8, 2020 to meet the share ownership guidelines.

 

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LOGO

 

Director since January 2014

 

Calgary, Alberta

Canada

  Michael H. Dilger (58) | Non-independent

2020 voting results: 99.75% for, 0.25% withheld

 

Mr. Dilger was appointed CEO of Pembina in January 2014. Before that, he was Pembina’s President and Chief Operating Officer (February 2012 to December 2013), Chief Operating Officer (November 2008 to February 2012) and Vice President, Business Development (2005 to 2008).

 

Before joining Pembina, Mr. Dilger worked as a senior executive in various finance and business development positions in oil and gas and infrastructure companies, ranging from companies in the initial capitalization phase to subsidiaries of multi-national corporations, including NOVA Corporation and TransCanada PipeLines Limited. His expertise includes corporate and strategic development, acquisitions and divestitures, and finance and business development. Mr. Dilger was co-chair of the 2016 United Way of Calgary campaign.

 

Mr. Dilger has been a Chartered Professional Accountant since 1989 and holds a Bachelor of Commerce degree from the University of Calgary. He is a member of the Institute of Corporate Directors.

 

 
      Board and committee membership and attendance1
    Board of directors                10 of 10 meetings                 100%
 

 

1  Mr. Dilger attended all board meetings in 2020 as a director and CEO and all committee meetings in 2020 in his capacity as CEO.

 

 
    Other public company boards and committee memberships
    None               
      
   
            Securities held as of March 19, 2021    
    Common        

 

shares

     Restricted and        

 

performance

 

share units

     Total value2              

Meets share ownership guidelines

 

(including 50% common shares) 3

    200,000      247,612      $16,449,741   yes
                       
      Options
      
    2,050,006       
 

 

 2  Based on $36,75, the closing price of our common shares on the TSX on March 18, 2021. Mr. Dilger is not entitled to deferred share units issued under our deferred share unit plan. Restricted and performance share units include units issued under our share unit plan and units accrued as dividend equivalents (see Executive compensation on page 65 for more information).

 

 

 3  Not including the value of performance share units.

 

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LOGO

 

Director since May 2020

 

Houston, Texas

U.S.

 

Robert G. Gwin (57) | Independent

2020 voting results: 99.81% for, 0.19% withheld

 

Mr. Gwin was President of Anadarko Petroleum Corporation (Anadarko), one of the world’s largest independent oil and natural gas exploration and production companies, until its acquisition by Occidental Petroleum Corporation in late 2019. He previously was Executive Vice President, Finance and Chief Financial Officer of Anadarko from 2009 to 2018. Mr. Gwin joined Anadarko in 2006 and was a member of Anadarko’s executive committee since 2008. Concurrently, he also served as Chairman of the Board of Western Gas Partners, LP (WES), a large U.S. oil and natural gas midstream company, from 2010 to 2018, and previously as WES’s President and CEO from 2007 to 2010.

 

Earlier in his career, Mr. Gwin held various positions in corporate finance and executive management.

 

Mr. Gwin currently chairs the board of directors of Enable Midstream Partners, LP.

 

Mr. Gwin served as a director of WES from 2007 to 2019, and as a director of LyondellBasell Industries, N.V. from 2011 to 2018, including serving as its Chairman from 2013 to 2018. He has also served as a director of several non-public entities throughout his career. He holds a Bachelor of Science degree from the University of Southern California and a Master of Business Administration degree from the Fuqua School of Business at Duke University. He also earned the Chartered Financial Analyst (CFA) designation from the CFA Institute. He is a member of the Institute of Corporate Directors.

 

 
      Board and committee membership and attendance
    Board of directors1    5 of 5 meetings    100%
    Human resources, health and compensation committee1    3 of 3 meetings    100%
    Governance, nominating and corporate social responsibility committee1    3 of 3 meetings    100%
 

 

1  Mr. Gwin was elected to the board of directors at the annual meeting of common shareholders of Pembina and appointed to the human resources, health and compensation committee and the governance, nominating and corporate social responsibility committee on May 8, 2020. He attended all board and committee meetings after his election and appointment.

 

 
    Other public company boards and committee memberships
    Enable Midstream Partners, LP | NYSE    Board chair     
   
 
          Securities held as of March 19, 2021
    Common

 

shares

     Deferred share

 

units

     Total value2)     

Meets share ownership guidelines

 

(including 50% common shares)

    -      4,578      $168,242      On track3
 

 

2  Deferred share units include units issued under our deferred share unit plan and units accrued as dividend equivalents (see Director compensation on page 62 for more information) and their value is based on $36.75, the closing price of our common shares on the TSX on March 18, 2021.

 

 

3  Mr. Gwin has five years from the date of his appointment to the board on May 8, 2020 to meet the guidelines.

 

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LOGO

 

Director since October 2017

 

Vancouver, British Columbia

 

Canada

 

Maureen E. Howe (63) | Independent

2020 voting results: 99.22% for, 0.78% withheld

 

Ms. Howe was a Research Analyst and Managing Director at RBC Capital Markets in equity research
from 1996 until 2008. She specialized in the area of energy infrastructure, which included power
generation, transmission and distribution, oil and gas transmission and distribution, gas processing,
and alternative energy. Prior to joining RBC Capital Markets, Ms. Howe held various positions in the
area of capital markets, including investment banking, portfolio management, and corporate finance.

 

Ms. Howe is a director of Methanex Corporation and is the Chairperson of the University of British
Columbia Phillips, Hager & North Centre for Financial Research. She previously served on the board of
directors and acted as chair of the audit committee of Mosaic Forest Management Corp.

 

Ms. Howe has a Bachelor of Commerce (Honours) from the University of Manitoba and a Ph.D. in
Finance from the University of British Columbia. She is a member of the Institute of Corporate
Directors.

 

 
  Board and committee membership and attendance
  Board of directors    10 of 10 meetings            100%        
  Audit committee    4 of 4 meetings    100%        
  Governance, nominating and corporate social responsibility committee (chair)    5 of 5 meetings    100%        
           
 
  Other public company boards and committee memberships
  Methanex Corporation | TSX, NASDAQ                 Governance; audit
 
 
  Securities held as of March 19, 2021

  Common          

 

  shares

  

Deferred share              

 

units

   Total value1                  

Meets share ownership guidelines

 

(including 50% common shares)

  23,588    12,264    $1,317,561    yes

1 Based on $36.75, the closing price of our common shares on the TSX on March 18, 2021. Deferred share units for directors include units issued under our deferred share unit plan and units accrued as dividend equivalents (see Director compensation on page 62 for more information).

 

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LOGO

 

Director since January 2015

 

Calgary, Alberta

Canada

 

Gordon J. Kerr (67) | Independent

2020 voting results: 96.47% for, 3.53% withheld

 

Mr. Kerr was President and Chief Executive Officer and director of Enerplus Corporation (a TSX and NYSE-listed company) from May 2001 until July 2013. He is a past Chairman of the Canadian Association of Petroleum Producers, a former director of Deer Creek Energy Limited and Laricina Energy Ltd., and a past member of the Canadian Council of Chief Executives.

 

He has gained extensive management experience in leadership positions at various oil and gas companies since launching his career in 1979. He started his employment with Enerplus Corporation and its predecessor firms in 1996, and held positions of increasing responsibility, including the positions of Chief Financial Officer and Executive Vice President.

 

Mr. Kerr is a member of the Management Advisory Council of the Haskayne School of Business at the University of Calgary.

  He has a Bachelor of Commerce from the University of Calgary. Mr. Kerr received his Chartered Accountant designation in 1979 and is a fellow of the Institute of Chartered Accountants of Alberta. Mr. Kerr is a graduate of the Institute of Corporate Directors Education Program and holds the ICD.D designation and is a member of the executive of the Calgary Chapter of the Institute of Corporate Directors.

 

  Board and committee membership and attendance
  Board of directors    10 of 10 meetings            100%        
  Audit committee (chair)    4 of 4 meetings    100%        
  Human resources, health and compensation committee1    1 of 1 meeting    100%        
  Governance, nominating and corporate social responsibility committee 1    3 of 3 meetings    100%        

1 On May 8, 2020, Mr. Kerr stepped down from the human resources, health and compensation committee and joined the governance, nominating and corporate social responsibility committee. He attended all meetings of the human resources, health and compensation committee from January 1, 2020 to May 8, 2020, and all meetings of the governance, nominating and corporate social responsibility committee from May 8, 2020 to December 31, 2020.

 
  Other public company boards and committee memberships2
  None

2 Mr. Kerr was a director of Laricina Energy Ltd., a private company, until February 5, 2016. Laricina Energy Ltd. was subject to proceedings under the Companies’ Creditors Arrangement Act (Canada) in 2015. On February 1, 2016, the proceedings were conditionally discharged.

 
  Securities held as of March 19, 2021

  Common          

 

  shares

   Deferred

 

share units              

   Total value                 

Meets share ownership guidelines

 

(including 50% common shares)

  10,400    35,575    $1,689,581   yes     

 

  Class A preferred shares           
  Series 7    6,000                      

3 Based on $36.75, the closing price of our common shares on the TSX on March 18, 2021. Deferred share units for directors include units issued under our deferred share unit plan and units accrued as dividend equivalents (see Director compensation on page 62 for more information).

 

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LOGO

 

Director since August 2010

 

Toronto, Ontario

Canada

 

David M.B. LeGresley (62) | Independent

2020 voting results: 97.18% for, 2.82% withheld

 

Mr. LeGresley has extensive experience in the financial services industry, including as a senior executive at National Bank Financial for 12 years, in several roles, including Head of Corporate and Investment Banking, and most recently Vice Chair. Before that, he held investment banking positions at Salomon Brothers Canada and CIBC Wood Gundy.

 

Mr. LeGresley currently chairs the board of directors of Equitable Group Inc. (and subsidiary Equitable Bank Inc.).

 

He received a Bachelor of Applied Science in Engineering from the University of Toronto and a Master of Business Administration from Harvard Business School. Mr. LeGresley is a graduate of the Institute of Corporate Directors Education Program and holds the designation ICD.D.

 
  Board and committee membership and attendance
  Board of directors    10 of 10 meetings            100%        
  Audit Committee1    2 of 2 meetings    100%        
  Governance, nominating and corporate social responsibility committee1    3 of 3 meetings    100%        
  Human resources, health and compensation committee1    4 of 4 meetings    100%        

 

1 On May 8, 2020, Mr. LeGresley stepped down from the audit committee and joined the governance, nominating and corporate social responsibility committee. He attended all meetings of the audit committee from January 1, 2020 to May 8, 2020, and all meetings of the governance, nominating and corporate social responsibility committee from May 8, 2020 to December 31, 2020.

 
  Other public company boards and committee memberships
  Equitable Group Inc. |  TSX                         Board chair          

 

 
  Securities held as of March 19, 2021

  Common          

 

  shares

  

Deferred share              

 

units

   Total value2                  

Meets share ownership guidelines

 

(including 50% common shares)

  59,789    38,250    $3,602,934    yes

 

2 Based on $36.75, the closing price of our common shares on the TSX on March 18, 2021. Deferred share units for directors include units issued under our deferred share unit plan and units accrued as dividend equivalents (see Director compensation on page 62 for more information).

 

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LOGO

 

Director since December 2008

 

Calgary, Alberta

Canada

 

Leslie A. O’Donoghue (58) | Independent

2020 voting results: 96.06% for, 3.94% withheld

 

Ms. O’Donoghue retired from Nutrien Ltd. at the end of 2019, after 20 years with the company. Her most recent roles were Executive Vice President & Chief Strategy & Corporate Development Officer and Executive Advisor to the CEO. While at Agrium Inc., the predecessor to Nutrien Ltd. prior to its merger with Potash Corporation of Saskatchewan, Ms. O’Donoghue held a number of roles including, Executive Vice President, Corporate Development & Strategy & Chief Risk Officer, Executive Vice President, Operations and Chief Legal Officer. Ms. O’Donoghue currently sits on the board of directors of Methanex Corporation and Richardson International Limited (a private company).

 

Before joining Agrium Inc. in 1999, Ms. O’Donoghue was a partner in the national law firm of Blake, Cassels & Graydon LLP.

 

She has a Bachelor of Economics from the University of Calgary and Bachelor of Laws from Queen’s University. She was admitted to the Alberta Bar in 1989. Ms. O’Donoghue is a member of the Institute of Corporate Directors.

 

  Board and committee membership and attendance
  Board of directors    10 of 10 meetings            100%        
  Human resources, health and compensation committee1    1 of 1 meeting    100%        
  Governance, nominating and corporate social responsibility1    2 of 2 meetings    100%        
  Audit committee1    2 of 2 meetings    100%        
  Safety and environment committee1    1 of 1 meeting    100%        

 

1 On May 8, 2020, Ms. O’Donoghue stepped down from the human resources, health and compensation committee and governance, nominating and corporate social responsibility committee and joined the audit committee and safety and environment committee. She attended all meetings of the human resources, health and compensation committee and governance, nominating and corporate social responsibility committee from January 1, 2020 to May 8, 2020, and all meetings of the audit committee and safety and environment committee from May 8, 2020 to December 31, 2020.

 
  Other public company boards and committee memberships
  Methanex Corporation |  TSX, NASDAQ                 Corporate governance; responsible care

 

 
  Securities held as of March 19, 2021

  Common          

 

  shares

  

Deferred share              

 

units

   Total value2                  

Meets share ownership guidelines

 

(including 50% common shares)

  35,588    38,821    $2,734,531    yes

 

2 Based on $36.75, the closing price of our common shares on the TSX on March 18, 2021. Deferred share units for directors include units issued under our deferred share unit plan and units accrued as dividend equivalents (see Director compensation on page 62 for more information).

 

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LOGO

 

Director since May 2017

 

Swarthmore, Pennsylvania U.S.

 

Bruce D. Rubin (64) | Independent

2020 voting results: 99.81% for, 0.19% withheld

 

Mr. Rubin has over 40 years of experience, including various executive and advisory positions and board memberships in the energy, refining and petrochemical sectors. He was CEO of Sunoco Chemicals Inc. (Sunoco Chemicals) and a Senior Vice President of Sunoco Inc. (2008 to 2010) and held various other executive positions during a 32-year career with that company. Mr. Rubin was the first CEO of Braskem America, Inc. (Braskem America), and he served with Braskem America in an executive capacity from 2010 until 2013. He oversaw the successful transition of Sunoco Chemicals to Braskem America and supported the successful acquisition by Braskem America of the polypropylene business of The Dow Chemical Company. Mr. Rubin was an advisor and director for Braskem America from 2014 to 2017.

 

Mr. Rubin serves on the board of DISA Global Solutions (a Court Square Capital Partners company) and the M. Holland Company. He served on the board of directors of Sylvatex Inc. from 2012 to 2016 and is currently an advisor to the company. He was an Executive Advisor for Court Square Capital Partners (2013 to 2015) and was an Operating Advisor for The Carlyle Group (2015 to 2017).

 

He has a Master of Business Administration from Widener University and a Bachelor of Science in chemical engineering from the University of Pennsylvania. He is a member of the Institute of Corporate Directors.

 

 
  Board and committee membership and attendance
  Board of directors    10 of 10 meetings            100%        
  Audit committee    4 of 4 meetings    100%        
  Safety and environment committee    4 of 4 meetings    100%        
           
 
  Other public company boards and committee memberships
  None
 
 
  Securities held as of March 19, 2021

  Common          

 

  shares

   Deferred share

 

units              

   Total value                

Meets share ownership guidelines

 

(including 50% common shares)

  20,000    18,223    $1,399,249   yes     

 

1 Based on US$29.33, the closing price of our common shares on the NYSE on March 18, 2021 and the Reuters noon U.S. Canadian dollar foreign exchange rate of 1.2437 as at March 18, 2021. Deferred share units for directors include units issued under our deferred share unit plan and units accrued as dividend equivalents (see Director compensation on page 62 for more information) and their value is based on $36.75, the closing price of our common shares on the TSX on March 18, 2021.

 

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LOGO

 

Director since October 2017

 

 

Calgary, Alberta

Canada

  

Henry W. Sykes (62) | Independent

2020 voting results: 97.28% for, 2.72% withheld

 

Mr. Sykes is the former President and director of MGM Energy Corp., a Canadian public energy company focused on the acquisition and development of hydrocarbon resources in Canada’s Northwest Territories and Arctic regions (January 2007 to June 2014). He was President of ConocoPhillips Canada (2001 to 2006) and Executive Vice-President, Business Development of Gulf Canada Resources Ltd. before that.

 

Mr. Sykes began his career as a lawyer and specialized in mergers and acquisitions, securities and corporate law. He is past Chair and member of the boards of Arts Commons and The Arctic Institute of North America, and a director of several private companies involved in the oil and gas industry.

 

He has a Bachelor of Arts in economics from McGill University, a law degree from the University of Toronto and a Master of Law degree from the London School of Economics. He is a member of the Institute of Corporate Directors.

  
 
   Board and committee membership and attendance
   Board of directors       10 of 10 meetings    100%
   Audit committee       4 of 4 meetings    100%
   Human resources, health and compensation    4 of 4 meetings    100%
   committee (chair)               
           
 
   Other public company boards and committee memberships1
   None
 

1   Mr. Sykes was a director of Parallel Energy Trust (a TSX listed company) from March 2011 to February 2016. Parallel Energy Trust filed an application in the Court of Queen’s Bench of Alberta for creditor protection under the Companies’ Creditors Arrangement Act (Canada) and voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code. In the Chapter 11 proceedings, the U.S. Bankruptcy Court approved the sale of the assets of Parallel Energy Trust and the sale closed on January 28, 2016. On March 3, 2016, the Canadian entities of Parallel Energy Trust filed for bankruptcy under the Bankruptcy and Insolvency Act (Canada) and a notice to creditors was sent by the trustee on March 4, 2016.

 
 
   Securities held as of March 19, 2021
   Common shares   

Deferred

 

share units

   Total value2   

Meets share ownership guidelines

 

(including 50% common shares)

   13,306    12.159    $935,839    yes
 

2  Based on $36.75, the closing price of our common shares on the TSX on March 18, 2021. Deferred share units for directors include units issued under our deferred share unit plan and units accrued as dividend equivalents (see Director compensation on page 62 for more information).

 

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Governance

 

Good governance is important for all our stakeholders – our customers, our investors, our employees and the communities we operate in. Strong stewardship by the board, and high standards of governance and ethics throughout our business, are essential for achieving our purpose and operating our business effectively.

 

Our governance practices meet or exceed legal and stock exchange requirements that apply to us. We also regularly benchmark ourselves against our peers to ensure we are following best practices. We continue to focus on ensuring our practices are aligned with our TSX 60 peer group.

 

Governance guidelines

 

  

 

Our purpose

 

Pembina’s objective is to be the leader in delivering integrated infrastructure solutions connecting global markets. We believe we can achieve this vision if:

 

·Customers choose us first for reliable and value-added services

 

·Investors receive industry leading returns

 

·Employees say we are the ‘employer of choice’ and value our safe, respectful, collaborative and fair work culture; and

 

·Communities welcome us and recognize the net positive impact of our social and environmental commitment.

Our board and management operate under governance guidelines that outline our emphasis on:   

  enhancing and preserving value;

 

· protecting dividends;

 

· meeting our commitment to our purpose and our four stakeholder groups: customers, investors, employees and communities; and

 

· operating in a safe, reliable and environmentally responsible way.

 

Our governance guidelines set out our commitment to principles of good governance.

  
  

 

2020 updates to our governance guidelines

 

· Added more formality to board assessments, including individual performance evaluations and the engagement of a third-party independent advisor every three years

 

· Added specific diversity targets, and adopted them under the board diversity policy (see page 36).

 

   

Board independence

  

  an independent chair of the board

 

  

  audit committee, human resources, health and compensation committee and governance, nominating and corporate social responsibility committee are 100% independent

 

  

  majority of the board must be independent

 

  

  regular in camera meetings held without management and without non—independent directors

 

   

Board diversity

  

  commitment to diversity by gender, age, skills and geographic location

 

  

  commitment to diversity of tenure through reasonable board turnover and renewal

 

  

  specific targets for gender diversity on the board, and additional targets for representation of women, Indigenous peoples, persons with disabilities, and members of racial, ethnic and/or visible minorities

 

   

Board effectiveness

  

  formal process for nominating directors and succession planning

 

  

  ongoing director orientation and director education program

 

  

  clearly established and distinct roles of board members and senior management

 

  

  commitment to maintaining dialogue between management and directors

 

  

  ability of the board and board committees to seek independent advice as appropriate

 

  

  formal board assessment and peer review process, including engaging a third—party independent advisor at least every three years

 

   

Integrity and ethical conduct

  

  commitment to ensuring the integrity of internal controls and public disclosure

 

  

  monitoring of overboarding, board interlocks, and other potential conflicts of interest

 

  

  established equity ownership requirements for directors

 

  

  formal policy on majority voting

 

   

Organizational effectiveness

 

  

  requirement of board to oversee corporate strategy and manage organizational risks

 

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The board’s mandate

 

The board of directors oversees our business, provides guidance to management, monitors management’s activities and sets corporate policy. The board is also responsible for developing our approach to corporate governance, including policies,

 

    

  

 

You can find a copy of the board’s charter on our website (www.pembina.com).

standards and practices that ensure we operate ethically and meet or exceed the laws and regulations that apply to us.

The board’s charter sets out specific matters that must be approved by the full board. All significant operational, governance, financial decisions, risk management decisions, and strategies that could affect our shareholders are reviewed by the board.

The board’s charter includes:

 

 

ensuring an ethical culture;

 

 

strategic planning;

 

 

enterprise risk management, including insurable risks;

 

 

financial management and reporting;

 

 

succession planning and diversity; and

 

 

officer compensation.

The board fulfils its mandated duties directly and by delegating certain responsibilities to its four standing committees (see page 43 for information about the committees).

Ensuring an ethical culture

One of our most valuable assets is our reputation as a reliable and responsible energy transportation and midstream service provider, with consistent financial performance and long-term financial stability. Fostering and ensuring a culture that promotes integrity and ethical conduct is key to maintaining our reputation. In early 2021, we implemented a human rights policy under our code of ethics (the code) to explicitly confirm our commitment to operating our business in a way that respects the human, cultural and legal rights of all individuals and communities, regardless of geographical location.

Our commitment to respecting human rights extends to all contractors and subcontractors working at our sites and includes the following, among other things:

 

·  

eliminating unlawful discrimination and harassment in the workplace;

 

·  

recognizing the legal rights of all individuals and communities, including women, Indigenous peoples, persons with disabilities, members of other racial, ethnic and/or visible minorities, and the economically disadvantaged;

 

·  

respecting the importance of the environment in the communities in which we operate;

 

·  

respecting personnel’s rights related to freedom of association and collective bargaining;

 

·  

recognizing the right to water as a fundamental human right; and

 

·  

addressing risks of modern slavery, forced labour and child labour (as applicable, recognizing that the risk of these human rights violations is low because of the primary geography of Pembina’s operations).

Our commitment to respecting human rights is informed by the principles of the Universal Bill of Human Rights, the United Nations Universal Declaration of Human Rights, the United Nations Guiding Principles on Business and Human Rights, the International Labor Organization’s Declaration of Fundamental Principles and Rights at Work and the Organization for Economic Development Guidelines for Multinational Enterprises.

All executives and employees must acknowledge every year that they have read and understand our code, whistleblower policy and other policies, will review all updates, and will comply with them at all times. You can find these and other policies on our website (www.pembina.com).

 

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Code of ethics

All directors, executives and employees of Pembina are governed by the code, which sets out principles for ethical

conduct in the following areas:

 

· conflicts of interest;

  

· disclosure and insider trading;

· business relationships and fair dealing;

  

· stakeholder and public relations;

· compliance with the law;

  

· privacy and confidentiality;

· human rights;

  

· protecting our assets and records;

· government relations;

  

· entertainment, gifts and other payments;

· health, safety and environmental matters;

  

· workplace environment and relationships; and

· integrity of financial information;

  

· reporting responsibilities and procedures.

Compliance is mandatory and everyone has a responsibility to report violations of the code. Violations can result in disciplinary action, including dismissal.

The board is responsible for establishing procedures for monitoring compliance with the code and does so through a combination of periodic reports from management, our annual certification process, as well as through our whistleblower policy (see below). No aspect of the code can be waived unless it is approved by the board and properly disclosed, as required by applicable laws and regulations. The board has not waived any aspect of the code since it was implemented in 2005, and no material change reports related to the conduct of any director or officer have been filed (which would generally be required for conduct that would constitute a material departure from the code). The code was last updated and approved by the board in February 2021.

Conflicts of interests and related party transactions

The directors and officers of Pembina may be directors or officers of entities that we are in competition with or are customers or suppliers of Pembina or certain entities in which Pembina holds an equity investment. This may give rise to a conflict of interest in the administration of their duties for Pembina. Directors and officers of Pembina are required to disclose the existence of potential conflicts in accordance with the code and other corporate governance policies and in accordance with the Business Corporations Act (Alberta).

The audit committee has oversight of related party transactions. Under our code, a director who has a material interest in a transaction or agreement involving Pembina must disclose the interest to the CEO and the Chair of the audit committee immediately and does not participate in any discussions or votes on the matter. All directors and corporate officers also complete an annual questionnaire disclosing any related party transactions. The oversight process is managed by the financial services team in cooperation with the governance team, who maintain a list of all affiliations and run a process quarterly to ensure they are reported and disclosed as required. See Note 30 in our audited consolidated financial statements for the year ended December 31, 2020 for further discussion on related party transactions.

Related party in this context means: (a) individuals who are considered key management personnel, including certain key officers and the directors of Pembina, and close members of the individual’s family; (b) any entities that the above individuals control, jointly control, have significant influence over, or serve as key management personnel or directors; (c) joint ventures held by Pembina; and (d) pension plans that benefit employees. A related party transaction is a transfer of resources, services or obligations between a reporting entity and a related party, regardless of whether a price is charged.

Whistleblower policy

Pembina has built its reputation over 65 years because of our strong record of safe, reliable and environmentally responsible operations. Our whistleblower policy is designed to help us uphold our reputation and maintain public confidence by encouraging employees, consultants, contractors, agents and other stakeholders to act responsibly and report possible unethical practices without fear of discrimination, retaliation or harassment. The policy includes examples of activities that should be reported, and the process whistleblowers should follow to file a confidential report, including a whistleblower line that allows people to report anonymously by telephone or the internet, or through our external legal counsel addressed as confidential for direct delivery to the chair of the audit committee, at any time. Each whistleblower complaint is treated confidentially and thoroughly investigated.

 

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Shareholder engagement

 

We engage with our shareholders through accurate and consistent public reporting, as well as open dialogue about our strategy, performance and business activities. We provide ongoing information to our shareholders in our annual report, management information circular, annual information form, quarterly reports, news releases, sustainability report, website,

  

 

2020 highlights

 

· Held our first-ever virtual annual meeting of shareholders

 

· Participated in 27 investor conferences and management road shows, 20 of which were held virtually.

corporate presentation, earnings calls, annual investor day and at industry conferences and other meetings. We host earnings calls every quarter that are open to all, with a live webcast and question and answer period. Our annual meeting is webcast live (this year’s meeting is virtual-only), and all shareholders and duly appointed proxyholders have an equal opportunity to participate. Guests will have an opportunity to ask questions during the live question and answer session following the meeting.

Our shareholder engagement program is formally set every year, and follows a consistent pattern of investor conferences, management road shows, industry-specific conferences, one-on-one meetings, and site tours. We endeavor to host an investor day every year during which our management team provides in-depth information about our strategy, operations, growth projects and financing plans. In order to comply with social distancing and travel restrictions as a result of the COVID-19 pandemic, we did not host an investor day in 2020 but look forward to continuing this tradition in the future.

 

We also ask investors for feedback at all engagement opportunities, as well as by email and by telephone, and our investor relations group has

  

 

Disclosure policy

 

Pembina is committed to providing material information to shareholders and the public in a timely, accurate and balanced fashion. We have a disclosure policy that applies to all directors, executives, employees and any other person authorized to speak on our behalf, that sets out our procedures for timely dissemination of material information to the public. We also have a disclosure committee made up of the chief executive officer and senior vice presidents who are responsible for reviewing and approving all material disclosure before it is released publicly. We regularly review our disclosure policy and update it as appropriate.

formal and informal interactions with shareholders about specific questions. Occasionally, members of the board, including the chair, will participate in these activities with management. Management regularly provides the board with feedback from our shareholders, both about our company and about more general themes related to our industry.

Our directors are also available to meet directly with shareholders, as appropriate. Interested parties can contact our board members through the corporate secretary at the address below. Board members also attend our annual shareholders’ meeting and are available to respond to questions and receive feedback from investors.

Chair of the board of directors

c/o Corporate Secretary

 

Pembina Pipeline Corporation

4000, 585 – 8th Avenue S.W.

Calgary, Alberta T2P 1G1

Shareholders can also contact our investor relations department any time, by letter, email or phone.

 

Strategic planning oversight

 

The board oversees the development and execution of our long-term strategic plan and shorter-term objectives and initiatives. Pembina is committed to growing shareholder value through strategic project development and acquisitions that support the long-term success of both our company and our customers.

 

The board holds two dedicated strategy sessions every year. At these

  

 

2020 highlights

 

Key areas of focus this year were our management of the COVID-19 pandemic and its impact on our employees, customers and investors, our ESG strategy, business diversification and the energy transition. You can read more about the pandemic and our response on page 2.

  

sessions, the board meets with management to review Pembina’s current activities, long-range financial forecast and future growth opportunities, including input from third-party advisors from time to time about industry or other

 

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trends and developments that may benefit us or pose a risk. The board approves our annual strategic plan and monitors performance against it throughout the year, based on quarterly updates and reports from management.

The board assesses the potential impact of significant projects against Pembina’s financial guardrails:

 

·  

generate 80% of adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) (see About non-GAAP measures on page 100) from fee-for-service business;

·  

maintain a strong “BBB” credit rating;

 

·  

maintain a strong customer base of 75% or greater of investment grade or secured counterparties; and

 

·  

target dividend payout of <100% of fee-for-service cash flow.

 

Risk management oversight

The board is responsible for overseeing risk management at Pembina. The board ensures it understands the principal risks of our business and assesses the balance between risk and potential return for Pembina and our shareholders to ensure our viability over the long-term.

 

As part of its responsibility, the board makes sure we have:

 

· an enterprise risk management (ERM) process, designed to identify and assess potential risks that may affect our business, operations or results, and to manage risk factors within our risk appetite;

 

· a risk management infrastructure to respond to identified risks, and critical risk management policies and procedures, including risk response, controls, monitoring, mitigation and reporting to the board; and

 

· specific management processes for addressing corporate, regulatory, securities and other compliance requirements.

 

 

2020 highlights

 

Our 2020 ERM process identified seven risks that may require new action. Among the risks under new action required were Pembina’s ESG strategy and business optimization and productivity, both of which are included in the executive compensation program for 2020 and 2021 (see page 56).

 
 

 

Risk management policies

 

Pembina maintains the following policies:

 

· ERM policy

 

· Market risk mitigation policy

 

· Counterparty risk management policy

 

· Acceptable use of information assets policy

 

· Information management policy

 

· Security management policy

 

To facilitate our risk review, we have an enterprise risk committee made up of members of management. The committee meets at least quarterly to review the performance, appropriateness and the current business environment surrounding our risk management activities. The committee requests each division’s leadership team to identify the top risks for their businesses. The committee conducts roundtable discussions and divides Pembina’s top risks into three categories:

 

·New action required: risks where mitigation will require a new approach or strategy;

 

·Mitigated with ongoing diligence: risks where there is mitigation in place, but may require some further adaptation or adjustments; and

 

·Black swan: risks that are remote, and no current mitigation is in place or contemplated.

 

A senior officer is assigned to every risk that requires new action or that has a mitigation strategy but may need adaptation or adjustment.

 

Management reports periodically to the board of directors about the risks that have been identified and, at least once a year, presents to the board of directors a summary of the enterprise risk committee’s review of risk identification, management and reporting, and any deficiencies identified. The governance, nominating and corporate social responsibility committee reviews the risk oversight functions of the board and board committees to confirm that identified risk oversight is appropriately allocated.

 

The ERM process also guides our materiality and disclosure decisions in relation to risks, based on the overriding principle that risks must be disclosed if they would most likely influence an investor’s decision to purchase securities of the company, and weighing both the probability of an outcome as well as the potential financial impact to the

 

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company. You can find a complete listing and explanation of our risk factors under the heading Risk factors in our annual information form (AIF) on our website (www.pembina.com), on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov).

 

Our 2020 ERM process identified 7 risks, listed to the right, that may require new action. For these top risks the enterprise risk committee identified potential impacts, mitigation strategies currently in place, emerging risks, and proposed additional mitigation approaches.

 

 

 

Risk exposure prompting action

 

· Project execution and capital cost efficiency

 

· Business optimization and productivity

 

· Western Canadian Sedimentary Basin growth/energy transition

 

· ESG strategy

 

· Access to capital and insurance capacity

 

· Lack of diversification (demand pull customers/business)

 

· Process safety implementation

Environmental, social and governance oversight

 

The board oversees sustainability at Pembina and recognizes the importance of ESG factors to Pembina’s long-term success.

 

Corporate social responsibility, Pembina’s overall sustainability and our sustainability report are the responsibility of the governance, nominating and corporate social responsibility committee. The safety and environment committee oversees environmental risks and policies. A new ESG steering committee, introduced in late 2020 and made up of members of management, meets regularly to review ESG-related risks and opportunities, updates our ESG strategy quarterly, and reports quarterly to the governance, nominating and corporate social responsibility committee

 

Pembina’s purpose includes a commitment to having a net positive impact on our stakeholders, and this is reflected in our policies and approach to health, safety and asset integrity, environmental stewardship, social well-being, Indigenous relations, our investment in communities, our direct engagement with the communities where we operate and our commitment to respecting human rights in our business and operations and our supply chain.

 

 

 

Taking action on our ESG strategy

 

ESG strategy was identified in the 2020 ERM

process as a risk requiring us to take new action.

 

The board continued to expand its focus on and oversight of sustainability matters, recognizing that our ability to address them impacts our commitment to create long-term value. In 2020, the board and management:

 

· approved the appointment of a new vice president responsible for sustainability;

 

· introduced an ESG management steering committee that prepares a quarterly ESG strategy document to identify both risks and opportunities; and

 

· improved the link between executive compensation and ESG metrics aligned with our four groups of stakeholders – customers, investors, employees and communities – for 2021 executive incentive plan design and compensation decisions (see page 56).

 

 

We also understand that we are exposed to legal and reputational risk if we fail to adapt to changing regulatory regimes, and political and social initiatives in this regard. We are aware of the increasing need for transparency in ESG reporting.

 

You can read about our activities in our 2020 sustainability report (available at www.pembina.com/sustainability/. This year, we enhanced our disclosure by adding additional metrics, and a listing of ESG related risk factors.

 

 

Reporting on environmental risks

 

Pembina’s 2020 sustainability report includes a listing of our top identified climate related risks and other ESG risks. The report is available on our website at www.pembina.com/sustainability/.

 

The risk factors listed in our 2020 AIF also include specific reference to the impact we currently think climate change could have on our company.

 

 

Our Carbon Stand

 

Pembina is committed to reducing the greenhouse gas (GHG) emission intensity in each of our businesses. We expect our Carbon Stand, introduced in 2019, to have the following outcomes:

 

· employees who are proud of working for Pembina because of our commitment to the environment;

 

· communities that recognize our commitment to GHG reductions, resulting in our investment being welcomed;

 

· demonstrate our commitment to GHG emissions reduction, aligning with leading customers’ strategies and actions; and

 

· maintain and expand our investor base, by demonstrating our commitment to GHG reduction.

 

Turn to page 33 for information about our Inclusion & Diversity Stand.

 

 

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Financial management and reporting

The board is responsible for:

·  

approving our financial statements, accompanying MD&A and earnings press releases;

·  

reviewing and overseeing compliance with the audit, accounting and financial reporting requirements that apply to our business;

·  

approving our annual operating and capital budgets and financing plans and strategies; and

·  

approving decisions to participate in the capital markets and all significant changes to our accounting policies and practices.

The board also makes sure we have a robust system for tracking internal controls over financial reporting, compliance with the Sarbanes-Oxley Act, internal audit, fraud and auditing matters and responding to complaints, including anonymous complaints we may receive from employees or others. You can read about the audit committee’s role in compliance and internal audit on page 44 and our whistleblower policy on page 27.

Cyber security

We have a robust program for identifying and mitigating information and security risks, enhancing the skills of our people, our processes and technology aspects of our operations.

Three components form the core of our approach to cyber security and are an integral part of our operating management system:

 

·  

security management system – integrated into the decision, design and implementation of technologies and Software as a Service (Saas) within Pembina and performs risk assessments on technology designs and cloud/SaaS security assessments. Reviewed annually by a third party and findings are documented and tracked

·  

cyber vulnerability management program – continuously monitors the internal environment for vulnerabilities

·  

security operation center – operates 24/7/365 to monitor the internal and external landscape, and triggers use cases and workflows if an anomaly is detected.

Employees take our information security training and compliance program at least annually. Cyber security is part of our enterprise risk management and reports quarterly to the enterprise security steering committee which is made up of several members of senior management. Management updates the audit committee and the safety and environment committee on cyber security quarterly.

Our cyber security programs align with the National Institute of Standards and Technologies Cyber Security Framework (NIST CSF), a world recognized framework for managing cyber security, and we engage a third party to perform a NIST CSF maturity assessment to identify potential areas for improvement.

We have information security risk insurance and have not experienced an information security breach in the last three years.

Compensation

Director compensation

The board is responsible for:

 

·  

approving director compensation;

 

·  

making sure director compensation is aligned with shareholder interests and adequately reflects the time commitment, scope of responsibilities, risks involved in being a director and market trends in director compensation;

 

·  

working with the human resources, health and compensation committee to review from time to time the competitiveness of the compensation of our board members, board chair and committee chairs; and

 

·  

working with independent external advisors that review director compensation and provide objective advice.

 

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Executive compensation   

All decisions about compensation of the CEO and senior vice presidents must be approved by the board.

 

The board works with the human resources, health and compensation committee and independent advisors retained by the committee, to determine compensation for our CEO and senior vice presidents, including variable compensation.

 

You can read more about our approach to compensation governance and how we compensate our directors and executives beginning on page 51, and the role and responsibilities of the human resources, health and compensation committee on page 48.

  

 

The human resources, health and compensation committee reviews and recommends compensation for directors, the CEO and senior vice presidents. You will find a full list of that committee’s activities in 2020 starting on page 48.

 

Key changes this year included enhancing the importance of Pembina’s stakeholder groups, our ESG strategy and business optimization and productivity in our executive compensation program for 2020 and 2021 (see page 56).

  
  

Executive succession planning and diversity

Executive succession planning

The board has developed position descriptions for the CEO, the senior vice president and Chief Financial Officer (CFO) and the other senior vice presidents, outlining the scope and responsibilities of each role.

The board is responsible for evaluating and appointing the CEO and the senior vice presidents, and for approving the management succession process for other executives. It reviews succession plans for the CEO, the senior vice presidents and other executives, taking into consideration recommendations by the human resources, health and compensation committee. There is also a development plan process in place for employees who are potential successors to senior vice presidents and other executives. Assessment of readiness includes a thorough review of each individual’s leadership competencies, technical skill and commercial acumen.

The executive team has formed a talent management committee that regularly reviews succession plans, identifies employees with high potential and ensures employee development is progressing as planned. The CEO meets with the human resources, health and compensation committee at least once a year to discuss the succession plan, review succession candidates for the CEO position, as well as senior management and other strategic positions, and review development plans for possible successors. Emergency successors for business continuity have also been identified for each executive position and are reviewed every year.

 

Leadership development

Pembina is developing a community of extraordinary leaders to realize the company’s vision, and our Leadership Competency Framework is an essential part of this process, including succession planning. The framework has three graduated components: leading self, leading others and leading the business, and focuses on Pembina’s 10 core competencies. The program brings employees across the company together to build relationships and share ideas, complementing on-the-job experience with formal and informal learning opportunities.

  

 

Pembina’s 10 core competencies

 

· Demonstrates Accountability & Commitment

 

· Acts Courageously

 

· Exhibits Self-awareness

 

· Communicates Effectively

 

· Works Collaboratively

 

· Empowers & Develops Others

 

· Thinks & Acts Strategically

 

· Leads Positive Change

 

· Drives Results

 

· Applies Business Acumen

 

Diversity

The executive team and the board are mindful of the importance of management diversity, and consider diversity of all types, among other factors, in management succession planning. We comply with the requirements of the Employment Equity Act (Canada) for women, Indigenous peoples, persons with disabilities, and members of visible minorities in management and submit a report annually to the federal government.

Our Inclusion & Diversity Stand reflects our commitment to diversity, equal opportunity and ensuring that our employees can thrive in an inclusive environment.

 

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Inclusion & Diversity Stand

 

We are committed to diversity, equal opportunity and ensuring that our employees have the ability to thrive in an inclusive environment. Our Inclusion & Diversity Stand, introduced in 2019, is expected to result in the following intended outcomes:

 

· Attracted, retained and developed a diverse workforce that is creative and innovative

 

· A work environment where employees feel valued and respected

 

· Cultivated a workforce that is representative of the communities where we live and work

 

· Developed a culturally aware workforce that succeeds in global markets

 

· Aligned our values with our customers by recognizing the importance of a diverse and inclusive work environment

 

· Demonstrated that we are investing in a diverse and inclusive workforce to strengthen our business and improve profitability

 

· Attracted and retained investors who are committed to ESG initiatives

 

Our approach to inclusion and diversity has three phases.

 

Phase 1 - Research and awareness Complete    Phase 2 - Creation of Stand and outcomes Complete    Phase 3 - Strategy and measurement In progress

· Best practice and industry research

 

· Internal stakeholder consultation sessions

 

· Executive awareness training

 

· Current state data analysis, including an employment equity narrative that assesses Pembina’s diversity by gender, Aboriginal peoples, persons with disabilities and visible minorities.

  

· Creation of a committee of officers and other executives to develop Pembina’s Inclusion & Diversity Stand and outcomes to drive commitment to the initiative.

  

· Development of a multi-year strategy

 

· Identification of key focus areas and initiatives

 

· Identification of key metrics for measurement

 

· Training for the recruitment team and other members of Human Resources.

Phases 1 and 2 are complete, and our employment equity narrative is available to all employees on the company’s intranet.

We continue to make progress on Phase 3. In 2019, we conducted an all-employee online inclusion survey and received responses from all demographic groups, with a good distribution among employees in the field and our offices. We also saw responses across genders. The survey aimed to identify any systemic or attitudinal barriers to inclusion our organization may face. We also conducted focus groups to gain further understanding of the survey data and to hear from employees directly.

Representation of women

Women currently represent approximately 25.4% of our workforce, which is higher than the Alberta mining and oil and gas extraction industry median for all employees of 21.5% in 2017, the last time this data was published, and the most closely comparable industry group. We currently have six female executives (22.2% of our executive team). While we do not have a formal target for women in executive positions, we are confident that, by continuing to identify female candidates for higher level executive positions, and with the growing number of women in management, our succession planning will lead to more women moving into executive positions.

We established the following three pilot employee resource groups, each of which was sponsored by senior executives and monitored for effectiveness in 2020:

 

·  

Women’s Mentorship Circle: focuses on women’s leadership and is modelled from a mentorship program;

 

·  

Women in Commercial: focuses on creating opportunities to share knowledge and experience related to barriers to women’s success in commercial roles; and

 

·  

Women in Finance: aimed at providing women in finance the support and knowledge to confidently pursue their career goals without barriers.

In 2021, we will continue to build on the success of these resource groups and consider how we can further develop representation among women across our businesses.

 

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Training and awareness

In 2020, we focused on increasing training and awareness to all employees across the organization. As part of our commitment to inclusion and diversity, all employees were required to complete two e-modules, in partnership with the Canadian Centre for Diversity and Inclusion, in which we are an employer partner. The first focused on inclusion and diversity fundamentals which provided a shared understanding of what we talk about when we refer to inclusion and diversity, and why inclusion and diversity are keys to the success of organizations as well as individuals. The second focused on unconscious bias, which explored the sources and mechanics of bias, its impact and cyclicality. We also launched a central self-serve hub which provides employees with additional training offerings, tools and resources to continue their learning journey.

In 2021, we will continue to work on and finalize our five-year strategy and will include the executives and inclusion and diversity advisory group to assist and provide feedback. We have also hired Pembina’s first Senior Advisor, Inclusion and Diversity, to ensure we have the subject matter expertise and commitment to move this work forward. We will continue to roll out additional employee resource groups and provide training to leaders. In addition, all employees will be accountable for including an inclusion and diversity pledge in their individual goal plan for 2021.

 

Employee engagement

We believe an engaged workforce increases company productivity, improves results and ultimately adds value to our shareholders. We began tracking employee engagement scores in 2013 and are updating those results every two or three years.

 

In 2018, we conducted a full engagement survey, and achieved a score of 66%, with a 98% response rate. Our response rate far exceeded AON’s global average response rate of 80% and our 66% score was consistent with other

  

 

2020 highlights

In 2020, Pembina was again recognized as one of ‘Alberta’s top 75 employers’ by Mediacorp Canada and recognized as one of ‘Canada’s top 100 employers’ by the Globe and Mail.

 

We improved our employee engagement score in 2020 and we have set 2021 targets to continue to improve.

TSX 60 companies in the survey at the time.

  

 

In 2020, we conducted an Employee Engagement Pulse Survey, using MacLean and Co. Our overall engagement score was 86%. We had a response rate of 88% and showcased improvements in key categories of focus since the 2018 survey.

 

We are committed to continuing to listen to employee feedback and create the actions and focus areas required to continue to make Pembina a great place

  

 

Human resources

 

Pembina maintains the following policies:

 

  Respectful workplace policy

 

  Alcohol and drug policy

 

  Privacy policy

  
  
to work. Because we aspire to a higher engagement level, our CEO and senior vice presidents have included specific goals for 2021 to address some of the concerns voiced by our employees. In 2021, we will continue work to sustain and improve upon our engagement with a goal of maintaining a 70% engagement score on a full engagement survey that we will conduct later in the year.

Employee health and wellness

For employees to be engaged, it is important that we take care of their health and wellness, particularly during the COVID-19 pandemic. We ensured we had a pandemic plan, instituted protocols to prevent the spread of the virus in our field operations, updated operating safety standards, decamped our Calgary and field offices to work from home, adapted standards to changing labour regulations and government restrictions and created an extended work from home standard specific to the pandemic. By the summer of 2020, we created a working group to prepare for the eventual safe return to the office. In recognition of the strain that the pandemic has placed on our employees, regular communication was and continues to be considered paramount. We also conducted a complete review of mental health support, additional resources were added, and all mental health offerings were communicated to employees.

 

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About the board of directors

We expect our directors to demonstrate the highest personal and professional ethics, integrity and values, and to represent the long-term interests of our stakeholders.

 

Independence

    

The board assesses the independence of directors annually using independence criteria that meet or exceed the following standards:

 

· National Policy 58-201 – Corporate Governance Guidelines;

 

· National Instrument 52-110 – Audit Committees;

 

· U.S. Securities and Exchange Commission rules and regulations;

 

·Sarbanes-Oxley Act; and

 

· TSX and NYSE rules.

 

    

 

  

 

Independent board

Ten of the eleven nominated directors are independent, meaning they do not have a business or other relationship (direct or indirect) that could, or could reasonably be perceived to, materially interfere with their ability to act in our best interests. Mr. Dilger is not independent because he is Pembina’s President and CEO.

 

This is described in detail in our Standards for Director Independence, which you can find on our website (www.pembina.com).

We require all directors who sit on the audit, human resources, health and compensation, and governance, nominating and corporate social responsibility committee, to be independent directors.

In camera sessions

The board meets in camera at each meeting to facilitate regular, open and candid discussion among the independent directors without non-independent directors (if there are any) and management present.

In 2020, our independent directors met separately at every board meeting.

About the chair of the board

The chair of the board is appointed by the directors for a term of one year. The board, in conjunction with the governance, nominating and corporate social responsibility committee, selects the chair of each board committee.

The board’s intent is to have an independent chair unless it is in the best interests of the company to appoint a chair who is not independent. The current board chair is independent. The roles of chair of the board and CEO have been separate since we went public in 1997.

The board has written position descriptions for the chair of the board and the committee chairs, outlining the scope and responsibilities of those roles. Committee chairs lead their committee and report to the board. The chair reports to the board and our shareholders and works with the CEO to make sure we fulfill our responsibilities to shareholders, employees, partners, governments and the public.

The chair is expected to provide leadership to the board and foster effective, responsible decision-making, including overseeing board direction and administration, and board and individual director effectiveness.

 

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Nomination of new directors

The board reviews its composition annually, considering diversity, specific skills, tenure and the experience required on the board. The board looks at director nomination dynamically, recognizing that the skills the board needs will change over time as the company and the industry evolve. The goal is a board that is effective, experienced and well- balanced.

The board considers new director candidates based on merit with regard to the benefits of diversity on the board, and with a view to the specific targets set out in Diversity targets (below). The board also considers diversity of age, geography skills, knowledge and experience in its selection process.

The governance, nominating and corporate social responsibility committee looks to several sources to identify new candidates, including outside search firms, and recommends new director candidates to the board for approval. The board proposes the final list of nominated directors to shareholders.

The governance, nominating and corporate social responsibility committee and the board look for directors who are inquisitive and objective, have practical wisdom and mature judgment. Potential candidates are identified based on competencies, skills, education, communication and interpersonal skills, and relevant business, government and civic experience. The committee and the board also consider the board’s skills matrix, to make sure board composition and diversity remain balanced. To make sure the process is impartial, the board takes into consideration any potential conflicts of interest and relationships between new directors and existing directors. It also considers whether the candidates can devote enough time to their duties as a director and reviews and consults with the chair of the board and the CEO to gather their input before proposing the nominated directors to shareholders.

We are excited this year to recommend Cynthia Carroll for election to the board. The board appointed Ms. Carroll to the board of directors on May 8, 2020. The governance, nominating and corporate social responsibility committee worked with two independent search firms to develop a list of candidates who met the diversity and experience needs of the board. Potential candidates were interviewed extensively by the search firm, members of the governance, nominating and social responsibility committee, and other members of the board. Ms. Carroll has the necessary mix of skills, experience and qualifications to be an effective member of the board and brings a wealth of relevant senior executive leadership experience and knowledge of global operations.

 

Board diversity

 

The board recognizes the importance of director diversity and has a written policy that serves as a framework for promoting diversity of all kinds. In 2020, the board amended its board diversity policy to add specific targets for gender representation on the board, and additional targets for representation of other minority groups.

 

We currently have four women on our board, and have improved the board’s geographic, educational, experience, and age diversity over time.

 

In line with the objectives of the board diversity policy, the governance, nominating and corporate social responsibility committee aims to achieve diversity on the board when identifying, selecting and recommending nominees for election, while balancing the professional qualifications required of our directors. In its annual assessment of board composition and mix of skills, the governance, nominating and corporate social responsibility committee also looks at how effective our diversity policy is at building board diversity, considering the skills required on the board at that time.

 

    

 

 

  

 

Diversity targets

 

The board has adopted diversity targets as part of its board diversity policy. It will consider new director candidates based on merit with regard to the benefits of diversity on the board, and with a view to the following diversity targets:

 

· female and male genders representing at least 30% of the independent directors on the board; and

 

· the board aspires to have at least 40% of independent directors represented by women, Indigenous peoples, persons with disabilities, or members of racial, ethnic and/or visible minorities.

 

    
    

 

36%

of the nominated directors are women

 

 

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The governance, nominating and corporate social responsibility committee and board are specifically committed to identifying candidates who will advance the board’s diversity targets. While we do not have specific timelines for reaching our targets, we are confident that diversity is being addressed on an ongoing basis by the governance, nominating and corporate social responsibility committee and the board. We have successfully added three women directors to the board since the implementation of our board diversity policy.

 

Age and tenure

 

Directors retire from our board or do not stand for re-election once they have turned 72, unless the board determines otherwise.

 

We do not have a formal policy imposing term limits. Our priority is to assemble a board that has the right mix of skills and experience to provide strong stewardship.

 

    

  

 

63

 

average age of our directors

 

5.9 years

 

average tenure of our independent directors

 

While the board recognizes that a longer serving director can make a growing contribution to the board over time, it balances experience with some turnover to generate fresh ideas and perspectives on various issues and our business in general.

Location

Pembina operates in Canada and the U.S., so it is important to have directors with experience in these markets. Seven of our directors are located in Canada, and four are located in the U.S. Aside from geographical location, we have several directors with relevant experience in both markets as well as internationally.

Skills and experience

The board regularly evaluates the competencies and skills of the directors against what it needs for proper oversight,

effective decision-making and fulfilling its mandate.

It is our goal to ensure the board has a prudent mix of relevant skills and experience, sufficiently diverse opinions to support balanced discussion and debate, and a manageable number of directors to facilitate productive discussion and decision-making. The board uses a skills matrix to identify and evaluate the experience and knowledge of the directors, and to identify potential areas to focus on when recruiting new director candidates. The governance, nominating and corporate social responsibility committee maintains the matrix and updates it regularly. In 2021, the governance, nominating and corporate social responsibility committee and the board revised its skills matrix in order to better illustrate our directors’ self-assessments of skill and experience levels, and added new skills that will be important to the company as it evolves.

The tables on the next page show the mix of experience and knowledge of our nominated directors. We include each director’s self-assessment of their previous experience and functional expertise, which they rank at one of three levels based on criteria specific to each category.

 

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The following table shows the mix of experience and knowledge of our nominated directors:

 

    LOGO  

 

LOGO

  LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO  

LOGO

 

                     

Previous experience

                                           
                     

Other public company board experience1

  🌑   🌑   🌑   🌑   🌑   🌑   🌑   LOGO   LOGO   O   🌑
                     

Public company senior leadership experience2

  🌑   🌑   🌑   🌑   🌑   O   🌑   LOGO   LOGO   LOGO   🌑
                     

Industry experience – Oil & Gas3

  🌑   🌑   🌑   🌑   🌑   LOGO   🌑   LOGO   O   🌑   🌑
                     

Sector experience – Midstream

  🌑   🌑   LOGO   🌑   🌑   🌑   O   O   O   LOGO   LOGO
                     

Sector experience - Petrochemical/LNG

  O   🌑   LOGO   O   🌑   LOGO   O   O   O   🌑   O
                       

Areas of functional expertise4

                                           
                     

Operational excellence

  O   🌑   🌑   LOGO   LOGO   O   O   O   🌑   🌑   LOGO
                     

Financial/Accounting management5

  🌑   LOGO   LOGO   🌑   🌑   🌑   🌑   🌑   LOGO   LOGO   LOGO
                     

Capital allocation

  🌑   🌑   🌑   🌑   🌑   🌑   🌑   LOGO   🌑   LOGO   🌑
                     

Engineering/Technology/Research/Academia

  LOGO   🌑   LOGO   LOGO   O   O   O   🌑   O   🌑   O
                     

Safety, health and environmental

  LOGO   🌑   🌑   LOGO   LOGO   O   LOGO   O   🌑   🌑   🌑
                     

Social and corporate governance

  LOGO   LOGO   🌑   LOGO   LOGO   LOGO   🌑   LOGO   🌑   LOGO   🌑
                     

Human resources and compensation

  🌑   LOGO   🌑   🌑   🌑   O   🌑   🌑   LOGO   O   🌑
                     

Capital markets

  🌑   O   LOGO   LOGO   🌑   🌑   🌑   🌑   LOGO   LOGO   LOGO
                     

Global business activity

  O   LOGO   🌑   O   🌑   O   🌑   O   LOGO   🌑   LOGO
                     

Enterprise risk management

  LOGO   🌑   LOGO   🌑   LOGO   LOGO   🌑   LOGO   🌑   LOGO   LOGO
                     

Technology/Data management

  O   LOGO   LOGO   O   LOGO   O   O   O   O   LOGO   O
                     

Legal and regulatory

  O   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   LOGO   🌑   LOGO   🌑
                     

Government relations

  O   O   🌑   LOGO   🌑   LOGO   🌑   LOGO   LOGO   🌑   🌑
                     

Other relevant expertise6

  -   🌑   🌑   🌑   🌑   🌑   🌑   🌑   🌑   🌑   -

 

1 

🌑= two or more other boards LOGO = one other board O= no other boards

2 

🌑= CEO/President LOGO = other C-suite level experience O= other public executive or private leadership

3 

🌑= material work experience LOGO = familiarity or limited prior work experience O= work experience or significant knowledge

4 

🌑= material work experience LOGO = work experience or significant knowledge O= familiarity or limited prior work experience

5 

🌑= eligible to be Audit Committee financial expert LOGO = familiarity or limited prior work experience O = material education/work experience

 

6 

Ms. Ainsworth’s other relevant experience includes industrial relations and labor negotiations. Ms. Carroll’s other relevant experience includes industrial relations and labor negotiations, and service on several private company boards. Ms. Howe’s other relevant experience includes several private company boards. Mr. LeGresley’s other relevant experience includes service on a clean-tech board. Mr. Rubin’s other relevant experience includes private equity and venture capital, as well as several private company boards. Mr. Dilger’s, Mr. Gwin’s, Mr. Kerr’s and Ms. O’Donoghue’s other relevant experience includes mergers & acquisitions experience.

 

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Attendance and active participation

  

We have a very committed group of directors and are proud to report that in 2020, our board had perfect attendance, as our directors attended all board and committee meetings. Directors are expected to attend all board meetings and all of their committee meetings unless there is an unavoidable conflict or other extenuating circumstances. Attendance is monitored by the

  

100%

meeting attendance in 2020

 

governance, nominating and corporate social responsibility committee and managed by the chair of the board.

We expect all board and committee meetings to be conducted in a way that promotes open communication, meaningful participation and timely resolution of issues. Generally, directors can serve on a maximum of three committees so they can fully participate and meet their obligations to the board. All of our independent directors serve on one or two committees.

The table below includes details of director meeting attendance in 2020.

 

                 Committee meetings
                  

Governance,
nominating

and corporate

social

   Human
resources,
health and
   Safety and    Total committee
      Board meetings   Audit    responsibility    compensation    environment    meetings

R. Findlay1

  

10 of 10

(chair)

   100%        5 of 5    5 of 5    100%
                 

A. Ainsworth

   10 of 10    100%             4 of 4    4 of 4 (chair)    8 of 8    100%
                 

C. Carroll2

   5 of 5    100%             3 of 3    1 of 1    4 of 4    100%
                 

M. Dilger3

   10 of 10    100%                       N/A    N/A

R. Gwin4

   5 of 5    100%        3 of 3    3 of 3    6 of 6    100%

M. Howe5

   10 of 10    100%   4 of 4    5 of 5 (chair)    9 of 9    100%
               

G. Kerr6

   10 of 10    100%   4 of 4 (chair)    3 of 3    1 of 1    8 of 8    100%
               

D. LeGresley7

   10 of 10    100%   2 of 2    3 of 3    4 of 4 (chair)    9 of 9    100%
               

R. Michaleski8

   5 of 5    100%        2 of 2    3 of 3    5 of 5    100%

L. O’Donoghue9

   10 of 10    100%   2 of 2    2 of 2    1 of 1    1 of 1    7 of 7    100%

B. Rubin

   10 of 10    100%   4 of 4              4 of 4    8 of 8    100%

J. Smith10,5

   5 of 5    100%        2 of 2 (chair)    3 of 3    5 of 5    100%
               

H. Sykes11

   10 of 10    100%   4 of 4         4 of 4 (chair)    8 of 8    100%
1

Mr. Findlay typically attends all committee meetings in his capacity as chair of the board.

2

Ms. Carroll was appointed to the board of directors, the human resources, health and compensation committee and the safety and environment committee on May 8, 2020 and attended all board and committee meetings after her appointment.

3

Mr. Dilger attended all board meetings in 2020 as a director and CEO and all committee meetings in 2020 in his capacity as CEO.

4

Mr. Gwin was elected to the board of directors, the human resources, health and compensation committee and the safety and environment committee on May 8, 2020 and attended all board and committee meetings after his appointment.

5 

Ms. Howe was appointed chair of the governance, nominating and corporate social responsibility committee on May 8, 2020, replacing Mr. Smith as chair on his retirement.

6

Mr. Kerr stepped down from the human resources, health and compensation committee and was appointed to the governance, nominating and corporate social responsibility committee on May 8, 2020 and attended all meetings after his appointment.

7 

Mr. LeGresley stepped down from the audit committee and was appointed to the governance, nominating and corporate social responsibility committee on May 8, 2020, and attended all meetings after his appointment.

8 

Mr. Michaleski did not stand for re-election at the 2020 annual meeting and retired from the board after the meeting.

9 

Ms. O’Donoghue stepped down from the human resources, health and compensation committee and the governance, nominating and corporate social responsibility committee and was appointed to the audit committee and safety and environment committee on May 8, 2020 and attended all meetings after her appointment.

10 

Mr. Smith did not stand for re-election at the 2020 annual meeting and retired from the board after the meeting.

11

Mr. Sykes was appointed chair of the human resources, health and compensation committee on May 8, 2020, replacing Mr. LeGresley as chair.

 

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Orientation and continuing education

  

The governance, nominating and corporate social responsibility committee is responsible for approving the director orientation process and annual plans for director education and development.

 

Orientation

Our orientation manual for new directors includes the following items:

 

· corporate governance guidelines;

 

· board mandate;

 

· committee charters;

 

· terms of reference for directors;

 

· written position descriptions for the board chair, committee chairs, CEO and the senior vice presidents;

 

· key corporate policies;

 

· recent disclosure and investor materials;

 

· strategic plan; and

 

· other relevant corporate and board information.

  

 

2021 priorities

The board has set the following priorities for continuing education in 2021:

 

Business/industry

· global commodity and financial markets;

· liquified natural gas (LNG); and

· alternative energy

 

Risk

· enterprise risk oversight;

· cyber security; and

· facility security

 

Governance

· ESG and sustainability reporting;

· shareholder activism and board shareholder engagement;

· board diversity; and

· director liability

 

New directors attend orientation sessions and one on one meetings with key officers to familiarize themselves with our business, significant risks and mitigation measures, our expectations, our corporate goals and objectives, and current business issues and opportunities.

Continuing education

Directors have ongoing opportunities to increase their knowledge and understanding of our business. All of our

directors are members of the Institute of Corporate Directors and the company pays the cost of this membership. The board also encourages individual directors to attend continuing education sessions and contributes to the cost of attending these courses. We also periodically provide educational sessions about our business, our industry and emerging trends and issues. These are presented at scheduled board and committee meetings, and include:

 

Annual briefings, which typically include reviews of the competitive environment, our five-year or ten-year financial outlook, our performance relative to our peers, significant risks and mitigation measures and other developments that could materially affect our business. Annual briefings may include presentations by third-party consultants, such as financial advisors, pension experts and outside legal counsel as needed;

 

Regular briefings on corporate governance developments and emerging best practices; and

 

Presentations from time to time by external consultants about general industry trends, other issues or other topics of interest.

The corporate secretary maintains a list of all skill development of, and continuing education taken by, the directors, which the governance, nominating and corporate social responsibility committee reviews when building each year’s director education plan. The table below shows the education sessions our directors attended in 2020.

 

Category    Event    Date   Presenter   Attendees

Financial

   Audit Education Session – Financial reporting    February 26   Ernst & Young   M.H. Dilger
   valuations: business combinations        M.E. Howe
          G.J. Kerr
          D.M.B. LeGresley
          B.D. Rubin
          H.W. Sykes
   The Economic Impact of COVID-19    April 17   KPMG   G.J. Kerr
   Audit Education Session – Non-GAAP measures    November 4   KPMG   M.E. Howe
   legislation        G.J. Kerr
          L.A. O’Donoghue
          B.D. Rubin
                H.W. Sykes

 

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Category    Event    Date   Presenter   Attendees
   Audit Education Session – Hedging Accounting    November 27   Pembina Accounting   R.J. Findlay
        Department   M.E. Howe
          G.J. Kerr
          L.A. O’Donoghue
          B.D. Rubin
          H.W. Sykes

Global

markets

   Board Resolutions Series Luncheon (Energy Turmoil Part 1)    April 1   Tudor, Pickering, Holt & Co. Securities   R.J. Findlay
     Directors’ Summit    April 21   Scotiabank   R.J. Findlay
Industry knowledge   

Top Risks 2020

 

   January 24   Eurasia Group   All directors
   Education Session: Human Resources, Health and Compensation Committee Overview    July 23   Pembina Human Resources Department   A.M.N. Ainsworth C. Carroll
          R.G. Gwin
          D.M.B. LeGresley
                H.W. Sykes
   Audit Education Session: Insurance update    August 5   Pembina Risk and Insurance   M.E. Howe
        Departments   G.J. Kerr
          L.A. O’Donoghue
          B.D. Rubin
                H.W. Sykes
   Energy transition: Blueprint for leadership success    December 8   Russell Reynolds   R.J. Findlay
Technology    Artificial intelligence; risks, opportunities and governance    February 13   Ernst & Young   D.M.B. LeGresley
ESG    Board Culture Profile: Strengths and    February 25   Heidrick & Struggles   All directors
   Opportunities for Achieving High Performance             
   National Unity as a Competitive Advantage; Canadian Boardrooms Balancing Energy, the Economy and the Environment; The Evolution of Fiduciary Duty and Governing the Future of Work    May 28   Institute of Corporate Directors   G.J. Kerr
   Culture in Transformative Times; BDC’s Economic Outlook; Data & Privacy in a Transparent World; Leadership Stories: Navigating Unprecedented Change; and various other topics    September 17 & 18   Chartered Professional Accountants of Canada   G.J. Kerr
   How Company Boards Move Forward    September 22   Institute of Corporate Directors – Calgary Chapter/McKinsey   G.J. Kerr
   Board Oversight Versus Board Directive    October 24   Haskayne School of Business   G.J. Kerr
   Climate-associated risks and opportunities: An overview of emerging issues    November 10   Institute of Corporate Directors   M.E. Howe G.J. Kerr
   Climate change reporting for success: What directors need to know    November 17   Institute of Corporate Directors   M.E. Howe G.J. Kerr
   The Canadian board’s role in climate strategy creation and implementation    November 24   Institute of Corporate Directors   M.E. Howe G.J. Kerr
   The board’s role in enabling innovation and technology as tools for climate change competitiveness    December 1   Institute of Corporate Directors   M.E. Howe G.J. Kerr
   Thriving in Turbulent Times: What Business Leaders Need to Compete in a New World    December 7   Haskayne School of Business   G.J. Kerr

 

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Serving on other boards   

We recognize the significant commitment involved in serving on a board and the value and experience gained from serving on other boards. None of our directors serve on more than three other public company boards.

 

  

The governance, nominating and corporate social responsibility committee has reviewed the boards our directors currently serve on, and has determined that they do not affect the board’s independence or its ability to operate effectively.

Our governance guidelines limit the number of public company boards our directors can serve on. Mr. Dilger, who is a director and our CEO, and other directors who

hold executive offices with public companies, can serve on one public company board in addition to Pembina’s. All other directors can serve on up to four public company boards in total (including Pembina’s). Directors who want to serve on the board, or as an executive, of another publicly traded company must notify the chair of our governance, nominating and corporate social responsibility committee before accepting the nomination or appointment. The chair of the governance, nominating and corporate social responsibility committee, together with the board chair, will determine whether accepting the appointment would compromise the director’s availability or capacity, or result in an actual or perceived conflict of interest.

The board regularly reviews the other directorships of its directors. If two or more directors serve together on another public company board, the board, together with the governance, nominating and corporate social responsibility committee, will review the situation and decide whether a director should continue to serve on our board. Two of our directors, Ms. Howe and Ms. O’Donoghue, sit on the board of another public company, Methanex Corporation. The board has determined that the ability of these directors to act independently is not affected by serving together on the Methanex Corporation board.

Board and committee evaluation

Regular board assessments are important to confirm that the board, its committees and individual directors are performing effectively, based on the expectations set out in the board and committee charters, and to encourage continuous improvement.

We complete an assessment of the board once a year and, in 2020, updated our governance guidelines to make this a formal requirement. We also amended the guidelines to require the board to engage a third-party advisor to assist in the evaluation and assessment of the board, its committees, the board chair and the committee chairs at least once every three years. An external advisor was engaged in 2020 to help facilitate the board effectiveness evaluation and peer reviews.

Annual process

The chair of the board leads the assessment, with input from all directors. Each director completes a formal questionnaire every one or two years, which is divided into four categories: board responsibility, board operations, board effectiveness and committee matters. Each director also evaluates the effectiveness and performance of the board chair and fellow directors.

The chair meets with each director individually, in person or by telephone, to discuss the results of the questionnaires and conduct an individual assessment. The chair also seeks input on board effectiveness, risk management, strategic oversight and other relevant topics. After the results of the questionnaires and meetings are compiled, the governance, nominating and corporate social responsibility committee and the board discuss the results, in camera, if appropriate.

 

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In-depth review

To ensure that the board, its committees and individual directors are equipped to evolve with the business given its transformative changes in recent years, the board retained an independent outside consultant in 2020 to conduct an evaluation of the board and management. The governance, nominating and corporate social responsibility committee considered this evaluation as part of its discussions on board, committee and director effectiveness in

2020.

The governance, nominating and corporate social responsibility committee and the board also recognize the important role that self-evaluation plays in the overall assessment of board effectiveness. In 2020, the board’s external advisors conducted one-on-one interviews with each director and sought feedback on: board effectiveness and culture; Pembina’s response to the COVID-19 pandemic and the resulting volatility in global energy prices; current and upcoming challenges; future strategy and talent needs; and board chair succession.

Board committees

The board has four standing committees to help carry out its duties and meet the statutory and policy requirements that apply to our business:

 

·  

Audit;

 

·  

Governance, nominating and corporate social responsibility;

 

·  

Human resources, health and compensation; and

 

·  

Safety and environment.

Each committee is governed by a written charter that is approved by the board and reviewed and assessed by the committees themselves and the board every year. All of the directors that serve on the board committees must be independent, except for our safety and environment committee, which must have a majority of independent directors.

Each committee updates the board regularly on its activities by providing a report to the board after each committee meeting and submits any recommendations that require board approval for discussion and review. Each committee is responsible for sharing information of mutual interest with other committees.

The board reviews the composition of its committees each year and adjusts committee membership as needed. The board can remove members of each committee by resolution when needed and fill vacancies if a committee has less than the minimum number of members.

The board may also, from time to time, establish ad hoc committees to address specific issues that emerge or assume tasks not covered by the standing committees and for a specific period of time.

You can find our committee charters online at our website (www.pembina.com) and read about the nominated directors starting on page 13.

 

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Audit committee

The audit committee is responsible for overseeing:

 

·  

the integrity of Pembina’s financial statements, the reporting process and internal controls over financial reporting;

 

·  

the relationship, reports, qualifications, independence and performance of the external auditor;

 

·  

the internal audit function;

 

·  

financial risk management with respect to areas outlined in the audit committee charter;

 

·  

compliance with legal and regulatory requirements;

 

·  

management information technology related to financial reporting and financial controls; and

 

·  

maintenance of open lines of communication between management, the external auditors, the internal auditors and the board.

The audit committee meets quarterly with management, the internal auditors, and the external auditors together, as well as separately with the internal auditors and the external auditors without management present. The audit committee met four times in 2020. All meetings included the internal and external auditors and time without management present.

 

Members

  

Gordon Kerr (chair)

Maureen Howe

Leslie O’Donoghue

  

Bruce Rubin

Henry Sykes

    

 

Gordo Kerr and Maureen Howe are financial experts and all of the members are financially literate under U.S. and Canadian securities laws.

Independence

  

 

100%

 

Each of the five directors met the independence criteria as of March 19, 2021, within the meaning of National Instrument 52-110 - Audit Committees, Rule 10A-3 under the U.S. Securities Act of 1934, as amended, and the corporate governance standards of the TSX and the NYSE.

Qualifications

  

 

Committee members must:

 

· be an accountant or have financial experience or accreditation, or both

 

· be able to read and understand a set of financial statements that are comparable in scope and complexity to our financial statements

Key

responsibilities

  

 

Financial statements, reporting process and internal controls over financial reporting

 

· reviewing annual and quarterly consolidated financial statements, MD&A, the earnings press releases and other financial disclosure, and recommending them to the board for approval

 

· reviewing significant financial reporting issues, changes in accounting policies, key estimates and judgments, significant deficiencies identified and compensating or mitigating controls, unresolved issues between management and the external auditor, material correspondence with regulators or government agencies, and whistleblower complaints

 

External auditor

 

· overseeing the relationship, reports, qualifications, independence and performance of the external auditors and audit services by other registered public accounting firms Pembina has engaged

 

Internal audit

 

· overseeing the internal audit function including the audit charter, activities, staffing and organizational structure

 

· approving the annual audit plan

 

· assessing performance and ensuring there are no unjustified restrictions or limitations

 

· meeting separately as appropriate, to discuss matters that should be discussed privately

 

· reviewing our internal controls over financial reporting under the Sarbanes-Oxley Act

 

· compliance

 

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· reviewing our disclosure controls and procedures with the CEO and CFO

 

· overseeing, investigating and reporting on whistleblower complaints

 

Financial risk management

 

· discussing governance guidelines and policies for risk assessment and management of areas outlined in the audit committee charter

 

· developing or overseeing the development of these guidelines and policies

 

 

2020 Highlights

  

 

Committee charter and education

 

· reviewed and updated the audit committee charter

 

· attended professional development sessions on topics including valuations, insurance, non-GAAP measure legislation and hedge accounting

 

· assessed ongoing professional development requirements

 

Financial reporting and tax

 

· reviewed changes in accounting policies and significant financial reporting considerations including, but not limited to, contingencies, estimates and judgments applied and significant provisions for consolidated financial statements and non-GAAP measures

 

· reviewed annual and quarterly consolidated financial statements, MD&A, earnings press releases and other financial disclosures

 

· reviewed and approved various accounting and governance related board policies

 

· oversaw the impact assessment and adoption of new International Financial Reporting Standards (IFRS) accounting standards

 

· oversaw the valuation and integration process for the acquisition of Kinder Morgan Canada Limited and the U.S. portion of the Cochin pipeline

 

External auditor oversight

 

· approved the 2020 external auditor audit engagements, audit plans and fees

 

· reviewed and approved a comprehensive review of the external auditor (2015-2019)

 

· reviewed and approved non-audit services to be provided by the external auditor

 

· reviewed the quarterly audit findings reports provided by the external auditors

 

Internal audit functional oversight

 

· reviewed and approved the internal audit charter

 

· reviewed and approved the whistleblower policy and procedures

 

· approved the annual internal audit plan and any changes made during the year

 

· reviewed executive summaries of internal audit reports issued

 

· monitored internal controls over financial reporting program progress

 

· held in camera discussions with VP, Internal Audit

 

· made recommendations relating to the annual remuneration of the VP, Internal Audit

 

Compliance, financial risk and other oversight

 

· reviewed the enterprise risk committee’s hedging recommendations

 

· approved the following reports and annual updates:

 

¡ update to market risk policy

 

¡ update to counterparty risk management policy

 

· monitored the status of our counterparty risk and market risk against established limits

 

· reviewed corporate insurance program and coverage

 

· monitored funding exposure and oversight of the pension plans

 

You can find more information about the audit committee under the heading Audit Committee Information in our AIF on our website (www.pembina.com), on SEDAR (www.sedar.com) and on EDGAR (www.sec.gov).

 

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Governance, nominating and corporate social responsibility committee

The governance, nominating and corporate social responsibility committee is primarily responsible for helping the board develop, implement and monitor Pembina’s corporate governance practices.

The committee is expected to work with management and others throughout the company to make sure we have a healthy governance culture. This includes reporting and making recommendations to the board and management about corporate governance issues, best practices, compliance and the effectiveness of our governance processes and systems.

The committee met five times in 2020. All meetings included time without management present.

 

 

Members

  

 

Maureen Howe (chair)

 

Randall Findlay

 

Gordon Kerr

 

  

 

David LeGresley

 

Robert Gwin

 

Independence

 

  

 

100%

 

    

 

Qualifications

  

 

· governance committee of other public companies

 

· legal, compliance or regulatory background

 

· CEO or senior executive experience

 

 

Key

responsibilities

  

 

Board governance

 

· board size and composition

 

· director orientation, education and training

 

· monitoring potential conflicts of interest and other board appointments

 

· eligibility and selection criteria, including independence, financial literacy and diversity

 

· recommending director candidates for election to the board and appointment to chair of the board

 

· recommending candidates for the CEO position

 

· conducting and reviewing annual board, director and committee assessments

 

Compliance and disclosure

 

· corporate social responsibility/ESG oversight

 

· monitoring best governance practices and our compliance with governance related laws and regulations

 

· approving our disclosure policy and overseeing our policies, procedures and the disclosure committee

 

· assisting the board in establishing appropriate risk oversight functions at the board and committee levels

 

· reviewing and approving the corporate social responsibility report

 

 

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2020 highlights

  

 

Director and chair succession

 

· regularly reviewed and updated the board composition matrix, skills matrix and director succession planning process

 

· retained external advisors to facilitate the 2020 board effectiveness evaluation, peer reviews and board chair succession discussion

 

· reviewed and approved changes to committee membership for 2020

 

· led the director recruitment and selection process for replacing two retiring directors

 

· reviewed and dealt with outside board appointments

 

Corporate governance best practices

 

· reviewed and recommended:

 

¡ adoption of board diversity targets

 

¡ amendments to corporate policies and board and committee charters

 

¡ amendments to the corporate by-laws to move from a requirement for two signatories on certain documents to one signatory

 

¡ adoption of the 2020 director education plan

 

· reviewed the activities of the company’s disclosure committee

 

· assessed relationships between Pembina and each director and determined that 10 out of the 11 nominated directors are independent

 

· monitored recent developments, emerging trends and best practices in ESG, corporate governance and disclosure practices, including shareholder engagement trends, cybersecurity, improving shareholder voting participation and activist shareholder developments and trends

 

· reviewed director and officer insurance coverage

 

Evaluation of the board, board committees, chairs and individual directors

 

· assessed director independence and reviewed director relationships, commitments and interlocks

 

· retained and oversaw external independent advisors to evaluate the board, its committees and the directors

 

Public disclosure

 

· reviewed and approved the information related to corporate governance in this circular, for recommendation to the board

 

· reviewed and oversaw the sustainability report

 

 

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Human resources, health and compensation committee

The human resources, health and compensation committee assists the board by providing oversight and direction on human resources strategy, policies and programs, including our compensation programs.

The committee reviews and recommends to the board approval of our general compensation philosophy, oversees the development and administration of our compensation programs, and oversees executive succession planning. The committee is also responsible for overseeing the risk associated with our compensation, succession and resource planning programs, and ensuring that appropriate actions are taken to mitigate those risks.

The committee reviews and recommends director compensation for approval by the board, recommends approval by the board of compensation for the CEO and senior vice presidents, and oversees compensation of the other executives.

The committee is responsible for assessing the fairness and effectiveness of our retirement, savings and incentive plans, and for ensuring all plans and health and benefit programs are administered according to applicable laws and regulations, stock exchange policies and stated compensation objectives that govern our business. It conducts thorough competitive evaluations each year and may consult external independent advisors for assistance in assessing the competitiveness of our director and executive compensation programs.

You can read about how we compensate our directors starting on page 62 and our executives on page 65. You can find more information about compensation governance on page 58.

The human resources, health and compensation committee met four times in 2020. All meetings included time without management present.

 

     

Members

  

Henry Sykes (Chair)

 

Anne-Marie Ainsworth

 

Cynthia Carroll

  

Robert Gwin

 

David LeGresley

Independence

   100%     

Qualifications

  

· executive or CEO experience

 

· human resources or compensation experience

 

· compensation committees of other public companies

 

· industry or sector experience

 

· financial or legal expertise

Key

responsibilities

  

Compensation philosophy and approach

 

· reviewing and recommending compensation philosophy

 

· reviewing and recommending executive compensation program and incentive plans

 

· reviewing and recommending director compensation, including retainers and attendance fees

 

Program oversight

 

· reviewing compensation design, corporate objectives and executive performance targets

 

· reviewing employment agreements and severance and change of control arrangements for the CEO and senior vice presidents

 

· assisting the board in establishing and overseeing officer succession plans

 

· overseeing the defined benefit and defined contribution pension plan and supplementary pension plan

 

· overseeing the employee health and wellness program

 

Annual performance and compensation

 

· recommending individual elements of total compensation for the CEO and senior vice presidents

 

· reviewing and recommending the annual report on executive compensation and public disclosure

 

 

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· reviewing and recommending performance goals for the short-term and long-term incentive plans

 

Compensation risk oversight

 

· ensuring executive compensation is aligned with our short, medium and long-term goals

 

· monitoring legal and stock exchange compliance

2020 highlights

  

 

Program oversight

 

· reviewed short-term and long-term incentive plans in detail

 

· reviewed and approved external advisor engagement, services and work plan

 

· reviewed and recommended for approval:

 

¡ the compensation and performance peer groups

 

¡ director compensation for 2021

 

¡ the creation and appointment of vice president positions

 

¡ changes to the defined benefit pension plan

 

· reviewed status of the occupational health program

 

· reviewed progress on the advancement of our Inclusion & Diversity Stand

 

Succession planning

 

· reviewed the executive succession plan and the executive development plan process

 

Annual performance and compensation

 

· recommended for approval:

 

¡ 2020 performance goals for the short-term incentive plan

 

¡ 2020 CEO and senior vice president compensation

 

¡ 2020 CEO objectives

 

¡ 2020 restricted share unit (RSU)/performance share unit (PSU) awards along with PSU performance measures

 

¡ 2020 stock option award

 

· reviewed and recommended for approval 2019 corporate and business unit performance to determine 2019 short term incentive payouts (paid in 2020)

 

· reviewed and recommended for approval the 2017 PSU multiplier for long-term incentive payouts (paid in 2020)

 

· reviewed and recommended for approval the budget for salary increases

 

Public disclosure

 

· reviewed and recommended for approval the information related to compensation in this circular

 

Education

 

· received an overview of:

 

¡ compensation trends and executive compensation market analysis

 

¡ the company’s employment equity narrative report for 2019

 

¡ the company’s pension and benefit program

 

¡ the company’s health and wellness program

 

¡ the company’s inclusion and diversity program

 

¡ received human resources updates

 

· new members received an overview of:

 

¡ the employee population

 

¡ compensation philosophy and the various elements of total compensation

 

¡ share ownership guidelines

 

¡ benefits, savings plan and pension summaries

 

¡ human resources and organizational effectiveness service offerings

 

 

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Safety and environment committee

The safety and environment committee is primarily responsible for helping the board oversee the development, implementation and monitoring of our environmental, safety and system integrity policies and systems, especially as they relate to accountability and compliance and cyber security.

The safety and environment committee met four times in 2020. All meetings included time without management present.

 

Members

  

Anne-Marie Ainsworth (chair)            Leslie O’Donoghue

Cynthia Carroll                                   Bruce Rubin

Independence

   100%

Qualifications

  

 

· engineering or operations background

 

· legal, compliance or regulatory experience

 

· CEO or senior executive experience

Key

responsibilities

  

Program and strategy development

 

· overseeing the development, implementation and auditing of our safety and environmental management policies, programs, systems and practices

 

· reviewing our safety and environmental strategy

 

Risk management

 

· identifying safety and environmental risks and recommending appropriate programs to manage and reduce risk

 

· monitoring current, pending or threatened regulatory action by or against us

 

Regulatory compliance and public disclosure

 

· reviewing and monitoring our incident reporting policies and practices, and reports about significant incidents, emerging issues, inspections, audits and actions taken to correct deficiencies

 

· reviewing and approving our annual internal sustainability report

2020 highlights

  

Safety and environment measures

 

· reviewed and approved the 2020 safety and environment performance measures to be used across all divisions, incorporating both leading and lagging indicators

 

· reviewed 2019 performance against targets and recommended for approval the safety and environment performance multiplier for the 2019 short-term incentive plan award to the human resources, health and compensation committee

 

· reviewed management’s 2020 environment work plan

 

Safety

 

· reviewed the results of management’s incident review panel related to all significant events

 

· monitored Pembina’s initial and ongoing response to the COVID-19 pandemic

 

· monitored emerging and material issues in safety, security and environment, including climate change, process safety, and security program requirements

 

· reviewed and monitored corporate and cyber security programs in 2020

 

· monitored 2020 pipeline integrity and geotechnical programs

 

· reviewed management’s 2020 work plans for asset integrity inspection and repairs

 

· monitored progress of the company’s implementation of the Operation Management System (OMS)

 

· monitored progress of Pembina’s process safety five-year vision plan designed to enhance process safety performance

 

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Compensation discussion and analysis

This section of our circular describes how we pay our directors and the named executives.

We have grouped it into four sections:

 

Executive summary page 52

Summarizes our performance and compensation decisions this year and changes we have made to our compensation plans.

Compensation governance page 58

Describes how we oversee compensation and manage risk.

It also tells you about our independent consultants.

Director compensation page 62

Describes our approach to compensating directors, our expectations for share ownership and what we paid our directors in 2020.

Executive compensation    page 65

A thorough discussion of what we pay the named executives at Pembina and why, along with a discussion of this year’s company performance and our 2020 compensation decisions.

 

 

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Executive summary

 

Pembina is a leading transportation and midstream service provider that has been serving North America’s energy industry for over 65 years.

 

We believe in staged, carefully managed growth that respects the interests and concerns of all our stakeholders while providing the energy services our growing economy demands. We have a strong record of community engagement, environmental stewardship and safe, reliable operations.

 

Our goal is to provide highly competitive and reliable returns through monthly dividends while enhancing the long-term value of our shares.

 

    

  

 

2020 named executives

 

  Michael Dilger, President and CEO

 

  Scott Burrows, Senior Vice President and CFO

 

  Paul Murphy , Senior Vice President and Corporate Services Officer

 

  Stuart Taylor, Senior Vice President, Marketing and New Ventures & Corporate Development Officer

 

  Harold Andersen, Senior Vice President, External Affairs & Chief Legal Officer

 

    

 

Our executive compensation program is designed to link strategy, performance and compensation while building equity ownership. This approach motivates our executives to keep the focus on long-term success and aligns compensation awards with our shareholders’ interests. This year’s incentive awards were based on our performance against targets that were set at the beginning of 2020, before the COVID-19 pandemic began. We did not adjust these targets during the year or make any adjustments to calculated results. Short-term incentive targets were not increased for 2021. You can read more about our compensation strategy starting on page 65.

 

Managing through a pandemic; stability and strength across an integrated and diversified business

    

 

Our corporate strategy

 

Our corporate strategy supports our corporate purpose and our focus on our key stakeholders.

 

The strategy has four components:

 

  preserve value by providing safe, environmentally conscious, cost-effective and reliable services

 

  diversify by providing integrated solutions which enhance profitability and customer service

 

  implement growth by pursuing projects or assets that are expected to generate cash flow per share accretion and capture long-life, economic hydrocarbon reserves

 

  secure global markets by understanding what the world needs, where they need it, and delivering it

Pembina entered 2020 with a great deal of momentum and

 

enthusiasm, as we had recently completed a strategic, value chain enhancing acquisition, were successfully executing our strategy to access global markets, and had $5.6 billion of secured growth projects underway. Like other companies, we were soon faced with the challenge of responding to both the COVID-19 pandemic and a decline in global energy prices.

Thanks to the incredible efforts of our staff, a resilient business model, disciplined execution of our strategy over many years and the enduring relationships we have formed with our stakeholders, Pembina ultimately achieved success in 2020 and enters 2021 in a position of strength, ready to capitalize on the many opportunities ahead.

Pembina felt the impact of lower crude oil and natural gas liquids (NGL) prices through reduced producer activity and a decline in physical volumes in certain of our businesses, as well as a lower contribution from our marketing business. However, the impact to our financial results was not as significant, given the highly contracted nature of our assets, diversification across commodities and geographies, our NGL hedging program, and the permanent cost savings achieved throughout the business.

We delivered adjusted EBITDA of approximately $3.3 billion, which was within our original pre-pandemic guidance range and about 96% of the midpoint of that range. We also increased the monthly dividend on our common shares in early 2020 and maintained that dividend even after the onset of the pandemic. This represents our tenth annual dividend increase and, more than ever, we take pride in the fact that our dividend has never been reduced. We assert this dividend remains solid and very well protected.

In 2020, we achieved zero pipeline integrity failures. We are particularly encouraged by Pembina’s safety record, which continues to exceed the average for our industry.

 

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Looking ahead to 2021

While COVID-19 is still an urgent global concern and much uncertainty remains, there has been significant progress made on understanding and mitigating the threat, and there is a growing expectation of a return to some normalcy and an associated rise in energy demand at some point this year. In 2020, Pembina effectively ‘hit the pause button’, but in 2021 there is renewed optimism building and a sense of being able to ‘hit play’ once again.

Following the pandemic-related deferrals earlier in the year, we were delighted in December to announce the reactivation of the phase VII expansion of the Peace pipeline system and the co-generation facility near Empress, Alberta. The other Peace pipeline expansion projects, the phase VIII expansion and the phase IX expansion, remain deferred, but the initial contracts supporting the projects are still in place and there are strong indications of interest for incremental capacity. We are also carefully evaluating our expansion project at our Prince Rupert Terminal, which also remains deferred. We are, however, making good use of the deferral period and are considering a larger expansion of the facility and the use of larger vessels, which will provide even greater value to customers by improving economies of scale and lowering per unit handling and vessel transport costs to premium markets. We expect to make a decision in the second half of 2021 in regard to all three projects. Taken together, they highlight the economic growth opportunities afforded by our industry-leading footprint, even during a period of more modest industry growth.

Integrating ESG

Pembina stands shoulder-to-shoulder with our customers in ensuring Canadian energy is developed and delivered with leading ESG standards and practices in place, making it the most ethically produced energy in the world.

While our enhanced ESG reporting is an important development, it is by nature often backwards looking. Pembina is equally focused on the future of ESG and ensuring we continue our journey, with a commitment to continuous improvement, transparency and engagement. Over the coming year, we will more formally integrate sustainability-related business practices and strategies throughout the organization. To improve oversight of ESG, we will be further enhancing our ESG disclosure and developing strategies and specific targets to support, among many other initiatives, Pembina’s previously released Carbon Stand and Inclusion & Diversity Stand. In particular, management will be developing an enhanced climate change strategy and greenhouse gas emissions intensity reduction targets.

While the topic of energy transition became more prominent in 2020, we believe that significant structural changes to the world’s energy systems will have to evolve over many decades, during which time total energy demand will continue to be met primarily by hydrocarbon energy, alongside a growing contribution from renewable energy. Pembina remains a proud provider of the services that get energy to where the world needs it. We are well positioned to support the growing use of natural gas to reduce global GHG emissions, and our proximity to Asia and its growing energy demand represents another strategic opportunity.

Pembina also has many of the core competencies needed to adjust to a changing energy mix and is positioned to provide infrastructure services for new forms of energy, including energy produced from hydrogen, or carbon sequestration. We will, however, do so prudently, ensuring we deploy capital as we always have – by making our existing business more valuable, adhering to our financial guardrails and in service of all four of our stakeholder groups.

In 2020, Pembina proved once again that we are resilient, agile and capable of safely and reliably delivering results and essential energy services of which our stakeholders can be proud. We expect the year ahead will not be without its challenges and much uncertainty remains, however Pembina’s track record speaks for itself and we are well positioned to navigate 2021.

 

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CEO compensation: five-year look-back

Our executive compensation program is designed to align compensation to corporate strategy and performance, and to reward executives for short and long-term success.

The graph below shows the CEO’s target compensation for each of the last five years, and the realized and realizable value of awards granted as of December 31, 2020. More than 84% of the CEO’s target compensation is at risk, tied to our share price, and paid out over performance periods ranging from one to seven years (see page 65 for more information about our executive compensation program).

The graph shows that a significant portion of the compensation the CEO has earned over the past five years has been the direct result of our performance on the value of his medium and long-term incentives. It also tells us that our executive compensation program is meeting a key objective: to drive long-term performance while aligning executives with the interests of our shareholders.

See page 82 for more information about Mr. Dilger’s performance and compensation in 2020.

 

LOGO

Target total direct compensation (Target TDC) includes base salary as of the end of the relevant year, target annual incentive award (1.0x) and grant value of the medium-and long-term incentive awards for the calendar year, calculated on the date of grant.

Realized/realizable pay includes:

 

base salary, annual incentive award paid for the year, realized medium- and long-term incentive awards (the payout of vested RSUs and PSUs, including RSUs and PSUs accrued as dividend equivalents to the payment date, and the value of stock options exercised, if any, during the period for the respective grant years); and

 

the value at December 31, 2020 of unrealized medium- and long-term incentive awards (RSUs and PSUs outstanding, RSUs and PSUs accrued as dividend equivalents to the end of the year, and in-the-money stock options for the respective grant years), including vested and unvested securities. We have estimated the realizable value of the 2019 and 2020 PSU grants assuming PSUs vest at target.

 

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Key performance measures and link to business strategy

The table below is a summary of the key performance measures that determine how our named executives are paid. Compensation increased in 2020 to recognize excellent performance against these measures, and to keep us in line with our peers. You can find more details about the key performance measures and results starting on page 74.

You will find a complete discussion of the compensation we paid our named executives in 2020 starting on page 71, and a discussion of each named executive’s accomplishments this year starting on page 82.

 

       
  Performance

 

  measure

   Results         Strategic link

Safety and

environment

  

  Based on the impressive safety results for 2020, despite the COVID-19 pandemic, we achieved 1.95 on key measures

 

  Zero pipeline integrity failures

 

  All divisions outperformed in 2020 against safety, integrity and environment key metrics

 

  Fifth consecutive year we outperformed, including contractor performance

 

  Improved performance from 2019 despite the challenge of the COVID-19 pandemic

 

        Implement growth in a safe and environmentally responsible way

Financial

  

  Adjusted cash flow from operating activities per share (see About non-GAAP measures on page 100) was $4.16, or 7.1% below our budget

 

  Adjusted EBITDA (see About non-GAAP measures on page 100) was $3.3 billion, approximately 4% under our budget

 

  Raised approximately $1.8 billion of capital in 2020 through the issuance of $1.5 billion in medium-term notes and a US$250 million term loan, lowering Pembina’s cost of debt

 

  Secured a new $800 million unsecured revolving credit facility, increasing Pembina’s revolving credit facility capacity to $3.3 billion, providing the company with additional liquidity

 

  Reduced capital spending by $1 billion to $1.1 billion by deferring certain expansion projects

 

       Maintain a conservative balance sheet

Business

development

  

  In response to the COVID-19 pandemic, the resulting economic slowdown and decreased demand for commodities, we deferred some expansion projects

 

       Diversify our asset base to enhance profitability

Productivity and

implementation

(new for 2020)

  

  Exceeded targets for two of the four components of return on invested capital (ROIC) (see page 56 for details about the four components):

 

  operating costs/capital in service (CIS); and

 

  net general & administrative expenses/CIS

 

  Continued to complete projects substantially on time and on budget

 

       Preserve value by providing cost effective and reliable services

Shareholder

value

  

  Three-year total shareholder return (TSR) was -11.64%, ranking 7th among our performance peer group

 

  Maintained the common share dividend of $0.21 per common share per month

 

       Enhance the long-term value of our shares

 

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The board and senior management also made progress in building top talent and creating a strong leadership culture:

 

 

maintained and updated succession plans for all executive level positions by identifying candidates and executing on development plans for key individuals;

 

 

added over 175 new employees as a result of the acquisition of the Kinder Morgan Canada Limited and the U.S. portion of the Cochin pipeline in December 2019, and to replace employees who left the company in the normal course of business;

 

 

maintained a voluntary attrition rate of less than 2%, excluding retirements; and

 

 

filled approximately 66 positions with internal candidates in 2020, including the promotion of several leaders in various parts of the organization as part of our development plans and intention to provide opportunity internally.

Changes to our compensation program

The human resources, health and compensation committee reviews our executive and director compensation philosophy and practices every year with assistance from Mercer, an independent external consultant, to ensure our compensation continues to be effective, is in line with what our peers are paying, is fair and reasonable, motivates our management team, retains talent, and attracts and supports new talent when needed.

The human resources, health and compensation committee worked with Mercer in 2020 to carry out a comprehensive review of the executive compensation program and approved the following changes for 2020 and 2021.

Short-term incentive plan

2020

We started measuring adjusted EBITDA by division rather than by business unit. This reflects how we operate our business and report our financial results externally.

We added a productivity performance measure. ROIC now accounts for 15% of the corporate multiplier, to reinforce our focus on efficiency while preserving value through optimization and productivity initiatives. ROIC includes four components:

 

Asset revenue/CIS – Asset revenue is calculated as the sum of net revenue (see About non-GAAP measures on page 100) for the pipelines division and facilities division, plus Pembina’s proportionate share from equity accounted investments.

 

 

Marketing revenue/CIS – Marketing revenue is calculated as the sum of net revenue (see About non-GAAP measures on page 100) for the marketing and new ventures division, plus Pembina’s proportionate share from equity accounted investments.

 

 

Operating costs/CIS – Operating costs is calculated as operating expense, plus Pembina’s proportionate share of operating expense from equity accounted investments.

 

 

Net general & administrative expenses/CIS – Net general & administrative expenses is calculated as general and administrative expense (excluding depreciation), plus Pembina’s proportionate share from equity accounted investments.

Capital in service (CIS) is calculated based on undepreciated cost of certain non-current assets, of most significance including property, plant and equipment, intangibles and goodwill, plus Pembina’s proportionate share from equity accounted investments.

2021

We intend to evaluate corporate performance against measures representing each of our four stakeholder groups by evaluating the following:

 

Investors – ROIC, cost optimization, maintenance of financial guardrails;

 

 

Customers – project implementation, previous acquisition synergies, execution of binding agreements, strategic long-term opportunities;

 

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Communities – ESG, impact on the communities in which we operate, external relationships; and

 

 

Employees – safety, integrity and environment, inclusion and diversity, employee engagement results.

Medium and long-term incentives

2020

We eliminated adjusted EBITDA growth as a performance measure for PSUs. This reduces duplication with the short-term incentive plan and reinforces the importance of outperforming our peers while maintaining our financial guardrails and optimizing ROIC.

2021

We intend to reduce the weighting of options (proportionately increasing the weighting of RSUs) as part of a company-wide initiative to be more in line with our peers and to reduce stock dilution. As a result, we expect to issue approximately 80% fewer options across the company in 2021 as compared to 2020.

Total compensation

The human resources, health and compensation committee reviewed total target direct compensation against our peers, and approved changes for the CEO and the other named executives in February 2020, to reflect changes in our business and more closely align compensation with our compensation comparator group. This resulted in an increase in base salaries and long-term incentive targets. There will be no increases to the base salaries of the CEO and the other named executives in 2021, and the target compensation mix is not expected to change in 2021. Compensation is targeted at the median of our compensation comparator group (see page 67).

There were no changes for 2020 or 2021 related to the COVID-19 pandemic or any other external factors.

 

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Compensation governance

The board of directors has ultimate responsibility for compensation at Pembina. The human resources, health and compensation committee assists the board in establishing and overseeing director and executive compensation, pension and benefit plan design, CEO performance goals and assessment and succession planning. See page 48 for information about the committee, its responsibilities and its activities in 2020.

 

Here’s where you can read about the key elements of our compensation program:

     page  

   Oversight by qualified, independent directors      58     

   Compensation aligned with risk management      59     

   Equity ownership and retention requirements      60     

   Advice from independent compensation experts      61     

   Compensation linked to performance and strategy      55     

   Compensation in line with peers      62, 66     

   A significant portion of compensation is deferred and at risk, encouraging a long-term view of shareholder value      70     

   Incentive plan funding based on performance against targets linked to strategy and performance compared to our peers      65     

   Cap on cash bonus      72     

   A disciplined process for making annual compensation decisions      68     

   An extensive risk-assessment before compensation is finalized, including stress testing      69     

   Clawback policy      60     

   Anti-hedging policy      61     

The human resources, health and compensation committee includes five directors, all of whom are independent. Each member has worked in leadership roles and has broad industry knowledge. They also have a mix of experience in operations, corporate strategy, executive compensation and financial matters. Together, they have the experience, skills and qualities necessary to make sure the committee carries out its mandate effectively.

The table below shows the experience of the current members of the human resources, health and compensation committee. The governance, nominating and corporate social responsibility committee looks at the mix of skills and experience every year to make sure it remains appropriate.

 

     
  Director    Related experience    Key biographical details

Henry Sykes (Chair)

(see his biography on page 24)

  

  Public company senior leadership experience

  Financial/Accounting management

  Social and corporate governance

  Human resources and compensation

  Enterprise risk management

  Legal and regulatory

 

  

  former energy industry president and director

  past Chair and member of the boards of Arts Common and the Arctic Institute of North America

  has a Bachelor of Economics, Bachelor of Laws and Master of Laws

  Director and member of the compensation committees of a number of private companies active in the energy industry

  member of the committee since October 2, 2017

 

 

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  Director    Related experience    Key biographical details

Anne-Marie

Ainsworth

(see her biography on page 15)

  

  Public company senior leadership experience

  Financial/Accounting management

  Social and corporate governance

  Human resources and compensation

  Enterprise risk management

  Legal and regulatory

 

  

  former energy industry president and CEO

  serves as a director for a number of public companies

  has a Bachelor of Science in chemical engineering and a Master of Business Administration from Rice University

  member of the committee since April 1, 2019

Cynthia Carroll

(see her biography on page 16)

  

  Public company senior leadership experience

  Financial/Accounting management

  Social and corporate governance

  Human resources and compensation

  Enterprise risk management

  

  former CEO of a major mining company

  held numerous leadership roles with global organizations

  serves as a director for a number of public companies

  holds a Bachelor’s degree and Master’s of Science degree in Geology, a Master’s of Business Administration from Harvard University, an Honorary Doctorate of Science from the University of Exeter, an Honorary Doctorate of Laws from Skidmore College and an Honorary Doctorate of Economics from the University of Limerick.

  member of the committee since May 8, 2020

 

Robert Gwin

(see his biography on page 18)

  

  Public company senior leadership experience

  Financial/Accounting management

  Social and corporate governance

  Human resources and compensation

  Enterprise risk management

  Legal and regulatory

 

  

  former energy industry president and executive

  breadth of leadership roles across organizations

  holds a Bachelor of Science degree from the University of Southern California; a Master’s of Business Administration from the Fuqua School of Business at Duke University and earned his CFA from the CFA institute

  member of the committee since May 8, 2020

David LeGresley

(see his biography on page 21)

  

  Public company senior leadership experience

  Financial/Accounting management

  Social and corporate governance

  Human resources and compensation

  Enterprise risk management

  Legal and regulatory

 

  

  senior executive level leadership experience

  current chair of the board of directors of Equitable Group Inc.

  holds a Bachelor of Applied Science in Engineering from the University of Toronto and a Master of Business Administration from Harvard Business School.

  member of the committee since May 5, 2017

 

Managing compensation risk

The board is responsible for understanding the principal risks of our business and assessing the balance between risk and potential return to ensure we promote shareholder value over the long term. We use a broad-based, systematic approach to identifying, assessing, reporting and managing the significant risks we face in our business and operations. The enterprise risk committee meets at least quarterly to review the performance, appropriateness and the current business environment surrounding our risk management activities, and reports its findings to the human resources, health and compensation committee.

Within this context, the human resources, health and compensation committee reviews and recommends to the board our compensation program and practices to:

 

align executive compensation with our short and long-term goals;

 

reflect financial, operating and share performance, dividend payments and individual accomplishments; and

 

ensure that compensation aligns with the interest of our shareholders and encourages the right behaviour.

This includes, among other things:

 

 

understanding the impact of operating and share price performance over a five-year period to assess the effect of different performance scenarios on future incentive payouts;

 

using balanced measures, including qualitative and quantitative goals, to determine annual incentive compensation;

 

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·  

incorporating time and performance vesting features in medium and long-term incentives;

·  

using target ranges for the annual and long-term incentive plans to ensure grants are effectively linked to actual performance and not unduly influenced by one-time events;

·  

capping the amount executives can receive under the short-term incentive plan and PSU plan; and

·  

having a balanced mix of short, medium and long-term compensation components to eliminate reliance on a single or a limited number of factors to determine potential awards and diversify potential reward scenarios.

The human resources, health and compensation committee also takes measures to prevent risks that could have a material adverse effect on our company, through appropriate compensation governance measures, which include:

·  

building a strong governance culture and ensuring effective oversight;

·  

implementing share ownership guidelines and retention periods;

·  

prohibiting executives and directors from hedging equity awards and building in safeguards against insider trading;

·  

applying a consistent compensation structure for the CEO, executives and employees;

·  

implementing a clawback policy that aligns with legislative and regulatory requirements;

·  

requiring the full board to review and approve compensation recommendations for the CEO and his senior vice presidents; and

·  

engaging an independent compensation consultant to complete a compensation risk assessment, looking at pay mix, incentive plan funding, leverage and caps, performance measures, pay for performance, quantum of incentives, plan governance and risk mitigation.

The human resources, health and compensation committee also makes sure our compensation plans and employee benefit programs are administered according to the laws and regulations and stock exchange policies that apply to us, and our compensation objectives. The board has not identified any material risks in our compensation program or practices that have an adverse impact on the company.

Clawback policy

We recognize the importance of clawback provisions in promoting ethical conduct and strong compensation governance practices and introduced a clawback policy in 2015.

The policy applies to the CEO and all senior vice presidents and requires repayment of:

 

any incentive or equity-based compensation awarded based on incorrect data where we are required to restate our financial statements because of material non-compliance with any financial reporting requirement under any applicable securities laws; and

 

incentive or equity-based compensation if the board finds a senior officer has committed fraud, a breach of fiduciary duty or willful or reckless misconduct.

The board can, at its sole discretion, use reasonable efforts to recover compensation paid or granted to the officer, including cancelling unvested equity compensation awards, recovering the after-tax amount of incentive compensation paid and recovering profits realized from trading Pembina securities.

Building equity ownership and retention

The human resources, health and compensation committee believes officers and directors should show their commitment to Pembina by owning equity in the company. The human resources, health and compensation committee introduced share ownership guidelines in 2010. The guidelines require the CEO, senior vice presidents and directors to own a certain multiple of their base salary or retainer in common shares, RSUs or DSUs. See page 63 to read about our guidelines for directors and page 65 for our guidelines for the named executive officers. The employment agreements we have with the named executives require them to maintain their minimum share ownership for one year after termination of the agreement, except if termination occurs as a result of a change of control or a constructive dismissal.

 

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Anti-hedging

To keep executives and directors motivated to continue to build shareholder value, our insider trading and reporting policy prohibits them from speculating in Pembina securities to reduce the price risk associated with any Pembina shares or other securities they hold (including buying securities on margin, short selling, selling call options or buying put options).

Continuous improvement

The human resources, health and compensation committee reviewed a number of regulatory developments and emerging best practices about executive compensation this year, as part of its commitment to compensation best practices, and is once again providing shareholders with a say on pay advisory vote (see page 28 for information about our shareholder engagement and page 12 for more information on the say on pay advisory vote).

Independent advice

The human resources, health and compensation committee has been working with Mercer since 2002 as its independent compensation consultant and retains Mercer to review executive compensation and benefit programs and provide objective advice. Mercer reports directly and exclusively to the committee, but may, at the committee’s direction, work cooperatively with management to review or prepare material for the committee to review.

The human resources, health and compensation committee takes Mercer’s information and recommendations into consideration, but the committee’s decisions are its own responsibility. Mercer has completed an independence test and demonstrated their independence to the human resources, health and compensation committee’s satisfaction.

Mercer’s mandate in 2020 included a comprehensive review of executive compensation, including:

·  

preparing information about market trends and issues;

·  

preparing benchmark market data for director and officer compensation;

·  

assessing the competitiveness of our compensation;

·  

reviewing the design of our short-and long-term incentive plans;

·  

attending each human resources, health and compensation committee meeting including an in-camera portion at each meeting; and

·  

preparing officer tally sheets and assessing the pay and performance relationship.

Mercer was paid the following fees for professional services in 2019 and 2020:

 

  ($ thousands)   

2019

($)

    

2020

($)

 

  Executive compensation-related fees

     237        403  

  Fees for services related to determining compensation for our directors and officers

                 

  All other fees

     333        696  

Fees for pension administration, actuarial valuation of our defined benefit pension plan and general advice related to compensation and benefits, annual compensation surveys for Canada and the U.S. and miscellaneous consulting services related to employee compensation and human resources matters1

     

  Total

     570        1,099  

 

1 

The committee does not pre-approve these services.

The human resources, health and compensation committee reviewed Mercer against the following six factors and confirmed its independence for 2020:

 

·  

the other services Mercer provides to Pembina;

·  

Mercer’s bills to Pembina as a percentage of Mercer’s total revenues;

·  

Mercer’s policies and procedures to prevent conflicts of interest;

·  

whether the Mercer advisor has any business or personal relationships with a member of the human resources, health and compensation committee;

·  

whether the Mercer advisor, and his or her immediate family, own any Pembina shares; and

·  

whether Mercer or its advisor has any business or personal relationships with a Pembina executive.

Management may retain other advisors from time to time, if necessary.

 

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Director compensation

We pay non-executive directors an annual retainer (in cash and equity) and additional amounts for committee memberships and chairing committees. This comprehensive compensation package:

·  

acknowledges the expertise, time, due diligence and counsel that each director contributes to the board;

·  

aligns the near and long-term interests of directors with those of our shareholders; and

·  

is competitive with the market.

The President and CEO does not receive director compensation because he is compensated in his role as President and CEO.

Director compensation package

The table below shows our director fee schedule for 2020. There are no changes to the compensation package for

2020 or 2021.

 

     
  Retainers          2020  

Board chair

   Annual retainer      400,000  

Board member

   Annual retainer                  205,000  

Committees

   Audit committee chair retainer      28,500  
  

Human resources, health and compensation committee chair retainer

     22,500  
  

Other committee chair retainer

     17,500  
  

Audit committee member retainer

     15,000  
    

Other committee member retainer

     12,500  

To help ensure they can meet their share ownership guideline within five years of joining the board, directors are required to take at least 50% of total director compensation as equity until they have met their share ownership guidelines. Directors may elect to take up to 100% of their compensation as equity. The rest of the compensation is paid in cash, quarterly in arrears.

The equity portion of the retainer is paid in DSUs under our deferred share unit plan. A DSU is a notional share that has the same value as one common share. Its value changes with our share price. DSUs do not have voting rights but they accrue dividends as additional DSUs, at the same rate as dividends paid on our common shares. DSUs vest when they are credited to the director’s account but are paid out only after the director retires from the board (and must be redeemed within a year of retirement). The amount the director receives on redemption is calculated by multiplying the number of DSUs he or she holds (including credited dividend equivalents) by the weighted average trading price of common shares on the TSX for the last five trading days before the termination date.

Compensation in line with our peers

To ensure we can attract and retain talented directors, we compensate them in a way that is fair and competitive, targeting compensation at the median offered by our director compensation peer group.

The human resources, health and compensation committee engages outside consultants every year to compare our director compensation practices and levels with companies we compete with for talent. The 2020 director compensation peer group includes 11 publicly listed companies from the oil and gas and energy utility sectors. These are the same companies that make up the named executive officer compensation peer group for 2020 (see page 66 for a listing and a discussion of the selection process).

 

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Building equity ownership

We believe directors should be aligned with the interests of shareholders and show their commitment to Pembina by owning equity, so we introduced share ownership guidelines in 2010.

Non-management directors must own three times their annual board retainer in Pembina equity. Common shares and DSUs (including the DSUs they accrue as dividend equivalents) can be used to meet the guideline, but at least

50% of the equity must be in common shares.

New directors must meet the guidelines within five years from the date of their appointment. The table below shows the equity holdings of the nominated directors as of March 19, 2021. As of that date, all current directors were in compliance with the guidelines or, in the case of Ms. Carroll and Mr. Gwin, had time from their date of appointment or election, as applicable, to meet the guidelines.

As at March 19, 2021, non-management directors as a group beneficially owned, directed or controlled 326,241 common shares and 223,088 DSUs with a combined value as of March 18, 2021 of $20,176,202.

 

     

Number of

common shares

    

Value of

common shares1

($)

    

Value of DSUs2

($)

    

 

Estimated

total value of

equity holdings

($)

    

 

Share

ownership

guideline

($)

    

 

Meets

share

ownership

guidelines

 

Randall Findlay

     140,821        5,175,172        1,284,118        6,459,290        1,200,000        yes  

Anne-Marie Ainsworth3

     22,749        829,832        870,901        1,700,733        764,876        yes  

Cynthia Carroll3

     0        0        168,242        168,242        764,876        on track 4 

Maureen Howe

     23,588        866,859        450,702        1,317,561        615,000        yes  

Robert Gwin3

     0        0        168,242        168,242        764,876        on track 4 

Gordon Kerr

     10,400        382,200        1,307,381        1,689,581        615,000        yes  

David LeGresley

     59,789        2,197,246        1,405,688        3,602,934        615,000        yes  

Leslie O’Donoghue

     35,588        1,307,859        1,426,672        2,734,531        615,000        yes  

Bruce Rubin3

     20,000        729,554        669,695        1,399,249        764,876        yes  

Henry Sykes

     13,306        488,996        446,843        935,839        615,000        yes  
1 

Calculated using $36.75 per share (the closing price of our common shares on the TSX on March 18, 2021).

 

2 

DSU value is estimated at $36.75 per share (the closing price of our common shares on the TSX on March 18, 2021). Includes DSUs that accrue as dividend equivalents.

 

3 

Ms. Ainsworth, Ms. Carroll, Mr. Gwin and Mr. Rubin are U.S. residents and their fees are paid in U.S. dollars. To be consistent with the guidelines, Ms. Ainsworth’s, Ms. Carroll’s, Mr. Gwin’s and Mr. Rubin’s equity ownership requirements are also in U.S. dollars, and converted to Canadian dollars using the Reuters noon U.S. Canadian dollar foreign exchange rate of 1.2437 on March 18, 2021. The value of their common shares is calculated using US$29.33 per share (the closing price of our common shares on the NYSE on March 18, 2021) and converted to Canadian dollars using the Reuters noon U.S. Canadian dollar foreign exchange rate of 1.2437 on March 18, 2021.

 

4 

Ms. Carroll and Mr. Gwin have five years from the date of their appointment to the board on May 8, 2020 to meet the share ownership guidelines. They received their initial grants of DSUs in January 2021.

 

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Director summary compensation table

The table below shows the value of all compensation paid to directors in 2020.

 

         
     

Total fees

earned1

($)

    

    Share-based

awards2

($)

    

All other

    compensation

($)

    

Total 

    compensation 

($) 

Randall Findlay (chair)

     206,250        141,180        3,638        351,068  

Anne-Marie Ainsworth3

     149,519        104,291        2,545        256,355  

Cynthia Carroll

     190,319        -5        -        190,319  

Maureen Howe

     119,502        79,568        2,000        201,070  

Robert Gwin

     190,319        -5        -        190,319  

Gordon Kerr

     123,000        84,188        0        207,188  

David LeGresley

     88,872        99,607        2,000        190,479  

Robert Michaleski4