Introduction

Not all individual directors on a board are equally effective.

For an effective board, normally the board and committee chairs are the most effective directors, and the newest directors are the least effective. For an ineffective board, normally the board or committee chair(s), or a tenured director(s) (e.g., four to five years on a board) is a less effective director. Coaching and development or retirement or rotation should therefore occur.

There are myriad reasons for director underperformance, including a lack of independence, conflicts of interest, excessive tenure, competencies and skills that are not current or relevant, unduly influencing board deliberations, not attending meetings, not attending for the full duration, not preparing for meetings, demonstrating a lack of integrity, breaching confidentiality, frequently talking over other directors, not being engaged or being distracted by the use of devices, a lack of resiliency or solidarity, operational- or management-domain questions or actions, a lack of understanding of the business model, an unwillingness to learn the business or industry, and other factors as well.

To counteract these infirmities, many regulators, investors, and boards are emphasizing the development and assessment of standards of independence, a competency matrix, behavioral expectations, and board diversity to maximize board and director effectiveness. The editor speaks to these practices in depth in Chapter 8.

In addition, a position description should be developed for individual directors, and each director should be assessed based on the achievement of the description (or similar criteria) by other directors (known as a peer assessment), as well as the competencies and skills that the director is expected to bring to the board.

An individual director position description guides directors as to their role and responsibilities and mitigates undesired conduct, including the underperformance issues above.

To assist boards in developing roles and responsibilities for individual directors, the following model terms of reference were developed by the editor:

Individual Director Position Description

Individual Directors of the Company are expected to attend all regular Board and applicable Board Committee meetings in person. In addition to those meetings scheduled to be held by telephone conference call, it is acceptable for an individual Director, on occasion and in appropriate circumstances, to attend a meeting by telephone or to miss a meeting.

Each individual Director of the Company shall contribute actively and collectively to the effective governance of the Company.

Each individual Director of the Company will:

1. Consider and act in the best interests of the Company.
2. Fulfill the duties of care and loyalty to the Company.
3. Contribute to fulfilling the duties and responsibilities outlined in the Board of Directors Guidelines, the Charter of the Committee(s) of which the Director is a Member, and this Position Description applicable to the individual Director.
4. Support the Company's commitment to sustainable business practices.
5. Comply with the Company Director Code of Conduct.
6. Demonstrate credibility, integrity, and high ethical standards in the individual Director's business dealings and personal affairs.
7. Understand the difference between governance responsibilities and day-to-day management, and function effectively in the governance role.
8. Work effectively and constructively with other Directors and Management.
9. Have sufficient time and energy to devote to fulfill the individual Director's duties and responsibilities.
10. Consult with the Chair of the Board in considering an appointment as a director to any other entity.
11. Prepare for, attend, and contribute knowledgeably and effectively to meetings of the Board and the Committee(s) of which the individual Director is a member. Directors who cannot attend a meeting will make all reasonable efforts to provide their input to the Chair prior to the meeting and indicate whether they agree or disagree with any actions proposed to be taken.
12. Listen carefully and ask appropriate questions of Management to encourage discussion of key issues and fulfill the individual Director's duties and responsibilities.
13. Participate in an annual assessment by the Nominating and Governance Committee of individual Director independence.
14. Aside from the requirements in the foregoing item, be independent-minded within the boardroom in addressing any and all: business and governance issues; related-party transactions; transactions or agreements that the Company is considering in respect of which a director or executive officer has a material interest; and potential conflict-of-interest situations.
15. Advise the Chair of the Nominating and Governance Committee of any changes in factors that could affect the independence or effectiveness of the individual Director.
16. Advise the Chair of the Nominating and Governance Committee of any material change in employment or health status.
17. Within a reasonable time following appointment, participate in the Company's Director Orientation program.
18. Maintain or enhance the competencies and skills the individual Director is expected to bring to the Board of Directors.
19. Apply those competencies and skills effectively to the strategic issues facing the Company.
20. Participate in continuing education opportunities to maintain or enhance skills and abilities, and ensure that the individual Director's knowledge and understanding of the Company's business and risks remains current.
21. Participate in an annual assessment by the Nominating and Governance Committee of personal performance and contribution, given the Position Description applicable to the individual Director, as well as the competencies and skills the individual Director is expected to bring to the Board.
22. Participate in an annual performance assessment by the Nominating and Governance Committee of the Board of Directors, Board Committees, and the other individual Directors.
23. With the approval of the Nominating and Governance Committee, individual Directors are permitted to engage independent advisors at the Company's expense in appropriate circumstances.
24. Carry out any other appropriate duties and responsibilities assigned by the Board of Directors or a Board Committee of which the individual Director is a member.
25. To honor the spirit and intent of applicable law as it evolves, the authority to make minor technical amendments to this Position Description is delegated to the Corporate Secretary, who will report any amendments to the Nominating and Governance Committee at its next meeting.
26. Once or more annually, as the Nominating and Governance Committee decides, this Position Description will be fully evaluated and updates recommended to the Board for consideration.