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Ensign Energy Services Inc. — Proxy Solicitation & Information Statement 2020
Apr 9, 2020
42745_rns_2020-04-08_3e38a7b9-737d-49e4-8e8b-316b13d8951c.pdf
Proxy Solicitation & Information Statement
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�ENSIGN�
Management�Information�Circular�
2020�
drilling directional drilling well servicing
Ensign�Management�Information�Circular�|�2020�
NOTICE�OF�THE�ANNUAL�MEETING�OF�SHAREHOLDERS�OF�ENSIGN�ENEGY�SERVICES�INC.�
Date,�Place� The�annual�meeting�(the�“ Meeting ”)�of�the�shareholders�(“ Shareholders ”)�of�Ensign�Energy�Services� and�Time� Inc.�(the�“ Corporation ”)�will�be�held�on�Friday,�May�8,�2020,�at�3:00�p.m.�(Calgary�time)�at�the�Calgary� Petroleum�Club,�319�–�5th�Avenue�S.W.,�Calgary,�Alberta.�The�Meeting�will�have�the�following�purposes:�
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Items�of� 1. To�receive�the�consolidated�financial�statements�of�the�Corporation�for�the�fiscal�year�ending� Business� December�31,�2019,�together�with�the�auditor’s�report�thereon;�
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To�set�the�number�of�Directors�of�the�Corporation�at�nine�(9)�and�to�elect�Directors�to�hold�office� until�the�close�of�the�next�annual�meeting;�
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To�appoint�auditors�of�the�Corporation�for�the�ensuing�fiscal�year�to�hold�office�until�the�close�of� the�next�annual�meeting;��
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To�approve,�on�a�non�binding�advisory�basis,�the�Corporation’s�approach�to�executive� compensation,�as�described�in�the�Information�Circular;�and��
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To�transact�such�other�business�as�may�be�properly�brought�before�the�Meeting�or�any� adjournment�thereof.�
The�specific�details�of�the�matters�proposed�to�be�put�before�the�Meeting�are�set�forth�in�the� accompanying�Information�Circular.��
Shareholders�who�cannot�be�present�in�person�at�the�Meeting�are�urged�to�complete,�sign�and�date� the�enclosed�Instrument�of�Proxy.�The�Instrument�of�Proxy�must�be�deposited�with�the�Secretary�of�the� Corporation,�care�of�Computershare�Trust�Company�of�Canada�at�100�University�Avenue,�9th�Floor,� Toronto,�Ontario,�M5J�2Y1,�not�later�than�3:00�p.m.�on�Wednesday,�May�6,�2020.�
Who�Can� Only�Shareholders�of�record�as�of�the�close�of�business�on�March�20,�2020�(the�“ Record�Date ”)�are� Vote� entitled�to�receive�notice�of�the�Meeting.�Shareholders�of�record�will�be�entitled�to�vote�those�Common� Shares�included�in�the�list�of�Shareholders�entitled�to�vote�at�the�Meeting�prepared�as�at�the�Record� Date,�unless�any�such�Shareholder�transfers�his�Common�Shares�after�the�Record�Date�and�the� transferee�of�those�Common�Shares�establishes�that�he�owns�the�Common�Shares�and�demands,�not� later�than�the�close�of�business�10�days�before�the�Meeting,�that�the�transferee’s�name�be�included�in� the�list�of�Shareholders�entitled�to�vote�at�the�Meeting,�in�which�case�such�transferee�shall�be�entitled� to�vote�such�Common�Shares�at�the�Meeting.�
In�light�of�public�health�recommendations�related�to�reducing�the�spread�of�coronavirus�(COVID�19),� we�strongly�encourage�shareholders�to�vote�by�proxy�rather�than�attending�the�Meeting�in�person.� To�this�end,�only��registered��shareholders��and��proxyholders�will�be�permitted�to�attend,�participate�� and��vote��in��the��business��of��the�Meeting. Persons�who�are�not�registered�shareholders�or� proxyholders�who�wish�to�attend�the�Meeting�as�a�registered�guest�should�request�permission�to�attend� in�advance�of�the�Meeting�via�email�to�[email protected],�by���telephone���at�(403)�262�1361�or�by� mail�to�Investor�Relations,�Ensign�Energy�Services�Inc.,�400�–�5[th] �Ave.�S.W.,�Suite�1000,�Calgary,�AB�T2P� 0L6.� Permission�to�attend�as�a�guest�may�be�withheld�if�the�number�of�persons�present�at�the�Meeting� does�not�fit�within�then�current�public�health�recommendations. �Other�persons�not�entitled�or� required�to�be�present�at�the�Meeting�may�be�admitted�only�with�the�consent�of�the�Chair�of�the� Meeting�or�with�consent�of�the�Meeting.�
WE�STRONGLY�ENCOURAGE�ALL�SHAREHOLDERS�TO�VOTE�ELECTRONICALLY�RATHER�THAN� ATTENDING�IN�PERSON.�
drilling directional drilling well servicing
Ensign�Management�Information�Circular�|�2020�
In�the�interest�of�protecting�the�health�and�safety�of�Ensign’s�shareholders,�our�employees�and�our� community,�we�may�adopt�screening�or�other�measures�for�identifying�COVID�19�symptoms�or�risk� factors�as�may�be�recommended�or�required�by�applicable�health�authorities�at�the�Meeting.�We�reserve� the�right�to�refuse�admission�to�a�Shareholder�or�proxyholder�seeking�to�attend�the�Meeting�but�who�we� believe�may�pose�a�health�risk�to�attendees�at�the�Meeting.�In�addition,�attendees�will�be�required�to� practice�social�distancing.�No�food�or�drinks�will�be�served�at�the�Meeting.�
In�order�to�permit�Shareholders�and�proxyholders�to�listen�to�the�Meeting�in�real�time,�without�having� to�attend�in�person,�a�conference�call�of�the�Meeting�will�be�available�as�follows:��
Conference�call�participation:�
-
North�America�Toll�Free:�1�888�231�8191�
-
Local�(Toronto):�647�427�7450�
-
Conference�ID:�9399373�
The�Meeting�will�also�be�able�to�be�heard�over�the�internet,�and�a�recording�of�the�conference�call�and� presentation�materials�will�be�available�for�listening�and�viewing�after�the�Meeting.�You�can�access�the� webcast�URL�to�listen�live�to�the�Meeting,�and�find�a�recording�of�the�conference�call�and�presentation� materials�after�the�Meeting,�through�our�website:��
https://www.ensignenergy.com/presentations
Shareholders�will�not�be�able�to�vote�through�the�conference�call ,�however,�there�will�be�a�question� and�answer�session�following�the�termination�of�the�formal�business�of�the�Meeting�during�which� Shareholders�attending�the�conference�call�can�ask�questions.��
In�light�of�changing�public�health�restrictions�and�recommendations�related�to�COVID�19,�there�may� be�changes�to�the�date,�time�and�location�of�the�Meeting.�Any�such�changes�will�be�communicated�by� news�release�which�will�be�made�available�under�the�Corporation’s�profile�on�SEDAR�at� www.sedar.com .
By�order�of�the�board�of�directors�of�Ensign�Energy�Services�Inc.�
DATED �at�the�City�of�Calgary,�in�the�Province�of�Alberta,�this�20[th] �day�of�March,�2020.�
BY�ORDER�OF�THE�BOARD�OF�DIRECTORS
Robert�H.�Geddes� President�&�Chief�Operating�Officer
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Ensign�Management�Information�Circular�|�2020�
Important�Notice�regarding�Proxy�Materials�and�Notice�and�Access�Procedures�
The�Corporation�has�elected�to�use�the�notice�and�access�provisions�under�National�Instrument�54�101�and� National�Instrument�51�102�(“ Notice�and�Access ”)�for�distribution�of�the�meeting�materials�to�Shareholders.� Notice�and�Access�allows�the�Corporation�to�post�electronic�versions�of�its�proxy�related�materials�on�the� System�for�Electronic�Document�Analysis�and�Retrieval�(“ SEDAR ”)�and�on�its�website,�rather�than�mailing� paper�copies�to�Shareholders.�Shareholders�will�still�receive�this�Notice�of�Meeting�and�a�form�of�proxy�(or� voting�instruction�form�if�applicable)�and�may�choose�to�receive�a�paper�copy�of�the�meeting�materials�in� accordance�with�the�instructions�set�forth�below.��
The�meeting�materials�will�be�available�on�the�Corporation’s�website�at�www.ensignenergy.com as�of�March� 27,�2020.�The�meeting�materials�will�also�be�available�under�the�Corporation’s�profile�on�SEDAR�at� www.sedar.com as�of�March�27,�2020.�The�use�of�this�alternative�means�of�delivery�is�more�environmentally� friendly�as�it�will�help�reduce�paper�use�and�it�will�also�reduce�the�Corporation's�printing�and�mailing�costs.� Shareholders�are�reminded�to�review�the�meeting�materials�prior�to�voting.��
Any�Shareholder�who�wishes�to�receive�a�paper�copy�of�the�meeting�materials,�at�no�cost�to�them,�may�request� copies�from�the�Corporation�at�400�–�5[th] �Ave.�S.W.,�Suite�1000,�Calgary,�Alberta,�T2P�0L6,�Fax:�(403)�262�8215,� Toll�Free:�1�(877)�262�1361�or�by�email�at�[email protected].�A�Shareholder�may�also�use�this�toll�free� number�to�obtain�additional�information�about�how�Notice�and�Access�works.��
Requests�for�paper�copies�should�be�made�as�soon�as�possible,�but�must�be�received�no�later�than�April�6,� 2020�in�order�to�allow�sufficient�time�for�Shareholders�to�receive�and�review�the�meeting�materials�and�return� the�proxy�form�or�voting�instruction�form�prior�to�the�proxy�deadline.�Shareholders�who�are�unable�to�attend� the�meeting�in�person�are�requested�to�complete,�date�and�sign�the�enclosed�form�of�proxy�(or�voting� instruction�form,�as�applicable)�and�return�it,�in�the�envelope�provided,�to�Computershare�Trust�Company�of� Canada,�100�University�Avenue,�9th�Floor,�Toronto,�Ontario,�M5J�2Y1,�so�that�it�is�received�no�later�than�3:00� p.m.�(Calgary�time)�on�Wednesday�May�6,�2020.�
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Ensign�Management�Information�Circular�|�2020�
Table�of�Contents�
Table�of�Contents�................................................................................................................................................�5 SECTION�1�–�PROXY�INFORMATION�.....................................................................................................................�7 Attendance�in�Person�...............................................................................................................................................�7 Attendance�by�Conference�Call�or�Webcast�............................................................................................................�8 Record�Date�.............................................................................................................................................................�8 Designation�of�Persons�Other�Than�Those�Set�Forth�in�the�Instrument�of�Proxy�....................................................�8 Beneficial�Holders�of�Shares�....................................................................................................................................�9 Voting�of�Common�Shares�Represented�by�Proxies�................................................................................................�9 Revocation�of�Proxies�............................................................................................................................................�10 SECTION�2�–�PARTICULARS�OF�MATTERS�TO�BE�ACTED�UPON�............................................................................�11 Number�of�Directors�..............................................................................................................................................�11 Election�of�Directors�..............................................................................................................................................�11 Majority�Director�Voting�...............................................................................................................................�18 Committees�...................................................................................................................................................�18 Meetings�of�the�Board�of�Directors�and�its�Committees�During�2019�...........................................................�19 Director�Tenure�..............................................................................................................................................�20 No�Common�Outside�Boards�.........................................................................................................................�20 Director�Equity�Ownership�Requirement�.......................................................................................................�21 Additional�Disclosures�Regarding�Directors�..................................................................................................�23 Appointment�of�Auditors�.......................................................................................................................................�23 Advisory�Vote�on�Executive�Compensation�(“Say�on�Pay”)�...................................................................................�24 SECTION�3�–�COMPENSATION�DISCUSSION�AND�ANALYSIS�................................................................................�25 Letter�to�Shareholders�from�the�Compensation�Committee�.................................................................................�25 Compensation�Discussion�&�Analysis�.....................................................................................................................�27 Board�of�Directors�Oversight�and�the�Compensation�Committee�.........................................................................�27 Compensation�Committee�Mandate�.....................................................................................................................�29 Compensation�Philosophy,�Principles�and�Objectives�...........................................................................................�29 Risk�Considerations�of�Executive�Compensation�...................................................................................................�30 Compensation�Benchmarking�Peer�Group.............................................................................................................�33 Performance�Peer�Group�.......................................................................................................................................�34 2020�Compensation�Program�Design�....................................................................................................................�35 NEO�Compensation�Components�–�Summary�.......................................................................................................�36 NEO�Compensation�Components�–�Detailed�Description�......................................................................................�37 Performance�Graph�...............................................................................................................................................�46 2019�Compensation�and�Pay�Mix�..........................................................................................................................�47 Compensation�Objective�Supported�......................................................................................................................�49 2019�Performance�of�the�NEO’s�............................................................................................................................�51 2019�Annual�Bonus�Calculation�–�Cash�Award�......................................................................................................�53 2019�PSUs�–�Achievement�of�Performance�Metrics�..............................................................................................�54 2019�Stock�Option�Grants�......................................................................................................................................�54 Looking�Ahead�to�2020�..........................................................................................................................................�55 Summary�Compensation�Table�..............................................................................................................................�55 Outstanding�Share�Based�Awards�and�Option�Based�Awards�...............................................................................�58
Page�|�5�
Ensign�Management�Information�Circular�|�2020�
Payout�of�2017�PSU�Awards�...................................................................................................................................�59 Calculation�of�Payout�Multiplier�............................................................................................................................�59 Incentive�Plan�Awards�–�Value�Vested�or�Earned�During�the�Year�........................................................................�60 Pension�Plan�Benefits�.............................................................................................................................................�61 Termination�and�Change�of�Control�Benefits�........................................................................................................�61 Executive�Equity�Ownership�Policy�........................................................................................................................�64 SECTION�4�–�DIRECTOR�COMPENSATION�...........................................................................................................�66 Director�Compensation�Philosophy�and�Objectives�..............................................................................................�66 Non�Management�Directors�–�Retainers�and�Fees:�...............................................................................................�67 Equity�Based�Compensation�–�Directors�DSU�Plan�and�Common�Share�Payment�Plan�........................................�68 2019�Directors�Summary�Compensation�Table�.....................................................................................................�69 Directors�Fees�–�Breakdown�..................................................................................................................................�71 Directors’�Outstanding�Share�Based�Awards�.........................................................................................................�71 Directors’�Incentive�Plan�Awards�–�Value�Vested�or�Earned�During�the�Year�.......................................................�72 SECTION�5�–�STATEMENT�OF�CORPORATE�GOVERNANCE�PRACTICES�..................................................................�74 Director�Independence�..........................................................................................................................................�74 Lead�Director..........................................................................................................................................................�75 Other�Issuer�Directorships�.....................................................................................................................................�75 “In�Camera”�Sessions�of�the�Independent�Directors�.............................................................................................�76 2019�Board�and�Committee�Meeting�Attendance�.................................................................................................�77 Board�Mandate�......................................................................................................................................................�77 Committees�and�Committee�Composition�............................................................................................................�78 Director�Skills�and�Experience�................................................................................................................................�78 Director�Orientation...............................................................................................................................................�80 Director�Education�.................................................................................................................................................�80 Director�Term�Limits�and�Other�Mechanisms�of�Board�Renewal�..........................................................................�82 Diversity�Policy�.......................................................................................................................................................�82 Ethical�Business�Conduct�.......................................................................................................................................�83 Independent�Judgment�of�Directors�......................................................................................................................�84 Nomination�of�Directors�........................................................................................................................................�85 Director�Compensation�..........................................................................................................................................�85 Board,�Board�Member�and�Committee�Assessments�............................................................................................�86 Mandatory�Share�Ownership�.................................................................................................................................�87 Communications�Policy�..........................................................................................................................................�87 Board�Approvals�and�Structure�..............................................................................................................................�87 SECTION�6�–�STOCK�OPTION�PLAN�.....................................................................................................................�88 Equity�Compensation�Plan�Information�As�At�December�31,�2019�.......................................................................�90 SECTION�7�–�OTHER�INFORMATION�...................................................................................................................�91 Voting�Securities�and�Principal�Holders�Thereof�...................................................................................................�91 Interest�of�Informed�Persons�in�Material�Transactions�.........................................................................................�91 Other�Matters�........................................................................................................................................................�91 Additional�Information�..........................................................................................................................................�92 SCHEDULE�1�–�BOARD�OF�DIRECTORS�MANDATE
Page�|�6�
Ensign�Management�Information�Circular�|�2020�
FOR�THE�ANNUAL�MEETING�OF�SHAREHOLDERS��
TO�BE�HELD�ON�FRIDAY,�MAY�8,�2020�
This�Information�Circular�is�dated�March�20,�2020.�
The�information�contained�in�this�Management�Information�Circular�(the�“ Information�Circular ”)�is� furnished�in�connection�with�the�solicitation�of�proxies�by�the�management�of�Ensign�Energy�Services�Inc.� (“ Ensign ”�or�the�“ Corporation ”)�for�use�at�the�2020�Annual�Meeting�(the�“ Meeting ”)�of�the�holders� (“ Shareholders ”)�of�common�shares�of�the�Corporation�(the�“ Common�Shares ”)�to�be�held�at�the�Calgary� Petroleum�Club,�319���5th�Avenue�S.W.,�Calgary,�Alberta,�on�Friday,�the�8[th] �day�of�May,�2020,�at�3:00�p.m.� (Calgary�time),�and�at�any�adjournments�thereof,�for�the�purposes�set�out�in�the�accompanying�Notice�of� the�Annual�Meeting�(the�“ Notice ”).�Although�it�is�expected�that�the�solicitation�of�proxies�will�be�primarily� by�mail,�proxies�may�also�be�solicited�personally�or�by�telephone,�or�other�means�of�communication�by� regular�employees�of�the�Corporation.�The�cost�of�any�such�solicitation�will�be�borne�by�the�Corporation.�
In�light�of�changing�public�health�restrictions�and�recommendations�related�to�COVID�19,�there�may�be� changes�to�the�date,�time�and�location�of�the�Meeting.�Any�such�changes�will�be�communicated�by�news� release�which�will�be�made�available�under�the�Corporation’s�profile�on�SEDAR�at�www.sedar.com .
SECTION�1�–�PROXY�INFORMATION�
Attendance�in�Person��
WE�STRONGLY�ENCOURAGE�ALL�SHAREHOLDERS�TO�VOTE�ELECTRONICALLY�BY�PROXY�RATHER�THAN� ATTENDING�IN�PERSON.
Ensign�acknowledges�and�continues�to�follow�the�restrictions�and�recommendations�regarding�large� gatherings�that�are�currently�in�place�due�to�the�novel�coronavirus�(COVID�19)�pandemic.�While�a� registered�Shareholder�may�attend�the�Meeting�in�person�or�may�be�represented�at�the�Meeting�by�proxy,� in�light�of�public�health�recommendations�to�reduce�the�spread�of�COVID�19,�we�strongly�encourage� registered�Shareholders�to�vote�by�completing�and�submitting�the�enclosed�Form�of�Proxy,�rather�than� attending�the�Meeting�in�person. �Only�registered�shareholders�and�proxyholders�will�be�permitted�to� attend�in�person,�participate�in�and�vote�in�the�business�of�the�Meeting.
In�the�interest�of�protecting�the�health�and�safety�of�Ensign’s�shareholders,�our�employees�and�our� community,�we�may�adopt�screening�or�other�measures�for�identifying�COVID�19�symptoms�or�risk�factors� as�may�be�recommended�or�required�by�applicable�health�authorities�at�the�Meeting.�We�reserve�the�right� to�refuse�admission�to�a�Shareholder�or�proxyholder�seeking�to�attend�the�Meeting�but�who�we�believe� may�pose�a�health�risk�to�attendees�at�the�Meeting.�In�addition,�attendees�will�be�required�to�practice� social�distancing.�No�food�or�drinks�will�be�served�at�the�Meeting.�
Page�|�7�
Ensign�Management�Information�Circular�|�2020�
Attendance�by�Conference�Call�or�Webcast�
In�order�to�permit�Shareholders�and�proxyholders�to�listen�to�the�Meeting�in�real�time,�without�having�to� attend�in�person,�a�conference�call�of�the�Meeting�will�be�available�as�follows:��
Conference�call�participation:�
-
North�America�Toll�Free:�1�888�231�8191�
-
Local�(Toronto):�647�427�7450�
-
Conference�ID:�9399373�
The�Meeting�will�also�be�able�to�be�heard�over�the�internet,�and�a�recording�of�the�conference�call�and� presentation�materials�will�be�available�for�listening�and�viewing�after�the�Meeting.�You�can�access�the� webcast�URL�to�listen�live�to�the�Meeting,�and�find�a�recording�of�the�conference�call�and�presentation� materials�after�the�Meeting,�through�our�website:��
https://www.ensignenergy.com/presentations
Record�Date�
The�persons�entitled�to�attend�and�vote�at�the�Meeting�or�to�be�represented�thereat�by�proxy�are�those� Shareholders�of�record�at�the�close�of�business�on�March�20,�2020�(the�“ Record�Date ”).�Shareholders�of� record�will�be�entitled�to�vote�those�Common�Shares�included�in�the�list�of�Shareholders�entitled�to�vote� at�the�Meeting�prepared�as�at�the�Record�Date,�unless�any�such�Shareholder�transfers�his�or�her�Common� Shares�after�the�Record�Date�and�the�transferee�of�those�Common�Shares�establishes�that�he�or�she�owns� the�Common�Shares�and�demands,�not�later�than�10�days�before�the�Meeting,�that�the�transferee's�name� be�included�in�the�list�of�Shareholders�entitled�to�vote�at�the�Meeting,�in�which�case�such�transferee�shall� be�entitled�to�vote�such�Common�Shares�at�the�Meeting.��
Designation�of�Persons�Other�Than�Those�Set�Forth�in�the�Instrument�of�Proxy��
The�persons�named�in�the�enclosed�Instrument�of�Proxy�to�represent�a�Shareholder�are�directors�or� officers�of�the�Corporation.� A�Shareholder�who�chooses�to�vote�by�submitting�an�Instrument�of�Proxy� has�the�right�to�appoint�a�person,�who�need�not�be�a�Shareholder�of�the�Corporation,�to�represent�such� Shareholder�at�the�Meeting�other�than�the�persons�designated�in�the�Instrument�of�Proxy�furnished� with�this�Information�Circular . Such�right�may�be�exercised�by�inserting�in�the�blank�space�provided�in�the� Instrument�of�Proxy�the�name�of�the�person�to�be�designated�or�by�completing�another�Instrument�of� Proxy�and,�in�either�case,�delivering�the�resulting�Instrument�of�Proxy�to�the�Secretary�of�the�Corporation,� care�of�Computershare�Trust�Company�of�Canada,�100�University�Avenue,�9th�Floor,�Toronto,�Ontario,� M5J�2Y1,�not�later�than�3:00�p.m.�(Calgary�time)�on�Wednesday,�May�6,�2020.��
WE�STRONGLY�ENCOURAGE�ALL�SHAREHOLDERS�TO�VOTE�ELECTRONICALLY�BY�PROXY�RATHER�THAN� ATTENDING�IN�PERSON.
Page�|�8�
Ensign�Management�Information�Circular�|�2020�
Beneficial�Holders�of�Shares��
The�information�set�forth�in�this�section�is�of�significant�importance�to�many�Shareholders�as�a�substantial� number�of�the�Shareholders�do�not�hold�Common�Shares�in�their�own�name.�Shareholders�who�do�not� hold�their�Common�Shares�in�their�own�name�(referred�to�herein�as�“ Beneficial�Shareholders ”)�should� note�that�only�proxies�deposited�by�Shareholders�whose�names�appear�on�the�records�of�the�Corporation� as�the�registered�holders�of�Common�Shares�can�be�recognized�and�acted�upon�at�the�Meeting.��
If�shares�are�listed�in�an�account�statement�provided�to�a�Shareholder�by�a�broker,�then�in�almost�all�cases� those�Common�Shares�will�not�be�registered�in�the�Shareholder's�name�on�the�records�of�the�Corporation.� Such�Common�Shares�will�more�likely�be�registered�under�the�name�of�the�Shareholder's�broker�or�an� agent�of�that�broker.�In�Canada,�the�vast�majority�of�such�shares�are�registered�under�the�name�of�CDS�&� Co.�(the�registration�name�for�The�Canadian�Depository�for�Securities�Limited,�which�acts�as�nominees�for� many�Canadian�brokerage�firms).�Common�Shares�held�by�brokers�or�their�nominees�can�only�be�voted� (for�or�against�resolutions)�upon�the�instructions�of�the�Beneficial�Shareholder.�Without�specific� instructions,�the�broker/nominees�are�prohibited�from�voting�Common�Shares�for�their�clients.�The� Corporation�does�not�know�for�whose�benefit�the�Common�Shares�registered�in�the�name�of�CDS�&�Co.� are�held.��
Applicable�regulatory�policy�requires�intermediaries/brokers�to�seek�voting�instructions�from�Beneficial� Shareholders�in�advance�of�shareholders�meetings.�Every�intermediary/broker�has�its�own�mailing� procedures�and�provides�its�own�return�instructions,�which�should�be�carefully�followed�by�Beneficial� Shareholders�in�order�to�ensure�that�their�Common�Shares�are�voted�at�the�Meeting.�Often,�the�form�of� proxy�supplied�to�a�Beneficial�Shareholder�by�its�broker�is�identical�to�the�form�of�proxy�provided�to� registered�Shareholders.�However,�its�purpose�is�limited�to�instructing�the�registered�Shareholder�how�to� vote�on�behalf�of�the�Beneficial�Shareholder.��
The�majority�of�brokers�now�delegate�responsibility�for�obtaining�instructions�from�clients�to�Broadridge� Financial�Solutions,�Inc.�(“ Broadridge ”).�Broadridge�typically�mails�a�scannable�Voting�Instruction�Form�in� lieu�of�the�Form�of�Proxy.�The�Beneficial�Shareholder�is�requested�to�complete�and�return�the�Voting� Instruction�Form�to�Broadridge�by�mail,�email�or�facsimile.�Alternatively�the�Beneficial�Shareholder�can� call�a�toll�free�telephone�number�to�vote�the�Common�Shares�held�by�the�Beneficial�Shareholder.� Broadridge�then�tabulates�the�results�of�all�instructions�received�and�provides�appropriate�instructions� respecting�the�voting�of�Common�Shares�to�be�represented�at�the�Meeting.�A�Beneficial�Shareholder� receiving�a�Voting�Instruction�Form�cannot�use�that�Voting�Instruction�Form�to�vote�Common�Shares� directly�at�the�Meeting�because�the�Voting�Instruction�Form�must�be�returned�as�directed�by�Broadridge� in�advance�of�the�Meeting�in�order�to�have�the�Common�Shares�voted.��
Voting�of�Common�Shares�Represented�by�Proxies��
The�Common�Shares�represented�by�proxy�will�be�voted�for,�against,�or�withheld�from�voting,�in� accordance�with�the�instructions�of�the�Shareholder�on�any�ballot�that�may�be�called�for,�and�if�the� Shareholder�specifies�a�choice�with�respect�to�any�matter�to�be�acted�upon,�the�Common�Shares�will�be� voted�accordingly.�If�no�choice�is�specified,�the�Common�Shares�represented�by�a�proxy�for�the�Meeting� will�be�voted�for�the�resolution�on�any�particular�resolution.��
Page�|�9�
Ensign�Management�Information�Circular�|�2020�
The�enclosed�Instrument�of�Proxy�confers�discretionary�authority�upon�the�persons�named�therein�with� respect�to�amendments�or�variations�of�any�resolution�voted�upon�at�the�Meeting�and�with�respect�to� other�matters�which�may�properly�be�brought�before�the�Meeting�or�any�adjournment�thereof.�At�the� time�of�printing�this�Information�Circular,�management�of�the�Corporation�knows�of�no�such�amendment,� variation�or�other�matter.��
WE�STRONGLY�ENCOURAGE�ALL�SHAREHOLDERS�TO�VOTE�ELECTRONICALLY�BY�PROXY�RATHER�THAN� ATTENDING�IN�PERSON.
Revocation�of�Proxies��
A�Shareholder�who�has�given�a�proxy�may�revoke�the�proxy,�at�any�time�prior�to�the�exercise�thereof.�If�a� person�who�has�given�a�proxy�attends�personally�at�the�Meeting,�such�person�may�revoke�the�proxy�and� vote�in�person.�In�addition�to�revocation�in�any�other�manner�permitted�by�law,�a�proxy�may�be�revoked� by�instrument�in�writing�executed�by�the�Shareholder�or�by�his�or�her�attorney�authorized�in�writing,�or�if� the�Shareholder�is�a�corporation,�under�its�corporate�seal�by�an�officer�or�attorney�thereof�duly� authorized.�The�revocation�of�proxy�must�be�deposited�with�the�Secretary�of�the�Corporation,�care�of� Computershare�Trust�Company�of�Canada,�100�University�Avenue,�9th�Floor,�Toronto,�Ontario,�M5J�2Y1,� or�at�the�corporate�office�of�the�Corporation�at�400���5th�Avenue�S.W.,�Suite�1000,�Calgary,�Alberta,�T2P� 0L6,�at�any�time�up�to�and�including�the�last�business�day�preceding�the�day�of�the�Meeting,�or�any� adjournment�thereof,�at�which�the�proxy�is�to�be�used,�or�with�the�Chairman�of�such�Meeting�on�the�date� of�the�Meeting�or�any�adjournment�thereof,�and�upon�any�of�such�deposits,�the�proxy�is�revoked.��
Page�|�10�
Ensign�Management�Information�Circular�|�2020�
SECTION�2�–�PARTICULARS�OF�MATTERS�TO�BE�ACTED�UPON�
To�the�knowledge�of�management�of�the�Corporation,�the�only�matters�to�be�placed�before�the�Meeting� are�those�matters�set�forth�in�the�Notice,�namely�to�set�the�number�of�Directors�of�the�Corporation�at� nine�(9),�to�elect�the�Directors�of�the�Corporation�for�the�ensuing�year,�to�appoint�the�Auditors�of�the� Corporation�for�the�ensuing�fiscal�year�and�a�non�binding�advisory�vote�with�respect�to�executive� compensation.��
The�resolutions�relating�to�the�Number�of�Directors,�the�Election�of�Directors�and�the�Appointment�of� Auditors�are�ordinary�resolutions�and�must�be�approved�by�in�excess�of�50%�of�the�votes�cast�by�the� Shareholders,�present�in�person�or�represented�by�proxy,�at�the�Meeting.���
Number�of�Directors�
The�affairs�of�the�Corporation�are�managed�by�a�Board�of�Directors�who�are�elected�annually�for�a�one�(1)� year�term�at�each�annual�meeting�of�Shareholders�and�who�hold�office�until�the�next�annual�meeting,�or� until�their�successors�are�duly�elected�or�appointed�or�until�a�Director�vacates�his�or�her�office�or�is� replaced�in�accordance�with�the�bylaws�of�the�Corporation.�The�Articles�of�the�Corporation�provide�that� the�Board�of�Directors�shall�consist�of�not�less�than�three�(3)�nor�more�than�fifteen�(15)�persons.��
Directors�who�have�celebrated�their�75[th] �birthday�may�not,�unless�the�remaining�Board�members�agree� to�a�specific�exception,�stand�for�election�as�a�Director�of�the�Corporation�(the�“ Director�Retirement� Policy ”).��
The�Board�presently�consists�of�nine�(9)�Directors�and�it�is�proposed�that�the�nine�(9)�current�Directors�be� re�elected�to�serve�on�the�Board�for�the�forthcoming�year.��
Election�of�Directors�
The�following�are�the�names�of�the�nine�(9)�proposed�nominees�for�election�as�Directors�of�the� Corporation:�
| ion: | ||
|---|---|---|
| N.MurrayEdwards | RobertH.Geddes | GaryW.Casswell |
| JamesB.Howe | LenO.Kangas | CaryA.Moomjian,Jr. |
| JohnG.Schroeder | GailD.Surkan | BarthE.Whitham |
The�persons�named�herein�have�been�nominated�for�election�and�have�consented�to�such�nomination.� The�current�Board�of�Directors�recommends�that�each�of�the�nominees�be�elected�to�serve�as�Directors� of�the�Corporation,�to�hold�office�until�the�next�annual�meeting�of�Shareholders�or�until�such�person’s� successor�is�elected�or�appointed.�As�you�will�note�from�the�enclosed�form�of�proxy�or�voting�instruction� form,�shareholders�may�vote�for�each�Director�individually.�In�addition,�the�Corporation�has�adopted�a� majority�director�voting�policy,�described�below.� If�no�choice�is�specified,�the�Common�Shares� represented�by�a�proxy�for�the�Meeting�will�be�voted�FOR�the�election�of�each�of�these�nominees .��
Page�|�11�
Ensign�Management�Information�Circular�|�2020�
The�current�Board�of�Directors�has�confirmed�that�Mr.�N.�Murray�Edwards�will,�subject�to�his�re�election� as�a�Director,�be�re�appointed�by�the�Board�of�Directors�as�Chairman�of�the�Board�of�Directors.�Each�such� Director’s�confirmation�and�Mr.�Edwards’�re�appointment�as�Chairman�are�subject�to�his�or�her�re�election� as�a�Director�by�the�Shareholders�at�the�Meeting.���
The�following�tables�set�forth�selected�information�for�each�of�the�proposed�Directors,�together�with�his� or�her�age,�principal�place�of�residence,�principal�occupation,�principal�directorships�with�other�boards,� date�first�elected�or�appointed�as�a�Director�of�the�Corporation,�whether�the�nominee�qualifies�as� independent,�the�Committee(s)�of�the�Board�on�which�the�nominee�serves,�the�number�of�Common� Shares�beneficially�owned,�or�controlled�or�directed�by�each�proposed�nominee�as�at�March�20,�2020�and� the�attendance�records�for�both�Board�and�Committee�meetings�held�in�2019.�All�nominees�are�currently� Directors�of�the�Corporation.�Certain�of�this�information,�not�being�within�the�knowledge�of�the� Corporation,�has�been�furnished�by�the�respective�nominees.��
==> picture [89 x 112] intentionally omitted <==
N.�Murray�Edwards��
Age:��60�
St.�Moritz,�Switzerland�� Director�since:�October� 1989�
Non�independent�–� management�(Chairman� of�Ensign)
Mr.�Edwards�is�an�investor�and�corporate�director.�Prior�to�December�2015,�he� was�the�President�of�Edco�Financial�Holdings�Ltd,�a�private�management�and� consulting�company.�He�is�currently�a�director�and�Chairman�of�Canadian�Natural� Resources�Limited,�a�publicly�traded�company�and�one�of�the�largest� independent�crude�oil�and�natural�gas�producers�in�the�world,�and�a�director�and� Chairman�of�Magellan�Aerospace�Corporation,�also�a�publicly�traded�company.� He�has�a�B.�Comm.�from�the�University�of�Saskatchewan�(Great�Distinction)�and� an�LL.B.�(Honours)�from�the�University�of�Toronto.�In�2007,�the�business�school� at�the�University�of�Saskatchewan�was�re�named�the�“N.�Murray�Edwards�School� of�Business”�in�recognition�of�his�support�of�the�school.�He�has�been�awarded� several�honorary�Doctor�of�Laws�degrees�from�prominent�Canadian�universities,� including�from�the�University�of�Calgary�(2004),�the�University�of�Saskatchewan� (2011),�and�the�University�of�Toronto�(2013),�in�each�case�in�recognition�of�his� achievements�in�business�and�support�of�educational,�cultural�and�community� organizations�and�institutions.��
| Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Attendance: | Attendance: | Attendance: | PublicBoardMemberships: | PublicBoardMemberships: | PublicBoardMemberships: | PublicBoardMemberships: |
|---|---|---|---|---|---|---|---|---|---|---|
| MemberoftheBoard. AsChairmanofEnsignandthereforenotan independentdirector,Mr.Edwardsmayattendall meetingsofBoardCommitteesbutasanon�voting participantonly. |
7/7(100%) | CanadianNatural ResourcesLimited MagellanAerospace Corporation |
1988topresent 1995topresent |
|||||||
| VotingResultsof2019AGM: | NumberofVotes: | %ofVotes: | ||||||||
| VotesFor | 102,150,842 | 88.03 | ||||||||
| VotesWithheld | 13,891,688 | 11.97 | ||||||||
| TotalCompensation Earnedin2019:(2) |
Securities/DSUsHeld(directlyandindirectly)asatMarch20,2020: | |||||||||
| Value | CommonShares/ DSUs |
TotalHoldings(Sharesand DSUs) |
MeetsMinimumShareholding Requirement(3) |
|||||||
| $1,740,238 | 31,582,085/N/A | 31,582,085 | Yes | |||||||
| OptionsHeldasatMarch20,2020: | ||||||||||
| Number | AverageWeightedExercisePrice | Exercisablein�the�MoneyOption Value |
Un�Exercisablein�the�MoneyOption Value |
|||||||
| 737,000 | $5.90 | $0 | $0 |
Page�|�12�
Ensign�Management�Information�Circular�|�2020�
==> picture [88 x 108] intentionally omitted <==
Robert�H.�Geddes�� Age:��63� Calgary,�Alberta,�Canada� Director�since:��March�2007� Non�independent�–� management�(President�&� Chief�Operating�Officer�of� Ensign)
Mr.�Geddes�has�been�with�the�Ensign�group�of�companies�since�1991�and�is� currently�the�President�&�Chief�Operating�Officer�of�the�Corporation,�a�position� he�has�held�since�January�1,�2007.�He�acted�as�Vice�President�Canadian�Drilling� from�1999�to�2004�and�President�Canadian�Operations,�from�2004�to�December� 31,�2006.�He�is�a�past�chairman�of�the�Canadian�Association�of�Oilwell�Drilling� Contractors�(CAODC),�currently�serves�as�Vice�Chair�of�the�International� Association�of�Drilling�Contractors,�and�is�a�member�of�the�Association�of� Professional�Engineers,�Geologists�and�Geophysicists�of�Alberta�(APEGGA).�He� holds�a�B.Sc.�in�Mechanical�Engineering�from�the�University�of�Alberta.�
| Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Attendance: | PublicBoardMemberships: | PublicBoardMemberships: |
|---|---|---|---|---|---|---|---|---|
| MemberoftheBoard. AsPresident&COOofEnsignandthereforenotan independentdirector,Mr.Geddesmayattendallmeetings ofBoardCommitteesbutasanon�votingparticipantonly. |
7/7(100%) | None | ||||||
| VotingResultsof2019AGM: | NumberofVotes: | %ofVotes: | ||||||
| VotesFor | 115,827,073 | 99.81 | ||||||
| VotesWithheld | 215,457 | 0.19 | ||||||
| TotalCompensation Earnedin2019:(2) |
Securities/DSUsHeld(directlyandindirectly)asatMarch20,2020: | |||||||
| Value | CommonShares/ DSUs |
TotalHoldings(Sharesand DSUs) |
MeetsMinimumShareholding Requirement(3) |
|||||
| $2,449,554 | 943,842/N/A | 943,842 | Yes | |||||
| OptionsHeldasatMarch20,2020: | ||||||||
| Number | AverageWeightedExercisePrice | Exercisablein�the�MoneyOption Value |
Un�Exercisablein�the�MoneyOption Value |
|||||
| 737,000 | $5.90 | $0 | $0 |
Page�|�13�
Ensign�Management�Information�Circular�|�2020�
==> picture [95 x 123] intentionally omitted <==
Gary�W.�Casswell�� Age:��67� Montgomery,� Texas,�USA� Director�since:�� December�2017�� Independent
Mr.�Casswell�is�a�retired�businessman�with�over�35�years�of�experience�as�a�senior� executive�in�the�onshore�and�offshore�drilling�industries.�His�industry�career�most� recently�included�tenure�as�the�President�&�Chief�Executive�Officer�of�Northern� Offshore�Ltd,�a�Bermuda�based�offshore�drilling�company,�listed�on�the�Oslo�Bors� stock�exchange.�Prior�to�that,�Mr.�Casswell�acted�as�the�Vice�President�of�Eastern� Hemisphere�Operations�for�Pride�International,�a�Houston,�Texas�based�drilling� company�that�was�acquired�by�Ensco�plc�(now�called�Valaris�plc)�in�2011.�Mr.� Casswell�has�lived�and�worked�extensively�throughout�the�Middle�East,�including� Kuwait,�Saudi�Arabia�and�Oman,�and�has�extensive�experience�in�the�United�States� land�drilling�market.�Mr.�Casswell�currently�serves�as�Chairman�of�the�Board�for� Northern�Drilling�Ltd,�a�Bermuda�based�offshore�drilling�company,�listed�on�the� Oslo�Bors�stock�exchange,�and�as�a�member�of�the�board�of�directors�for�Norther� Ocean�Ltd.,�also�listed�on�the�Oslo�Bors�stock�exchange.�He�obtained�a�Bachelor� of�Science�degree�in�Business�Administration�from�the�University�of�California,� Long�Beach�in�1980�and�is�a�member�of�the�Society�of�Petroleum�Engineers.�
| Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Attendance:(6) | PublicBoardMemberships: | PublicBoardMemberships: | PublicBoardMemberships: |
|---|---|---|---|---|---|---|---|
| MemberoftheBoard MemberoftheCorporateGovernance,Nominations&Risk Committee ChairoftheHealth,Safety&EnvironmentCommittee |
7/7(100%) 4/4(100%) 4/4(100%) |
NorthernDrillingLtd. NorthernOceanLtd. |
2017topresent 2020topresent |
||||
| VotingResultsof2019AGM: | NumberofVotes: | %ofVotes: | |||||
| VotesFor | 115,439,963 | 99.48 | |||||
| VotesWithheld | 602,567 | 0.52 | |||||
| TotalCompensation Earnedin2019:(4) |
Securities/DSUsHeld(directlyandindirectly)asatMarch20,2020: | ||||||
| Value | CommonShares/ DSUs |
TotalHoldings(Sharesand DSUs) |
MeetsMinimumShareholding Requirement(5)(6) |
||||
| $180,500 | 40,000/46,953 | 86,953 | N/A |
==> picture [76 x 96] intentionally omitted <==
James�B.�Howe� Age:��70� Calgary,�Alberta,� Canada� Director�since:��June� 1987�
Independent
Mr.�Howe�is�President�of�Bragg�Creek�Financial�Consultants�Ltd.,�a�private�financial� consulting�company.�He�brings�extensive�corporate�board�experience�to�Ensign,� including�in�the�oil�and�natural�gas�and�related�service�industries,�together�with� significant�accounting,�finance�and�executive�compensation�expertise.�Over�his�40�year� career,�Mr.�Howe�has�served�as�Chief�Financial�Officer�of�several�public�companies�and� currently�serves�on�the�board�of�directors�and�audit�committee�of�Bengal�Energy�Ltd.,� and�on�the�board�of�directors,�audit�committee�and�compensation�committee�of�Pason� Systems�Inc.�Mr.�Howe�earned�a�B.A.�from�the�Ivey�School�of�Business�at�the�University� of�Western�Ontario�and�is�a�Chartered�Accountant.�He�is�a�member�of�the�Chartered� Professional�Accountants�of�Alberta.�
| Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Attendance: | Attendance: | PublicBoardMemberships: | PublicBoardMemberships: | PublicBoardMemberships: | |
|---|---|---|---|---|---|---|---|
| MemberoftheBoard MemberoftheAuditCommittee ChairoftheCompensationCommittee |
7/7(100%) 6/6(100%) 5/5(100%) |
BengalEnergyLtd. PasonSystemsInc. |
2005topresent 1997topresent |
||||
| VotingResultsof2019AGM: | NumberofVotes: | %ofVotes: | |||||
| VotesFor | 112,771,986 | 97.18 | |||||
| VotesWithheld | 3,270,544 | 2.82 | |||||
| TotalCompensation Earnedin2019:(4) |
Securities/DSUsHeld(directlyandindirectly)asatMarch20,2020: | ||||||
| Value | CommonShares/ DSUs |
TotalHoldings(Sharesand DSUs) |
MeetsMinimumShareholding Requirement(5) |
||||
| $179,500 | 468,490/25,916 | 494,406 | Yes |
Page�|�14�
Ensign�Management�Information�Circular�|�2020�
==> picture [80 x 96] intentionally omitted <==
Len�O.�Kangas� Age:��71� Red�Deer,�Alberta,� Canada� Director�since:�� June�1990� Independent
Mr.�Kangas�is�a�retired�businessman�and�oilfield�marketing�consultant�with�over�40� years�of�experience�in�oilfield�servicing,�transportation�and�related�businesses.�He�was� the�President�of�Mar�Len�Enterprises�Trucking�&�Rental�Company,�from�1992�until� 2006.�He�has�also�served�on�a�number�of�community�and�non�profit�boards.��
| Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Attendance: | PublicBoardMemberships: |
|---|---|---|---|---|---|
| MemberoftheBoard ChairoftheCorporateGovernance,Nominations&Risk Committee MemberoftheHealth,Safety&EnvironmentCommittee LeadDirector |
7/7(100%) 4/4(100%) 4/4(100%) |
None | |||
| VotingResultsof2019AGM: | NumberofVotes: | %ofVotes: | |||
| VotesFor | 112,907,951 | 97.30 | |||
| VotesWithheld | 3,134,579 | 2.70 | |||
| TotalCompensation Earnedin2019:(4) |
Securities/DSUsHeld(directlyandindirectly)asatMarch20,2020: | ||||
| Value | CommonShares/ DSUs |
TotalHoldings(Sharesand DSUs) |
MeetsMinimumShareholding Requirement(5) |
||
| $183,000 | 79,232/82,044 | 161,276 | Yes |
==> picture [81 x 102] intentionally omitted <==
Cary�A.�Moomjian�Jr.�� Age:�72� Frisco,�Texas,�USA�� Director�since:� November�2014�� Independent
Mr.�Moomjian�is�a�former�oil�and�gas�drilling�industry�executive�with�over�40�years� of�international�and�domestic�experience�in�legal,�contractual,�risk�management,� commercial�and�corporate�governance�activities�that�included�negotiation�of�land� and�offshore�drilling�contracts,�oilfield�service�and�supply�agreements,�joint�venture� relationships,�rig�construction�projects,�financings,�mergers�and�acquisitions.�He� acted�as�Vice�President,�General�Counsel�and�Secretary�to�ENSCO�International�Inc.� and�Ensco�plc�(now�called�Valaris�plc)�from�2002�until�2011,�and�prior�to�that�was� Vice�President,�General�Counsel�and�Secretary�of�Santa�Fe�International�Corporation.� He�has�a�B.�A.�( cum�laude )�from�Occidental�College�in�Los�Angeles,�CA�and�a�J.D.�(with� distinction)�from�the�Duke�University�School�of�Law�in�Durham,�North�Carolina.�He� has�been�a�member�of�the�California�and�Texas�State�bar�associations�since�1972�and� 1994�respectively.�He�has�been�a�prominent�member�of�and�contributor�to�the� International�Association�of�Drilling�Contractors�(IADC),�which�named�him� “Contractor�of�the�Year”�in�1996,�and�is�a�recognized�expert�on�drilling�contracts.��
| Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Attendance: | PublicBoardMemberships: |
|---|---|---|---|---|---|
| MemberoftheBoard MemberoftheCompensationCommittee MemberoftheCorporateGovernance,Nominations& RiskCommittee |
7/7(100%) 5/5(100%) 4/4(100%) |
None | |||
| VotingResultsof2019AGM: | NumberofVotes: | %ofVotes: | |||
| VotesFor | 115,416,978 | 99.46 | |||
| VotesWithheld | 625,552 | 0.54 | |||
| TotalCompensation Earnedin2019:(4) |
Securities/DSUsHeld(directlyandindirectly)asatMarch20,2020: | ||||
| Value | CommonShares/ DSUs |
TotalHoldings(Sharesand DSUs) |
MeetsMinimumShareholding Requirement(5) |
||
| $177,500 | 362,048/66,434 | 428,482 | Yes |
Page�|�15�
Ensign�Management�Information�Circular�|�2020�
==> picture [83 x 103] intentionally omitted <==
John�G.� Schroeder�� Age:��73� Calgary,�Alberta,� Canada� Director�since:�� June�1990� Independent
Mr.�Schroeder�has�over�30�years�of�experience�in�the�oil�and�natural�gas�industry,�with� significant�accounting,�finance,�compliance�and�human�resources�expertise.�He�retired�on� July�31,�2009�from�his�position�as�Vice�President,�Finance�and�Chief�Financial�Officer�of� Parkland�Income�Fund�(now�called�Parkland�Fuel�Corporation),�a�public�petroleum� marketing�income�trust,�following�a�successful�22�year�career�with�that�company�during� which�he�played�a�key�role�in�its�growth.�Prior�to�joining�Parkland,�Mr.�Schroeder�was�Vice� President�Finance�for�Geocrude�Energy�Inc.�and�Vice�President�Finance�and� Administration�for�Pancana�Minerals�Inc.�Mr.�Schroeder�earned�a�B.�Comm.,�with� Honours,�from�the�University�of�Manitoba�and�is�a�Chartered�Accountant.�He�is�a�member� of�the�Chartered�Professional�Accountants�of�Alberta.�
| Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Attendance: | Attendance: | PublicBoardMemberships: |
|---|---|---|---|---|
| MemberoftheBoard ChairoftheAuditCommittee MemberoftheCompensationCommittee |
7/7(100%) 6/6(100%) 5/5(100%) |
None | ||
| VotingResultsof2019AGM: | NumberofVotes: | %ofVotes: | ||
| VotesFor | 113,398,185 | 97.72 | ||
| VotesWithheld | 2,644,345 | 2.28 | ||
| TotalCompensation Earnedin2019:(4) |
Securities/DSUsHeld(directlyandindirectly)asatMarch20,2020: | |||
| Value | CommonShares/ DSUs |
TotalHoldings(Sharesand DSUs) |
MeetsMinimumShareholding Requirement(5) |
|
| $185,000 | 18,376/121,148 | 139,524 | Yes |
==> picture [83 x 103] intentionally omitted <==
Gail�D.�Surkan� Age:��72� Red�Deer,� Alberta,�Canada� Director�since:�� March�2006� Independent
Ms.�Surkan�is�a�retired�businesswoman�with�30�years�of�experience�in�economic�and� human�resource�development,�strategic�leadership�and�governance.�She�was�a�four�term� mayor�of�Red�Deer,�Alberta,�from�1992�to�2004.�Ms.�Surkan�was�a�founding�director�of�ATB� Financial,�where�she�served�for�nine�years�and�chaired�the�Human�Resources�Committee.� She�also�served�as�the�chair�of�the�Alberta�Heritage�Foundation�for�Medical�Research�for� four�years.�Ms.�Surkan�has�served�on�the�boards�of�numerous�other�private,�crown� corporation�and�non�profit�organizations.�These�include�Agriculture�Financial�Services� Corporation�and�Canada�West�Foundation�where�she�chaired�the�Governance� Committees.�She�chaired�the�Governance�Committee�for�the�2019�Canada�Winter�Games.� In�addition�to�her�extensive�board�experience,�Ms.�Surkan�has�significant�expertise�in� business�and�organizational�strategy,�executive�recruitment�and�human�resources.�She�has� a�Bachelor�of�Economics�from�the�University�of�Saskatchewan.�Ms.�Surkan�continues�to�be� very�active�at�the�community�level�and�is�an�Honorary�Colonel�(retired)�for�the�20[th] �Field� Regiment�of�the�Canadian�Forces.�
| Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Attendance: | PublicBoardMemberships: |
|---|---|---|---|---|
| MemberoftheBoard MemberoftheCompensationCommittee MemberoftheCorporateGovernance,Nominations& RiskCommittee |
7/7(100%) 5/5(100%) 4/4(100%) |
None | ||
| VotingResultsof2019AGM: | NumberofVotes: | %ofVotes: | ||
| VotesFor | 115,403,034 | 99.45 | ||
| VotesWithheld | 639,496 | 0.55 | ||
| TotalCompensationEarnedin 2019:(4) |
Securities/DSUsHeld(directlyandindirectly)asatMarch20,2020: | |||
| Value | CommonShares/ DSUs |
TotalHoldings(Sharesand DSUs) |
MeetsMinimumShareholding Requirement(5) |
|
| $170,000 | 55,319/66,479 | 121,798 | Yes |
Page�|�16�
Ensign�Management�Information�Circular�|�2020�
==> picture [84 x 107] intentionally omitted <==
Barth�E.� Whitham� Age:��63� Denver,� Colorado,�USA�� Director�since:�� March�2007� Independent
Since�2004,�Mr.�Whitham�has�been�the�President�&�Chief�Executive�Officer�of�Enduring� Resources,�LLC,�a�private�Denver�based�company�with�exploration�and�production� operations�onshore�United�States.�He�also�serves�as�a�director�for�that�company.�In�1991� he�co�founded�Westport�Oil�and�Gas,�which�went�public�as�Westport�Resources�Corp.,�an� upstream�energy�company�listed�on�the�NYSE,�and�served�as�its�President�&�Chief� Operating�Officer�from�1991�until�2004,�when�it�merged�with�Anadarko�Petroleum� Corporation.�He�also�served�on�the�Board�of�Directors�for�Westport�Resources�Corp.�Prior� to�Westport,�Mr.�Whitham�worked�extensively�in�the�upstream�United�States,� international�and�offshore�energy�industry�in�project�planning,�development�and� operations.�He�has�a�B.Sc.�in�Petroleum�Engineering,�an�M.Sc.�in�Economics�from�the� Colorado�School�of�Mines,�and�is�a�Registered�Professional�Engineer.�Mr.�Whitham�serves� on�the�Audit�and�Governance�committee�of�Intrepid�Potash�and�chairs�the�Compensation� committee.�He�is�currently�Board�Chair�of�Children’s�Hospital�Colorado�and�its�Health� System.�He�is�a�past�director�for�the�Society�of�Petroleum�Engineers.�
| Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Board/CommitteeMembership:(1) | Attendance: | PublicBoardMemberships: | PublicBoardMemberships: |
|---|---|---|---|---|---|---|
| MemberoftheBoard MemberoftheAuditCommittee MemberoftheHealth,Safety&EnvironmentCommittee |
7/7(100%) 5/6(83%) 4/4(100%) |
IntrepidPotashInc. QEPResources,Inc. |
2008–present 2019–present |
|||
| VotingResultsof2019AGM: | NumberofVotes: | %ofVotes: | ||||
| VotesFor | 115,756,924 | 99.75 | ||||
| VotesWithheld | 285,606 | 0.25 | ||||
| TotalCompensation Earnedin2019:(4) |
Securities/DSUsHeld(directlyandindirectly)asatMarch20,2020: | |||||
| Value | CommonShares/ DSUs |
TotalHoldings(Sharesand DSUs) |
MeetsMinimumShareholding Requirement(5) |
|||
| $176,500 | 108,203/0 | 108,203 | Yes |
(1) As�at�December�31,�2019.�
(2) For�further�details�on�the�compensation�earned�by�the�Chairman�and�the�President�&�Chief�Operating�Officer�of�the�Corporation,� please�see�the�section�of�this�Information�Circular�entitled�“Compensation�Discussion�and�Analysis”.�
(3) For�further�details�on�the�minimum�shareholding�requirement�for�the�Chairman�and�the�President�&�Chief�Operating�Officer�of�the� Corporation,�please�see�the�section�of�this�Information�Circular�entitled�“Compensation�Discussion�and�Analysis�–�Mandatory� Executive�Share�Ownership�Guidelines”.�
(4) For�further�details�on�the�compensation�earned�by�Directors,�please�see�the�section�of�this�Information�Circular�entitled�“Director� Compensation”.�
(5) For�further�details�on�the�minimum�shareholding�requirement�applicable�to�Directors�who�are�not�members�of�Management,�please� see�the�section�of�this�Information�Circular�entitled�“Director�Equity�Ownership�Requirements”.�
(6) Mr.�Casswell�has�until�December�2022�to�meet�our�share�ownership�requirement.�
“ Independent ”�in�the�tables�above�refers�to�the�standards�of�independence�established�under�Section�1.2� of�the�Canadian�Securities�Administrators’�National�Instrument�58�101�(Disclosure�of�Corporate� Governance�Practices).��
Page�|�17�
Ensign�Management�Information�Circular�|�2020�
Majority�Director�Voting��
On�March�14,�2008,�the�Board�adopted�a�policy�whereby�the�election�of�director�nominees�by� shareholders�in�an�uncontested�election�shall�be�by�majority�vote.�A�director�nominee�who�receives�less� than�50%�of�the�votes�cast�in�favour�of�the�election�of�the�director�nominee�shall�forthwith�submit�to�the� Board�his�or�her�resignation,�to�take�effect�upon�acceptance�by�the�Board.�The�Board�shall�exercise� discretion�in�considering�any�such�resignation�of�the�director�nominee.�If�it�is�deemed�to�be�in�the�best� interests�of�the�Corporation�and�the�Shareholders,�and�absent�any�extenuating�circumstances�deemed�by� the�Board�to�exist,�the�Board�shall�accept�such�resignation�within�90�days�of�having�received�the� resignation�of�the�director�nominee.��
In�2016,�this�policy�was�updated�to�include�the�following�additional�requirements:��
-
A�director�who�tenders�a�resignation�pursuant�to�the�policy�will�not�participate�in�any�meeting�of� the�board�or�any�sub�committee�of�the�board�at�which�the�resignation�is�considered;�
-
A�news�release�will�be�promptly�issued�with�the�board's�decision�regarding�the�tendered� resignation�of�the�director;�
-
A�copy�of�the�news�release�with�the�board’s�decision�will�be�provided�to�TSX;�and�
-
If�the�board�determines�not�to�accept�a�resignation,�the�news�release�must�fully�state�the�reasons� for�that�decision.��
Committees��
The�Board�of�Directors�currently�has�four�(4)�Committees:�
1. Audit�Committee;�
2. Compensation�Committee;
3. Corporate�Governance,�Nominations�&�Risk�Committee;�and��
4. Health,�Safety�&�Environment�Committee.�
Throughout�2019�and�as�at�March�20,�2020,�the�Board�of�Directors�was�comprised�of�nine�(9)�members,� all�of�whom�are�standing�for�re�election�at�the�Meeting.�Membership�of�the�Board�Committees�(comprised� exclusively�of�independent�Directors)�is�currently�as�follows:�
Page�|�18�
Ensign�Management�Information�Circular�|�2020�
| Committees | Committees | ||||
|---|---|---|---|---|---|
| Independent Director |
Year Appointed |
Audit | Compensation | Governance, Nominations &Risk |
Health,Safety &Environment |
| Casswell,GaryW. | 2017 | X | Chair | ||
| Howe,JamesB. | 1987 | X | Chair | ||
| Kangas,LenO. | 1990 | Chair | X | ||
| MoomjianJr.,CaryA. | 2014 | X | X | ||
| Schroeder,JohnG. | 1990 | Chair | X | ||
| Surkan,GailD. | 2006 | X | X | ||
| Whitham,BarthE. | 2007 | X | X |
Meetings�of�the�Board�of�Directors�and�its�Committees�During�2019��
The�individual�attendance�record�for�meetings�of�the�Board�of�Directors�and�its�committees�is�set�forth�in� the�tables�above�and�in�the�section�of�this�Information�Circular�entitled�“Statement�of�Corporate� Governance�Practices”.�
The�overall�average�attendance�for�all�meetings�of�the�Board�of�Directors�and�its�committees�held�in� 2019�was�99.2%.
Page�|�19�
Ensign�Management�Information�Circular�|�2020�
Director�Tenure�
Other�than�in�connection�with�the�Director�Retirement�Policy,�Ensign�does�not�currently�have�a�policy�for� Director�term�limits.�The�Board�of�Directors�believes�it�is�critical�that�all�Directors�have�a�comprehensive� understanding�of�the�Corporation’s�business,�and�that�such�an�understanding�is�achieved�through�and� enhanced�by�length�of�tenure.�While�new�Directors�may�bring�fresh�perspectives�and�new�experience,� Directors�who�have�served�for�several�years�accumulate�valuable�knowledge�regarding�our�business,� including�industry�trends�and�cycles,�market�conditions�and�geo�political�influences.��
The�nominees�for�election�to�the�Board�of�Directors�include�individuals�having�served�between�two�(2)� and�up�to�33�years�as�a�Director�of�the�Corporation,�as�categorized�below:��
| Tenure | #ofDirectors | Director |
|---|---|---|
| 0–5years | 1 | GaryW.Casswell |
| 6–10years | 1 | CaryA.Moomjian,Jr. |
| Geddes,RobertH. | ||
| 11–15years | 3 | Surkan,GailD. |
| Whitham,BarthE. | ||
| 16–20years | 0 | N/A |
| Edwards,N.Murray | ||
| 21+years | 4 | Howe,JamesB. Kangas,LenO. |
| Schroeder,JohnG. |
The�average�age�of�the�Corporation’s�Directors�as�of�the�date�of�this�Information�Circular�is�67.9�years.��
No�Common�Outside�Boards��
As�of�the�date�of�this�Information�Circular,�no�two�or�more�of�the�Corporation’s�directors�were�serving� together�on�any�other�board�of�directors.�
Page�|�20�
Ensign�Management�Information�Circular�|�2020�
Director�Equity�Ownership�Requirement�
With�a�view�to�aligning�the�non�management�Directors�interests�with�those�of�the�Shareholders,�the� Corporation�has�implemented�a�requirement�that�such�Directors�acquire�and�hold�Common�Shares�and/or� DSUs�with�a�minimum�aggregate�value�equal�to�three�(3)�times�the�base�annual�cash�and�equity�retainer,� within�five�(5)�years�of�their�initial�appointment�as�a�Director.�
The�minimum�equity�ownership�requirement�for�2019,�based�on�a�multiple�of�three�(3)�times�the�base� annual�cash�and�equity�retainer�as�at�December�31,�2019,�was�Common�Shares�and/or�DSUs�having�a�value� of�$420,000,�an�increase�over�2018�level�of�$378,000.��
Once�the�applicable�threshold�is�met,�further�purchases�are�not�required�if�the�value�of�the�Common� Shares�held�decreases�solely�as�a�result�of�a�decline�in�the�market�value�of�the�Common�Shares.�However,� if�the�value�decreases�for�any�other�reason�(i.e.�sale�of�Common�Shares),�such�Director�would�be�required� to�increase�the�value�of�his�or�her�holdings�to�achieve�the�required�threshold.��
To�avoid�the�need�to�continuously�monitor�and�adjust�the�value�of�holdings�based�on�fluctuations� in�the�market�price�of�the�Common�Shares,�for�purposes�of�the�minimum�equity�ownership� requirement�applicable�to�the�Corporation’s�non�management�Directors,�the�value�of�holdings�is� calculated�based�on�the�greater�of:��
-
i. The�current�market�value�of�the�Common�Shares;��
-
ii. The�market�value�of�the�Common�Shares�as�at�December�31�of�the�immediately�preceding� year;�or�
-
iii. The�acquisition�cost�of�each�Director’s�holdings.��
Throughout�2019�and�as�at�March�20,�2020,�each�Director�being�nominated�for�election�at�the�Meeting,� and�subject�to�the�minimum�equity�ownership�requirement,�has�met�the�minimum�equity�ownership� requirement,�based�on�one�or�more�of�the�permitted�calculation�methods,�as�demonstrated�below:�
| 2019Requirement:Valueof$420,000 | 2019Requirement:Valueof$420,000 | ||
|---|---|---|---|
| HoldingsasatDecember31,2019 | HoldingsasatMarch20,2020 | ||
| Name | (DSUs+CommonShares) | (DSUs+CommonShares) | MeetsRequirement(1)(2) |
| Casswell,GaryW. | 58,162 | 86,953 | N/A |
| Howe,JamesB. | 492,073 | 494,406 | Yes–AcquisitionCost |
| Kangas,LenO. | 159,757 | 161,276 | Yes–AcquisitionCost |
| MoomjianJr.,CaryA. | 108,195 | 428,482 | Yes–AcquisitionCost |
| Schroeder,JohnG. | 137,191 | 139,524 | Yes–AcquisitionCost |
| Surkan,GailD. | 120,602 | 121,798 | Yes–AcquisitionCost |
| Whitham,BarthE. | 108,203 | 108,203 | Yes–AcquisitionCost |
| TOTAL: | 1,184,183 | 1,540,642 |
(1) Based�on�the�acquisition�cost�of�holdings�that�exceed�both�current�market�value�and�the�equity�ownership�requirement.�
(2) All�Directors�except�for�Mr.�Casswell,�who�was�appointed�to�the�Board�of�Directors�on�December�4,�2017,�have�been�on�the�Board� of�Directors�for�five�(5)�or�more�years�and�are�therefore�subject�to�the�requirement.�
Page�|�21�
Ensign�Management�Information�Circular�|�2020�
As�at�March�20,�2020,�the�non�management�Directors�being�nominated�for�election�at�this�Meeting�hold� an�aggregate�of�1,131,668�Common�Shares�and�408,974�DSUs.�The�Common�Shares�of�the�non� management�Directors�represent�0.69%�of�the�issued�and�outstanding�Common�Shares�as�at�that�date.� Management�Directors�have�separate�share�ownership�requirements.��
Cumulatively,�non�management�and�management�Directors�hold�a�total�of�34,066,569�Common�Shares� representing�20.63%�of�the�issued�and�outstanding�Common�Shares.�
The�Director�equity�ownership�requirement�is�reviewed�periodically�by�the�Corporate�Governance,� Nominations�&�Risk�Committee�to�ensure�that�the�level�is�appropriate�to�demonstrate�commitment�to� Ensign’s�success,�in�view�of�Common�Share�value�and�the�current�level�of�compensation�being�provided� to�non�management�Directors.�
In�addition�to�equity�ownership,�the�following�Directors�(including�the�non�independent�Directors)�hold� convertible�debentures,�issued�March�29,�2018�and�maturing�on�January�31,�2022,�in�the�following� principal�amounts:��
| edebentures,issuedMarch mounts: |
29,2018andmaturingonJanuary31,2022, |
|---|---|
| Director | PrincipalAmountofConvertibleDebenture |
| Edwards,N.Murray | $20,000,000 |
| Geddes,RobertH. | $200,000 |
| Howe,JamesB. | $500,000 |
| Moomjian,CaryA. | $250,000 |
| Whitham,BarthE. | $5,000,000 |
| TOTAL: | $25,950,000 |
These�convertible�debentures,�of�which�$37,000,000�are�outstanding,�bear�interest�at�7.0%�per�annum,� payable�semi�annually�in�arrears,�on�April�1�and�October�1�of�each�year,�and�are�convertible�at�the�option� of�the�holder�into�Common�Shares�at�any�time�prior�to�the�close�of�business�on�the�maturity�date�upon�at� least�61�days�prior�notice,�at�a�conversion�price�of�$7.00�per�Common�Share.�These�debentures�are� descriebd�in�further�detail�in�the�Corporation’s�financial�statements�for�the�year�ended�December�31,� 2019,�available�on�SEDAR�at www.sedar.com.
Page�|�22�
Ensign�Management�Information�Circular�|�2020�
Additional�Disclosures�Regarding�Directors�
To�the�knowledge�of�the�Corporation,�in�the�last�ten�years,�none�of�the�above�named�nominees�is�or�has� been:�(i)�a�director,�chief�executive�officer�or�chief�financial�officer�of�any�other�issuer�that,�while�that� person�was�acting�in�that�capacity�or�which�resulted�from�an�event�which�occurred�while�that�person�was� acting�in�such�capacity,�was�the�subject�of�a�cease�trade�order�or�similar�order,�or�an�order�that�denied� the�other�issuer�access�to�any�exemptions�under�Canadian�securities�legislation,�for�a�period�of�more�than� 30�consecutive�days;�or�(ii)�a�director�or�executive�officer�of�any�company�that,�while�such�person�was� acting�in�such�capacity,�or�within�one�year�of�that�person�ceasing�to�act�in�that�capacity,�became�bankrupt,� made�a�proposal�under�any�legislation�relating�to�bankruptcy�or�insolvency,�or�was�subject�to�or�instituted� any�proceedings,�arrangement�or�compromise�with�creditors,�or�had�a�receiver,�receiver�manager�or� trustee�appointed�to�hold�its�assets.��
Furthermore,�to�the�knowledge�of�the�Corporation,�in�the�last�ten�years,�no�director�or�officer�of�the� Corporation,�or�a�Shareholder�holding�a�sufficient�number�of�securities�of�the�Corporation�to�affect� materially�the�control�of�the�Corporation,�has�become�bankrupt,�made�a�proposal�under�any�legislation� relating�to�bankruptcy�or�insolvency,�or�became�subject�to�or�instituted�any�proceedings,�arrangement�or� compromise�with�creditors,�or�had�a�receiver,�receiver�manager�or�trustee�appointed�to�hold�his�or�her� assets.�
Appointment�of�Auditors�
The�Shareholders�will�be�asked�to�consider�an�ordinary�resolution�to�appoint�the�firm�of� PricewaterhouseCoopers�LLP�as�auditors�of�the�Corporation,�to�hold�office�until�the�next�annual�meeting� of�the�Shareholders�and�to�authorize�the�Board�of�Directors�to�fix�their�remuneration.��
Total�fees�for�audit�and�audit�related�services�for�the�Corporation’s�fiscal�year�ended�December�31,�2019� were�$1,303,370�(2018�–�$685,350).�For�more�information�relating�to�auditors’�fees,�reference�is�made�to� the�Annual�Information�Form�dated�March�12,�2020,�under�the�heading�“Audit�Committee�Disclosures”,� which�is�hereby�incorporated�by�reference�and�which�can�be�found�on�SEDAR�at� www.sedar.com�or� obtained�free�of�charge�by�any�shareholder�from�the�Corporate�Secretary�of�the�Corporation�at�400�–�5th� Avenue�S.W.,�Suite�1000,�Calgary,�Alberta,�T2P�0L6.�
Page�|�23�
Ensign�Management�Information�Circular�|�2020�
Advisory�Vote�on�Executive�Compensation�(“Say�on�Pay”)��
The�Board�has�resolved�to�hold�a�“Say�on�Pay”�vote�on�the�Corporation’s�approach�to�executive� compensation�at�each�annual�meeting�of�Shareholders.�At�the�Meeting,�Shareholders�will�be�asked�to�cast� an�advisory�vote�on�the�Corporation’s�approach�to�executive�compensation.�Ensign’s�approach�to� compensation�paid�to�its�NEOs�is�described�in�detail�under�the�heading�“Compensation�Discussion�and� Analysis”.�
The�Board�believes�that�this�advisory�vote�will�continue�to�assist�Ensign�in�its�dialogue�with�our� Shareholders�about�governance�and�other�matters�relating�to�executive�compensation.�The�results� of�the�“Say�on�Pay”�vote�will�be�non�binding�on�the�Board. However, the�vote�is�an�important�part� of�our�engagement�with�Shareholders�with�respect�to�executive�compensation .
Shareholders�are�encouraged�to�review�the�discussion�about�Ensign’s�executive�compensation�under�the� heading�“Compensation�Discussion�and�Analysis”�to�cast�an�informed�vote.�
At�the�Meeting,�Shareholders�will�be�asked�to�vote�for�or�against�the�following�non�binding,�advisory� resolution�concerning�Ensign’s�approach�to�executive�compensation:��
“BE�IT�RESOLVED,�on�an�advisory�basis�and�not�to�diminish�the�role�and�responsibilities� of�the�Board�of�Directors�of�Ensign�Energy�Services�Inc.�(“Ensign”)�or�its�committees,� that�the�Shareholders�of�Ensign�accept�the�approach�to�executive�compensation� disclosed�in�Ensign’s�Information�Circular�dated�March�20,�2020�and�delivered�in� advance�of�the�2020�annual�meeting�of�Shareholders.”�
As�this�is�an�advisory�vote,�the�results�will�not�be�binding�upon�the�Board.�However,�the�Board�will�take� the�voting�results�and�other�Shareholder�feedback�into�consideration�when�evaluating�the�Corporation’s� approach�to�executive�compensation,�including�discretionary�awards.�The�Board�and�the�Compensation� Committee�of�the�Board�actively�monitor�trends�relating�to�compensation�and�governance�of� compensation�to�ensure�executive�management�is�aligned�with�Shareholder�interests�and�incentivized�to� act�in�the�best�interests�of�Ensign.�
At�our�annual�meeting�held�in�2019,�90.94%�of�the�shares�voted�were�in�favour�of�our�approach�to� executive�compensation.�
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Ensign�Management�Information�Circular�|�2020�
SECTION�3�–�COMPENSATION�DISCUSSION�AND�ANALYSIS��
Ensign�strives�to�continually�refine�and�improve�our�compensation�programs�and�associated� disclosure.
Letter�to�Shareholders�from�the�Compensation�Committee��
Fellow�Shareholders,��
We�are�pleased�to�present�Ensign’s�Compensation�Discussion�&�Analysis�(“ CD&A ”)�with�respect�to�the� compensation�paid�to�our�Named�Executive�Officers�in�2019.�This�section�will�help�you�understand�our� compensation�philosophy,�practices�and�approach�to�executive�compensation,�both�in�2019�and�for�the� current�year.�
Beginning�in�2016,�the�Board�of�Directors�has�annually�offered�Shareholders�an�advisory�vote�on�executive� compensation.�Although�we�are�continually�reviewing�and�refining�our�compensation�program�design,�we� specifically�consider�the�outcome�of�such�advisory�votes�in�determining�whether�and�when�further� improvements�could�be�made�to�certain�elements�of�our�compensation�program�design�and�disclosure.� The�results�of�each�prior�advisory�vote�have�been�carefully�considered,�as�will�the�results�from�our�2020� Meeting.�
The�most�recent�significant�improvements�made�to�our�medium�and�long�term�compensation�programs� were�implemented�in�2017.�At�that�time:�we�implemented�a�“Performance�Share�Unit�Plan”�(the�“ PSU� Plan ”);�we�re�aligned�the�weighting�of�medium�and�long�term�compensation�such�that�more�emphasis�is� now�placed�on�PSUs�than�on�stock�options;�we�amended�our�stock�option�plan�to�include�a�“double� trigger”�applicable�to�NEOs;�we�re�aligned�the�weightings�assigned�to�metrics�used�to�calculate�our�short� term�incentives�for�NEOs;�and�we�implemented�a�cap�on�the�annual�aggregate�payments�calculated� pursuant�to�our�Annual�Bonus�Plan�and�PSU�Plan.�These�improvements�to�medium�and�long�term� executive�compensation�were�adopted�to�increase�the�emphasis�on�performance�based�vesting�and� reinforce�the�link�between�pay�and�performance�for�our�key�executives.�We�are�pleased�that�Shareholders� responded�positively�to�those�improvements�and�consequently,�the�changes�have�remained�in�place�since� implementation�in�2017.�
Since�2016,�the�Compensation�Committee�has�placed�a�fixed�cap�on�the�total�amount�of�any�payout� under�the�Annual�Bonus�Plan�at�3%�of�EBITDA�(as�adjusted).�A�fixed�cap�on�the�total�amount�of�any� payout�under�the�PSU�Plan�has�been�set�at�2%�of�EBITDA�(as�adjusted)�of�the�final�year�of�each�award.� The�first�tranche�of�PSUs�awarded�pursuant�to�the�PSU�Plan�matured�on�December�31,�2019.�
Page�|�25�
Ensign�Management�Information�Circular�|�2020�
We�have�also�continued�our�focus�on�improving�the�disclosure�related�to�our�compensation�programs.� We�believe�our�comprehensive�disclosure�demonstrates�a�transparent�link�between�pay�and�corporate� performance,�which�is�significantly�based�upon�performance�relative�to�designated�peer�companies.��
On�an�annual�basis,�we�review�our�compensation�peer�group,�our�performance�peer�group,�the� compensation�and�disclosure�practices�of�our�peers,�as�well�as�the�outcome�of�realized�pay�in�a�year.�We� make�adjustments�as�appropriate�to�ensure�that�our�compensation�program�continues�to�be�competitive,� is�aligned�with�the�interests�of�Shareholders�and�meet�our�objectives�of�attraction�and�retention�of�our� top�talent.���
Considering�the�changes�to�our�compensation�programs�implemented�for�the�2017�year,�together�with� the�persistent�challenges�being�experienced�in�our�industry,�which�since�2015�have�significantly�impacted� the�Corporation’s�financial�performance�and�which�continue�to�drive�efficiencies�in�the�way�we�conduct� business,�we�did�not�make�any�significant�adjustments�to�our�compensation�programs�in�2019.�However� the�recent�and�evolving�impact�of�the�novel�coronavirus�(COVID�19)�outbreak�upon�global�commerce�and� energy�demand,�dramatic�commodity�price�declines,�and�related�market�disruptions,�have�caused�us�to� implement�significant�wage�reductions,�which�will�become�effective�on�April�1,�2020.�These�wage� reductions�will�impact�all�of�our�senior�managers,�including�the�NEOs,�our�board�of�directors,�as�well� certain�other�groups�of�employees.���
Other�than�as�described�above,�we�do�not�currently�intend�to�changes�to�the�design�of�our�compensation� programs�2020.�We�believe�that�the�compensation�programs�we�refined,�changed�and�implemented�in� 2017�are�generally�achieving�our�objectives�of�appropriate�pay�outcomes,�retention,�attraction,�market� competitiveness�and�an�alignment�with�corporate�performance.�In�the�event�that�any�adjustments�are� necessary�or�desirable,�the�Compensation�Committee�will�continue�to�use�its�experience�and�collective� judgment�in�making�any�such�adjustments.���
We�live�in�challenging�times�and�will�continue�to�assess�ongoing�developments�that�impact�our�industry� and�our�company.�As�a�Committee,�we�will�continue�to�monitor�trends�in�executive�compensation�and� review�our�compensation�programs�to�ensure�they�remain�competitive�and�aligned�with�the�best�interests� of�the�Shareholders.�
Submitted�by�members�of�the�Compensation�Committee,�all�of�whom�are�independent.�
James�B.�Howe�(Chair)�� Cary�A.�Moomjian,�Jr.�� John�G.�Schroeder�� Gail�D.�Surkan
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Ensign�Management�Information�Circular�|�2020�
Compensation�Discussion�&�Analysis��
This�Compensation�Discussion�and�Analysis�(“ CD&A ”)�describes�the�compensation�programs�and�practices� applicable�to�the�following�executive�officers�of�the�Corporation�who�are�classified�as�“Named�Executive� Officers”�pursuant�to�National�Instrument�51�102�(each�a�“ NEO ”�and�collectively,�the�“ NEOs ”)�for�all�or�a� part�of�the�2019�year:��
| Geddes,RobertH. | President&ChiefOperatingOfficer |
|---|---|
| Gray,MichaelR. | ChiefFinancialOfficer |
| Connors,ThomasJ. | ExecutiveVicePresidentCanadianOperations |
| Conway,BrentJ. | ExecutiveVicePresidentInternationalOperations |
| Nuss,MichaelR. | ExecutiveVicePresidentUnitedStatesOperations |
| Edwards,N.Murray | Chairman |
References�in�this�CD&A�to�our�“ Executive�Management�Committee ”�means,�collectively,�the�NEOs�listed� above.�As�described�further�in�the�section�of�this�Information�Circular�entitled�“Statement�of�Corporate� Governance�Practices”,�the�Corporation�does�not�have�a�named�Chief�Executive�Officer�(“ CEO ”).��
Board�of�Directors�Oversight�and�the�Compensation�Committee�
The�Board�of�Directors�recognizes�the�importance�of�appointing�knowledgeable�and�experienced� individuals�to�the�Compensation�Committee�in�general�and,�in�particular,�to�appoint�those�who�have�the� necessary�background�in�executive�compensation�and�risk�management�to�fulfill�the�Compensation� Committee’s�obligations�to�the�Board�of�Directors�and�Shareholders.�
The�Compensation�Committee�is�currently�comprised�of�James�B.�Howe�(Chairman),�Cary�A.�Moomjian�Jr.,� John�G.�Schroeder�and�Gail�D.�Surkan,�all�of�whom�served�on�the�Committee�during�the�entire�year�ended� December�31,�2019.�Mr.�Howe�served�as�Chairman�of�the�Compensation�Committee�throughout�2019�and� continues�in�this�role�as�of�the�date�hereof.��
All�members�of�the�Compensation�Committee�are�independent�directors�who�have�the�experience�and� knowledge�required�with�respect�to�compensation,�specifically�in�connection�with�executive� compensation�programs�and�levels,�and�other�human�resources�matters�including�succession� planning,�talent�development,�recruitment,�employee�retention�and�employee�engagement.�
Two�members�of�the�Compensation�Committee�also�sit�on�our�Audit�Committee.�Two�members�of�the� Compensation�Committee�also�sit�on�our�Corporate�Governance,�Nominations�&�Risk�Committee.�This� assists�in�bringing�important�risk�management�and�risk�assessment�perspectives�to�our�compensation� programs,�philosophy�and�practices.
Page�|�27�
Ensign�Management�Information�Circular�|�2020�
| Committee | ||
|---|---|---|
| Member | RelevantSkillsandExperience | |
| Howe,JamesB. | Mr.HowehasbeenamemberofEnsign’sCompensationCommitteesince1998,andhasactedasChairman | |
| (Committee Chairman) |
since2004.Mr.HowealsocurrentlyservesonthecompensationcommitteeofPasonSystemsInc.,a Canadianpubliccompany.AsaCharteredAccountantandexperiencedpubliccompanydirector,hehas significantfinancialexpertisein,andin�depthexposureto,thedesign,implementationandevaluationof |
|
| alternativestrategiesandbestindustrypracticestoperformance�basedcompensationprograms,inthe | ||
| energyindustryingeneralandintheoilfieldservicessectorspecifically. | ||
| MoomjianJr., | Mr.MoomjianwasappointedtotheCompensationCommitteeinDecember2014.Hebringsover40years | |
| CaryA. | ofindustryexperience,including18yearsofexperienceinexecutivecompensation,totheCommittee. | |
| From1994to2011,inhisformerrolesasVicePresident,GeneralCounselandSecretaryofEnscoplc, | ||
| ENSCOInternationalInc.,andSantaFeInternationalCorporation,heparticipatedinallmeetingsofthe | ||
| boardsofdirectorsandcommitteesofthoseissuers,includingcompensationcommittees.Whileserving | ||
| asVicePresident,GeneralCounselandSecretaryofthosecompanies,Mr.Moomjiandevelopedadepth | ||
| andbreadthofunderstandingofcompensationprograms,design,evaluation,issuesandtrends,and | ||
| relatedgovernanceandbestpracticesconsiderations,inthecontextofanoilfieldservicesprovider. | ||
| Further,havingservedasadepartmentheadofanoilfieldservicescompanybetween1983and2011,he | ||
| hashadcomprehensiveexperiencewithhumanresourcesmanagement.Suchexperienceincludes | ||
| successionplanning,employeeretention,performancereview,cashandincentivecompensation | ||
| administrationaswellaspersonneltraininganddevelopment. | ||
| Schroeder, | Mr.SchroederhasbeenamemberofEnsign’sCompensationCommitteesince1998.AsaChartered | |
| JohnG. | AccountantandafinanceexecutiveontheseniormanagementteamofParklandIncomeFund(nowcalled | |
| ParklandFuelCorporation),apublicpetroleummarketingcompany,Mr.Schroederwasresponsiblefor | ||
| thehumanresourcesfunctionfor20years.Thisincluded,togetherwiththePresidentandCEO, | ||
| responsibilityoverthedesignandevaluationofcompensationplansforexecutivesandsenioremployees. | ||
| Further,asalong�servingmemberofEnsign’sCompensationCommittee,Mr.Schroederisexperiencedin | ||
| thedesign,evaluation,modificationandbestpracticesgenerallyastheyrelatetocompensationpractices | ||
| foracorporationofthesizeandscopeofEnsign. | ||
| Surkan,GailD. | Ms.SurkanhasbeenamemberofEnsign’sCompensationCommitteesince2007andshebrings | |
| approximately15yearsofexperienceinhumanresourcesplanning,inparticularinexecutiverecruitment, | ||
| executivecompensation,successionplanningandemployeeengagement,toEnsign’sCompensation | ||
| Committee.InherformercapacityastheMayorofRedDeerandChairoftheAlbertaHeritageFoundation | ||
| forMedicalResearch,andinthenumerousboardpositionsshehasheldwithcrowncorporations,non� | ||
| profitorganizationsandprivatecompanies,shehashadextensiveexperiencewithoversightofhuman | ||
| resourcesfunctions,includingcompensationplanningandevaluation,andtheretentionaspects | ||
| associatedwithemployeeandexecutivecompensation.Morespecifically,Ms.SurkanchairedtheHuman | ||
| ResourcesCommitteeforATBFinancialforanumberofyearsandledtheCEOrecruitmentteamsforboth | ||
| theCityofRedDeerandtheAlbertaHeritageFoundationforMedicalResearchduringhertenurewith | ||
| thoseorganizations. |
The�Board�of�Directors�believes�that�the�members�of�the�Compensation�Committee�have�the�knowledge�and� experience�to�effectively�perform�their�responsibilities.
Page�|�28�
Ensign�Management�Information�Circular�|�2020�
Compensation�Committee�Mandate��
The�mandate�of�the�Compensation�Committee�of�the�Board�of�Directors�includes�the�following:�
-
i. Establishing�and�reviewing�the�Corporation's�executive�compensation�philosophy;�
-
ii. Administering�compensation�policies�and�programs,�including�salaries,�bonuses�and�equity� compensation�plans,�which�reflect�the�executive�compensation�philosophy;�
-
iii. Reporting�to�the�Board�of�Directors�and�submitting�compensation�recommendations�to�the�Board� of�Directors�for�approval;�
-
iv. Performing�a�review�of�the�Corporation's�senior�management�and�the�steps�being�taken�to�assure� the�succession�of�qualified�senior�management�at�the�Corporation;��
-
v. Periodically�reviewing�and�approving�grants�or�awards�pursuant�to�the�Corporation's�Stock�Option� Plan,�and�other�equity�based�award�programs�as�may�be�established�from�time�to�time,�under� which�Common�Shares�may�be�acquired�or�awarded�to�eligible�participants;��
-
vi. Reviewing�the�administration�of�any�equity�plans�the�Board�may�establish;�and��
-
vii. Reviewing�and�monitoring�risks�associated�with�the�Corporation’s�compensation�and�human� resources�programs�and�practices,�including�succession�planning�and�retention.�
In�approving�any�element�of�compensation,�the�Compensation�Committee�considers�recommendations� from�management.��
Compensation�Philosophy,�Principles�and�Objectives��
Compensation�levels�and�programs�for�NEOs�are�designed�and�implemented�to�align�with�the� Corporation’s�annual�and�long�term�growth�objectives,�and�the�enhancement�of�shareholder�value�driven� by�the�following�principles�and�objectives:�
-
i. Provide�market�competitive�compensation�to�attract�and�retain�qualified�individuals;�
-
ii. Maintain�a�pay�for�performance�philosophy�by�delivering�a�meaningful�proportion�of�total� compensation�using�variable�pay�tied�to�corporate,�business�unit,�safety�and�personal� performance;�
-
iii. Provide�incentives�linked�to�financial�performance�and�enhanced�shareholder�returns�relative�to� our�peers,�as�well�as�operating�results�and�non�financial�metrics�measured�by�the�health,�safety� and�environmental�performance�of�the�Corporation;��
-
iv. Provide�incentives�which�support�appropriate�risk�taking�in�support�of�the�short�term�and�long� term�goals�of�the�Corporation,�reflective�of�our�risk�tolerance;��
-
v. Consistency�with�Ensign’s�vision�of�growth�through�collaborative�learning,�achieving�the�potential� of�our�people�and�technology�and�creating�excellence;�and��
-
vi. Consistency�with�Ensign’s�values�of�integrity,�teamwork�and�learning.�
The�compensation�programs�at�Ensign�are�intended�to�reward�strong�performance.�Employees,� including�NEOs,�maximize�their�compensation�when�annual�operating�and�financial�goals�are� achieved,�when�annual�safety�performance�goals�are�achieved,�when�progress�is�made�in�executing� Ensign’s�growth�strategy,�and�when�strong�relative�total�shareholder�return�and�return�on�capital� employed�are�achieved.��
Page�|�29�
Ensign�Management�Information�Circular�|�2020�
Risk�Considerations�of�Executive�Compensation�
The�committees�of�the�Board�assist�the�Board�in�monitoring�the�most�significant�risks�facing�the� Corporation,�including�strategic,�operational�and�reputational�risks,�which�build�upon�management’s�risk� assessment�and�mitigation�processes.�Specifically,�the�Compensation�Committee:�
-
i. Assists�the�Board�in�monitoring�the�risks�associated�with�the�Corporation’s�compensation� programs�and�practices,�including�the�retention�of�key�senior�management�personnel;�
-
ii. Reviews�from�time�to�time�the�risk�implications�of�the�Corporation’s�compensation�programs,� including�specifically�compensation�risks�as�they�relate�to�the�Corporation’s�strategic�plans,�other� desired�performance�measures,�overall�corporate�performance�and�risk�management�principles;� and�
-
iii. Periodically�undertakes�a�formal�review�of�the�risk�implications�of�the�design�of�the�Corporation’s� compensation�policies�for�senior�executives�and�succession�plans�for�such�senior�personnel.�
In�reviewing�and�prior�to�approving�the�Corporation’s�compensation�programs�or�compensation�being� provided�pursuant�to�such�programs,�risks�are�considered.�The�Compensation�Committee�believes�that� the�Corporation’s�compensation�policies�do�not�create�an�environment�where�an�executive�or�any� individual�is�encouraged�to�take�excessive�risk.��
The�compensation�offered�by�Ensign�is�designed�to�reward�prudent�business�judgment�and� appropriate�risk�taking�over�both�the�short�term�and�the�long�term,�without�creating�risk�that�could� reasonably�be�likely�to�have�a�material�adverse�impact�on�the�Corporation.
The�Compensation�Committee�reviews�incentive�programs�on�an�annual�basis.�The�Compensation� Committee�also�models�and�adjusts�programs,�targets�and�measures�as�needed�to�ensure�optimal� alignment�with�the�Corporation’s�strategic�plans.�The�Compensation�Committee�also�reviews�and� considers�the�results�of�the�Shareholder’s�advisory�votes�on�executive�compensation,�and�other�input� from�the�investor�and�corporate�governance�constituencies.�As�a�result�of�these�reviews,�significant� adjustments�were�made�to�our�compensation�programs�in�2017,�described�in�detail�elsewhere�herein,� which�remain�in�place�today.���
Key�oversight�procedures�and�risk�mitigation�features�to�support�managing�compensation�risk�are�as� follows:�
Page�|�30�
Ensign�Management�Information�Circular�|�2020�
Oversight�Procedures�and�Risk�Mitigation�Features�
“At�Risk”�Compensation :��
-
A�significant�portion�of�Ensign's�NEO�compensation�is�“at�risk”,�consisting�of�the�annual�cash�bonus,�annual� Performance�Share�Unit�grants�(which�began�in�2017),�and�awards�of�stock�options.�PSUs�are�“at�risk”�and� “medium�term”,�as�they�cliff�vest�at�the�end�of�a�three�year�period.�Stock�options�are�“at�risk”�and�“long� term”,�as�options�do�not�fully�vest�until�the�end�of�the�fifth�(5[th] )�year�following�the�date�of�the�grant.��
-
Since�the�final�value�of�the�PSUs�is�dependent,�in�whole�or�in�part,�upon�the�price�of�the�Common�Shares�at� the�end�of�the�applicable�vesting�period,�and�thus�is�linked�to�the�achievement�of�medium�and�long�term� value�creation,�the�Compensation�Committee�believes�that�the�motivation�for�executives�to�take� inappropriate�action�or�excessive�risk�that�may�be�beneficial�to�them�from�the�standpoint�of�their� compensation,�at�the�expense�of�Ensign�and�its�Shareholders,�is�limited.��
-
Furthermore,�the�Compensation�Committee�may�apply�discretion�to�adjust�the�size�of�the�cash�bonus.�This� discretion�would�only�be�used�sparingly�following�a�comprehensive�assessment�of�corporate�performance� and�the�accomplishments�of�each�executive.�Although�this�discretionary�power�may�be�exercised� judiciously�by�the�Compensation�Committee,�it�nonetheless�discourages�undue�risk�taking.�Such�discretion� has�not�been�used�in�more�than�five�(5)�years,�except�with�respect�to:�(i)�the�suspension�in�2016�and� subsequent�termination�in�2017�of�a�“Performance�Share�Award”�program,�which�impacted�all�eligible� employees�including�NEOs;�and�(ii)�the�election�offered�to�senior�executives�to�receive�their�2016�annual� cash�bonus�in�Common�Shares�at�a�50%�premium�over�the�value�of�the�cash�bonus.��
-
Since�2016,�in�light�of�persistent�economic�and�market�challenges�facing�the�Corporation�and�our�industry� around�the�globe,�the�Compensation�Committee�has�set�a�fixed�cap�for�the�payout�of�the�Annual�Bonus� Plan�(cash�bonus)�in�each�year�at�3%�of�EBITDA�(as�adjusted).�This�cap�remains�in�place�for�each�annual� period�until�otherwise�determined�by�the�Compensation�Committee.
Executive�Equity�Ownership�Policy
- Ensign’s�executive�equity�ownership�policy�(described�in�detail�below)�is�intended�to�discourage�excessive� risk�taking.�This�policy�promotes�an�alignment�of�long�term�interests�between�the�Corporation’s�executives� and�those�of�its�Shareholders.�
Anti�Hedging :��
- The�Corporation’s�policies�prohibit�directors�and�officers�of�the�Corporation�from�purchasing�any�financial� instrument�that�is�designed�to�hedge�or�offset�any�decrease�in�the�market�value�of�the�Common�Shares.�
Compensation�Recoupment�(“Clawback”)�Policy :��
- A�Compensation�Recoupment�Policy�was�implemented�in�2014,�which�provides�the�Compensation� Committee�the�authority�to�direct�the�Corporation�to�seek�reimbursement�from�a�NEO�of�some�or�all�of�the� incentive�compensation�paid�to�such�NEO�in�the�event�of�an�accounting�restatement�resulting�from� misconduct�by�a�NEO.��
Page�|�31�
Ensign�Management�Information�Circular�|�2020�
Succession�Planning:�
-
The�Compensation�Committee�reviews�the�Corporation’s�succession�planning�and�implementation� progress,�at�a�minimum�on�a�semi�annual�basis.�Succession�planning�is�also�frequently�considered�in�the�in� camera�discussions�of�the�Board�of�Directors,�as�well�as�by�the�Corporate�Governance,�Nominations�&�Risk� Committee�in�the�context�of�its�quarterly�review�of�enterprise�risks.�
-
The�Corporation�has�developed�a�strong�culture�of�developing�its�employees�and�promoting�from�within.� The�majority�of�our�NEOs�attained�their�current�positions�through�prior�positions�within�the�Corporation,� assuming�increasing�responsibility�as�they�progressed�and�demonstrated�excellent�leadership�skills.�In�2019,� folowing�completion�of�the�Trinidad�Acquisition,�we�augmented�our�NEO�group�by�retaining�the�former� Trinidad�CEO�to�serve�as�our�Executive�Vice�President�of�International�Operations.�
-
Members�of�senior�management�review,�on�an�annual�basis,�each�key�management�position,�evaluating� the�qualification,�experience�and�leadership�competencies�needed�to�succeed�in�the�position.�The�results� of�that�evaluation�drive�management’s�decisions�regarding�identification�of�candidates�for�succession�and� the�desired�developmental�steps�to�be�undertaken�for�such�candidates.��
-
The�Compensation�Committee�receives�reports,�at�a�minimum�annually,�on�the�progression�and� development�of�the�executives�and�members�of�senior�management�being�considered�for�future�executive� roles�and�on�succession�planning�more�generally�throughout�the�management�levels�of�the�Corporation.� The�Executive�Management�Committee�makes�succession�recommendations�for�senior�management� positions�to�the�Compensation�Committee�for�their�review,�consideration�and�approval.
Corporate�Operating�Structure:�
- As�described�in�further�detail�in�the�“Statement�of�Corporate�Governance�Practices”,�the�Corporation�does� not�have�a�named�CEO.�The�duties�and�responsibilities�normally�associated�with�the�role�of�CEO�are� delegated�by�the�Board�of�Directors�to�the�Executive�Management�Committee,�composed�primarily�of�the� NEOs.�This�structure,�which�has�been�in�place�throughout�the�Corporation’s�history,�limits�the�ability�of�any� one�individual�to�unduly�influence�the�direction�of�the�Corporation�and�enables�the�continuation�of�strong� leadership�in�the�event�of�the�departure�of�a�member�of�the�Executive�Management�Committee.�
Page�|�32�
Ensign�Management�Information�Circular�|�2020�
Compensation�Benchmarking�Peer�Group�
Ensign�compares�its�executive�compensation�to�the�compensation�provided�to�executives�in�comparable� positions�by�a�comparator�group�of�Canadian�oilfield�service�companies�in�primarily�the�contract�drilling� and�well�servicing�lines�of�business.�The�comparator�group�is�further�refined�on�the�basis�of�size,� complexity,�operating�regions�and�style�of�operation.�The�companies�in�this�comparator�group�compete� with�Ensign�for�executive�personnel�and�therefore�provide�a�useful�and�relevant�benchmark�for�the� Compensation�Committee�in�its�evaluation�of�the�Corporation’s�executive�compensation�programs.��
For�2019,�Ensign�looked�to�the�following�companies�in�benchmarking�executive�compensation:��
| PayPeerName: | Sector |
|---|---|
| EnsignEnergyServicesInc. | OilandGasDrilling |
| CalFracWellServicesLtd. | OilandGasEquipment&Services |
| ShawCorLtd. | OilandGasEquipment&Services |
| TotalEnergyServicesCorp. | OilandGasDrilling |
| SecureEnergyServicesInc. | OilandGasEquipment&Services |
| PrecisionDrillingCorporation | OilandGasDrilling |
| TricanWellServiceLtd. | OilandGasEquipment&Services |
For�benchmarking�purposes,�we�review�peer�company�proxy�materials�and�participate�in�third�party� compensation�surveys,�which�provides�relevant�data�regarding�our�selected�peer�group.��
Because�Ensign�is�a�complex,�global�enterprise�with�multiple�geographical�operating�units,�the� Compensation�Committee�also�looks�at�selected�energy�services�companies�outside�Canada,�primarily�in� the�United�States,�to�ensure�that�executive�compensation�reflects�the�international�scope�of�Ensign’s� operations.�From�time�to�time,�Ensign�reviews�and�evaluates�compensation�and�compensation�programs� disclosed�by�the�following�oilfield�service�companies�that�are�either�US�based�or�have�a�significant� presence�in�the�United�States:��
| UnitedStates: | |
|---|---|
| PayPeerName: | Sector |
| UnitCorporation | OilandGasDrilling |
| Valarisplc | OilandGasDrilling(offshore) |
| NaborsIndustriesLtd. | OilandGasDrilling |
| Patterson�UTIDrillingCompany,LLC | OilandGasDrilling |
| Helmerich&Payne,Inc. | OilandGasDrilling |
In�addition�to�benchmarking�against�peer�groups�as�described�above,�in�2019�the�Corporation�participated� in�selected�compensation�surveys,�and�purchased�certain�published�results�in�order�to�assist�in� benchmarking�against�its�peers�in�the�various�geographic�locations�in�which�it�operates.�
The�Corporation�does�not�anticipate�making�significant�changes�to�its�compensation�benchmarking�peer� group�for�2020,�however,�a�normal�course�review�takes�place�each�year.�
Page�|�33�
Ensign�Management�Information�Circular�|�2020�
Performance�Peer�Group�
With�the�adoption�of�a�PSU�program�in�2017,�we�now�also�look�to�a�performance�peer�group�to�benchmark� the�metrics�we�have�chosen�in�connection�with�the�PSU�Plan.��
Our�performance�peer�group�is�made�up�of�companies�in�our�industry�sector�(primarily�land�based�drilling,� completion�and�production�services�peers),�with�similar�risk�profiles�as�ours,�and�with�whom�we�compete� for�investors.�Our�performance�peer�group�is�somewhat�different�from�our�compensation�peer�group�(see� above),�which�is�focussed�on�comparable�companies�with�whom�we�compete�for�executive�talent.��
The�Compensation�Committee�reviews�the�performance�peer�group�annually�for�relevance�and�ongoing� measurement�similarities.�The�key�issues�and�principles�we�consider�in�establishing�our�performance�peer� group�are�the�following:�
-
Which�peer�group�companies�operate�in�the�same�industry�sector,�and�are�of�similar�size�to� Ensign?�Land�based�drilling�operations,�and�completions�and�production�services,�are�the�primary� considerations.�
-
Do�we�compete�with�the�peer�group�company�for�investor�dollars?�On�this�basis,�our�performance� peer�group�should�include�a�majority�of�Canadian�listed�peers.��
-
Size�is�considered�to�be�less�important�than�business�similarity�and�risk�profile.�
-
The�best�peers�will�have�historical�price�performance�that�is�reasonably�well�correlated�to� Ensign’s.���
-
Aim�to�select�at�least�10�performance�peers�to�foster�the�validity�of�results�and�have�some�(but� not�total)�overlap�with�the�compensation�peer�group�so�that�pay�outcomes�are�likely�to�be� directionally�aligned�with�corporate�performance.��
For�2019,�following�a�review�of�business�profiles,�revenues,�EBITDA,�assets,�employees�and�market� capitalization,�the�following�performance�peers�were�selected:
| 2019PERFORMANCEPEERS | 2019PERFORMANCEPEERS |
|---|---|
| CANADIAN�BASEDPERFORMANCEPEERS: | |
| 1. | PrecisionDrillingCorporation |
| 2. | TotalEnergyServicesInc. |
| 3. | WesternEnergyServicesCorp. |
| 4. | PasonSystemsInc. |
| 5. | AkitaDrillingLtd. |
| 6. | SecureEnergyServicesInc. |
| US�BASEDPERFORMANCEPEERS: | |
| 1. | Patterson�UTIDrillingCompany,LLC |
| 2. | Helmerich&Payne,Inc. |
| 3. | NaborsIndustriesLtd. |
| TOTALPERFORMANCEPEERS=9 |
Page�|�34�
Ensign�Management�Information�Circular�|�2020�
Adjustments�will�be�made�as�needed�to�respond�to�changes�in�our�industry�to�ensure�that�each�year’s� performance�is�compared�against�a�representative�group�of�companies.�
2020�Compensation�Program�Design�
As�noted�elsewhere�in�this�CD&A,�in�2017,�the�Compensation�Committee�implemented�significant�changes� to�certain�elements�of�our�compensation�programs�in�order�to�better�achieve�alignment�between�pay�and� performance,�ensure�the�appropriate�and�competitive�compensation�of�our�senior�executives,�and� provide�additional�transparency�regarding�the�metrics�used�in�measuring�outcomes.��
As�mentioned�above�in�the�Letter�to�Shareholders,�wage�reductions�will�be�implemented�on�April�1,�2020� which�will�impact�all�of�our�non�field�personnel�globally,�including�the�NEOs.�This�step�became�necessary� in�light�of�the�recent�and�evolving�impact�of�the�novel�coronavirus�(COVID�19)�outbreak�upon�global� commerce�and�energy�demand,�dramatic�commodity�price�declines,�and�related�market�disruptions.� Specifically,the�base�annual�compensation�of�to�our�NEOs�has�been�reduced�(effective�April�1,�2020)�as� follows:��
-
By�12.5%�(Mssrs.�Gray,�Connors,�Conway�and�Nuss);�
-
By�20%�(Mr.�Geddes);�and��
-
By�40%�(Mr.�Edwards).�
No�additional�changes�are�currently�being�contemplated�for�2020,�however�the�Compensation�Committee� will�continue�to�use�its�experience,�collective�judgment�and�discretion�in�implementing�further�changes� that�may�be�necessary�or�desirable�in�light�of�changing�business�conditions.�The�Compensation�Committee� has�maintained�the�cap�on�the�aggregate�payment�of�any�future�annual�cash�bonus,�including�for�2020,�at� 3%�of�EBITDA�(as�adjusted),�and�the�cap�on�the�aggregate�payment�of�any�PSU�award�at�2%�of�EBITDA�(as� adjusted)�achieved�in�the�final�year�of�the�term�of�each�award.�These�caps�will�remain�in�place�until� changed�by�the�Compensation�Committee.�
Page�|�35�
Ensign�Management�Information�Circular�|�2020�
NEO�Compensation�Components�–�Summary��
The�Corporation�recognizes�the�importance�of�attracting,�developing�and�retaining�top�quality�talent�and� is�committed�to�paying�for�individual�and�team�performance�in�the�context�of�strong�operating�results�and� achievement�of�financial�and�non�financial�metrics.�Since�2017,�the�Corporation's�compensation�program� for�NEOs�has�consisted�of�four�(4)�main�components,�as�follows:��
| Performance | ||||
|---|---|---|---|---|
| Component | Description | Form | Period | PerformanceOrientation |
| FIXED: | Basesalaryor | Cash | 1year | Fixedpayforperformingdaytodayresponsibilities. |
| BasePay | annual consulting fee |
Evaluatedbasedonpastandexpectedfuturecontribution,levelof responsibilityandvaluetotheorganization. |
||
| Reflectsthemarketvalueoftheposition,aswellasexperience, | ||||
| expertise,education,timeintherole,andinternalequity | ||||
| considerations. | ||||
| Reviewedonanannualbasis,adjustedbasedonoutcomeof | ||||
| review. | ||||
| Increasesreflectjobperformanceandpromotions.For2019, | ||||
| certainincreasestoNEObaseannualcompensationalsoreflected | ||||
| theincreasedsizeandscopeofEnsign’sbusinessasaresultofthe | ||||
| acquisitionofTrinidadDrillingLtd.inlate2018. | ||||
| ATRISK: | AnnualBonus | Cash | 1year | Tiedtotheachievementofannualcorporateanddivisional |
| Short�term incentive |
Plan | objectives,includingfinancial,health,safetyandenvironmental objectivesandstrategicobjectives.Levelandobjectivesreviewed onanannualbasis,adjustedbasedonoutcomeofreview. |
||
| Theaggregatemaximumpayoutamount(includingpayoutsto | ||||
| NEOs)withrespecttotheAnnualBonusPlaniscappedat3%ofthe | ||||
| Corporation’sEBITDA(asadjusted)fortheyear. | ||||
| ATRISK: | Performance | Cash | 3year | Rewardsrelativesharepriceperformanceandreturnoncapital |
| Medium� | ShareUnit | performance | employed.Fullyat�riskwitha0%to200%oftargetpayout. | |
| term | Plan | cycle(cliff | Performancecriteriaarebasedonrelativetotalshareholderreturn | |
| incentive | vestatendof term) |
andreturnoncapitalemployed.Theaggregatemaximumpayout amountofthePSUs(includingpayoutstoNEOs)iscappedatat2% |
||
| oftheCorporation’sEBITDA(asadjusted)inthefinalyearofthe | ||||
| termofeachaward. | ||||
| ATRISK: | StockOption | Stock | 1/5thof | Designedtofocusexecutiveofficereffortsonsustainably |
| Long�term Incentive |
Plan | Options | awardvest eachyear over5years, |
increasingshareholdervalueandreturnsoveraperiodofyears. Deliversvalueonlyifsharepriceappreciates. |
| fulltermof upto6years |
Grantlevelsaredeterminedwithreferencetorole,responsibilities, individualperformance,andperformanceoftheCorporation overall,aswellastheapplicabledivisioninwhichanemployeeis |
|||
| employedandpeergroupgrantlevels. | ||||
| Previousgrantsarenottakenintoaccountwhenconsideringnew | ||||
| grants. |
Page�|�36�
Ensign�Management�Information�Circular�|�2020�
NEO�Compensation�Components�–�Detailed�Description�
Total�compensation�for�NEOs�at�Ensign�is�reviewed�for�competitiveness�and�compared�to�the� Corporation’s�peer�group�for�the�achievement�of�established�levels�of�performance.
A�detailed�description�of�each�of�the�four�(4)�elements�of�NEO�compensation�for�2019�is�below.�Please�see� the�“Summary�Compensation�Table”�for�details�regarding�overall�executive�compensation�awarded�to� NEOs�in�2019�and�the�table�entitled�“Outstanding�Share�Based�and�Option�Based�Awards”�for�details�on� grants�of�stock�options�and�PSUs�to�the�NEOs�in�2019.�
The�Compensation�Committee�retains�the�ability�to�exercise�discretion�to�ensure�that�compensation�and� incentive�plan�designs�achieve�the�intended�results�and�avoid�unintended�consequences.�In�determining� whether�discretion�is�warranted,�the�Compensation�Committee�comprehensively�assesses�each�element� of�the�compensation�package�provided�to�executives,�the�overall�compensation�package�provided�to�each� executive,�the�performance�of�the�Corporation�(financial�and�non�financial)�and�individual�performance.� This�discretionary�power�is�exercised�sparingly�and�judiciously�by�the�Compensation�Committee.��
As�noted�above,�other�than�with�respect�to:�(i)�the�suspension�in�2016�and�subsequent�termination�in� 2017�of�a�“Performance�Share�Award”�program,�which�impacted�all�eligible�employees�including�NEOs;� and�(ii)�the�election�offered�to�senior�executives�to�receive�their�2016�annual�cash�bonus�in�Common� Shares�at�a�50%�premium�over�the�value�of�the�cash�bonus;�no�other�adjustments�from�the�set�formulas� were�made�with�respect�to�any�NEOs�in�2019�or�in�any�of�the�past�five�(5)�years.��
- Base�Compensation�(salary�or�annual�consulting�fee) :�The�Compensation�Committee�typically� reviews�and�approves�base�compensation�for�the�upcoming�year�in�December�of�the�prior�year�and� makes�adjustments�as�necessary�to�reflect�changes�in�economic�circumstances,�market�conditions�and� competitive�practices.��
Effective�January�1,�2015,�in�response�to�swiftly�changing�adverse�market�conditions,�the�NEOs� accepted�a�10%�reduction�in�base�annual�compensation�(implemented�along�with�a�reduction�in� Director�compensation,�as�further�discussed�below).�Such�action�was�taken�by�the�NEOs�and�the�Board� of�Directors�to�demonstrate�leadership�and�emphasize�the�importance�of�controlling�costs�during�an� unstable�period�for�the�industry.�Base�compensation�remained�largely�at�the�2015�levels,�in�light�of� then�prevailing�industry�and�economic�conditions,�except�with�respect�to�promotions�and�relocations,� until�August�2018�when�half�of�the�2015�rollbacks�were�reinstated�for�all�employees,�including�NEOs.��
Effective�January�1,�2019,�certain�NEOs�received�increases�to�their�base�annual�salaries,�in�part�due�to� the�acquisition�of�control�over�Trinidad�Drilling�Ltd.�in�the�fourth�quarter�of�2018�and�the� corresponding�increase�in�the�size�and�scope�of�the�Corporation�and�the�corresponding�duties�and� responsibilities�of�certain�NEOs.�These�increases�were�also�due�in�part�to�modest�improvements�in�the� industry�outlook�at�that�time�for�2019.��
As�noted�above,�wage�reductions�will�be�implemented�effective�April�1,�2020�which�will�impact�all�of� our�non�field�personnel�globally,�including�the�NEOs�whose�base�annual�compensation�will�be�reduced� by�12.5%�(Mssrs.�Gray,�Connors,�Conway�and�Nuss),�20%�(Mr.�Geddes)�and�40%�(Mr.�Edwards).�This� step�became�necessary�in�light�of�the�recent�and�evolving�impact�of�the�novel�coronavirus�(COVID�19)� outbreak�upon�global�commerce�and�energy�demand,�dramatic�commodity�price�declines,�and�related� market�disruptions.�This�reduction�in�base�annual�compensation�will�also�be�reflected�in�the�annual� bonus�plan�(described�below),�as�earned�base�compensation�in�a�year�is�the�denominator�used�for�the�
Page�|�37�
Ensign�Management�Information�Circular�|�2020�
calculation�of�annual�bonuses�in�each�year.�For�the�PSU�Plan�(described�below),�the�annual�base� compensation�before�the�reduction�discussed�above�is�the�denominator�used�to�generate�grant� amounts.��
- Annual�Bonus�Plan�(“ABP”): �Ensign’s�ABP�is�a�short�term�incentive�plan�designed�so�that�NEOs�have� all�or�a�high�portion�of�their�potential�annual�cash�bonus�compensation�linked�to�overall�corporate� financial�results�and�the�achievement�of�safety�and�strategic�goals,�rather�than�to�individual�business� unit�or�geographical�segment�results.�The�potential�ABP�payout�grid�varies�from�“entry�level”�up�to�the� NEO�levels,�increasing�in�accordance�with�role�responsibilities�and�influence�on�corporate�goal� achievement.�The�ABP�is�designed�to�recognize�achievements�measured�over�a�one�year�period,�and� provides�an�opportunity�for�employees,�including�NEOs,�to�earn�a�target�annual�cash�bonus�based�on� meeting�corporate�performance�objectives�in�key�areas:��
Annual�Bonus�Plan�–�Metrics��
| 1. | Corporate | � | ThiscomponentoftheannualbonususesthekeyfinancialmetricofEBITDA(as | ThiscomponentoftheannualbonususesthekeyfinancialmetricofEBITDA(as |
|---|---|---|---|---|
| financial | adjusted)asapercentageoftheannualapprovedbudget.TheBoardofDirectors | |||
| performance: | approvesannualbudgets,whichdefineoperating,financial,safetyandother | |||
| EBITDA(as | corporategoalsfortheCorporation(whichincludesallofitsoperatingdivisions). | |||
| adjusted)vs. approved2019 budget |
� | OverallcorporatefinancialperformanceisbasedontheCorporation’sconsolidated financialresults,whileeachoperatingdivisionhasspecificfinancialperformance targetsbasedonitsownapprovedannualbudgettoensure“lineofsight”forthe |
||
| 50%or75%ofNEO | employeesinthatdivision. | |||
| annualbonus | � | Aminimumthresholdforcorporateearnings(80%oftarget)mustbemetinorderto | ||
| receiveanannualbonus.Themaximumbonusisachievedat120%oftarget. | ||||
| 2. | Corporate | � | TheAssetEfficiencyRatioisafinancialmetricdevelopedbyEnsigntoreflectthe | |
| financial | returnoncapitalinvestedwithrespecttoitsassets.TheratioapplicabletoNEOs | |||
| performance: | measurestheadjustedafter�taxcashflowgeneratedbyEnsignonaconsolidated | |||
| AssetEfficiency | basis,dividedbytheaveragevalueoftheassetsandequipmentutilizedbyEnsignin | |||
| Ratio(AER) | theyear. | |||
| 30%or45%ofNEO | � | AminimumAERof15%achievestheminimumthresholdforachievementofabonus | ||
| annualbonus | basedonthismetric;anAERrateof25%achievesthemaximumbonusachievement | |||
| basedonthismetric. | ||||
| 3. | Safety: | � | ThiscomponentoftheAnnualBonusPlanisdesignedtoincentivizeongoingpositive | |
| 10%or15%ofNEO | behaviourtoreduceoreliminateincidentsandinjuries. | |||
| annualbonus | � | TheHealth,Safety&EnvironmentCommitteeapprovesannualobjectivescomprised | ||
| ofacombinationof: | ||||
| o Leadingindicators(2019weighting=75%)–composedofaminimumofthree |
||||
| (3)keybehavior�basedperformanceindicators;and | ||||
| o Laggingindicators(2019weighting=25%)–totalrecordableinjuryrates,to |
||||
| promoteyear�over�yearimprovement; | ||||
| onbothadivisionalandacorporatebasis. | ||||
| � | Threshold,targetandstretchtargetsaresetandalignedwithapointssystem. | |||
| 4. | StrategicGoals: | � | TheBoardofDirectorsannuallyapprovesstrategicgoalsandobjectivesfortheNEOs, | |
| 10%or15%ofNEO | insomeorallofthefollowingareas: | |||
| annualbonus | o BalanceSheetManagement o DebtCovenantCompliance |
|||
| o SafetyandTraining o Systems |
||||
| o BusinessDevelopment o Innovation/Technology |
||||
| � | Threshold,targetandstretchtargetsaresetandalignedwithapointssystem. |
Page�|�38�
Ensign�Management�Information�Circular�|�2020�
The�annual�cash�bonus�varies�based�on�the�degree�to�which�financial,�non�financial�and�strategic� objectives�meet�or�exceed�the�established�targets.�If�all�objectives�are�met�or�exceeded,�NEOs�are� eligible�for�an�annual�cash�bonus�for�2019�at�a�set�level�of�up�to�either�100%�or�150%�(depending�on� the�NEO’s�role)�of�their�base�compensation,�as�follows:�
| LEVEL1A–MAXIMUM100%ANNUALBONUSLEVEL(1) | LEVEL1A–MAXIMUM100%ANNUALBONUSLEVEL(1) | LEVEL1A–MAXIMUM100%ANNUALBONUSLEVEL(1) | LEVEL1A–MAXIMUM100%ANNUALBONUSLEVEL(1) | ||||
|---|---|---|---|---|---|---|---|
| 1.FinancialPerformance | 2.AssetEfficiencyRatio | 3.Safety(vs.2019Safety | 4.StrategicBonus | ||||
| [50%] | (AER)[30%] | Targets)[10%] | [10%] | ||||
| BITDA(as adjusted)as a%of2019 Budget |
Bonus%of 2019Base Comp. |
AER% | Bonus%of 2019Base Comp. |
HSEPoints | Bonus%of 2019Base Comp. |
Strategic% | Bonus%of 2019Base Comp. |
| Below80% | 0.00% | Below15% | 0.00% | Below80PTS | 0.00% | Below20PTS | 0.00% |
| At80% | 5.00% | At15% | 3.00% | At80PTS | 1.00% | At20PTS | 5.00% |
| At85% | 11.25% | At16.25% | 6.75% | At85PTS | 2.25% | ||
| At90% | 17.50% | At17.50% | 10.50% | At90PTS | 3.50% | At30PTS | 6.25% |
| At95% | 23.75% | At18.75% | 14.25% | At95PTS | 4.75% | ||
| At100% | 30.00% | At20.00% | 18.00% | At100PTS | 6.00% | At40PTS | 7.50% |
| At105% | 35.00% | At21.25% | 21.00% | At105PTS | 7.00% | ||
| At110% | 40.00% | At22.50% | 24.00% | At110PTS | 8.00% | At50PTS | 8.75% |
| At115% | 45.00% | At23.75% | 27.00% | At115PTS | 9.00% | ||
| At120% | 50.00% | At25+% | 30.00% | At120PTS | 10.00% | At60PTS | 10.00% |
| LEVEL1–MAXIMUM150%ANNUALBONUSLEVEL(2) | |||||||
| 1.FinancialPerformance | 2.AssetEfficiencyRatio | 3.Safety(vs. | 2019Safety | 4.StrategicBonus | |||
| [50%] | (AER)[30%] | Targets)[10%] | [10%] | ||||
| EBITDA(as adjusted)as a%of2019 Budget |
Bonus%of 2019Base Comp. |
AER% | Bonus%of 2019Base Comp. |
HSEPoints | Bonus%of 2019Base Comp. |
Strategic% | Bonus%of 2019Base Comp. |
| Below80% | 0.00% | Below15% | 0.00% | Below80PTS | 0.00% | Below20PTS | 0.00% |
| At80% | 7.50% | At15% | 4.50% | At80PTS | 1.50% | At20PTS | 5.00% |
| At85% | 16.88% | At16.25% | 10.13% | At85PTS | 3.38% | ||
| At90% | 26.25% | At17.50% | 15.75% | At90PTS | 5.25% | At30PTS | 7.50% |
| At95% | 35.63% | At18.75% | 21.38% | At95PTS | 7.13% | ||
| At100% | 45.00% | At20.00% | 27.00% | At100PTS | 9.00% | At40PTS | 10.00% |
| At105% | 52.50% | At21.25% | 31.50% | At105PTS | 10.50% | ||
| At110% | 60.00% | At22.50% | 36.00% | At110PTS | 12.00% | At50PTS | 12.50% |
| At115% | 67.50% | At23.75% | 40.50% | At115PTS | 13.50% | ||
| At120% | 75.00% | At25+% | 45.00% | At120PTS | 15.00% | At60PTS | 15.00% |
(1) This�bonus�level�applied�in�2019�to�Messrs.�Connors�and�Conway.�
(2) This�bonus�level�applied�in�2019�to�Messrs.�Geddes,�Edwards,�Gray�and�Nuss.
Page�|�39�
Ensign�Management�Information�Circular�|�2020�
For�2019,�certain�NEOs�(being�Mr.�Geddes,�Mr.�Edwards,�Mr.�Gray�and�Mr.�Nuss)�were�eligible� for�an�annual�cash�bonus�at�a�set�level�of�up�to�150%�of�their�base�compensation,�and�certain� NEOs�(being�Mr.�Connors�and�Mr.�Conway)�were�eligible�for�an�annual�cash�bonus�at�a�set�level� of�up�to�100%�of�their�base�compensation.��
In�2019,�on�a�consolidated�basis,�the�Corporation’s�EBITDA�(as�adjusted)�achieved�approximately�85%� of�the�approved�annual�budget�for�the�year,�resulting�in�an�annual�cash�bonus�payout�to�the�NEOs� based�on�this�metric.��
As�desribed�elsewhere,�since�2016,�the�Compensation�Committee�has�used�its�authority�to�set�a�fixed� cap�on�the�aggregate�payout�under�the�Annual�Bonus�Plan,�including�payments�to�NEOs,�at�a� maximum�of�3%�of�EBITDA�(as�adjusted).�The�total�payout�pursuant�to�the�ABP�for�2019�to�all�of� Ensign’s�eligible�employees,�including�NEOs,�was�1.1%�of�EBITDA�(as�adjusted),�and�as�such�did�not� result�in�excess�of�3%�of�EBITDA�(as�adjusted)�and�therefore�it�was�not�necessary�to�roll�back�the� calculated�payments�to�the�level�of�the�cap.�This�cap�remains�in�place�for�future�years,�until�specifically� removed�or�modified�by�the�Compensation�Committee.�
The�Compensation�Committee�reviews�and�approves�the�final�proposed�annual�cash�bonus�payments� to�NEOs,�and�may,�where�appropriate,�adjust�such�bonus�payments�following�a�comprehensive� assessment�of�corporate�performance�and�the�accomplishments�of�each�NEO.�No�such�adjustments� impacting�NEO�bonuses�have�been�made�in�more�than�five�(5)�years,�except�with�respect�to:�(i)�the� suspension�in�2016�and�subsequent�termination�in�2017�of�a�“Performance�Share�Award”�component� of�the�Annual�Bonus�Plan,�which�impacted�all�eligible�employees�including�NEOs;�and�(ii)�the�election� offered�to�senior�executives�to�receive�their�2016�annual�cash�bonus�in�Common�Shares�at�a�50%� premium�over�the�value�of�the�cash�bonus;�described�in�further�detail�in�the�Summary�Compensation� Table�below.�
The�ABP�is�subject�to�annual�review�by�the�Compensation�Committee,�and�in�particular�the�annual� safety�and�strategic�metrics�are�considered�and�approved.��
For�2020,�the�strategic�metrics�approved�with�respect�to�the�NEOs�are�largely�related�to�financial� objectives,�which�remain�the�Corporation’s�priority�following�the�acquisition�of�Trinidad�Drilling� Ltd.�in�late�2018,�which�substantially�increased�the�size�and�scope�of�Ensign’s�global�operations� and�footprint.�These�strategic�metrics�for�2020�specifically�relate�to�capital�expenditure� management,�debt�reduction�and�the�operational�achievement�of�certain�operational�objectives� across�our�global�fleet.��
Page�|�40�
Ensign�Management�Information�Circular�|�2020�
- Performance�Share�Units�(“PSUs”) :�The�Compensation�Committee�has�implemented�a�Performance� Share�Unit�Plan,�intended�to�provide�an�incentive�that�will�enable�the�Corporation�to�achieve�its� medium�and�long�term�objectives,�and�allow�the�Corporation�to�attract�and�retain�quality�personnel.��
The�first�grant�of�PSUs�pursuant�to�this�plan�occurred�in�2017.�Grants�of�PSUs�are�approved�by�the� Compensation�Committee�annually�on�or�before�April�1�of�each�year.�The�minimum�thresholds� pursuant�to�the�PSU�Plan�for�the�2017�awards�have�been�met�and�as�such,�the�first�payout�pursuant� to�the�PSU�Plan�is�in�2020.
Performance�Share�Units�(“PSUs”)��
| FormofAward | Cashpayment. | |
|---|---|---|
| WhoParticipates | SeniorexecutivesoftheCorporation(vicepresidentlevelandabove).Directorsarenot | |
| eligibletoreceivePSUsunlessheorsheisalsoanofficeroremployeeoftheCorporation. | ||
| TargetAward | Adollaramountisdeterminedbasedonapercentageofbaseannualsalary,whichisused | |
| Amount | todetermineanumberofPSUsbasedonthevolumeweightedaveragetradingpriceof | |
| Ensign’sCommonSharesoverthe10dayspriortothegrantdate.Thetargetamountof | ||
| theawardisaPSUvalueof100%ofthePSUgrant. | ||
| Dividends | Dividendsareaccruedonoutstanding,unvestedPSUs,andaccumulateintheformof | |
| additionalPSUs. | ||
| Vesting | AwardsofPSUscliff�vestattheendofathree(3)yearperformanceperiod,whichaligns | |
| withcalendaryearsbeginningtheyearofthegrant.ExtendingtherealizationofPSUs | ||
| overathree(3)yearperiodisintendedtoencouragecorporateperformanceandstock | ||
| priceappreciation.IfanemployeeleavesemploymentwiththeCorporationforany | ||
| reason(otherthanincertainlimitedcircumstances,includingterminationof | ||
| employmentconcurrentlywithorfollowingachangeofcontrol),unvestedPSUsare | ||
| forfeited. | ||
| Payout | Cashsettlement,basedonaformulathatincludesrelativetotalshareholderreturnand | |
| returnoncapitalemployed,calculatedineachyearoftheterm(20%weightingperyear) | ||
| andoverthefullterm(40%weightingofthefulltermaverage). | ||
| Anyafter�taxpaymentistobeusedtopurchaseCommonSharesiftherecipient’s | ||
| minimumshareholdingrequirementhasnotyetbeenmet. | ||
| Performance | ThevalueatvestingofthePSUswilldependonEnsign’sstockpriceandcorporate | |
| Measures | performance,asmeasuredbymetricsincludingtheCorporation’srelativetotal | |
| shareholderreturn(TSR)andreturnoncapitalemployed(ROCE)relativetoitspeer | ||
| group,overthethree�yearvestingperiod.Futurerealizedvaluesatthetimeofvesting | ||
| willreflectstockpriceperformance,reinvesteddividendaccruals,andachievementof | ||
| performancecriteria,allasmeasuredoverthevestingperiod. | ||
| TheaggregatepayoutpursuanttoeachPSUgrantiscappedatamaximumof2%of | ||
| EBITDA(asadjusted),inthefinalyearofeachthree�yearterm.Thiscapremainsinplace | ||
| untilspecificallyremovedormodifiedbytheCompensationCommittee. |
Page�|�41�
Ensign�Management�Information�Circular�|�2020�
NEOs�and�other�key�corporate�and�operational�employees�at�the�vice�president�level�and�above�are� eligible�to�receive�grants�of�PSUs.�Grant�amounts�for�2019�were�determined�using�base�salaries�and�a� multiplier�based�on�role:�
| Title | MultipleofBaseSalary(todeterminegrantvalue) | |
|---|---|---|
| President&ChiefOperatingOfficer | BaseSalaryx150%=grantvalue(1) | |
| Chairman | ||
| DivisionalPresident | BaseSalaryx75%=grantvalue | |
| ExecutiveVicePresident | ||
| ChiefFinancialOfficer | ||
| SeniorVicePresident | BaseSalaryx50%=grantvalue | |
| VicePresident |
- (1) In�2019,�for�PSU�grants�to�the�President�&�Chief�Operating�Officer�and�to�the�Chairman,�the� multiple�of�base�salary�used�was�increased�from�125%�to�150%.�This�is�largely�due�to�the�increased� size,�scope�and�complexity�of�the�Corporation’s�operations,�and�related�integration�workload,�as�a� result�of�the�acquisition�of�Trinidad�Drilling�Ltd.�in�late�2018�and�the�corresponding�impact�on�those� roles.��
The�calculated�grant�value�is�then�divided�by�the�Corporation’s�volume�weighted�average�share�price� over�the�10�trading�days�prior�to�the�grant�date,�to�determine�the�final�number�of�units�granted.�
Any�eventual�payment�amount�a�NEO�may�ultimately�receive�depends�on�our�three�year�TSR�relative� to�the�performance�peer�group�(67%�weighting),�our�relative�return�on�capital�employed�(33%� weighting),�and�our�share�price�at�the�end�of�the�vesting�period.�We�believe�relative�TSR�and�return� on�capital�employed�compared�to�our�peers�are�important�measures�of�performance,�because�they� reflect�our�ability�to�outperform�companies�affected�by�similar�market�conditions�and�our�ability�to� efficiently�use�our�capital�over�time.��
At�the�end�of�the�three�year�performance�period,�a�multiplier�ranging�from�0–2.0x�is�calculated�by� ranking�our�three�year�TSR�against�the�TSR�of�the�performance�peer�group�(adjusted�to�reflect� dividends�paid�over�the�period),�and�our�three�year�ROCE�relative�to�our�performance�peer�group,� using�the�scales�below.�The�performance�multipliers�between�the�thresholds�described�will�be� calculated�on�a�sliding�scale.��
| RelativeTSRRanking(67%weighting) | Multiplier | |
|---|---|---|
| MaximumPerformanceLevel | 75%orhigher | 2.0timespayout |
| TargetPerformanceLevel | 50%(median) | 1.0timespayout |
| ThresholdPerformanceLevel | 35% | 0.4timespayout |
| BelowThresholdPerformanceLevel | Below35% | 0payout |
| ROCE(33%weighting) | Multiplier | |
| MaximumPerformanceLevel | 75%orhigher | 2.0timespayout |
| TargetPerformanceLevel | 50% | 1.0timespayout |
| ThresholdPerformanceLevel | 35% | 0.4timespayout |
| BelowThresholdPerformanceLevel | Below35% | 0payout |
Page�|�42�
Ensign�Management�Information�Circular�|�2020�
The�overall�performance�multiplier�is�calculated�for�each�one�year�performance�period�in�the�term,� and�an�average�performance�multiplier�is�calculated�for�the�entire�term:��
| PerformanceMultiplierFormula | |||
|---|---|---|---|
| 20% | Year1 | 67%weightingxRelativeTSRsharemultiplier0�2.0)+(33%weightingxROCE | |
| weighting | sharemultiplier0�2.0)=Year1PerformanceMultiplier | ||
| 20% | Year2 | (67%weightingxRelativeTSRsharemultiplier0�2.0)+(33%weightingxROCE | |
| weighting | sharemultiplier0�2.0)=Year2PerformanceMultiplier | ||
| 20% | Year3 | (67%weightingxRelativeTSRsharemultiplier0�2.0)+(33%weightingxROCE | |
| weighting | sharemultiplier0�2.0)=Year3PerformanceMultiplier | ||
| 40% | Years1�3 | (67%weightingxRelativeTSRsharemultiplier0�2.0)+(33%weightingxROCE | |
| weighting | sharemultiplier0�2.0)=Years1�3PerformanceMultiplier | ||
| =PerformanceMultiplieroverthefullTerm |
From�this,�the�total�payout�of�PSUs�on�maturity�is�determined�in�accordance�with�the�following� formula:�
| NumberofPSUs granted+ dividends accumulated overthe3�year term |
X | Performance multiplieroverthe fullterm0�2.0x |
X | 10�dayvolume weightedaverage priceofESIshareson theTSXoverthe10 tradingdayspriorto theDec.31maturity date |
= | PSUpayout, subjectto capof2%of EBITDA(as adjusted) |
|---|---|---|---|---|---|---|
The�amount�that�NEOs�and�other�PSU�award�recipients�ultimately�may�receive�will�depend�on�the� number�of�units�including�dividend�reinvestment�over�the�three�year�term,�our�three�year�relative� TSR�and�ROCE�as�compared�with�our�performance�peer�group�and�our�share�price�at�the�end�of�the� term�of�the�award.��
The�aggregate�payout�of�all�PSUs�is�capped�at�2%�of�EBITDA�(as�adjusted)�for�the�final�year�of�the�term� of�each�award.�
- Option�Based�Awards�–�Stock�Options :�The�Compensation�Committee�periodically�awards�stock� options�to�NEOs�and�other�qualifying�employees�for�the�purpose�of�providing�an�incentive�that�will� foster�achievement�of�the�Corporation’s�long�term�objectives�and�allow�the�Corporation�to�attract� and�retain�quality�personnel.��
The�Compensation�Committee�considers�proposals�from�the�Executive�Management�Committee�for� awards�of�stock�options�to�NEOs�and�other�qualifying�employees�on�an�individual�basis.��
Stock�appreciation�rights�(SARs)�are�provided�to�certain�employees�residing�outside�of�Canada�and�the� United�States,�in�lieu�of�stock�options,�and�are�subject�to�the�same�general�conditions�and�restrictions� as�stock�options.�As�all�of�our�NEOs�currently�reside�in�North�America,�SARs�are�not�currently�awarded� to�any�of�our�NEOs.��
Page�|�43�
Ensign�Management�Information�Circular�|�2020�
Beginning�with�stock�options�granted�in�2018,�the�Compensation�Committee�implemented�a�cap�on� the�aggregate�number�of�stock�options�and�SARs�that�may�be�approved�by�the�Compensation� Committee�in�any�fiscal�year�of�1%�of�the�Corporations’�issued�and�outstanding�Common�Shares.��
| StockOptionPlan | |
|---|---|
| FormofAward | OptionsonCommonShares,whichareissuedfromtreasury. |
| WhoParticipates | OfficersandemployeesoftheCorporation.Directorsarenoteligibletoreceivestock |
| optionsunlessheorsheisalsoanofficeroremployeeoftheCorporation. | |
| ExercisePrice | TheclosingpricefortheCorporation’sCommonSharesonthelasttradingday |
| precedingthedatetheoptionsweregranted. | |
| Vesting | 20%peryearoveraperiodoffive(5)years. |
| Term | Expireattheendofthesixth(6th)yearfollowingthegrantdate. |
| Payout | Uponexerciseofastockoption,theholderreceivesoneCommonShareforeachstock |
| optionexercised.Theholderofstockoptionsmayelecttoreceiveacashpayment,in | |
| lieuofCommonShares,equaltothedifferencebetweenthestockoptionexercise | |
| priceandthemarketpriceoftheCorporation’sCommonSharesontheTSXonthe | |
| dateofexercise. | |
| Termination | Unvestedstockoptionsareforfeitedonthedateofcessationofemployment, |
| whetherduetoterminationwithoutcause,terminationwithcause,resignation, | |
| retirementordeath.Vestedoptionsoutstandingasatthedateofcessationof | |
| employmentmaybeexercisedinthe90daysfollowingtheeffectivedateofthe | |
| cessationofemployment. | |
| ChangeofControl | Thevestingofstockoptionsinachangeofcontrolscenariowilldependonwhether |
| theNEOisactuallyorconstructivelyterminatedfollowingachangeofcontrolevent | |
| (“doubletrigger”). | |
| Restrictions | Nooneperson,northeNEOsasagroup,mayholdstockoptionsexceeding5%ofthe |
| Corporation’soutstandingCommonShares. | |
| Re�Pricing | TheCorporationdoesnotre�priceout�of�the�money,orother,stockoptions. |
Further�to�a�comprehensive�review�of�compensation�programs�undertaken�in�2016,�and�the� subsequent�implementation�of�the�PSU�Plan�in�2017,�grants�of�stock�options�to�NEOs�beginning�in� 2017�have�been�at�lower�numbers�than�historical�pre�2016�grant�amounts.�
Page�|�44�
Ensign�Management�Information�Circular�|�2020�
5. Other�Compensation:��
Other�Compensation�Elements
| Employee | ForCanada�basedemployees,theCorporationalsoprovidesan“EmployeeSavingsPlan”, | |
|---|---|---|
| SavingsPlan: | wherebyemployeescanelecttocontribute,basedonyearsofservice,upto5%oftheir | |
| regularearningstoasavingsplan. | ||
| Ensigncontributes,onamatchingbasis,bywayofthepurchaseofCommonShares | ||
| acquiredeachpayperiodthroughtheTSX.TheCommonSharesvestinfavourof | ||
| participatingemployeesasto50%intheyearfollowingtheyearinwhichthecontribution | ||
| wasmade,and50%inthenextyear. | ||
| CertainalternativeplansareprovidedbytheCorporationtoemployeesinjurisdictions | ||
| outsideofCanada. | ||
| Benefitsand | Ensignprovidesstandardbenefitsaspartofacompetitivecompensationpackage.We | |
| Perquisites: | limittheuseofperquisitesforourexecutives,aswedonotthinktheyshouldbea | |
| significantelementofcompensationbeyondwhatisappropriatetokeepEnsign | ||
| competitive. | ||
| TheCorporationdoesnothave: | ||
| � EmploymentcontractswithanyofitsNEOsorotherexecutives; |
||
| � Separatechangeincontrolagreements;or |
||
| � Executivepensionorretirementplans. |
Page�|�45�
Ensign�Management�Information�Circular�|�2020�
Performance�Graph��
The�following�performance�graph�illustrates�Ensign’s�five�year�cumulative�shareholder�return,�as� measured�by�the�closing�price�of�Ensign’s�Common�Shares�at�the�end�of�each�financial�year,�assuming�an� initial�investment�of�$100�on�December�31,�2014,�compared�to�the�S&P/TSX�Composite�Index�and�the�TSX� Oil�&�Gas�Equipment�&�Services�Index,�assuming�the�reinvestment�of�dividends,�where�applicable.��
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----- Start of picture text -----
160
140
120
100
80
60
40
20
0
2014 2015 2016 2017 2018 2019
Ensign�Energy�Services�Inc. S&P/TSX�Composite�Index TSX�Oil�&�Gas�Equipment�&�Services�Index
----- End of picture text -----
| 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | |
|---|---|---|---|---|---|---|
| EnsignEnergyServicesInc. | 100 | 75 | 102 | 75 | 60 | 91 |
| S&P/TSXCompositeIndex | 100 | 92 | 111 | 121 | 110 | 136 |
| TSXOil&GasEquipment& ServicesIndex |
100 | 61 | 85 | 72 | 51 | 36 |
The�December�31,�2014�starting�point�in�the�performance�graph�reflected�a�period�of�softening�in�the� oilfield�services�markets,�which�had�begun�earlier�that�year�and�increased�through�year�end.�Due�primarily� to�an�oversupply�of�equipment�in�North�American�markets,�activity�levels�in�oilfield�services�began�to� decline�and�our�share�price�dropped�significantly�in�the�last�half�of�2014�as�the�outlook�worsened�due� primarily�to�falling�oil�and�gas�commodity�prices.��
Steep�declines�in�energy�commodity�prices�continued�throughout�2015,�as�energy�supply�and�demand� fundamentals�remained�imbalanced.�The�continued�decrease�in�our�share�price�in�2015�reflected�a�decline� in�operating�revenue�of�40%�as�compared�with�2014,�reflective�of�the�challenged�commodity�prices�and� corresponding�weak�demand�for�oilfield�services.��
Continued�low�commodity�prices�prolonged�the�period�of�challenged�operating�and�financial�results�across� the�energy�sector�into�2016.�However,�oil�and�natural�gas�prices�began�to�stabilize�and�slowly�recover� throughout�the�year,�such�that�notwithstanding�a�further�decline�in�operating�revenue�of�38%�in�2016�as� compared�to�2015,�our�share�price�began�a�modest�recovery�over�the�year.�
Although�our�financial�results�for�2017�improved�as�compared�with�2016�and�2015,�and�the�modest� recovery�of�crude�oil�and�natural�gas�prices�continued�throughout�the�year,�our�share�price,�together�with�
Page�|�46�
Ensign�Management�Information�Circular�|�2020�
the�share�prices�of�our�Canadian�peers,�declined�somewhat.�This�was�due,�in�part,�to�an�imbalance� between�rig�supply�and�customer�demand�resulting�in�drilling�and�services�contracts�being�negotiated�at� lower�rates�and�for�shorter�terms�than�the�preceeding�contracts.�Moreover,�ongoing�uncertainties�in� Canada�regarding�pipeline�access�for�both�oil�and�gas�and�energy�supply�and�demand�fundamentals� adversely�impacted�oifield�service�companies�operating�in�Canada.��
In�2018,�production�in�the�United�States�increased,�resulting�in�some�downward�pressure�on�global�crude� oil�prices,�which�was�somewhat�off�set�by�OPEC�supply�cuts�that�took�effect�during�the�year.�Compounding� this�effect,�by�the�latter�part�of�2018,�the�price�differential�between�WTI�spot�prices�and�lower�Canadian� oil�spot�prices�increased�to�wider�levels�than�historical�differentials.�Although�there�was�some�narrowing� of�this�differential�in�the�latter�part�of�2018,�the�resulting�moderate�activity�levels�in�Canada�negatively� impacted�our�overall�activity�levels.��
In�the�aggregate,�although�our�2018�financial�results�were�again�improved�year�over�year,�our�share�price� (and�the�share�prices�of�many�oilfield�services�companies�and�our�Canadian�peers,�in�particular)�continued� to�be�negatively�impacted�by�these�macro�economic�conditions.��
Crude�oil�prices�modestly�improved�early�in�2019�over�the�2018�exit,�due�in�part�to�additional�production� cuts�announced�by�OPEC�and�other�select�non�OPEC�countries�in�late�2018.�However�average�crude�oil� prices�generally�were�slightly�lower�throughout�the�year�as�compared�with�2018.��
Operating�activity�overall�in�Canada�was�modestly�lower�in�2019�as�compared�with�2018,�in�part�due�to� the�price�differential�between�WTI�spot�prices�and�lower�Canadian�oil�spot�prices,�which�continued�to� demonstrate�significant�volatility.�In�the�aggregate,�although�our�2019�financial�results�were�again� improved�year�over�year,�our�share�price�(and�the�share�prices�of�many�oilfield�services�companies�and� our�Canadian�peers,�in�particular)�continued�to�be�negatively�impacted�by�these�macro�economic� conditions.�
2019�Compensation�and�Pay�Mix��
The�following�pie�charts�show�the�respective�actual�pay�mixes�as�between�fixed�and�variable� compensation�achieved�for�each�of�the�NEO’s�for�2019�and�2018.�As�indicated,�historically�most�of�our� NEOs’�compensation�has�been�delivered�through�variable�compensation.��
The�pie�charts�demonstrate�fairly�consistent�proportions�of�total�pay�granted�to�or�received�by�NEOs�in� the�form�of�variable�compensation.�In�2018�and�in�2019,�the�compensation�provided�to�NEOs�included�the� four�(4)�elements�described�above,�being�base�salary,�annual�cash�bonus,�a�grant�of�PSUs�and�a�grant�of� stock�options�(of�less�than�historical�grant�levels).��
For�a�breakdown�of�all�elements�of�actual�compensation�paid�in�2019,�please�refer�to�the�“Summary� Compensation�Table”.���
Page�|�47�
Ensign�Management�Information�Circular�|�2020�
2019�
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----- Start of picture text -----
Robert�H.�Geddes
Fixed
34%
Variable
66%
----- End of picture text -----
Michael�R.�Gray
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----- Start of picture text -----
Fixed
37%
Variable
63%
----- End of picture text -----
Thomas�J.�Connors
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----- Start of picture text -----
Variable Fixed
49% 51%
----- End of picture text -----
2018�
Robert�H.�Geddes
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----- Start of picture text -----
Fixed
34%
Variable
66%
----- End of picture text -----
Michael�R.�Gray
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----- Start of picture text -----
Fixed
Variable
43%
57%
----- End of picture text -----
Thomas�J.�Connors
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----- Start of picture text -----
Fixed
Variable
46%
54%
----- End of picture text -----
Brent�J.�Conway
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----- Start of picture text -----
Variable
Fixed
47%
53%
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----- Start of picture text -----
N/A�
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Page�|�48�
Ensign�Management�Information�Circular�|�2020�
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2019� 2018�
Michael�R.�Nuss Michael�R.�Nuss
Fixed
Variable Fixed Variable
44%
48% 52% 56%
N.�Murray�Edwards
N.�Murray�Edwards
Fixed Fixed
29% 31%
Variable Variable
71% 69%
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Compensation�Objective�Supported��
Base�salaries�reflect�Ensign’s�goal�of�retaining�and�attracting�qualified�individuals.�Base�salary� determination�for�the�NEOs�is�based�primarily�on�past�and�expected�future�contribution,�value�to�the� organization,�market�competitiveness�and�individual�performance.�Industry�challenges�and�outlook�as� well�as�general�economic�conditions�in�the�regions�in�which�Ensign�operates,�factors�which�customarily� affect�Common�Share�performance,�are�also�considered�in�determining�base�salary�levels.��
In�early�2015,�in�response�to�the�challenging�industry�outlook�which�began�in�mid�2014�and�was�ongoing� at�that�time,�the�NEOs�accepted�a�10%�reduction�in�base�salary�or�annual�consulting�fee,�coinciding�with� a�period�of�lower�performance�for�the�Common�Shares.�This�reduction�largely�remained�in�place�until�mid� 2018,�although�certain�adjustments�had�been�made�previously�to�reflect�promotions�and�increases�in� responsibility.��
In�August�2018,�certain�NEOs�who�had�had�their�salaries�rolled�back�in�January�2015,�and�had�not� otherwise�received�an�increase�since�early�2015,�received�an�increase�equal�to�half�of�the�amount�of�the� 2015�roll�back.�The�result�was�that�effective�as�of�January�1,�2019,�all�employees�(including�NEOs)�who� had�received�a�salary�rollback�in�2015,�and�who�had�not�otherwise�received�an�increase�since�early�2015,� had�their�annual�base�salary�restored�to�the�pre�2015�level.�
Through�the�industry�downturn�beginning�in�2015,�the�proportion�of�variable�compensation�earned�and� paid�decreased�substantially�as�compared�with�fixed�elements�of�compensation.�In�2018�and�2019,�in�part� due�to�modest�improvements�in�industry�conditions,�with�the�majority�of�compensation�granted�to�most� of�our�NEOs�was�again�being�derived�from�variable�compensation.��
Page�|�49�
Ensign�Management�Information�Circular�|�2020�
In�2019,�as�in�2018,�no�variable�compensation�benefit�was�realized�by�the�NEOs�from�the�exercise�of�stock� options�or�from�any�PSU�award�(the�first�tranche�of�which�vested�on�December�31,�2019).��
The�pie�charts�(which�reflect�compensation�paid�as�well�as�compensation�granted�but�not�paid)�generally� reflect�fairly�consistent�total�compensation�in�2019�as�compared�with�2018,�although�the�reported�totals� for�NEOs�who�were�paid�in�US�dollars�(Mr.�Nuss)�are�higher�in�2018�than�in�2019�in�part�due�to�the�year� end�exchange�rates�used,�of�CAD�$1.00�=�USD�$1.30�for�2019�amounts,�and�CAD�$1.00�=�USD�$1.36�for� 2018�amounts.��
Mr.�Gray’s�total�compensation�in�2019�was�higher�than�in�2018�due�to�a�merit�and�responsibility�based� salary�increase�in�the�year,�which�had�a�corresponding�impact�on�his�achieved�annual�cash�bonus.�Further,� Mr.�Geddes,�Mr.�Gray�and�Mr.�Edwards�each�earned,�in�2019,�an�extraordinary�one�time�bonus�of� $200,000,�in�connection�with�the�completion�on�April�10,�2019,�of�the�final�refinancing�steps�related�to� the�acquisition�of�Trinidad�Drilling�Ltd.,�as�described�in�further�detail�below�under�“2019�Annual�Bonus� Calculation�–�Cash�Award”.��
These�outcomes�for�both�2019�and�2018�reflect�the�Corporation’s�compensation�philosophy�of�delivering� a�meaningful�proportion�of�total�compensation�to�NEOs�using�variable�pay,�such�that�in�years�such�as� these�where�the�Corporation�experiences�very�challenging�market�conditions�and�prolonged�poor� economic�fundamentals,�variable�pay�declines�significantly.�The�Corporation’s�compensation�program�is� structured�to�achieve�significantly�increased�variable�pay�during�years�of�stronger�financial,�safety�and� relative�share�price�performance.�
Ensign’s�ABP�pays�out�when�certain�minimum�thresholds�are�met�for�corporate�earnings,�safety�results� and�the�achievement�of�strategic�objectives�over�a�one�year�period.�Value�from�PSUs�is�realized�when� Ensign’s�performance�relative�to�its�performance�peer�group�on�the�metrics�of�total�shareholder�return� and�return�on�capital�employed�are�at�or�above�a�threshold�level,�and�where�Ensign’s�share�price� appreciates�over�the�medium�term.�Lastly,�value�is�realized�from�stock�options�when�Ensign’s�share�price� appreciates�over�the�long�term.��
The�annual�and�long�term�incentives�are�variable�or�at�risk�compensation,�which�are�awarded� based�on�corporate�and�business�unit�performance.�The�relative�weighting�of�these�elements�varies� by�level�within�the�Corporation,�where�the�most�senior�individuals,�including�the�NEOs,�have�the� highest�proportion�of�compensation�at�risk.�This�is�intended�to�ensure�alignment�between�an� individual’s�ability�to�influence�business�unit�and�corporate�results,�and�the�degree�to�which�his�or� her�compensation�is�affected�by�those�results.�
Page�|�50�
Ensign�Management�Information�Circular�|�2020�
2019�Performance�of�the�NEO’s�
In�late�2018,�Ensign�was�successful�in�acquiring�one�of�its�peers,�Trinidad�Drilling�Ltd.�This�significant� acquisition�is�the�largest�in�Ensign’s�history�–�the�size�of�our�global�drilling�rig�fleet�nearly�doubled� and�our�geographic�footprint�expanded.�The�integration�of�Trinidad’s�operations�into�Ensign�was� well�underway�by�the�end�of�2018�and�continued�throughout�2019.�The�achievement�of�operational,� cost�and�revenue�synergies,�initiated�in�late�2018,�were�achieved�throughout�2019�and�will�be� ongoing�as�necessary.��
Each�of�Ensign’s�NEOs�was�impacted�throughout�2019�by�this�late�2018�acquisition.�
Ensign�also�achieved�success�in�a�number�of�other�aspects�in�2019,�including�with�respect�to�our� financial�and�safety�performance,�and�we�continue�to�be�well�positioned�to�capitalize�on�business� opportunities,�even�as�the�overall�market�environment�continues�to�experience�significant� challenges.
The�Board�of�Directors�believes�that�Ensign�continues�to�compare�favourably�to�its�peer�group�on�the�key� metrics�of�balance�sheet,�capital�structure,�return�on�invested�capital�and�cash�flow.�Specific�measures� have�been�put�into�place�to�monitor�achievement�of�corporate�strategy,�including�return�on�invested� capital,�total�shareholder�return,�annual�growth�targets,�reliability�and�cost�targets.�
Progress�generally�continues�to�be�made�towards�the�Corporation’s�health,�safety�and�environmental� performance�goals�on�employee�development,�recordable�injuries,�energy�efficiency,�environmental� stewardship�and�reliability.�Our�focus�on�and�commitment�towards�behaviour�based�training,�in�particular� for�inexperienced�personnel,�has�resulted�in�sustained�improvements.�Our�NEOs�continued�to�provide� outstanding�leadership�in�focusing�on�operational�excellence,�capital�discipline�and�strategic�direction.�In� 2019�the�Corporation�specifically�achieved�the�following:
2019�Achievements�
| Integrationof | WeacquiredTrinidadinlate2018to:(i)growourhigh�qualityrigfleet;(ii)expandourpresence | WeacquiredTrinidadinlate2018to:(i)growourhigh�qualityrigfleet;(ii)expandourpresence |
|---|---|---|
| Trinidad | inactiveU.S.andinternationalmarkets;(iii)increaseouroverallsizeandscalewithinthe | |
| DrillingLtd. | industrybynearlydoublingourrigfleetandbecomingthethirdlargestdrillingrigprovider | |
| (“Trinidad”) | globally(asmeasuredbyfleetsize);(iv)expandourcustomerbase;and(v)takeadvantageof | |
| materialcostsavingsandoperationalandscale�basedsynergies.Throughout2019,Trindad’s | ||
| globaloperationswereintegratedintoEnsign’sexistingoperationalstructurewhile | ||
| maintainingoverallsafetyincidentratesathistoriclows. | ||
| Financial | RelatedtotheacquisitionofTrinidad: |
-
We�redeemed�all�of�our�outstanding�USD�$200�million�in�senior�guaranteed�notes,� comprised�of�USD�$100�million�of�3.97%�notes�due�February�22,�2019,�and�USD�$100� million�of�4.54%�notes�due�February�22,�2022;�
-
We�repurchased�the�outstanding�US$350�million�of�Trinidad�senior�notes�due� February�15,�2025;�and�
-
We�entered�into�a�note�indenture�with�respect�to�the�issue�of�senior�notes�in�the� principal�amount�of�USD�$700�million,�due�2024�and�bearing�interest�at�9.25%.�
Page�|�51�
Ensign�Management�Information�Circular�|�2020�
These�refinancing�steps�have�provided�us�with�the�resources�and�the�flexibility�required�to� continue�to�service�our�operational�needs.�
| Financial | Throughongoingprudentcostmanagement,wedeclaredtotaldividendsin2019totalling | |
|---|---|---|
| $0.42perCommonShare. | ||
| Financial | Weachievedgeneralandadministrativeexpenseof3.45%ofrevenuein2019,alevelthat | |
| remainsexceptionalinourpeergroup. | ||
| Safety | In2019,Ensignachievedaglobal“TotalRecordableInjuryRate”(TRIR)of1.05,representing | |
| slightlymorethanonerecordableincidentper100full�timeworkersduring2019,anhistoric | ||
| lowfortheCorporation,whileexperiencinga43%increaseinexposurehoursresultingfrom | ||
| theTrinidadintegration.Theresultisanoutcomeofhavingastrongfocusonleadingindicators | ||
| suchasleadershipvisits,operationalexcellencemeetingsandtheimplementationofeffective | ||
| correctiveandpreventativemeasures. | ||
| Safety | In2019wesuccessfullyintegratedallTrinidadrigstocoreHSEprocesses.Inaddition,were� | |
| launchedanupgradedversionofourGlobalRiskManagementSystem(GRMS).Thenew | ||
| versionofGRMSisfunctionalinallouroperatinglanguages(English,SpanishandArabic)and | ||
| supportsaconsistentdeliveryofkeyHSEprocesses,suchasincidentreportingand | ||
| investigations,BehaviorBasedSafety(BBS),observationtrendingandJobSafetyAnalysis(JSA). | ||
| Operations | Successfullyupgradedandspuddedthreedrillingrigsintotwonewcountries–two2)drilling | |
| rigsinKuwait(throughajointventureofwhichtheCorporationisa60%partner)andone(1) | ||
| drillingriginBahrainwhichis100%ownedbyEnsign. | ||
| Innovation/ | TheEnsignEdge®rigcontrolssystemwereinstalledonapproximately50drillingrigsinour | |
| Technology | fleetbytheendof2019.ThesesystemsincludeoneormoreofControls,ControlsPlus, | |
| Analytics/Historian,andthefullRigOperatingSystem.Totheendof2019,theEnsignEdge® | ||
| hascaptureddatafrom8,818totalwells,95milliontotalfeetofdrillingand51billiondata | ||
| records. | ||
| Training | AspartoftheTrinidadacquisition,Ensignexecutedonopportunitiestoconsolidatelearning | |
| managementsystems(LMSs),ultimatelygoingfromfour(4)differentsystemsintooneglobal | ||
| platformcalled“Elevate”.Inaddition,Ensignmergedits“GlobalSkillsStandard”(GSS)with | ||
| Trinidad’sEssentialSkillsTraining(TEST)program,establishingaminimumbaselevelof | ||
| competencyforEnsignfieldcrewsworldwide.Fullimplementationacrosstheentiredrillingrig | ||
| fleetisplannedfor2020. |
Page�|�52�
Ensign�Management�Information�Circular�|�2020�
2019�Annual�Bonus�Calculation�–�Cash�Award��
As�described�in�the�section�above�entitled�“Executive�Compensation�Components�–�Detailed�Description”,� for�the�2019�year,�Ensign�rewarded�the�NEOs�and�other�ABP�participants�based�on�the�performance� achieved�versus�annual�approved�targets,�as�follows:�
Together,�the�achievement�in�2019�of�financial�and�safety�metrics�resulted�in�a�total�annual�cash� bonus�pursuant�to�the�ABP�of�between�24%�and�41%�of�earned�base�salary�for�the�NEOs�(depending� on�bonus�level�and�the�proportion�of�the�annual�bonus�which�is�based�on�corporate�consolidated� results�as�compared�with�divisional�results).
| Metrics | Metrics | 2019Achievement | ||
|---|---|---|---|---|
| Financial | In2019,onaconsolidatedbasis,theCorporation’sEBITDA(asadjusted)achieved | |||
| Performance | approximately85%oftheapprovedannualbudgetfor2019,resultinginanannualcash | |||
| bonuspayouttotheNEOsbasedonthismetric. | ||||
| Asset | Efficiency | In2019,onaconsolidatedbasis,theAERratiowaslessthan15%,resultinginnoannualcash | ||
| Ratio | bonuspaidtoNEOsbasedonthismetric. | |||
| Safety | Safetyperformancemetricsonaconsolidatedbasisin2019achievedapproximately112 | |||
| Performance | pointsoutofatargetof100andastretchof120.Dependingonbonuslevel,splitsbetween | |||
| corporateanddivisionalresults,andothersafetygoals,NEOsachievedacashbonusof | ||||
| between9.9%and12.6%forthisbonuscomponent. | ||||
| StrategicGoals | Fourpre�approvedstrategicgoalsweresetfortheNEOgroupin2019.Onewaspartially | |||
| achieved,twowereachievedandonewasexceeded.Thisresultedintheachievementofa | ||||
| cashbonusofeither11.9%or8.4%forNEOs,dependingonbonuslevel,onthismetricfor | ||||
| theyear. |
Governance�of�the�financial�performance�criteria�and�metrics�is�comprehensive.�Reviews�of�measures,� weightings,�targets�and�performance�results�are�conducted�at�various�times�of�the�year�by�the�appropriate� divisional,�corporate�and�Compensation�Committee�levels�before�being�approved�by�the�Board�of� Directors.�Annual�safety�goals�for�each�division�are�reviewed�by�the�Health,�Safety�&�Environment� Committee�(“ HSE�Committee ”)�of�the�Board�of�Directors,�to�ensure�alignment�with�the�objectives�of�that� Committee.�
In�the�2019�year,�the�Compensation�Committee�approved�the�payment�of�an�extraordinary,�one�time� bonus�for�each�of�four�(4)�key�members�of�the�Executive�Management�Committee,�three�(3)�of�whom�are� NEOs�(Mr.�Geddes,�Mr.�Gray�and�Mr.�Edwards),�in�the�amount�of�$200,000�each.�This�bonus�was�approved,� only�after�the�completion,�on�April�10,�2019,�of�the�final�refinancing�steps�related�to�the�acquisition�of� Trinidad�Drilling�Ltd.,�to�recognize�and�reward�the�efforts�and�achievements�of�each�of�these�specific� individuals�in�connection�with�this�acquisition�and�the�related�refinancing�transactions.�
Page�|�53�
Ensign�Management�Information�Circular�|�2020�
2019�PSUs�–�Achievement�of�Performance�Metrics��
The�inaugural�grant�of�PSUs�under�the�PSU�Plan�took�place�in�2017�and�those�awards�matured�on� December�31,�2019�and�are�payable�in�2020.�As�described�above,�the�performance�metrics�used�to� calculate�any�eventual�payout�of�PSUs�are�based�upon�relative�total�shareholder�return�and�return�on� capital�employed,�as�measured�against�our�performance�peer�group.�For�2019,�the�following�performance� metrics�were�achieved:��
| 2019PerformanceMultiplier | 2019PerformanceMultiplier |
|---|---|
| Component | 2019 |
| RelativeTSRRank | 24.9% |
| RelativeTSRMultiplier(67%weighting) | 0.0x |
| ROCEActual | 58.8% |
| ROCEMultiplier(33%weighting) | 1.352x |
| CombinedMultiplier | 0.446x |
2019�Stock�Option�Grants��
NEOs�and�certain�other�employees�are�eligible�to�receive�grants�of�stock�options.�Grants�of�stock�options� are�recommended�by�the�Executive�Management�Committee�to�the�Compensation�Committee�for�review� and�approval.�Options�are�not�guaranteed�to�be�granted�annually�or�on�a�pre�determined�schedule,�but� are�granted�at�the�discretion�of�the�Compensation�Committee,�having�regard�to�market�cycles,� recruitment,�retention,�competitive�compensation,�roles,�responsibilities�and�individual�performance,�as� balanced�by�the�number�of�options�available�and�the�requirement�to�restrict�the�volume�of�outstanding� options�below�acceptable�dilution�thresholds.��
The�NEOs�received�the�following�stock�option�grants�in�2019:�
| Name | March2019Grant |
|---|---|
| StockOptions | |
| Geddes,RobertH. | 95,000 |
| Gray,MichaelR. | 28,500 |
| Connors,ThomasJ. | 28,500 |
| Conway,BrentJ. | 28,500 |
| Nuss,MichaelR. | 28,500 |
| Edwards,N.Murray | 95,000 |
Page�|�54�
Ensign�Management�Information�Circular�|�2020�
Looking�Ahead�to�2020��
Base�salaries�for�NEOs�in�2020�initially�were�to�have�remained�at�2019�levels,�however�as�descibed� elsewhere�in�this�Information�Circular,�effective�April�1,�2020,�a�significant�wage�roll�back�will�be� implemented�which�will�impact�all�of�our�non�field�personnel�globally,�including�the�NEOs.�Specifically,the� base�annual�compensation�of�to�our�NEOs,�at�the�suggestion�of�Mr.�Edwards�and�Mr.�Geddes,�have�been� reduced�(effective�April�1,�2020)�as�follows:��
-
By�12.5%�(Mssrs.�Gray,�Connors,�Conway�and�Nuss);�
-
By�20%�(Mr.�Geddes);�and��
-
By�40%�(Mr.�Edwards).�
This�step�became�necessary�in�light�of�the�recent�and�evolving�impact�of�the�novel�coronavirus�(COVID� 19)�outbreak�upon�global�commerce�and�energy�demand,�dramatic�commodity�price�declines,�and�related� market�disruptions.�Elements�of�variable�compensation�remain�unchanged�in�2020,�although�reductions� to�base�annual�compensation�will�have�the�effect�of�reducing�potential�annual�bonus�plan�payments�and� will�reduce�the�number�of�PSUs�granted,�as�those�grants�take�place�on�April�1�of�each�year�and�will� therefore�be�basd�on�the�reduced�salaries.�In�light�of�recent�dramatic�declines�in�the�price�of�crude�oil�and� the�anticipated�impact�on�activity�levels�for�the�remainder�of�the�year,�the�Compensation�Committee�will� make�further�adjustments�as�necessary�to�the�compensation�of�NEOs�and�all�other�employees.�We�do�not� expect�the�design�of�our�compensation�programs�to�change�materially�in�2020.��
Summary�Compensation�Table�
The�following�table�sets�forth�for�the�year�ended�December�31,�2019�information�concerning�the� compensation�paid�or�payable�to�the�executive�officers�of�the�Corporation�whose�total�compensation� exceeded�$150,000�and�who�met�the�requirements�to�be�classified�as�“Named�Executive�Officers”� pursuant�to�National�Instrument�51�102.�As�described�further�in�the�Statement�of�Corporate�Governance� Practices,�the�Corporation�does�not�have�a�named�Chief�Executive�Officer.�Specific�aspects�of�this� compensation�are�covered�in�greater�detail�in�subsequent�tables.�
The�total�cash�and�non�cash�compensation�paid�or�awarded�to�the�NEOs�over�the�past�three�(3)�years�is� detailed�in�the�following�table.�Amounts�earned,�but�not�paid,�are�reflected�in�the�year�in�which�the� compensation�was�earned.��
All�amounts�are�in�Canadian�dollars.�With�respect�to�those�NEOs�who�are�paid�in�United�States�dollars�(Mr.� Nuss),�the�translation�to�Canadian�dollars�was�at�the�December�31,�2019�rate�of�USD�$1�=�CAD�$1.30.��
Page�|�55�
Ensign�Management�Information�Circular�|�2020�
| NameandPrincipal Position Year Salary ($) Share� Based Awards (PSUs)($) (3) Option� Based Awards(4) ($) |
Non�Equity IncentivePlan Compensation Annual IncentivePlans (5) ($) Allother Comp.(6) ($) TotalComp. ($) |
|---|---|
| Geddes,RobertH. President&Chief OperatingOfficer 2019 2018 2017 700,000 586,000 573,740 1,050,000 717,175 717,175 86,450 115,700 238,500 |
485,303 412,147 328,933 127,801 51,103 43,087 2,449,554 1,882,125 1,901,435 |
| Gray,Michael ChiefFinancialOfficer 2019 2018 2017 325,000 262,000 220,000 243,750 195,000 165,000 25,935 44,500 79,500 |
332,462 123,988 84,086 26,218 17,301 11,000 953,365 642,789 559,586 |
| Connors,ThomasJ. ExecutiveVicePresident CanadianOperations 2019 2018 380,000 370,000 284,438 277,500 25,935 44,500 |
90,167 128,649 32,476 20,999 813,016 841,648 |
| Conway,BrentJ. ExecutiveVicePresident InternationalOperations 2019 400,000 300,000 25,935 |
117,424 92,004 935,363 |
| Nuss,MichaelR.(1) ExecutiveVicePresident UnitedStatesOperations 2019 2018 2017 513,500 497,420 456,250 384,197 351,120 342,891 25,935 44,500 79,500 |
152,651 297,824 139,930 93,166 53,673 47,438 1,169,449 1,244,537 1,066,009 |
| Edwards,N.Murray(2) Chairman 2019 2018 2017 0 0 0 750,000 503,800 503,800 86,450 115,700 238,500 |
403,788 289,525 231,068 500,000 425,432 403,040 1,740,238 1,334,457 1,376,408 |
| (1) Mr.Nuss’baseannualsalaryin2019wasUSD$395,000.Forreportingpurposes,theUSdollarportionofallcompensationelementsf Nuss(whoreceivesallofhiscompensationinUSdollars)weretranslatedatthefollowingexchangerates: Date ExchangeRate December31,2019 USD$1.00=CAD$1.30 December29,2018 USD$1.00=CAD$1.36 December30,2017 USD$1.00=CAD$1.25 |
(1) Mr.�Nuss’�base�annual�salary�in�2019�was�USD�$395,000.�For�reporting�purposes,�the�US�dollar�portion�of�all�compensation�elements�for�Mr.� Nuss�(who�receives�all�of�his�compensation�in�US�dollars)�were�translated�at�the�following�exchange�rates:�
(2) Mr.�Edwards�is�not�an�employee�of�the�Corporation�and�does�not�receive�a�salary.�However,�he�and�a�controlled�corporation�provide�ongoing� management�services�and�strategic�advice�to�Ensign�and�thus�Mr.�Edwards�meets�the�definition�of�a�NEO.�Mr.�Edwards’�controlled�corporation� receives�an�annual�consulting�fee�for�the�costs�it�incurs�on�behalf�of�and�for�services�it�provides�to�the�Corporation,�included�in�the�column� “All�other�compensation”.�When�awarded,�Mr.�Edwards�may�personally�receive�variable�compensation�amounts,�for�example�pursuant�to�the� Annual�Bonus�Plan,�the�Stock�Option�Plan,�the�PSU�Plan�or�such�other�compensation�awards�or�plans�as�may�be�approved�by�the�Compensation� Committee�from�time�to�time.�
(3) Share�based�awards :�Share�based�awards�represent�the�grant�date�fair�value�of�PSU�awards.�US�dollar�amounts�(Mr.�Nuss)�were�converted� to�Canadian�dollars�on�the�grant�date�using�the�following�exchange�rates:�2017�awards�–�1.25x;�2018�awards�–�1.28x;�2019�awards�–�1.30x.��
Page�|�56�
Ensign�Management�Information�Circular�|�2020�
- (4) Option�based�awards :�The�grant�date�fair�value�of�option�based�awards�granted�to�NEOs�pursuant�to�the�Stock�Option�Plan�is�calculated�for� compensation�disclosure�purposes�using�the�Black�Scholes�option�pricing�model�with�the�following�assumptions:�
| GrantDateFair Value March2019 $0.91 |
Black�ScholesOptionPricingModel–Assumptions |
|---|---|
| AverageRiskFree InterestRate AverageExpected Life ExpectedVolatility |
|
| 1.68% 5years 40.0% |
|
| April2018 $0.89 |
2.02% 5years 40.0% |
| March2017 $1.59 |
1.26% 5years 40.0% |
The�fair�value�for�compensation�disclosure�purposes�differs�from�accounting�fair�value,�as�the�option�based�awards�are,�under�IFRS�2,� considered�to�be�compound�financial�instruments�and�accounted�for�as�cash�settled�awards.�Accordingly,�these�awards�are�re�valued�at�every� quarter�end.��
-
(5) Annual�Incentive�Plans:�Annual�incentive�plans:� Annual�incentive�plans�include�the�cash�bonus�amounts�earned�under�the�Annual�Bonus� Plan.�Cash�bonus�awards�are�paid�to�the�NEOs�in�cash�in�April�or�May�following�the�year�in�which�they�were�earned�and�accrued.�Because�of� the�timing�of�the�payments�of�these�bonuses�relative�to�the�date�of�this�Information�Circular,�prior�year�numbers�are�adjusted�as�appropriate� to�reflect�actual�final�payment�amounts.�The�2017�figures�represent�the�calculated�cash�bonus,�rolled�back�from�the�actual�bonus�achieved,� following�the�application�of�the�cap�on�the�aggregate�payment�at�3%�of�EBIDTA�(as�adjusted),�as�discussed�elsewhere�in�this�Information� Circular.�The�2019�figures�reported�for�Mr.�Geddes,�Mr.�Gray�and�Mr.�Edwards�also�include�an�extraordinary,�one�time�bonus�of�$200,000..� This�bonus�was�approved,�only�after�the�completion,�on�April�10,�2019,�of�the�final�refinancing�steps�related�to�the�acquisition�of�Trinidad� Drilling�Ltd.,�to�recognize�and�reward�the�efforts�and�achievements�of�each�of�these�specific�individuals�in�connection�with�this�acquisition� and�the�related�refinancing�transactions.�
-
(6) All�other�compensation :��
-
(i)� Canadian�Employee�Savings�Plan:�This�includes�Common�Shares�that�have�vested�during�the�year�to�the�benefit�of�NEOs�who�elect�to� participate�in�the�Corporation’s�“Employee�Savings�Plan”�for�Canadian�based�employees.�Up�to�5%�of�a�participating�employee’s�base� salary�is�matched�in�cash�contributions�made�by�the�Corporation,�used�to�purchase�Common�Shares�on�the�TSX�on�behalf�of�the�NEO,� which�vest�to�the�benefit�of�each�NEO�equally�over�two�years�each�February�1.�The�value�of�the�vested�shares�is�derived�by�multiplying� the�Common�Share�price�on�the�vesting�date�by�the�number�of�Common�Shares�vesting�to�the�benefit�of�the�NEO�on�that�date.�
-
(ii) Benefits:�Our�global�benefits�programs�offer�competitive�comprehensive�coverage�and�cost�sharing.�Benefits�programs�offered�to� NEO’s�are�the�same�benefits�as�are�offered�to�all�employees�in�the�applicable�region.��
-
(iii) Perquisites:�Our�executives�receive�limited�perquisites�consistent�with�our�industry�peers�and�which�form�a�part�of�their�competitive� compensation�packages.�The�availability�of�some�perquisites�varies�by�position.�
-
(iv) The�amounts�reported�as�“all�other�compensation”�for�each�NEO�include�the�following:�
-
Mr.�Geddes:�The�employer�match�pursuant�to�the�Canadian�Employee�Savings�Plan,�a�vehicle�allowance,�parking,�the�employer� portion�of�benefit�premiums,�club�memberships,�a�housing�amount�(to�cover�the�cost�of�a�secondary�residence�for�Mr.�Geddes�in� Houston,�which�represents�the�significant�portion�of�time�he�is�required�to�spend�in�Houston)�and�an�executive�health�program.�
-
Mr.�Gray:�The�employer�match�pursuant�to�the�Canadian�Employee�Savings�Plan,�parking,�the�employer�portion�of�benefit� premiums,�a�club�membership�and�an�executive�health�program.��
-
Mr.�Connors:�A�vehicle�allowance,�parking,�the�employer�portion�of�benefit�premiums,�a�club�membership,�a�gym�membership� and�an�executive�health�program.�
-
Mr.�Conway:�A�$50,000�country�allowance�paid�to�Mr.�Conway�with�respect�to�his�responsibilities�over�the�Corporation’s� operations�in�Latin�America,�the�Middle�East�and�Australia,�a�vehicle�allowance,�parking,�the�employer�portion�of�benefit� premiums�and�a�club�membership.�
-
Mr.�Nuss:�A�USD�$30,000�country�allowance�paid�to�Mr.�Nuss�with�respect�to�his�responsibilities�over�the�Corporation’s�operations� in�Latin�America�(this�country�allowance�will�be�discontinued�at�the�end�of�2020�as�these�responsibilities�fully�transition�to�Mr.� Conway),�a�vehicle�allowance,�the�employer�portion�of�benefit�premiums,�employer�contribution�to�a�401(k)�plan�and�a�club� membership.���
-
Mr.�Edwards:�The�consulting�fee�described�in�Note�2�above.�Mr.�Edwards�does�not�receive�any�additional�perquisites�or�benefits� from�the�Corporation.��
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Page�|�57�
Ensign�Management�Information�Circular�|�2020�
Outstanding�Share�Based�Awards�and�Option�Based�Awards�
The�following�table�sets�forth�for�each�NEO�all�option�based�and�share�based�awards�outstanding�as�at� December�31,�2019.�
| Name | Option�BasedAwards | Share�BasedAwards(PSUs) | Share�BasedAwards(PSUs) | Share�BasedAwards(PSUs) | ||
|---|---|---|---|---|---|---|
| GrantDate (dd/mm/yyyy) |
#ofSecurities Underlying Unexercised Options(1)(2) (#) Option Exercise Price($) Option Expiration Date (dd/mm/yyyy) |
Valueof Un� Exercised in�the� Money Options(3) ($) |
Plan Year |
Numberof sharesor unitsof sharesthat havenot vested(#) |
Marketor payoutvalue ofshare� basedawards thathavenot vested(4) Marketor payoutvalue ofvested share�based awardsnot paidoutor distributed |
|
| Geddes, RobertH. Total: |
03/12/2014 02/12/2015 10/03/2017 05/04/2018 12/03/2019 |
200,000 250,000 150,000 130,000 95,000 825,000 10.37 7.30 7.98 5.60 5.69 31/12/2019 31/12/2020 31/12/2021 31/12/2022 31/12/2023 |
0 0 0 0 0 0 |
PSU PSU PSU 2017 2018 2019 |
141,444 146,115 204,131 491,690 |
$403,115 $416,428 $581,774 $1,401,317 �� �� �� |
| Gray, MichaelR. Total: |
02/12/2015 10/03/2017 05/04/2018 12/03/2019 |
20,000 50,000 50,000 28,500 7.30 7.98 5.60 5.69 31/12/2020 31/12/2021 21/12/2022 31/12/2023 |
0 0 0 0 |
PSU PSU PSU 2017 2018 2019 |
32,542 39,729 47,388 |
$92,744 $113,227 $135,055 $341,026 �� �� �� |
| 148,500 | 0 | 119,659 | ||||
| Connors, ThomasJ. Total: |
03/12/2014 02/12/2015 10/03/2017 05/04/2018 12/03/2019 |
75,000 100,000 50,000 50,000 28,500 303,500 10.37 7.30 7.98 5.60 5.69 31/12/2019 31/12/2020 31/12/2021 31/12/2022 31/12/2023 |
0 0 0 0 0 0 |
PSU PSU PSU 2017 2018 2019 |
47,686 56,537 55,298 159,521 |
$135,905 $161,130 $157,598 $454,633 �� �� �� |
| Conway, BrentJ. Total: |
12/03/2019 | 28,500 5.69 31/12/2023 |
0 | PSU 2019 |
32,894 | $93,749 $166,221 $259,970 �� �� |
| 28,500 | 0 | PSU 2019 |
58,323 | |||
| 0 | 91,217 | |||||
| Nuss, MichaelR. Total: |
03/12/2014 02/12/2015 10/03/2017 05/04/2018 12/03/2019 |
100,000 100,000 50,000 50,000 28,500 328,500 10.37 7.30 7.98 5.60 5.69 31/12/2019 31/12/2020 31/12/2021 31/12/2022 31/12/2023 |
0 0 0 0 0 0 |
PSU PSU PSU 2017 2018 2019 |
67,626 71,536 74,692 213,854 |
$192,734 $203,878 $212,872 $609,484 �� �� �� |
| Edwards, N.Murray Total: |
03/12/2014 02/12/2015 10/03/2017 05/04/2018 12/03/2019 |
200,000 250,000 150,000 130,000 95,000 825,000 10.37 7.30 7.95 5.60 5.69 31/12/2019 31/12/2020 31/12/2021 31/12/2022 31/12/2023 |
0 0 0 0 0 0 |
PSU PSU PSU 2017 2018 2019 |
99,361 102,643 145,808 347,812 |
$283,179 $292,531 $415,553 $991,263 �� �� �� |
(1) Composed�of�the�number�of�unexercised�options�as�at�December�31,�2019.�
(2) The�securities�underlying�the�options�granted�are�Common�Shares.�The�options�granted�vest�at�the�rate�of�20%�per�year,�on�a�cumulative� basis.�For�more�information,�see�the�section�entitled�“Stock�Option�Plan”.�
(3) All�option�values�have�been�determined�based�on�the�closing�price�for�Common�Shares�of�$2.85�on�December�31,�2019.�“In�the�money”� means�that�the�exercise�price�for�the�option�is�more�than�$2.85.��
(4) PSU�values�are�based�on�the�closing�price�for�Common�Shares�of�$2.85�on�December�31,�2019,�and�assume�a�payout�multiplier�of�1.0x.� PSUs�granted�in�2017�vested�on�December�31,�2019,�PSUs�granted�in�2018�vest�on�December�31,�2020�and�PSUs�granted�in�2019�vest�on� December�31,�2021.�The�value�of�all�PSU�awards�assumes�a�payout�multiplier�of�1.0x.��
Page�|�58�
Ensign�Management�Information�Circular�|�2020�
Payout�of�2017�PSU�Awards��
The�2017�award�of�PSUs�vested�on�December�31,�2019�and�were�paid�out�between�March�15,�2020�and� April�15,�2020.�The�table�below�shows�the�difference�between�the�grant�value�and�the�payout�value�for� each�NEO,�illustrating�the�at�risk�nature�of�these�awards.�The�NEOs�received�a�final�PSU�payout�that�was� 48%�of�the�grant�value�of�the�award.��
| #of | #of | FullTerm | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| PSUs | PSUsat | 2017 | 2018 | 2019 | Combined | |||||
| Grant | Granted | Maturity | Multiplier | Multiplier | Multiplier | Multiplier | FinalPSU | Payout%of | ||
| Name | Value(1) | (2) | (3) | (20%) | (20%) | (20%) | (40%) | Payout(4) | GrantValue | |
| Geddes,RobertH. | $717,175 | 110,675 | 144,453 | 0.758 | 1.469 | 0.348 | 0.859 | $343,996 | 48% | |
| Gray,Michael | $165,000 | 25,463 | 33,234 | 0.758 | 1.469 | 0.348 | 0.859 | $79,143 | 48% | |
| Connors,ThomasJ. | $241,787 | 37,313 | 48,701 | 0.758 | 1.469 | 0.348 | 0.859 | $115,974 | 48% | |
| Conway,BrentJ. | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | N/A | |
| Nuss,MichaelR.(5) | $342,891 | 52,915 | 69,065 | 0.758 | 1.469 | 0.348 | 0.859 | $164,469 | 48% | |
| Edwards,N.Murray | $503,800 | 77,747 | 101,475 | 0.758 | 1.469 | 0.348 | 0.859 | $241,650 | 48% |
- (1) Grant�values�are�determined�by�role.�Mr.�Geddes�and�Mr.�Edwards�received�a�PSU�grant,�in�2017,�having�a�value�of�125%�of�their�2017�base� annual�compensation;�Mssrs.�Gray,�Connors�and�Nuss�received�a�grant�having�a�value�of�75%�of�their�2017�base�annual�compensation.��
(2) The�number�of�PSUs�initially�granted�were�based�on�the�grant�value�divided�by�the�volume�weighted�average�price�of�the�Corporation’s� shares�for�the�10�trading�days�prior�to�the�grant�date�of�August�25,�2017,�being�$6.28.��
- (3) The�number�of�PSUs�that�matured�at�the�end�of�the�three�year�term�of�the�award�includes�additional�PSUs�received�as�reinvested�dividend� equivalents.��
(4) The�volume�weighted�average�price�of�the�Corporation’s�shares�for�the�10�trading�days�prior�to�the�maturity�date�of�December�31,�2019�was� $2.77.��
- (5) The�PSU�payout�for�Mr.�Nuss�was�converted�back�to�USD�at�the�same�rate�his�base�salary�was�converted�into�CAD�on�the�award�date�of� August�25,�2017,�being�CAD�$1.00�=�USD�$1.25.�
Calculation�of�Payout�Multiplier��
For�the�2017�PSU�awards�which�matured�on�Decmeber�31,�2019,�our�three�year�average�TSR�and�ROCE� for�the�performance�period�from�January�1,�2017�to�December�31,�2019,�relative�to�our�PSU�Performance� Peer�Group�and�weighted�as�to�20%�in�each�individual�year�and�40%�for�the�average�over�the�three�year� period,�resulted�in�an�overall�award�multipier�of�0.859x,�as�demonstrated�below:�
| PSUMultiplier | ||||
|---|---|---|---|---|
| Component | 2017 | 2018 | 2019 | 3YrAvg |
| RelativeTSRRank | 43.10% | 71.60% | 24.90% | |
| RelativeTSRMultiplier(67%) | 0.724x | 1.864x | 0.000x | 0.86x |
| ROCEActual | 45.70% | 41.70% | 51.40% | |
| ROCEMultiplier | 0.828x | 0.668x | 1.056x | 0.851x |
| CombinedMultiplier | 0.758x | 1.469x | 0.348x | 0.859x |
The�Compensation�Committee�reviewed�and�approved�the�multipliers�in�each�year�of�the�award�and�at� the�end�of�the�three�year�performance�period,�and�believes�that�the�payouts�are�appriopriate�in�light�of�
Page�|�59�
Ensign�Management�Information�Circular�|�2020�
original�grant�values,�market�conditions�during�the�applicable�years�included�in�the�performance�period,� our�relative�share�price�performance�and�our�relative�return�on�capital�employed�over�the�three�year�term� of�these�awards.��
Incentive�Plan�Awards�–�Value�Vested�or�Earned�During�the�Year�
The�following�table�sets�forth,�for�each�NEO,�the�value�of�option�based�and�share�based�awards�which� vested�during�the�year�ended�December�31,�2019,�and�the�value�of�non�equity�incentive�plan� compensation�earned�during�the�year�ended�December�31,�2019.�
| Option�BasedAwards | Share�BasedAwards | Non�EquityIncentivePlan | |
|---|---|---|---|
| –ValueVestedDuring | –ValueVested | Compensation–Value | |
| Name | theYear($)(1)(2) | DuringtheYear($)(3) | EarnedDuringtheYear($)(4) |
| Geddes,RobertH. | 0 | 403,115 | 485,303 |
| Gray,MichaelR. | 0 | 92,745 | 332,462 |
| Connors,ThomasJ. | 0 | 135,905 | 90,167 |
| Conway,BrentJ. | 0 | 0 | 117,424 |
| Nuss,MichaelR. | 0 | 192,734 | 152,651 |
| Edwards,N.Murray | 0 | 283,179 | 403,788 |
-
(1) Includes�options�which�vested�pursuant�to�the�Stock�Option�Plan�during�2019.���
-
(2) Option�based�awards :�Options�vest�at�the�rate�of�20%�per�annum.�Each�option�based�award�has�a�set�vesting�date�of�July�1� in�each�year.�As�such,�one�fifth�of�the�options�granted�to�each�NEO�in�2014,�2015,�2017,�2018�and�2019�vested�and�became� exercisable�in�2019.�The�value�of�option�based�awards�is�calculated�based�on�the�difference�between�the�market�value�of� the�Common�Shares�underlying�the�options�on�the�vesting�date�(July�2,�2019,�being�the�first�trading�day�following�the�vesting� date�of�July�1,�2019�–�$4.12)�and�the�exercise�price�of�the�options,�and�reflects�the�aggregate�value�realized�had�the�vested� options�been�exercised�on�the�vesting�date.
-
(3) Share�based�awards�(PSUs):� The�share�based�awards�outstanding�as�of�December�31,�2019�were�the�2017,�2018�and�2019� PSU�grants.�The�2017�grant�vested�December�31,�2019�and�are�payable�in�cash�in�2020.�The�2018�and�2019�grants�vest�on� December�31,�2020�and�December�31,�2021�respectively,�and�are�payable�in�cash�on�or�before�March�15,�2021�and�March� 15,�2022�respectively.�The�value�of�PSUs�for�this�purpose�is�calculated�based�on�the�market�value�of�the�Common�Shares� underlying�the�2017�award�of�PSUs�on�the�maturity�date�of�such�award�(being�December�31,�2019�–�$2.85),�and�assumes�a� multiplier�of�1.0x.
-
(4) Non�Equity�Incentive�Plan�Compensation :�Non�equity�incentive�plan�compensation�earned�for�the�2019�year�by�NEOs� includes�the�annual�cash�bonus,�as�well�as�the�one�time�extraordinary�bonus�of�$200,000�in�the�case�of�Mr.�Geddes,�Mr.� Gray�and�Mr.�Edwards,�described�further�above.�The�exchange�rate�used�to�convert�the�bonus�awarded�to�Mr.�Nuss�in�USD� is�as�of�December�31,�2019�(USD�$1.00�=�CAD�$1.30).��
None�of�the�Corporation’s�NEOs�realized�any�benefit�from�the�exercise�of�stock�options�in�the�year�ended� December�31,�2019.�
Page�|�60�
Ensign�Management�Information�Circular�|�2020�
Pension�Plan�Benefits�
The�Corporation�does�not�have�a�pension�plan�or�provide�other�retirement�plan�benefits.�
Termination�and�Change�of�Control�Benefits�
Ensign�does�not�have�written�employment�agreements�in�place�with�any�of�its�NEOs�which�provide�for� incremental�payments,�payables�or�benefits�upon�termination�(whether�voluntary,�involuntary�or� constructive),�resignation,�retirement,�a�change�in�control�of�the�Corporation�or�a�change�in�a�NEO’s� responsibilities.�Upon�termination�of�employment�for�any�reason,�such�executives�(as�with�other� employees)�would�be�entitled�to�benefits�for�a�severance�period�to�be�determined,�pursuant�to�applicable� law,�at�the�time�of�termination,�depending�upon�length�of�service,�age,�salary�level�and�a�number�of�other� factors.�
The�specific�provisions�of�the�Corporation’s�Stock�Option�Plan,�and�the�PSU�Plan�(which�was�implemented� in�2017),�govern�the�treatment�of�unvested�and�vested�Options�and�PSUs,�and�the�PSA�and�the�Employee� Savings�Plan�govern�the�treatment�of�unvested�shares�held�in�these�plans�on�the�cessation�of�employment,� including�on�a�change�of�control�(please�see�the�section�entitled�“Stock�Option�Plan”�below,�and�the� section�entitled�“Executive�Compensation�Components”�above,�for�further�details).�Depending�on�the� conditions�of�termination,�we�treat�NEOs�and�other�employees�as�follows:��
Page�|�61�
Ensign�Management�Information�Circular�|�2020�
| Termination | AnnualBonus | Employee | PerformanceShare | ||
|---|---|---|---|---|---|
| Type | Payment | Plan | StockOptions | SavingsPlan(1) | Units |
| Resignation | Allsalaryand | Cashbonusis | Vestedstock | Unvestedshares | MaturedPSUswhichhave |
| benefitprograms | forfeited. | optionsmustbe | heldintrustare | notyetbeenpaidasoflast | |
| cease. | exercisedwithin90 | forfeited. | dayofemploymentarepaid | ||
| days;unvested | inthenormalcourse. | ||||
| stockoptionsare | UnmaturedPSUsare | ||||
| forfeited. | forfeited. | ||||
| Termination | Allsalaryand | Cashbonusis | Vestedstock | Unvestedshares | MaturedPSUswhichhave |
| without | benefitprograms | forfeited. | optionsmustbe | heldintrustare | notyetbeenpaidasoflast |
| Cause | cease. | exercisedwithin90 | forfeited. | dayofemploymentarepaid | |
| Severanceprovided | days;unvested | inthenormalcourse. | |||
| onanindividual | stockoptionsare | UnmaturedPSUswill | |||
| basispursuantto | forfeited. | matureonapro�rated | |||
| applicablelaw, | basis,usingdaysof | ||||
| whichinmost | employmentwithinthe | ||||
| jurisdictionsreflects | Termrelativetothedaysin | ||||
| lengthofservice, | theTerm. | ||||
| position,age,salary | UnmaturedPSUsare | ||||
| levelandother | forfeited. | ||||
| applicablefactors. | |||||
| Termination | None.Allsalaryand | Cashbonusis | Vestedstock | Unvestedshares | MaturedPSUswhichhave |
| withCause | benefitprograms | forfeited. | optionsmustbe | heldintrustare | notyetbeenpaidasoflast |
| cease. | exercisedwithin90 | forfeited. | dayofemploymentarepaid | ||
| days;unvested | inthenormalcourse. | ||||
| stockoptionsare | UnmaturedPSUsare | ||||
| forfeited. | forfeited. | ||||
| Retirement | Allsalaryandbenefit | Cashbonusispaid | Vestedstock | Unvestedsharesheld | MaturedPSUswhichhave |
| (ageplus | programscease. | onapro�ratabasis. | optionsmustbe | intrustvestinan | notyetbeenpaidasoflast |
| yearsof | exercisedwithin90 | acceleratedmanner, | dayofemploymentare | ||
| serviceatthe | days;unvested | asattheretirement | paidinthenormalcourse. | ||
| timeof | stockoptionsare | date. | UnmaturedPSUsare | ||
| retirementis | forfeited. | subjecttoforfeiture. | |||
| equaltoor | |||||
| greaterthan | |||||
| 65). | |||||
| Deathor | Allsalaryandbenefit | Cashbonusispaid | Vestedstock | Unvestedsharesheld | AllunmaturedPSUsmature |
| Disability | programscease | onapro�ratabasis. | optionsmustbe | intrustvestinan | inanacceleratedmanner |
| (exceptforthe | exercisedwithin90 | acceleratedmanner | asofthedateofdeathor | ||
| payoutofapplicable | days;unvested | (onthedateof | permanentdisability. | ||
| lifeinsurance | stockoptionsare | death). | |||
| benefits). | forfeited. | ||||
| Changeof | Notrigger. | Notrigger. | Noaccelerated | Noaccelerated | Noacceleratedvesting |
| Control | vestingunless | vestingunless | unlessemploymentisalso | ||
| employmentisalso | employmentisalso | terminated. | |||
| terminated. | terminated. |
(1) The�Canadian�Employee�Savings�Plan�is�an�employee�benefit�plan�available�to�employees�resident�in�Canada�only.�Similar� plans�may�be�in�place�for�the�benefit�of�employees�in�the�Corporation’s�other�jurisdictions�of�operation.�
No�other�incremental�payments,�payables�and�benefits�are�triggered�by,�or�result�from,�a�change�of�control� scenario�for�compensation.�If�any�of�the�NEOs�were�terminated�following�a�change�of�control,�such� executives�would�be�entitled�to�salary,�annual�bonus�and�other�compensatory�benefits�for�a�severance�
Page�|�62�
Ensign�Management�Information�Circular�|�2020�
period�to�be�determined�at�the�time�of�such�change�of�control,�depending�upon�length�of�service,�age,� salary�level�and�a�number�of�other�factors.��
In�March�2017,�the�Compensation�Committee�adopted�certain�amendments�to�the�Stock�Option�Plan� (discussed�in�further�detail�in�the�section�below�entitled�“Stock�Option�Plan”).�The�amended�Stock�Option� Plan�added�a�“double�trigger”�with�respect�to�the�accelerated�vesting�of�options�upon�a�change�of�control.� Upon�a�change�of�control,�substitute�or�replacement�options�on�similar�terms�will�be�provided�to� participants.�Only�where�this�replacement�does�not�or�will�not�occur�upon�the�occurrence�of�the�change� of�control�for�any�reason,�would�outstanding�Options�vest�automatically.�The�replacement�stock�options� will�vest�immediately�if�the�executive�is�terminated�without�cause�or�is�constructively�terminated�within� 12�months�following�the�change�of�control.�Similar�change�in�control�provisions�are�applicable�to�PSUs.�
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Ensign�Management�Information�Circular�|�2020�
Executive�Equity�Ownership�Policy��
With�a�view�to�further�aligning�management’s�interests�with�those�of�the�Shareholders,�the�Corporation� has�implemented�a�policy�that�the�executive�officers�and�senior�managers�at�the�levels�listed�below�hold� the�level�of�equity�(being�Common�Shares�or�share�grants�or�units�having�the�same�economic�interest�as� Common�Shares)�outlined�below:�
| ExecutiveLevel | OwnershipRequirement |
|---|---|
| Chairman | 4timesannualconsultingfee |
| President&ChiefOperatingOfficer | 4timesbasesalary |
| ChiefFinancialOfficer,ExecutiveVicePresidents | 2timesbasesalary |
| andDivisionalPresidents | |
| SeniorVicePresidentsandVicePresidents | 1timesbasesalary |
Executive�officers�and�senior�managers�to�whom�this�policy�applies�must�reach�the�minimum�required� level�of�equity�ownership�within�five�(5)�years�of�their�date�of�promotion�or�appointment�to�the�executive� officer�or�senior�manager�level�position.�In�calculating�equity�ownership�for�officers,�the�aggregate�value� of�Common�Shares�or�share�grants�or�units�having�the�same�economic�interest�as�Common�Shares�is�used� (including�PSUs�at�target,�but�excluding�the�value�of�any�exercisable�and�vested�stock�options).�The� minimum�requirement�for�the�levels�noted�above�fluctuates�yearly�based�on�salary�changes�and�changes� to�the�price�of�the�Common�Shares.��
In�order�to�avoid�the�need�to�continuously�monitor�and�adjust�holdings�based�on�fluctuations�in� the�market�price�of�the�Common�Shares,�for�the�purposes�of�the�minimum�equity�ownership� requirement�applicable�to�the�Corporation’s�members�of�management,�the�value�of�equity� holdings�is�calculated�based�on�the�greater�of:��
-
i. The�current�market�value�of�the�Common�Shares;��
-
ii. The�market�value�of�the�Common�Shares�as�at�December�31�of�the�immediately�preceding� year;�and��
-
iii. The�acquisition�cost�of�such�Common�Shares.�
Once�the�applicable�threshold�is�met,�further�purchases�or�acquisitions�are�not�required�if�the�value�of�the� Common�Shares�held�decreases�solely�as�a�result�of�a�decline�in�the�trading�price�of�the�Common�Shares.� However,�if�the�value�decreases�for�any�other�reason�(i.e.�sale�of�Common�Shares),�such�member�of� Management�is�required�to�increase�the�value�of�his�or�her�investment�to�the�required�threshold.��
Due�to�the�suspension�in�2016�and�subsequent�termination�in�2017�of�the�Corporation’s�Performance� Share�Award�program,�which�historically�had�been�an�element�of�compensation�through�which�the� minimum�shareholding�requirement�was�intended�to�be,�in�part,�satisfied,�the�Compensation�Committee� has�determined�that�PSUs�currently�will�be�counted,�at�target,�towards�the�achievement�of�the�minimum� shareholding�requirement.�However,�for�any�executive�subject�to�this�requirement�who�has�not�met�his� or�her�requirement�through�ownership�of�actual�Common�Shares,�the�after�tax�proceeds�of�any�PSU� payment�(the�first�of�which�has�occurred�in�2020,�for�awards�granted�in�2017�and�which�matured�on�
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Ensign�Management�Information�Circular�|�2020�
December�31,�2019)�must�be�used�to�purchase�Common�Shares,�such�that�the�applicable�ownership�level� is�ultimately�met�through�ownership�of�actual�Common�Shares.�
As�of�December�31,�2019,�all�of�the�executive�officers�and�senior�managers�subject�to�this�policy�have� satisfied�their�ownership�requirements,�other�than�those�senior�managers�who�are�within�the�five�(5)�year� time�period�during�which�such�senior�managers�have�to�accumulate�these�holdings.�The�table�below� summarizes�the�share�ownership�levels�for�each�of�the�current�NEOs�as�of�March�20,�2020.��
| AsofDecember31,2019,alloftheexecutiveofficersandseniormanagerssubjecttothispolicyhave satisfiedtheirownershiprequirements,otherthanthoseseniormanagerswhoarewithinthefive(5)year timeperiodduringwhichsuchseniormanagershavetoaccumulatetheseholdings.Thetablebelow summarizestheshareownershiplevelsforeachofthecurrentNEOsasofMarch20,2020. |
AsofDecember31,2019,alloftheexecutiveofficersandseniormanagerssubjecttothispolicyhave satisfiedtheirownershiprequirements,otherthanthoseseniormanagerswhoarewithinthefive(5)year timeperiodduringwhichsuchseniormanagershavetoaccumulatetheseholdings.Thetablebelow summarizestheshareownershiplevelsforeachofthecurrentNEOsasofMarch20,2020. |
|---|---|
| NameandPrincipalPosition OwnershipRequirement MeetsRequirement Ownershipas atMarch20, 2020(#)(1) MultipleofCurrent BaseCompensation (CAD$) Requirement (CAD$) |
|
| Geddes,RobertH. President&ChiefOperating Officer 943,842 |
4x$700,000 $2,800,000 Yes–AcquisitionCost |
| Gray,MichaelR. ChiefFinancialOfficer 123,408 |
2x$325,000 $650,000 N/A(2) |
| Connors,ThomasJ. ExecutiveVicePresidentCanadian Operations 169,695 |
2x$380,000 $760,000 N/A(3) |
| Conway,BrentJ. ExecutiveVicePresident InternationalOperations 125,000 |
2x$400,000 $800,000 N/A(4) |
| Nuss,MichaelR. ExecutiveVicePresidentUnited States&LatinAmerican Operations 125,843 |
2x$500,500(5) $1,001,000 N/A(6) |
| Edwards,N.Murray Chairman 31,582,085 |
4x$500,000 $2,000,000 Yes–AcquisitionCost, December31,2019valueand March20,2020value |
(1) Includes�Common�Shares�beneficially�owned,�controlled�or�directed�by�the�NEO.�
(2) Mr.�Gray�has�until�October�2021,�being�5�years�from�his�appointment�to�the�office�of�Chief�Financial�Officer,�to�meet�the�requirement.��
(3) Mr.�Connors�has�until�August�2021,�being�5�years�from�his�appointment�to�the�office�of�Executive�Vice�President,�to�meet�the� requirement.�He�currently�meets�the�requirement�for�his�prior�position�of�Senior�Vice�President,�based�on�the�acquisition�cost�of�his� shares�and�the�inclusion�of�his�PSUs�at�target�(currently�permitted�by�our�policy,�as�described�above).�
(4) Mr.�Conway�has�until�December�2023,�being�5�years�from�his�appointment�to�the�office�of�Executive�Vice�President,�International� Operations,�to�meet�the�requirement.�
(5) For�reporting�purposes�and�consistency�throughout�this�Information�Circular,�current�base�compensation�levels�paid�in�US�dollars�(Mr.� Nuss�=�USD�$395,000)�have�been�translated�at�the�exchange�rate�on�December�31,�2019,�being�USD�$1.00�=�CAD�$1.30.�
(6) Mr.�Nuss�has�until�August�2021,�being�5�years�from�his�appointment�to�the�office�of�Executive�Vice�President,�United�States�&�Latin� American�Operations,�to�meet�the�requirement.�He�currently�meets�the�requirement�for�his�prior�position�of�Senior�Vice�President,� based�on�the�acquisition�cost�of�his�shares�and�the�inclusion�of�his�PSUs�at�target�(currently�permitted�by�our�policy,�as�described� above).�
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Ensign�Management�Information�Circular�|�2020�
SECTION�4�–�DIRECTOR�COMPENSATION�
Director�Compensation�Philosophy�and�Objectives��
In�2019,�all�non�management�Directors�of�the�Corporation�received�a�comprehensive�compensation� package�comprised�of�both�cash�and�equity�compensation,�as�follows:��
-
i. An�annual�retainer�in�the�form�of�a�cash�retainer;��
-
ii. An�annual�equity�retainer�in�the�form�of�deferred�share�units�(“ DSUs ”)�or�Common�Shares� pursuant�to�the�“Directors�Deferred�Share�Unit�and�Common�Share�Payment�Plan”�(described�in� detail�below);��
-
iii. Committee�chair�and�committee�member�cash�retainers;�and��
-
iv. Meeting�fees.��
Compensation�programs�and�levels�for�non�management�Directors�are�designed�to�attract�and�retain�high� quality�individuals�who�possess�experience�and�capabilities�appropriate�for�the�demands�of�the� Corporation’s�board,�and�to�align�the�interests�of�the�non�management�Directors�with�the�Shareholders.��
In�addition,�the�remuneration�package�for�Directors�is�intended�to�compensate�these�individuals�for�their� time�commitment,�the�discharge�of�their�responsibilities�and�the�accountabilities�of�serving�as�a�Director� of�the�Corporation.�
The�Corporate�Governance,�Nominations�&�Risk�Committee�(the�“ CGNR�Committee ”)�and�the�Board�of� Directors�as�a�whole�review�director�compensation�on�an�annual�basis�for�its�adequacy�in�light�of�the� foregoing�factors,�as�well�as�for�competitiveness�against�the�Corporation’s�peer�group.��
For�the�2019�year,�director�fees�had�been�restored�to�their�pre�2015�levels,�in�response�to�the� cautious�optimism�in�improving�market�conditions�that�prevailed�at�that�time�in�the�oilfield�services� industry.���
In�response�to�the�expected�impact�of�the�COVID�19�global�pandemic�on�commerce�and�energy� demand,�the�recent�rapid�deterioration�in�commodity�prices�and�related�market�disruptions,�on� March�20,�2020�the�Board�of�Directors�unanimously�agreed�to�a�20%�reduction�on�all�cash�retainers� and�a�40%�reduction�to�the�equity�retainer�(from�$100,000�per�year�to�$60,000�per�year).�These� reductions,�like�the�reductions�to�the�base�annual�compensation�for�NEOs,�will�come�into�effect�on� April�1,�2020.�These�measures�are�being�taken�to�demonstrate�leadership�in�a�period�of�uncertainty,� and�to�emphasize�the�importance�of�controlling�costs�at�all�levels�of�our�company.�
The�Board�of�Directors�continues�to�monitor�evolving�industry�conditions�and�may�make�further� adjustments�to�Director�compensation�as�may�be�deemed�appropriate�under�the�circumstances.��
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Ensign�Management�Information�Circular�|�2020�
Non�Management�Directors�–�Retainers�and�Fees:��
Director�compensation�for�2019�as�compared�with�2018,�and�current�2020�compensation,�is�as�follows:�
| CompensationDescription | 2020(1)(2) | 2019 | 2018(6) |
|---|---|---|---|
| BaseRetainer | $34,000 | $40,000 | $33,667 |
| BaseEquityRetainer(DSUor | DSUsorCommon | DSUsorCommon | DSUsorCommon |
| CommonShareRetainer) | Sharesvaluedat | Sharesvaluedat | Sharesvaluedat |
| $70,000 | $100,000 | $84,167 | |
| AuditCommitteeChairRetainer | $12,750 | $15,000 | $12,625 |
| CompensationCommitteeChair | $8,500 | $7,500 | $7,500 |
| Retainer | |||
| CommitteeChairperson | $6,375 | $7,500 | $6,313 |
| Retainer–othercommittees | |||
| LeadDirectorRetainer | $8,500 | $10,000 | $8,417 |
| CommitteeMemberRetainer(3) | $3,000 | $3,000 | $2,525 |
| AuditCommitteeMember | $4,250 | $5,000 | $4,208 |
| Retainer(3) | |||
| BoardandCommitteeMeeting | $1,500 | $1,500 | $1,307 |
| Attendance(4) | |||
| TravelAllowance(5) | $1,500/day | $1,500/day | $1,500/day |
(1) 2020�values�reflect�director�fees�at�2019�levels�from�January�1,�2020�until�March�31,�2020,�and�then�a�20%�reduction,� effective�April�1,�2020,�on�all�cash�retainers�over�the�remainder�of�the�year�(including�the�base�cash�retainer,�committee� chair�retainers,�committee�member�retainers�and�the�Lead�Director�retainer),�and�a�40%�reduction,�also�effective�April�1,� 2020,�on�the�base�equity�retainer�over�the�remainder�of�the�year.��
(2) The�next�regular�annual�review�of�non�management�Director�compensation�is�scheduled�to�take�place�in�November�2020.�
(3) Committee�chairs�do�not�also�receive�a�committee�member�retainer�for�the�same�committee.�
(4) Includes�meetings�held�in�person�and�by�telephone�conference�call;�includes�attendance�at�strategic�planning�sessions�with� members�of�the�Corporation’s�senior�management,�if�any,�held�in�the�year.�
(5) The�full�amount�of�the�travel�allowance�day�rate�is�paid�where�a�Director�flies�to�or�from�outside�North�America�to�attend�a� meeting.�Half�the�day�rate�($750)�is�paid�where�a�Director�flies�to�or�from�a�meeting�within�North�America,�where�the�flight� time�is�equal�to�or�greater�than�two�hours.�Out�of�pocket�expenses�are�also�reimbursed.��
(6) 2018�values�reflect�the�reversal,�effective�August�1,�2018,�of�half�of�the�20%�fee�reduction�implemented�in�January�2015.The� remainder�of�this�fee�reduction�was�re�instated�effective�January�1,�2019,�restoring�director�compensation�to�pre�2015�levels� for�the�2019�year.��
All�fees�(other�than�the�equity�retainer,�which�is�credited�or�paid�quarterly)�are�paid�to�Directors�annually,� in�December�of�the�year�in�which�the�fees�are�earned.�Fees�are�pro�rated�for�partial�service.�Where� applicable,�DSUs�are�credited�to�a�DSU�account�maintained�for�the�eligible�Director�on�a�quarterly�basis�and� Common�Shares�are�purchased�on�the�open�market�by�the�Corporation�on�a�quarterly�basis�and�are� transferred�to�each�eligible�Director.�Once�the�applicable�minimum�equity�holding�requirement�has�been�
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met�by�a�Director,�such�Director�can�elect�to�take�up�to�a�maximum�of�60%�of�the�equity�retainer�in�cash� instead�of�DSUs�or�Common�Shares.�
The�equity�component�of�the�annual�retainer�for�Directors�is�intended�to�ensure�an�alignment�of� interests�between�the�Directors�who�are�not�also�full�time�employees�of�the�Corporation,�and�those� of�the�Shareholders.
Equity�Based�Compensation�–�Directors�DSU�Plan�and�Common�Share�Payment�Plan�
The�Board�of�Directors�believes�that�equity�based�compensation�for�Directors�provides�for�greater� alignment�of�interests�between�Directors�and�Shareholders.�As�such,�non�management�Directors�receive� equity�based�compensation�in�the�form�of�Deferred�Share�Units�(notional�shares)�or�Common�Shares.�
Effective�January�1,�2011,�the�CGNR�Committee�implemented�a�deferred�share�unit�plan.�This�plan,�called� the�“Directors�Deferred�Share�Unit�and�Common�Share�Payment�Plan”�(the�“ DSU�Plan ”),�applies�to�non� management�Directors�of�the�Corporation.��
Pursuant�to�the�DSU�Plan,�eligible�Directors�may�be�awarded�DSUs,�or�may�elect�instead�to�receive�up�to� 100%�of�the�award�in�Common�Shares,�in�such�numbers�as�may�be�awarded�by�the�CGNR�Committee�from� time�to�time.�An�election�to�receive�Common�Shares�in�lieu�of�DSUs�lasts�for�one�year�and�once�made,�is� irrevocable�for�such�year.�If�a�Director�elects�to�receive�Common�Shares,�these�Common�Shares�are� purchased�on�the�open�market,�on�a�quarterly�basis,�at�the�prevailing�market�price�on�the�TSX�for�the� Common�Shares.�
DSUs�are�credited�quarterly�to�a�DSU�account�for�each�eligible�Director,�at�a�fair�market�value�based�upon� the�volume�weighted�average�trading�price�of�the�Common�Shares�on�the�TSX�for�the�five�(5)�trading�days� immediately�prior�to�the�date�the�DSUs�are�credited.�The�DSUs�may�not�be�redeemed�until�a�Director�has� ceased�to�hold�any�position�with�the�Corporation.�Following�the�date�the�eligible�Director�ceases�to�hold� any�position�with�the�Corporation,�he�or�she�will�have�until�July�1�of�the�following�calendar�year�to�redeem� his�or�her�awards�in�exchange�for�a�cash�payment�equal�to�the�number�of�DSUs�held�multiplied�by�the� volume�weighted�average�trading�price�of�the�Common�Shares�on�the�TSX�for�the�five�(5)�trading�days� immediately�prior�to�the�date�of�settlement,�adjusted�for�dividends.��
DSUs�are�regarded�as�equivalent�to�Common�Shares�for�the�sole�purpose�of�evaluating�a�Directors’� shareholdings�in�connection�with�the�minimum�shareholding�requirement�applicable�to�Directors.�Once� any�applicable�minimum�equity�holding�requirement�was�met�by�a�Director,�such�Director�can�elect�to� take�up�to�a�maximum�of�60%�of�the�equity�retainer�in�cash�instead�of�DSUs�or�Common�Shares.��
The�CGNR�Committee�may�amend,�suspend�or�terminate�the�DSU�Plan�at�any�time.��
Effective�January�1,�2019,�the�CGNR�Committee�increased�the�equity�retainer�to�$100,000�per�year,�which� represented�a�full�reinstatement�of�this�element�of�comepnsation�to�pre�2015�levels.�Effective�April�1,� 2020,�this�has�been�reduced�to�$60,000�per�year,�for�an�annualized�base�equity�retainer�of�$70,000.�
Approximately�49%�of�non�management�Directors�total�compensation�in�2019�was�paid�through�the� issuance�of�DSUs�or�Common�Shares,�and�the�remaining�51%�was�paid�in�cash.��
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Ensign�Management�Information�Circular�|�2020�
2019�Directors�Summary�Compensation�Table�
The�following�table�sets�forth,�for�the�year�ended�December�31,�2019,�information�concerning�the� compensation�paid�to�Directors�(other�than�Directors�who�are�also�NEOs,�being�Robert�H.�Geddes�and�N.� Murray�Edwards,�whose�compensation�information�is�provided�in�Section�3�–�Compensation�Discussion� and�Analysis).��
The�Corporation�does�not�provide�any�non�equity�incentive�plan�compensation�to�non�management� Directors.��
| Name | FeesEarned ($) |
Non�Cash Retainer ($)(1) |
Non�CashRetainer ElectedtoBe TakeninCash($)(1) |
AllOther Comp($)(2) |
TotalComp ($) |
|
|---|---|---|---|---|---|---|
| Casswell,GaryW. | 73,000 | 100,000 | 0 | 7,500 | 180,500 | |
| Howe,JamesB. | 79,500 | 40,000 | 60,000 | 0 | 179,500 | |
| Kangas,LenO. | 83,000 | 70,000 | 30,000 | 0 | 183,000 | |
| Moomjian,Jr.,CaryA. | 70,000 | 100,000 | 0 | 7,500 | 177,500 | |
| Schroeder,JohnG. | 85,000 | 100,000 | 0 | 0 | 185,000 | |
| Surkan,GailD. | 70,000 | 100,000 | 0 | 0 | 170,000 | |
| Whitham,BarthE. | 72,000 | 100,000 | 0 | 4,500 | 176,500 | |
| TOTAL: | 532,500 | 610,000 | 90,000 | 19,500 | 1,252,000 |
-
(1) “ Non�cash�retainer ”�includes�the�DSU�or�Common�Share�award�component�of�the�Directors�annual�retainer,�pursuant�to�the� DSU�Plan.�The�equity�retainer�values�reported�in�the�table�above�have�been�rounded�to�total�$100,000.�Actual�values,�without� rounding�(due�to�the�calculation�methods�for�the�DSU�and�Common�Shares�awarded),�are�shown�in�the�tables�immediately� below.���
-
(i) DSUs:�Eligible�(non�employee)�Directors�who�received�DSUs�in�2019�were�credited�such�DSUs�at�the�end�of�each�fiscal� quarter.�Mr.�Casswell,�Mr.�Schroeder�and�Ms.�Surkan�received�100%�of�their�equity�retainer�in�DSUs;�Mr.�Kangas�elected� to�receive�70%�of�his�quarterly�equity�retainer�in�DSUs,�with�30%�paid�in�cash�(as�to�40%�DSUs�in�each�of�Q1�and�Q1,� and�100%�DSUs�in�each�of�Q3�and�Q4);�Mr.�Moomjian�elected�to�receive�50%�of�his�quarterly�retainer�in�DSUs�and�50%� in�Common�Shares;�and�Mr.�Howe�elected�to�receive�40%�of�his�quarterly�equity�retainer�in�DSUs,�with�60%�paid�in� cash.��
| DSUs–100%(Casswell,Schroeder,Surkan) | DSUs–100%(Casswell,Schroeder,Surkan) | ||
|---|---|---|---|
| QuarterEnded | BasePrice($) | DSUsCredited(#) | ValueofDSUs($) |
| 31�Mar�19 | 5.4120 | 4,619 | 24,998 |
| 30�Jun�19 | 4.4263 | 5,648 | 25,000 |
| 30�Sep�19 | 3.0315 | 8,247 | 25,000 |
| 31�Dec�19 | 2.8297 | 8,835 | 25,000 |
| TOTAL: | 27,349 | 99,998 | |
| DSUs–70%Election(Kangas) | |||
| QuarterEnded | BasePrice($) | DSUsCredited(#) | ValueofDSUs($) |
| 31�Mar�19 | 5.4120 | 1,848 | 10,001 |
| 30�Jun�19 | 4.4263 | 2,259 | 9,999 |
| 30�Sep�19 | 3.0315 | 8,247 | 25,000 |
| 31�Dec�19 | 2.8297 | 8,835 | 25,000 |
| TOTAL: | 21,189 | 75,000 |
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Ensign�Management�Information�Circular�|�2020�
| DSUs–50%Election(Moomjian) | DSUs–50%Election(Moomjian) | |||
|---|---|---|---|---|
| QuarterEnded | BasePrice($) | DSUsCredited(#) | ValueofDSUs($) | |
| 31�Mar�19 | 5.4120 | 2,310 | 12,501 | |
| 30�Jun�19 | 4.4263 | 2,824 | 12,500 | |
| 30�Sep�19 | 3.0315 | 4,123 | 12,500 | |
| 31�Dec�19 | 2.8297 | 4,417 | 12,500 | |
| TOTAL: | 13,674 | 50,001 | ||
| DSUs–40% | Election(Howe) | |||
| QuarterEnded | BasePrice($) | DSUsCredited(#) | ValueofDSUs($) | |
| 31�Mar�19 | 5.4120 | 1,848 | 10,001 | |
| 30�Jun�19 | 4.4263 | 2,259 | 9,999 | |
| 30�Sep�19 | 3.0315 | 3,299 | 10,000 | |
| 31�Dec�19 | 2.8297 | 3,534 | 10,000 | |
| TOTAL: | 10,940 | 40,000 |
-
(ii) The�pricing�of�the�DSUs�paid�to�Directors�who�received�their�equity�retainer�in�the�form�of�DSUs�in�2019�is�based�on�the� volume�weighted�average�trading�price�of�the�Common�Shares�on�the�TSX�for�the�five�(5)�trading�days�prior�to�the�date� the�DSUs�are�credited.�
-
(iii) Common�Shares:�Eligible�(non�employee)�Directors�who�elected�to�receive�Common�Shares�in�2019�were�paid�such� Common�Shares�at�the�end�of�each�fiscal�quarter.�Mr.�Whitham�received�100%�of�his�equity�retainer�in�Common�Shares,� and�Mr.�Moomjian�elected�to�receive�50%�of�his�quarterly�retainer�in�DSUs�and�50%�in�Common�Shares.
Common�Shares�(Whitham)�
| QuarterEnded | BasePrice($) | CommonShares(#) | ValueofCommonShares ($) |
|---|---|---|---|
| 31�Mar�19 | 5.90 | 4,257 | 25,116 |
| 30�Jun�19 | 4.25 | 5,911 | 25,122 |
| 30�Sep�19 | 3.00 | 8,375 | 25,125 |
| 31�Dec�19 | 2.83 | 8,828 | 24,983 |
| TOTAL: | 27,371 | 100,346 |
| CommonShares–50% | Election(Moomjian) | ||
|---|---|---|---|
| QuarterEnded | BasePrice($) | CommonShares(#) | ValueofCommonShares ($) |
| 31�Mar�19 | 5.90 | 2,096 | 12,366 |
| 30�Jun�19 | 4.25 | 2,912 | 12,376 |
| 30�Sep�19 | 3.00 | 4,125 | 12,375 |
| 31�Dec�19 | 2.83 | 4,414 | 12,492 |
| TOTAL: | 13,547 | 49,609 |
(iv) The�aggregate�value�of�the�Common�Shares�paid�to�Directors�who�elected�to�receive�their�equity�retainer�in�the�form� of�Common�Shares�in�2019�is�based�on�the�acquisition�price�of�the�Common�Shares�on�the�TSX.�In�certain�instances,�as� a�consequence�of�the�Common�Shares�being�purchased�on�the�open�market,�the�Common�Share�credit�date�may�differ� from�the�trade�settlement�date.��
(2) “ All�other�compensation ”�includes�the�travel�allowance�amounts�paid�to�certain�Directors�in�2019.��
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Ensign�Management�Information�Circular�|�2020�
Directors�Fees�–�Breakdown��
The�following�table�sets�forth�a�detailed�breakdown�of�the�fees�earned�by�our�Directors�(other�than� Directors�who�are�also�NEOs,�being�Robert�H.�Geddes�and�N.�Murray�Edwards,�whose�compensation� information�is�provided�in�Section�3�–�Compensation�Discussion�and�Analysis),�for�the�year�ended� December�31,�2019:�
| ecember31,2019: | |||||||
|---|---|---|---|---|---|---|---|
| Retainer | Board | Committee | Travel | Equity | Other | ||
| Fees(1) | Meetings | Meetings | Allowance | Retainer(2) | (3) | Total | |
| Name | ($) | ($) | ($) | ($) | ($) | ($) | ($) |
| Casswell,GaryW. | 50,500 | 10,500 | 12,000 | 7,500 | 100,000 | 0 | 180,500 |
| Howe,JamesB. | 52,500 | 10,500 | 16,500 | 0 | 40,000 | 60,000 | 179,500 |
| Kangas,Len.O. | 60,500 | 10,500 | 12,000 | 0 | 70,000 | 30,000 | 183,000 |
| Moomjian,Jr.,CaryA. | 46,000 | 10,500 | 13,500 | 7,500 | 100,000 | 0 | 177,500 |
| Schroeder,JohnG. | 58,000 | 10,500 | 16,500 | 0 | 100,000 | 0 | 185,000 |
| Surkan,GailD. | 46,000 | 10,500 | 13,500 | 0 | 100,000 | 0 | 170,000 |
| Whitham,BarthE. | 48,000 | 10,500 | 13,500 | 4,500 | 100,000 | 0 | 176,500 |
| TOTAL: | 361,500 | 73,500 | 97,500 | 19,500 | 610,000 | 90,000 | 1,252,000 |
(1) Retainer�amounts�reported�include�the�annual�base�cash�retainer�plus�cash�retainer�amounts�for�committee�chairs�and� committee�membership.��
(2) See�Note�1�to�the�Directors�Summary�Compensation�Table for�a�description�of�the�calculation�of�the�equity�retainer,� comprised�of�DSUs�or�Common�Shares�credited�or�paid�to�Directors�in�2019.�Subject�to�qualifying�conditions,�certain� Directors�elected�to�take�a�portion�of�their�annual�equity�retainer�in�cash,�or�split�between�DSUs�and�Common�Shares.�
(3) Non�cash�retainer�elected�to�be�taken�in�cash.�
Directors’�Outstanding�Share�Based�Awards��
The�following�table�sets�forth�as�at�December�31,�2019�information�concerning�all�share�based�awards� outstanding�for�all�of�our�Directors,�other�than�Directors�who�are�also�NEOs�(whose�compensation� information�is�provided�in�Section�3�–�Compensation�Discussion�and�Analysis).����
| Share�BasedAwards | ||||
|---|---|---|---|---|
| MarketorPayoutValue | MarketorPayoutValue | |||
| #ofSharesorUnitsof | ofShare�BasedAwards | ofVestedShare�Based | ||
| SharesThatHaveNot | ThatHaveNotVested | AwardsNotPaidOutor | ||
| Name | Vested(1)(#) | ($) | Distributed(2)($) | |
| Casswell,GaryW. | 0 | 0 | 85,893 | |
| Howe,JamesB. | 0 | 0 | 41,362 | |
| Kangas,LenO. | 0 | 0 | 79,689 | |
| Moomjian,Jr.,CaryA. | 0 | 0 | 55,792(3) | |
| Schroeder,JohnG. | 0 | 0 | 107,827 | |
| Surkan,GailD. | 0 | 0 | 91,733 | |
| Whitham,BarthE. | N/A | N/A | N/A(3) |
(1) Although�DSUs�vest�immediately�upon�being�credited�to�a�participant’s�account,�in�accordance�with�the “Directors�Deferred� Share�Unit�and�Common�Share�Payment�Plan”,�DSUs�cannot�be�redeemed�until�after�retirement�or�other�separation�of� service�of�the�Director.�
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Ensign�Management�Information�Circular�|�2020�
-
(2) Calculated�based�on�the�closing�price�of�the�Common�Shares�on�December�31,�2019�of�$2.85�multiplied�by�the�accumulated� number�of�DSUs�credited�to�the�Director�on�such�date,�including�DSU�equivalents�issued�in�lieu�of�cash�dividends�paid�on�the� underlying�Common�Shares,�for�the�period�from�the�grant�date�to�December�31,�2019�(being�a�total�of�162,209�DSUs:� Casswell�–�30,138;�Howe�–�14,513;�Kangas�–�27,961;�Moomjian�–�19,576;�Schroeder�–�37,834;�and�Surkan�–�32,187).���
-
(3) Pursuant�to�the�DSU�Plan,�Mr.�Moomjian�elected�to�receive�50%�of�his�equity�retainer�in�Common�Shares�and�50%�of�his� equity�retainer�in�DSUs,�and�Mr.�Whitham�elected�to�receive�Common�Shares�in�lieu�of�DSUs�in�2019.��
The�Corporation�has�not�granted�options�to�non�management�Directors�since�2007�and�the�amended� Stock�Option�Plan�approved�by�Shareholders�at�the�annual�and�special�meeting�of�the�Shareholders�held� on�May�20,�2009�no�longer�permits�any�such�grants�to�Directors.��
Directors’�Incentive�Plan�Awards�–�Value�Vested�or�Earned�During�the�Year�
The�only�share�based�awards�granted�by�the�Corporation�are�pursuant�to�the�“Directors�Deferred�Share� Unit�and�Common�Share�Payment�Plan”,�instituted�in�2011�by�the�Corporation�for�Directors�who�are�not� also�full�time�employees�of�the�Corporation.�All�of�these�awards�vested�on�their�credit�or�payment�date.� DSUs�expire�on�July�1�of�the�calendar�year�immediately�following�the�year�in�which�a�holder�ceases�to�be� a�Director.�The�value�excludes�dividend�equivalents�credited�to�such�Director’s�DSU�account�and�dividends� paid�on�Common�Shares�during�the�year�ended�December�31,�2019.�
| aidonCommonSharesduringthe | yearendedDecember31,2019. |
|---|---|
| Name | Share�BasedAwards–ValueVestedDuringtheYear($)(1) |
| Casswell,GaryW. | 99,357 |
| Howe,JamesB. | 39,745 |
| Kangas,LenO. | 69.993 |
| Moomjian,Jr.,CaryA. | 98,586(2)(49,678DSUsand48,908CommonShares) |
| Schroeder,JohnG. | 99,357 |
| Surkan,GailD. | 99,357 |
| Whitham,BarthE. | 98,920(2) |
- (1) DSUs :�Calculated�based�on�the�closing�price�of�the�Common�Shares�on�the�credit�date,�multiplied�by�the�number�of�DSUs� credited.�In�2018,�Mr.�Moomjian�elected�to�receive�50%�of�his�quarterly�equity�award�in�DSUs�and�50%�in�Common�Shares,� Mr.�Howe�elected�to�take�40%�of�his�quarterly�equity�retainer�in�DSUs�(the�remaining�60%�was�paid�in�cash);�and�Mr.�Kangas� elected�to�take�70%�of�his�overall�annual�equity�retainer�in�DSUs�(the�remaining�30%�was�paid�in�cash),�as�to�40%�DSUs�in� each�of�the�first�and�second�quarters�of�2019,�and�100%�DUSs�in�each�of�the�third�and�fourth�quarters�of�2019.�
| DSUs–100%Election(Casswell,Schroeder,Surkan): | DSUs–100%Election(Casswell,Schroeder,Surkan): | ||
|---|---|---|---|
| CreditDate | ClosingPrice($) | DSUsCredited(#) | ValueVested($) |
| 31�Mar�19 | 5.35 | 4,619 | 24,712 |
| 30�Jun�19 | 4.29 | 5,648 | 24,230 |
| 30�Sep�19 | 3.06 | 8,247 | 25,236 |
| 31�Dec�19 | 2.85 | 8,835 | 25,180 |
| TOTAL: | 27,349 | 99,357 |
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| DSUs–70%Election(Kangas) | DSUs–70%Election(Kangas) | ||
|---|---|---|---|
| CreditDate | ClosingPrice($) | DSUsCredited(#) | ValueVested($) |
| 31�Mar�19 | 5.35 | 1,848 | 9,887 |
| 30�Jun�19 | 4.29 | 2,259 | 9,691 |
| 30�Sep�19 | 3.06 | 8,247 | 25,236 |
| 31�Dec�19 | 2.85 | 8,835 | 25,180 |
| TOTAL: | 21,189 | 69,993 | |
| DSUs–50%Election(Moomjian) | |||
| CreditDate | ClosingPrice($) | DSUsCredited(#) | ValueVested($) |
| 31�Mar�19 | 5.35 | 2,310 | 12,359 |
| 30�Jun�19 | 4.29 | 2,824 | 12,115 |
| 30�Sep�19 | 3.06 | 4,123 | 12,616 |
| 31�Dec�19 | 2.85 | 4,417 | 12,588 |
| TOTAL: | 13,674 | 49,678 | |
| DSUs–40%Election(Howe) | |||
| CreditDate | ClosingPrice($) | DSUsCredited(#) | ValueVested($) |
| 31�Mar�19 | 5.35 | 1,848 | 9,887 |
| 30�Jun�19 | 4.29 | 2,259 | 9,691 |
| 30�Sep�19 | 3.06 | 3,299 | 10,095 |
| 31�Dec�19 | 2.85 | 3,534 | 10,072 |
| TOTAL: | 10,940 | 39,745 |
(2) Common�Shares :�Mr.�Whitham�elected�to�receive�Common�Shares�in�lieu�of�DSUs�in�2019.�Mr.�Moomjian�elected�to�receive� 50%�of�his�quarterly�equity�retainer�in�DSUs�and�50%�in�Common�Shares.�As�a�consequence�of�the�Common�Shares�being� purchased�on�the�open�market,�the�Common�Share�credit�or�award�date�may�differ�from�the�trade�settlement�date.� Calculated�based�on�the�closing�price�of�the�Common�Shares�on�the�award�date,�multiplied�by�the�number�of�Common�Shares� awarded.��
| COMMONSHARES(Whitham): | COMMONSHARES(Whitham): | ||
|---|---|---|---|
| AwardDate | ClosingPrice($) | CommonShares(#) | Valuevested($) |
| 31�Mar�19 | 5.35 | 4,257 | 22,775 |
| 30�Jun�19 | 4.29 | 5,911 | 25,358 |
| 30�Sep�19 | 3.06 | 8,375 | 25,628 |
| 31�Dec�19 | 2.85 | 8,828 | 25,160 |
| TOTAL: | 27,371 | 98,920 |
| COMMONSHARES–50%Election(Moomjian): | COMMONSHARES–50%Election(Moomjian): | ||
|---|---|---|---|
| AwardDate | ClosingPrice($) | CommonShares(#) | Valuevested($) |
| 31�Mar�19 | 5.35 | 2,096 | 11,214 |
| 30�Jun�19 | 4.29 | 2,912 | 12,492 |
| 30�Sep�19 | 3.06 | 4,125 | 12,623 |
| 31�Dec�19 | 2.85 | 4,414 | 12,580 |
| TOTAL: | 48,908 |
Page�|�73�
Ensign�Management�Information�Circular�|�2020�
SECTION�5�–�STATEMENT�OF�CORPORATE�GOVERNANCE�PRACTICES�
National�Instrument�58�101�entitled�“Disclosure�of�Corporate�Governance�Practices”�(“ NI�58�101 ”)� requires�that�if�management�of�an�issuer�solicits�proxies�from�its�security�holders�for�the�purpose�of� electing�directors,�that�certain�prescribed�disclosure�respecting�corporate�governance�matters�be� included�in�its�management�information�circular.�The�Toronto�Stock�Exchange�(“ TSX ”)�also�requires�listed� companies�to�provide,�on�an�annual�basis,�the�corporate�governance�disclosure�which�is�prescribed�by� NI�58�101.�
The�Board�of�Directors�of�Ensign�is�responsible�for�the�overall�stewardship�and�governance�of�the� Corporation,�and�has�put�in�place�standards�and�benchmarks�by�which�that�responsibility�can�be� measured.�
Director�Independence��
The�Board�of�Directors�of�Ensign�has�determined�that�a�majority�of�Directors�(seven�of�the�nine�Directors)� standing�for�election�are�considered�to�be�independent�within�the�meaning�of�NI�58�101.�
The�CGNR�Committee�and�the�Board�reviews�annually�the�relationship�that�each�Director�has�with�the� Corporation�(either�directly,�or�as�a�partner,�shareholder�or�officer�of�an�organization�that�has�a� relationship�with�the�Corporation).�Following�this�review,�only�those�Directors�who�the�Board�and�the� CGNR�Committee�affirmatively�determine�have�no�direct�or�indirect�material�relationship�with�the� Corporation�will�be�considered�independent�directors.�
The�following�table�illustrates�the�independence�status�of�each�Director�nominee:�
| Director | IndependenceStatus | BasisforDeterminationofNon�Independence |
|---|---|---|
| Edwards,N.Murray | Non�independent | AsasignificantshareholderandasChairmanofthe |
| (Chairman) | Corporation,Mr.Edwardshassubstantialinfluencefrom | |
| theBoardofDirector’sperspectiveontheCorporation's | ||
| businessapproach,strategies,practicesandculture. | ||
| Geddes,RobertH. | Non�independent | Mr.Geddes,President&ChiefOperatingOfficerofthe |
| Corporation,isnotconsideredtobeanindependent | ||
| directorduetohiscurrentroleasanofficerofthe | ||
| Corporation. | ||
| Casswell,GaryW. | Independent | N/A |
| Howe,JamesB. | Independent | N/A |
| Kangas,LenO. | Independent | N/A |
| (LeadDirector) | ||
| Moomjian,Jr.CaryA. | Independent | N/A |
| Schroeder,JohnG. | Independent | N/A |
| Surkan,GailD. | Independent | N/A |
| Whitham,BarthE. | Independent | N/A |
Page�|�74�
Ensign�Management�Information�Circular�|�2020�
As�noted�above,�the�Board�of�Directors�has�determined�that�the�Chairman�of�the�Board�of�Directors,�N.� Murray�Edwards,�is�not�an�independent�director.�The�Board�of�Directors,�in�conjunction�with�the�CGNR� Committee�has�developed�a�broad�mandate�for�the�CGNR�Committee�(of�which�Mr.�Edwards�is�not�a� member),�which�includes�managing�and�developing�a�more�effective�board�and�ensuring�that�the�Board� of�Directors�can�function�independently�of�management.��
The�Corporation’s�bylaws�do�not�permit�a�second�or�casting�vote�by�the�Chairman�in�the�event�of�a�tie.��
To�provide�additional�leadership�to�its�independent�Directors,�the�Board�of�Directors�encourages�all� Directors�to�add�agenda�items�to�any�Board�of�Directors�meeting�or�to�the�meeting�of�any�committee.� Further,�the�Chairman�of�the�CGNR�Committee�(who�currently�is�also�the�Lead�Director)�acts�as�the�chair� for�the�“in�camera”�session�of�each�Board�of�Directors�meeting,�during�which�the�independent�Directors� are�provided�with�an�opportunity�to�express�views�in�the�absence�of�members�of�management.��
Lead�Director��
On�March�14,�2013,�the�Board�of�Directors�accepted�a�recommendation�of�the�CGNR�Committee�and� approved�the�establishment�of�a�lead�director�role,�which�would�be�assumed�by�the�Chair�of�the�CGNR� Committee,�who�is�an�independent�director�or,�at�the�discretion�of�the�independent�directors,�by�another� independent�director.�This�provides�the�independent�directors�flexibility�in�determining�who�is�best�to� lead�the�independent�directors�as�circumstances�dictate.��
The�Lead�Director�is�charged�with�providing�independent�leadership�to�the�Board�in�circumstances� where�the�non�independent�Chairman�could�potentially�be�in�conflict,�or�at�any�other�time�the�Board� determines�that�leadership�of�a�Lead�Director�is�appropriate.�Mr.�Kangas�currently�serves�as�Lead� Director.
Other�Issuer�Directorships��
There�is�no�formal�limit�placed�on�the�number�of�public�corporation�directorships�that�a�Director�may� have.�However�the�Corporation’s�Directors�are�encouraged�to�consult�with�the�CGNR�Committee�when� considering�any�appointment�to�the�board�of�another�public�company,�so�that�such�Committee�may� ensure�that�the�Director’s�other�commitments,�including�to�such�other�proposed�public�board,�do�not� interfere�with�the�time�commitment�required�by�the�Corporation’s�Board�of�Directors.�Moreover,�the� Corporation’s�Code�of�Integrity,�Business�Ethics�and�Conduct�prohibits�a�Director�from�acting�as�a�director,� officer�or�in�any�other�role�of�any�other�entity�engaged�in�the�oil�and�gas�drilling�and/or�service�business� and�which�competes�directly�or�indirectly�with�any�activity�of�the�Corporation.��
In�addition�to�the�foregoing,�the�Board’s�mandate�does�not�specifically�prohibit�interlocking�Board� positions.�The�Board�prefers�to�examine�each�situation�on�its�own�merits�with�a�view�to�examining�material� relationships�which�may�affect�a�Director’s�independence.�There�are�no�current�interlocking�Board� memberships�among�our�Directors.�
The�CGNR�Committee�is�of�the�view�that�each�Director�was�in�2019,�and�will�be�for�2020,�able�to�devote� the�time�and�resources�necessary�for�the�proper�discharge�of�his�or�her�duties�as�a�Director.�The�table� below�sets�forth�the�current�directorships�of�other�issuers�held�by�Ensign’s�Director�nominees:�
Page�|�75�
Ensign�Management�Information�Circular�|�2020�
| NameofDirector | NamesofOtherReportingIssuers | ||
|---|---|---|---|
| Casswell,GaryW. | NorthernDrillingLtd.(OsloBors) | ||
| NorthernOceanLtd.(OsloBors) | |||
| Edwards,N.Murray | CanadianNaturalResourcesLimited(TSX,NYSE) | ||
| MagellanAerospaceCorporation(TSX) | |||
| Howe,JamesB. | BengalEnergyLtd.(TSX) | ||
| PasonSystemsInc.(TSX) | |||
| Whitham,BarthE. | IntrepidPotashInc.(NYSE) | ||
| QEPResources,Inc.(NYSE) |
“In�Camera”�Sessions�of�the�Independent�Directors��
The�agenda�for�each�Board�of�Directors�meeting�and�each�committee�meeting,�whether�regularly� scheduled�or�specially�convened,�includes�an�“in�camera”�session�which�takes�place�towards�or�at� the�end�of�each�such�meeting.�
The�“in�camera”�session�includes�only�the�independent�Directors,�absent�the�Directors�who�are�members� of�management,�being�Robert�H.�Geddes,�the�President�&�Chief�Operating�Officer�of�the�Corporation,�N.� Murray�Edwards,�the�Corporation’s�Chairman,�and�any�other�member�of�management�present�at�such� Board�of�Directors�or�committee�meeting.��
The�Lead�Director�acts�as�chairperson�of�each�“in�camera”�session�of�the�Board�of�Directors.�The�Lead� Director�or�chairperson�of�each�“in�camera”�session�reports�any�items�of�business�that�arose�or�resolutions� passed�during�such�session�to�the�Corporate�Secretary�of�the�Corporation�immediately�following�each� such�“in�camera”�session.�
Page�|�76�
Ensign�Management�Information�Circular�|�2020�
2019�Board�and�Committee�Meeting�Attendance��
The�overall�average�attendance�for�all�meetings�of�the�Board�of�Directors�and�its�committees�held�in�2019� was�99.2%.�The�specific�attendance�record�of�each�Director�for�all�Board�of�Directors�meetings�and� meetings�of�any�committee�of�the�Board�of�Directors�for�the�financial�year�ended�December�31,�2019�is� set�forth�below:�
| meetingsofanycomm setforthbelow: |
itteeoftheB | oardofDire | ctorsforthe | financialyeare | ndedDecember | 31,2019is |
|---|---|---|---|---|---|---|
| Corporate | ||||||
| Governance, | Health,Safety | |||||
| Boardof | Audit | Comp. | Nominations& | &Environment | ||
| Directors | Committee | Committee | RiskCommittee | Committee | Overall | |
| Director | Meetings(2) | Meetings(2) | Meetings(2) | Meetings(2) | Meetings(2) | Attendance |
| Edwards,N.Murray(1) | 7/7 | ��� | ��� | ��� | ��� | 100% |
| Geddes,RobertH.(1) | 7/7 | ��� | ��� | ��� | ��� | 100% |
| Casswell,GaryW. | 7/7 | ��� | ��� | 4/4 | 4/4 | 100% |
| Howe,JamesB. | 7/7 | 6/6 | 5/5 | ��� | ��� | 100% |
| Kangas,LenO. | 7/7 | ��� | ��� | 4/4 | 4/4 | 100% |
| Moomjian,Jr.,CaryA. | 7/7 | ��� | 5/5 | 4/4 | ��� | 100% |
| Schroeder,JohnG. | 7/7 | 6/6 | 5/5 | ��� | ��� | 100% |
| Surkan,GailD. | 7/7 | ��� | 5/5 | 4/4 | ��� | 100% |
| Whitham,BarthE. | 7/7 | 5/6 | ��� | ��� | 4/4 | 94% |
(1) As�members�of�management,�Mr.�Edwards�and�Mr.�Geddes�may�attend,�and�in�practice�do�regularly�attend,�committee� meetings�but�do�not�serve�on�any�of�the�Committees�of�the�Board�of�Directors.��
(2) In�camera�meetings�without�Directors�who�are�also�members�of�management�were�held�at�the�end�of�each�Board�and� Committee�meeting�that�took�place�in�2019.�Directors�in�attendance�at�each�of�the�meetings�indicated�in�this�table�were� also�in�attendance�for�the�in�camera�portion�of�such�meetings.��
Board�Mandate��
The�Board�of�Directors�has�the�obligation�to�oversee�the�conduct�of�the�business�of�the�Corporation�and� to�supervise�senior�management�who�are�responsible�for�the�day�to�day�conduct�of�the�business.�A�copy� of�the�mandate�of�the�Board�of�Directors�is�included�in�Schedule�1�at�the�end�of�this�Information�Circular.��
The�Corporation’s�corporate�governance�guidelines�state�that�the�Board�of�Directors�is�responsible�for�the� stewardship�of�the�Corporation�and�supervising�the�management�of�the�business�and�affairs�of�the� Corporation.�Accordingly,�the�Board�of�Directors,�through�its�quarterly�meetings�and�meetings�of�its� committees,�and�through�its�directions�to�management�and�policies�and�resolutions�of�the�Board,� regularly�reviews�and�supervises�the�business�and�affairs�of�the�Corporation.�In�addition,�the�Board�of� Directors,�in�conjunction�with�senior�management,�determines�the�limits�of�management’s�authority�and� responsibility�and�establishes�and�monitors�the�corporate�objectives�which�management�is�responsible� for�meeting.�
The�Board�of�Directors�has�developed�written�position�descriptions�for�the�Chairman�of�the�Board�of� Directors�and�the�Chairman�of�each�Committee�of�the�Board�of�Directors.�
The�Corporation�does�not�have�a�named�CEO.�This�role�is�delegated�by�the�Board�of�Directors�to�the� Executive�Management�Committee,�currently�composed�of�the�senior�executives�of�the�Corporation� acting�in�the�following�capacities:�Chairman,�President�&�Chief�Operating�Officer,�Chief�Financial�Officer�
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and�Executive�Vice�President.�Collectively,�these�positions�carry�the�responsibilities�normally�associated� with�a�CEO.��
Committees�and�Committee�Composition��
The�Board�of�Directors�currently�has�four�(4)�standing�committees:�the�Audit�Committee,�CGNR� Committee,�the�Compensation�Committee�and�the�HSE�Committee.�All�Committees�are�composed�entirely� of�independent�Directors.��
The�CGNR�Committee,�which�is�composed�entirely�of�independent�Directors,�reviews�the�makeup�of�the� Board�and�its�Committees�on�an�annual�basis.�This�Committee�then�acts�as�a�nominating�committee�to� consider�if�and�when�new�directors�are�to�be�proposed�as�additions�to,�or�to�fill�vacancies�of,�the�Board�of� Directors,�having�regard�to�the�competencies,�skills�and�personal�qualities�of�the�candidates�and�the� members�of�the�Board�of�Directors�and�their�perception�of�the�needs�of�the�Corporation.�
The�Board�of�Directors�periodically�considers�whether�additional�committees�are�required�or�whether�the� mandates�of�existing�committees�should�be�expanded�to�include�additional�areas�of�responsibility�and� consideration.��
Director�Skills�and�Experience�
Directors�are�only�nominated�if�they�have�an�appropriate�mix�of�skills,�knowledge�and�business�experience,� and�a�history�of�achievement.�This�experience�is�critical�for�the�Board�to�provide�effective�oversight�and� support�our�future�growth.��
The�CGNR�Committee�has�developed�a�skills�and�experience�matrix,�which�is�used�to�assess�the� composition�of�the�Board�and�as�a�tool�to�assist�in�the�assessment�and�recruitment�of�potential�candidates� for�the�Board�of�Directors.
In�addition�to�the�identified�skills�and�experience�qualifications,�candidates�must�exhibit�the�highest� degree�of�professionalism,�integrity,�values�and�independent�judgment.
The�age�and�gender�of�current�and�prospective�Directors�are�also�considered�in�the�matrix.�The�objective� is�to�maintain�a�sufficient�range�of�skills,�expertise,�experience�and�diversity�necessary�to�enable�the�Board� as�a�whole�to�carry�out�its�responsibilities�effectively.�
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| Skills&Experience | Edwards Geddes Casswell Howe Kangas Moomjian Schroeder Surkan Whitham |
Edwards Geddes Casswell Howe Kangas Moomjian Schroeder Surkan Whitham |
Edwards Geddes Casswell Howe Kangas Moomjian Schroeder Surkan Whitham |
Edwards Geddes Casswell Howe Kangas Moomjian Schroeder Surkan Whitham |
Edwards Geddes Casswell Howe Kangas Moomjian Schroeder Surkan Whitham |
Edwards Geddes Casswell Howe Kangas Moomjian Schroeder Surkan Whitham |
Edwards Geddes Casswell Howe Kangas Moomjian Schroeder Surkan Whitham |
Edwards Geddes Casswell Howe Kangas Moomjian Schroeder Surkan Whitham |
Edwards Geddes Casswell Howe Kangas Moomjian Schroeder Surkan Whitham |
|---|---|---|---|---|---|---|---|---|---|
| BoardofDirectorExperience:Priororcurrentexperienceas aboardmemberofamajororganization(public,privateor non�profit). |
X | X | X | X | X | X | X | X | X |
| SeniorLeadershipExperience:Experiencedrivingstrategic insightanddirection,achievinginnovationandgrowthina private,publicorgovernmentalinstitution. |
X | X | X | X | X | X | X | X | X |
| StrategicPlanning:Experiencewithplanning,evaluatingand implementingastrategicplan;demonstratedabilitytofocus onlongertermgoalsandstrategicoutcomes. |
X | X | X | X | X | X | X | X | |
| IndustrySpecialist:Experienceinoilfieldservicesoroiland gasexplorationandproduction;knowledgeofcustomers, markets,operationalchallenges,strategies,regulatory mattersandtechnology. |
X | X | X | X | X | X | X | X | |
| FinancialExpertise:Executiveexperienceinfinancial accounting,reportingandknowledgeofotherconsiderations andissuesassociatedwithauditingrequirementsofpublic companies;experienceincorporatefinancewith demonstratedknowledgeofdebtandequitymarkets,M&A activities,tax,investorrelationsandinsurance. |
X | X | X | X | |||||
| InternationalExperience:Seniorexecutiveexperienceinan organizationwithglobaloperations;understandingof cultural,politicalandregulatoryrequirementsoutsideof NorthAmerica. |
X | X | X | X | X | ||||
| Compensation:Executiveorboardcompensationcommittee experience,leadingtoathoroughunderstandingof compensation,benefits,incentives,equityandperquisites. |
X | X | X | X | X | X | X | X | |
| HumanResources:Executiveorboardexperiencein attracting,promoting,developingandretainingpersonnel, includingsuccessionplanningandtalentmanagement |
X | X | X | X | X | X | |||
| Health,Safety,Environment:Understandingofindustry regulationsandrequirementsrelatedtoworkplacehealth, safetyandenvironment. |
X | X | X | X | X | X | |||
| Legal:Experienceinlitigation,contracts,internationallegal systemsandsecurities/capitalmarketsregulatory framework. |
X | ||||||||
| RiskManagement:Experienceintheprocessofidentifying andmanagingprincipalcorporaterisks. |
X | X | X | X | X | X | X | X | X |
| SecuritiesandCapitalMarkets:Experienceindomesticand cross�bordertransactions(includingdebt,equityand financingtransactions),includingstructure,regulatory complianceanddisclosureobligations. |
X | X | X | X | X |
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Director�Orientation��
Under�the�Corporation’s�orientation�program,�senior�management,�along�with�certain�Directors,�provide� orientation�to�new�Directors.�In�addition,�new�Directors�are�provided�background�material�regarding�the� Corporation�that�include,�among�other�things,�details�on�the�Corporation’s�financial�operating�results,� investor�presentations,�philosophy�and�policies,�corporate�management�and�legal�structure,�a�list�of�all� corporate�divisions�and�their�principal�business�activities�and�industry�information.�Field�visits�are� arranged�as�appropriate.��
The�most�recent�orientation�of�a�new�Director�took�place�in�the�fall�of�2017,�before�Mr.�Casswell�joined� the�Board�on�December�4,�2017.�Mr.�Casswell�was�provided�extensive�materials�and�met�with�members� of�management�and�certain�members�of�the�Board�of�Directors�in�Calgary,�Alberta,�to�familiarize�himself� with�our�industries,�geographic�regions�of�operation,�assets�and�equipment,�financial�results,�debt� structure�and�balance�sheet,�vision�and�strategies,�policies,�governance�practices,�compensation� structure,�succession�planning,�insurance�program,�and�our�budgeting�and�forecasting�processes.�
Director�Education��
At�regularly�scheduled�meetings,�the�Board�of�Directors�receives�and�discusses�reports�concerning�the� operations�and�financial�results�of�the�Corporation�and�each�of�its�business�segments.�These�reports� provide�Directors�ongoing�operational�information�relevant�to�market�conditions�and�trends�impacting� short�and�long�term�divisional�results�and�are�important�in�the�Board�of�Directors’�ability�to�provide� strategic�direction.��
Quarterly�presentations�are�held�on�topics�relevant�to�the�Directors’�understanding�of�the� Corporation’s�business�or�their�role�as�a�Director,�and�to�educate�and�inform�them�of�relevant�matters� including�in�the�following�areas:�industry�changes,�requirements�and�standards,�business�trends,� challenges�and�opportunities,�corporate�governance�and�legal�trends�and�issues,�market�analyses,�and� technological�developments�relevant�to�the�industry.
Board�of�Directors�meetings�have�occasionally�been�held�at�divisional�offices�to�allow�for�a�tour�of�the� facilities�and�improve�the�Directors’�general�knowledge�of�the�Corporation’s�business.�Field�visits�are�also� periodically�undertaken�by�Directors.�
Further,�strategic�planning�sessions�are�periodically�held�with�the�Board�of�Directors�and�senior�executives.� These�sessions�provide�intensive�additional�detailed�operational,�market�and�business�activity�information� to�the�Directors.�A�specific�focus�of�these�sessions�is�to�provide�a�briefing�on�strategic�issues�affecting�the� Corporation,�including�a�review�of�the�competitive�environment,�industry�trends,�and�the�Corporation’s� performance�relative�to�its�peers,�and�to�provide�a�forum�for�a�review�of�the�Corporation’s�perceived� strengths,�weaknesses,�opportunities�and�threats.��
During�2019,�the�following�continuing�education�presentations,�strategy�sessions,�site�visits�and�related� events�were�held�for�or�attended�by�all�or�some�of�the�Directors:�
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| Date | Topic | Presenter/Host | Attendees |
|---|---|---|---|
| March6 | Kuwaitmarketentry/ | BrentConway(ExecutiveVice | AllDirectors |
| operationalupdate | President) | ||
| May9 | Cybersecurity | RonTolton(DirectorInformation | AllDirectors |
| ReviewofBondOffering | Technology) | ||
| InvestorPresentationand | MichaelGray(ChiefFinancialOfficer), | ||
| LessonsLearned | BobGeddes(President&Chief | ||
| OperatingOfficer) | |||
| July31 | RigMinder–businessoverview | GregWard(President,RigMinder | AllDirectors |
| Permianoperations–pre�and� | OperatingLLC) | ||
| postacquisition | NialShepherd(VicePresident, | ||
| Operations),TomHorton(Vice | |||
| President,Sales) | |||
| November6 | TechnologyUpdate | BobGeddes(President&Chief | AllDirectors |
| OperatingOfficer) | |||
| InvestorRelationsUpdate | NicoleRomanow(InvestorRelations) | ||
| CapitalStructureOverview | MichaelGray(ChiefFinancialOfficer) |
Further,�Management�provides�quarterly�reports�to�the�HSE�Committee�regarding�current�issues,�trends,� regulatory�requirements,�risk�areas�and�compliance�programs.�Also�in�2019,�certain�directors,�being�Mr.� Howe�and�Mr.�Moomjian,�participated�in�all�or�a�portion�of�a�webinar�series�hosted�by�U.S.�law�firm�Hunton� Andrews�Kurth�LLP�addressing�executive�compensation�issues.�Mr.�Moomjian�participated�in�other�legal� continuing�education�activities�in�compliance�with�Texas�State�Bar�requirements�and�acquired�information� on�industry�compliance,�governance�and�contracting�issues�as�a�member�of�the�Ethics�&�Compliance�and� Contracts�Committees�of�the�International�Association�of�Drilling�Contractors.�
Directors�are�also�encouraged�to�identify�their�continuing�education�needs�through�a�variety�of�means,� including�discussions�with�management�and�at�Board�and�Committee�meetings.�Course�and�conference� attendance�on�topics�relevant�to�a�Director’s�knowledge�and�skill�set�are�encouraged�and�periodically� attended.�Management�also�periodically�provides�Directors�newsletters�and�corporate�or�outside�reports� relevant�to�the�Corporation’s�business�or�their�committee�responsibilities.�Directors�also�periodically� conduct�site�visits.��
Representatives�of�the�external�auditor�of�the�Corporation�are�present�at�all�meetings�of�the�Audit� Committee,�providing�a�forum�for�discussion�of�any�emerging�trends,�requirements�and�issues�related� to�accounting�and�audit�matters.�Further,�all�Directors�are�invited�to�attend,�and�in�practice�do�attend,� each�meeeting�of�the�Audit�Committee.�The�CGNR�Committee�receives�regular�updates�on�corporate� risks,�governance�trends�and�best�practices�from�Management.�The�Compensation�Committee�receives� semi�annual�reports�from�Management�regarding�compensation�programs�and�trends,�succession� planning�and�leadership�development�programs.
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Director�Term�Limits�and�Other�Mechanisms�of�Board�Renewal��
Ensign’s�Board�has�not�adopted�a�policy�for�term�limits�for�Directors.�A�Director�Retirement�Policy�has� been�in�place�for�a�number�of�years,�which�requires�that�Directors�who�have�celebrated�their�75[th] �birthday� may�not,�unless�the�remaining�Board�members�agree�to�a�specific�exception,�stand�for�re�election�as�a� Director�of�the�Corporation.��
See�“Director�Tenure”�above�for�additional�disclosure�and�background�regarding�Ensign’s�decision�to� refrain�from�implementing�a�policy�for�term�limits�for�Directors.�See�“Directors�Skills�and�Experience”� above�regarding�the�skills,�experience�and�other�attributes�considered�by�the�CGNR�Committee�in� connection�with�the�nomination�process�of�the�Board.��
Diversity�Policy�
Ensign�is�committed�to�advancing�women,�and�other�individuals�representing�a�diversity�of� backgrounds�into�leadership�roles�through�its�talent�management,�learning�development,�and� succession�planning�processes.�In�support�of�this�commitment,�on�March�1,�2018,�the�CGNR� Committee�recommended,�and�the�Board�adopted,�a�diversity�policy�for�the�Board.�It�provides�that� the�CGNR�Committee,�which�is�responsible�for�recommending�director�nominees�to�the�Board,�will� consider�candidates�on�merit,�based�on�a�balance�of�skills,�background,�experience�and�knowledge.� In�identifying�the�highest�quality�directors,�the�Committee�will�take�into�account�diversity� considerations�such�as�gender,�age�and�ethnicity,�with�a�view�to�ensuring�that�the�Board�benefits� from�a�broader�range�of�perspectives�and�relevant�experience.�
Ensign’s�Board�of�Directors�supports�the�objectives�of�increasing�diversity�on�boards�of�directors�and�at� the�executive�levels�of�issuers,�and�recognizes�that�gender�and�other�diversity�characteristics�and� backgrounds�provides�a�depth�and�breadth�of�viewpoints�and�perspectives.�In�early�2018,�the�Board�of� Directors�adopted�a�written�“Board�Diversity�Policy”,�which�outlines�the�Corporation’s�commitment�to� promoting�a�diverse�board,�in�particular�with�respect�to�gender�diversity�and�the�identification�and� nomination�of�women�directors.��
The�Board�Diversity�Policy�reiterates�Ensign’s�commitment�to�a�merit�and�qualifications�based�method�of� selecting�Directors.�In�considering�candidates�for�both�Board�and�executive�officer�appointments,�the� Board�considers�primarily�skill,�knowledge,�experience,�business�requirements,�gender,�age�and�individual� character,�as�it�believes�this�approach�is�in�the�best�interests�of�Shareholders.�These�characteristics�in�the� current�Board�are�also�considered,�to�ensure�that�a�range�of�characteristics�and�qualities�are�present�in� the�Board�as�a�whole.�By�continuing�to�foster�opportunities�for�development�and�promotion�at�all�levels� of�the�Corporation,�Ensign’s�objectives�of�diversity�are�continually�being�pursued.��
The�Corporation�has�not�adopted�specific�targets�regarding�the�representation�of�women�on�its�Board�of� Directors.�While�diversity�is�an�important�consideration,�the�Corporation�cannot�make�a�commitment�to� select�a�Board�candidate�whose�gender�is�a�decisive�factor�above�all�other�considerations.�However�even� before�the�adoption�of�the�Board�Diversity�Policy,�it�considered�the�level�of�representation�of�women�on� the�Board�in�identifying�and�nominating�candidates�for�election�or�re�election�to�the�Board.��
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In�accordance�with�this�policy,�the�CGNR�Committee�considers�the�level�of�representation�of�women�on� the�Board�by�overseeing�the�selection�process�and�ensuring�that�sufficent�numbers�of�women�and�other� diverse�candidates�are�included�in�the�slate�of�candidates�for�Board�of�Directors�consideration.�The�slate� of�candidates�is�maintained�in�the�context�of�the�skills�matrix�developed�for�the�Board�of�Directors� (described�above)�and�planned�retirements�in�accordance�with�our�Director�Retirement�Policy�(also� described�above).��
Currently,�one�(1)�of�the�nine�(9)�Directors�on�the�current�Board,�and�being�proposed�for�re�election,�is�a� woman�(11%).�Two�(2)�of�Ensign’s�current�officers�at�the�vice�president�level�and�above�are�women�(8%),� one�(1)�of�whom�serves�on�the�Corporation’s�Senior�Executive�Committee,�which�is�currently�composed� of�eight�(8)�senior�executives.��
Ethical�Business�Conduct��
The�Corporation�has�developed�a�code�of�conduct�(the�“ Code�of�Conduct ”)�that�includes�such�topics�as� employment�standards,�conflicts�of�interest,�and�the�treatment�of�confidential�information�and�trading�in� the�Corporation's�shares,�to�foster�conduct�of�the�Corporation's�business�in�a�consistently�legal�and�ethical� manner.�Each�Director,�all�employees,�contractors�and�consultants�are�required�to�abide�by�the�Code�of� Conduct�as�a�condition�of�their�employment�or�engagement�with�the�Corporation.�The�Corporation�has� also�developed�a�comprehensive�anti�bribery�and�anti�corruption�policy�(the�“ ABC�Policy ”)�aimed�at� preventing�and�monitoring�corruption,�and�educating�our�workforce�with�respect�to�our�commitment�to� full�compliance�with�legal�and�ethical�standards�in�this�regard.��
The�CGNR�Committee�periodically�reviews�the�Corporation's�Code�of�Conduct�and�ABC�Policy�to�ensure� they�address�appropriate�topics�and�comply�with�regulatory�requirements.�Any�recommended�changes� are�submitted�to�the�Board�of�Directors�for�approval.�The�CGNR�Committee�concluded�a�regularly� scheduled�review�of�the�Code�of�Conduct�in�2019,�and�certain�amendments�to�the�prior�version�of�the� Code�of�Conduct�were�adopted.�The�next�regularly�scheduled�review�of�the�Code�of�Conduct�is�scheduled� to�take�place�in�the�third�quarter�of�2022.�The�next�regularly�scheduled�review�of�the�ABC�Policy�will�take� place�in�2020.��
Ensign�provides�all�employees�access�to�an�employee�handbook�that�includes�links�to�the�full�text�of�the� Code�of�Conduct�and�the�ABC�Policy�on�the�Corporation’s�intranet.�As�part�of�our�new�employee�on� boarding�process,�all�new�employees�must�complete�a�Code�of�Conduct�e�learning�module,�and�new� employees�in�roles�that�potentially�may�be�exposed�to�corruption�or�bribery�(based�on�function�and/or� location�of�employmenty),�must�also�complete�an�ABC�Policy�e�learning�module.�Existing�employees�as� well�as�all�members�of�the�Board�of�Directors�are�required�to�complete�these�modules�on�either�an�annual� basis�(office�personnel�and�Directors)�or�every�three�(3)�years�(field�personnel).��
==> picture [77 x 74] intentionally omitted <==
Since�2015,�each�Director�and�employee�has�been�required�to�complete,�on�an� annual�basis,�an�e�training�module�on�the�Code�of�Conduct.�This�e�training�module� contains�an�acknowledgement�of�understanding�of�the�training�and�the�Code�of� Conduct.��
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The�Code�of�Conduct�also�requires�Directors�and�employees�to�disclose�any�real�or�perceived�conflict�of� interest�as�they�arise.�A�link�to�the�conflict�of�interest�disclosure�form�is�also�included�in�the�e�training� module.�
The�Code�of�Conduct�e�training�module,�the�three�year�review�cycle�of�the�Code�of�Conduct�itself,�the� annual�acknowledgments�and�conflict�of�interest�disclosures,�and�the�ABC�Policy,�are�all�overseen�by�the� CGNR�Committee.��
In�addition�to�the�foregoing,�the�Corporation’s�Business�Ethics�Hotline�provides�a�procedure�for�the� submission�of�information�by�any�Director,�officer�or�employee�relating�to�possible�violations�of�the�Code� of�Conduct,�the�ABC�Policy�or�any�other�policy.�Reports�can�also�be�made�directly�to�the�Chairman�of�the� Audit�Committee.��
==> picture [77 x 82] intentionally omitted <==
Since�2015,�Ensign�has�had�in�place�an�independent�third�party�“Business�Ethics� Hotline”�service�provider�for�the�purpose�of�receiving�reports�of�violations�of�the� Code�of�Conduct�or�any�other�policy.�Reports�can�be�made�anonymously�and� confidentially�online,�by�email,�by�mail�and�by�phone�in�over�150�languages.� Reports�also�can�still�be�made�directly�to�the�Chairman�of�the�Audit�Committee.�
The�Chairman�of�the�Audit�Committee�oversees�investigations�of�alleged�breaches�of�the�Code�of�Conduct� together�with�management�where�appropriate.�The�Chairman�of�the�Audit�Committee�reports�on� Business�Ethics�Hotline�activity�to�the�Board�of�Directors�on�a�quarterly�basis.��
No�material�change�reports�were�filed�in�2019�or�in�2020�up�to�the�date�hereof�pertaining�to�any�conduct� of�a�Director�or�executive�officer�that�constitutes�a�departure�from�the�Code�of�Conduct.�
The�Code�of�Conduct�is�available�on�the�Corporation’s�website�(www.ensignenergy.com),�on�SEDAR�at� www.sedar.com,�or�by�contacting�the�Corporate�Secretary�of�the�Corporation�at�400�–�5th�Avenue�S.W.,� Suite�1000,�Calgary,�Alberta,�T2P�0L6.�
Independent�Judgment�of�Directors��
Directors�who�are�a�party�to�or�are�a�director�or�an�officer�of�a�person�who�is�a�party�to�a�material�contract� or�material�transaction�or�a�proposed�material�contract�or�proposed�material�transaction�are�required�to� disclose�the�nature�and�extent�of�their�interest�and�not�to�vote�on�any�resolution�to�approve�the�contract� or�transaction.�Such�Directors�excuse�themselves�from�that�portion�of�the�meeting.�If�required,�an� independent�committee�may�be�formed�to�deliberate�on�such�matters�in�the�absence�of�the�interested� party.��
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Ensign�Management�Information�Circular�|�2020�
Nomination�of�Directors��
The�CGNR�Committee�is�responsible�for�identifying�and�recommending�to�the�board�new�candidates�for� nomination�to�the�Board�of�Directors,�having�regard�to�the�competencies,�skills�and�personal�qualities�of� the�candidates�and�the�members�of�the�Board�of�Directors,�diversity,�and�a�perception�of�the�needs�of�the� Corporation.�From�time�to�time�the�CGNR�Committee�will�make�recommendations�to�the�Board�of� Directors�as�to�the�appropriate�size�of�the�Board�of�Directors.�In�addition,�the�CGNR�Committee�will�review� annually�and�recommend�to�the�Board�of�Directors�the�nomination�of�directors�for�election�at�the�annual� meeting�of�shareholders,�the�appointments�to�each�committee�of�the�Board�of�Directors�and�any�changes� to�the�terms�of�reference�of�such�committees.�
The�CGNR�Committee�of�the�Board�of�Directors�maintains�a�“skills�matrix”�to�assist�in�identifying�and� evaluating�potential�new�members�of�the�Board�of�Directors�against�existing�skills�and�experience�on�the� Board.�The�“skills�matrix”�is�reviewed�and�updated�by�the�CGNR�Committee�on�an�ongoing�basis.��
See�the�section�of�this�Information�Circular�above�called�“Director�Skills�and�Experience”,�where�the� current�skills�matrix�is�disclosed.
Director�Compensation��
The�CGNR�Committee�and�the�Board�of�Directors�periodically�reviews�the�adequacy�and�structure�of� Directors’�compensation�to�ensure�that�the�level�of�compensation�reflects�the�responsibilities,�time� commitment�and�risks�involved�in�being�an�effective�director.�For�further�details,�please�see�the�subsection� of�this�Information�Circular�entitled�“Director�Compensation”.�
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Ensign�Management�Information�Circular�|�2020�
Board,�Board�Member�and�Committee�Assessments��
Regular�assessments�of�the�efficiency�of�the�Board,�its�committees�and�individual�Directors�are� conducted.�
The�responsibility�for�assessing�the�effectiveness�of�the�Board�of�Directors�as�a�whole,�the�committees�of� the�Board�of�Directors�and�the�contribution�of�individual�Directors�has�been�included�in�the�mandate�of� the�CGNR�Committee.�Assessments,�including�Director�peer�assessments,�are�conducted�in�alternating� years�by�the�CGNR�Committee,�as�follows:�
| yearsby | theCGNRCommittee,asfollows: | |
|---|---|---|
| Year1: | PeerReview | Outcome |
| AssessmentsbyallDirectorsoftheirownperformanceaswellastheperformanceof | � Fullresponsesare | |
| theotherDirectors,directedprimarilyatthefollowing: | reviewedbythe | |
| � | EffectivenessoftheChairoftheBoardofDirectorsandCommitteeChairs; | CGNRCommittee. |
| � | ContributionsofindividualDirectorstotheBoardofDirectorsasawholeand | � Asummaryreportis |
| toCommittees; | providedbytheChair | |
| � | TheapparentpreparationofindividualDirectorsforBoardofDirectorsand Committeemeetings;and |
oftheCGNR Committeetothefull BoardofDirectors. |
| � | TheconductofindividualDirectorsinBoardofDirectorsandCommittee meetings. |
� TheCGNR CommitteeChair |
| Year2: | BoardReview | followsupwith |
| individualDirectors | ||
| AssessmentbyallDirectorsoftheoverallfunctioningoftheBoardofDirectorsandits Committees,andself�assessmentofpersonalcontributions,specifically: |
onanymattersof concernraisedinthe |
|
| � | Review,approvalandmonitoringofstrategicandoperatingplans; | assessmentandtakes |
| � | Corporatecomplianceandcontrols; | action,as |
| � | Reviewandapprovalofmanagementperformanceandcompensation; | appropriate. |
| � | Reviewofsuccessionplanning; | |
| � | Adviceandcounseltomanagement; | |
| � | SelectionandevaluationofBoardcandidates; | |
| � | Boardpracticesgenerally;and | |
| � | Committeestructureandperformance. |
Assessments�are�conducted�in�the�form�of�a�confidential�on�line�questionnaire,�aimed�at�facilitating� fulsome�responses,�including�qualitative�responses�and�comments,�and�providing�assurance�as�to�the� anonymity�of�the�responses�provided.�The�Chair�of�the�CGNR�Committee�compiles�the�results�of�the� annual�assessments,�including�any�qualitative�comments,�and�provides�a�formal�report,�in�a�summary� form,�to�this�Committee�and�to�the�Board�of�Directors�as�a�whole.��
Areas�of�concern�and�suggestions�for�improvement�raised�by�Directors�in�the�assessments,�whether�with� respect�to�individual�Directors,�the�Board�of�Directors�as�a�whole�or�its�Committees,�are�highlighted�and� reviewed�by�the�CGNR�Committee.�Trends�are�observed�and�strategies�for�improvement�are�discussed,� with�review�and�follow�up�by�the�entire�Board�of�Directors.�Meetings�are�held�between�the�Chair�of�the� CGNR�Committee�and�individual�Directors�(on�an�as�needed�basis)�to�address�any�issues�of�concern� brought�forth�in�the�above�assessments.���
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Ensign�Management�Information�Circular�|�2020�
Mandatory�Share�Ownership��
The�Corporation�has�adopted�mandatory�share�ownership�policies�that�apply�to�Directors�and�senior� officers�of�the�Corporation.�Please�see�the�sections�of�this�Information�Circular�entitled�“Election�of� Directors”,�“Director�Equity�Ownership�Requirement”�and�“Compensation�Discussion�and�Analysis�– Executive�Equity�Ownership�Policy”,�for�details�on�requirements�for�mandatory�equity�ownership�for� Directors�and�senior�officers,�respectively.���
As�at�December�31,�2019,�each�Director�and�senior�officer�subject�to�this�policy�meets�the�applicable� requirement�pursuant�to�these�policies.��
Communications�Policy�
The�Board�has�a�disclosure�policy�wherein�it�has�delegated�the�communications�function�to�the�senior� management�of�the�Corporation.�The�President�&�Chief�Operating�Officer�or�the�Chief�Financial�Officer� generally�handle�shareholder�communications.�They�also�are�responsible�for�all�communications�from�and� to�the�Corporation's�shareholders,�other�stakeholders�and�the�public�generally.�
Board�Approvals�and�Structure�
In�addition�to�maintaining�the�powers�it�must�retain�by�statute,�significant�business�activities,�actions�and� communications�proposed�to�be�taken�or�submitted�for�consideration�by�the�Corporation�are�subject�to� approval�by�the�Board�of�Directors.��
Annual�capital�and�operating�budgets�and�significant�changes,�long�range�plans,�the�annual�management� information�(proxy)�circular,�the�annual�information�form,�major�changes�in�the�organizational�structure� of�the�Corporation,�annual�and�quarterly�financial�statements,�major�acquisition�and�disposition� transactions,�major�financing�transactions�involving�the�issuance�of�shares,�debt�securities�and�other� securities,�major�banking�relationships,�dividends,�long�term�contracts�with�significant�cumulative� financial�commitments,�appointment�of�officers�and�succession�plans�for�Directors�and�senior�officers�are� all�subject�to�approval�by�the�Board�of�Directors.�
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Ensign�Management�Information�Circular�|�2020�
SECTION�6�–�STOCK�OPTION�PLAN�
In�1997,�the�Shareholders�approved�the�establishment�of�a�stock�option�plan�(the�“ Plan ”).�Pursuant�to�the� Plan,�the�Corporation�is�permitted�to�grant�options�(“ Options ”)�from�time�to�time�to�officers�and�other� employees�of�the�Corporation�and�its�subsidiaries.�Since�the�initial�approval�of�the�Plan,�periodic� amendments�have�been�made,�as�follows:��
-
In�2001,�the�Shareholders�approved�an�amendment�to�the�Plan�to�provide�all�current�option�holders� the�right�to�elect�to�receive�Common�Shares�or�a�direct�cash�payment�in�exchange�for�Options� exercised.�This�amendment�to�the�Plan�was�designed�to�balance�the�need�for�a�long�term� compensation�program�to�retain�employees�and�the�concerns�of�shareholders�regarding�the�dilution� caused�by�stock�options.���
-
In�2005,�the�Shareholders�approved�an�amendment�to�the�Plan�to�delete�the�reference�to�a�maximum� number�of�Common�Shares�issuable�or�reserved�pursuant�to�the�Plan,�and�provide�the�maximum� number�of�Common�Shares�issuable�pursuant�to�the�Plan�shall�be�equal�to�10%�of�the�outstanding� Common�Shares.�Any�increase�in�the�issued�and�outstanding�Common�Shares�will�result�in�an�increase� in�the�available�number�of�Common�Shares�issuable�under�the�Plan,�and�any�exercise�of�Options�will� make�new�grants�available�under�the�Plan.���
-
In�2009,�the�Shareholders�again�approved�certain�amendments�to�the�Plan,�which�were�proposed�by� the�Board�of�Directors�in�light�of�trends�in�corporate�governance�and�the�objective�of�providing� principled�executive�compensation.�The�primary�amendments�approved�by�Shareholders�on�that�date� were:�(i)�to�prescribe�a�fixed�maximum�number�of�Common�Shares�of�15,300,000�to�be�set�aside�and� reserved�for�the�granting�of�stock�options�under�the�Plan;�(ii)�to�fix�the�number�of�Common�Shares� issuable�under�the�Plan�in�any�calendar�year�at�2%�of�the�then�outstanding�Common�Shares;�(iii)�to� eliminate�the�eligibility�of�non�management�members�of�the�Board�of�Directors�to�receive�grants�of� stock�options;�(iv)�to�extend�the�expiry�date�of�a�stock�option�which�would�otherwise�expire�during�a� blackout�period�for�a�period�of�10�business�days�after�the�blackout�period�ends;�and�(v)�to�provide�for� the�Board�of�Directors�to�amend,�modify�or�discontinue�the�Plan�or�any�stock�options�granted� thereunder.�Shareholder�approval�is�required�to:�(a)�increase�the�maximum�number�of�15,300,000� Common�Shares�reserved�for�issuance;�(b)�reduce�the�exercise�price�of�or�cancel�and�re�issue�any� stock�option;�(c)�extend�the�expiry�dates�on�any�outstanding�stock�option;�(d)�allow�non�management� directors�to�be�eligible�for�the�grant�of�stock�options;�(e)�permit�transfers�(or�assignments)�of�stock� options�except�for�estate�settlement�purposes;�or�(f)�increase�the�number�of�Common�Shares�issuable� to�insiders�beyond�the�current�restrictions.��
-
On�March�10,�2017,�in�connection�with�the�ongoing�re�design�of�the�Corporation’s�executive� compensation�plans,�the�Compensation�Committee�approved�certain�“housekeeping”�amendments� to�the�Plan.�Shareholder�approval�of�these�amendments�is�not�required.��
The�Plan�specifies�that�in�the�event�of�a�change�of�control�of�the�Corporation,�Options�granted�to� executive�officers�do�not�automatically�vest�unless�the�employment�of�such�executive�officer�is�also� actually�or�constructively�terminated�within�12�months�of�the�change�of�control�event.�
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Ensign�Management�Information�Circular�|�2020�
Other�features�of�the�current�Plan�are�as�follows:�
-
Eligible�participants�include�officers�and�key�employees�of�the�Corporation.�
-
The�number�of�Common�Shares�issuable�(or�reserved�for�issuance)�to�insiders�will�not�exceed�5%�of� the�outstanding�Common�Shares.�
-
The�number�of�Common�Shares�issuable�(or�reserved�for�issuance)�to�any�one�optionee�will�not�exceed� 5%�of�the�outstanding�Common�Shares.�
-
The�number�of�Common�Shares,�together�with�all�of�the�Corporation's�other�previously�established�or� proposed�share�compensation�arrangements:��
-
issuable�(or�reserved�for�issuance)�to�insiders�at�any�time�will�not�exceed�10%�of�the�outstanding� Common�Shares;�
-
which�may�be�issued�to�insiders�within�a�one�year�period�will�not�exceed�10%�of�the�outstanding� Common�Shares;�and�
-
which�may�be�issued�to�any�one�insider�and�such�insider's�associates�within�a�one�year�period�will� not�exceed�5%�of�the�outstanding�Common�Shares.���
-
The�exercise�price�of�Options�granted�will�be�the�closing�price�per�Common�Share�on�the�Toronto� Stock�Exchange�on�the�last�trading�day�preceding�the�date�of�grant�of�the�Options.���
-
Options�granted�pursuant�to�the�Plan�have�a�term�not�exceeding�10�years�and�have�generally�been� issued�on�the�basis�of�vesting�equally�over�five�(5)�years.���
-
In�case�of�cessation�of�employment�of�an�optionee,�Options�are�exercisable�within�90�days�from�such� cessation.���
-
In�case�of�death�of�an�optionee,�Options�may�be�exercised�by�the�personal�representatives�of�heirs�of� the�deceased�optionee�within�90�days�from�the�date�of�death.�
-
Options�are�non�assignable.���
The�Board�of�Directors�believes�that�granting�of�stock�options�is�and�should�be�used�by�the�Corporation�to� augment�the�overall�compensation�package�offered�to�its�employees.�The�Corporation�has�a�long�standing� policy�of�awarding�stock�options�to�executive�officers�and�employees,�assisting�the�Corporation�in� providing�compensation�packages�that�are�competitive�with�its�industry�peer�group.��
The�Plan�also�constitutes�a�principal�component�in�the�compensation�arrangements�for�the�executives� and�employees�of�the�Corporation,�aiding�in�the�recruitment�and�retention�of�skilled,�knowledgeable�and� dedicated�staff.�The�Board�of�Directors�believes�this�established�policy�of�awarding�stock�options�aligns� executives�and�employees�with�shareholders�and�meets�the�Corporation’s�business�objectives,�specifically� those�of�retention�and�competitive�compensation,�balanced�by�the�overriding�principle�that�outstanding� options�and�the�ability�to�grant�additional�options�should�be�restricted�to�levels�below�acceptable�dilution� thresholds.�
The�Board�of�Directors�is�of�the�view�that�the�Options�provide�an�incentive�to�all�recipients�to�ensure� they�are�striving�to�maximize�shareholder�value.
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Ensign�Management�Information�Circular�|�2020�
Equity�Compensation�Plan�Information�As�At�December�31,�2019��
#�of�Securities�to�be� Weighted�Average� #�of�Securities�Remaining� Issued�Upon�Exercise�of� Exercise�Price�of� Available�for�Future� Outstanding�Options,� Outstanding�Options,� Issuance�Under�Equity� Plan�Category� Warrants�and�Rights� Warrants�and�Rights� Compensation�Plans� Equity�compensation� 5,408,900� $6.53� 9,477,500� plans�approved�by� security�holders� Equity�compensation� Nil� Nil� Nil� plans�not�approved�by� security�holders��
The�Stock�Option�Plan�is�the�only�equity�compensation�plan�of�the�Corporation.�From�time�to�time,�stock� appreciation�rights�(“ SARs ”)�are�granted�to�certain�employees�of�the�Corporation�in�lieu�of�stock�options,� where�such�employee’s�jurisdiction�of�residence�or�taxation�makes�the�receipt�of�stock�options� undesirable.�All�SARs�granted�are�subject�to�the�same�general�conditions�and�restrictions�as�set�forth�in� the�Stock�Option�Plan,�with�the�exception�of�any�right�or�ability�to�exercise�the�SAR�for�Common�Shares� (SARs�may�only�be�exercised�for�cash).�The�number�of�securities�to�be�issued�upon�exercise�of�outstanding� Options,�as�of�December�31,�2019,�represented�3.32%�of�the�total�number�of�Common�Shares�issued�and� outstanding�as�of�that�date�(2018�–�3.76%).���
In�2019,�1,337,600�Options�were�granted�pursuant�to�the�Plan�(2018�–�1,358,700).�This�represented�0.82%� of�the�issued�and�outstanding�Common�Shares�as�of�December�31,�2019�(2018�–�0.87%).�The�stock�option� annual�grant�rate�over�the�past�three�(3)�years�is�as�follows:�
| OptionsGrantedDuringtheYearasa | |||
|---|---|---|---|
| #ofCommonSharesIssuedand | #ofOptionsGranted | %ofIssuedandOutstanding | |
| Year | OutstandingasatJanuary1 | DuringtheYear | CommonSharesfortheYear |
| 2019 | 163,118,758 | 1,337,600 | 0.82% |
| 2018 | 157,074,616 | 1,358,700 | 0.87% |
| 2017 | 157,074,616 | 2,064,750 | 1.31% |
Ensign’s�annual�burn�rate�(as�described�in�Section�613(p)�of�the�TSX�Company�Manual)�for�the�past�three� (3)�years,�calculated�by�dividing�the�number�of�stock�options�granted�in�the�fiscal�year�by�the�weighted� average�number�of�outstanding�shares�for�the�year,�is�as�shown�in�the�table�above.�The�burn�rate�is�subject� to�change�from�time�to�time�based�on�the�number�of�options�granted�and�the�total�number�of�Common� Shares�issued�and�outstanding.�As�noted�elsewhere�in�this�Information�Circular,�commencing�in�2018,�the� annual�award�of�stock�options�(and�including�stock�appreciation�rights)�that�may�be�approved�by�the� Compensation�Committee�in�any�fiscal�year�will�be�capped�at�1%�of�the�Corporations’�issued�and� outstanding�Common�Shares�as�of�the�end�of�each�fiscal�year.��
Page�|�90�
Ensign�Management�Information�Circular�|�2020�
SECTION�7�–�OTHER�INFORMATION�
Voting�Securities�and�Principal�Holders�Thereof��
The�record�date�for�determination�of�the�holders�of�Common�Shares�entitled�to�notice�of�and�to�vote�at� the�Meeting�is�March�20,�2020.�As�at�March�20,�2020�there�were�163,118,758�Common�Shares�issued�and� outstanding.�Each�Shareholder�or�his�or�her�proxy�represented�at�the�Meeting�will�be�entitled�to�one�vote� for�each�Common�Share�held�by�such�Shareholder.��
The�following�are�the�only�parties�known�to�the�Directors�and�senior�officers�of�the�Corporation�to� beneficially�own,�directly�or�indirectly�or�exercise�control�or�direction�over,�more�than�10%�of�the� outstanding�voting�securities�of�the�Corporation�as�at�March�20,�2020:���
| NumberofVotingSecurities,Owned, | PercentageofOutstandingVoting | |
|---|---|---|
| DirectlyorIndirectly,orOverWhichControl | SecuritiesSoOwned,Controlled | |
| Name | orDirectionisExercised | orDirected |
| Edwards,N.Murray | 31,582,085CommonShares | 19.36% |
| St.Moritz,Switzerland |
Interest�of�Informed�Persons�in�Material�Transactions��
Management�of�the�Corporation�is�not�aware�of�any�material�interest,�direct�or�indirect,�of�any�Director� or�officer�of�the�Corporation,�any�nominee�for�director�of�the�Corporation,�or�any�person�beneficially� owning,�directly�or�indirectly,�more�than�10%�of�the�Corporation's�voting�securities,�or�any�associate�or� affiliate�of�any�such�person�in�any�material�transaction�during�2019�or�in�any�material�proposed� transaction�which�in�either�case�has�materially�affected�or�would�materially�affect�the�Corporation�or�any� of�its�subsidiaries.��
Other�Matters��
Management�of�the�Corporation�knows�of�no�amendment,�variation�or�other�matter�to�come�before�the� Meeting�other�than�those�set�forth�in�the�Notice.�If�other�matters�properly�come�before�the�Meeting,�the� accompanying�proxy�will�be�voted�on�such�matters�in�accordance�with�the�best�judgment�of�the�person� or�persons�voting�the�proxy.�
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Ensign�Management�Information�Circular�|�2020�
Additional�Information��
Additional�information�relating�to�the�Corporation�is�available�on�SEDAR�at www.sedar.com.
Financial�information�is�provided�in�the�Corporation’s�comparative�consolidated�financial�statements�and� management’s�discussion�and�analysis�(“ MD&A ”)�for�the�fiscal�year�ended�December�31,�2019.�� Shareholders�may�request�copies�of�the�Corporation’s�consolidated�financial�statements�and�MD&A�by� contacting:�
ENSIGN�ENERGY�SERVICES�INC.�
400�–�5th�Avenue�S.W.,�Suite�1000� Calgary,�Alberta�T2P�0L6�
Attention:�Corporate�Secretary� Telephone�(403)�262�1361� Fax�(403)�262�8215� Website:� www.ensignenergy.com
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Schedule�1 Mandate�of�the�Board�of�Directors�
drilling
directional drilling well servicing
SCHEDULE�1�
ENSIGN�ENERGY�SERVICES�INC.� (THE�"CORPORATION")�
MANDATE�OF�THE�BOARD�OF�DIRECTORS�
Role�and�Objectives:
The�Board�of�Directors�(the�“ Board ”)�of�Ensign�Energy�Services�Inc.�(the�“ Corporation ”)�is�responsible�for� the�stewardship�of�the�Corporation.�In�discharging�its�responsibility,�the�Board�will�exercise�the�care,� diligence�and�skill�that�a�reasonably�prudent�person�would�exercise�in�comparable�circumstances�and�will� act�honestly�and�in�good�faith�with�a�view�to�the�best�interests�of�the�Corporation.�In�general�terms,�the� Board�will:�
-
(a) review,�discuss�and�approve�the�Corporation’s�strategic�planning�and�organizational� structure,�including�in�consultation�with�senior�management�of�the�Corporation�where� appropriate;�
-
(b) supervise�the�management�of�the�business�and�affairs�of�the�Corporation�while�delegating� to�senior�management�the�responsibility�for�day�to�day�management�of�the�Corporation,� with�the�goal�of�achieving�the�Corporation’s�principal�objectives�as�defined�by�the�Board;�
-
(c) discharge�the�duties�imposed�on�the�Board�by�applicable�laws,�the�constating�documents� of�the�Corporation,�this�Mandate�and�the�committee�mandates;�and�
-
(d) for�the�purpose�of�carrying�out�the�foregoing�responsibilities,�take�all�such�actions�as�the� Board�deems�necessary�or�appropriate.�
Meetings
-
The�agenda�of�the�Board�meeting�will�be�prepared�by�the�chairperson�of�the�Board�(the�“ Chair ”),� working�with�the�secretary,�and,�whenever�reasonably�practicable,�circulated�to�each�director� prior�to�each�meeting.�
-
The�Board�shall�meet�at�least�four�times�per�year�and/or�as�deemed�appropriate�by�the�Chair.�
-
Minutes�of�all�Board�meetings�shall�be�taken�by�the�secretary�of�the�meeting.�The�minutes�of�the� meetings�shall�accurately�record�the�discussions�of�and�decisions�made�by�the�Board�and�shall�be� distributed�to�all�directors.�
-
The�President�or�his�or�her�designates�may�be�present�at�all�meetings�of�the�Board.�
-
Vice�Presidents�and�such�other�staff�as�appropriate�to�provide�information�to�the�Board�shall� attend�meetings�at�the�invitation�of�the�Board.�
Delegation
-
Subject�to�limits�set�out�in�the� Business�Corporations�Act �(Alberta),�the�Board�may�delegate�its� duties�to,�and�receive�reports�and�recommendations�from,�any�committee�of�the�Board.�
-
Subject�to�limits�set�out�in�the� Business�Corporations�Act �(Alberta)�and�other�applicable�laws�and� stock�exchange�rules,�delegate�to�the�officers�of�the�Corporation�powers�to�manage�the�business� and�affairs�of�the�Corporation.�
Mandate�and�Responsibilities�of�the�Board:�
The�Board’s�primary�roles�are�overseeing�both�corporate�performance�and�the�quality,�depth�and� continuity�of�management�required�to�meet�the�Corporation’s�strategic�objectives.�Without�limiting�the� generality�of�the�foregoing,�the�Board’s�principal�duties�include�the�following:�
Strategic�Direction,�Operating�and�Capital�Plans:
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Oversee,�review,�question�and�approve�the�mission�of�the�Corporation�and�its�strategy,�objectives� and�goals,�taking�into�account�the�opportunities�available�to�the�Corporation,�the�potential�risks� it�faces�and�the�Corporation’s�risk�appetite.�
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Approve�the�annual�operating�and�capital�plans�proposed�by�management.�
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Review�progress�towards�the�achievement�of�the�goals�established�in�the�strategic�planning� process�and�the�operating�and�capital�plans�and�revise�and�alter�the�Board’s�direction�to� management�in�light�of�changing�circumstances.�
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Approve�issuances�of�additional�common�shares�or�other�securities�to�the�public.�
Risk�Management :�
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Oversee�the�Corporation’s�systems�for�effectively�identifying,�monitoring�and�managing�the�risks� it�faces�with�a�view�to�achieving�a�proper�balance�between�the�risks�incurred�and�the�potential� returns�to�the�Corporation�and�the�long�term�sustainability�of�the�Corporation.�
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Approve�policies�and�procedures�designed�to�ensure�that�the�Corporation�acts�responsibly�and�in� compliance�with�applicable�laws,�rules�and�regulations.�
Management�and�Organization :
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Appoint�the�President�and�approve�the�position�description�and�annual�performance�goals�and� compensation�of�the�President.�
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Evaluate�the�performance�of�the�President�at�least�annually.�
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Establish�the�limits�of�management’s�authority�and�responsibility�in�conducting�the�Corporation’s� business.�
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Oversee�the�appointment�of�all�other�executive�officers�of�the�Corporation.�
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Oversee�succession�planning�processes�for�the�President�and�senior�management�of�the� Corporation.�
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Approve�any�proposed�significant�change�in�the�management�organization�structure�of�the� Corporation.�
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Approve�all�retirement�plans�for�officers�and�employees�of�the�Corporation.�
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Generally�provide�advice�and�guidance�to�management.�
Communications�and�Reporting :
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Review�the�communications�policy�for�the�Corporation,�including�with�respect�to�shareholders,� employees,�customers,�financial�analysts,�governments�and�regulatory�authorities,�the�media�and� other�stakeholders.�
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Oversee�management’s�process�for�the�timely,�accurate�and�complete�disclosure�of� developments�that�have�a�significant�and�material�impact�on�the�Corporation.�
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Oversee�timely,�accurate�and�regular�disclosure�and�reporting�of�the�financial�performance�of�the� Corporation�to�shareholders,�other�security�holders�and�regulators�in�accordance�with�applicable� laws�and�accounting�standards.�
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Monitor�and�support�the�Corporation’s�investor�relations�activities�and�its�stakeholder� engagement�policies�and�practices,�including�the�processes�for�receiving�feedback�from� shareholders.��
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Report�annually�to�shareholders�on�the�Board’s�stewardship�for�the�preceding�year.�
Finances�and�Controls :
-
Monitor�the�appropriateness�of�the�Corporation’s�capital�and�financial�structure�and�approve� changes�to�that�structure.�
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Oversee�management’s�institution�and�maintenance�of�the�integrity�of�internal�control�and� information�systems,�including�maintenance�of�all�required�records�and�documentation.�
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Delegate�to�senior�management�the�authority�for�expenditures�and�transactions,�subject�to� specified�limits�beyond�which�Board�approval�would�be�required.�
Corporate�Responsibility�and�Ethics :
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Support�a�culture�of�integrity�and�responsible�stewardship.��
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Satisfy�itself,�to�the�extent�feasible,�the�integrity�of�the�President�and�other�senior�management� and�that�such�individuals�promote�a�culture�of�integrity�throughout�the�Corporation.�
Governance :
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Approve�the�Corporation’s�approach�to�corporate�governance,�including�this�Mandate,�the� mandates�of�the�Board’s�committees�and�the�position�descriptions�for�the�Chair,�the�Lead� Director,�the�President�and�committee�chairs�and�facilitate�the�continuity,�effectiveness�and� independence�of�the�Board,�including�by:��
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(a) Overseeing�succession�planning�for�the�Board�and�selecting�nominees�for�election�to�the� Board;�
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(b) Approving�the�appointment�of�directors�to�the�audit�committee�and�the�other� committees�of�the�Board�approved�by�the�Board�from�time�to�time;�
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(c) Conducting�regular�(and�not�less�than�annual)�assessments�of�the�Board�as�a�whole,�the� committees�of�the�Board,�the�contribution�of�each�individual�director�and�the�Chair,�Lead� Director�and�committee�chairpersons,�in�each�case�by�reference�to�this�Mandate,�the� applicable�committee�mandate�and/or�the�applicable�position�description;�
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(d) Reviewing�the�orientation�and�education�programs�for�new�directors;�and�
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(e) Approving�the�Corporation’s�approach�to�director�compensation�and�protection.�
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Oversee�structures�and�procedures,�including�the�appointment�of�a�Lead�Director�(if�applicable),� to�enable�the�Board�to�exercise�independent�judgment�and�make�decisions�on�director� independence.�
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Delegate�to�the�Board�committees�oversight�of�specific�matters�while�retaining�ultimate� responsibility�for�those�delegated�matters.�
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Approve�the�Corporation’s�approach�to�director�compensation�and�protection.�
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Enforce�Board�policy�respecting�confidentiality�of�the�Corporation’s�proprietary�information�and� Board�deliberations.�
General :�
- Review�and�reassess�the�adequacy�of�this�Mandate�periodically�and�as�it�deems�appropriate,�and� recommend�changes.�The�performance�of�the�Board�shall�be�evaluated�with�reference�to�this� Mandate�annually.