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Corporate Governance Charter

Terms of Reference

1) Purpose

The purpose of the Governance & Compensation Committee (“the Committee”) is to assist the Board in fulfilling its role as directors of the Cabo Drilling Corp. (“Cabo”) and provide a focus on governance and compensation that will enhance Cabo’s performance. The Committee will:

  1. Assess and make recommendations to the Board regarding Board and Committee effectiveness;
  2. Assist the Board in fulfilling its obligations relating to the CEO, senior management, executive management and Board of Directors compensation matters;
  3. Assist the Board in assessing its direction relating to Regulatory Compliance of Corporate Governance Practices; and
  4. Proposing new nominees for the Board and Committees annually for appointment and orienting new directors.  

2) Composition and Operations

  1. The Committee shall be composed of not fewer than three directors, the majority of which shall be independent.
  2. A quorum shall be a simple majority.
  3. The Committee shall operate in a manner that is consistent with the Committee Guidelines of the Board Manual.
  4. The Committee shall meet at least four times each year, separate from Board meetings.

3) Duties and Responsibilities

           Governance Role

Subject to the powers and duties of the Board, the Committee has the   responsibility to:

  1. Review annually, for Board approval, Board level policies and procedures by which the Board will operate including the Board Manual, terms of reference for the Board, the Board Chair, Directors and Committees;
  2. Review and reassess the adequacy of the Company’s corporate governance policies, practices and procedures, prepare any report as may be required under applicable securities law, stock exchange and any other regulatory requirements annually and recommend to the Board any changes deemed appropriate by the Committee;
  3. Review any proposed changes to the Company’s constating documents as such documents relate to corporate governance matters;
  4. Recommend to the Board any reports on governance and human resources that may be required or considered advisable;
  5.  At the request of the Board Chair or the Board, undertake such other corporate governance initiatives as may be necessary or desirable to contribute to the success of the Company;
  6.  Advise the Board on the appropriateness of its structures and procedures so that the Board can function with the proper degree of independence from management;
  7. Review and recommend to the Board the corporate disclosure requirements pursuant to the regulations;

    Policies for Board and Executive Team
     
  8. Recommend to the Board a policy for Engagement of Independent Counsel;
  9. Recommend to the Board Code of Conduct and Ethics, and Conflict of Interest Policies;

    Board Composition
     
  10. Recommend to the Board, and annually implement an appropriate evaluation process for the Board, the Board Chair, and committees and assume responsibility for recommending an individual director evaluation;
  11. Develop recommendations regarding the essential and desired experiences and skills for potential directors, taking into consideration the Board’s short-term needs and long-term succession plans;
  12. Review, monitor and make recommendations regarding director orientation and ongoing development;
  13. Assess whether a director is independent;

    Compensation
     
  14. Review and recommend a role and job description for the CEO to the Board;
  15. Recommend a performance evaluation process for the CFO and when approved, review the implementation of the evaluation process. Lead the implementation of the CEO review;
  16. Review and recommend to the Board the CEO compensation plan (including contracts, incentive compensation, and equity based plans);
  17. Review the CEO’s performance feedback and compensation plans (including contracts, incentive compensation, and equity based plans) of the CFO;
  18. Review the Director’s compensation;
  19. Review with the CEO existing management resources and plans, including recruitment and training programs, to ensure that qualified personnel will be available for succession to execute positions in Cabo and its subsidiaries and key officer positions in its reporting organizations, and report on this matter to the Board at least once each year;
  20. Review and endorse major changes in the organizational structure of executive as proposed by the CEO;
  21. Review the Company’s Human Resource Policies from time to time including staff compensation philosophy and guidelines, and employee benefit package; 
  22. Review with the CEO any significant outside commitments the CEO is considering before the commitment is made. This includes commitments to act as a director or trustee of for-profit and not-for-profit organizations. The CEO will conduct an annual review of the outside commitments of each member of the Executive team including a review of the Conflict of Interest Policy.

 4) Accountability

The Committee shall report its discussions to the Board by maintaining minutes of its meetings and providing an oral and written report at the next Board meeting.

5) Committee Workplan

The workplan below outlines the Committee’s schedule of activities.

CABO DRILLING CORP.
CORPORATE GOVERNANCE AND COMPENSATION COMMITTEE WORKPLAN

     

Activity Completed

    

Activity to be Reviewed

    

Activity Delayed

Activity

 Qtr:   

Date:  

Governance Guidelines

   
  • Terms of Reference and Work Plans
   
  • Board
   
  • Board Chair
   
  • Director
   
  • Committees
   
  • Review of Board Manual

 

 

  • Review and Report on TSX Corporate Governance Guidelines

 

 

  • Other Governance Issues as Required.
   

Policies for Board and Executive Team

   
  • Engagement of Independent Counsel
   
  • Code of Conduct and Ethics
   
  • Conflict of Interest
   
  • Remuneration & Expense Reimbursement
   
  • Travel
   
  • Investments
   
  • Limits of Spending Authority
   

Board Composition and Performance Review

   
  • Conduct Annual Board Self Evaluation
   
  • Review Board Self Evaluation Follow Up Plan
   
  • Review Director Matrix and New Director Criteria
   
  • Review Director Orientation & Development
   

 Compensation

   
  • Review CEO and CFO Role & Job Description
   
  • Review CFO Role & Job Description with CEO
   
  • Review CEO and CFO Compensation & Evaluation
   
  • Review Contracts & Compensation Plan $125,000
   
  • Review Compensation Philosophy & Guidelines
   
  • A)Employee benefit package

 

 

  • B)Succession planning

 

 

  • C) Review organizational structure

 

 

  • D)Review CEO and CFO outside commitments
   
  • Other HR Issues as Required
   
  • Review PIPA Guidelines and Policy
   
  • Review Sexual Harassment Policy
   
  • Other Issues
   

 

Last Updated: 09/26/2008