The main business of the Corporation is carried out by the Bank, which comprises approximately 99% of the Corporation’s assets. The Bank’s Board of Directors and its Committees assist in carrying out and overseeing corporate governance for the Corporation. Both the Corporation and the Bank have Audit Committees and Human Resources & Corporate Governance Committees. The Bank also has a Conduct Review Committee and a Risk Review Committee.

The fundamental duty of the Board of Directors is to exercise independent judgement in directing and overseeing management of the Corporation with the objective of maximizing and protecting real shareholder value. Pacific & Western believes that sound corporate governance policies and practices serve to ensure Board independence and thus strengthen the Board’s ability to effectively fulfill its oversight responsibilities.

Board Independence

The Board of Directors is comprised of eight members. All but one Board member, being the President & Chief Executive Officer of Pacific & Western, is independent, as that term is defined by applicable regulatory and stock exchange requirements. At the conclusion of each quarterly Board meeting, the independent members of the Board hold regular sessions at which members of management are not in attendance. Additional information respecting the Board members can be found on the Board of Directors page. The Corporation’s Management Proxy Circular also provides information on the Board, including individual members’ background, meeting attendance records, shareholdings, and other information.

Board Annual Assessment

In accordance with the Mandate of the Human Resources & Corporate Governance Committee, the members of the Board completed an assessment process whereby each member was asked to complete a Board performance assessment and a self-assessment. In addition, the Chair of each Committee was asked to complete a Committee performance assessment. The Board and Committee assessments were returned directly to the Chair of the Human Resources & Corporate Governance Committee who compiled and presented a report on the results of the assessments to the Board. In addition, the Chairman of the Board completed a performance assessment of the Chief Executive Officer, and the results of that assessment were presented to the Board.

Board of Directors’ Responsibilities

The Boards of Pacific & Western are primarily responsible for governance issues. The following is a summary of some of the most important corporate governance related functions that the Boards perform:

• Approve a Mandate for the Board of Directors and for the Chair of the Board
• Appoint a Chair of the Board who is independent
• Appoint officers, including the Chief Executive Officer, and regularly evaluate the effectiveness and performance of such officers in managing the operations of Pacific & Western and the risks to which it is exposed
• Annually review the Management Succession Plan and the Human Resources Plan
• Oversee employee compensation plans and ascertain whether they are consistent with sustainable achievement of business objectives, the prudent management of operations and the risks to which Pacific & Western is exposed
• Establish Board committees and approve their mandates
• Approve a Corporate Disclosure Policy
• Approve major changes to organizational structure and all significant acquisitions
• Establish procedures for the approval of all significant acquisitions and major contracts and approve all those which are out of the ordinary course of business
• Recommend the appointment of the external auditor to the shareholders, approve the compensation of the external auditor upon recommendation of the Audit Committee, and require the external auditor to report directly to the Audit Committee
• Approve the appointment of the internal auditor
• Approve all policies, including those pertaining to risk management, liquidity and funding management, capital management, operational risk, and corporate disclosure
• Oversee communications with shareholders, including approving the annual financial statements, annual management’s discussion and analysis, annual information form, and shareholders’ meeting materials
• Establish the business objectives and consider and approve the business strategy and business plans in order to assess whether they remain appropriate and prudent in light of the business and economic environment, resources and results

In order to discharge the Board’s responsibilities, certain governance issues have been delegated to committees of the Board.