Our Approach
1
Effectively overseeing the management of the Company
Our Board oversees and makes decisions with respect to the Company’s strategy, financial
objectives, capital allocation, relationship with Dealers, executive compensation, talent
development and succession planning, growth opportunities, financial reporting and disclosure,
fundamental policies and systems, the control environment, enterprise risk management, the
safeguarding and enhancement of the Company’s brand, and ESG matters. In carrying out its
duties, the Board considers the financial, risk, competitive, human resource and brand
implications of strategies, tactics and transactions proposed by management.
The Board has delegated a number of its responsibilities to its four standing Committees, as
permitted by law, to enable the Board to operate more efficiently and spend more time on
priority matters while empowering its Committees to focus on key areas of accountability. The approach to Committee delegation complements and enhances the work of the Board. Each
Committee has a written mandate that sets out its purpose and responsibilities. Key areas of
responsibility for each Committee are highlighted below:
Audit Committee:
financial statements and related disclosures; internal control over
financial reporting and disclosure controls and procedures; enterprise risk management;
and internal and external auditor oversight.
Management Resources and Compensation Committee:
human resources
strategies, plans, policies and procedures; executive compensation; talent development
and succession planning; workforce diversity, inclusion and belonging; and employee
engagement.
Governance Committee:
corporate governance policies and practices; Board renewal
and Committee composition; Board performance assessments; director education and
orientation; and director compensation.
Brand and Corporate Responsibility Committee:
Brand Purpose and brand trust;
ESG topics, strategy development and reporting; and risks related to ESG topics
impacting brand and reputation.
Each Committee has provided a report summarizing its purpose and responsibilities under its
mandate and providing an update on its activities during 2022. See pages 36 to 42 of our 2023
Management Information Circular.
Our approach to ESG governance
Board oversight of how management is addressing the Company’s priority ESG topics
and the resulting impacts on the Company’s brand and reputation is the responsibility of
the Board’s Brand and Corporate Responsibility Committee, which coordinates with the
other Committees of the Board. Management oversight of our ESG strategies and
related initiatives is the responsibility of the Executive ESG Council. More details on how
we manage and oversee our priority ESG topics and related strategies and risks can be
found in the Our Approach to ESG section of this report.
2
Ensuring our Board is independent and reflects a diverse mix of experiences, skills and
personal characteristics
The Board’s wide-ranging responsibilities, such as strategy and operational performance, risk
oversight and succession planning, are inherently complex, requiring talented and dedicated
individuals with a diverse mix of experience, skills, backgrounds and other personal
characteristics to effectively govern the Company. Having a majority of independent directors is
also one of the ways we ensure that the Board is able to make decisions in the best interests of
the Company. The Board dedicates significant time and effort towards renewal to ensure the
Board is well-balanced and well-positioned to fulfill its responsibilities.
The director selection process is led by the Governance Committee, as the Board’s nominating
committee, which evaluates the current composition of the Board in light of any changes to the Company’s strategies and risks, current and anticipated Company priorities, and plans for
succession.
In 2022, the Governance Committee developed a skills matrix to ensure that the highest priority
skills for effectively overseeing the management of the Company are represented on the Board.
The Board also adopted a written diversity policy codifying its commitment to diversity and set a
target that it be comprised of at least 30% women by the 2023 Annual Meeting of Shareholders
and thereafter. At the 2023 Annual Meeting of Shareholders, the shareholders elected five
women to the Board, achieving this target. For more information on the composition of our
Board, please see our 2023 Management Information Circular.
The Governance Committee, which is composed of independent directors, makes the
recommendation to the Board on each director’s nomination for election or appointment, after
having considered the skills matrix, the Board diversity policy, the results of director
performance assessments, director tenure, succession planning, independence considerations
and other legal requirements, the overboarding policy, interlocking directorships, and the results
of due diligence reviews.
3
Instituting strong risk management policies and frameworks
Balanced risk-taking and effective risk management create valuable business returns and
shareholder value, as well as market opportunities and competitive advantages, all of which
support profitable growth. The effective management of risk is a key priority for the Board and
management.
The Board and the Audit Committee have joint accountability for ensuring that management
develops and implements a comprehensive Enterprise Risk Management (ERM) Policy and
Framework, Risk Appetite Statement and other policies designed for identifying, assessing,
monitoring, mitigating and reporting on the Company’s key and emerging strategic, operational
and financial risks. The Company has also established an Enterprise Risk Committee, an
executive management committee that meets at least quarterly and provides direct oversight of
all key and emerging risks faced by CTC.
Through its delegated authority, the Audit Committee reports to the Board on management’s
assessment of key and emerging risks, including mitigation plans and risk ratings. It also
recommends to the Board changes to the ERM Policy and Framework, Risk Appetite Statement
and other policies governing significant risks, such as cyber security and financial risk, which the
Audit Committee oversees on behalf of the Board. The Board conducts an annual review of the
Company’s ERM processes and, assisted by the review of the Audit Committee, approves the
Company’s risk disclosures.
The Board has also delegated oversight over certain key risks to its other standing Committees,
with the Management Resources and Compensation Committee overseeing talent risk and the
Brand and Corporate Responsibility Committee overseeing brand risk related to ESG topics.
Effective monitoring of our enterprise strategy requires the Board to monitor risks to, or of, the
strategy. As such, in addition to the Audit Committee’s role in overseeing the Company’s ERM
processes and Committee oversight of certain allocated risks, the Board directly oversees top
strategic risks. These risks are addressed through reporting from the Committees, management
and the Board’s external advisors on a regular cadence, and discussions on one or more top strategic risks are held at regularly scheduled Board meetings in order to monitor their status
and the Company’s ongoing response.
CTC’s Risk Governance Structure
Board of Directors + Board Committees
President and CEO
Management Committees
Three lines of defense
1ST LINE:
Business units and Support Functions, who are responsible for assessing and managing risks associated with their activities
2ND LINE:
Oversight Functions, who provide oversight and challenge of risk and risk-taking activities
3RD LINE:
Internal Audit, who provides independent assurance and advice on the effectiveness of CTC's risk management, control and governance process
Management oversight of risk
We regularly assess our businesses to identify and evaluate key risks that could have a
significant adverse impact on our brand, financial performance and/or ability to achieve
our strategic objectives. We approach the mitigation and management of risk holistically,
with a view to ensuring all risk exposures are considered. Examples of risks assessed:
- Strategic Risks: strategy, key business relationships, reputation
- Financial Risks: financial instrument, liquidity, foreign currency, interest rate
- Operational Risks: talent, technology functionality, resiliency and security, cyber,
data and information, operations, financial reporting, credit, legal, regulatory and
litigation, geo-political
We monitor our risk exposures to ensure that business activities are operating within
approved limits, strategies and risk appetite. Exceptions, if any, are reviewed by the
Enterprise Risk Committee and reported to the CEO, the Audit Committee and the
Board, as appropriate.
4
Maintaining open communication with our shareholders
We believe that maintaining open lines of communication with our shareholders on key matters
is of critical importance. Our Board and management are always interested in their views, and
we have worked to develop a trusted relationship with the investment community. The
Governance Committee actively oversees management’s approach to shareholder engagement
and reviews the Board’s processes in order to strengthen its connection with shareholders.
Ordinary course engagement and communications with shareholders, whether through the
Board or management, include:
- quarterly earnings calls and news releases
- annual and quarterly financial reports
- other annual disclosures and voluntary reporting, including the Management Information
Circular, the 2022 Annual Information Form and the Company’s ESG Report
- industry conferences, store tours and distribution centre tours
- information provided on our website
- responses to investor inquiries via phone, email or letters
- our annual meeting of shareholders
- events and meetings with institutional and other shareholders
2022 shareholder outreach highlights
SIX INVESTOR CONFERENCES AND ROADSHOWS
Actively engaged with existing shareholders and marketed to prospective investors across North America.
ENGAGEMENT WITH OVER 85 INSTITUTIONAL INVESTORS
The Board and management conducted various shareholder engagement activities, addressing topics of interest to investors, including strategy and performance as well as governance and ESG matters.
Connecting with the Canadian Coalition for Good Governance
The Canadian Coalition for Good Governance represents the interests of institutional
investors, promoting good governance practices in Canadian public companies. In 2022,
the Chairman of the Board and the Chairs of the Governance Committee and the
Management Resources and Compensation Committee met with the Canadian Coalition
for Good Governance on a broad range of topics, including board composition and
diversity, skills and succession planning, corporate strategy and material business risk
oversight.