Key Impacts & Outcomes Who We Are How We Report President's Message Policies & Governance Social Performance HSE Performance Economic Performance Independent Report Social Performance Data HSE Performance Data Economic Performance Data GRI Reference Indicators Glossary & Abbreviations Forward Looking Statements
PDF Version of Talisman 2005 CR
© 2006 Talisman CR

handcrafted by nonfiction

Policies And Governance

WHAT ROLE DOES TALISMAN'S GOVERNANCE STRUCTURE PLAY IN MANAGING CORPORATE RESPONSIBILITY ISSUES?

Governance of corporate responsibility issues at Talisman is guided by the Company's commitment to a number of international standards, including the Universal Declaration of Human Rights and the Global Compact and initiatives such as the Extractive Industries Transparency Initiative (EITI) and the Voluntary Principles on Security and Human Rights.

Internally, responsibility for Talisman's social, health, safety and environmental performance rests with the entire Board of Directors. Issues are reviewed at the Board level and not by a specific subcommittee. Comprehensive corporate responsibility reviews and country specific updates are provided to the Board of Directors annually. Health, safety and environmental reports are also provided to the Board of Directors at each regularly scheduled Board meeting. Other reports are provided throughout the year as appropriate. Talisman's commitment to corporate responsibility and ethical business conduct is founded in its PBCE.

Policy on Business Conduct and Ethics

A statement of the ethical principles to which Talisman is committed, the PBCE is the foundation of the Company's corporate responsibility framework and is supported by the Company's internal control system. The PBCE sets out the Company's code of ethical behaviour and its expectations for business conduct. Every Talisman employee is required to read the Policy as a condition of employment and understand how it relates to his or her business dealings. The Policy can be found on Talisman's internal and external websites and copies have been translated into relevant local languages including English, Spanish, Indonesian, Norwegian and Arabic, for use in Talisman's international offices. In 2005, Talisman introduced an online PBCE training component, which employees and significant contractors will be required to complete every two years.

Audit, Training and Compliance

Talisman annually checks its business activities to test conformance with the PBCE and specific training presentations were made to employees by Talisman's Legal Department. Employees, officers, directors and some contractors are also required to complete a Compliance Certificate annually certifying observance of the PBCE while noting any exceptions. Compliance Certificates are returned directly to the President and CEO. The President and CEO and each member of the Board of Directors also complete a Certificate of Compliance and provide it to the Chairman of the Board of Directors. In 2005, this process was automated for employees and contractors to improve record keeping.

Breaches of the PBCE

The Company requires that all employees promptly report any observed breaches of the PBCE. The Governance and Nominating Committee of the Company's Board of Directors must approve any waiver of any of the provisions of the PBCE for a director or an executive officer. Material departure from the PBCE by a director or officer, which constitutes a material change to the Company, will be promptly disclosed.

Breaches of the PBCE are dealt with by senior management, including the application of the Company's Progressive Discipline Procedure, which is available to all employees through Talisman's internal website.

In 2005, Talisman's President and CEO received 3,719 Compliance Certificates from employees and contractors in North America (2,390), the North Sea (725) and the rest of the world (604). Submissions included 16 potential exceptions, which were all assessed or investigated and found to be immaterial. The Company values employee good faith actions and will not tolerate retaliation of any kind for reporting exceptions. All reported exceptions are promptly assessed, investigated and are treated confidentially.

Corporate Governance

Talisman's corporate governance practices satisfy all the existing guidelines for effective corporate governance established by Canadian National Instrument 58-101 and National Policy 58-201 (collectively, the CSA Rules), all of the New York Stock Exchange (NYSE) corporate governance listing standards applicable to non-US companies, and substantially all of the NYSE Stock Exchange corporate governance listing standards applicable to US companies. In 2005, the Toronto Stock Exchange replaced its corporate governance principles with a requirement that listed issuers comply with the CSA Rules.

Ongoing Governance Activities

In 2005, Talisman established an accounting and auditing complaints procedure for the treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters. As part of this initiative, a confidential, anonymous third party hotline was established to allow employees to submit complaints. No complaints were received in 2005. The Company's PBCE was also amended to incorporate these procedures. The director share ownership policy was revised to link share ownership requirements to annual retainers for Board members. This policy, which was initially adopted by the Board of Directors in 2004, requires non-executive directors of Talisman to own, over a five-year implementation period, a minimum amount of common shares or deferred share units of Talisman. In addition, at least 40% of a nonexecutive director's annual retainer must be received in the form of deferred share units. To reflect best governance practices, shareholders were given the opportunity to vote for individual directors (as opposed to a "slate" vote) at the May 3, 2005 annual general and special meeting of shareholders.

The terms of reference of the Board of Directors and its committees were updated in 2005 to incorporate new legislative requirements, including best practices elaborated on in the CSA rules. In addition, the Board of Directors approved updates to Talisman's Insider Trading Policy and a new Disclosure Policy in 2005. Talisman's governance efforts were recognized by the Globe and Mail in its fourth annual corporate governance survey entitled Board Games. Talisman tied for twelfth place out of a total of 209 Standard & Poor's/Toronto Stock Exchange (S&P/TSX) index companies analyzed in the October 2005 installment of this survey. For more information on Talisman's governance structures, see Schedule "A" of Talisman's corporate governance statement, which appears in the Company's management proxy circular dated March 13, 2006.