Enerplus Resources Fund 2002 Annual Report

2002 Annual Report > Corporate Governance

CORPORATE GOVERNANCE AND HUMAN RESOURCES COMMITTEE

In January 2003, the Corporate Governance Committee and the Human Resources and Compensation Committee held a joint meeting to review their respective mandates and responsibilities. It became apparent that the committees dealt with many related matters and that efficiencies could be achieved by combining the two committees. As a result of these findings, the Board approved of the combination of the committees on February 5, 2003, to form the Corporate Governance and Human Resources Committee. The Corporate Governance and Human Resources Committee is currently comprised of three unrelated directors. The principle responsibilities of the Committee are twofold in nature.

reviewing the Fund’s compliance with legislative, regulatory and stock exchange protocols respecting corporate governance best practices;
ensuring the size and composition of the Board reflects diversity of experience for effective decision making;
reviews and amends the mandates of the Board’s committees;
reviewing the credentials of new nominees to the Board and the past performance of incumbent nominees proposed for reelection at the annual general meeting of unitholders of the Fund; and
overseeing the effectiveness of management and management’s interaction with and responsiveness to the concerns and requests of the Board.

The Committee has also championed the development of an orientation program developed for new directors of the Board. Pursuant to this program, the new director is provided with a Corporate Governance Manual and an opportunity to meet with and question the Chairman of the Board and the senior management of the Fund.

Human Resources
Another primary responsibility of the Committee relates to employment, compensation and human resource matters of the Fund. In satisfying this obligation, the Committee:

assesses the performance of the Chief Executive Officer and senior management generally, with reference to corporate objectives set and approved by the Board at the annual strategic planning session;
reviews the annual performance assessments submitted by the Chief Executive Officer of senior executives;
reviews and recommends to the Board executive compensation policies, programs and awards;
reviews and approves the granting of trust unit rights to directors, officers and employees under the Trust Unit Rights Incentive Program;
reviews and recommends to the Board awards under the performance incentive plan which are determined with reference to pre-approved corporate objectives;
reviews compensation at all levels to ensure that the Fund remains competitive and retains talented employees to ensure the continued success of the Fund;
reviews and ensures that long-term succession plans for senior executive positions are appropriate; and
reviews the compensation paid to directors to ensure that it is competitive with industry standards.

From time to time, the Committee will engage independent consultants to ensure its compensation practices on all levels are aligned with those of comparable Canadian and U.S. corporations.

Audit and Risk Management Committee
The Audit and Risk Management Committee is currently comprised of three unrelated directors, all of whom are financially literate. The Chairman of the Committee has a Chartered Accountant designation and another member holds a Chartered Financial Analyst designation. The Committee is responsible for the quality of the Fund’s financial reporting and operates pursuant to a charter which identifies its objectives and responsibilities.

During the year, the Committee undertook a general review of its duties and responsibilities and specifically focussed on the financial disclosure reports, the adequacy of internal financial controls and related disclosure materials of the Fund in light of the legislative and regulatory changes resulting from the recent passage of the Sarbanes-Oxley Act of 2002 in the United States.

Following this intensive review, the current responsibilities and duties of the Committee include:

reviewing with management and the external auditors the interim and annual financial statements;
application and their appropriateness;
assessing the effectiveness and suitability of the processes relating to the evaluation of the Fund’s internal financial controls;
engaging the Fund’s external auditors and assessing their performance annually;
reviewing and approving the annual audit plan and audit fees;
approving unrelated audit services, where applicable;
reviewing financial reporting systems;
reviewing the processes by which management identifies, measures and manages the various financial risks of the business and the proper disclosure respecting same;
reviewing, together with the full Board, the hedging and derivatives policies of, and transactions entered into by, management of the Fund; and
ensuring the chief executive officer and the chief financial officer certify the accuracy of the information set forth in the consolidated annual financial statements and related disclosure materials of the Fund.

In the fall of 2002, the Committee endorsed the creation and implementation of a policy to encourage employees and consultants of the Manager to disclose any perceived acts or circumstances of financial or ethical misconduct they may observe and which may impact the assets or affairs of the Fund or the interests of its unitholders. The Fund has always been dedicated to the principles of honesty and integrity in all matters concerning the conduct of its business and it expects and believes that all employees and contract personnel share this commitment. As a result of this policy change, any improprieties which are detected in the organization can be directly reported to, among others, the Chairman of the Committee, on a confidential basis. Further, any person providing a report pursuant to this initiative shall be protected from any form of retaliation by any Fund or Manager personnel.

Environment, Safety and Reserves Committee
The Environment, Safety and Reserves Committee is comprised of two unrelated directors and one related director. The Board believes that the industry knowledge of the related director benefits the review and decision processes of the Committee. It also believes that since two members, including the Chairman of the Committee, are unrelated, the independence of the Committee is not compromised. The duties and responsibilities of the Environment, Safety and Reserves Committee can be divided into two separate areas:

Safety and Environment
The obligations of the Committee relating to safety and environment matters include:

review, approve and amend as required, internal environmental and safety policies and emergency response plans;
review and approve strategies employed to manage risk in field operations;
review internal and third party due diligence inspections; and
review ongoing environmental and safety reporting and auditing results.

Twice yearly, the Board is presented with a Corporate Environmental Due Diligence Statement executed by senior management. The document certifies that, after due inquiry with the appropriate staff members, management is not aware of any significant environmental issues that have not been reported to the Committee and that appropriate procedures are in place to address any such issues, should they arise.

Reserves
The Committee is also responsible for monitoring the Fund’s reserves. In this capacity the Committee satisfies its obligations primarily by:

reviewing the procedures for providing information to the Fund’s independent reserves evaluator;
meeting independently with the independent reserves evaluator to determine the ability of the evaluator to report, without reservation, on the reserves of the Fund;
reviewing the appointment of the independent reserves evaluator;
reviewing the available tax pools and future price/cost assumptions utilized in the analysis;
reviewing the reconciliation of changes in reserves and future net revenue; and
eviewing with management all information associated with oil and gas production and operational activities.

The Committee meets twice yearly and obtains, annually, a signed report from the independent reserves evaluator and a certificate of compliance from management.
Management Disclosure Committee
As a foreign private issuer listed on the New York Stock Exchange ("NYSE"), the Fund abides by applicable U.S. law and regulations and generally follows the recommendations of the Securities Exchange Commission ("SEC"). One of the recommendations of the SEC concerns the creation of a Disclosure Committee. In February of 2003, a Disclosure Committee was formed by members of management, (it is not a Committee of the Board), to specifically deal with the increasing disclosure obligations facing the Fund. The purpose of this management Committee is to determine the disclosure obligations of the Fund on a timely basis. The Committee reports to senior management, including the chief executive officer and the chief financial officer and also serves as the coordinating group for the Fund’s public disclosure. Members of the Committee are selected by the Chief Executive Officer and the Chief Financial Officer.
The Committee’s mandate includes:

reviewing all periodic reports;
reviewing current reports on relevant SEC Forms;
reviewing press releases containing financial information or providing earnings distributions;
reviewing presentations to analysts, investor conferences and rating agencies; and
reviewing road show presentations to investors and other correspondence sent to unitholders.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of the design and operation of our disclosure controls and procedures within 90 days of the filing date of this annual report pursuant to Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the "Exchange Act"). Based on that evaluation, our principal executive officer and principal financial officer have concluded that these controls and procedures are effective. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation.

Disclosure controls and procedures are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified under the Exchange Act. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file under the Exchange Act is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

DIRECTORS

	Douglas R. Martin (3) (4) (7) Charles Avenue Capital Corp. Calgary, Alberta	André Bineau (1) Vice President Association de bienfaisance et de retraite des policiers et policières de la Ville de Montréal Montréal, Québec
	Derek J.M. Fortune (3) Secretary / Manager Superannuation Fund, City of Ottawa Ottawa, Ontario	Gordon J. Kerr President & CEO Enerplus Global Energy Management Company Calgary, Alberta
	Robert L. Normand (1) (3) (5) Corporate Director Montréal, Québec	Eric P. Tremblay (2) Senior Vice President, Capital Markets Enerplus Global Energy Management Company Calgary, Alberta
	Harry Wheeler (1) (2) (6) President Colchester Investments Ltd. Calgary, Alberta	Robert Zorich Managing Director EnCap Investments L.C. Houston, Texas
(1) Audit & Risk Management Committee (2) Environment, Safety & Reserves Committee (3) Corporate Governance, Compensation & Human Resources Committee (4) Chairman of the Board (5) Chairman of the Audit & Risk Management Committee (6) Chairman of the Environment, Safety & Reserves Committee (7) Chairman of the Corporate Governance, Compensation & Human Resources Committee

OFFICERS

Gordon J. Kerr President & Chief Executive Officer	Heather J. Culbert Senior Vice President, Corporate Services
Garry A. Tanner Senior Vice President & Chief Operating Officer	Eric P. Tremblay Senior Vice President, Capital Markets
Robert J. Waters Senior Vice President & Chief Financial Officer	Jo-Anne M. Caza Vice President, Investor Relations
Daryl W. Cook Vice President, Operations	Ian C. Dundas Vice President & Director, Business Development
Wayne T. Foch Vice President, Finance	David A. McCoy General Counsel & Corporate Secretary
Daniel M. Stevens Vice President, Development Services	Rodney D. Gray Controller, Finance
Wayne G. Ford Controller, Operations	Christina Meeuwsen Assistant Corporate Secretary

CORPORATE INFORMATION

Operating Companies owned by
Enerplus Resources Fund

EnerMark Inc.
Enerplus Resources Corporation

Legal Counsel

Blake, Cassels & Graydon LLP
Calgary, Alberta and Toronto, Ontario

Auditors

Deloitte & Touche LLP Calgary, Alberta

Bankers

Canadian Imperial Bank of Commerce
Royal Bank of Canada
The Bank of Nova Scotia
The Toronto - Dominion Bank
Bank of Montreal
Citibank, NA, Canadian Branch
National Bank of Canada

Independent Reserve Engineers

Sproule Associates Limited
Calgary, Alberta

Stock Exchange Listings and Trading Symbols

New York Stock Exchange: ERF
Toronto Stock Exchange: ERF.un

Transfer Agent

The CIBC Mellon Trust Company
Calgary, Alberta
Toll free: 1-800-387-0825
Email: inquiries@cibcmellon.com

Head Office
The Dome Tower
3000, 333 - 7th Avenue S.W.
Calgary, Alberta T2P 2Z1
Telephone: (403) 298-2200
Toll free: 1-800-319-6462
Fax: (403) 298-2211
Email: investorrelations@enerplus.com

Enerplus Internet Site
Enerplus Resources Fund has a comprehensive website that provides investors with an immediate source of all public information with respect to the Fund. The following documents are available at www.enerplus.com:

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Adjusted Cost Base Calculator
Corporate Governance

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