responsible leadership




Enerplus has provided a 227% total return over the past 10 years.



Corporate Governance

Enerplus believes that good corporate governance is essential to creating long-term value for our unitholders. Sustained financial success can only be achieved by operating with integrity and in an ethical manner. As such, Enerplus is committed to following corporate governance best practices.

The Board of Directors of EnerMark Inc. (“EnerMark”), a wholly-owned subsidiary of the Fund, is responsible for the overall governance of the Fund.

 

THE BOARD OF DIRECTORS

Currently, our Board is composed of nine directors. Seven of the directors are deemed to be “unrelated or independent” pursuant to the Toronto Stock Exchange (“TSX”) guidelines and the New York Stock Exchange (“NYSE”) listing standards, respectively. Throughout our disclosure of corporate governance practices, we will use the term “independent” to denote both independent and unrelated.

The Board is charged with the overall stewardship of the Fund and manages or supervises the business of the Fund and its management. Specifically, the Board’s responsibilities include:

  • approving the annual audited financial statements of the Fund;
  • recommending to the unitholders the appointment of the Fund’s external auditors;
  • reviewing, adopting and monitoring the Fund’s strategic planning process;
  • approving goals and objectives for the Fund;
  • reviewing and approving the Fund’s operating budget;
  • ensuring policies and processes are in place for the identification of principal business risks and reviewing and approving risk management strategies;
  • approving corporate policies and other corporate protocols and controls;
  • succession planning, including nominating and monitoring the Chief Executive Officer and senior management;
  • approving the Fund’s policy on public disclosure; and
  • ensuring the integrity of internal financial controls and reviewing management information systems.

In addition, the Board has the responsibility at all times to act in the best interest of the Fund and its unitholders.

The Board meets a minimum of six times per year. Each scheduled board meeting is followed by a discussion of the independent directors without the presence of management. Directors assist in preparing the agenda for Board and committee meetings and receive a comprehensive package of information in advance of each meeting. Further, the Board attends an annual strategic planning session to review, amend or adopt new corporate objectives for the upcoming year and longer-term strategies.

BOARD INITIATIVES TO IMPROVE CORPORATE GOVERNANCE

The Board continually reviews its practices and procedures to ensure it follows corporate governance best practices. During 2003, the Board undertook a number of initiatives to improve its corporate governance practices. An example of this is the approval of a new Code of Business Conduct (the “Code”) (following the internalization of the Fund’s management company) which sets standards of ethical behaviour for the Fund and all of its affiliates. Each director, officer (including our principal executive officer, principal financial officer, principal accounting officer and controller), employee, and consultant must adhere to the standards described in the Code and must sign an acknowledgement of such standards and disclose any deviation from such standard each year. Prior to the adoption of the Code, the employees responsible for the Fund’s management conducted themselves pursuant to the code of ethics of that manager’s former parent company. The Code can be found, in its entirety, on our website at www.enerplus.com. As of March 17, 2004, no waivers have been granted pursuant to the Code of Business Conduct.

Other initiatives taken by the Board include: a review of director independence; mandating certain committee memberships be restricted to independent directors; and a review of committee charters to ensure best practices.

The current corporate structures, policies and practices of the Board and its committees has enabled the Board to conclude that Enerplus is in full compliance with the Guidelines of Corporate Governance established by the TSX, which is more particularly outlined in the Fund’s Information Circular and Proxy Statement for its 2004 annual general meeting.

The Board of Directors discharges its responsibilities either acting in its entirety, or through one of its committees.

CORPORATE GOVERNANCE, NOMINATING AND ENVIRONMENT, HEALTH & SAFETY COMMITTEE

This Committee is comprised of three independent directors, appointed annually following the annual general meeting of the Fund. The purpose of this Committee includes:

Corporate Governance and Nominating
  • assessing and making recommendations as to the size, composition and effectiveness of the Board;
  • recommending nominees for election to the Board;
  • conducting an annual self evaluation process of the Board and each of its directors;
  • conducting an annual evaluation process to assess the effectiveness of the President & Chief Executive Officer;
  • reviewing and monitoring the orientation of new directors;
  • receiving annual compliance certificates from all employees, directors, officers and consultants; and
  • generally ensuring good corporate governance practices are observed.


Environment, Health & Safety
  • reviewing the Fund’s environment, health and safety (“EH&S”) programs and policies;
  • reviewing management’s performance relating to EH&S matters;
  • reviewing significant external and internal EH&S reports on risk assessments, ongoing investigations and audits performed;
  • ensuring that long-range preventive programs are in place to limit future risks;
  • receiving an environment, health and safety compliance certificate from the Chief Operating Officer twice annually; and
  • long-term succession plans for senior executive generally ensuring the integrity of the Fund’s EH&S programs and policies.
COMPENSATION AND HUMAN RESOURCES COMMITTEE

The purpose of this Committee is to assist the Board in fulfilling its duties regarding human resources, compensation matters and succession planning. The Committee is composed of three independent directors. The Committee’s responsibilities include:
  • assessing the performance of the Chief Executive Officer and senior management with reference to corporate objectives;
  • recommending executive compensation policies, programs and awards to the Board;
  • reviewing and approving the granting of trust unit rights to officers and employees under the Trust Unit Rights Incentive Program and entitlements under the Full Value Unit Plan;
  • reviewing and recommending to the Board awards under the Fund’s performance incentive plan;
  • reviewing compensation at all levels to ensure competitiveness and employee retention; and
  • reviewing long-term succession plans for senior executive positions.
AUDIT AND RISK MANAGEMENT COMMITTEE

The Audit and Risk Management Committee is currently comprised of three independent directors, being Robert Normand, Chairman, Andre Bineau, and Harry Wheeler, all of whom are financially literate. Robert Normand, the Chairman of the Committee, is a Chartered Accountant and has been identified to be the Committee’s “Financial Expert” under applicable U.S. reporting rules. The Committee is primarily responsible for the quality of the Fund’s financial reporting and operates pursuant to a charter which identifies its objectives and responsibilities.

The Committee’s responsibilities include:

  • reviewing, with management and the external auditors, the interim and annual financial statements to be recommended for approval;
  • 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;
  • reviewing with the external auditors the use by management of generally accepted accounting principles, their consistent application and their appropriateness;
  • engaging the Fund’s external auditors and assessing their performance annually;
  • reviewing and approving the annual audit plan and audit fees;
  • reviewing and approving non-audit services to be provided by the Fund’s external auditors;
  • reviewing financial reporting systems and monitoring management’s initiatives with regard to internal controls;
  • reviewing the processes by which management identifies, measures and manages the various financial risks of the business;
  • reviewing the hedging and derivatives policies of, and transactions entered into by, management of the Fund; and
  • meeting independent of management with the external auditors following each scheduled Committee meeting.

The charter of the Audit and Risk Management Committee can be found, in its entirety, on our website at www.enerplus.com.

The Committee implemented a policy to encourage employees and consultants to disclose any perceived acts or circumstances of financial or ethical misconduct which may impact the assets of the Fund or the interests of its unitholders. The Fund is 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, any improprieties which are detected in the organization can be anonymously and 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 personnel.



RESERVES COMMITTEE

The Reserves Committee is comprised of three independent directors. The Committee’s responsibilities include:

  • recommending to the Board the engagement of the independent reserves evaluator;
  • assessing the work of independent reserves evaluator annually;
  • reviewing the Fund’s procedures relating to the disclosure of information with respect to its reserves;
  • reviewing the scope of the annual review of the reserves by the independent reserves evaluator, including findings and any disagreements with management;
  • meeting independent of management with the reserves evaluator;
  • determining whether any restrictions affect the ability of the reserves evaluator in reporting on the Fund’s reserves data;
  • receiving, annually, a signed reserves evaluator’s report and a certificate of compliance/due diligence from management; and
  • approving the year-end reserves evaluation.
MANAGEMENT DISCLOSURE AND OVERSIGHT COMMITTEE

In addition to the Board committees, management has formed an internal committee to enhance and ensure the Fund meets its increasing disclosure obligations. As a foreign private issuer listed on the NYSE, the Fund abides by applicable U.S. law and regulations and generally follows the recommendations of the Securities Exchange Commission (“SEC”) and the NYSE. 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. The Committee’s responsibilities include:

  • reviewing the Fund’s internal financial controls and ensuring such controls are sufficient to discharge the Fund’s legal and regulatory obligations;
  • ensuring the Fund’s internal financial controls are being observed by Fund personnel and are operating effectively;
  • reviewing all periodic reports and disclosure documents; and
  • reviewing news releases with respect to quarterly and annual financial results.

We believe our approach to corporate governance observes the best practices. Further, we are in compliance with the Toronto Stock Exchange Guidelines for Improved Corporate Governance in Canada. In this regard, we direct the reader to the Fund’s Information Circular and Proxy Statement for its 2004 annual general meeting under the heading of “Statement of Corporate Governance Practices”.

As a foreign private issuer listed on the NYSE, the Fund is required, pursuant to Section 303A.11 of the NYSE Listing Manual, to compare its corporate governance practices to the new NYSE corporate

governance listing standards. We have undertaken a review of these new listing standards and confirm that the Fund’s practices in corporate governance are not significantly nor materially different from such standards. As a foreign private issuer, we are not obligated to and we do not have an internal audit function. However, Enerplus is currently reviewing its position on this matter.

As a foreign private issuer, the Fund is also subject to certain reporting, disclosure and certification obligations in the United States. The Fund has complied with, and will continue to comply with, all of these obligations, including all required certifications by its Chief Executive Officer and Chief Financial Officer pursuant to the Sarbanes-Oxley Act as well as Canadian securities laws.

Environment, Health & Safety

Enerplus places a high priority on protecting our environment and the health and safety of our employees, contractors and the public. We recognize the value of maintaining superior environment, health and safety standards and actively manage programs to support and measure our efforts for further improvement.

Enerplus monitors the key industry benchmarks of recordable and lost time injuries for employees and contractors. Our results compare favourably to industry data as our employees have not experienced a lost time accident since 2000. We consistently outperform the employee lost time injury index as measured against benchmark data provided by CAPP (the Canadian Association of Petroleum Producers). However, this benchmark data highlights the need to improve our contractor safety performance and this will be a focus area in 2004.





Our EH&S Management System includes other ongoing assessments designed to support top tier performance and continuous improvement as demonstrated by the following initiatives:

  • Enerplus achieved a 94% rating from a third party audit conducted on our Certificate of Recognition in the Partnership Program with Alberta Human Resources and Employment and the Workers Compensation Board. This is an excellent accomplishment that demonstrates our drive for distinction within our program.
  • Enerplus continues to participate at a Platinum Level, the highest level attainable, in the Environmental Health and Safety Stewardship Program initiated by CAPP.
  • An internal EH&S Steering Committee was formed, comprised of Executive, Managers and EH&S staff, to address environmental, health and safety standards and policies. Emphasis will include enhancements to programs to ensure hazardous tasks are carried out safely, responsibly and effectively.
  • As part of our Corrosion Integrity Management Program, Enerplus continues to provide inspection and upgrading of our production infrastructure to minimize potential environmental and financial impacts. Last year, approximately 2,000 kilometres (43%) of our pipelines were flow modeled and risk assessed, 410 (25%) of our tanks were inspected or leak tested, and 100% of the required pressure vessels inspections were completed. Enerplus also successfully achieved the Alberta Boiler Safety Association (“ABSA”) external three-year audit renewal.
COMMUNITY INVOLVEMENT

Enerplus is committed to investing in our local communities both in Calgary and throughout western Canada. We believe that as a responsible corporate citizen, we can contribute to the quality of life in the communities where we have operations. We do this by contributing to various community-based organizations that we believe maximize our charitable giving. Our employees are equally committed to the communities where they live and work. In 2003, through the efforts of our employees and a matching of their contributions, Enerplus was able to donate approximately $300,000 to the Calgary United Way. We are also a supporter of Habitat for Humanity and have joined forces with three industry partners to build two townhomes in 2004 for families in need of affordable housing in Calgary. This program not only provides us with a tangible result to our corporate giving, but also reinforces the spirit of teamwork at Enerplus as our employees will lend their manpower in the building of these homes.