Precision Drilling Corporation ("Precision") is a Canadian oilfield services company headquartered in Calgary, Alberta. Precision has issued securities in the United States and has a listing of its common shares on both the Toronto Stock Exchange ("TSX") and the New York Stock Exchange ("NYSE"). Precision is not required to comply with most of the NYSE corporate governance listing standards and instead may comply with Canadian corporate governance practices. However, as a non-U.S. issuer listed on the NYSE, Precision is required under Section 303A of the NYSE Company Manual (the “Listing Standards”) to provide a description of any significant differences between Precision's corporate governance practices and those required of U.S. domestic companies listed on the NYSE.
Precision's corporate governance practices meet or exceed the TSX guidelines and all other applicable Canadian requirements. Precision's corporate governance practices also incorporate some best practices derived from the NYSE rules and comply with applicable rules adopted by the Securities and Exchange Commission ("SEC") to give effect to the provisions of the Sarbanes-Oxley Act of 2002.
The following is a summary of the significant ways in which Precision's corporate governance practices differ from those followed by U.S. domestic companies under the NYSE Listing Standards.
- NYSE Comparison Rider
NYSE Rule 303A.08 requires shareholder approval of all equity compensation plans and any material revisions to such plans, regardless of whether the securities to be delivered under such plans are newly issued or purchased on the open market, subject to a few limited exceptions. In contrast, the TSX rules require shareholder approval of equity compensation plans only when such plans involve newly issued securities. In addition, equity compensation plans that do not provide for a fixed maximum number of securities to be issued must have a rolling maximum number of securities to be issued, based on a fixed percentage of the issuer's outstanding securities, and must also be approved by shareholders every three years. If the plan provides a procedure for its amendment, the TSX rules require shareholder approval of amendments only where the amendment involves a reduction in the exercise price or an extension of the term of options held by insiders. Precision follows the TSX rules with respect to the requirements for shareholder approval of equity compensation plans and amendments to such plans.
- The NYSE rules require all listed companies to have an audit committee that complies with Rule 10A-3 of the Securities and Exchange Act. Rule 10A-3 requires the audit committee of a U.S. company to be directly responsible for the appointment of any registered accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit review or attest services. There is an exception for foreign private issuers that are required under a home country law to have auditors selected pursuant to home country standards. Pursuant to the Alberta Business Corporations Act, the auditors of Precision are to be appointed by the shareholders at the annual general meeting of the Corporation. Precision's Audit Committee is responsible for evaluating the auditors and advising the Board of Directors of its recommendation regarding the appointment of auditors.