UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2022
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
Commission file number 0-12014
IMPERIAL OIL LIMITED
(Exact name of registrant as specified in its charter)
Canada
(State or other jurisdiction of
incorporation or organization)
505 Quarry Park Boulevard S.E., Calgary, Alberta, Canada
(Address of principal executive offices)
98-0017682
(I.R.S. Employer
Identification No.)
T2C 5N1
(Postal Code)
1-800-567-3776
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
None
Trading symbol
Name of each exchange on
which registered
None
Securities registered pursuant to Section 12(g) of the Act:
Common Shares (without par value)
(Title of Class)
Indicate by check mark if the registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act).
Yes ✓ No......
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934.
Yes...... No ✓
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes ✓ No......
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes ✓ No......
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in
Rule 12b-2 of the Securities Exchange Act of 1934.
Large accelerated filer
✓
Smaller reporting company……
Accelerated filer.....
Emerging growth company……
Non-accelerated filer.....
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act……
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its
audit report. ✓
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12 b-2 of the Securities Exchange Act of 1934). Yes..... No ✓
As of the last business day of the 2022 second fiscal quarter, the aggregate market value of the voting stock held by non-affiliates of the registrant was
Canadian $11,744,615,092 based upon the reported last sale price of such stock on the Toronto Stock Exchange on that date.
The number of common shares outstanding, as of February 8, 2023, was 584,152,718.
1
Table of contents
PART I
Item 1.
Business
Upstream
Disclosure of reserves
Proved undeveloped reserves
Oil and gas production, production prices and production costs
Drilling and other exploratory and development activities
Present activities
Delivery commitments
Oil and gas properties, wells, operations and acreage
Downstream
Supply and trading
Transportation
Refining
Distribution
Marketing
Chemical
Human capital resources
Competition
Government regulations
The company online
Item 1A. Risk factors
Item 1B. Unresolved staff comments
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Properties
Legal proceedings
Mine safety disclosures
Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities
Management’s discussion and analysis of financial condition and results of operations
Item 7.
Item 7A. Quantitative and qualitative disclosures about market risk
Financial statements and supplementary data
Item 8.
Item 9.
Changes in and disagreements with accountants on accounting and financial disclosure
Item 9A. Controls and procedures
Item 9B. Other information
Item 9C. Disclosure regarding foreign jurisdiction that prevents inspections
PART III
Item 10. Directors, executive officers and corporate governance
Item 11.
Item 12.
Item 13. Certain relationships and related transactions, and director independence
Item 14.
PART IV
Item 15.
Item 16.
SIGNATURES
Financial section
Proxy information section
Exhibits, financial statement schedules
Form 10-K summary
Principal accountant fees and services
Executive compensation
Security ownership of certain beneficial owners and management and related stockholder matters
Page
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41
111
All dollar amounts set forth in this report are in Canadian dollars, except where otherwise indicated. Note that
numbers may not add due to rounding.
2
Forward-looking statements
Statements of future events or conditions in this report, including projections, targets, expectations, estimates,
and business plans are forward-looking statements. Similarly, discussion of emission-reduction roadmaps or
future plans related to carbon capture, biofuel, hydrogen, plastics recycling and other plans to drive towards net
-zero emissions are dependent on future market factors, such as continued technological progress and policy
support, and represent forward-looking statements. Forward-looking statements can be identified by words such
as believe, anticipate, intend, propose, plan, goal, seek, project, predict, target, estimate, expect, strategy,
outlook, schedule, future, continue, likely, may, should, will and similar references to future periods. Forward-
looking statements in this report include, but are not limited to, references to estimates, development, timing
and recovery of reserves; the improvement of recovery through experimental operations; the infill development
drilling program at Cold Lake; the timing, cost, efficiency and production of the Leming and SAGD Grand Rapids
Phase 1 and LASER projects at Cold Lake and the Aspen project; the continued evaluation of other oil sands
leases and unconventional assets; the upstream focus on key oil sands assets; future activities with respect to
Beaufort Sea licences; the impact of the Kearl Boiler Flue Gas heat recovery unit, and progressing plans for
application to up to four additional boilers by year end 2023; the ability of rail infrastructure to mitigate pipeline
capacity constraints; human capital resources strategy and impact; anticipated capital and operating
expenditures, including with respect to environmental protection; continued evaluation of the company’s share
purchase program; being well positioned to participate in future investments and reduce commodity price risk;
the company’s long-term business outlook including demand, supply and energy mix and pathways related to
greenhouse gas emissions; the impact of participation in the Pathways alliance; Imperial’s company-wide net-
zero goal by 2050 (Scope 1 and 2) and the company’s greenhouse gas emissions intensity goal for 2030 for its
oil sands operations; the extent of ongoing effects of current global economic uncertainty and geopolitical
events affecting supply and demand, including inflation, and the company’s ability to mitigate cost impacts and
offset inflationary pressure; segment growth, competitive strategies and benefits from an integrated business
model; the ability of the company’s current investment strategy of value and select volume growth to deliver
robust returns and support long term growth; continued evaluation of opportunities such as rail shipments and
pace of the Aspen project; the impact of Downstream strategies and competitive position and the expected
volatility of refining margins; potential impacts from environmental risks, carbon policy, climate related
regulations and biofuels mandates; the timing and production from the renewable diesel facility at Strathcona;
the benefits to the Chemical business from integration with the Sarnia refinery and relationship with ExxonMobil;
capital structure and financial strength as a competitive advantage, for risk mitigation and meeting funding
requirements; expected full year capital expenditures of about $1.7 billion for 2023; earnings sensitivities; risks
associated with use of derivative instruments; the impact of any pending litigation, accounting standards and
unrecognized tax benefits; standardized measures of discounted future cash flows; the effectiveness of the
company’s compensation plan in long term performance and mitigating risk; the progress and impact of various
initiatives including with E3 Lithium, Air Products, FLO and Atura Power; and the impact of the Sarnia products
pipeline.
Forward-looking statements are based on the company’s current expectations, estimates, projections and
assumptions at the time the statements are made. Actual future financial and operating results, including
expectations and assumptions concerning future energy demand, supply and mix; commodity prices and
foreign exchange rates; production rates, growth and mix across various assets; production life, resource
recoveries and reservoir performance; project plans, timing, costs, technical evaluations and capacities, and the
company’s ability to effectively execute on these plans and operate its assets, including its investment in the
renewable diesel complex at Strathcona and the Leming, Grand Rapids and LASER projects at Cold Lake; the
adoption and impact of new facilities or technologies on reductions to GHG emissions intensity, including
technologies using solvents to replace energy intensive steam at Cold Lake, boiler flue gas technology at Kearl,
Strathcona renewable diesel, carbon capture and storage including in connection with hydrogen for the
renewable diesel project, recovery technologies and efficiency projects and any changes in the scope, terms, or
costs of such projects; that any required support from policymakers and other stakeholders for various new
technologies such as carbon capture and storage will be provided; for renewable diesel, the availability and cost
of locally-sourced and grown feedstock and the supply of renewable diesel to British Columbia in connection
with its low-carbon fuel legislation; the amount and timing of emissions reductions, including the impact of lower
carbon fuels; performance of third party service providers; receipt of regulatory and third party approvals in a
timely manner; applicable laws and government policies, including with respect to climate change, GHG
emissions reductions and low carbon fuels; refinery utilization and product sales; the ability to offset any
ongoing inflationary pressures; cash generation, financing sources and capital structure, such as dividends and
shareholder returns, including the timing and amounts of share repurchases; progression of COVID-19 and its
impacts on Imperial’s ability to operate its assets; capital and environmental expenditures; the capture of
3
efficiencies within and between business lines and the ability to maintain near-term cost reductions as ongoing
efficiencies; and general market conditions could differ materially depending on a number of factors.
These factors include global, regional or local changes in supply and demand for oil, natural gas, petroleum and
petrochemical products, feedstocks and other market factors, economic conditions or seasonal fluctuations and
resulting demand, price, differential and margin impacts; transportation for accessing markets; political or
regulatory events, including changes in law or government policy, applicable royalty rates, tax laws including
taxes on share buybacks, and actions in response to COVID-19; environmental risks inherent in oil and gas
activities; environmental regulation, including climate change and greenhouse gas regulation and changes to
such regulation; government policies supporting lower carbon investment opportunities; failure or delay of
supportive policy and market development for emerging lower-emission energy technologies; the receipt, in a
timely manner, of regulatory and third-party approvals; third-party opposition to company and service provider
operations, projects and infrastructure; availability and allocation of capital; availability and performance of third-
party service providers; unanticipated technical or operational difficulties; management effectiveness and
disaster response preparedness; commercial negotiations; project management and schedules and timely
completion of projects; unexpected technological developments; the results of research programs and new
technologies, including with respect to greenhouse gas emissions, and the ability to bring new technologies to
commercial scale on a cost-competitive basis; reservoir analysis and performance; the ability to develop or
acquire additional reserves; operational hazards and risks; cybersecurity incidents; currency exchange rates;
the impacts of COVID-19 or other public health crises, including the effects of government responses on people
and economies; general economic conditions, including the occurrence and duration of economic recessions or
downturns; and other factors discussed in Item 1A Risk factors and Item 7 Management’s discussion and
analysis of financial condition and results of operations in this annual report on Form 10-K.
Forward-looking statements are not guarantees of future performance and involve a number of risks and
uncertainties, some that are similar to other oil and gas companies and some that are unique to Imperial Oil
Limited. Imperial’s actual results may differ materially from those expressed or implied by its forward-looking
statements and readers are cautioned not to place undue reliance on them. Imperial undertakes no obligation to
update any forward-looking statements contained herein, except as required by applicable law.
Forward-looking and other statements regarding Imperial's environmental, social and other sustainability efforts
and aspirations are not an indication that these statements are necessarily material to investors or requiring
disclosure in the company's filings with securities regulators. In addition, historical, current and forward-looking
environmental, social and sustainability-related statements may be based on standards for measuring progress
that are still developing, internal controls and processes that continue to evolve, and assumptions that are
subject to change in the future, including future rule-making.
Energy demand models are forward-looking by nature and aim to replicate system dynamics of the global
energy system, requiring simplifications. The reference to any scenario in this report, including any potential net-
zero scenarios, does not imply Imperial views any particular scenario as likely to occur. In addition, energy
demand scenarios require assumptions on a variety of parameters. As such, the outcome of any given scenario
using an energy demand model comes with a high degree of uncertainty. For example, the International Energy
Agency (IEA) describes its Net Zero Emissions (NZE) by 2050 scenario as extremely challenging, requiring
unprecedented innovation, unprecedented international cooperation and sustained support and participation
from consumers. Third-party scenarios discussed in this report reflect the modeling assumptions and outputs of
their respective authors, not Imperial, and their use by Imperial is not an endorsement by the company of their
underlying assumptions, likelihood or probability. Investment decisions are made on the basis of Imperial’s
separate planning process. Any use of the modeling of a third-party organization within this report does not
constitute or imply an endorsement by Imperial of any or all of the positions or activities of such organization.
The term “project” as used in this report can refer to a variety of different activities and does not necessarily
have the same meaning as in any government payment transparency reports.
4
Item 1. Business
PART I
Imperial Oil Limited was incorporated under the laws of Canada in 1880 and was continued under the Canada
Business Corporations Act (the “CBCA”) by certificate of continuance dated April 24, 1978. The head and
principal office of the company is located at 505 Quarry Park Boulevard S.E., Calgary, Alberta, Canada T2C
5N1. Exxon Mobil Corporation (“ExxonMobil”) owns approximately 69.6 percent of the outstanding shares of the
company. In this report, unless the context otherwise indicates, reference to the “company” or “Imperial”
includes Imperial Oil Limited and its subsidiaries, and reference to ExxonMobil includes Exxon Mobil
Corporation and its affiliates, as appropriate.
The company is one of Canada’s largest integrated oil companies. It is active in all phases of the petroleum
industry in Canada, including the exploration for, and production and sale of, crude oil and natural gas. In
Canada, it is a major producer of crude oil, the largest petroleum refiner, a leading marketer of petroleum
products, and a major producer of petrochemicals. The company also pursues lower-emission business
opportunities including carbon capture and storage, hydrogen and lower-emission fuels.
The company’s operations are conducted in three main segments: Upstream, Downstream and Chemical.
Upstream operations include the exploration for, and production of, crude oil, natural gas, synthetic crude oil
and bitumen. Downstream operations consist of the transportation and refining of crude oil, blending of refined
products and the distribution and marketing of those products. Chemical operations consist of the
manufacturing and marketing of various petrochemicals.
Operating data and financial information about the company’s business segments are contained in this report
under the following: “Management’s discussion and analysis of financial condition and results of operations” and
the “Financial section” under note 2 to the consolidated financial statements: “Business segments”.
5
Upstream
Disclosure of reserves
Summary of oil and gas reserves at year-end
The table below summarizes the net proved reserves for the company, as at December 31, 2022, as detailed in
the “Supplemental information on oil and gas exploration and production activities” part of the “Financial
section”, starting on page 41 of this report.
All of the company’s reported reserves are located in Canada. The company has reported proved reserves
based on the average of the first-day-of-the-month price for each month during the last 12-month period ending
December 31. Natural gas is converted to an oil-equivalent basis at six million cubic feet per one thousand
barrels. No major discovery or other favourable or adverse event has occurred since December 31, 2022 that
would cause a significant change in the estimated proved reserves as of that date.
Liquids (a)
Natural gas
millions of
barrels
billions of
cubic feet
4
—
4
60
12
72
Synthetic
crude oil
millions of
barrels
248
105
353
Total
oil-equivalent
basis
millions of
barrels
1,953
240
2,193
Bitumen
millions of
barrels
1,691
133
1,824
Net proved reserves:
Developed
Undeveloped
Total net proved
(a) Liquids include crude oil, condensate and natural gas liquids (NGLs). NGL proved reserves are not material and are therefore
included under liquids.
The estimation of proved reserve volumes, which is based on the requirement of reasonable certainty, is an
ongoing process based on rigorous technical evaluations, commercial and market assessments, detailed
analysis of well information such as flow rates and reservoir pressures, and development and production costs,
and other factors. Furthermore, the company only records proved reserves for projects which have received
significant funding commitments by management made toward the development of the reserves. Although the
company is reasonably certain that proved reserves will be produced, the timing and amount recovered can be
affected by a number of factors, including completion and optimization of development projects, reservoir
performance, regulatory approvals, government policies, consumer preferences, changes in the amount and
timing of capital investments, royalty frameworks and significant changes in oil and gas price levels. In addition,
proved reserves could be affected by an extended period of low prices which could reduce the level of the
company’s capital spending and also impact its partners’ capacity to fund their share of joint projects.
Technologies used in establishing proved reserves estimates
Imperial’s proved reserves in 2022 were based on estimates generated through the integration of available and
appropriate geological, engineering and production data, utilizing well established technologies that have been
demonstrated in the field to yield repeatable and consistent results.
Data used in these integrated assessments included information obtained directly from the subsurface via
wellbores, such as well logs, reservoir core samples, fluid samples, static and dynamic pressure information,
production test data, and surveillance and performance information. The data utilized also included subsurface
information obtained through indirect measurements, including seismic data, calibrated with available well
control information. The tools used to interpret the data included seismic processing software, reservoir
modeling and simulation software, and data analysis packages.
In some circumstances, where appropriate analog reservoirs were available, reservoir parameters from these
analogs were used to increase the quality of and confidence in the reserves estimates.
6
Preparation of reserves estimates
Imperial has a dedicated reserves management group that is separate from the base operating organization.
Primary responsibilities of this group include oversight of the reserves estimation process for compliance with
the U.S. Securities and Exchange Commission rules and regulations, review of annual changes in reserves
estimates and the reporting of Imperial’s proved reserves. This group also maintains the official reserves
estimates for Imperial’s proved reserves. In addition, this group provides training to personnel involved in the
reserve estimation and reporting processes within Imperial.
The reserves management group maintains a central database containing the company’s official reserves
estimates. Appropriate controls, including limitations on database access and update capabilities, are in place to
ensure data integrity within this central database. An annual review of the system’s controls is performed by
internal audit. Key components of the reserves estimation process include technical evaluations, commercial
and market assessments, analysis of well and field performance, and long standing approval guidelines. No
changes may be made to reserves estimates in the central database, including the addition of any new initial
reserves estimates or subsequent revisions, unless those changes have been thoroughly reviewed and
evaluated by duly authorized personnel within the base operating organization. In addition, changes to reserves
estimates that exceed certain thresholds require further review and endorsement by the operating organization
and the reserves management group, culminating in reviews with and approval by senior management and the
company’s board of directors.
The internal qualified reserves evaluator is a professional geoscientist registered in Alberta, Canada and has 20
years of petroleum industry experience, including 11 years of reserves related experience. The position
provides leadership to the internal reserves management group and is responsible for filing a reserves report
with the Canadian securities regulatory authorities. The company’s internal reserves evaluation staff consists of
20 persons with an average of 14 years of relevant technical experience in evaluating reserves, of whom 18
persons are qualified reserves evaluators for purposes of Canadian securities regulatory requirements. The
company’s internal reserves evaluation management team is made up of 15 persons with an average of 11
years of relevant experience in evaluating and managing the evaluation of reserves.
Proved undeveloped reserves
As at December 31, 2022, approximately 11 percent of the company’s proved reserves were proved
undeveloped reflecting volumes of 240 million oil-equivalent barrels. Proved undeveloped reserves are
associated with Syncrude and Cold Lake. This compared to 386 million oil-equivalent barrels of proved
undeveloped reserves reported at the end of 2021. The decrease of 146 million oil-equivalent barrels of proved
undeveloped reserves includes a decrease of 133 million oil-equivalent barrels at Cold Lake associated with a
shift of future development from the traditional Cyclic Steam Stimulation (CSS) to lower emissions intensity,
solvent based technologies, a decrease of 7 million oil-equivalent barrels at Syncrude, and a decrease of 6
million oil-equivalent barrels due to the Montney and Duvernay unconventional assets sale. No proved
undeveloped reserves were converted into proved developed reserves during 2022.
Proved undeveloped reserves that have remained undeveloped for five years or more represent about 6
percent (14 million oil-equivalent barrels) of proved undeveloped reserves and are associated with ongoing
development programs at Cold Lake. These undeveloped reserves are planned to be developed in a staged
approach to align with operational capacity and efficient capital spending commitment over the life of the asset.
The company is reasonably certain that these proved reserves will be produced; however the timing and
amount recovered can be affected by a number of factors including completion and optimization of development
projects, reservoir performance, regulatory approvals, government policies, consumer preferences, changes in
the amount and timing of capital investments, royalty frameworks and significant changes in oil and gas price
levels.
One of the company’s requirements to report resources as proved reserves is that management has made
significant funding commitments towards the development of the reserves. The company has a disciplined
investment strategy and many major fields require a long lead-time in order to be developed. The company
made investments of about $167 million during the year to progress the development of proved undeveloped
reserves at Cold Lake and Syncrude. These investments represented about 15 percent of the $1,128 million in
total reported Upstream capital and exploration expenditures.
7
Oil and gas production, production prices and production costs
Reference is made to the portion of the “Financial section” entitled “Management’s discussion and analysis of
financial condition and results of operations” on page 47 of this report for a narrative discussion on the material
changes.
Average daily production of oil
The company’s average daily oil production by final products sold during the three years ended
December 31, 2022 was as follows. All reported production volumes were from Canada.
thousands of barrels per day (a)
2022
2021
2020
Bitumen:
Kearl:
Cold Lake:
Total bitumen:
Synthetic crude oil (d):
Liquids (e):
Total:
- gross (b)
- net (c)
- gross (b)
- net (c)
- gross (b)
- net (c)
- gross (b)
- net (c)
- gross (b)
- net (c)
- gross (b)
- net (c)
172
157
144
106
316
263
77
63
9
9
402
335
186
178
140
114
326
292
71
62
11
10
408
364
158
155
132
124
290
279
69
68
13
12
372
359
(a) Volume per day metrics are calculated by dividing the volume for the period by the number of calendar days in the period.
(b) Gross production is the company’s share of production (excluding purchases) before deduction of the mineral owners’ or
governments’ share or both.
(c) Net production is gross production less the mineral owners’ or governments’ share or both.
(d) The company’s synthetic crude oil production volumes were from the company’s share of production volumes in the Syncrude joint
venture and include immaterial amounts of bitumen and other products exported to the operator's facilities using an existing
interconnect pipeline.
(e) Liquids include crude oil, condensate and NGLs.
Average daily production and production available for sale of natural gas
The company’s average daily production and production available for sale of natural gas during the three years
ended December 31, 2022 are set forth below. All reported production volumes were from Canada and are
calculated at a pressure base of 14.73 pounds per square inch absolute at 60 degrees Fahrenheit. Reference is
made to the portion of the “Financial section” entitled “Management’s discussion and analysis of financial
condition and results of operations” on page 47 of this report for a narrative discussion on the material changes.
millions of cubic feet per day (a)
Gross production (b) (c)
Net production (c) (d) (e)
Net production available for sale (f)
2022
85
83
50
2021
120
115
81
2020
154
150
115
(a) Volume per day metrics are calculated by dividing the volume for the period by the number of calendar days in the period.
(b) Gross production is the company’s share of production (excluding purchases) before deduction of the mineral owners’ or
governments’ share or both.
(c) Production of natural gas includes amounts used for internal consumption with the exception of the amounts reinjected.
(d) Net production is gross production less the mineral owners’ or governments’ share or both.
(e) Net production reported in the above table is consistent with production quantities in the net proved reserves disclosure.
(f)
Includes sales of the company’s share of net production and excludes amounts used for internal consumption.
8
Total average daily oil-equivalent basis production
The company’s total average daily production expressed in an oil-equivalent basis is set forth below, with
natural gas converted to an oil-equivalent basis at six million cubic feet per one thousand barrels.
thousands of barrels per day (a)
Total production oil-equivalent basis:
- gross (b)
- net (c)
2022
2021
2020
416
349
428
383
398
384
(a) Volume per day metrics are calculated by dividing the volume for the period by the number of calendar days in the period.
(b) Gross production is the company’s share of production (excluding purchases) before deduction of the mineral owners’ or
governments’ share or both.
(c) Net production is gross production less the mineral owners’ or governments’ share or both.
Average unit sales price
The company’s average unit sales price and average unit production costs by product type for the three years
ended December 31, 2022 were as follows.
Canadian
dollars
per barrel
Bitumen
Synthetic
crude oil
Liquids (a)
Canadian
dollars
per
thousand
cubic feet
Natural gas
(a) Liquids include crude oil, condensate and NGLs.
2022
84.67
125.46
93.77
2021
57.91
81.61
59.41
2020
25.69
49.76
27.40
5.69
3.83
1.90
In 2022, Imperial's average Canadian dollar realization for bitumen increased generally in line with Western
Canada Select (WCS). The company's average Canadian dollar realizations for synthetic crude oil increased
generally in line with West Texas Intermediate (WTI), adjusted for changes in exchange rates and transportation
costs and reflect a premium over WTI driven by supply and demand.
In 2021, Imperial’s average Canadian dollar realizations for bitumen increased generally in line with Western
Canada Select (WCS). The company’s average Canadian dollar realizations for synthetic crude oil increased
generally in line with West Texas Intermediate (WTI), adjusted for changes in exchange rates and transportation
costs.
Average unit production costs
Canadian
dollars
per barrel
Bitumen
Synthetic
crude oil
Total
oil-equivalent
basis (a)
(a)
Includes liquids, bitumen, synthetic crude oil and natural gas.
2022
39.05
68.00
44.02
2021
29.06
61.97
34.32
2020
25.73
45.51
28.73
In 2022, bitumen unit production costs increased, primarily driven by higher energy costs.
In 2022, synthetic crude oil unit production costs increased, primarily driven by higher energy costs.
In 2021, bitumen unit production costs increased, primarily driven by higher energy costs.
In 2021, synthetic crude oil unit production costs increased, primarily driven by higher maintenance costs and
mine tailings spend.
9
Drilling and other exploratory and development activities
The company has been involved in the exploration for and development of crude oil and natural gas in Canada
only.
Wells drilled
The following table sets forth the net exploratory and development wells that were drilled or participated in by
the company during the three years ended December 31, 2022.
wells
Net
productive exploratory
Net
dry exploratory
Net
productive development
Net
dry development
Total
2022
2021
2020
—
—
24
—
24
—
—
13
—
13
—
—
29
—
29
In 2022, wells drilled to add productive capacity include 24 development wells at Cold Lake.
In 2021, wells drilled to add productive capacity include 12 development wells at Cold Lake and 1 well
associated with the Montney and Duvernay unconventional assets.
In 2020, wells drilled to add productive capacity include 28 development wells at Cold Lake and 1 well
associated with the Montney and Duvernay unconventional assets.
Wells drilling
At December 31, 2022, the company was drilling the following development wells to add productive capacity at
Cold Lake. All wells were located in Canada.
Wells
Total
2022
Gross
21
Net
21
Exploratory and development activities regarding oil and gas resources
Cold Lake
To maintain production at Cold Lake, capital expenditures for additional production wells and associated
facilities are required periodically. In 2022, additional wells were drilled on existing phases. In 2023, an infill
development drilling program is planned within the approved development area to add productive capacity.
Additionally, in 2022, the company approved the budget for the Leming steam-assisted gravity drainage (SAGD)
project that will re-develop the original pilot area of the Cold Lake field, with development activities to
commence in 2023 and start-up planned in 2024.
The company also conducts experimental pilot operations to improve recovery of bitumen from wells by means
of new drilling, production or recovery techniques.
Aspen, Cold Lake expansion and other oil sands activities
In October 2018, the company received regulatory approval for the Aspen solvent-assisted, steam-assisted
gravity drainage (SA-SAGD) project from the Alberta Energy Regulator. Development was proposed to occur in
two phases, each producing about 75,000 barrels per day, before royalties. The first phase of the project was
approved by the company’s board, and appropriated for $2.6 billion. Construction began late in the fourth
quarter of 2018. In March 2019, the company slowed the pace of development given market uncertainty
stemming from the Government of Alberta’s temporary mandatory production curtailment regulations and other
industry competitiveness challenges. Although the Government of Alberta repealed the regulatory authority for
imposing temporary production curtailments at the end of 2021, major investment remains on hold. Aspen’s
project pace will continue to be evaluated and remains an important opportunity for Imperial.
10
In August 2018, Imperial received regulatory approval from the Alberta Energy Regulator for an expansion
project at Cold Lake to develop the Grand Rapids interval using SA-SAGD technology, capable of producing
50,000 barrels per day before royalties. Imperial intends to develop the Grand Rapids reservoir through capital-
efficient investments that make use of available steam capacity from existing plants, with the initial phase of
Grand Rapids development planned as an extension from the Nabiye plant. In April 2022, the Grand Rapids
Phase 1 (GRP1) project was approved by the company's board with a forecasted average production of 15,000
barrels per day before royalties. Development activities are planned to be completed by year-end 2023.
Work progresses on technical and technology evaluations to support potential Clarke Creek, Corner, Clyden
and Chard in-situ development regulatory applications.
The company also has interests in other oil sands leases in the Athabasca region of northern Alberta.
Evaluation wells completed on these leased areas established the presence of bitumen. The company
continues to evaluate these leases to determine their potential for future development.
Montney and Duvernay
The company owned a 50 percent interest in XTO Energy Canada, which included Montney and Duvernay
unconventional assets located in central Alberta. On August 31, 2022, jointly with ExxonMobil Canada, Imperial
sold its interests in XTO Energy Canada to Whitecap Resources Inc. The sale completed the marketing effort
announced in January 2022, and is consistent with Imperial’s strategy to focus upstream resources on key oil
sands assets and its commitment to deliver long-term value to shareholders. The assets included 567,000 net
acres in the Montney shale, 72,000 net acres in the Duvernay shale and additional acreage in other areas of
Alberta. Net production from these assets was about 140 million cubic feet of natural gas per day and about
9,000 barrels of crude, condensate and natural gas liquids per day.
The sale of the assets followed the company's ramp down of drilling activity and adjustment of long-term
development plans in 2020 and 2021.
Beaufort Sea
The company holds a 25 percent interest in two exploration licences in the Beaufort Sea. In 2016, the Federal
Government of Canada declared Arctic waters off limits to new offshore oil and gas licences for five years
subject to review at the end of that period. Existing licences were not impacted. In June 2019, the Federal
Government approved selective changes to the Canada Petroleum Resources Act to prohibit and freeze the
existing licences through the completion of the Beaufort Regional Strategic Environmental Assessment (BR-
SEA) review. In 2022, the prohibition was extended to December 31, 2023 with a second one-year extension.
During this time, the Federal Government plans to finalize the BR-SEA for public release which will be subject to
a stakeholder review period that will aim to address regional social, environmental, economic and spill response
impacts of natural resource development in the Arctic. The company continues to hold the licences while
maintaining community engagement and participation in the BR-SEA process.
Exploratory and development activities regarding oil and gas resources extracted by mining
methods
The company continues to evaluate other undeveloped, mineable oil sands acreage in the Athabasca region.
11
Present activities
Review of principal ongoing activities
Kearl
Kearl is a joint venture established to recover shallow deposits of oil sands using open-pit mining methods to
extract the crude bitumen, which is processed through extraction and froth treatment trains. The company holds
a 70.96 percent participating interest in the joint venture and ExxonMobil Canada Properties holds the other
29.04 percent. The product, a blend of bitumen and diluent, is typically shipped to the company’s refineries,
Exxon Mobil Corporation refineries and to other third parties. Diluent is natural gas condensate or other light
hydrocarbons added to the crude bitumen to facilitate transportation by pipeline and rail.
During 2022, the company’s share of Kearl’s net bitumen production was about 157,000 barrels per day and
gross production was about 172,000 barrels per day.
Total gross production for Kearl was about 242,000 barrels per day (172,000 barrels Imperial’s share), down
21,000 barrels per day (14,000 barrels Imperial's share) compared to 2021, as a result of extreme cold weather
impacts in the first quarter of 2022.
In 2022, the company successfully completed the startup of the second Boiler Flue Gas Unit, incorporating
learnings from the first unit's startup in 2021. This technology recovers waste heat from a boiler’s combustion
exhaust to pre-heat process water. Each unit has the potential to reduce operating costs and emissions.
Imperial is currently progressing plans to apply this innovative technology on up to four additional boilers by
year-end 2023.
Cold Lake
Cold Lake is an in-situ heavy oil bitumen operation. The product, a blend of bitumen and diluent, is typically
shipped to the company’s refineries, Exxon Mobil Corporation refineries and to other third parties.
During 2022, net bitumen production at Cold Lake was about 106,000 barrels per day and gross production was
about 144,000 barrels per day. Gross production increased about 4,000 barrels per day compared to 2021 as a
result of improved reliability, production optimizations, and recent capital-efficient infill drilling.
Cold Lake has expanded its commercial application of Liquid Addition to Steam for Enhanced Recovery
(LASER), with the technology now being applied to approximately 10 per cent of production, resulting in
reduced greenhouse gas emissions compared to traditional CSS technology.
Syncrude
Syncrude is a joint venture established to recover shallow deposits of oil sands using open-pit mining methods
to extract crude bitumen, and then upgrade it to produce a high-quality, light (32 degrees API), sweet, synthetic
crude oil. The company holds a 25 percent participating interest in the joint venture. The produced synthetic
crude oil is typically shipped to the company’s refineries, Exxon Mobil Corporation refineries and to other third
parties.
In 2022, the company’s share of Syncrude’s net production was about 63,000 barrels per day. The gross
production was about 77,000 barrels per day, which is an increase of about 6,000 barrels per day compared to
2021, supported by the interconnect pipeline.
The Province of Alberta, in its capacity as lessor of Kearl, Cold Lake, and Syncrude oil sands leases, is entitled
to a royalty on production. Royalties are subject to the oil sands royalty regulations which are based upon a
sliding scale determined largely by the price of crude oil.
Delivery commitments
The company has no material commitments to provide a fixed and determinable quantity of oil or gas under
existing contracts and agreements.
12
Oil and gas properties, wells, operations and acreage
Production wells
The company’s production of liquids, bitumen and natural gas is derived from wells located exclusively in
Canada. The total number of wells capable of production, in which the company had interests at
December 31, 2022 and December 31, 2021, is set forth in the following table. The statistics in the table are
determined in part from information received from other operators. The total number of wells decreased in 2022
primarily due to divestment activities and the shut-in of multiple non-economical wells.
Year
ended
December
31, 2022
Year
ended
December
31, 2021
Crude oil
Natural gas
Crude oil
Natural gas
wells
Total (c)
Gross (a)
Net
(b)
Gross
(a)
Net
(b)
Gross
(a)
Net
(b)
Gross
(a)
Net (b)
4,277
4,264
2,419
774
4,557
4,509
2,729
885
(a) Gross wells are wells in which the company owns a working interest.
(b) Net wells are the sum of the fractional working interest owned by the company in gross wells, rounded to the nearest whole number.
(c) Multiple completion wells are permanently equipped to produce separately from two or more distinctly different geological formations.
At year-end 2022, the company had an interest in 12 gross wells with multiple completions (2021 - 12 gross wells).
Land holdings
At December 31, 2022 and December 31, 2021, the company held the following oil and gas rights, and bitumen
and synthetic crude oil leases, all of which are located in Canada, specifically in the western provinces, in the
Canada lands and in the Atlantic offshore.
thousands
of
acres
Western
provinces (a):
Liquids
and gas
Bitumen
-
gross (b)
-
net (c)
-
gross (b)
-
net (c)
Synthetic
crude oil
-
gross (b)
Canada
lands (d):
Liquids
and gas
Atlantic offshore:
Liquids
and gas
Total (e):
-
net (c)
-
gross (b)
-
net (c)
-
gross (b)
-
net (c)
-
gross (b)
-
net (c)
Developed
Undeveloped
Total
2022
2021
2022
2021
2022
2021
1,059
517
196
182
119
30
2
2
65
6
441
260
196
182
119
30
2
2
65
6
823
480
185
135
584
255
100
25
621
350
584
255
100
25
626
395
780
437
219
55
1,680
867
780
437
219
55
1,803
1,803
1,805
1,805
495
495
497
497
146
22
267
36
3,375
1,161
211
28
3,641
1,412
332
42
4,816
1,898
1,441
2,818
737
932
(a) Western provinces include British Columbia and Alberta.
(b) Gross acres include the interests of others.
(c) Net acres exclude the interests of others.
(d) Canada lands include the Arctic Islands, Beaufort Sea / Mackenzie Delta, and other Northwest Territories.
(e) Certain land holdings are subject to modification under agreements whereby others may earn interests in the company’s holdings by
performing certain exploratory work (farm-out) and whereby the company may earn interests in others’ holdings by performing certain
exploratory work (farm-in).
13
Western provinces
The company’s bitumen leases include about 161,000 net acres of oil sands leases near Cold Lake and an area
of about 34,000 net acres at Kearl. The company also has about 68,000 net acres of undeveloped, mineable oil
sands acreage in the Athabasca region. In addition, the company has interests in other bitumen oil sands leases
in the Athabasca areas totalling about 173,000 net acres, which include about 62,000 net acres of oil sands
leases in the Clyden area, about 34,000 net acres of oil sands leases in the Aspen area, about 30,000 net acres
of oil sands leases in the Corner area, about 29,000 net acres in the Clarke Creek area and about 18,000 net
acres in the Chard area. The 173,000 net acres are suitable for in-situ recovery techniques.
The company’s share of Syncrude joint venture leases covering about 55,000 net acres accounts for the entire
synthetic crude oil acreage.
Oil sands leases have an exploration period of 15 years and are continued beyond that point by payment of
escalating rentals or by production. The majority of the acreage in Cold Lake, Kearl and Syncrude is continued
by production.
The company holds interests in an additional 395,000 net acres of developed and undeveloped land in the
western provinces related to crude oil and natural gas. In 2022, the company divested its interest in Horn River
totalling about 103,000 net acres and its interest in XTO Energy Canada totalling about 365,000 net acres.
Crude oil and natural gas leases and licences from the western provinces have exploration periods ranging from
two to 15 years and are continued beyond that point by proven production capability.
Canada lands
Land holdings in Canada lands primarily include exploration licence (EL) acreage in the Beaufort Sea of about
252,000 net acres and significant discovery licence (SDL) acreage in the Mackenzie Delta and Beaufort Sea
areas of about 183,000 net acres.
Exploration licences on Canada lands have a finite term. If a significant discovery is made, a SDL may be
granted that holds the acreage under the SDL indefinitely, subject to certain conditions.
The company’s net acreage in Canada lands is either continued by production or held through ELs and SDLs.
Atlantic offshore
Exploration licences on Atlantic offshore have a finite term. The Atlantic offshore acreage is continued by
production licences or held by SDLs.
14
Downstream
Supply and trading
The company supplements its own production of crude oil, condensate and petroleum products with substantial
purchases from a number of other sources at negotiated market prices, in addition to undertaking trading
activities. Purchases and sales are made under both spot and term contracts from domestic and foreign
sources, including ExxonMobil.
Transportation
Imperial currently transports the company’s crude oil production and third-party crude oil required to supply
refineries by contracted pipelines, common carrier pipelines and rail. To mitigate pipeline capacity constraints,
the company has developed rail infrastructure. The Edmonton rail terminal has total capacity to ship up to
210,000 barrels per day of crude oil.
Refining
The company owns and operates three refineries, which process predominantly Canadian crude oil. The
company purchases finished products to supplement its refinery production.
The approximate average daily volumes of refinery throughput and utilization during the three years ended
December 31, 2022, and the daily rated capacities of the refineries as at December 31, 2022, were as follows.
Refinery
throughput (a)
Rated
capacities (b)
Year
ended
December 31
at
December 31
thousands
of
barrels
per day
2022
2021
Strathcona, Alberta
Sarnia, Ontario
Nanticoke, Ontario
Total
Utilization
of
refinery
capacity (percent)
195
113
110
418
98
172
106
101
379
89
2020
170
86
84
340
80
2022
197
123
113
433
(a) Refinery throughput is the volume of crude oil and feedstocks that is processed in the refinery atmospheric distillation units.
(b) Rated capacities are based on definite specifications as to types of crude oil and feedstocks that are processed in the refinery
atmospheric distillation units, the products to be obtained and the refinery process, adjusted to include an estimated allowance for
normal maintenance shutdowns. Accordingly, actual capacities may be higher or lower than rated capacities due to changes in
refinery operation and the type of crude oil available for processing.
2022
Improved refinery throughput in 2022 was primarily driven by increased demand and reduced turnaround
activity.
2021
Improved refinery throughput in 2021 primarily reflects reduced impacts associated with the COVID-19
pandemic, partially offset by a planned turnaround at Strathcona.
Distribution
The company maintains a nationwide distribution system to move petroleum products to market by pipeline,
tanker, rail and road transport. The company owns and operates fuel terminals across the country, as well as
natural gas liquids and products pipelines in Alberta, Manitoba and Ontario and has interests in the capital stock
of two products pipeline companies.
15
Marketing
The company markets petroleum products throughout Canada under well-known brand names, most notably
Esso and Mobil, to all types of customers.
Imperial supplies petroleum products through Esso and Mobil-branded sites and independent marketers. At the
end of 2022, there were about 2,400 sites operating under a branded wholesaler model, in alignment with Esso
and Mobil brand standards, whereby Imperial supplies fuel to independent third parties.
Imperial also sells petroleum products, including fuel, asphalt and lubricants, to large industrial and
transportation customers, independent marketers, resellers, as well as other refiners. The company serves
agriculture, residential heating and commercial markets through branded fuel and lubricant resellers.
The approximate daily volumes of net petroleum products (excluding purchases / sales contracts with the same
counterparty) sold during the three years ended December 31, 2022, are set out in the following table.
thousands of barrels per day
Gasolines
Heating, diesel and jet fuels
Lube oils and other products
Heavy fuel oils
Net petroleum product sales
2022
2021
2020
229
176
47
23
475
224
160
45
27
456
215
146
40
20
421
In 2022, improved petroleum product sales primarily reflects increased demand.
In 2021, improved petroleum product sales primarily reflects reduced impacts associated with the COVID-19
pandemic.
Chemical
The company’s Chemical operations manufacture and market benzene, aromatic and aliphatic solvents,
plasticizer intermediates, polyethylene resin, and markets refinery grade propylene. Its petrochemical and
polyethylene manufacturing operations are located in Sarnia, Ontario, adjacent to the company’s petroleum
refinery.
The company’s total petrochemical sales volumes during the three years ended December 31, 2022, were as
follows.
thousands
of tonnes
Total
petrochemical sales
2022
842
2021
831
2020
749
In 2022, sales volumes increased primarily due to higher sales of propylene and polyethylene, partially offset by
lower intermediates.
In 2021, sales volumes increased primarily due to higher sales of intermediates and aromatics.
16
Human capital resources
Imperial operates in a complex, competitive and changing business environment where decisions and risks play
out over time horizons that are often decades in length. This long-term orientation underpins the company’s
philosophy on talent development.
Talent development begins with recruiting exceptional candidates and continues with individually planned
experiences and training designed to facilitate broad development and a deep understanding of our business
across the business cycle. The company’s compensation is market competitive, long-term oriented, and highly
differentiated by individual performance. In addition, benefits and workplace programs support the company’s
talent management approach, and are designed to attract and retain employees for a long-term career. Overall,
this multifaceted approach has resulted in strong employee retention.
Imperial views diversity as an opportunity. The company encourages and respects diversity of thought, ideas,
and perspective in its workforce. The company considers diversity through all stages of employment including
recruitment, training and development of its employees. Imperial’s goal is to reflect the mix and diversity of the
communities where it operates, and it continues to focus on diverse representation at all levels of the
organization.
The number of regular employees was about 5,300 at the end of 2022 (2021 - 5,400, 2020 - 5,800). Regular
employees are defined as active executive, management, professional, technical and wage employees who
work full-time or part-time for the company and are covered by the company’s benefit plans and programs.
Competition
The Canadian energy and petrochemical industries are highly competitive. Competition exists in the search for
and development of new sources of supply, the construction and operation of crude oil, natural gas and refined
products pipelines and facilities and the refining, distribution and marketing of petroleum products and
chemicals. The energy and petrochemical industries also compete with other industries in supplying the energy,
fuel and chemical needs of both industrial and individual consumers. Certain industry participants, including
Imperial, are expanding investments in lower-emission energy and emission-reduction services and
technologies.
17
Government regulations
Petroleum, natural gas and oil sands rights
Most of the company’s petroleum, natural gas and oil sands rights were acquired from governments, either
federal or provincial. These rights, in the form of leases or licences, are generally acquired for cash or work
commitments. A lease or licence entitles the holder to explore for petroleum, natural gas and / or oil sands on
the leased lands for a specified period.
In western provinces, the lease holder can produce the petroleum or natural gas discovered on the leased lands
and retains the rights based on continued production. Oil sands leases are retained by meeting the minimum
level of evaluation, payment of rentals, or by production.
The holder of a licence relating to Canada lands and the Atlantic offshore can apply for a SDL if a discovery is
made. If granted, the SDL holds the lands indefinitely subject to certain conditions. The holder may then apply
for a production licence in order to produce petroleum or natural gas from the licenced land.
Project approval
Approvals and licences from relevant provincial or federal governmental or regulatory bodies are required for
the company to carry out, or make modifications to, its oil and gas activities. The project approval process for
major projects can involve, among other things, environmental assessments (including relevant mitigation
measures), stakeholder and Indigenous consultation and input regarding project concerns, and public hearings.
Approval may be subject to various conditions and commitments arising through these processes.
Approval of large energy projects may be impacted by the environmental assessment framework under
Canada's Impact Assessment Act (IAA). The IAA includes broader consideration for social, health, and gender-
based impacts, the impact on Canada’s climate change commitments (including a requirement under the
Strategic Assessment for Climate Change to provide a credible plan for the project to deliver net-zero
greenhouse gas emissions by 2050), reliance on strategic and regional assessments and adjusted regulatory
review timelines.
Environmental protection
The company regards protecting the environment in connection with its various operations as a priority. The
company is subject to extensive environmental regulations in Canada that apply to all phases of exploration,
development, operation, and final closure. These requirements cover the management and monitoring of
potential environmental impacts during active operations, including practices for land disturbance, wildlife
protection, specifications for equipment operation and material storage and limitations on discharges to the
environment. It also includes conducting environmental surveys and collecting continuous operational
measurements and sampling to confirm that environmental practices are adequately protecting the
environment. These regulations also specify the actions and requirements for final reclamation, abandonment
and closure of facilities. The company works in cooperation with government agencies, industry associations
and communities to address existing, and to anticipate potential, environmental protection issues. The company
also maintains extensive operating procedures, processes and emergency response plans to address
environmental risks at its operations.
As discussed in Item 1A. “Risk factors” in this report, compliance with existing and potential future government
regulations, including environmental regulations, may have material effects on the capital expenditures,
earnings, and competitive position of the company. Imperial takes new and ongoing measures throughout its
operations each year to prevent and minimize the impact of its operations on air, land and water. These include
significant investments in refining infrastructure and technology to manufacture clean fuels, continued
evaluation and implementation of new technologies to reduce greenhouse gas emissions, adherence to federal
and provincial greenhouse gas emissions reduction and reporting programs, enhanced water and land
management, and expenditures for asset retirement obligations. In the past five years, the company has made
capital and operating expenditures of about $4.5 billion on environmental protection and facilities. In 2022, the
company’s environmental capital and operating expenditures totalled approximately $1.4 billion, which was
spent primarily on activities to protect the air, land and water, including remediation projects. Environmental
expenditures are expected to increase to approximately $1.8 billion in 2023, with capital expenditures expected
to account for approximately 65 percent of the total. Costs for 2024 are anticipated to increase to approximately
$2.2 billion, with capital expenditures expected to account for approximately 69 percent of the total.
18
Crude oil
Production
The maximum allowable gross production of crude oil from wells in Canada is subject to limitations by various
regulatory authorities on the basis of engineering and conservation principles.
Additionally, the Government of Alberta has in the past used temporary mandatory production curtailment
regulations to impose production limits on large producers in Alberta, such as those implemented in 2019 and
repealed in 2021.
Exports
Export contracts of more than one year for light crude oil and petroleum products and two years for heavy crude
oil (including bitumen) require the prior approval of the Canada Energy Regulator (CER) and the Government of
Canada. Export contracts of less than one year for light crude oil and petroleum products and two years for
heavy crude oil (including bitumen) require an order from the CER.
Natural gas
Production
The maximum allowable gross production of natural gas from wells in Canada is subject to limitations by various
regulatory authorities. These limitations are to ensure oil recovery is not adversely impacted by accelerated gas
production practices. These limitations do not impact gas reserves, only the timing of production of the reserves
and did not have a significant impact on Imperial’s 2022 gas production rates.
Exports
The Government of Canada has the authority to regulate the export price for natural gas. Exports of natural gas
from Canada require approval by the CER and the Government of Canada. The Government of Canada allows
the export of natural gas by CER order without volume limitation for terms not exceeding 24 months.
Royalties
The Government of Canada and the provinces in which the company produces crude oil and natural gas
impose royalties on production from lands where they own the mineral rights. Some producing provinces also
receive revenue by imposing taxes on production from lands where they do not own the mineral rights.
Different royalties are imposed by the Government of Canada and each of the producing provinces. Royalties
imposed on crude oil, natural gas and natural gas liquids vary depending on a number of parameters, including
well production volumes, selling prices and recovery methods. For information with respect to royalties for Kearl,
Cold Lake and Syncrude, see “Upstream” section entitled “Present activities” under Item 1 on page 12.
Investment Canada Act
The Investment Canada Act requires Government of Canada approval, in certain cases, of the acquisition of
control of a Canadian business by an entity that is not controlled by Canadians. The acquisition of natural
resource properties may, in certain circumstances, be considered a transaction that constitutes an acquisition of
control of a Canadian business requiring Government of Canada approval.
The Act also requires notification of the establishment of new unrelated businesses in Canada by entities not
controlled by Canadians, but does not require Government of Canada approval except when the new business
is related to Canada’s cultural heritage or national identity. The Government of Canada is also authorized to
take any measures that it considers advisable to protect national security, including the outright prohibition of a
foreign investment in Canada.
By virtue of the majority stock ownership of the company by ExxonMobil, the company is considered to be an
entity which is not controlled by Canadians.
19
Competition Act
The Competition Bureau seeks to ensure that Canadian businesses and consumers prosper in a competitive
and innovative marketplace. The Competition Bureau is responsible for the administration and enforcement of
the Competition Act (the Act). A merger transaction, whether or not notifiable, is subject to examination by the
Commissioner of the Competition Bureau to determine whether the merger will have, or is likely to have, the
effect of preventing or lessening substantially competition in a definable market. The assessment of the
competitive effects of a merger is made with reference to the factors identified under the Act.
An Advance Ruling Certificate (ARC) may be issued by the Commissioner to a party or parties to a proposed
merger transaction who want to be assured that the transaction will not give rise to proceedings under section
92 of the Act. An ARC may be issued when the Commissioner is satisfied that there would not be sufficient
grounds on which to apply to the Competition Tribunal for an order against a proposed merger. The issuance of
an ARC is discretionary. An ARC cannot be issued for a transaction that has been completed, nor does an ARC
ensure approval of the transaction by any agency other than the Competition Bureau.
The company online
The company’s website www.imperialoil.ca contains a variety of corporate and investor information free of
charge, including the company’s annual report on Form 10-K, quarterly reports on Form 10-Q and current
reports on Form 8-K and amendments to these reports. These reports are made available as soon as
reasonably practicable after they are filed or furnished to the SEC. The SEC’s website, www.sec.gov, contains
reports, proxy and information statements, interactive data files, and other information regarding issuers that are
submitted and posted electronically with the SEC.
20
Item 1A. Risk factors
Imperial’s financial and operating results are subject to a variety of risks inherent in oil, gas and petrochemical
businesses, and the pursuit of lower-emission business opportunities. Many of these risk factors are not within
Imperial’s control and could adversely affect Imperial’s business, financial and operating results, or financial
position. These risk factors include:
Supply and demand
The oil, gas, fuels and petrochemical businesses are fundamentally commodity businesses. This means the
company’s operations and earnings may be significantly affected by changes in oil, natural gas and
petrochemical prices, and by changes in margins on refined products and petrochemicals. Crude oil, natural
gas, petrochemical and petroleum product prices and margins depend on local, regional, and global events or
conditions that affect supply and demand for the relevant commodity or product. Commodity prices have been
volatile, and the company expects that volatility to continue. Any material decline in crude oil prices could have a
material adverse effect on Imperial’s Upstream operations, financial position, proved reserves and the amount
spent to develop reserves. On the other hand, a material increase in crude oil prices could have a material
adverse effect on Imperial’s Downstream margins, depending on the market conditions for refined products. The
company's pursuit of lower-emission business opportunities including carbon capture and storage, hydrogen,
and lower-emission fuels also depends on the growth and development of markets for those products and
services, including implementation of supportive government policies and developments in technology to enable
those products and services to be provided on a cost-effective basis at commercial scale. See "Climate change,
energy transition and greenhouse gas restrictions" in this Item 1A. The company may also be impacted by
changes in other commodities the company utilizes, such as prices and availability of feedstocks for lower-
emission fuels including renewable diesel.
Economic conditions
The demand for energy and petrochemicals is generally linked closely with broad-based economic activities and
levels of prosperity. The occurrence of recessions or other periods of low or negative economic growth will
typically have a direct adverse impact on the company’s results. Other factors that affect general economic
conditions such as changes in population growth rates, government regulation or austerity programs, trade
tariffs or broader breakdowns in global trade, security or public health issues and responses, the inability to
access debt markets due to rating, banking, or legal constraints, liquidity crises, other events or conditions that
impair the functioning of financial markets and institutions also pose risks to Imperial.
Other demand-related factors
Factors that may affect the demand for crude oil, gas, fuels and petrochemicals, and therefore could impact
Imperial’s results include technological improvements in energy efficiency; seasonal weather patterns, which
affect the demand for our products, including lower demand for gasoline, impacting Downstream results in the
winter; increased competitiveness of, or government policy support for, alternative energy sources; new product
quality regulations; technological changes or consumer preferences that alter fuel choices, such as
technological advances in energy storage that make wind and solar more competitive for power generation;
changes in consumer preferences for the company’s products, including consumer demand for alternative
fueled or electric transportation or alternatives to plastic products; broad-based changes in personal income
levels, interest rates and inflation; and security or public health issues and responses such as epidemics and
pandemics. See also “Climate change, energy transition and greenhouse gas restrictions” below.
21
Other supply-related factors
Commodity prices and margins also vary depending on a number of factors affecting supply. For example,
increased supply from the development of new oil and gas supply sources and technologies to enhance
recovery from existing sources tends to reduce commodity prices to the extent such supply increases are not
offset by commensurate growth in demand. Similarly, increases in industry refining or petrochemical
manufacturing capacity relative to demand tend to reduce margins on affected products. Crude oil, gas and
petrochemical supply levels can also be affected by factors that reduce available supplies, such as the level of
and adherence by participating countries or others to production quotas established by OPEC or “OPEC+” and
other agreements among sovereigns, government policies that restrict oil and gas production or increase
associated costs, including actions intended to reduce greenhouse gas emissions and previous Government of
Alberta curtailment regulations, the occurrence of wars, hostile actions, natural disasters, trade tariffs or broader
breakdowns in global trade, disruptions in competitors’ operations, or unexpected pipeline or rail constraints that
may disrupt and have in the past disrupted supplies. For example, Russia's military action in Ukraine has
impacted global crude oil and gas supply levels and prices, and continues to contribute to a volatile commodity
environment, the duration of which is uncertain. Technological change can also alter the relative costs for
competitors to find, produce, and refine oil and gas and to manufacture petrochemicals.
Canadian-specific market factors
The market price for western Canadian heavy crude oil is typically lower than light and medium grades of oil,
principally due to the higher transportation and refining costs. Western Canadian crude oil may also be subject
to limits on transportation capacity to markets. Future crude price differentials between western Canadian crude
oil relative to prices in the U.S. Gulf Coast are uncertain and changes in the heavy or light crude oil differentials
could have a material adverse effect on the company’s business. Increased differentials, have in the past, led
the Government of Alberta to enact temporary mandatory production curtailment regulations that imposed
production limits on large producers in Alberta such as Imperial. Although the regulatory authority to impose
curtailments was repealed at the end of 2021, the use of similar curtailment regulations in the future could have
an adverse effect on the company’s business. A significant portion of the company’s production is bitumen,
which is blended with diluent for transportation and marketability of heavy crude oil. Increases to diluent prices,
relative to heavy crude oil prices, could also have an adverse effect on the company’s business.
Other market factors
Market factors may also result in losses from commodity derivatives and other instruments used to hedge price
exposures or for trading purposes. Imperial’s future business results, including cash flows and financing needs,
will also be affected by the rate of recovery from the COVID-19 pandemic, as well as the occurrence and
severity of future outbreaks, the responsive actions taken by governments and others, and the resulting effects
on regional and global markets and economies. If the company’s mitigation and response efforts prove
insufficient, then large outbreaks of epidemics, pandemics or other health crises such as COVID-19 at operating
sites, particularly in remote locations and where work camps are utilized, could materially impact the company’s
personnel and its operations, reducing productivity and increasing costs.
Government and political factors
Imperial’s results can be adversely impacted by political, legal or regulatory developments affecting operations
and markets. Changes in government policy or regulations, changes in law or interpretation of settled law,
challenges to legislative jurisdiction between different levels of government, third-party opposition to company or
infrastructure projects, and duration of regulatory reviews could impact Imperial’s existing operations and
planned projects. This includes actions by policy-makers, regulators or other actors to delay or deny necessary
licences and permits, restrict the availability of oil and gas leases or the operation of third-party infrastructure
that the company relies on, such as pipelines to transport the company’s upstream production to market or that
supply feedstock to the company’s refineries. Additionally, changes in environmental regulations, assessment
processes or other laws and increasing and expanding stakeholder consultation (including Indigenous
stakeholders), may increase the cost of compliance or reduce or delay available business opportunities and
adversely impact the company’s results.
Other government and political factors that could adversely affect the company’s financial results include
increases in taxes or government royalty rates (including retroactive claims) and changes in trade policies and
agreements. Changes in taxation policy, such as the Government of Canada announcement in 2022 of a tax on
share buybacks, could impact the company’s results and ability to return surplus cash to shareholders. Further,
the adoption of regulations mandating efficiency standards, and the use of alternative fuels or uncompetitive fuel
components could affect the company’s operations. Many governments are providing tax advantages and other
subsidies to support alternative energy sources or are mandating the use of specific fuels or technologies.
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Governments are also introducing bans on certain technologies that could impact demand for products, such as
the Government of Canada’s intention to ban the sale of new internal combustion engine cars and light trucks
beginning in 2035. Governments and others are also promoting research into new technologies to reduce the
cost and increase the scalability of alternative energy sources, and the success of these initiatives may
decrease demand for the company’s products. Actions by policy makers, regulators or others may require
changes in the company’s business or strategy that could result in reduced returns.
Governments may establish regulations with respect to the control of the company’s production, such as the
Government of Alberta's temporary mandatory production curtailment regulations that were in effect from 2019
through 2021, as discussed in the “Supply and demand” section above. Government intervention in free
markets may introduce unintended consequences such as market volatility and uncertainty, misallocation of
resources, and erosion of investor confidence.
Environmental risks
All phases of the Upstream, Downstream and Chemical businesses are subject to environmental regulation
pursuant to a variety of Canadian federal, provincial, territorial and municipal laws and regulations, as well as
international conventions (collectively, “environmental legislation”).
Environmental legislation imposes, among other things, restrictions, liabilities and obligations in connection with
the generation, handling, storage, transportation, treatment and disposal of hazardous substances and waste
and in connection with spills, releases and emissions of various substances into the environment. As well,
environmental regulations are imposed on the qualities and compositions of the products sold and imported,
and include those aimed at reducing consumption or addressing environmental concerns with certain end
products. Changes to these requirements could adversely affect the company’s results by impacting commodity
prices, increasing costs and reducing revenues.
Environmental legislation also requires that wells, facility sites and other properties associated with the
company’s operations be operated, maintained, monitored, abandoned and reclaimed to the satisfaction of
applicable regulatory authorities. This includes the requirement for specific approvals for many areas of
interaction with the environment, such as land use, air quality, water use, biodiversity protection and waste,
including mine tailings management. The failure to operate as anticipated and adhere to conditions, the delay or
denial of approvals and changes to conditions or regulations could impact the company’s ability to operate its
projects and facilities and adversely affect the company’s results.
Regulation of air, water and land
The implementation of, and compliance with, policies and regulations related to air, water and land, such as
Alberta’s Lower Athabasca Regional Plan and Wetland Policy applicable to the company’s oil sands assets,
could restrict development in current and future areas of operation. The company also depends on water
obtained under licences for withdrawal, storage, reuse and discharge in both its Upstream and Downstream
businesses, including future projects and expansions. Water use may be limited by regulatory requirements,
seasonal fluctuations, competing demands, environmental sensitivities, increasingly stringent water
management standards, and changes to conditions or availability of licences, which may restrict and adversely
affect the company’s operations. Additionally, a number of air quality regulations and frameworks are being
developed and implemented at the federal and provincial levels, including sulphur dioxide limits for refineries in
Ontario, and could impact existing and planned operations and projects through increased capital and operating
expenses including retrofits to existing equipment, and could adversely impact the company’s operations and
financial results.
Regulation of wildlife
Federal and provincial legislation aimed at protecting sensitive, threatened or endangered wildlife, such as
woodland caribou and species of migratory birds, may also increase restoration and offset costs and impact the
company’s projects. If it is determined that such wildlife and their habitat are not sufficiently protected,
governments or other parties may take actions to limit the pace or ability to develop in areas of Imperial’s
current and future projects.
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Regulation of oil sands
The company’s mining operations are subject to tailings management regulations that establish approval,
monitoring, reporting and performance criteria for tailings ponds and management plans. Further, the absence
or evolving nature of policies and regulations for the timing and closure of tailings ponds, including the approved
technologies and methods for closure (such as the use of end pit lakes and water capped tailings), and dam
safety directives, regulations, guides and abandonment requirements could have a material impact on
conditions for approvals and ultimate mine closure costs. Additionally, successful management and closure
requires the release of water to the environment, and although an Alberta water release policy and federal oil
sands effluent regulations are being developed, the timing and impact of these regulations is uncertain and the
absence of effective regulation could negatively impact the company’s operations and financial results.
Environmental assessments
In addition, certain types of operations, including exploration and development projects and significant changes
to certain existing projects, may require the submission and approval of environmental impact assessments.
The Government of Canada's environmental assessment framework under the Impact Assessment Act expands
assessment considerations beyond the environment to include social, health, economic, and gender-based
impacts and the impact on Canada’s climate change commitments (including a requirement under the Strategic
Assessment for Climate Change to provide a credible plan for the project to deliver net-zero greenhouse gas
emissions by 2050). It also includes a reliance on strategic and regional assessments and adjusted regulatory
review timelines. The impact of this legislation is not fully apparent, but it may impact the cost, manner, duration
and ability to advance large energy projects and project expansions.
Compliance costs
Compliance with environmental legislation can require significant expenditures and failure to comply with
environmental legislation may result in the cessation of operations, imposition of fines and penalties, and liability
for clean-up costs and damages.
The costs of complying with environmental legislation in the future could have a material adverse effect on the
company’s financial condition or results of operations. The company anticipates that changes in environmental
legislation may require, among other things, reductions in emissions from its operations to the air and water and
may result in increased capital expenditures. Changes in environmental legislation (including, but not limited to,
application of regulations related to air, water, land, biodiversity and waste, such as mine tailings and the
production or use of new or recycled plastics) may increase the cost of compliance or reduce or delay available
business opportunities. Future changes in environmental legislation and the enforcement of regulations could
occur and result in stricter standards and enforcement, larger fines, penalties and liability, and increased capital
expenditures and operating costs, which could have a material adverse effect on the company’s financial
condition or results of operations.
Risk Management
There are operational risks inherent in oil and gas exploration and production activities, as well as the potential
to incur substantial financial liabilities, if the company does not manage those risks effectively. Environmental
hazards including severe weather events may impact the company’s operational performance, such as extreme
cold weather that makes mining operations more difficult. The ability to insure risks is limited by the capacity of
the applicable insurance markets, which may not be sufficient to cover the likely cost of a major adverse
operating event. Accordingly, the company’s primary focus is on prevention, including through its rigorous
operations integrity management system. The company’s future results will depend on the continued
effectiveness of these efforts.
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Climate change, energy transition and greenhouse gas restrictions
Net-zero scenarios
Driven by concern over the risks of climate change, the provinces and the Government of Canada have adopted
or have revised regulatory frameworks to reduce greenhouse gas emissions including emissions from the
production and use of oil and gas, and their products. These actions are being taken both independently by
national and regional governments and within the framework of United Nations Conference of the Parties’
summits under which Canada has endorsed objectives to reduce the atmospheric concentration of CO2 over
the coming decades, with an ambition ultimately to achieve “net zero”. Net zero means that emissions of
greenhouse gases from human activities would be balanced by actions that remove such gases from the
atmosphere. Expectations for transition of the world’s energy system to lower-emission sources, and ultimately
net zero, derive from hypothetical scenarios that reflect many assumptions about the future and reflect
substantial uncertainties. The company’s actions with respect to the energy transition, including its announced
goal, ultimately, to achieve company-wide net-zero emissions (Scope 1 and 2) from its operated assets, carries
risks that the transition, including underlying technologies, policies, and markets as discussed in more detail
below, will not develop at the pace or in the manner estimated by current net-zero scenarios. The success of
Imperial's strategy for the energy transition will also depend on its ability to recognize key signposts of change
in the global energy system on a timely basis, and the corresponding ability to direct investment to the
technologies and businesses, at the appropriate stage of development, to best capitalize on the company's
competitive strengths.
Greenhouse gas restrictions
Government actions intended to reduce greenhouse gas emissions include adoption of carbon emissions
pricing, cap and trade regimes, carbon taxes, emissions limits, increased mileage and other efficiency
standards, low carbon fuels standards, mandates for sales of electrical vehicles and incentives or mandates for
renewable energy. The Government of Canada has updated its nationally determined contribution (NDC) under
the Paris Agreement on climate change, to reduce greenhouse gas emissions economy-wide by 40 to 45
percent below 2005 levels by 2030, a substantial increase in ambition beyond its original NDC. To implement
these goals, the Government of Canada uses a number of policy tools including the Greenhouse Gas Pollution
Pricing Act (GGPPA), which sets a federal backstop carbon price Canada-wide through a carbon levy applied to
fossil fuels ($50 per tonne CO2 equivalent emissions starting in 2022 and increasing by $15 per tonne annually
to $170 per tonne in 2030), and an output-based pricing system for large industrial emitters. Under the GGPPA,
provinces are required to either adopt the GGPPA, or obtain equivalency by adopting a price-based system
(with a minimum of the federal carbon pricing) or a cap and trade system. Further, in 2021 the Government of
Canada enacted legislation to formalize Canada’s target to achieve net-zero emissions by 2050 and establish
interim emissions reductions targets at five year intervals. Under the Canadian Net-Zero Emissions
Accountability Act, the Government of Canada is required to develop an emissions reduction plan for 2030
consistent with achieving net-zero emissions by 2050.
The Government of Alberta obtained federal equivalency for its Technology Innovation and Emissions Reduction
Regulation (TIER) that came into effect in 2020 and applies to facilities with CO2 emissions in excess of
100,000 tonnes per year. TIER is designed to reduce emissions by putting a price on nominally 10 percent of a
facility’s emissions in 2020. This price increased to 11 percent in 2021 and 12 percent in 2022, with the oil
sands mining and upgrading facilities increasing to 17 percent in 2021 and 18 percent in 2022, and these
percentages are anticipated to increase by 2 percent per year starting in 2023, followed by an increase of 4
percent in 2029 and 2030 for the oil sands sector. Further, the Alberta Oil Sands Emissions Limit Act sets a limit
of 100 megatonnes of CO2 per year of emissions in the oil sands sector, but oil sands emissions remain below
the limit and it is not yet possible to predict the impact of this act on the company’s future oil sands operations in
Alberta. With respect to other provinces, Ontario obtained federal equivalency for its Emissions Performance
System, which puts a price on 8 percent of a facility’s emissions, increasing by 2.4 percent in 2023 followed by
1.5 percent in 2024. British Columbia has carbon pricing in place for all emissions, with pricing expected to meet
or exceed the federal carbon pricing schedule in 2023. Increases in carbon pricing could adversely impact the
company’s operations and financial results unless the company can adapt its operations through technological
innovation and investment in a cost-effective manner or meet compliance through offset credits or other
mechanisms.
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There are also various low carbon fuel standards being developed or already applicable to the company’s
products. In 2022, the Government of Canada finalized draft regulations for the Clean Fuel Regulations, which
will require the reduction in carbon intensity of liquid transportation fuels supplied in Canada starting in July
2023. The regulations build upon the existing federal renewable fuels regulations that require fuel producers
and importers to have a specified amount of renewable fuel in gasoline and diesel. Similarly, British Columbia
introduced a Low Carbon Fuel Standard in 2013, which increased to a 10 percent carbon intensity reduction
requirement in 2020. Beginning in 2023, the British Columbia government has further increased the carbon
intensity reductions to a total of 30 percent by 2030 (compared to the 2010 baseline). Compliance can be
achieved by either blending renewable fuels with low carbon intensity or by purchasing credits.
The Government of Canada's Impact Assessment Act links environmental assessment approvals to climate
change-related goals, and has also discussed a goal of establishing legally-binding policies for being carbon-
neutral by 2050. Changes and policies related to this act could adversely impact the company’s ability to
progress new oil sands projects.
International accords and underlying regional and national regulations covering climate change and greenhouse
gas emissions continue to evolve with uncertain timing and outcome, making it difficult to predict their business
impact. Such laws and policies could make Imperial’s products more expensive and less competitive, reduce or
delay available business opportunities, reduce demand for hydrocarbons, and shift hydrocarbon demand toward
lower greenhouse gas emission energy sources. Current and pending greenhouse gas regulations or policies
may also increase compliance and abatement costs including taxes and levies, increase abandonment and
reclamation obligations and impact decommissioning timelines, lengthen project evaluation and implementation
times, impact reserves evaluations and affect operations. Increased costs may not be recoverable in the market
place, could negatively affect our returns and could reduce the global competitiveness of the company’s crude
oil, natural gas and refined products. Governments may also impose restrictions on production of, or emissions
from, oil and gas to the extent they view such measures as a viable approach for pursuing national and global
energy and climate policies. For example, the Government of Canada announced its intention to pursue a cap
on greenhouse gas emission from oil and gas activities by 2030. Concern over the risks of climate change may
lead governments to make laws applicable to the energy industry progressively more stringent over time.
Political and other actors and their agents are also increasingly seeking to advance climate change objectives
indirectly, such as by seeking to reduce the availability or increase the cost of financing and investment in the oil
and gas sector and taking actions intended to promote changes in business strategy for oil and gas companies.
Technology and lower-emission solutions
Achieving societal ambitions to reduce greenhouse gas emissions and ultimately achieve net-zero will require
new technologies to reduce the cost and increase the scalability of alternative energy sources as well as
technologies such as carbon capture and storage (CCS). CCS technologies, focused initially on capturing and
sequestering CO2 emissions from high-intensity industrial activities, can assist in meeting society’s objective to
mitigate atmospheric greenhouse gas levels while also helping ensure the availability of the reliable and
affordable energy the world requires. The company’s future results and ability to succeed through the energy
transition while helping meet Canada's emission-reduction goals and meet its own net-zero and emission
reduction goals will depend in part on the success of these research and collaboration efforts. It will also rely on
the company’s ability to adapt and apply the strengths of its current business model to providing the energy
products of the future in a cost-competitive manner.
Policy and market development
The scale of the world’s energy system means that, in addition to developments in technology discussed above,
a successful energy transition will require appropriate support from governments and private participants
throughout the global economy. The company’s ability to develop and deploy CCS and other lower-emission
energy technologies at commercial scale will depend in part on the continued development of supportive
government policies and markets. Failure or delay of these policies or markets to materialize or be maintained
could adversely impact these investments. Policy and other actions that result in restricting the availability of
hydrocarbon products without commensurate reduction in demand may have unpredictable adverse effects,
including increased commodity price volatility; periods of significantly higher commodity prices and resulting
inflationary pressures; and local or regional energy shortages. Such effects in turn may depress economic
growth or lead to rapid or conflicting shifts in policy by different actors, with resulting adverse effects on the
company’s business.
In addition, the existence of supportive policies in any jurisdiction is not a guarantee that those policies will
continue in the future. See also the discussion of “Supply and demand”, “Government and political factors”, and
“Management effectiveness” in this Item 1A.
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Currency
Prices for commodities produced by the company are commonly benchmarked in U.S. dollars. The majority of
Imperial’s sales and purchases are related to these industry U.S. dollar benchmarks. As the company records
and reports its financial results in Canadian dollars, to the extent that the value of the Canadian dollar
strengthens, the company’s reported earnings will be negatively affected. The company does not currently make
use of derivative instruments to offset exposures associated with foreign currency.
Other business risks
Imperial is reliant on a number of key chemicals, catalysts and third-party service providers, including input and
output commodity transportation (pipelines, rail, trucking, marine) and utilities providing services, including
electricity and water, to various company operations. The lack of availability, capacity or proximity, with respect
to pipeline facilities and railcars, could negatively impact Imperial’s ability to produce at capacity levels.
Transportation disruptions, including those caused by events unrelated to the company’s operations, could
adversely affect the company’s price realizations, refining operations and sales volumes. This includes outages
of key third-party infrastructure, such as pipelines servicing the company’s oil sands assets or pipelines
supplying feedstock to its refineries, which could impact the company’s ability to operate its assets or limit the
ability to deliver production and products to market. A third-party utilities outage could have an adverse impact
on the company’s operations and ability to produce.
The company also enters into contractual relationships with suppliers, partners and other counterparties to
procure and sell goods and services, and the company’s operations, market position and financial condition
may be adversely impacted if these counterparties do not fulfil their obligations. Imperial may also be adversely
affected by the outcome of litigation resulting from its operations or by government enforcement proceedings
alleging non-compliance with applicable laws or regulations. Litigation is subject to uncertainty and success is
not guaranteed, and the company may incur significant expenses and devote significant resources in defending
litigation.
Current and future increases in operating costs such as energy, transportation and materials, including through
shipping, supply chain disruptions and inflationary cost pressures, could adversely affect the company’s
financial results if it is unable to control or offset these costs. In addition to direct potential impacts on the
company's costs and revenues, market factors such as rates of inflation may indirectly impact results to the
extent such factors reduce general rates of economic growth and therefore energy demand, as discussed under
“Supply and demand". Further, with inflation rising in Canada and other countries throughout 2022,
governments have increased interest rates which may further impact the company through the availability of
financing, cost of debt, and exchange rate fluctuations. Additional information regarding the potential future
impact of market factors on our businesses is included or incorporated by reference under Item 7A Quantitative
and qualitative disclosures about market risk in this report.
Operational and other factors
In addition to external economic and political factors, Imperial’s future business results also depend on the
company’s ability to manage successfully those factors that are at least in part within its control. The extent to
which Imperial manages these factors will impact its performance relative to competition. For projects in which
the company is not the operator such as Syncrude, Imperial depends on the management effectiveness of one
or more co-venturers whom the company does not control.
Project management
The nature of the company’s Upstream, Downstream and Chemical businesses depend on complex, long-term,
and capital intensive projects that require a high degree of project management expertise to maximize
efficiency. This includes development, engineering, construction, commissioning and ongoing operational
activities and expertise. The company’s results are affected by its ability to develop and operate projects and
facilities as planned, and by events or conditions that affect the advancement, operation, cost or results of such
projects or facilities. These risks include the company’s ability to obtain the necessary environmental and other
regulatory approvals; changes in regulations; the ability to negotiate successfully with joint venturers, partners,
governments, suppliers, customers and others; the ability to model and optimize reservoir performance;
changes in resources and operating costs including the availability and cost of materials, equipment and
qualified personnel; the impact of general economic, business and market conditions; and the company’s ability
to respond effectively to unforeseen technical difficulties that could delay project start-up or cause unscheduled
downtime.
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Operational efficiency
An important component of Imperial’s competitive performance, especially given the commodity based nature of
Imperial’s business, is the ability to operate efficiently, including the company’s ability to manage expenses and
improve production yields on an ongoing basis. This requires continuous management focus, including
technological improvements, cost control, productivity enhancements and regular reappraisal of the company’s
asset portfolio. The company’s operations and results also depend on key personnel and subject matter
expertise, the recruitment, development and retention of high caliber employees, and the availability of skilled
labour.
Research and development and technical change
Imperial relies upon the research and development organizations of the company and ExxonMobil, with whom
the company conducts shared research. Innovation and technology are important to maintain the company’s
competitive position, especially in light of the technological nature of Imperial’s business and the need for
continuous efficiency improvement.
The company’s research and development organizations must be able to adapt to a changing market and policy
environment, including developing technologies to help reduce greenhouse gas emissions intensity. To remain
competitive, the company must also continuously adapt and capture the benefits of new technologies including
growing the company’s capabilities to utilize digital data technologies to gain new business insights. There are
risks associated with projects that rely on new technology, including that the results of implementing the new
technology may differ from simulated, piloted or expected results. The failure to develop and adopt new
technology may have an adverse impact on the company’s operations, ability to meet regulatory requirements
and operational commitments and targets (including environmental sustainability and reduction of greenhouse
gas emissions), and financial results.
Safety, business controls and environmental risk management
The scope and nature of the company’s operations present a variety of significant hazards and risks, including
operational hazards and risks such as explosions, fires, pipeline ruptures and crude oil spills. Imperial’s
operations are also subject to the additional hazards of pollution, releases of toxic gas and environmental
hazards and risks, including severe weather (such as extreme cold weather events that impacted the
company's oil sands operations in early 2022) and geological events. The company’s results depend on
management’s ability to minimize these inherent risks, to effectively control business activities and to minimize
the potential for human error. Imperial applies rigorous management systems, including a combined program of
effective operations integrity management, ongoing upgrades, key equipment replacements, and
comprehensive inspection and surveillance. The company also maintains a disciplined framework of internal
controls and applies a controls management system for monitoring compliance with this framework. The
company’s upstream and downstream operations may experience loss of production, slowdowns or shutdowns
and increased costs due to the failure of interdependent systems, and substantial liabilities and other adverse
impacts could result if the company’s management systems and controls do not function as intended.
Cybersecurity
Imperial is regularly subject to attempted cybersecurity disruptions from a variety of sources, including state-
sponsored actors. Imperial’s defensive preparedness includes multi-layered technological capabilities for
prevention and detection of cybersecurity disruptions: non-technological measures such as threat information
sharing with governmental and industry groups; annual internal training and awareness campaigns including
routine testing of employee awareness via mock threats; and an emphasis on resiliency including business
response and recovery.
If the measures the company is taking to protect against cybersecurity disruptions prove to be insufficient or if
the company’s proprietary data is otherwise not protected, the company, as well as its customers, employees or
third parties, could be adversely affected. The company is exposed to potential harm from cybersecurity events
that may affect the operations of third parties, including our partners, suppliers, service providers (including
providers of cloud-based services for our data or applications), and customers. Cybersecurity disruptions could
cause physical harm to people or the environment; damage or destroy assets; compromise business systems;
result in proprietary information being altered, lost or stolen; result in employee, customer or third-party
information being compromised; or otherwise disrupt the company’s business operations. Imperial could incur
significant costs to remedy the effects of a major cybersecurity disruption, in addition to costs in connection with
resulting regulatory actions, litigation or reputational harm.
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Preparedness
The company’s operations may be disrupted by severe weather events, natural disasters, human error, and
similar events. Our facilities are designed, engineered, constructed, and operated to withstand a variety of
extreme climatic and other conditions, with safety factors built in to cover a number of uncertainties, including
those associated with permafrost stability, temperature extremes, extreme rainfall events, earthquakes and
other events. Our consideration of changing weather conditions and inclusion of safety factors in design covers
the engineering uncertainties that climate change and other events may potentially introduce. Imperial’s ability
to mitigate the adverse impacts of these events depends in part upon the effectiveness of its robust facility
engineering, rigorous disaster preparedness and response, and business continuity planning.
Reputation
Imperial’s reputation is an important corporate asset. Factors that could have an impact on the company’s
reputation including an operating incident or significant cybersecurity disruption; changes in consumer views
concerning the company’s products; a perception by investors or others that insufficient progress is being made
with respect to the company’s ambition in the energy transition, or that pursuit of this ambition may result in
allocation of capital to investments with reduced returns; and other adverse events such as those described in
this Item 1A. Negative impacts on Imperial’s reputation could, in turn, make it more difficult for the company to
compete successfully for new opportunities, obtain necessary regulatory approvals, obtain financing, and attract
talent, or they could reduce consumer demand for the company’s branded products. Imperial’s reputation may
also be harmed by events which negatively affect the image of the industry as a whole, including public and
investor perception of Alberta oil sands in relation to greenhouse gas emissions and environmental impact.
Reserves
The company’s future production and cash flows from bitumen, synthetic crude oil, liquids and natural gas
reserves are highly dependent upon the company’s success in exploiting its current reserves. To maintain
production and cash flows over the long term, the company must replace produced reserves, which can be
accomplished through exploration discovery of new resources, appraisal and investments in developing
discovered resources, or acquisition of reserves. To the extent cash flows from operations are insufficient to
fund capital expenditures and external sources of capital become limited or unavailable, the company’s ability to
make the necessary capital investments to maintain and grow oil and natural gas reserves will be adversely
impacted. In addition, the company may be unable to find and develop or acquire additional reserves to replace
oil and natural gas production at acceptable costs.
Estimates of economically recoverable oil and natural gas reserves and future net cash flows involve many
uncertainties, including factors beyond the company’s control. Key factors with uncertainty include: geological
and engineering estimates, including that additional information obtained through seismic and drilling programs,
reservoir analysis and production and operational history may result in revisions to reserves; the assumed
effects of regulation or changes to regulation by government agencies, including royalty frameworks and
environmental regulations (such as the regulation of greenhouse gas emissions, including accelerated timelines
and emission reduction stringency to meet government goals, which could impose significant compliance costs
on the company, require new technology, or impact the economic viability of certain projects); future commodity
prices, where low commodity prices may affect reserves development; abandonment and reclamation costs,
including reclamation and tailings requirements for mining operations; and operating costs. Actual production,
revenues, taxes and royalties, development costs, abandonment and reclamation costs, and operating
expenditures, with respect to reserves, will likely vary from such estimates, and such variances could be
material.
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Item 1B. Unresolved staff comments
None.
Item 2. Properties
Reference is made to Item 1 above.
Item 3. Legal proceedings
Refer to the relevant portions of note 9. "Litigation and other contingencies" of the “Financial section” of this
report for additional information on legal proceedings.
Imperial has elected to use a US $1 million threshold for disclosing environmental proceedings.
Item 4. Mine safety disclosures
Not applicable.
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Item 5. Market for registrant’s common equity, related
stockholder matters and issuer purchases of equity
securities
PART II
Market information
The company’s common shares are listed and trade on the Toronto Stock Exchange in Canada, and have
unlisted trading privileges and trade on the NYSE American LLC in the United States. The symbol for the
company’s common shares on these exchanges is IMO.
As of February 8, 2023 there were 9,342 holders of record of common shares of the company.
Information for security holders outside Canada
Cash dividends paid to shareholders resident in countries with which Canada has an income tax convention are
usually subject to a Canadian non-resident withholding tax of 15 percent, but may vary from one tax convention
to another.
The withholding tax is reduced to 5 percent on dividends paid to a corporation resident in the U.S. that owns at
least 10 percent of the voting shares of the company.
The company is a qualified foreign corporation for purposes of the reduced U.S. capital gains tax rates, which
are applicable to dividends paid by U.S. domestic corporations and qualified foreign corporations.
There is no Canadian tax on gains from selling shares or debt instruments owned by non-residents not carrying
on business in Canada, as long as the shareholder does not, in any given 60 month period, own 25 percent or
more of the shares of the company.
Canada has approved several positions with respect to the Multilateral Convention to Implement Tax Treaty
Related Measures to Prevent Base Erosion and Profit Shifting (“MLI”), which may impact the taxability of
dividends and capital gains in Canada if the shareholder’s country of residence has also approved these same
positions of the MLI.
During the fourth quarter, the company did not issue or sell any unregistered equity securities.
Securities authorized for issuance under equity compensation plans
Sections of the company’s management proxy circular are contained in the “Proxy information section”, starting
on page 111. The company’s management proxy circular is prepared in accordance with Canadian securities
regulations.
Reference is made to the section under the “Company executives and executive compensation”:
• Entitled “Performance graph” within the “Compensation discussion and analysis” section on page 170 of
this report; and
• Entitled “Equity compensation plan information”, within the “Compensation discussion and analysis”, on
page 176 of this report.
31
Issuer purchases of equity securities
Total number of
shares purchased
Average price paid
per share
(Canadian dollars)
Total number of Maximum number
of shares that may
yet be purchased
under the plans or
programs (a) (b)
shares purchased
as part of publicly
announced plans
or programs
October 2022
(October 1 - October 31)
November 2022
(November 1 - November 30)
December 2022
6,673,198
65.06
6,673,198
—
—
—
(December 1 - December 31)
20,689,655
72.50
20,689,655
—
—
—
(a) On June 27, 2022, the company announced by news release that it had received final approval from the Toronto Stock Exchange for
a new normal course issuer bid to continue its existing share purchase program. The program enabled the company to purchase up
to a maximum of 31,833,809 common shares during the period June 29, 2022 to June 28, 2023. This maximum included shares
purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but outside of the normal course
issuer bid. As in the past, Exxon Mobil Corporation advised the company that it intended to participate to maintain its ownership
percentage at approximately 69.6 percent. Imperial accelerated share purchases under the normal course issuer bid program, and
the program completed on October 21, 2022 as a result of the company purchasing the maximum allowable number of shares under
the program.
(b) On November 4, 2022, the company commenced a substantial issuer bid pursuant to which it offered to purchase for cancellation up
to $1.5 billion of its common shares through a modified Dutch auction and proportionate tender offer. The substantial issuer bid was
completed on December 14, 2022, with the company taking up and paying for 20,689,655 common shares at a price of $72.50 per
share, for an aggregate purchase of $1.5 billion and 3.4 percent of Imperial’s issued and outstanding shares at the close of business
on October 31, 2022. This included 14,399,985 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to
maintain its ownership percentage at approximately 69.6 percent.
The company will continue to evaluate the renewal of its normal course issuer bid share purchase program in
June 2023 in the context of its overall capital activities.
Purchase plans may be modified at any time without prior notice.
Item 7. Management’s discussion and analysis of financial
condition and results of operations
Reference is made to the section entitled “Management’s discussion and analysis of financial condition and
results of operations” in the “Financial section”, starting on page 47 of this report.
Item 7A. Quantitative and qualitative disclosures about market
risk
Reference is made to the section entitled “Market risks” in the “Financial section”, starting on page 63 of this
report. All statements other than historical information incorporated in this Item 7A are forward-looking
statements. The actual impact of future market changes could differ materially due to, among other things,
factors discussed in this report.
32
Item 8. Financial statements and supplementary data
Reference is made to the table of contents in the “Financial section” on page 41 of this report:
• Consolidated financial statements, together with the report thereon of PricewaterhouseCoopers LLP
(PCAOB ID: 271), Calgary, Canada dated February 22, 2023, beginning with the section entitled
“Report of Independent Registered Public Accounting Firm” on page 71 and continuing through note 18,
“Divestment activities” on page 106;
“Supplemental information on oil and gas exploration and production activities” (unaudited) starting on
page 107.
•
Item 9. Changes in and disagreements with accountants on
accounting and financial disclosure
None.
Item 9A. Controls and procedures
As indicated in the certifications in Exhibit 31 of this report, the company’s principal executive officer and
principal financial officer have evaluated the company’s disclosure controls and procedures as of December 31,
2022. Based on that evaluation, these officers have concluded that the company’s disclosure controls and
procedures are effective in ensuring that information required to be disclosed by the company in the reports that
it files or submits under the Securities Exchange Act of 1934, as amended, is accumulated and communicated
to them in a manner that allows for timely decisions regarding required disclosures and are effective in ensuring
that such information is recorded, processed, summarized and reported within the time periods specified in the
SEC’s rules and forms.
Reference is made to page 70 of this report for “Management’s report on internal control over financial
reporting” and page 71 for the “Report of Independent Registered Public Accounting Firm” on the company’s
internal control over financial reporting as of December 31, 2022.
There has not been any change in the company’s internal control over financial reporting during the last fiscal
quarter that has materially affected, or is reasonably likely to materially affect, the company’s internal control
over financial reporting.
Item 9B. Other information
None.
Item 9C. Disclosure regarding foreign jurisdiction that prevents
inspections
Not applicable.
33
PART III
Item 10. Directors, executive officers and corporate governance
Sections of the company’s management proxy circular are contained in the “Proxy information section”, starting
on page 111. The company’s management proxy circular is prepared in accordance with Canadian securities
regulations.
The company currently has seven directors. The articles of the company require that the board have between
five and fifteen directors. Each director is elected to hold office until the close of the next annual meeting. Each
of the seven individuals listed in the section entitled “Nominees for director” on pages 112 to 116 of this report
have been nominated for election at the annual meeting of shareholders to be held May 2, 2023. All of the
nominees, with the exception of S.R. Driscoll, J. Floren and G.J. Goldberg, are now directors and have been
since the dates indicated. Ms. Driscoll, Mr. Floren and Mr. Goldberg are not currently directors and are being
nominated for election as directors at the annual meeting of shareholders for the first time. K.T. Hoeg, J.M.
Mintz and D.S. Sutherland are currently directors and are not standing for re-election in 2023 as they have
reached the company's mandatory retirement age for directors.
Reference is made to the section under “Nominees for director”:
•
“Director nominee tables”, on pages 112 to 116 of this report;
Reference is made to the sections under “Corporate governance disclosure”:
“Skills and experience of our board members and nominees”, on page 121 of this report.
•
•
“Other public company directorships of our board members and nominees”, on page 125 of this report.
• The table entitled “Audit committee” under “Board and committee structure”, on page 134 of this report;
•
•
“Ethical business conduct”, starting on page 147 of this report; and
“Largest shareholder”, on page 151 of this report.
Reference is made to the sections under “Company executives and executive compensation”:
•
“Named executive officers of the company” and “Other executive officers of the company”, on pages
153 to 154 of this report.
Item 11. Executive compensation
Sections of the company’s management proxy circular are contained in the “Proxy information section”, starting
on page 111. The company’s management proxy circular is prepared in accordance with Canadian securities
regulations.
Reference is made to the sections under “Corporate governance disclosure”:
•
•
“Director compensation”, on pages 139 to 146 of this report; and
“Share ownership guidelines of independent directors and chairman, president and chief executive
officer”, on page 146 of this report.
Reference is made to the following sections under “Company executives and executive compensation”:
•
•
“Letter to shareholders from the executive resources committee on executive compensation”, on page
155 of this report; and
“Compensation discussion and analysis”, on pages 156 to 178 of this report.
34
Item 12. Security ownership of certain beneficial owners and
management and related stockholder matters
Sections of the company’s management proxy circular are contained in the “Proxy information section”, starting
on page 111. The company’s management proxy circular is prepared in accordance with Canadian securities
regulations.
Reference is made to the section under “Company executives and executive compensation” entitled “Equity
compensation plan information”, within the “Compensation discussion and analysis” section, on page 176 of this
report.
Reference is made to the section under “Corporate governance disclosure” entitled “Largest shareholder”, on
page 151 of this report.
Reference is also made to the security ownership information for directors and executive officers of the
company under the preceding Items 10 and 11. The compensation of the directors and executive officers of the
company for the year-ended December 31, 2022 is described in the sections under “Nominees for director”
starting on page 112, “Director compensation” starting on page 139 and “Company executives and executive
compensation” starting on page 153. The following table shows the number of Imperial Oil Limited and Exxon
Mobil Corporation common shares owned and restricted stock units held by each named executive officer, and
the incumbent directors and executive officers as a group, as of February 8, 2023.
Named executive officer
B.W. Corson
D.E. Lyons
S.P. Younger
B.A. Jolly
J.R. Wetmore
Incumbent directors and executive
officers as a group (16 people)
Imperial Oil Limited
Exxon Mobil Corporation
Common
shares (a)
Restricted
stock units (b)
Common
shares (a)
Restricted
stock units (b)
—
—
—
12,506
15,990
323,600
94,800
54,400
73,800
60,400
120,676
10,419
8,796
—
—
73,850
9,600
13,600
—
—
113,437
807,550
161,155
225,450
(a) No common shares are beneficially owned by reason of exercisable options. None of these individuals owns more than 0.01 percent
of the outstanding shares of Imperial Oil Limited or Exxon Mobil Corporation. The directors and officers as a group own approximately
0.02 percent of the outstanding shares of Imperial Oil Limited, and less than 0.01 percent of the outstanding shares of Exxon Mobil
Corporation. Information not being within the knowledge of the company has been provided by the directors and the executive
officers individually.
(b) Restricted stock units do not carry voting rights prior to the issuance of shares on settlement of the awards.
35
Item 13. Certain relationships and related transactions, and
director independence
Sections of the company’s management proxy circular are contained in the “Proxy information section”, starting
on page 111. The company’s management proxy circular is prepared in accordance with Canadian securities
regulations.
Reference is made to the section under “Corporate governance disclosure” entitled “Independence of our board
members and nominees”, on page 122 of this report.
Reference is made to the section under “Corporate governance disclosure” entitled “Transactions with Exxon
Mobil Corporation”, on page 151 of this report.
M.R. Crocker is deemed a non-independent member of the board of directors and the executive resources
committee, safety and sustainability committee, nominations and corporate governance committee and
community collaboration and engagement committee under the relevant standards. As an employee of Exxon
Mobil Corporation, M.R. Crocker is independent of the company’s management and is able to assist these
committees by reflecting the perspective of the company’s shareholders.
36
Item 14. Principal accountant fees and services
Auditor information
The audit committee of the board of directors recommends that PricewaterhouseCoopers LLP (PwC) be
reappointed as the auditor of the company until the close of the next annual meeting. PwC has been the auditor
of the company for more than five years and are located in Calgary, Alberta. PwC is a participating audit firm
with the Canadian Public Accountability Board and the Public Company Accounting Oversight Board (United
States) (PCAOB).
Auditor fees
The aggregate fees of PwC for professional services rendered for the audit of the company’s financial
statements and other services for the fiscal years ended December 31, 2022 and December 31, 2021 were as
follows:
thousands
of
Canadian dollars
Audit fees
Audit-related fees
Tax fees
All
other fees
Total fees
2022
2,190
92
—
—
2021
1,890
92
—
—
2,282
1,982
Audit fees included the audit of the company’s annual financial statements, internal control over financial
reporting, and a review of the first three quarterly financial statements in 2022. Audit-related fees consisted of
other assurance services including the audit of the company’s retirement plan and royalty statement audits for
oil and gas producing entities. The company did not engage the auditor for any other services.
The audit committee formally and annually evaluates the performance of the external auditor, recommends the
external auditor to be appointed by the shareholders, recommends their remuneration and oversees their work.
The audit committee also approves the proposed current year audit program of the external auditor, assesses
the results of the program after the end of the program period and approves in advance any non-audit services
to be performed by the external auditor after considering the effect of such services on their independence.
All of the services rendered by the auditor to the company were approved by the audit committee.
Auditor independence
The audit committee periodically discusses with PwC their independence from the company and from
management. PwC have confirmed that they are independent with respect to the company within the meaning
of the Rules of Professional Conduct of the Chartered Professional Accountants of Alberta, the PCAOB and the
rules of the SEC. The company has concluded that the auditor’s independence has been maintained.
37
PART IV
Item 15. Exhibits, financial statement schedules
Reference is made to the table of contents in the “Financial section” on page 41 of this report.
The following exhibits, numbered in accordance with Item 601 of Regulation S-K, are filed as part of this report:
(3)
(i)
(ii)
Restated certificate and articles of incorporation of the company (Incorporated herein by
reference to Exhibit (3.1) to the company’s Form 8-K filed on May 3, 2006 (File No. 0-12014)).
By-laws of the company (Incorporated herein by reference to Exhibit (3)(ii) to the company’s
Quarterly Report on Form 10-Q for the quarter ended March 31, 2003 (File No. 0-12014)).
(4)
(vi) Description of capital stock. (Incorporated herein by reference to Exhibit (4)(vi) of the company’s
Annual Report on Form 10-K for the year ended December 31, 2019 (File No. 0-12014)).
(10)
(ii)
(1) Alberta Cold Lake Transition Agreement, effective January 1, 2000, relating to the royalties
payable in respect of the Cold Lake production project and terminating the Alberta Cold
Lake Crown Agreement dated June 25, 1984. (Incorporated herein by reference to Exhibit
(10)(ii)(20) of the company’s Annual Report on Form 10-K for the year ended December 31,
2001 (File No. 0-12014)).
(2) Syncrude Bitumen Royalty Option Agreement, dated November 18, 2008, setting out the
terms of the exercise by the Syncrude Joint Venture owners of the option contained in the
existing Crown Agreement to convert to a royalty payable on the value of bitumen, effective
January 1, 2009 (Incorporated herein by reference to Exhibit 1.01(10)(ii)(2) of the
company’s Form 8-K filed on November 19, 2008 (FileNo. 0-12014)).
(iii)(A) (1)
Form of Letter relating to Supplemental Retirement Income (Incorporated herein by
reference to Exhibit (10)(c)(3) of the company’s Annual Report on Form 10-K for the year
ended December 31, 1980 (File No. 2-9259)).
(2)
(3)
(4)
(5)
(6)
Deferred Share Unit Plan for Nonemployee Directors. (Incorporated herein by reference
to Exhibit (10)(iii)(A)(6) of the company’s Annual Report on Form 10-K for the year ended
December 31, 1998 (File No. 0-12014)).
Amended Restricted Stock Unit Plan with respect to Restricted Stock Units granted in
2011 and subsequent years, as amended effective November 14, 2011 (Incorporated
herein by reference to Exhibit 9.01(c)[10(iii)(A)(1)] of the company’s Form 8-K filed on
February 23, 2012 (File No. 0-12014)).
Amended Restricted Stock Unit Plan with respect to Restricted Stock Units granted in
2016 and subsequent years, as amended effective October 26, 2016 (Incorporated herein
by reference to Exhibit 9.01(c)[10(iii)(A)(1)] of the company’s Form 8-K filed on October
31, 2016 (File No. 0-12014)).
Amended Short Term Incentive Program with respect to awards granted in 2016 and
subsequent years, as amended effective October 26, 2016 (Incorporated herein by
reference to Exhibit 9.01(c)[10(iii)(A)(1)] of the company’s Form 8-K filed on October 31,
2016 (File No. 0-12014)).
Amended Restricted Stock Unit Plan with respect to Restricted Stock Units granted in
2020 and subsequent years, as amended effective November 24, 2020 (Incorporated
herein by reference to Exhibit (10)(iii)(A)(6) of the company’s Annual Report on Form 10-
K for the year ended December 31, 2020 (File No. 0-12014)).
(7)
Amended Restricted Stock Unit Plan with respect to Restricted Stock Units granted in
2022 and subsequent years, as amended effective November 29, 2022.
38
(21)
(31.1)
(31.2)
(32.1)
(32.2)
(101)
(104)
Imperial Oil Resources Limited is incorporated in Alberta, Canada and Canada Imperial
Oil Limited is incorporated in Canada, and both are wholly-owned subsidiaries of the
company. The names of all other subsidiaries of the company are omitted because,
considered in the aggregate as a single subsidiary, they would not constitute a significant
subsidiary as of December 31, 2022.
Certification by principal executive officer of Periodic Financial Report pursuant to Rule
13a-14(a).
Certification by principal financial officer of Periodic Financial Report pursuant to Rule
13a-14(a).
Certification by chief executive officer of Periodic Financial Report pursuant to Rule
13a-14(b) and 18 U.S.C. Section 1350.
Certification by chief financial officer of Periodic Financial Report pursuant to Rule
13a-14(b) and 18 U.S.C. Section 1350.
Interactive Data Files (formatted as Inline XBRL).
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
Copies of Exhibits may be acquired upon written request of any shareholder to the vice president, investor
relations, Imperial Oil Limited, 505 Quarry Park Boulevard S.E., Calgary, Alberta T2C 5N1, and payment of
processing and mailing costs.
Item 16. Form 10-K summary
Not applicable.
39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf on February 22, 2023 by the undersigned, thereunto duly
authorized.
Imperial Oil Limited
by
/s/ Bradley W. Corson
(Bradley W. Corson)
Chairman, president and chief executive officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below on
February 22, 2023 by the following persons on behalf of the registrant and in the capacities indicated.
Signature
Title
/s/ Bradley W. Corson
(Bradley W. Corson)
/s/ Daniel E. Lyons
(Daniel E. Lyons)
/s/ David W. Cornhill
(David W. Cornhill)
/s/ Matthew R. Crocker
(Matthew R. Crocker)
/s/ Krystyna T. Hoeg
(Krystyna T. Hoeg)
/s/ Miranda C. Hubbs
(Miranda C. Hubbs)
/s/ Jack M. Mintz
(Jack M. Mintz)
/s/ David S. Sutherland
(David S. Sutherland)
Chairman, president and
chief executive officer and director
(Principal executive officer)
Senior vice-president,
finance and administration, and controller
(Principal financial officer and principal accounting officer)
Director
Director
Director
Director
Director
Director
40
Financial section
Table of contents
Financial information (U.S. GAAP)
Frequently used terms
Management’s discussion and analysis of financial condition and results of operations
Overview
Business environment
Business results
Liquidity and capital resources
Capital and exploration expenditures
Market risks
Critical accounting estimates
Management’s report on internal control over financial reporting
Report of Independent Registered Public Accounting Firm
Consolidated statement of income (U.S. GAAP)
Consolidated statement of comprehensive income (U.S. GAAP)
Consolidated balance sheet (U.S. GAAP)
Consolidated statement of shareholders’ equity (U.S. GAAP)
Consolidated statement of cash flows (U.S. GAAP)
Notes to consolidated financial statements
1. Summary of significant accounting policies
2. Business segments
3. Income taxes
4. Employee retirement benefits
5. Other long-term obligations
6. Financial and derivative instruments
7. Share-based incentive compensation programs
8. Investment and other income
9. Litigation and other contingencies
10. Common shares
11. Miscellaneous financial information
12. Financing and additional notes and loans payable information
13. Leases
14. Long-term debt
15. Accounting for suspended exploratory well costs
16. Transactions with related parties
17. Other comprehensive income (loss) information
18. Divestment activities
Supplemental information on oil and gas exploration and production activities (unaudited)
41
Page
42
43
47
47
48
52
59
62
63
65
70
71
74
75
76
77
78
79
79
85
87
88
93
94
96
97
97
98
100
101
102
104
104
105
106
106
107
Financial information (U.S. GAAP)
millions of Canadian dollars
Revenues
Net income (loss):
Upstream
Downstream
Chemical
Corporate and other
Net income (loss)
Cash and cash equivalents at year-end
Total assets at year-end
Long-term debt at year-end
Total debt at year-end
Other long-term obligations at year-end
Shareholders’ equity at year-end
Cash flow from operating activities
Per share information (Canadian dollars)
Net income (loss) per common share - basic
Net income (loss) per common share - diluted
Dividends per common share - declared
2022
59,413
2021
37,508
2020
22,284
3,645
3,622
204
(131)
7,340
3,749
43,524
4,033
4,155
3,467
22,413
10,482
11.47
11.44
1.46
1,395
895
361
(172)
2,479
2,153
40,782
5,054
5,176
3,897
21,735
5,476
3.48
3.48
1.03
(2,318)
553
78
(170)
(1,857)
771
38,031
4,957
5,184
4,100
21,418
798
(2.53)
(2.53)
0.88
42
Frequently used terms
Listed below are definitions of several of Imperial’s key business and financial performance measures. The
definitions are provided to facilitate understanding of the terms and how they are calculated. Certain measures
included in this document are not prescribed by U.S. Generally Accepted Accounting Principles (GAAP). These
measures constitute “non-GAAP financial measures” under Securities and Exchange Commission Regulation G
and Item 10(e) of Regulation S-K, and “specified financial measures” under National Instrument 52-112 Non-
GAAP and Other Financial Measures Disclosure of the Canadian Securities Administrators.
Reconciliation of these non-GAAP financial measures to the most comparable GAAP measure, and other
information required by these regulations, have been provided. Non-GAAP financial measures and specified
financial measures are not standardized financial measures under GAAP and do not have a standardized
definition. As such, these measures may not be directly comparable to measures presented by other
companies, and should not be considered a substitute for GAAP financial measures.
Capital employed
Capital employed is a non-GAAP financial measure that is a measurement of net investment. When viewed
from the perspective of how capital is used by the business, it includes the company’s property, plant and
equipment and other assets, less liabilities, excluding both short-term and long-term debt. When viewed from
the perspective of the sources of capital employed in total for the company, it includes total debt and equity. The
most directly comparable financial measure that is disclosed in the financial statements is total assets within the
company’s Consolidated balance sheet. Both of these views include the company’s share of amounts
applicable to equity companies, which the company believes should be included to provide a more
comprehensive measurement of capital employed.
Reconciliation of capital employed
millions of Canadian dollars
From the Consolidated balance sheet
Business uses: asset and liability perspective
Total assets
Less: Total current liabilities excluding notes and loans payable
Total long-term liabilities excluding long-term debt
Add: Imperial’s share of equity company debt
Total capital employed
Total company sources: Debt and equity perspective
Notes and loans payable
Long-term debt
Shareholders’ equity
Add: Imperial’s share of equity company debt
Total capital employed
2022
2021
2020
43,524
(8,776)
(8,180)
25
26,593
122
4,033
22,413
25
26,593
40,782
(5,432)
(8,439)
20
26,931
122
5,054
21,735
20
26,931
38,031
(3,153)
(8,276)
26
26,628
227
4,957
21,418
26
26,628
43
Return on average capital employed (ROCE)
ROCE is a non-GAAP ratio. From the perspective of the business segments, ROCE is annual business
segment net income divided by average business segment capital employed (an average of the beginning and
end-of-year amounts). Segment net income includes Imperial’s share of segment net income of equity
companies, consistent with the definition used for capital employed, and excludes the cost of financing. Capital
employed is a non-GAAP financial measure and is disclosed and reconciled above. The company’s total ROCE
is net income excluding the after-tax cost of financing divided by total average capital employed. The company
has consistently applied its ROCE definition for many years and views it as one of the best measures of
historical capital productivity in a capital-intensive, long-term industry. Additional measures, which are more
cash flow based, are used to make investment decisions.
Components of return on average capital employed
millions of Canadian dollars
From the Consolidated statement of income
Net income (loss)
Financing (after-tax) including Imperial’s share of equity companies
Net income (loss) excluding financing
Average capital employed
Return on average capital employed (percent) – corporate total
2022
2021
2020
7,340
55
7,395
26,762
27.6
2,479
40
2,519
26,780
9.4
(1,857)
52
(1,805)
28,059
(6.4)
Cash flows from operating activities and asset sales
Cash flows from operating activities and asset sales is a non-GAAP financial measure that is the sum of the net
cash provided by operating activities and proceeds from asset sales reported in the Consolidated statement of
cash flows. This cash flow reflects the total sources of cash both from operating the company’s assets and from
the divesting of assets. The most directly comparable financial measure that is disclosed in the financial
statements is cash flows from (used in) operating activities within the company’s Consolidated statement of
cash flows. The company employs a long-standing and regular disciplined review process to ensure that assets
are contributing to the company’s strategic objectives. Assets are divested when they no longer meet these
objectives or are worth considerably more to others. Because of the regular nature of this activity, the company
believes it is useful for investors to consider sales proceeds together with cash provided by operating activities
when evaluating cash available for investment in the business and financing activities, including shareholder
distributions.
Reconciliation of cash flows from (used in) operating activities and asset sales
millions of Canadian dollars
From the Consolidated statement of cash flows
2022
2021
2020
Cash flows from (used in) operating activities
Proceeds from asset sales
Total cash flows from (used in) operating activities and asset sales
10,482
904
11,386
5,476
81
5,557
798
82
880
44
Operating costs
Operating costs is a non-GAAP financial measure that are the costs during the period to produce, manufacture,
and otherwise prepare the company’s products for sale – including energy costs, staffing and maintenance
costs. It excludes the cost of raw materials, taxes and interest expense and are on a before-tax basis. The most
directly comparable financial measure that is disclosed in the financial statements is total expenses within the
company’s Consolidated statement of income. While the company is responsible for all revenue and expense
elements of net income, operating costs represent the expenses most directly under the company’s control and
therefore, are useful in evaluating the company’s performance.
Reconciliation of operating costs
millions of Canadian dollars
From the Consolidated statement of income
Total expenses
Less:
Purchases of crude oil and products
Federal excise tax and fuel charge
Financing
Subtotal
Imperial's share of equity company expenses
Total operating costs
Components of operating costs
millions of Canadian dollars
From the Consolidated statement of income
Production and manufacturing
Selling and general
Depreciation and depletion (includes impairments)
Non-service pension and postretirement benefit
Exploration
Subtotal
Imperial's share of equity company expenses
Total operating costs
2022
2021
2020
50,186
34,307
24,796
37,742
2,179
60
39,981
71
10,276
23,174
1,928
54
25,156
61
9,212
13,293
1,736
64
15,093
64
9,767
2022
2021
2020
7,404
882
1,897
17
5
10,205
71
10,276
6,316
784
1,977
42
32
9,151
61
9,212
5,535
741
3,293
121
13
9,703
64
9,767
45
Net income (loss) excluding identified items
Net income (loss) excluding identified items is a non-GAAP financial measure that is total net income (loss)
excluding individually significant non-operational events with an absolute corporate total earnings impact of at
least $100 million in a given quarter. The net income (loss) impact of an identified item for an individual segment
in a given quarter may be less than $100 million when the item impacts several segments or several periods.
The most directly comparable financial measure that is disclosed in the financial statements is net income (loss)
within the company’s Consolidated statement of income. Management uses these figures to improve
comparability of the underlying business across multiple periods by isolating and removing significant non-
operational events from business results. The company believes this view provides investors increased
transparency into business results and trends, and provides investors with a view of the business as seen
through the eyes of management. Net income (loss) excluding identified items is not meant to be viewed in
isolation or as a substitute for net income (loss) as prepared in accordance with U.S. GAAP. All identified items
are presented on an after-tax basis.
Reconciliation of net income (loss) excluding identified items
millions
of
Canadian dollars
From
the
Consolidated
statement
of income
2022
2021
2020
Net
income
(loss)
(U.S. GAAP)
7,340
2,479
(1,857)
Less
identified
items
included
in
Net
income (loss)
Gain/(loss)
on
sale
of assets
Impairments
Subtotal
of
identified items
208
—
208
—
—
—
Net
income
(loss)
excluding
identified items
7,132
2,479
—
(1,171)
(1,171)
(686)
46
Management’s discussion and analysis of financial condition and results
of operations
Overview
The following discussion and analysis of Imperial’s financial results, as well as the accompanying financial
statements and related notes to consolidated financial statements to which they refer, are the responsibility of
the management of Imperial Oil Limited.
The company’s accounting and financial reporting fairly reflect its integrated business model involving
exploration for, and production of, crude oil and natural gas, manufacture, trade, transport and sale of crude oil,
natural gas, petroleum products, petrochemicals and a variety of specialty products.
Imperial, with its resource base, financial strength, disciplined investment approach and technology portfolio, is
well-positioned to participate in substantial investments to develop new Canadian energy supplies. The
company’s operating segments are Upstream, Downstream, Chemicals, and Corporate and other. The
company’s integrated business model generally reduces the company’s risk from changes in commodity prices.
While commodity prices depend on supply and demand and may be volatile on a short-term basis, Imperial’s
investment decisions are grounded on fundamentals reflected in its long-term business outlook, and use a
disciplined approach in selecting and pursuing the most attractive investment opportunities. The Corporate Plan
is a fundamental annual management process that is the basis for setting operating and capital objectives, in
addition to providing the economic assumptions used for investment evaluation purposes. The foundation for
the assumptions supporting the Corporate Plan is ExxonMobil’s Outlook for Energy, and Corporate Plan volume
projections are based on individual field production profiles, which are also updated annually. Price ranges for
crude oil, natural gas, including price differentials, refinery and chemical margins, volumes and operating costs
including greenhouse gas emissions pricing, and foreign currency exchange rates are based on Corporate Plan
assumptions developed annually and are utilized for investment evaluation purposes. Major investment
opportunities are evaluated over a range of potential market conditions. Once the company makes major
investments, it completes a reappraisal process to ensure that it learns from the investment decision and
incorporates the lessons into future projects.
The term “project” as used in this report can refer to a variety of different activities and does not necessarily
have the same meaning as in any government payment transparency reports.
47
Business environment
Long-term business outlook
The “Long-term business outlook” is based on Exxon Mobil Corporation’s Outlook for Energy (the Outlook),
which combined with the near-term pathways, is used to help inform the company’s long-term business
strategies and investment plans.
The company’s business planning is underpinned by a deep understanding of long-term market fundamentals.
These fundamentals include supply and demand trends, the scale and variety of energy needs worldwide;
capability, practicality and affordability of energy alternatives including low-carbon solutions; greenhouse gas
emission-reduction technologies; and supportive government policies. The Outlook considers these
fundamentals to form the basis for the company’s long-term business planning, investment decisions, and
research programs. The Outlook reflects the company’s view of global energy demand and supply through
2050. It is a projection based on current trends in technology, government policies, consumer preferences,
geopolitics, and economic development.
The Outlook uses projections and scenarios from reputable third parties such as the International Energy
Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC). The IEA describes the Net Zero
Emissions by 2050 (NZE) as extremely challenging, requiring all stakeholders - governments, businesses,
investors, and citizens - to take immediate, unprecedented action. The IEA acknowledges that society is not
currently on the IEA NZE pathway. No single transition pathway can be reasonably predicted, given the wide
range of uncertainties. Key unknowns include yet-to-be-developed government policies, market conditions, and
advances in technology that may influence the cost, pace, and potential availability of certain pathways.
Scenarios that employ a full complement of technology options are likely to provide the most economically
efficient pathways.
By 2050, the world’s population is projected at around 9.7 billion people, or about 2 billion more than in 2021.
Coincident with this population increase, the Outlook projects worldwide economic growth to average close to
2.5 percent per year, with economic output growing by around 110 percent by 2050 compared to 2021. As
economies and populations grow, and as living standards improve for billions of people, the need for energy is
expected to continue to rise. Even with significant efficiency gains, global energy demand is projected to rise by
almost 15 percent from 2021 to 2050. This increase in energy demand is expected to be driven by developing
countries (i.e., those that are not member nations of the Organization for Economic Co-operation and
Development (OECD)).
As expanding prosperity drives global energy demand higher, increasing use of energy-efficient technologies
and practices, as well as lower-emission products, will continue to help significantly reduce energy consumption
and CO2 emissions per unit of economic output over time. Substantial efficiency gains are likely in all key
aspects of the world’s economy through 2050, affecting energy requirements for power generation,
transportation, industrial applications, and residential and commercial needs.
Under the Outlook, global electricity demand is expected to increase over 75 percent from 2021 to 2050, with
developing countries likely to account for about 80 percent of the increase. Consistent with this projection,
power generation is expected to remain the largest and fastest growing major segment of global primary energy
demand, supported by a wide variety of energy sources. The share of coal-fired generation is expected to
decline substantially and approach 15 percent of the world’s electricity in 2050, versus nearly 35 percent in
2021, in part due to policies to improve air quality as well as reduce greenhouse gas emissions to address risks
related to climate change. From 2021 to 2050, the amount of electricity supplied using natural gas, nuclear
power and renewables is expected to more than double, accounting for the entire growth in electricity supplies
and offsetting the reduction of coal. Electricity from wind and solar is expected to increase more than 550
percent, helping total renewables (including other sources, e.g., hydropower) to account for over 80 percent of
the increase in electricity supplies worldwide through 2050. Total renewables are expected to reach about 50
percent of global electricity supplies by 2050. Natural gas and nuclear are expected to be about 25 percent and
10 percent, respectively, of global electricity supplies by 2050. Supplies of electricity by energy type will reflect
significant differences across regions reflecting a wide range of factors including the cost and availability of
various energy supplies and policy developments.
48
Under the Outlook, energy for transportation – including cars, trucks, ships, trains and airplanes – is expected to
increase by over 30 percent from 2021 to 2050. Transportation energy demand is expected to account for
around 65 percent of the growth in liquid fuels demand worldwide over this period. Light-duty vehicle demand
for liquid fuels is projected to peak by around 2025, and then decline to levels seen in the early-2000s by 2050,
as the impact of better fuel economy and significant growth in electric cars, led by China, Europe, and the
United States, work to offset growth in the worldwide car fleet of almost 70 percent. By 2050, light-duty vehicles
are expected to account for around 15 percent of global liquid fuels demand. During the same time period,
nearly all the world’s commercial transportation fleets are expected to continue to run on liquid fuels, including
biofuels, which are expected to be widely available and offer practical advantages in providing a large quantity
of energy in small volumes.
Almost half of the world’s energy use is dedicated to industrial activity. As the global middle class continues to
grow, demand for durable products, appliances, and consumable goods will increase. Industry uses energy
products both as a fuel and as a feedstock for chemicals, asphalt, lubricants, waxes, and other specialty
products. The Outlook anticipates technology advances, as well as the increasing shift toward cleaner forms of
energy such as electricity and natural gas, with coal declining. Demand for oil will continue to grow as a
feedstock for industry.
As populations grow and prosperity rises, more energy will be needed to power homes, offices, schools,
shopping centers, hospitals, etc. Combined residential and commercial energy demand is projected to rise by
around 15 percent through 2050. Led by the growing economies of developing nations, average worldwide
household electricity use will rise about 75 percent between 2021 and 2050.
Liquid fuels provide the largest share of global energy supplies today reflecting broad-based availability,
affordability, ease of transportation, and fitness as a practical solution to meet a wide variety of needs. By 2050,
global demand for liquid fuels is projected to grow to approximately 110 million oil-equivalent barrels per day, an
increase of about 17 percent from 2021. The non-OECD share of global liquid fuels demand is expected to
increase to nearly 70 percent by 2050, as liquid fuels demand in the OECD is expected to decline by around 20
percent. Much of the global liquid fuels demand today is met by crude production from conventional sources;
these supplies will remain important, and significant development activity is expected to offset much of the
natural declines from these fields. At the same time, a variety of emerging supply sources – including tight oil,
deepwater, oil sands, natural gas liquids, and biofuels – are expected to grow to help meet rising demand. The
world’s resource base is sufficient to meet projected demand through 2050 as technology advances continue to
expand the availability of more economic and lower-carbon supply options. However, timely investments will
remain critical to meeting global needs with reliable and affordable supplies.
Natural gas is a lower-emission, versatile and practical fuel for a wide variety of applications, and it is expected
to grow the most of any primary energy type from 2021 to 2050, meeting about 40 percent of global energy
demand growth. Global natural gas demand is expected to rise nearly 25 percent from 2021 to 2050, with
around two thirds of that increase coming from the Asia Pacific region. Significant growth in supplies of
unconventional gas – the natural gas found in shale and other tight rock formations – will help meet these
needs. In total, about 50 percent of the growth in natural gas supplies is expected to be from unconventional
sources. At the same time, conventionally-produced natural gas is likely to remain the cornerstone of global
supply, meeting around two-thirds of worldwide demand in 2050. Liquefied natural gas (LNG) trade will expand
significantly, meeting about 50 percent of the increase in global demand growth, with much of this supply
expected to help meet rising demand in Asia Pacific.
The world’s energy mix is highly diverse and will remain so through 2050. Oil is expected to remain the largest
source of energy with its share remaining close to 30 percent in 2050. Coal and natural gas are the next largest
sources of energy today, with the share of natural gas growing to more than 25 percent by 2050, while the share
of coal falls to about half that of natural gas. Nuclear power is projected to grow, as many nations are likely to
expand nuclear capacity to address rising electricity needs as well as energy security and environmental issues.
Total renewable energy is expected to exceed 20 percent of global energy by 2050, with other renewables (e.g.,
biomass, hydropower, geothermal) contributing a combined share of more than 10 percent. Total energy
supplied from wind and solar is expected to increase rapidly, growing over 480 percent from 2021 to 2050,
when they are projected to be around 10 percent of the world energy mix.
49
Decarbonization of industry activities will require a suite of nascent or future lower-carbon technologies and
supporting policies. Lower-emission fuels, hydrogen-based fuels, and carbon capture and storage are three key
lower-carbon solutions needed to support a lower-emission future, in addition to wind and solar. Along with
electrification, lower-emission fuels are expected to play an important role in decarbonization of the
transportation sector, particularly in hard-to-decarbonize areas, such as aviation. Low-carbon hydrogen will be a
key enabler replacing traditional furnace fuel to decarbonize the industrial sector. Hydrogen and hydrogen-
based fuels like ammonia are also expected to make inroads into commercial transportation as technology
improves to lower its cost and policy develops to support the needed infrastructure development. Carbon
capture and storage on its own, or in combination with hydrogen production, is among the few proven
technologies that could enable CO2 emission reductions from high-emitting and hard-to-decarbonize sectors
such as power generation and heavy industries, including manufacturing, refining and petrochemicals.
To meet this projected demand under the Outlook and the IEA's Stated Policies Scenario (STEPS), the
company anticipates that the world’s available oil and gas resource base will grow, not only from new
discoveries, but also from increases in previously discovered fields. Technology will underpin these increases.
The investments to develop and supply resources to meet global demand through 2050 will be significant, and
would be needed to meet even the rapidly declining demand for oil and gas envisioned in the IEA's Net Zero
Emissions by 2050 scenario.
International accords and underlying regional and national regulations covering greenhouse gas emissions
continue to evolve with uncertain timing and outcome, making it difficult to predict their business impact.
Imperial’s estimates of potential costs related to greenhouse gas emissions align with applicable provincial and
federal regulations. Additionally, Imperial uses the Outlook as a foundation for estimating energy supply and
demand requirements from various energy sources and uses, and the Outlook takes into account policies
established to reduce energy related greenhouse gas emissions. The climate accord reached at the Conference
of the Parties (COP 21) in Paris set many new goals, and many related policies are still emerging. The Outlook
reflects an environment with increasingly stringent climate policies and is consistent with the global aggregation
of Nationally Determined Contributions (NDCs), submitted by the nations that are signatories to the Paris
Agreement, as available at the end of 2021. The Outlook seeks to identify potential impacts of climate related
government policies, which often target specific sectors. As people and nations look for ways to reduce risks of
global climate change, they will continue to need practical solutions that do not jeopardize the affordability or
reliability of the energy they need. The company continues to monitor the updates to the NDCs that nations
provided around COP 27 in Egypt in November 2022 as well as other policy developments in light of net-zero
ambitions formulated by some nations, including Canada.
The information provided in the Outlook includes ExxonMobil's internal estimates and projections based upon
internal data and analyses, as well as publicly available information from external sources including the
International Energy Agency.
Progress reducing emissions
Practical solutions to the world’s energy and climate challenges will benefit from market competition in addition
to well-informed, well-designed and transparent policy approaches that carefully weigh costs and benefits. Such
policies are likely to help manage the risks of climate change while also enabling societies to pursue other high
priority goals around the world – including clean air and water, access to reliable and affordable energy, and
economic progress for all people. The company encourages sound policy solutions that reduce climate-related
risks across the economy at the lowest societal cost. All practical and economically viable energy sources will
need to be pursued to continue meeting global energy demand, recognizing the scale and variety of worldwide
energy needs, as well as the importance of expanding access to modern energy to promote better standards of
living for billions of people.
Imperial and its industry peers launched the Oil Sands Pathways to Net Zero alliance in 2021, with the goal of
working collectively with the federal and Alberta governments to achieve net-zero greenhouse gas emissions
from oil sands operations by 2050 to help Canada meet its climate goals.
50
As part of the company’s efforts to provide solutions that lower the greenhouse gas emissions intensity of its
operations and provide lower life-cycle emissions products to customers, Imperial has announced a company-
wide goal to achieve net zero emissions (Scope 1 and 2) by 2050 in its operated assets through collaboration
with government and industry partners. Successful technology development and supportive fiscal and
regulatory frameworks will be needed to achieve this goal. This work builds on Imperial’s previously announced
net-zero goal for operated oil sands as part of the Pathways Alliance initiative, as well as the company’s
emission intensity reduction goal of 30 percent by 2030 for operated oil sands facilities when compared to 2016
levels. The company plans to achieve its net zero goal by applying oil sands recovery technologies that use less
steam, implementing carbon capture and storage and implementing efficiency projects including the use of
lower carbon fuels at its operations.
51
Recent business environment
Prior to the COVID-19 pandemic, many companies in the industry invested below the levels needed to maintain
or increase production capacity to meet anticipated demand. During the COVID-19 pandemic, this decline in
investments accelerated as industry revenue collapsed, resulting in underinvestment and supply tightness as
demand for petroleum and petrochemical products recovered. Across late 2021 and the first half of 2022, these
reductions, along with supply chain constraints, and a continuation of demand recovery, led to a steady increase
in oil and natural gas prices and refining margins.
Demand for petroleum and petrochemical products grew in 2022, with the company's financial results benefiting
from stronger prices and margins. Commodity and product prices are expected to remain volatile given the
current global economic uncertainty and geopolitical events affecting supply and demand, including Russia's
military action in Ukraine that has impacted global crude oil and gas supply levels and prices.
The general rate of inflation in Canada and many other countries experienced a brief decline in the initial stage
of the COVID-19 pandemic, before starting to increase steadily in 2021, due to an imbalance in supply and
demand, and continued to increase in 2022. The underlying factors include, but are not limited to, time cycle of
capacity investments, supply chain disruptions, shipping bottlenecks, labour constraints, and side effects from
monetary and fiscal expansions. The company closely monitors market trends and works to mitigate both
operating and capital cost impacts in all price environments.
Business results
Consolidated
millions
of
Canadian dollars
Net
income
(loss)
(U.S. GAAP)
Identified
items1 included
on
sale
Gain/(loss)
of assets
in
Net
income (loss)
Impairments
Subtotal
of
identified
items1
2022
7,340
208
—
208
2021
2,479
—
—
—
2020
(1,857)
—
(1,171)
(1,171)
Net
income
(loss)
excluding
identified
items1
7,132
2,479
(686)
2022
Net income in 2022 was $7,340 million, or $11.44 per share on a diluted basis, up from $2,479 million, or $3.48
per share in 2021. Current year results include favourable identified items1 of $208 million after tax, related to
the company’s gain on the sale of interests in XTO Energy Canada.
2021
Net income in 2021 was $2,479 million, or $3.48 per share on a diluted basis, compared to a net loss of $1,857
million, or $2.53 per share in 2020. Prior year results include unfavourable identified items1 of $1,171 million
after tax, related to the company’s decision to no longer develop a significant portion of its unconventional
portfolio.
1 non-GAAP financial measure - see "Frequently used terms" section on page 43 for definition and reconciliation.
52
Upstream
Overview
Imperial produces crude oil and natural gas for sale predominantly into North American markets. Imperial’s
Upstream business strategies guide the company’s exploration, development, production, research and gas
marketing activities. These strategies include improving asset reliability, accelerating development and
application of high impact technologies, maximizing value by capturing new business opportunities and
managing the existing portfolio, as well as pursuing sustainable improvements in organizational efficiency and
effectiveness. These strategies are underpinned by a relentless focus on operations integrity, commitment to
innovative technologies, disciplined approach to investing and cost management, development of employees
and investment in the communities within which the company operates.
Imperial has a significant oil and gas resource base and a large inventory of potential projects. The company’s
current investment strategy is to invest for value and select volume growth, with focus on optimization within
existing assets, cost reduction opportunities and productivity enhancements that aim to deliver robust returns at
a wide range of prices. The company also continues to evaluate opportunities to support long-term growth.
Although actual volumes will vary from year to year, the focus is on value-add, long-term growth opportunities
within the context of the factors described in Item 1A. “Risk factors”. Imperial continually evaluates
opportunities, including crude shipments by rail and the pace of the development of its Aspen in-situ oil sands
project, as economically justified.
Prices for most of the company's crude oil sold are referenced to Western Canada Select (WCS) and West
Texas Intermediate (WTI) oil markets. Additionally, the market price for WCS is typically lower than light and
medium grades of oil, and price differentials between WCS and WTI can fluctuate.
Imperial believes prices over the long term will be driven by market supply and demand, with the demand side
largely being a function of general economic activity, alternative energy sources, levels of prosperity, technology
advancements, consumer preference and government policies. On the supply side, prices may be significantly
impacted by political events, logistics constraints, the actions of OPEC, governments, alternative energy
sources, and other factors. To manage the risks associated with price, Imperial tests the resiliency of its annual
plans and all major investments across a range of price scenarios.
Key events
Upstream assets demonstrated strong performance in 2022. The company continued to benefit from its actions
implemented in prior years to manage the cost structure and improve the reliability of its assets, enabling the
Upstream to capture significant value and take advantage of the improving business environment throughout
2022.
Upstream full-year production averaged 416,000 gross oil-equivalent barrels per day.
At Kearl, gross production was about 242,000 barrels per day (172,000 barrels Imperial’s share), down 21,000
barrels per day (14,000 barrels Imperial's share) compared to 2021, as a result of extreme cold weather impacts
in Q1 2022.
At Cold Lake, annual production averaged 144,000 gross oil-equivalent barrels per day.
At Syncrude, annual production averaged 77,000 gross oil-equivalent barrels per day, supported by the
interconnect pipeline.
On August 31, 2022, jointly with ExxonMobil Canada, Imperial sold its interests in XTO Energy Canada to
Whitecap Resources Inc.
As described in more detail in Item 1A. “Risk factors”, environmental risks and climate related regulations could
have negative impacts on the upstream business.
53
Results of operations
2022 Net income (loss) factor analysis
millions of Canadian dollars
Price – Higher realizations were generally in line with increases in marker prices, driven primarily by increased
demand. Average bitumen realizations increased by $26.76 per barrel generally in line with WCS, and synthetic
crude oil realizations increased by $43.85 per barrel.
Volumes – Lower volumes were primarily the result of downtime at Kearl in the first half of the year, partly offset
by higher production at Syncrude and Cold Lake.
Royalty – Higher royalties primarily driven by improved commodity prices.
Identified items1 – Current year results include favourable identified items1 related to the company's gain on the
sale of interests in XTO Energy Canada.
Other – Higher operating expenses of about $500 million, primarily from higher energy prices, partially offset by
favourable foreign exchange impacts of about $270 million, and higher electricity sales at Cold Lake of about
$60 million due to increased prices.
2021 Net income (loss) factor analysis
millions of Canadian dollars
Price – Higher realizations were primarily driven by average bitumen realizations increasing by $32.22 per
barrel generally in line with WCS, and synthetic crude oil realizations increasing by $31.85 per barrel generally
in line with WTI.
Volumes – Higher volumes primarily driven by the absence of production balancing with market demands that
occurred in 2020 increased net income by about $550 million.
Royalty – Higher royalties primarily driven by higher commodity prices.
Identified items1 – Prior year results included unfavourable identified items1 of $1,171 million related to the
company's decision to no longer develop a significant portion of its unconventional portfolio.
Other – Higher operating expenses of about $720 million, unfavourable foreign exchange impacts of about $230
million and lower Canada Emergency Wage Subsidy received by the company compared to prior year of about
$60 million, which includes Imperial's proportionate share of a joint venture.
1 non-GAAP financial measure - see "Frequently used terms" section on page 43 for definition and reconciliation.
54
1,3953,140(80)(970)208(48)3,6452021PriceVolumesRoyaltyIdentified Items¹Other2022(2,318)3,640550(680)1,171(968)1,3952020PriceVolumesRoyaltyIdentified Items¹Other2021
Marker prices and average realizations
Canadian
dollars,
unless
otherwise noted
Intermediate
Select
(US$)
(US$)
(per barrel)
(US$)
(per barrel)
(per barrel)
Texas
West
Western
WTI/WCS
Bitumen
Synthetic
Conventional
Natural
Natural
Average
Canada
Spread
(per barrel)
oil
crude
crude
liquids
gas
gas
(per
foreign
(per barrel)
oil
(per barrel)
(per barrel)
thousand
exchange
cubic feet)
rate (US$)
2022
94.36
76.28
18.08
84.67
125.46
97.45
64.92
5.69
0.77
2021
68.05
54.96
13.09
57.91
81.61
59.84
35.87
3.83
0.80
2020
39.26
26.87
12.39
25.69
49.76
29.34
13.85
1.90
0.75
Crude oil and natural gas liquids (NGL) - production and sales (a)
thousands
of
barrels
per day
2022
2021
2020
crude
Bitumen
Synthetic
oil (b)
Conventional crude oil
Total crude
NGLs
Total crude oil and
Bitumen sales, including
NGL
available for sale
sales (d)
oil production
NGL production
diluent (c)
gross
316
77
8
401
1
402
424
1
net
263
63
8
334
1
335
gross
326
71
10
407
1
408
451
—
net
292
62
9
363
1
364
gross
290
69
11
370
2
372
401
2
net
279
68
10
357
2
359
Natural gas - production and production available for sale (a)
millions
of
cubic
feet
per day
Production
(e) (f)
Production
available
for sale (g)
2022
gross
85
net
83
50
2021
gross
net
gross
2020
120
115
81
154
net
150
115
(a) Volume per day metrics are calculated by dividing the volume for the period by the number of calendar days in the period. Gross
production is the company’s share of production (excluding purchases) before deduction of the mineral owners’ or governments’
share or both.
(b) The company’s synthetic crude oil production volumes were from the company’s share of production volumes in the Syncrude joint
venture and include immaterial amounts of bitumen and other products exported to the operator's facilities using an existing
interconnect pipeline.
(c) Diluent is natural gas condensate or other light hydrocarbons added to crude bitumen to facilitate transportation to market by pipeline
and rail.
(d) 2021 NGL sales round to 0.
(e) Gross production of natural gas includes amounts used for internal consumption with the exception of the amounts re-injected.
(f) Net production is gross production less the mineral owners’ or governments’ share or both. Net production reported in the above table
is consistent with production quantities in the net proved reserves disclosure.
Includes sales of the company’s share of net production and excludes amounts used for internal consumption.
(g)
2022
Lower production at Kearl was primarily a result of downtime in the first half of the year.
2021
Higher production at Kearl was primarily driven by the absence of prior year production balancing with market
demands.
55
Downstream
Overview
Imperial’s Downstream serves predominantly Canadian markets with refining, trading, logistics and marketing
activities. Imperial’s Downstream business strategies competitively position the company across a range of
market conditions. These strategies include targeting industry-leading performance in reliability, safety and
operations integrity, as well as maximizing value from advanced technologies, capitalizing on integration across
Imperial’s businesses, selectively investing for resilient and advantaged returns, operating efficiently and
effectively, and providing quality, valued and differentiated products and services to customers.
Imperial owns and operates three refineries in Canada with aggregate distillation capacity of 433,000 barrels
per day. Refining margins are largely driven by differences in commodity prices and are a function of the
difference between what a refinery pays for its raw materials (primarily crude oil) and the market prices for the
range of products produced (primarily gasoline, heating oil, diesel oil, jet fuel, fuel oil and asphalt). Crude oil and
many products are widely traded with published prices, including those quoted on the New York Mercantile
Exchange. Prices for these commodities are determined by the global and regional marketplaces and are
influenced by many factors, including global and regional supply / demand balances, inventory levels, industry
refinery operations, import / export balances, currency fluctuations, seasonal demand, weather and political
considerations. While industry refining margins significantly impact earnings, strong operations performance,
product mix optimization, and disciplined cost control are also critical to the company's strong financial
performance. Imperial's integration across the value chain, from refining to marketing, enhances overall value
across the fuels business.
Key events
Refining margins increased sharply in 2022 in the face of strengthening demand, low inventory levels, and
supply uncertainty. While refining margins are anticipated to remain volatile in the near term, the company
continues to closely monitor industry and global economic conditions.
The company progressed the Strathcona renewable diesel project in 2022, culminating in a final investment
decision in January 2023 to construct the largest such facility in Canada, designed to produce more than one
billion litres of renewable diesel annually.
As described in more detail in Item 1A. “Risk factors”, proposed carbon policy and other climate related
regulations, as well as continued biofuels mandates, could have negative impacts on the downstream business.
Imperial supplies petroleum products through Esso and Mobil-branded sites and independent marketers. At the
end of 2022, there were about 2,400 sites operating under a branded wholesaler model, in alignment with Esso
and Mobil brand standards, whereby Imperial supplies fuel to independent third parties.
Results of operations
2022 Net income (loss) factor analysis
millions of Canadian dollars
Margins – Higher margins primarily reflect improved market conditions.
Other – Lower turnaround impacts of about $140 million, reflecting the absence of turnaround activities at
Strathcona refinery, improved volumes of about $130 million, favourable foreign exchange impacts of about
$120 million, and absence of the prior year unfavourable out-of-period inventory adjustment of $74 million,
partially offset by higher operating expenses of about $190 million.
56
8952,3503773,6222021MarginsOther2022
2021 Net income (loss) factor analysis
millions of Canadian dollars
Margins – Higher margins reflect improved product demand.
Other – Unfavourable foreign exchange impacts of about $150 million and an unfavourable inventory
adjustment of $74 million1, partially offset by lower operating expenses of about $50 million.
Refinery utilization
thousands
of
barrels
per
day (a)
Total
refinery
throughput (b)
Rated
capacity
at
December
31 (c)
Utilization
of
total refinery capacity (percent)
2022
418
433
98
2021
379
428
89
2020
340
428
80
(a) Volume per day metrics are calculated by dividing the volume for the period by the number of calendar days in the period.
(b) Refinery throughput is the volume of crude oil and feedstocks that is processed in the refinery atmospheric distillation units.
(c) Rated capacities are based on definite specifications as to types of crude oil and feedstocks that are processed in the refinery
atmospheric distillation units, the products to be obtained and the refinery process, adjusted to include an estimated allowance for
normal maintenance shutdowns. Accordingly, actual capacities may be higher or lower than rated capacities due to changes in
refinery operation and the type of crude oil available for processing.
2022
Improved refinery throughput in 2022 was primarily driven by increased demand and reduced turnaround
activity.
2021
Improved refinery throughput in 2021 primarily reflects reduced impacts associated with the COVID-19
pandemic, partially offset by a planned turnaround at Strathcona.
Petroleum product sales
thousands of barrels per day (a)
Gasolines
Heating, diesel and jet fuels
Lube oils and other products
Heavy fuel oils
Net petroleum product sales
2022
2021
2020
229
176
47
23
475
224
160
45
27
456
215
146
40
20
421
(a) Volume per day metrics are calculated by dividing the volume for the period by the number of calendar days in the period.
2022
Improved petroleum product sales in 2022 primarily reflects increased demand.
2021
Improved petroleum product sales in 2021 primarily reflects reduced impacts associated with the COVID-19
pandemic.
1 In 2021, the company recorded an unfavourable $74 million ($82 million, before tax) inventory adjustment (including the proportionate
share of LIFO changes) related to reconciliations of additives and products inventory at equity and third-party terminals. The out-of-period
impact of $57 million ($63 million, before tax) occurred over a number of years, and has been resolved.
57
553600(258)8952020MarginsOther2021
Chemical
Overview
North America continued to benefit from abundant supplies of natural gas and gas liquids, providing both low
cost energy and feedstock for steam crackers.
Key events
In 2022, margins were adversely impacted by increased domestic supply of polyethylene.
Imperial maintains a competitive advantage through continued operational excellence, consistent product
quality, investment and cost discipline, and integration of its chemical plant in Sarnia with the refinery. The
company also benefits from its relationship with ExxonMobil’s North American chemical businesses, enabling
Imperial to maintain a leadership position in its key market segments.
Results of operations
2022 Net income (loss) factor analysis
millions of Canadian dollars
Margins – Lower margins primarily reflect weaker industry polyethylene margins.
2021 Net income (loss) factor analysis
millions of Canadian dollars
Margins – Improved margins were primarily due to stronger industry polyethylene margins.
Sales
thousands of tonnes
Polymers and basic chemicals
Intermediates
Total petrochemical sales
Corporate and other
millions of Canadian dollars
Net income (loss)
2022
635
207
842
2021
599
232
831
2020
574
175
749
2022
(131)
2021
(172)
2020
(170)
58
361(110)(47)2042021MarginsOther202278250333612020MarginsOther2021
Liquidity and capital resources
Sources and uses of cash
The company issues long-term debt from time to time and maintains a commercial paper program. However,
internally generated funds cover the majority of its financial requirements. Cash that may be temporarily surplus
to the company’s immediate needs is carefully managed through counterparty quality and investment guidelines
to ensure that it is secure and readily available to meet the company’s cash requirements and to optimize
returns.
Cash flows from operating activities are highly dependent on crude oil and natural gas prices, as well as
petroleum and chemical product margins. In addition, to provide for cash flow in future periods, the company
needs to continually find and develop new resources, and continue to develop and apply new technologies to
existing fields in order to maintain or increase production.
The company’s financial strength enables it to make large, long-term capital expenditures. Imperial’s portfolio of
development opportunities and the complementary nature of its business segments help mitigate the overall
risks for the company and its cash flows. Further, due to its financial strength, debt capacity and portfolio of
opportunities, the risk associated with delay of any single project would not have a significant impact on the
company’s liquidity or ability to generate sufficient cash flows for its operations and fixed commitments.
Funding of registered retirement plans complies with federal and provincial pension regulations, and the
company makes contributions to the plans based on an independent actuarial valuation completed at least once
every three years depending on funding status. The most recent valuation of the company’s registered
retirement plans was completed as at December 31, 2019. A valuation of the company’s registered retirement
plans as at December 31, 2022 is expected to be completed in 2023. The company contributed $174 million to
the registered retirement plans in 2022. Future funding requirements are not expected to affect the company’s
existing capital investment plans or its ability to pursue new investment opportunities.
millions of Canadian dollars
Cash provided by (used in)
Operating activities
Investing activities
Financing activities
Increase (decrease) in cash and cash equivalents
2022
2021
2020
10,482
(618)
(8,268)
1,596
5,476
(1,012)
(3,082)
1,382
798
(802)
(943)
(947)
Cash and cash equivalents at end of year
3,749
2,153
771
Cash flow from operating activities
2022
Cash flow generated from operating activities primarily reflects higher Upstream realizations, improved
Downstream margins, and favourable working capital impacts.
2021
Cash flow generated from operating activities primarily reflects higher Upstream realizations and stronger
Downstream margins.
Cash flow used in investing activities
2022
Cash flow used in investing activities primarily reflects higher additions to property, plant and equipment, which
were partially offset by proceeds from the sale of interests in XTO Energy Canada.
2021
Cash flow used in investing activities primarily reflects higher additions to property, plant and equipment.
59
Cash flow used in financing activities
2022
At the end of 2022, total debt outstanding was $4,155 million, compared with $5,176 million at the end of 2021.
During the third quarter of 2022, the company decreased its long-term debt by $1 billion by partially repaying an
existing facility with an affiliated company of ExxonMobil.
During the second quarter of 2022, the company reduced its existing $500 million committed long-term line of
credit to $250 million and extended the maturity date to June 30, 2023. Subsequently in the fourth quarter of
2022, this committed long-term line of credit was cancelled in full. The company also extended one of its $250
million committed long-term lines of credit to June 30, 2024.
In November 2022, the company extended the maturity date of an existing $250 million committed short-term
line of credit to November 2023.
The company has not drawn on any of its outstanding $500 million of available credit facilities.
2021
At the end of 2021, total debt outstanding was $5,176 million, compared with $5,184 million at the end of 2020.
During the second quarter of 2021, the company extended the maturity date of two of its short-term lines of
credit, totalling $750 million, to May 2023, these facilities are now long-term. The company also extended its
$300 million committed short-term line of credit to June 2022.
In November 2021, the company extended the maturity date of an existing $250 million committed short-term
line of credit to November 2022.
The company has not drawn on these facilities.
Share repurchases
millions
of
Canadian
dollars,
unless noted
Share repurchases
Number
of
shares
purchased
(millions) (a)
2022
6,395
93.9
2021
2,245
56.0
2020
274
9.8
(a) Share repurchases were made under the company’s normal course issuer bid program, and substantial issuer bids that commenced
on May 6, 2022 and November 4, 2022, and expired on June 10, 2022 and December 9, 2022, respectively. Includes shares
purchased from Exxon Mobil Corporation concurrent with, but outside of, the normal course issuer bid, and by way of a proportionate
tender under the company’s substantial issuer bids.
2022
On June 27, 2022, the company announced that it had received final approval from the Toronto Stock Exchange
for a new normal course issuer bid. The program enabled the company to purchase up to a maximum of
31,833,809 common shares during the period June 29, 2022 to June 28, 2023. The program completed on
October 21, 2022 as a result of the company purchasing the maximum allowable number of shares under the
program.
On May 6, 2022, the company commenced a substantial issuer bid pursuant to which it offered to purchase for
cancellation up to $2.5 billion of its common shares through a modified Dutch auction and proportionate tender
offer. The substantial issuer bid was completed on June 15, 2022, with the company taking up and paying for
32,467,532 common shares at a price of $77.00 per share, for an aggregate purchase of $2.5 billion and
4.9 percent of Imperial’s issued and outstanding shares at the close of business on May 2, 2022. This included
22,597,379 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its
ownership percentage at approximately 69.6 percent.
60
On November 4, 2022, the company commenced a substantial issuer bid pursuant to which it offered to
purchase for cancellation up to $1.5 billion of its common shares through a modified Dutch auction and
proportionate tender offer. The substantial issuer bid was completed on December 14, 2022, with the company
taking up and paying for 20,689,655 common shares at a price of $72.50 per share, for an aggregate purchase
of $1.5 billion and 3.4 percent of Imperial's issued and outstanding shares at the close of business on
October 31, 2022. This included 14,399,985 shares purchased from Exxon Mobil Corporation by way of a
proportionate tender to maintain its ownership percentage at approximately 69.6 percent.
2021
On April 30, 2021, the company announced an amendment to its normal course issuer bid to increase the
number of common shares that were available to be purchased. Under the amendment, the number of common
shares available for purchase increased to a maximum of 29,363,070 common shares during the period June
29, 2020 to June 28, 2021. In 2021, the company purchased 29,356,095 shares under this amended program.
On June 23, 2021, the company announced that it received final approval from the Toronto Stock Exchange for
a new normal course issuer bid to continue its existing share purchase program. The program enabled the
company to purchase up to a maximum of 35,583,671 common shares during the period June 29, 2021 to June
28, 2022. In accordance with the company’s announcement in November 2021 that it intended to accelerate
purchases under the normal course issuer bid, the program was subsequently completed on January 31, 2022
as a result of the company purchasing the maximum allowable number of shares under the program.
Dividends
millions
of
Canadian
dollars,
unless noted
Dividends paid
Per
share
dividend
paid (dollars)
Financial strength
2022
851
1.29
2021
706
0.98
2020
649
0.88
The table below shows Imperial’s consolidated debt-to-capital ratio. The data demonstrates the company’s
creditworthiness:
percent
At
December 31
Debt
to
capital (a)
2022
16
2021
19
2020
19
(a) Debt, defined as the sum of “Notes and loans payable” and “Long-term debt” (page 76), divided by capital, defined as the sum of debt
and “Total shareholders’ equity” (page 76).
Debt-related interest incurred in 2022, before capitalization of interest, was $111 million, up from $63 million in
2021. The weighted-average interest rate on the company’s debt was 2.2 percent in 2022, up from 1.2 percent
in 2021.
The company’s financial strength represents a competitive advantage of strategic importance providing it the
opportunity to readily access capital markets across a range of market conditions and enables the company to
take on large, long-term capital commitments in the pursuit of maximizing shareholder value.
Contractual obligations
The company has contractual obligations involving commitments to third parties that impact its liquidity and
capital resource needs. These contractual obligations are primarily for leases, debt, asset retirement
obligations, pension and other postretirement benefits, other long-term obligations, and firm capital
commitments. Further information on this topic can be found in notes 4, 5, 13 and 14 to the consolidated
financial statements.
Other long-term purchase agreements are commitments that are non-cancelable, or cancelable only under
certain conditions, as well as long-term commitments, other than unconditional purchase obligations. They
include primarily transportation services agreements, raw material supply and community benefits agreements.
The total obligation at year-end 2022 was $8.8 billion, of which $783 million is due in 2023, and $670 million is
due in 2024.
61
Litigation and other contingencies
As discussed in note 9 to the consolidated financial statements on page 97, a variety of claims have been made
against Imperial and its subsidiaries. Based on a consideration of all relevant facts and circumstances, the
company does not believe the ultimate outcome of any currently pending lawsuits against the company will
have a material adverse effect on the company’s operations, financial condition, or financial statements taken
as a whole.
Additionally, as discussed in note 9, Imperial was contingently liable at December 31, 2022, for guarantees
relating to performance under contracts. These guarantees do not have a material effect on the company’s
operations, financial condition, or financial statements taken as a whole.
There are no events or uncertainties beyond those already included in reported financial information that would
indicate a material change in future operating results or financial condition.
Capital and exploration expenditures
Capital and exploration expenditures represent the combined total of additions at cost to property, plant and
equipment, additions to finance leases, additional investments and acquisitions; exploration expenses on a
before-tax basis from the Consolidated statement of income; and the company’s share of similar costs for equity
companies. Capital and exploration expenditures exclude the purchase of carbon emission credits. While
Imperial’s management is responsible for all investments and elements of net income, particular focus is placed
on managing the controllable aspects of this group of expenditures.
millions of Canadian dollars
Upstream (a)
Downstream
Chemical
Corporate and other
Total
(a) Exploration expenses included.
2022
1,128
295
10
57
1,490
2021
632
476
8
24
1,140
For the Upstream segment, capital and exploration expenditures were primarily related to sustaining activity in
support of the company’s in-situ and oil sands assets.
For the Downstream segment, capital expenditures were primarily for enhancing the company’s distribution
network as well as refinery projects to improve environmental performance, reliability, feedstock flexibility, and
energy efficiency.
Total capital and exploration expenditures are expected to be approximately $1.7 billion in 2023.
Expected capital and exploration expenditures for 2023 includes firm capital commitments of $407 million for the
construction and purchase of fixed assets and other permanent investments. An additional $211 million of firm
capital commitments have been made for years 2024 and beyond.
Actual spending could vary depending on the progress of individual projects.
62
Market risks
Crude oil, natural gas, petroleum product and chemical prices have fluctuated in response to changing market
forces. The impacts of these price fluctuations on earnings from Upstream, Downstream and Chemical
operations have varied.
Imperial’s earnings are influenced by North American crude oil benchmark prices as well as changes in the
differentials between these benchmarks and western Canadian prices for light and heavy crude oil. Imperial’s
integrated business model reduces the company’s risk from changes in commodity prices. For instance, when
differentials between North American crude benchmarks and western Canadian prices widen, Imperial is able to
mitigate the impact of widening differentials on the Upstream through integration with Downstream investments
in refineries, pipeline commitments and the Edmonton rail terminal.
In the competitive downstream and chemical environments, earnings are primarily determined by margin
capture rather than absolute price levels on products sold. Refining margins are a function of the difference
between what a refiner pays for its raw materials (primarily crude oil) and the market prices for the range of
products produced. These prices, in turn, depend on global and regional supply / demand balances, inventory
levels, refinery operations, import / export balances and weather.
Industry crude oil commodity prices and petroleum and chemical product prices are commonly benchmarked in
U.S. dollars. The majority of Imperial’s sales and purchases are related to these industry U.S. dollar
benchmarks. As the company records and reports its financial results in Canadian dollars, to the extent that the
Canadian / U.S. dollar exchange rate fluctuates, the company’s earnings will be affected.
Imperial is exposed to changes in interest rates, primarily on its debt which carries floating interest rates. The
impact of a quarter percent change in interest rates affecting Imperial’s debt would not be material to earnings
or cash flow. Imperial has access to significant sources of long-term and short-term liquidity. Internally
generated funds are expected to cover the majority of financial requirements, supplemented by long-term and
short-term debt as needed.
The company’s potential exposure to commodity price and margin, and Canadian / U.S. dollar exchange rate
fluctuations is summarized in the earnings sensitivities table, which shows the estimated annual effect, under
current conditions, on the company’s after-tax net income. For any given period, the extent of actual benefit or
detriment will be dependent on the price movements of individual types of crude oil and products, production
and sales volumes, transportation capacity, costs and egress methods, and other factors. Accordingly, changes
in benchmark prices for crude oil and crude oil differentials, and other factors listed in the table following, only
provide broad indicators of changes in the earnings experienced in any particular period.
Earnings sensitivities (a)
millions of Canadian dollars, after-tax
One dollar (U.S.) per barrel increase (decrease) in crude oil prices
One dollar (U.S.) per barrel increase (decrease) in refining 2-1-1 margins (b)
One cent decrease (increase) in the value of the Canadian dollar versus the U.S. dollar
+ (-)
+ (-)
+ (-)
105
140
170
(a) Each sensitivity calculation shows the annual impact on net income resulting from a change in one factor, after tax and royalties, and
holding all other factors constant. These sensitivities have been updated to reflect current market conditions. They may not apply
proportionately to larger fluctuations.
(b) The 2-1-1 crack spread is an indicator of the refining margin generated by converting two barrels of crude oil into one barrel of
gasoline and one barrel of diesel.
The demand for crude oil, petroleum products and petrochemical products are generally linked closely with
economic growth. The occurrence of recessions or other periods of low or negative economic growth will
typically have a direct adverse impact on the company’s financial results. Although price levels of crude oil may
rise and fall significantly over the short to medium-term due to global economic conditions, political events,
decisions by OPEC, governments and other factors, industry economics over the long-term will continue to be
driven by market supply and demand. The company evaluates investments over a range of prices, including
estimated greenhouse gas emission costs.
63
The global energy markets can give rise to extended periods in which market conditions are adverse to one or
more of the company’s businesses. Such conditions, along with the capital-intensive nature of the industry and
very long lead times associated with many of the company’s projects, underscore the importance of maintaining
a strong financial position. Management views the company’s financial strength as a competitive advantage.
In general, segment results are not dependent on the ability to sell and / or purchase products to / from other
segments. Where such intersegment sales take place, they are the result of efficiencies and competitive
advantages from integrated business segments and refinery and chemical complexes. The company’s
intersegment sales include crude oil produced by the Upstream and sold to the Downstream, as well as sales
between refineries and the chemical plant related to raw materials, feedstocks and finished products. All
intersegment sales are at market based prices. Refer to note 2 for additional information on intersegment
revenue.
The company has an active asset management program in which nonstrategic assets are considered for
divestment. The asset management program includes a disciplined, regular review to ensure that assets are
contributing to the company’s strategic objectives.
Risk management
The company’s size, strong capital structure and the complementary nature of its business segments reduces
the company’s enterprise-wide risk from changes in commodity prices and currency exchange rates. In addition,
the company may use commodity-based contracts, including derivatives, to manage commodity price risk and
to generate returns from trading. The company’s derivatives are not accounted for under hedge accounting.
Credit risk associated with the company’s derivative position is mitigated by several factors, including the use of
derivative clearing exchanges and the quality of and financial limits placed on derivative counterparties. No
material market or credit risks to the company’s financial position, results of operations or liquidity exist as a
result of the derivatives described in note 6 on page 94. The company maintains a system of controls that
includes the authorization, reporting and monitoring of derivative activity.
64
Critical accounting estimates
The company’s financial statements have been prepared in accordance with United States Generally Accepted
Accounting Principles (U.S. GAAP). U.S. GAAP requires management to make estimates and judgments that
affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent
assets and liabilities. The company’s accounting and financial reporting fairly reflect its business model involving
exploration for, and production of, crude oil and natural gas; manufacture, trade, transport and sale of crude oil,
natural gas, petroleum products, petrochemicals and a variety of specialty products; and pursuit of lower-
emission business opportunities, including carbon capture and storage, hydrogen and lower-emission fuels.
Imperial does not use financing structures for the purpose of altering accounting outcomes or removing debt
from the balance sheet. The company’s significant accounting policies are summarized in note 1 to the
consolidated financial statements on page 79.
Oil and natural gas reserves
Evaluations of oil and natural gas reserves are important to the effective management of upstream assets. They
are an integral part of investment decisions about oil and gas properties such as whether development should
proceed.
The estimation of proved reserve volumes, which is based on the requirement of reasonable certainty, is an
ongoing process based on rigorous technical evaluations, commercial and market assessments, detailed
analysis of well information such as flow rates and reservoir pressures, and development and production costs,
and other factors. The estimation of proved reserves is controlled by the company through long-standing
approval guidelines. Reserves changes are made within a well-established, disciplined process driven by
qualified geoscience and engineering professionals, assisted by the reserves management group which has
significant technical experience, culminating in reviews with and approval by senior management and the
company’s board of directors. Notably, the company does not use specific quantitative reserves targets to
determine compensation. Key features of the reserves estimation process are covered in “Disclosure of
reserves” in Item 1.
Oil and natural gas reserves include both proved and unproved reserves.
• Proved oil and natural gas reserves are determined in accordance with U.S. Securities and Exchange
Commission (SEC) requirements. Proved reserves are those quantities of oil and natural gas which, by
analysis of geoscience and engineering data, can be estimated with reasonable certainty to be
economically producible under existing economic and operating conditions and government regulations.
Proved reserves are determined using the average of first-day-of-the-month oil and natural gas prices
during the reporting year.
Proved reserves can be further subdivided into developed and undeveloped reserves. Proved
developed reserves include amounts which are expected to be recovered through existing wells,
facilities, or mining activities with existing equipment and operating methods. Proved undeveloped
reserves include amounts expected to be recovered from new wells, existing wells, facilities, or mining
activities, where a relatively major capital expenditure is required. Proved undeveloped reserves are
recognized when a development plan has been adopted indicating that the reserves are scheduled to
be developed within five years, unless specific circumstances support a longer period of time.
The company is reasonably certain that proved reserves will be produced. However, the timing and
amount recovered can be affected by a number of factors including completion and optimization of
development projects, reservoir performance, regulatory approvals, government policies, consumer
preferences, royalty frameworks and significant changes in oil and natural gas price levels.
• Unproved reserves are quantities of oil and natural gas with less than reasonable certainty of
recoverability and include probable reserves. Probable reserves are reserves that, together with proved
reserves, are as likely as not to be recovered.
Revisions in previously estimated volumes of proved reserves for existing fields can occur due to the evaluation
or re-evaluation of already available geologic, reservoir or production data; new geologic, reservoir or
production data; or changes in the average of first-day-of-the-month oil and natural gas prices and / or costs
that are used in the estimation of reserves. Revisions can also result from significant changes in either
development strategy or production equipment and facility capacity.
65
In 2020, downward revisions of proved bitumen reserves were a result of low prices. The 2.2 billion barrels of
bitumen at Kearl and 0.6 billion barrels of bitumen at Cold Lake no longer qualified as proved reserves under
the SEC definition of proved reserves. Downward revisions to proved synthetic crude oil reserves were a result
of lower prices, offset by the addition of proved undeveloped reserves associated with future development at
Syncrude. Changes to the liquids and natural gas proved reserves were the result of updated development
plans at the Montney and Duvernay unconventional assets and the divestment of conventional properties.
In 2021, upward revisions of proved bitumen reserves were a result of improved prices. The 1.7 billion barrels of
bitumen at Kearl and 0.5 billion barrels of bitumen at Cold Lake qualified as proved reserves under the SEC
definition of proved reserves. Upward revisions to proved synthetic crude oil reserves were a result of improved
prices. Changes to the liquids and natural gas proved reserves were the result of updated development plans
and divestments at the Montney and Duvernay unconventional assets.
In 2022, downward revisions of proved bitumen reserves were driven by a decrease of 0.2 billion barrels at
Kearl as a result of higher royalty obligations associated with pricing, and a decrease of 0.2 billion barrels at
Cold Lake due to an updated development plan. An increase to the bitumen reserves of 0.1 billion barrels is
associated with extensions at Cold Lake for the Grand Rapids Phase 1 SA-SAGD and Leming SAGD projects.
Downward revisions to proved synthetic crude oil reserves were a result of mine development plan updates and
higher royalty obligations at Syncrude associated with pricing. Changes to the liquids and natural gas proved
reserves were primarily a result of the sale of the company’s interest in the Montney and Duvernay
unconventional assets.
Under the terms of certain contractual arrangements or government royalty regimes, lower prices can also
increase proved reserves attributable to Imperial. The company’s operating decisions and its outlook for future
production volumes are not impacted by proved reserves as disclosed under the SEC definition.
Unit-of-production depreciation
Oil and natural gas reserve volumes are used as the basis to calculate unit-of-production depreciation rates for
most upstream assets. Depreciation is calculated by taking the ratio of asset cost to total proved reserves or
proved developed reserves applied to actual production. The volumes produced and asset cost are known,
while proved reserves are based on estimates that are subject to some variability.
In the event that the unit-of-production method does not result in an equitable allocation of cost over the
economic life of an upstream asset, an alternative method is used. The straight-line method is used in limited
situations where the expected life of the asset does not reasonably correlate with that of the underlying
reserves. For example, certain assets used in the production of oil and natural gas have a shorter life than the
reserves, and as such, the company uses straight-line depreciation to ensure the asset is fully depreciated by
the end of its useful life.
To the extent that proved reserves for a property are substantially de-booked and that property continues to
produce such that the resulting depreciation charge does not result in an equitable allocation of cost over the
expected life, assets will be depreciated using a unit-of-production method based on reserves determined at the
most recent SEC price which results in a more meaningful quantity of proved reserves, appropriately adjusted
for production and technical changes. This approach was applied in 2021, with the corresponding effect on
depreciation expense being immaterial compared to prior periods. For 2022 and 2023, all properties have
sufficient reserves at current SEC prices which will enable equitable allocation of cost over the economic lives of
the Upstream assets.
Impact of oil and gas reserves and prices and margins on testing for impairment
The company tests assets or groups of assets for recoverability on an ongoing basis whenever events or
changes in circumstances indicate that the carrying amounts may not be recoverable. The company has a
robust process to monitor for indicators of potential impairment across its asset groups throughout the year. This
process is aligned with the requirements of ASC 360 and ASC 932 and relies, in part, on the company’s
planning and budgeting cycle.
66
Because the lifespans of the vast majority of the company’s major assets are measured in decades, the future
cash flows of these assets are predominantly based on long-term oil and natural gas commodity prices, industry
margins, and development and production costs. Significant reductions in the company’s view of oil or natural
gas commodity prices or margin ranges, especially the longer-term prices and margins, and changes in the
development plans, including decisions to defer, reduce or eliminate planned capital spending, can be an
indicator of potential impairment. Other events or changes in circumstances, including indicators outlined in
ASC 360 can be indicators of potential impairment as well.
In general, Imperial does not view temporarily low prices or margins as an indication of impairment.
Management believes that prices over the long term must be sufficient to generate investments in energy
supply to meet global demand. Although prices will occasionally drop significantly, industry prices over the long
term will continue to be driven by market supply and demand fundamentals. On the supply side, industry
production from mature fields is declining. This is being offset by investments to generate production from new
discoveries, field developments, and technology and efficiency advancements. OPEC investment activities and
production policies also have an impact on world oil supplies. The demand side is largely a function of general
economic activities, alternative energy sources and levels of prosperity. During the lifespan of its major assets,
the company expects that oil and gas prices and industry margins will experience significant volatility.
Consequently, these assets will experience periods of higher earnings and periods of lower earnings, or even
losses. In assessing whether events or changes in circumstances indicate the carrying value of an asset may
not be recoverable, the company considers recent periods of operating losses in the context of its longer-term
view of prices and margins.
Outlook for Energy and cash flow assessment
The annual planning and budgeting process, known as the company plan, is the mechanism by which
resources (capital, operating expenses and people) are allocated across the company. The foundation for the
energy supply and demand assumptions supporting the company plan begins with the Outlook, which contains
demand and supply projections based on its assessment of current trends in technology, government policies,
consumer preferences, geopolitics, economic development, and other factors.
Reflective of the existing global policy environment, the Outlook does not attempt to project the degree of
required future policy and technology advancement and deployment for the world or the company, to meet net
zero by 2050. As future policies and technology advancements emerge, they will be incorporated into the
Outlook, and consequently, the company’s business plans will be updated accordingly.
If events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, the
company estimates the future undiscounted cash flows of the affected properties to judge the recoverability of
carrying amounts. In performing this assessment, assets are grouped at the lowest level for which there are
identifiable cash flows that are largely independent of the cash flows of other groups of assets. Cash flows used
in recoverability assessments are based on the assumptions developed in the company plan, which is reviewed
and approved by the board of directors, and are consistent with the criteria management uses to evaluate
investment opportunities. These evaluations make use of the company’s assumptions of future capital
allocations, crude oil and natural gas commodity prices including price differentials, refining and chemical
margins, volumes, development and operating costs, including greenhouse gas emissions prices, and foreign
currency exchange rates. Volumes are based on projected field and facility production profiles, throughput, or
sales. Management’s estimate of upstream production volumes used for projected cash flows makes use of
proved reserve quantities and may include risk-adjusted unproved reserve quantities. The greenhouse gas
emission prices reflect existing or anticipated policy actions of applicable provincial and federal governments.
While third-party scenarios, such as the International Energy Agency Net Zero Emissions by 2050, may be used
to test the resiliency of company’s businesses or strategies, they are not used as a basis for developing future
cash flows for impairment assessments.
Fair value of impaired assets
An asset group is impaired if its estimated future undiscounted cash flows are less than the asset group’s
carrying value. Impairments are measured by the excess of the carrying value over fair value. The assessment
of fair value is based on the views of a likely market participant. The principal parameters used to establish fair
value include estimates of acreage values and flowing production metrics from comparable market transactions,
market-based estimates of historical cash flow multiples, and discounted cash flows. Inputs and assumptions
used in discounted cash flow models include estimates of future production volumes, throughput and product
sales volumes, commodity prices which are consistent with the average of third-party industry experts and
government agencies, refining and chemical margins, drilling and development costs, operating costs, and
discount rates which are reflective of the characteristics of the asset group.
67
Other impairment estimates
Unproved properties are assessed periodically to determine whether they have been impaired. Significant
unproved properties are assessed for impairment individually, and valuation allowances against the capitalized
costs are recorded based on the company’s future development plans, the estimated economic chance of
success and the length of time that the company expects to hold the properties. Properties that are not
individually significant are aggregated by groups and amortized based on development risk and average
holding period.
Long-lived assets that are held for sale are evaluated for possible impairment by comparing the carrying value
of the asset with its fair value less the cost to sell. If the net book value exceeds the fair value less cost to sell,
the assets are considered impaired and adjusted to the lower value. Judgment is required to determine if assets
are held for sale, and to determine the fair value less cost to sell.
Investments accounted for by the equity method are assessed for possible impairment when events or changes
in circumstances indicate that the carrying value of an investment may not be recoverable. Examples of key
indicators include a history of operating losses, negative earnings and cash flow outlook, significant downward
revisions to oil and gas reserves, and the financial condition and prospects for the investee’s business segment
or geographic region. If the decline in value of the investment is other than temporary, the carrying value of the
investment is written down to fair value. In the absence of market prices for the investment, discounted cash
flows are used to assess fair value, which requires significant judgment.
Recent impairments
In 2020, the company announced its decision to not further develop a significant portion of its unconventional
portfolio in Alberta, resulting in a non-cash, after-tax impairment charge of $1,171 million in the company’s 2020
Upstream results.
Factors which could put further assets at risk of impairment in the future include reductions in the company’s
price or margin outlooks, changes in the allocation of capital or development plans, reduced long-term demand
for the company’s products and operating cost increases which exceed the pace of efficiencies or the pace of oil
and natural gas price increases or margins. However, due to the inherent difficulty in predicting future
commodity prices or margins, and the relationship between industry prices and costs, it is not practicable to
reasonably estimate the existence or range of any potential future impairment charges related to the company’s
long-lived assets.
Supplemental information regarding oil and gas results of operations, capitalized costs and reserves is provided
following the notes to consolidated financial statements.
Pension benefits
The company’s pension plan is managed in compliance with the requirements of governmental authorities and
meets funding levels as determined by independent third-party actuaries. Pension accounting requires explicit
assumptions regarding, among others, the discount rate for the benefit obligations, the expected rate of return
on plan assets and the long-term rate of future compensation increases. All pension assumptions are reviewed
annually by senior management. These assumptions are adjusted only as appropriate to reflect long-term
changes in market rates and outlook. The long-term expected rate of return on plan assets of 4.3 percent used
in 2022 compares to actual returns of 5.6 percent and 6.5 percent achieved over the last 10- and 20-year
periods respectively, ending December 31, 2022. If different assumptions are used, the obligation and expense
could increase or decrease as a result. As an indication of the company’s potential exposure to changes in the
critical assumptions such as the expected rate of return on plan assets and the discount rate for measuring the
pension plan benefits obligation, a reduction of 1 percent in the discount rate would increase the benefits
obligation by approximately $1 billion. Similarly, a reduction of 1 percent in the long-term rate of return on plan
assets would increase the annual pension expense by approximately $95 million before tax. At Imperial,
differences between actual returns on plan assets and the long-term expected returns are not recorded in
pension expense in the year the differences occur. Such differences are deferred, along with other actuarial
gains and losses, and are amortized into pension expense over the expected average remaining service life of
employees. Employee benefits expense represented about 1 percent of total expenses in 2022.
68
Asset retirement obligations
The company is subject to retirement obligations for certain assets. The fair values of these obligations are
recorded as liabilities on a discounted basis, which is typically at the time the assets are installed. In the
estimation of fair value, the company uses assumptions and judgments regarding such factors as the existence
of a legal obligation for an asset retirement obligation; technical assessments of the assets; estimated amounts
and timing of settlements; discount rates; and inflation rates. On page 93, note 5 to the consolidated financial
statements provides a three-year continuity table detailing the changes in asset retirement obligations.
Suspended exploratory well costs
The company continues capitalization of exploratory well costs when it has found a sufficient quantity of
reserves to justify its completion as a producing well and the company is making sufficient progress assessing
the reserves and the economic and operating viability of the project. Exploratory well costs not meeting these
criteria are charged to expense. Assessing whether the company is making sufficient progress on a project
requires careful consideration of the facts and circumstances. The facts and circumstances that support
continued capitalization of suspended wells at year-end are disclosed in note 15 to the consolidated financial
statements on page 104.
Tax contingencies
The operations of the company are complex, and related tax interpretations, regulations and legislation are
continually changing.
The benefits of uncertain tax positions that the company has taken or expects to take in its income tax returns
are recognized in the financial statements if management concludes that it is more likely than not that the
position will be sustained with the tax authorities. For a position that is likely to be sustained, the benefit
recognized in the financial statements is measured at the largest amount that is greater than 50 percent likely of
being realized. Significant management judgment is required in the accounting for income tax contingencies
and tax disputes because the outcomes are often difficult to predict. The company’s unrecognized tax benefits
and a description of open tax years are summarized in note 3 to the consolidated financial statements.
69
Management’s report on internal control over financial reporting
Management, including the company’s chief executive officer and principal accounting officer and principal
financial officer, is responsible for establishing and maintaining adequate internal control over the company’s
financial reporting. Management conducted an evaluation of the effectiveness of internal control over financial
reporting based on criteria established in Internal Control – Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management
concluded that Imperial Oil Limited’s internal control over financial reporting was effective as of December 31,
2022.
PricewaterhouseCoopers LLP, an independent registered public accounting firm, audited the effectiveness of
the company’s internal control over financial reporting as of December 31, 2022, as stated in their report which
is included herein.
/s/ Bradley W. Corson
Bradley W. Corson
Chairman, president and chief executive officer
(Principal executive officer)
/s/ Daniel E. Lyons
Daniel E. Lyons
Senior vice-president,
finance and administration, and controller
(Principal accounting officer and principal financial officer)
February 22, 2023
70
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Imperial Oil Limited
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Imperial Oil Limited and its subsidiaries
(together, the Company) as of December 31, 2022 and 2021, and the related consolidated statements of
income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period
ended December 31, 2022, including the related notes (collectively referred to as the consolidated financial
statements). We also have audited the Company’s internal control over financial reporting as of December 31,
2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting
principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in
all material respects, effective internal control over financial reporting as of December 31, 2022, based on
criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining
effective internal control over financial reporting, and for its assessment of the effectiveness of internal control
over financial reporting, included in the accompanying Management’s report on internal control over financial
reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on
the Company’s internal control over financial reporting based on our audits. We are a public accounting firm
registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to
be independent with respect to the Company in accordance with the U.S. federal securities laws and the
applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement, whether due to error or fraud, and whether effective internal
control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of
material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating
the overall presentation of the consolidated financial statements. Our audit of internal control over financial
reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that
a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control
based on the assessed risk. Our audits also included performing such other procedures as we considered
necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
71
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements
in accordance with generally accepted accounting principles, and that receipts and expenditures of the
company are being made only in accordance with authorizations of management and directors of the company;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use,
or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the
consolidated financial statements that was communicated or required to be communicated to the audit
committee and that (i) relates to accounts or disclosures that are material to the consolidated financial
statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication
of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the
critical audit matter or on the accounts or disclosures to which it relates.
The Impact of Proved Oil and Natural Gas Reserves on Upstream Property, Plant and Equipment, Net
As described in Notes 1 and 2 to the consolidated financial statements, the Company’s upstream property, plant
and equipment (PP&E), net balance was $26,949 million as of December 31, 2022, and the related depreciation
and depletion expense for the year ended December 31, 2022 was $1,673 million. Management uses the
successful efforts method to account for its exploration and production activities. Costs incurred to purchase,
lease, or otherwise acquire a property (whether unproved or proved) are capitalized when incurred. As
disclosed by management, proved oil and natural gas reserve volumes are used as the basis to calculate unit-
of-production depreciation rates for most upstream assets. The estimation of proved oil and natural gas reserve
volumes is an ongoing process based on technical evaluations, commercial and market assessments, detailed
analysis of well information such as flow rates and reservoir pressures, and development and production costs,
among other factors. As further disclosed by management, reserves changes are made within a well-
established, disciplined process driven by qualified geoscience and engineering professionals, assisted by the
reserves management group (together “management’s specialists”).
The principal considerations for our determination that performing procedures relating to the impact of proved oil
and natural gas reserves on upstream PP&E, net is a critical audit matter are (i) the significant judgment by
management, including the use of management’s specialists, when developing the estimates of proved oil and
natural gas reserve volumes, as the reserve volumes are based on engineering assumptions and methods,
which in turn led to (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and
evaluating the audit evidence related to the data, methods, and assumptions used by management and its
specialists in developing the estimates of proved oil and natural gas reserve volumes.
72
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming
our overall opinion on the consolidated financial statements. These procedures included testing the
effectiveness of controls relating to management’s estimates of proved oil and natural gas reserve volumes. The
work of management’s specialists was used in performing the procedures to evaluate the reasonableness of
estimates of proved oil and natural gas reserve volumes. As a basis for using this work, management’s
specialists’ qualifications were understood and the Company’s relationship with management’s specialists was
assessed. The procedures performed also included evaluation of the methods and assumptions used by
management’s specialists, tests of the data used by management’s specialists, and an evaluation of
management’s specialists’ findings.
/s/ PricewaterhouseCoopers LLP
Chartered Professional Accountants
Calgary, Canada
February 22, 2023
We have served as the Company’s auditor since 1934.
73
Consolidated statement of income (U.S. GAAP)
millions of Canadian dollars
For the years ended December 31
Revenues and other income
Revenues (a)
Investment and other income (note 8, 18)
Total revenues and other income
Expenses
Exploration (note 15)
Purchases of crude oil and products (b)
Production and manufacturing (c) (note 11)
Selling and general (c)
Federal excise tax and fuel charge
Depreciation and depletion (includes impairments) (note 2, 11)
Non-service pension and postretirement benefit
Financing (d) (note 12)
Total expenses
2022
2021
2020
59,413
257
59,670
5
37,742
7,404
882
2,179
1,897
17
60
50,186
37,508
82
37,590
32
23,174
6,316
784
1,928
1,977
42
54
34,307
22,284
104
22,388
13
13,293
5,535
741
1,736
3,293
121
64
24,796
Income (loss) before income taxes
9,484
3,283
(2,408)
Income taxes (note 3)
Net income (loss)
Per share information (Canadian dollars)
Net income (loss) per common share - basic (note 10)
Net income (loss) per common share - diluted (note 10)
(a) Amounts from related parties included in revenues, (note 16).
(b) Amounts to related parties included in purchases of crude oil and products,
(note 16).
(c) Amounts to related parties included in production and manufacturing,
and selling and general expenses, (note 16).
(d) Amounts to related parties included in financing, (note 16).
2,144
7,340
11.47
11.44
17,042
3,795
460
78
804
(551)
2,479
(1,857)
3.48
3.48
8,777
2,737
420
28
(2.53)
(2.53)
5,107
2,484
579
61
The information in the notes to consolidated financial statements is an integral part of these statements.
74
Consolidated statement of comprehensive income (U.S. GAAP)
millions
of
Canadian dollars
For
Net
years
the
ended
income (loss)
December 31
Other
comprehensive
income
(loss),
income taxes
Postretirement
benefits
liability
(excluding amortization)
net
of
adjustment
Amortization
included
of
in
postretirement
net
comprehensive
benefit costs
Total
other
income (loss)
benefits
liability
adjustment
2022
7,340
2021
2,479
2020
(1,857)
582
83
665
679
133
812
(212)
134
(78)
Comprehensive
income (loss)
8,005
3,291
(1,935)
The information in the notes to consolidated financial statements is an integral part of these statements.
75
Consolidated balance sheet (U.S. GAAP)
millions of Canadian dollars
At December 31
Assets
Current assets
Cash and cash equivalents
Accounts receivable - net (a)
Inventories of crude oil and products (note 11)
Materials, supplies and prepaid expenses
Total current assets
Investments and long-term receivables (b)
Property, plant and equipment,
less accumulated depreciation and depletion (note 2, 18)
Goodwill
Other assets, including intangibles - net
Total assets
Liabilities
Current liabilities
Notes and loans payable (note 12)
Accounts payable and accrued liabilities (a) (note 11)
Income taxes payable
Total current liabilities
Long-term debt (c) (note 14)
Other long-term obligations (note 5)
Deferred income tax liabilities (note 3)
Total liabilities
Commitments and contingent liabilities (note 9)
Shareholders’ equity
Common shares at stated value (d) (note 10)
Earnings reinvested
Accumulated other comprehensive income (loss) (note 17)
Total shareholders’ equity
Total liabilities and shareholders’ equity
2022
2021
3,749
4,719
1,514
754
10,736
893
30,506
166
1,223
43,524
122
6,194
2,582
8,898
4,033
3,467
4,713
21,111
2,153
3,869
1,102
689
7,813
757
31,240
166
806
40,782
122
5,184
248
5,554
5,054
3,897
4,542
19,047
1,079
21,846
(512)
22,413
1,252
21,660
(1,177)
21,735
43,524
40,782
(a) Accounts receivable - net included net amounts receivable from related parties of $1,108 million (2021 – $1,031 million), (note 16).
(b)
Investments and long-term receivables included amounts from related parties of $288 million (2021 – $298 million), (note 16).
(c) Long-term debt included amounts to related parties of $3,447 million (2021 – $4,447 million), (note 16).
(d) Number of common shares authorized and outstanding were 1,100 million and 584 million, respectively (2021 – 1,100 million and 678
million, respectively), (note 10).
The information in the notes to consolidated financial statements is an integral part of these statements.
Approved by the directors.
/s/ Bradley W. Corson
/s/ Daniel E. Lyons
Bradley W. Corson
Chairman, president and
chief executive officer
Daniel E. Lyons
Senior vice-president
finance and administration, and controller
76
Consolidated statement of shareholders’ equity (U.S. GAAP)
millions of Canadian dollars
At December 31
Common shares at stated value (note 10)
At beginning of year
Share purchases at stated value
At end of year
Earnings reinvested
At beginning of year
Net income (loss) for the year
Share purchases in excess of stated value
Dividends declared
Cumulative effect of accounting change
At end of year
Accumulated other comprehensive income (loss) (note 17)
At beginning of year
Other comprehensive income (loss)
At end of year
2022
2021
2020
1,252
(173)
1,079
21,660
7,340
(6,222)
(932)
—
21,846
(1,177)
665
(512)
1,357
(105)
1,252
22,050
2,479
(2,140)
(729)
—
21,660
(1,989)
812
(1,177)
1,375
(18)
1,357
24,812
(1,857)
(256)
(647)
(2)
22,050
(1,911)
(78)
(1,989)
Shareholders’ equity at end of year
22,413
21,735
21,418
The information in the notes to consolidated financial statements is an integral part of these statements.
77
Consolidated statement of cash flows (U.S. GAAP)
millions
of
Canadian dollars
For
the
years
ended
December 31
Operating activities
income (loss)
Net
2022
2021
2020
7,340
2,479
(1,857)
Adjustments
for
Depreciation
Impairment
(Gain)
loss
Deferred
non-cash items:
and
intangible
asset
depletion (includes
assets
(note
and other
sales
8, 18)
of
on
income
operating
taxes
assets
and liabilities:
(note 11)
Changes
in
impairments)
(note 2)
Accounts receivable
Inventories,
materials,
supplies
and
prepaid expenses
Income taxes payable
Accounts
payable
and
accrued liabilities
All
Cash
other items -
flows
from
net (b)
(used
in)
operating activities
Investing activities
to property,
Additions
asset
from
Proceeds
plant
sales
and equipment
8, 18)
(note
Additional investments
Loans
Cash
to
flows
equity
companies - net
from
(used
in)
investing activities
Financing activities
net
Short-term
debt -
(note 12)
debt -
Long-term
lease
Finance
Dividends paid
reduction
obligations -
(note 14)
reduction
(note 14)
Common
Cash
shares
from
purchased
in)
(used
flows
(note 10)
financing activities
Increase
(decrease)
in cash
Cash
Cash
and
cash
and cash
equivalents
equivalents
at
at
beginning of year
end
year (a)
of
1,897
—
(158)
(77)
(862)
(477)
1,876
948
(5)
10,482
(1,526)
904
(6)
10
(618)
—
(1,000)
(22)
(851)
(6,395)
(8,268)
1,596
2,153
3,749
1,977
—
(49)
91
(1,950)
45
248
2,020
615
5,476
(1,108)
81
—
15
(1,012)
(111)
—
(20)
(706)
(2,245)
(3,082)
1,382
771
2,153
3,273
20
(35)
(521)
780
78
(106)
(1,087)
253
798
(868)
82
—
(16)
(802)
—
—
(20)
(649)
(274)
(943)
(947)
1,718
771
(a) Cash is composed of cash in bank and cash equivalents at cost. Cash equivalents are all highly liquid securities with maturity of
three months or less.
Included contributions to registered pension plans.
(b)
Income taxes
(paid),
Interest
(paid) refunded.
net
of capitalization.
(174)
(374)
(60)
(164)
(195)
58
(43)
(42)
(62)
The information in the notes to consolidated financial statements is an integral part of these statements.
78
Notes to consolidated financial statements
The accompanying consolidated financial statements and the supporting and supplemental material are the
responsibility of the management of Imperial Oil Limited.
The company’s principal business involves exploration for, and production of, crude oil and natural gas;
manufacture, trade, transport and sale of crude oil, natural gas, petroleum products, petrochemicals and a
variety of specialty products; and pursuit of lower-emission business opportunities including carbon capture and
storage, hydrogen and lower-emission fuels.
The consolidated financial statements have been prepared in accordance with United States Generally
Accepted Accounting Principles (U.S. GAAP), which requires management to make estimates and judgments
that affect the reported amounts of assets, liabilities, revenues and expenses, and the disclosure of contingent
assets and liabilities. Actual results could differ from these estimates. Prior years’ data have been reclassified in
certain cases to conform to the 2022 presentation basis. All amounts are in Canadian dollars unless otherwise
indicated.
1. Summary of significant accounting policies
Principles of consolidation
The consolidated financial statements include the accounts of subsidiaries the company controls. Intercompany
accounts and transactions are eliminated. Subsidiaries include those companies in which Imperial has both an
equity interest and the continuing ability to unilaterally determine strategic, operating, investing and financing
policies. Imperial Oil Resources Limited and Canada Imperial Oil Limited are significant subsidiaries included in
the consolidated financial statements and are wholly owned by Imperial Oil Limited. The consolidated financial
statements also include the company’s share of the undivided interest in certain upstream assets, liabilities,
revenues and expenses, including its 70.96 percent interest in the Kearl joint venture and its 25 percent interest
in the Syncrude joint venture.
Revenues
Imperial generally sells crude oil, natural gas and petroleum and chemical products under short-term
agreements at prevailing market prices. In some cases, products may be sold under long-term agreements, with
periodic price adjustments to reflect market conditions.
Revenue is recognized at the amount the company expects to receive when the customer has taken control,
which is typically when title transfers and the customer has assumed the risks and rewards of ownership. The
prices of certain sales are based on price indices that are sometimes not available until the next period. In such
cases, estimated realizations are accrued when the sale is recognized, and are finalized when final information
is available. Such adjustments to revenue from performance obligations satisfied in previous periods are not
significant. Payment for revenue transactions is typically due within 30 days.
Revenues include amounts billed to customers for shipping and handling. Shipping and handling costs incurred
up to the point of final storage prior to delivery to a customer are included in “Purchases of crude oil and
products” in the Consolidated statement of income. Delivery costs from final storage to customer are recorded
as a marketing expense in “Selling and general” expenses. The company does not enter into ongoing
arrangements whereby it is required to repurchase its products, nor does the company provide the customer
with a right of return.
Future volume delivery obligations that are unsatisfied at the end of the period are expected to be fulfilled
through ordinary production or purchases. These performance obligations are based on market prices at the
time of the transaction and are fully constrained due to market price volatility.
Purchases and sales of inventory with the same counterparty that are entered into in contemplation of one
another are combined and recorded as exchanges measured at the book value of the item sold.
“Revenues” and “Accounts receivable - net” include revenue and receivables both within the scope of ASC 606
Revenue from Contracts with Customers, and those outside the scope of ASC 606. Long-term receivables are
primarily from receivables outside the scope of ASC 606. Contract assets are mainly from marketing assistance
programs and are not significant. Contract liabilities are mainly customer prepayments and accruals of expected
volume discounts, and are not significant.
79
Consumer taxes
Taxes levied on the consumer and collected by the company are excluded from the Consolidated statement of
income. These are primarily provincial taxes on motor fuels, the federal goods and services tax and the federal /
provincial harmonized sales tax.
Derivative instruments
Imperial may use derivative instruments for trading purposes and to offset exposures associated with
commodity prices, currency exchange rates and interest rates that arise from existing assets, liabilities, firm
commitments and forecasted transactions. All derivative instruments, except those designated as normal
purchase and normal sale, are recorded at fair value. Derivative assets and liabilities with the same
counterparty are netted if the right of offset exists and certain other criteria are met. Collateral payables or
receivables are netted against derivative assets and derivative liabilities, respectively.
Recognition and classification of the gain or loss that results from adjusting a derivative to fair value depends on
the purpose for the derivative. The gains and losses resulting from changes in the fair value of derivatives are
recorded under “Revenues” or “Purchases of crude oil and products” in the Consolidated statement of income.
Fair value
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. Hierarchy levels 1, 2 and 3 are terms for the priority of inputs to
valuation techniques used to measure fair value. Hierarchy level 1 inputs are quoted prices in active markets for
identical assets or liabilities. Hierarchy level 2 inputs are inputs other than quoted prices included within level 1
that are directly or indirectly observable for the asset or liability. Hierarchy level 3 inputs are inputs that are not
observable in the market.
Inventories
Inventories are recorded at the lower of current market value or cost. The cost of crude oil and products is
determined primarily using the last-in, first-out (LIFO) method. LIFO was selected over the alternative first-in,
first-out and average cost methods because it provides a better matching of current costs with the revenues
generated in the period.
Inventory costs include expenditures and other charges (including depreciation), directly or indirectly incurred in
bringing the inventory to its existing condition and location. Selling and general expenses are reported as period
costs and excluded from inventory costs. Inventories of materials and supplies are valued at cost or less.
Investments
The company’s interests in the underlying net assets of affiliates it does not control, but over which it exercises
significant influence, are accounted for using the equity method. They are recorded at the original cost of the
investment plus Imperial’s share of earnings since the investment was made, less dividends received. Imperial’s
share of the after-tax earnings of these investments is included in “Investment and other income” in the
Consolidated statement of income. Investments in equity securities, other than consolidated subsidiaries and
equity method investments, are measured at fair value, with changes in the fair value recognized in net income.
The company uses a modified approach for equity securities that do not have a readily determinable fair value.
This modified approach measures investments at cost minus impairment, if any, plus or minus changes
resulting from observable price changes in orderly transactions in similar investments of the same issuer.
Dividends from these investments are included in “Investment and other income”.
These investments represent interests in non-publicly traded pipeline companies and a rail loading joint venture
that facilitate the sale and purchase of liquids in the conduct of company operations. Other parties who also
have an equity interest in these investments share in the risks and rewards according to their percentage of
ownership. Imperial does not invest in these investments in order to remove liabilities from its balance sheet.
80
Property, plant and equipment
Cost basis
Imperial uses the “successful efforts” method to account for its exploration and production activities. Under this
method, costs are accumulated on a field-by-field basis. Costs incurred to purchase, lease, or otherwise acquire
a property (whether unproved or proved) are capitalized when incurred. Exploratory well costs are carried as an
asset when the well has found a sufficient quantity of reserves to justify its completion as a producing well and
where the company is making sufficient progress assessing the reserves and the economic and operating
viability of the project. Exploratory well costs not meeting these criteria are charged to expense. Other
exploratory expenditures, including geophysical costs and annual lease rentals, are expensed as incurred.
Development costs, including costs of productive wells and development dry holes, are capitalized.
Interest costs incurred to finance expenditures during the construction phase of projects are capitalized as part
of the historical cost of acquiring the constructed assets. The project construction phase commences with the
development of the detailed engineering design and ends when the constructed assets are ready for their
intended use. Capitalized interest costs are included in property, plant and equipment and are depreciated over
the service life of the related assets.
Maintenance and repair costs, including planned major maintenance, are expensed as incurred. Improvements
that increase or prolong the service life or capacity of an asset are capitalized.
Depreciation, depletion and amortization
Depreciation, depletion and amortization are primarily determined under either the unit-of-production method or
the straight-line method, which is based on estimated asset service life taking obsolescence into consideration.
Depreciation and depletion for assets associated with producing properties begin at the time when production
commences on a regular basis. Depreciation for other assets begins when the asset is in place and ready for its
intended use. Assets under construction are not depreciated or depleted.
Acquisition costs of proved properties are amortized using a unit-of-production method, computed on the basis
of total proved oil and natural gas reserve volumes. Capitalized exploratory drilling and development costs
associated with productive depletable extractive properties are amortized using the unit-of-production rates
based on the amount of proved developed reserves of oil and gas that are estimated to be recoverable from
existing facilities using current operating methods. Under the unit-of-production method, oil and natural gas
volumes are considered produced once they have been measured through meters at custody transfer or sales
transaction points at the outlet valve on the lease or field storage tank. In the event that the unit-of-production
method does not result in an equitable allocation of cost over the economic life of an upstream asset, an
alternative method is used. The straight-line method is used in limited situations where the expected life of the
asset does not reasonably correlate with that of the underlying reserves. For example, certain assets used in
the production of oil and natural gas have a shorter life than the reserves, and as such, the company uses
straight-line depreciation to ensure the asset is fully depreciated by the end of its useful life. Investments in
mining heavy equipment and certain ore processing plant assets at oil sands mining properties are depreciated
on a straight-line basis over a maximum of 15 years and 50 years respectively. Depreciation of other plant and
equipment is calculated using the straight-line method, based on the estimated service life of the asset.
To the extent that proved reserves for a property are substantially de-booked and that property continues to
produce such that the resulting depreciation charge does not result in an equitable allocation of cost over the
expected life, assets will be depreciated using a unit-of-production method based on reserves determined at the
most recent SEC price which results in a more meaningful quantity of proved reserves, appropriately adjusted
for production and technical changes. This approach was applied in 2021, with the corresponding effect on
depreciation expense being immaterial compared to prior periods. For 2022 and 2023, all properties have
sufficient reserves at current SEC prices which will enable equitable allocation of cost over the economic lives of
the Upstream assets.
Investments in refinery and chemical process manufacturing equipment are generally depreciated on a straight-
line basis over a 25-year life. Maintenance and repairs, including planned major maintenance, are expensed as
incurred. Major renewals and improvements are capitalized and the assets replaced are retired.
81
Impairment assessment
The company tests assets or groups of assets for recoverability on an ongoing basis whenever events or
changes in circumstances indicate that the carrying amounts may not be recoverable.
Among the events or changes in circumstances which could indicate that the carrying value of an asset or asset
group may not be recoverable are the following:
•
•
•
•
•
•
a significant decrease in the market price of a long-lived asset;
a significant adverse change in the extent or manner in which an asset is being used or in its physical
condition including a significant decrease in current and projected reserve volumes;
a significant adverse change in legal factors or in the business climate that could affect the value,
including an adverse action or assessment by a regulator;
an accumulation of project costs significantly in excess of the amount originally expected;
a current-period operating loss combined with a history and forecast of operating or cash flow losses;
and
a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of
significantly before the end of its previously estimated useful life.
The company has a robust process to monitor for indicators of potential impairment across its asset groups
throughout the year. This process is aligned with the requirements of ASC 360 and ASC 932 and relies, in part,
on the company’s planning and budgeting cycle. Asset valuation analysis, profitability reviews and other periodic
control processes assist the company in assessing whether events or changes in circumstances indicate the
carrying amounts of any of its assets may not be recoverable.
Because the lifespans of the vast majority of the company’s major assets are measured in decades, the future
cash flows of these assets are predominantly based on long-term oil and natural gas commodity prices, industry
margins, and development and production costs. Significant reductions in the company’s view of oil or natural
gas commodity prices or margin ranges, especially the longer-term prices and margins, and changes in the
development plans, including decisions to defer, reduce or eliminate planned capital spending, can be an
indicator of potential impairment. Other events or changes in circumstances, including indicators outlined in
ASC 360 can be indicators of potential impairment as well.
In general, Imperial does not view temporarily low prices or margins as an indication of impairment.
Management believes that prices over the long term must be sufficient to generate investments in energy
supply to meet global demand. Although prices will occasionally drop significantly, industry prices over the long
term will continue to be driven by market supply and demand fundamentals. On the supply side, industry
production from mature fields is declining. This is being offset by investments to generate production from new
discoveries, field developments, and technology and efficiency advancements. OPEC investment activities and
production policies also have an impact on world oil supplies. The demand side is largely a function of general
economic activities, alternative energy sources and levels of prosperity. During the lifespan of its major assets,
the company expects that oil and gas prices and industry margins will experience significant volatility.
Consequently, these assets will experience periods of higher earnings and periods of lower earnings, or even
losses. In assessing whether events or changes in circumstances indicate the carrying value of an asset may
not be recoverable, the company considers recent periods of operating losses in the context of its longer-term
view of prices and margins.
In the Upstream, the standardized measure of discounted cash flows included in the “Supplemental information
on oil and gas exploration and production activities” is required to use prices based on the average of first-day-
of-month prices in the year. These prices represent discrete points in time and could be higher or lower than the
company’s price assumptions which are used for impairment assessments. The company believes the
standardized measure does not provide a reliable estimate of the expected future cash flows to be obtained
from the development and production of its oil and gas properties or of the value of its oil and gas reserves and
therefore does not consider it relevant in determining whether events or changes in circumstances indicate the
need for an impairment assessment.
82
Outlook for Energy and cash flow assessment
The annual planning and budgeting process, known as the company plan, is the mechanism by which
resources (capital, operating expenses and people) are allocated across the company. The foundation for the
energy supply and demand assumptions supporting the company plan begins with Exxon Mobil Corporation’s
Outlook for Energy (the Outlook), which contains demand and supply projections based on its assessment of
current trends in technology, government policies, consumer preferences, geopolitics, economic development,
and other factors.
Reflective of the existing global policy environment, the Outlook does not project the degree of required future
policy and technology advancement and deployment for the world or the company, to meet net zero by 2050. As
future policies and technology advancements emerge, they will be incorporated into the Outlook, and
consequently, the company’s business plans will be updated accordingly.
If events or changes in circumstances indicate that the carrying value of an asset may not be recoverable, the
company estimates the future undiscounted cash flows of the affected properties to judge the recoverability of
carrying amounts. In performing this assessment, assets are grouped at the lowest level for which there are
identifiable cash flows that are largely independent of the cash flows of other groups of assets. Cash flows used
in recoverability assessments are based on the assumptions developed in the company plan, which is reviewed
and approved by the board of directors, and are consistent with the criteria management uses to evaluate
investment opportunities. These evaluations make use of the company’s assumptions of future capital
allocations, crude oil and natural gas commodity prices including price differentials, refining and chemical
margins, volumes, development and operating costs, including greenhouse gas emissions prices, and foreign
currency exchange rates. Volumes are based on projected field and facility production profiles, throughput, or
sales. Management’s estimate of upstream production volumes used for projected cash flows makes use of
proved reserve quantities and may include risk-adjusted unproved reserve quantities. The greenhouse gas
emission prices reflect existing or anticipated policy actions of applicable provincial and federal governments.
Fair value of impaired assets
An asset group is impaired if its estimated future undiscounted cash flows are less than the asset group’s
carrying value. Impairments are measured by the excess of the carrying value over fair value. The assessment
of fair value is based on the views of a likely market participant. The principal parameters used to establish fair
value include estimates of acreage values and flowing production metrics from comparable market transactions,
market-based estimates of historical cash flow multiples, and discounted cash flows. Inputs and assumptions
used in discounted cash flow models include estimates of future production volumes, throughput and product
sales volumes, commodity prices which are consistent with the average of third-party industry experts and
government agencies, refining and chemical margins, drilling and development costs, operating costs, and
discount rates which are reflective of the characteristics of the asset group.
Other impairment estimates
Unproved properties are assessed periodically to determine whether they have been impaired. Significant
unproved properties are assessed for impairment individually, and valuation allowances against the capitalized
costs are recorded based on the company’s future development plans, the estimated economic chance of
success and the length of time that the company expects to hold the properties. Properties that are not
individually significant are aggregated by groups and amortized based on development risk and average
holding period.
Long-lived assets that are held for sale are evaluated for possible impairment by comparing the carrying value
of the asset with its fair value less the cost to sell. If the net book value exceeds the fair value less cost to sell,
the assets are considered impaired and adjusted to the lower value. Gains on sales of proved and unproved
properties are only recognized when there is neither uncertainty about the recovery of costs applicable to any
interest retained nor any substantial obligation for future performance by the company.
83
Asset retirement obligations and other environmental liabilities
The company incurs retirement obligations for certain assets. The fair values of these obligations are recorded
as liabilities on a discounted basis, which is typically at the time the assets are installed. In the estimation of fair
value, the company uses assumptions and judgments regarding such factors as the existence of a legal
obligation for an asset retirement obligation, technical assessments of the assets, estimated amounts and
timing of settlements, discount rates and inflation rates. Asset retirement obligations incurred in the current
period were Level 3 fair value measurements. The costs associated with these liabilities are capitalized as part
of the related assets and depreciated as the reserves are produced. Over time, the liabilities are accreted for
the change in their present value.
Asset retirement obligations for downstream and chemical facilities generally become firm at the time the
facilities are permanently shut down and dismantled. These obligations may include the costs of asset disposal
and additional soil remediation. However, these sites generally have indeterminate lives based on plans for
continued operations, and as such, the fair value of the conditional legal obligations cannot be measured, since
it is impossible to estimate the future settlement dates of such obligations. On page 93, note 5 to the
consolidated financial statements provides a three-year continuity table detailing the changes in asset
retirement obligations.
The company accrues environmental liabilities when it is probable that obligations have been incurred and the
amount can be reasonably estimated. Provisions for environmental liabilities are determined based on
engineering estimated costs, taking into account the anticipated method and extent of remediation consistent
with legal requirements, current technology and the possible use of the location. These provisions are not
reduced by possible recoveries from third parties and projected cash expenditures are not discounted.
Foreign-currency translation
Monetary assets and liabilities in foreign currencies have been translated at the rates of exchange prevailing on
December 31. Any exchange gains or losses are recognized in income.
84
2. Business segments
The company operates its business in Canada. The Upstream, Downstream and Chemical functions best define
the operating segments of the business that are reported separately. The factors used to identify these
reportable segments are based on the nature of the operations that are undertaken by each segment and the
structure of the company’s internal organization. The Upstream segment is organized and operates to explore
for and ultimately produce crude oil and its equivalent, and natural gas. The Downstream segment is organized
and operates to refine crude oil into petroleum products and to distribute and market these products. The
Chemical segment is organized and operates to manufacture and market hydrocarbon-based chemicals and
chemical products. The above segmentation has been the long-standing practice of the company and is broadly
understood across the petroleum and petrochemical industries.
These functions have been defined as the operating segments of the company because they are the segments
(a) that engage in business activities from which revenues are earned and expenses are incurred; (b) whose
operating results are regularly reviewed by the company’s chief operating decision maker to make decisions
about resources to be allocated to each segment and assess its performance; and (c) for which discrete
financial information is available.
Corporate and other includes assets and liabilities that do not specifically relate to business segments –
primarily cash, capitalized interest costs, short-term borrowings, long-term debt and liabilities associated with
incentive compensation, pension and other postretirement benefit liabilities. Net earnings effects under
Corporate and other activities primarily include debt-related financing, corporate governance costs, non-service
pension and postretirement benefit costs, share-based incentive compensation expenses and interest income.
Segment accounting policies are the same as those described in note 1 "Summary of significant accounting
policies". Upstream, Downstream and Chemical expenses include amounts allocated from Corporate and other
activities. The allocation is based on proportional segment expenses. Transfers of assets between segments
are recorded at book amounts. Intersegment sales are made essentially at prevailing market prices. Assets and
liabilities that are not identifiable by segment are allocated.
85
millions of Canadian dollars
Revenues and other income
Revenues (a) (b)
Intersegment sales (c)
Investment and other income (note 8, 18)
Expenses
Exploration (note 15)
Purchases of crude oil and products (c) (note 11)
Production and manufacturing (note 11)
Selling and general
Federal excise tax and fuel charge
Depreciation and depletion (d) (note 11)
Non-service pension and postretirement benefit
Financing (note 12)
Total expenses
Income (loss) before income taxes (note 11)
Income tax expense (benefit) (note 3)
Net income (loss) (c) (note 11)
Cash flows from (used in) operating activities (c)
Capital and exploration expenditures (e)
Property, plant and equipment
Cost
Accumulated depreciation and depletion
Net property, plant and equipment (f)
Total assets (c)
millions of Canadian dollars
Revenues and other income
Revenues (a) (b)
Intersegment sales (c)
Investment and other income (note 8, 18)
Expenses
Exploration (note 15)
Purchases of crude oil and products (c) (note 11)
Production and manufacturing (note 11)
Selling and general
Federal excise tax and fuel charge
Depreciation and depletion (d) (note 11)
Non-service pension and postretirement benefit
Financing (note 12)
Total expenses
Income (loss) before income taxes (note 11)
Income tax expense (benefit) (note 3)
Net income (loss) (c) (note 11)
Cash flows from (used in) operating activities (c)
Capital and exploration expenditures (e)
Property, plant and equipment
Cost
Accumulated depreciation and depletion
Net property, plant and equipment (f)
Total assets (c)
Upstream
2021
2022
2020
2022
Downstream
2021
2020
2022
Chemical
2021
494
19,135
135
19,764
5
7,971
5,491
—
—
1,673
—
5
15,145
4,619
974
3,645
5,834
1,128
5,863
9,956
12
15,831
32
7,492
4,661
—
—
1,775
—
15
13,975
1,856
461
1,395
4,913
632
6,263
2,527
7
8,797
13
4,834
3,852
—
—
3,084
—
3
11,786
(2,989)
(671)
(2,318)
286
561
57,466
7,476
43
64,985
—
55,569
1,640
653
2,177
179
—
1
60,219
4,766
1,144
3,622
4,415
295
30,207
4,520
59
34,786
—
29,505
1,445
572
1,928
158
—
—
33,608
1,178
283
895
179
476
15,178
1,480
78
16,736
—
12,047
1,468
619
1,736
166
—
—
16,036
700
147
553
470
251
1,453
523
—
1,976
—
1,330
273
85
2
18
—
—
1,708
268
64
204
276
10
1,438
319
1
1,758
—
966
210
90
—
18
—
—
1,284
474
113
361
421
8
2020
843
165
—
1,008
—
579
215
92
—
19
—
—
905
103
25
78
114
21
45,784
(18,835)
26,949
28,830
48,200
(20,389)
27,811
29,416
47,693
(18,786)
28,907
31,835
6,926
(4,143)
2,783
9,277
6,772
(4,096)
2,676
7,945
6,321
(3,962)
2,359
4,554
995
(741)
254
491
984
(721)
263
474
975
(699)
276
408
Corporate and other
2021
2022
2020
Eliminations
2021
2022
2020
2022
Consolidated
2021
2020
—
—
79
79
—
—
—
150
—
27
17
54
248
(169)
(38)
(131)
(59)
57
—
—
10
10
—
—
—
128
—
26
42
39
235
(225)
(53)
(172)
(47)
24
—
—
19
19
—
(27,134)
—
(27,134)
—
(14,795)
—
(14,795)
—
(4,172)
—
59,413
—
257
(4,172) 59,670
—
—
—
35
—
24
121
61
241
(222)
(52)
(170)
(64)
41
—
(27,128)
—
(6)
—
—
—
—
(27,134)
—
—
—
16
—
—
(14,789)
—
(6)
—
—
—
—
(14,795)
—
—
—
10
—
—
—
(5)
—
—
—
—
5
(4,167) 37,742
7,404
882
2,179
1,897
17
60
(4,172) 50,186
9,484
—
2,144
—
—
7,340
(8) 10,482
1,490
—
37,508
—
82
37,590
32
23,174
6,316
784
1,928
1,977
42
54
34,307
3,283
804
2,479
5,476
1,140
22,284
—
104
22,388
13
13,293
5,535
741
1,736
3,293
121
64
24,796
(2,408)
(551)
(1,857)
798
874
863
(343)
520
5,312
806
(316)
490
3,196
782
(290)
492
1,632
—
—
—
(386)
—
—
—
(249)
—
—
—
54,568
(24,062)
30,506
(398) 43,524
56,762
(25,522)
31,240
40,782
55,771
(23,737)
32,034
38,031
86
Includes export sales to the United States of $12,394 million (2021 - $7,228 million, 2020 - $4,614 million).
(a)
(b) Revenues include both revenue within the scope of ASC 606 and outside the scope of ASC 606. Trade receivables in "Accounts
receivable – net" reported on the Consolidated balance sheet include both receivables within the scope of ASC 606 and outside the
scope of ASC 606. Revenue and receivables outside the scope of ASC 606 primarily relate to physically settled commodity contracts
accounted for as derivatives. Contractual terms, credit quality and type of customer are generally similar between contracts within the
scope of ASC 606 and those outside it.
Revenues
millions of Canadian dollars
Revenue from contracts with customers
Revenue outside the scope of ASC 606
Total
2022
52,265
7,148
59,413
2021
34,275
3,233
37,508
2020
22,199
85
22,284
(c)
(d)
In 2021, the Downstream segment acquired a portion of Upstream crude inventory for $444 million. There was no earnings impact and
the effects of this transaction have been eliminated for consolidation purposes.
In 2020, the Upstream segment included a non-cash impairment charge of $1,531 million, before-tax, related to the company’s
decision not to further develop a significant portion of its unconventional portfolio.
(e) Capital and exploration expenditures (CAPEX) include exploration expenses, additions to property, plant and equipment, additions to
finance leases, additional investments and acquisitions and the company’s share of similar costs for equity companies. CAPEX
excludes the purchase of carbon emission credits.
Includes property, plant and equipment under construction of $2,676 million (2021 - $2,348 million, 2020 - $1,874 million).
(f)
3. Income taxes
millions of Canadian dollars
Current income tax expense (benefit) (a)
Deferred income tax expense (benefit) (a)
Total income tax expense (benefit) (a)
Statutory corporate tax rate (percent)
Increase (decrease) resulting from:
Enacted tax rate change (a)
Other (b)
Effective income tax rate (percent)
2022
2,228
(84)
2,144
24.1
—
(1.5)
22.6
2021
711
93
804
24.0
—
0.5
24.5
2020
(27)
(524)
(551)
25.0
0.1
(2.2)
22.9
(a) On June 28, 2019, the Alberta government enacted a 4 percent decrease in the provincial tax rate, from 12 percent to 8 percent by
2022. On December 9, 2020, the Alberta government enacted an accelerated decrease in the province’s general corporate income
tax rate from 10 percent to 8 percent, effective July 1, 2020. The cumulative effect of the 2020 legislative tax changes on the
company’s financial statements was immaterial.
(b) Other primarily relates to disposals, prior year adjustments and re-assessments. In 2022, the company's sale of its interests in XTO
Energy Canada decreased the effective income tax rate by 1.3 percent.
Deferred income taxes are based on differences between the accounting and tax values of assets and liabilities.
These differences in value are re-measured at each year-end using the tax rates and tax laws expected to apply
when those differences are realized or settled in the future. Components of deferred income tax liabilities and
assets as at December 31 were:
millions of Canadian dollars
Depreciation and amortization
Successful drilling and land acquisitions
Pension and benefits
Asset retirement obligation
Capitalized interest
LIFO inventory valuation
Tax loss carryforwards
Valuation allowance
Other
Net deferred income tax liabilities
2022
5,388
236
(105)
(529)
127
(454)
(84)
73
(53)
4,599
2021
5,284
331
(303)
(418)
120
(413)
(42)
—
(101)
4,458
2020
5,319
363
(534)
(403)
120
(150)
(460)
—
(154)
4,101
87
Unrecognized tax benefits
Unrecognized tax benefits reflect the difference between positions taken or expected to be taken on income tax
returns and the amounts recognized in the financial statements.
The following table summarizes the movement in unrecognized tax benefits:
millions of Canadian dollars
Balance as of January 1
Additions based on current year’s tax position
Additions for prior years’ tax positions
Settlements with tax authorities
Balance as of December 31
2022
2021
2020
47
12
10
(9)
60
36
16
—
(5)
47
35
2
—
(1)
36
The unrecognized tax benefit balances shown above are predominately related to tax positions that would
reduce the company’s effective tax rate if the positions are favourably resolved. Unfavourable resolution of
these tax positions generally would not increase the effective tax rate. The 2022, 2021 and 2020 changes in
unrecognized tax benefits did not have a material effect on the company’s net income or cash flow. The
company’s tax filings from 2018 to 2022 are subject to examination by the tax authorities. Tax filings from 2007
to 2017 have open objections and therefore are also subject to examination by the tax authorities. The Canada
Revenue Agency has made certain adjustments to the company’s filings. Management has evaluated these
adjustments and is formally disputing those matters to which the company disagrees. Many of these
outstanding matters will not be resolved until after 2023. The impact on unrecognized tax benefits and the
company’s effective income tax rate from these matters is not expected to be material.
Resolution of the related tax positions could take many years to complete. It is difficult to predict the timing of
resolution for tax positions since such timing is not entirely within the control of the company.
The company classifies interest on income tax related balances as interest expense or interest income and
classifies tax related penalties as operating expense.
Unrecognized tax benefits are not classified as future commitments because the company does not expect
there will be any cash impact from the final settlements as sufficient funds have been deposited with the
Canada Revenue Agency.
4. Employee retirement benefits
Retirement benefits, which cover almost all retired employees and their surviving spouses, include pension
income and certain health care and life insurance benefits. They are met through funded registered retirement
plans and through unfunded supplementary benefits that are paid directly to recipients.
Pension income benefits consist mainly of company-paid defined benefit plans that are based on years of
service and final average earnings. The company shares in the cost of health care and life insurance benefits.
The company’s benefit obligations are based on the projected benefit method of valuation that includes
employee service to date and present compensation levels, as well as a projection of salaries to retirement.
The expense and obligations for both funded and unfunded benefits are determined in accordance with
accepted actuarial practices and U.S. GAAP. The process for determining retirement-income expense and
related obligations includes making certain long-term assumptions regarding the discount rate, rate of return on
plan assets and rate of compensation increases. The obligation and pension expense can vary significantly with
changes in the assumptions used to estimate the obligation and the expected return on plan assets.
88
The benefit obligations and plan assets associated with the company’s defined benefit plans are measured on
December 31.
Pension benefits
2022
2021
Other postretirement
benefits
2022
2021
benefit
obligations
at
Assumptions
December
used
to
31 (percent)
determine
Discount rate
Long-term
rate
of
compensation increase
5.10
4.00
3.00
4.00
5.10
4.00
3.00
4.00
millions
of
Canadian dollars
Change
in
benefit obligation
Benefit
obligation
at
January 1
Service cost
Interest cost
Actuarial
loss
(gain) (a)
Benefits
paid (b)
9,850
10,716
280
295
(2,528)
(523)
324
271
(925)
(536)
Benefit
obligation
at
December 31
7,374
9,850
Accumulated
benefit
obligation
at
December 31
6,820
8,885
(a) Actuarial loss (gain) primarily driven by changes in the year-end discount rate and salary experience.
(b) Benefit payments for funded and unfunded plans.
818
23
24
(248)
(28)
589
873
28
22
(83)
(22)
818
The discount rate for the purpose of calculating year-end postretirement benefits plan obligation is determined
by using the Canadian Institute of Actuaries recommended spot yield curve for high-quality, long-term Canadian
corporate bonds with an average maturity (or duration) approximating that of the liabilities. For the
measurement of the accumulated postretirement benefit obligation, the assumed health care cost trend rates
start with 6.01 percent in 2023 and gradually decline to 3.57 percent by 2040 and beyond.
millions
of
Canadian dollars
Change
in
plan assets
Fair
value
at
January 1
Actual
return
(loss) gain
Company contributions
Benefits
paid (a)
Fair
value
at
December 31
Plan
obligation
assets
at
excess
in
December 31
of
(less
Funded plans
Unfunded plans
Total (b)
Pension
benefits
2022
2021
9,440
9,426
(1,594)
174
(479)
7,541
319
164
(469)
9,440
543
(376)
167
89
(499)
(410)
Other postretirement
benefits
2022
2021
(589)
(589)
(818)
(818)
than)
projected
benefit
(a) Benefit payments for funded plans only.
(b) Fair value of assets less projected benefit obligation shown above.
Funding of registered retirement plans complies with federal and provincial pension regulations, and the
company makes contributions to the plans based on an independent actuarial valuation. In accordance with
authoritative guidance relating to the accounting for defined pension and other postretirement benefits plans,
the overfunded or underfunded status of the company’s defined benefit postretirement plans was recorded as
an asset or liability in the Consolidated balance sheet, and the changes in that funded status in the year in
which the changes occurred was recognized through other comprehensive income.
89
millions
of
Canadian dollars
Amounts
consist of:
recorded
in
the
Consolidated
balance sheet
Other
assets,
including
intangibles - net
Current liabilities
Other
long-term obligations
Total recorded
Amounts
comprehensive
recorded
in
income
accumulated
consist of:
other
Net
actuarial
loss (gain)
Prior
service cost
Total
recorded
comprehensive
in
accumulated other
income, before-tax
Pension
benefits
2022
2021
543
(35)
(341)
167
190
(26)
(574)
(410)
666
235
901
1,272
252
1,524
Other
postretirement
benefits
2022
2021
—
(28)
(561)
(589)
(84)
—
(84)
—
(30)
(788)
(818)
173
—
173
The company establishes the long-term expected rate of return on plan assets by developing a forward-looking
long-term return assumption for each asset class, taking into account factors such as the expected real return
for the specific asset class and inflation. A single, long-term rate of return is then calculated as the weighted
average of the target asset allocation percentages and the long-term return assumption for each asset class.
The 2022 long-term expected return of 4.3 percent used in the calculations of pension expense compares to an
actual rate of return of 5.6 percent and 6.5 percent over the last 10- and 20-year periods respectively, ending
December 31, 2022.
Assumptions
benefit
cost
used
to
years
for
determine
ended
net periodic
December
31 (percent)
Discount rate
Long-term
Long-term
of
rate
rate of
on
funded assets
return
compensation increase
millions
of
Canadian dollars
periodic
benefit
cost
of
net
Components
Service cost
Interest cost
on
Expected
return
prior
Amortization of
Amortization of
actuarial
Net periodic benefit cost
plan assets
service cost
loss (gain)
Changes in
amounts recorded
comprehensive income
other
actuarial loss (gain)
Net
in accumulated
Amortization of net actuarial
net
benefit cost
periodic
(loss) gain included in
prior service
Amortization of
periodic benefit cost
Total
recorded
other
in
comprehensive income
cost
included in net
Total
recorded
in
other comprehensive
net
periodic
benefit
cost and
income, before-tax
Pension
benefits
Other
postretirement
benefits
2022
2021
2020
2022
2021
2020
3.00
4.30
4.00
2.50
4.50
4.00
3.10
4.50
4.50
3.00
—
4.00
2.50
—
4.00
3.10
—
4.50
280
295
(412)
17
84
264
324
271
(427)
17
143
328
305
308
(391)
14
153
389
23
24
—
—
9
56
28
22
—
—
16
66
24
24
—
—
13
61
(522)
(817)
129
(248)
(83)
152
(84)
(143)
(153)
(9)
(16)
(13)
(17)
(623)
(17)
(977)
(14)
(38)
—
(257)
—
(99)
—
139
(359)
(649)
351
(201)
(33)
200
Costs for defined contribution plans, primarily the employee savings plan, were $43 million in 2022 (2021 - $47
million, 2020 - $47 million).
90
A summary of the change in accumulated other comprehensive income is shown in the table below:
millions of Canadian dollars
(Charge) credit to other comprehensive income, before-tax
Deferred income tax (charge) credit (note 17)
(Charge) credit to other comprehensive income, after-tax
Total pension and other
postretirement benefits
2022
880
(215)
665
2021
1,076
(264)
812
2020
(101)
23
(78)
The company’s investment strategy for pension plan assets reflects a long-term view, a careful assessment of
the risks inherent in plan assets and liabilities and broad diversification to reduce the risk of the portfolio. The
pension plan assets are primarily invested in passive global equity and domestic fixed income index funds to
diversify risk while minimizing costs. The fixed income funds are largely invested in investment grade corporate
and government debt securities with interest rate sensitivity designed to approximate the interest rate sensitivity
of plan liabilities. The target asset allocation for the pension plan is reviewed periodically and set based on
considerations such as risk, diversification and liquidity. The target asset allocation for equity securities is 30
percent with the remainder in fixed-income securities.
The fair value measurement levels are accounting terms that refer to different methods of valuing assets. The
terms do not represent the relative risk or credit quality of an investment.
The 2022 fair value of the pension plan assets, including the level within the fair value hierarchy, is shown in the
table below:
Fair value measurements at December 31, 2022, using:
millions of Canadian dollars
Total
Level 1
Level 2
Level 3
Asset class
Equity securities
Canadian
Non-Canadian
Debt securities - Canadian
Corporate
Government
Asset backed
Equities – Venture capital
Cash
Total plan assets at fair value
96
2,215
1,156
3,842
2
199
31
7,541
10
10
Net Asset
Value
96
2,215
1,156
3,842
2
199
21
7,531
91
The 2021 fair value of the pension plan assets, including the level within the fair value hierarchy, is shown in the
table below:
Fair value measurements at December 31, 2021, using:
millions
of
Canadian dollars
Total
Level 1
Level 2
Level 3
Asset class
Equity securities
Canadian
Non-Canadian
Debt
securities - Canadian
Corporate
Government
Asset backed
Equities
–
Venture capital
Cash
Total
plan
assets
at
fair value
247
2,539
1,496
4,865
1
249
43
9,440
36
36
Net Asset
Value
247
2,539
1,496
4,865
1
249
7
9,404
A summary of pension plans with accumulated benefit obligation and projected benefit obligation in excess of
plan assets is shown in the table below:
millions
of
Canadian dollars
For
obligation
funded
in
pension
excess
benefit
of
benefit
Projected
Fair
value
Projected
plan assets
projected
(a) (b)
assets:
with
plans
of
obligation
plan
benefit
obligation
less
fair
value
of
plan assets
Pension benefits
2022
2021
—
—
—
1,132
1,031
101
For
(a)
(b)
by
plans
covered
book reserves:
pension
benefit obligation
unfunded
Projected
Accumulated
In 2022, the fair value of plan assets exceeded the projected benefit obligation for both the company sponsored plan
and its proportionate share of a joint venture sponsored plan.
In 2021, projected benefit obligation exceeded the fair value of plan assets only for the company’s proportionate share
of a joint venture sponsored pension plan.
benefit obligation
376
353
499
461
Cash flows
Benefit payments expected in:
millions
of
Canadian dollars
2023
2024
2025
2026
2027
2028 - 2032
Pension benefits
480
470
470
470
470
2,360
Other postretirement
benefits
29
30
30
31
31
166
In 2023, the company expects to make cash contributions of about $180 million to its pension plans.
92
5. Other long-term obligations
millions of Canadian dollars
Employee retirement benefits (a) (note 4)
Asset retirement obligations and other environmental liabilities (b) (c)
Share-based incentive compensation liabilities (note 7)
Operating lease liability (note 13)
Other obligations
Total other long-term obligations
2022
902
2,150
101
151
163
2021
1,362
1,713
79
147
596
3,467
3,897
(a) Total recorded employee retirement benefits obligations also included $63 million in current liabilities (2021 – $56 million).
(b) Total asset retirement obligations and other environmental liabilities also included $116 million in current liabilities (2021 – $102
million).
(c) For 2022, the asset retirement obligations were discounted at 6 percent (2021 - 6 percent). Asset retirement obligations incurred in
the current period were level 3 fair value measurements.
The following table summarizes the activity in the liability for asset retirement obligations:
millions of Canadian dollars
Balance as at January 1
Additions (deductions)
Accretion
Settlement
Balance as at December 31
2022
1,721
415
101
(59)
2021
1,674
6
99
(58)
2020
1,400
265
82
(73)
2,178
1,721
1,674
Estimated cash payments for asset retirement obligations are $82 million in 2023 and $64 million in 2024.
93
6. Financial and derivative instruments
Financial instruments
The fair value of the company’s financial instruments is determined by reference to various market data and
other appropriate valuation techniques. There are no material differences between the fair value of the
company’s financial instruments and the recorded carrying value. At December 31, 2022 and December 31,
2021, the fair value of long-term debt ($3,447 million and $4,447 million respectively, excluding finance lease
obligations) was primarily a level 2 measurement.
Derivative instruments
The company’s size, strong capital structure and the complementary nature of its business segments reduce
the company’s enterprise-wide risk from changes in commodity prices and currency exchange rates. In addition,
the company uses commodity-based contracts, including derivatives, to manage commodity price risk and to
generate returns from trading. Commodity contracts held for trading purposes are presented in the Consolidated
statement of income on a net basis in the line “Revenues”. The company does not designate derivative
instruments as a hedge for hedge accounting purposes.
Credit risk associated with the company’s derivative position is mitigated by several factors, including the use of
derivative clearing exchanges and the quality of and financial limits placed on derivative counterparties. The
company maintains a system of controls that includes the authorization, reporting and monitoring of derivative
activity.
At December 31, the net notional long / (short) position of derivative instruments was:
thousands
of barrels
Crude
Products
2022
1,800
(350)
2021
7,390
(560)
Realized and unrealized gain or (loss) on derivative instruments recognized in the Consolidated statement of
income is included in the following lines on a before-tax basis:
millions
of
Canadian dollars
Revenues
Purchases
of
crude
oil
and products
Total
2022
148
—
148
2021
(46)
(33)
(79)
2020
(13)
(21)
(34)
The
estimated
measurement
fair
is
value
of
as follows:
derivative
instruments,
and
the
related
hierarchy
level
for
the
fair
value
December
At
millions
31, 2022
Canadian dollars
of
Fair value
Level
1
Level 2
Level 3
Total
Effect of
counterparty
netting
Effect of
collateral
netting
Net
carrying
value
Assets
Derivative
assets (a)
17
32
—
49
(27)
—
22
Liabilities
Derivative
liabilities (b)
21
20
—
41
(27)
(4)
10
(a)
(b)
Included in the Consolidated balance sheet line: “Materials, supplies and prepaid expenses”, “Accounts receivable - net” and “Other
assets, including intangibles - net”.
Included in the Consolidated balance sheet line: “Accounts payable and accrued liabilities” and “Other long-term obligations”.
94
At December 31, 2021
millions of Canadian dollars
Assets
Fair value
Level
1
Level 2
Level 3
Total
Effect of
counterparty
netting
Effect of
collateral
netting
Net
carrying
value
Derivative
assets (a)
24
17
—
41
(31)
—
10
Liabilities
Derivative
liabilities (b)
31
12
—
43
(31)
(7)
5
(a)
(b)
Included in the Consolidated balance sheet line: “Materials, supplies and prepaid expenses”, “Accounts receivable - net” and “Other
assets, including intangibles - net”.
Included in the Consolidated balance sheet line: “Accounts payable and accrued liabilities” and “Other long-term obligations”.
At December 31, 2022 and December 31, 2021, the company had $14 million and $6 million, respectively, of
collateral under a master netting arrangement not offset against the derivatives on the Consolidated balance
sheet in “Accounts receivable - net”, primarily related to initial margin requirements.
95
7. Share-based incentive compensation programs
Share-based incentive compensation programs are designed to retain selected employees, reward them for
high performance and promote individual contribution to sustained improvement in the company’s future
business performance and shareholder value over the long-term. The nonemployee directors also participate in
share-based incentive compensation programs.
Restricted stock units and deferred share units
Under the restricted stock unit plan, each unit entitles the recipient to the conditional right to receive from the
company, upon vesting, an amount equal to the value of one common share of the company, based on the five-
day average of the closing price of the company’s common shares on the Toronto Stock Exchange on and
immediately prior to the vesting dates. For the majority of the units, 50 percent of the units vest on the third
anniversary of the grant date, and the remainder vest on the seventh anniversary of the grant date. As a result
of an employee stock program expansion implemented in 2022, some new participants will be eligible for
awards granted that vest 100 percent after three years. The company may also issue units to the chairman,
president and chief executive officer where 50 percent of the units vest on the fifth anniversary of the grant date
and the remainder vest on the tenth anniversary of the grant date, except that for awards granted prior to 2020,
the vesting of the tenth anniversary portion is delayed until retirement if later than 10 years.
The deferred share unit plan is made available to nonemployee directors. The nonemployee directors can elect
to receive all or part of their eligible directors’ fees in units. The number of units granted is determined at the end
of each calendar quarter by dividing the dollar amount of the nonemployee director’s fees for that calendar
quarter elected to be received as deferred share units by the average closing price of the company’s shares for
the five consecutive trading days (“average closing price”) immediately prior to the last day of the calendar
quarter. Additional units are granted to represent dividends on unexercised units, and are calculated by dividing
the cash dividend payable on the company’s shares by the average closing price immediately prior to the
payment date for that dividend and multiplying the resulting number by the number of deferred share units held
by the recipient, as adjusted for any share splits. Deferred share units cannot be exercised until after
termination of service as a director, including termination due to death, and must be exercised in their entirety in
one election no later than December 31 of the year following the year of termination of service. On the exercise
date, the cash value to be received for the units is determined based on the company’s average closing price
immediately prior to the date of exercise, as adjusted for any share splits.
All units require settlement by cash payments with the following exceptions. The restricted stock unit program
provides that, for units granted to Canadian residents, the recipient may receive one common share of the
company per unit or elect to receive the cash payment for the units that vest on the seventh year anniversary of
the grant date. For units where 50 percent vest on the fifth anniversary of the grant date and the remainder vest
on the tenth anniversary of grant, the recipient may receive one common share of the company per unit or elect
to receive cash payment for all that vest.
The company accounts for all units by using the fair-value-based method. The fair value of awards in the form of
restricted stock and deferred share units is the market price of the company’s stock. Under this method,
compensation expense related to the units of these programs is measured each reporting period based on the
company’s current stock price and is recorded in the Consolidated statement of income over the requisite
service period of each award.
The following table summarizes information about these units for the year ended December 31, 2022:
Outstanding at January 1, 2022
Granted
Vested / Exercised
Forfeited and cancelled
Outstanding at December 31, 2022
Restricted
stock units
3,950,615
884,140
(787,110)
(11,290)
Deferred
share units
166,665
13,219
—
—
4,036,355
179,884
96
In 2022, the before-tax compensation expense charged against income for these programs was $113 million
(2021 - $96 million expense, 2020 - $2 million benefit). Income tax benefit recognized in income related to
compensation expense for the year was $27 million (2021 - $23 million, 2020 - $0 million). Cash payments of
$78 million were made for these programs in 2022 (2021 - $52 million, 2020 - $33 million).
As of December 31, 2022, there was $133 million of total before-tax unrecognized compensation expense
related to non-vested restricted stock units based on the company’s share price at the end of the current
reporting period. The weighted-average vesting period of non-vested restricted stock units is 4.1 years. All units
under the deferred share programs have vested as of December 31, 2022.
8. Investment and other income
Investment and other income includes gains and losses on asset sales as follows:
millions of Canadian dollars
Proceeds from asset sales
Book value of asset sales
Gain (loss) on asset sales, before tax (a)
Gain (loss) on asset sales, after tax (a)
2022
904
746
158
241
2021
2020
81
32
49
43
82
47
35
32
(a) 2022 included a gain of $116 million ($208 million, after tax) from the sale of interests in XTO Energy Canada, which included the
removal of a deferred tax liability.
9. Litigation and other contingencies
A variety of claims have been made against Imperial and its subsidiaries in a number of lawsuits.
Management has regular litigation reviews, including updates from corporate and outside counsel to assess the
need for accounting recognition or disclosure of these contingencies. The company accrues an undiscounted
liability for those contingencies where the incurrence of a loss is probable and the amount can be reasonably
estimated. If a range of amounts can be reasonably estimated and no amount within the range is a better
estimate than any other amount, then the minimum of the range is accrued. The company does not record
liabilities when the likelihood that the liability has been incurred is probable but the amount cannot be
reasonably estimated or when the liability is believed to be only reasonably possible or remote. For
contingencies where an unfavourable outcome is reasonably possible and which are significant, the company
discloses the nature of the contingency and, where feasible, an estimate of the possible loss. For purposes of
the company’s contingency disclosures, “significant” includes material matters, as well as other matters which
management believes should be disclosed. Based on a consideration of all relevant facts and circumstances,
the company does not believe the ultimate outcome of any currently pending lawsuits against the company will
have a material adverse effect on the company’s operations, financial condition, or financial statements taken
as a whole.
Additionally, the company has other commitments arising in the normal course of business for operating and
capital needs, all of which are expected to be fulfilled with no adverse consequences material to the company’s
operations or financial condition. Unconditional purchase obligations, as defined by accounting standards, are
those long-term commitments that are non-cancelable or cancelable only under certain conditions and that third
parties have used to secure financing for the facilities that will provide the contracted goods and services. The
company has not entered into any unconditional purchase obligations.
As a result of the completed sale of Imperial’s remaining company-owned Esso retail sites, the company was
contingently liable at December 31, 2022, for guarantees relating to performance under contracts of other third-
party obligations totalling $17 million (2021 - $21 million).
97
10. Common shares
At December 31
thousands of shares
Authorized
Common shares outstanding
2022
2021
1,100,000
1,100,000
584,153
678,080
The most recent 12-month normal course issuer bid program came into effect June 29, 2022, under which
Imperial continued its existing share purchase program. The program enabled the company to purchase up to a
maximum of 31,833,809 common shares (5 percent of the total shares on June 15, 2022) which included
shares purchased under the normal course issuer bid and from Exxon Mobil Corporation concurrent with, but
outside of the normal course issuer bid. As in the past, Exxon Mobil Corporation advised the company that it
intended to participate to maintain its ownership percentage at approximately 69.6 percent. The program
completed on October 21, 2022 as a result of the company purchasing the maximum allowable number of
shares under the program.
On May 6, 2022, the company commenced a substantial issuer bid pursuant to which it offered to purchase for
cancellation up to $2.5 billion of its common shares through a modified Dutch auction and proportionate tender
offer. The substantial issuer bid was completed on June 15, 2022, with the company taking up and paying for
32,467,532 common shares at a price of $77.00 per share, for an aggregate purchase of $2.5 billion and 4.9
percent of Imperial’s issued and outstanding shares at the close of business on May 2, 2022. This included
22,597,379 shares purchased from Exxon Mobil Corporation by way of a proportionate tender to maintain its
ownership percentage at approximately 69.6 percent.
On November 4, 2022, the company commenced a substantial issuer bid pursuant to which it offered to
purchase for cancellation up to $1.5 billion of its common shares through a modified Dutch auction and
proportionate tender offer. The substantial issuer bid was completed on December 14, 2022, with the company
taking up and paying for 20,689,655 common shares at a price of $72.50 per share, for an aggregate purchase
of $1.5 billion and 3.4 percent of Imperial’s issued and outstanding shares at the close of business on October
31, 2022. This included 14,399,985 shares purchased from Exxon Mobil Corporation by way of a proportionate
tender to maintain its ownership percentage at approximately 69.6 percent.
The excess of the purchase cost over the stated value of shares purchased has been recorded as a distribution
of earnings reinvested.
The company’s common share activities are summarized below:
Thousands of
shares
743,902
7
(9,832)
734,077
7
(56,004)
678,080
—
(93,927)
584,153
Millions of
dollars
1,375
—
(18)
1,357
—
(105)
1,252
—
(173)
1,079
as
at
Balance
under
Issued
at
Purchases
as
Balance
at
under
Issued
Purchases
at
at
as
Balance
under
Issued
at
Purchases
at
Balance
January
employee
stated value
December
employee
stated value
December
employee
stated value
December
as
1, 2020
share-based
31, 2020
share-based
31, 2021
share-based
awards
awards
awards
31, 2022
98
The following table provides the calculation of basic and diluted earnings per common share and the dividends
declared by the company on its outstanding common shares:
Net income (loss) per common share – basic
Net income (loss) (millions of Canadian dollars)
Weighted-average number of common shares outstanding (millions of shares)
Net income (loss) per common share (dollars)
Net income (loss) per common share – diluted
Net income (loss) (millions of Canadian dollars)
Weighted-average number of common shares outstanding (millions of shares)
Effect of employee share-based awards (millions of shares) (a)
Weighted-average number of common shares outstanding,
assuming dilution (millions of shares)
Net income (loss) per common share (dollars)
2022
2021
2020
7,340
640.2
11.47
7,340
640.2
1.3
641.5
11.44
2,479
711.6
3.48
2,479
711.6
1.6
713.2
3.48
(1,857)
735.3
(2.53)
(1,857)
735.3
—
735.3
(2.53)
Dividends per common share – declared (dollars)
1.46
1.03
0.88
(a) For 2020, the Net income (loss) per common share – diluted excludes the effect of 1.9 million employee share-based awards. Share-
based awards have the potential to dilute basic earnings per share in the future.
99
11. Miscellaneous financial information
LIFO inventory
In 2022, net income included an after-tax gain of $62 million (2021 – $13 million loss, 2020 – $19 million loss)
attributable to the effect of changes in last-in, first-out (LIFO) inventories. The replacement cost of inventories
was estimated to exceed their LIFO carrying values at December 31, 2022 by about $2 billion (2021 – $1.8
billion). Inventories of crude oil and products at year-end consisted of the following:
millions of Canadian dollars
Crude oil
Petroleum products
Chemical products
Other
Total
2022
809
471
76
158
1,514
2021
674
310
73
45
1,102
In 2021, the company recorded an unfavourable $74 million ($82 million, before tax) inventory adjustment
(including the proportionate share of LIFO changes) related to reconciliations of additives and products
inventory at equity and third-party terminals. The out-of-period impact of $57 million ($63 million, before tax)
occurred over a number of years, and has been resolved. The company determined that the adjustment was not
material to the consolidated financial statements for the year ended December 31, 2021, or any of the prior
periods related to the adjustment. Accordingly, comparative periods presented in the consolidated financial
statements have not been restated.
Research and development
Research expenditures are mainly spent on developing technologies to improve bitumen recovery, reduce costs
and reduce the environmental impact of upstream operations, including technologies to reduce greenhouse gas
emissions intensity, supporting environmental and process improvements in the refineries, as well as accessing
ExxonMobil’s research worldwide.
The company has scientific research agreements with affiliates of ExxonMobil, which provide for technical and
engineering work to be performed by all parties, the exchange of technical information and the assignment and
licensing of patents, and patent rights. These agreements provide mutual access to scientific and operating data
related to nearly every phase of the petroleum and petrochemical operations of the parties.
Net research and development costs charged to expenses in 2022 were $74 million (2021 – $89 million, 2020 –
$105 million). These costs are included in expenses due to the uncertainty of future benefits.
Accounts payable and accrued liabilities
“Accounts payable and accrued liabilities” included accrued taxes other than income taxes of $458 million at
December 31, 2022 (2021 – $415 million).
Goodwill impairment
In the first quarter of 2020, the company assessed its goodwill balances for impairment and recognized a non-
cash goodwill impairment charge of $20 million in the company’s Upstream segment. The goodwill impairment
was reflected in “Depreciation and depletion” on the Consolidated statement of income and “Goodwill” on the
Consolidated balance sheet. The remaining balance of goodwill is associated with the Downstream segment.
Government assistance
The company received subsidies as part of the Government of Canada’s COVID-19 Economic Response Plan,
which included the company’s proportionate share of a joint venture. It was recognized as a reduction to
expense (2020 – $155 million before tax) and was included in the Consolidated statement of income, primarily
as part of “Production and manufacturing”.
In 2022, the company prospectively adopted the Financial Accounting Standards Board’s standard, Government
Assistance (Topic 832). The standard requires the annual disclosure of certain types of government assistance
not otherwise covered by authoritative accounting guidance. The company receives allowances from
governments in the form of emission credits as a result of performing better than facility level expectations for
emission targets and records these at a nominal amount in the Consolidated balance sheet. During 2022,
government assistance was immaterial to the company’s financial results.
100
12. Financing and additional notes and loans payable information
millions
of
Canadian dollars
Debt-related
interest (a)
Capitalized interest
Net
interest expense
Other interest
Total
financing (b)
2022
111
2021
63
(57)
(24)
54
6
60
39
15
54
2020
102
(41)
61
3
64
Includes related party interest with ExxonMobil.
(a)
(b) The weighted-average interest rate on short-term borrowings in 2022 was 2.0 percent (2021 – 0.2 percent, 2020 – 0.8 percent) and
on long-term borrowings, with ExxonMobil, in 2022 was 1.9 percent (2021 – 0.6 percent, 2020 – 1.4 percent).
During the second quarter of 2022, the company reduced its existing $500 million committed long-term line of
credit to $250 million and extended the maturity date to June 30, 2023. Subsequently, in the fourth quarter of
2022, this committed long-term line of credit was cancelled in full. The company also extended one of its
$250 million committed long-term lines of credit to June 30, 2024.
In November 2022, the company extended the maturity date of an existing $250 million committed short-term
line of credit to November 2023.
The company has not drawn on any of its outstanding $500 million of available credit facilities.
In 2021, the company repaid the $111 million outstanding balance and terminated the non-interest bearing,
revolving demand loan under an arrangement with an affiliate company of ExxonMobil.
101
13. Leases
The company generally purchases the property, plant and equipment used in operations, but there are
situations where assets are leased, primarily storage tanks, rail cars, marine vessels and transportation
facilities. Right of use assets and lease liabilities are established on the balance sheet for leases with an
expected term greater than one year, by discounting the amounts fixed in the lease agreement for the duration
of the lease which is reasonably certain, considering the probability of exercising any early termination and
extension options. The portion of the fixed payment related to service costs for tankers and finance leases is
excluded from the calculation of right of use assets and lease liabilities. Usually, assets are leased only for a
portion of their useful lives and are accounted for as operating leases. In limited situations, assets are leased for
nearly all of their useful lives and are accounted for as finance leases. In general, leases are capitalized using
the company’s incremental borrowing rate.
Variable payments under these lease agreements are not significant. Residual value guarantees, restrictions, or
covenants related to leases, and transactions with related parties are also not significant. The company’s
activities as a lessor are not material.
The table below summarizes the total lease cost incurred:
millions
of
Canadian dollars
Operating
lease cost
Short-term
and
other
(net
of
sublease
rental income)
Amortization of
right of
use assets
Interest on
lease liabilities
Total
lease cost
2022
2021
2020
Operating Finance
leases
leases
Operating Finance
leases
leases
Operating Finance
leases
leases
119
40
123
19
157
40
19
30
17
33
159
49
142
50
197
29
38
67
The following table summarizes the amounts related to operating leases and finance leases recorded on the
Consolidated balance sheet, weighted-average remaining lease term and weighted-average discount rates
applied at December 31:
millions
of
Canadian dollars
Right
of
use assets
2022
2021
Operating
leases
Finance
leases
Operating
leases
Finance
leases
Included
in
Other
assets,
including
intangibles - net
245
245
Included
in
Property,
plant
and
equipment, less
accumulated
depreciation
and depletion
618
637
Total
right
of
use assets
245
618
245
637
Lease
liability
due
within
one year
Included
in
Accounts
payable
and
accrued liabilities
Included
in
Notes
and
loans payable
Long-term
lease liability
Included
in
Other
long-term obligations
Included
in
Long-term debt
Total
lease liability
Weighted-average
remaining
lease
term (years)
Weighted-average
discount
rate (percent)
100
151
251
5
1.1
—
22
—
586
608
37
4.7
102
147
249
4
1.2
—
22
—
607
629
38
4.8
102
The maturity analysis of the company’s lease liabilities as at December 31 are summarized below:
millions
of
Canadian dollars
Maturity
analysis
of
lease liabilities
2023
2024
2025
2026
2027
2028
and beyond
Total
lease payments
Discount to
present value
Total
lease liability
2022
Operating
leases
Finance
leases
102
70
15
10
10
56
263
(12)
251
50
49
46
44
43
900
1,132
(524)
608
In addition to the operating lease liabilities in the table immediately above, at December 31, 2022, additional
undiscounted commitments for leases not yet commenced totalled $14 million (2021 - $5 million).
Estimated cash payments for operating and finance leases not yet commenced are $5 million in both 2023 and
2024.
The table below summarizes the cash paid for amounts included in the measurement of lease liabilities and the
right of use assets obtained in exchange for new lease liabilities:
millions
of
Canadian dollars
Operating
leases
Finance
leases
Operating
leases
Finance
leases
Operating
leases
Finance
leases
2022
2021
2020
paid
for
amounts
included
in
the
measurement
Cash
of
lease liabilities
Cash
flows
from
operating activities
Cash
flows
from
financing activities
121
—
22
122
—
20
136
15
20
Non-cash
liabilities
right
of
use
assets
recorded
for
lease
In
exchange
for
lease
liabilities
during
the year
117
—
176
123
63
14
103
14. Long-term debt
At December 31
millions of Canadian dollars
Long-term debt (a) (b)
Finance leases (c)
Total long-term debt
2022
3,447
586
4,033
2021
4,447
607
5,054
(a) Borrowed under an existing agreement with an affiliated company of ExxonMobil that provides for a long-term, variable-rate,
Canadian dollar loan from ExxonMobil to the company of up to $7.75 billion at interest equivalent to Canadian market rates. The
agreement is effective until June 30, 2025, cancelable if ExxonMobil provides at least 370 days advance written notice.
(b) During the third quarter of 2022, the company decreased its long-term debt by $1 billion, partially repaying an existing facility with an
affiliated company of ExxonMobil.
(c) Finance leases are primarily associated with transportation facilities and services agreements. The average imputed interest rate was
4.7 percent in 2022 (2021 – 4.8 percent). Total finance lease obligations also include $22 million in current liabilities (2021 - $22
million). Principal payments on finance leases of approximately $20 million on average per year are due in each of the next four years
after December 31, 2023.
15. Accounting for suspended exploratory well costs
The company continues capitalization of exploratory well costs when the well has found a sufficient quantity of
reserves to justify its completion as a producing well and the company is making sufficient progress assessing
the reserves and the economic and operating viability of the project. The term “project” as used in this report
can refer to a variety of different activities and does not necessarily have the same meaning as in any
government payment transparency reports. The company had no capitalized suspended exploratory well costs
as at December 31, 2022, 2021 and 2020.
Exploration activity involves drilling multiple wells, over a number of years, to fully evaluate a project. The
company had no projects with exploratory wells costs capitalized as at December 31, 2022, 2021 and 2020.
104
16. Transactions with related parties
Revenues and expenses of the company also include the results of transactions with affiliated companies of
ExxonMobil in the normal course of operations. These were conducted on terms comparable to those which
would have been conducted with unrelated parties and primarily consisted of the purchase and sale of crude oil,
natural gas, petroleum and chemical products, as well as technical, engineering and research and development
costs. Transactions with ExxonMobil also included amounts paid and received in connection with the company’s
participation in a number of upstream activities conducted jointly in Canada.
In addition, the company has existing agreements with ExxonMobil:
a) To provide computer and customer support services to the company and to share common business and
operational support services that allow the companies to consolidate duplicate work and systems;
b) To operate certain western Canada production properties owned by ExxonMobil, as well as provide for the
delivery of management, business and technical services to ExxonMobil in Canada. These agreements are
designed to provide organizational efficiencies and to reduce costs. No separate legal entities were created
from these arrangements. Separate books of account continue to be maintained for the company and
ExxonMobil. The company and ExxonMobil retain ownership of their respective assets, and there is no
impact on operations or reserves;
c) To provide for the option of equal participation in new upstream opportunities; and
d) To enter into derivative agreements on each other’s behalf.
The company had an existing agreement with ExxonMobil to provide for the delivery of management, business
and technical services to Syncrude Canada Ltd. by ExxonMobil, which was terminated in connection with the
transfer of operatorship of Syncrude on September 30, 2021.
Certain charges from ExxonMobil have been capitalized; they are not material in the aggregate.
The amounts of purchases and revenues by Imperial in 2022, with ExxonMobil, were $3,719 million and
$17,042 million respectively (2021 - $2,669 million and $8,777 million respectively).
As at December 31, 2022, the company had an outstanding long-term loan of $3,447 million (2021 – $4,447
million) from ExxonMobil (see note 14, "Long-term debt", on page 104 and note 12, "Financing and additional
notes and loans payable information", on page 101 for further details). The amount of financing costs with
ExxonMobil were $78 million (2021 - $28 million).
Imperial has other related party transactions not detailed above in note 16, as they are not significant.
105
17. Other comprehensive income (loss) information
Changes in accumulated other comprehensive income (loss):
millions
of
Canadian dollars
Balance
at
January 1
Postretirement
benefits
liability adjustment:
Current
period
change
accumulated
excluding
amounts
other comprehensive income
reclassified
from
Amounts
reclassified
from
accumulated
other
comprehensive income
Balance
at
December 31
2022
2021
2020
(1,177)
(1,989)
(1,911)
582
83
679
133
(212)
134
(512)
(1,177)
(1,989)
Amounts
reclassified
out
of
accumulated
other
comprehensive
income
(loss) -
before-tax
income
(expense):
millions
of
Canadian dollars
2022
2021
2020
Amortization
included
of
in
postretirement
benefit
net
cost (a)
benefits
liability
adjustment
(110)
(176)
(180)
(a)
This
accumulated
other
comprehensive
income
component
is
included
in
the
computation
of
net
periodic
benefit
cost
(note 4).
Income
tax
expense
(credit)
for
components
of
other
comprehensive
income (loss):
millions
of
Canadian dollars
Postretirement
benefits
liability adjustments:
Postretirement
benefits
liability
adjustment
(excluding amortization)
Amortization
included
of
in
postretirement
benefit cost
net
benefits
liability
adjustment
Total
18. Divestment activities
2022
2021
2020
188
27
215
221
43
264
(69)
46
(23)
Jointly with ExxonMobil Canada, Imperial signed an agreement in the second quarter of 2022 with Whitecap
Resources Inc. for the sale of its interests in XTO Energy Canada which included assets in the Montney and
Duvernay areas of central Alberta, for total cash consideration of approximately $1.9 billion ($0.9 billion
Imperial's share). The transaction closed on August 31, 2022 and the company recognized a gain of
approximately $0.2 billion, after tax. Imperial’s total assets associated with this transaction include about
$0.9 billion (about $0.8 billion of property, plant and equipment) and about $0.2 billion total liabilities in the
Upstream segment.
106
Supplemental information on oil and gas exploration and production
activities (unaudited)
The information on pages 107 to 108 excludes items not related to oil and natural gas extraction, such as
administrative and general expenses, pipeline operations, gas plant processing fees and gains or losses on
asset sales. The company’s 25 percent interest in proved synthetic crude oil reserves in the Syncrude joint-
venture is included as part of the company’s total proved oil and gas reserves and in the calculation of the
standardized measure of discounted future cash flows, in accordance with U.S. Securities and Exchange
Commission (SEC) and U.S. Financial Accounting Standards Board rules. Results of operations, costs incurred
in property acquisitions, exploration and development activities, and capitalized costs include the company’s
share of Kearl, Syncrude and other unproved mineable acreages in the following tables.
Results of operations
millions
of
Canadian dollars
Revenue
Sales
to
third
parties (a)
Transfers
(a) (b)
Production expenses
Exploration expenses
Depreciation
and
depletion
(includes impairments)
Income taxes
Results
of
operations
2022
2021
2020
7,154
4,182
11,336
5,521
5
1,467
1,030
3,313
5,081
3,037
8,118
4,728
32
1,579
457
1,322
2,066
1,777
3,843
3,977
13
2,857
(678)
(2,326)
The amounts reported as costs incurred in property acquisitions, exploration and development activities include
both capitalized costs and costs charged to expense during the year. Costs incurred also include new asset
retirement obligations established in the current year, as well as increases or decreases to the asset retirement
obligation resulting from changes in cost estimates or abandonment date.
Costs incurred in property acquisitions, exploration and development activities
millions
of
Canadian dollars
Property
costs (c)
Proved
Unproved
Exploration costs
Development costs
Total
costs
incurred
in
property acquisitions,
exploration
and
development
activities
2022
2021
2020
—
—
5
1,602
1,607
—
—
32
576
608
—
—
13
816
829
(a) Sales to third parties or transfers do not include the sale of natural gas and natural gas liquids purchased for resale, as well as royalty
payments or diluent costs. These items are reported gross in note 2 in “Revenues”, “Intersegment sales” and in “Purchases of crude
oil and products”.
(b) Sales of crude oil to consolidated affiliates are at market value, using posted field prices. Sales of natural gas liquids to consolidated
(c)
affiliates are at prices estimated to be obtainable in a competitive, arm’s-length transaction.
“Property costs” are payments for rights to explore for petroleum and natural gas and for purchased reserves (acquired tangible and
intangible assets such as gas plants, production facilities and producing-well costs are included under “producing assets”). “Proved”
represents areas where successful drilling has delineated a field capable of production. “Unproved” represents all other areas.
107
Capitalized
millions
costs
Canadian dollars
of
Property
costs (a)
Proved
Unproved
Producing assets
Incomplete construction
Total
capitalized
cost
Accumulated
depreciation
and depletion
Net
capitalized costs
2022
2021
1,840
493
39,075
2,375
43,783
2,045
2,468
39,926
1,762
46,201
(18,512)
(20,112)
25,271
26,089
(a)
“Property costs” are payments for rights to explore for petroleum and natural gas and for purchased reserves (acquired tangible and
intangible assets such as gas plants, production facilities and producing-well costs are included under “producing assets”). “Proved”
represents areas where successful drilling has delineated a field capable of production. “Unproved” represents all other areas.
Standardized measure of discounted future cash flows
As required by the U.S. Financial Accounting Standards Board, the standardized measure of discounted future
net cash flows is computed by applying first-day-of-the-month average prices, year-end costs and legislated tax
rates and a discount factor of 10 percent to net proved reserves. The standardized measure includes costs for
future dismantlement, abandonment and remediation obligations. The company believes the standardized
measure does not provide a reliable estimate of the company’s expected future cash flows to be obtained from
the development and production of its oil and gas properties or of the value of its proved oil and gas reserves.
The standardized measure is prepared on the basis of certain prescribed assumptions, including first-day-of-
the-month average prices, which represent discrete points in time and therefore may cause significant variability
in cash flows from year to year as prices change.
Standardized measure of discounted future net cash flows related to proved oil and gas reserves
millions
of
Canadian dollars
Future
Future
Future
Future
Future
Annual
Discounted
cash flows
production costs
development costs
income taxes
cash flows
net
10
percent
discount
cash flows
of
future
2022
198,923
(104,765)
(23,392)
(16,872)
53,894
(28,340)
25,554
2021
161,577
(101,580)
(21,903)
(8,192)
29,902
(15,732)
14,170
2020
23,911
(18,787)
(6,096)
(155)
(1,127)
1,065
(62)
for
estimated
timing
of
cash flows
Changes in standardized measure of discounted future net cash flows related to proved oil and gas
reserves
millions
of
Canadian dollars
of year
at
beginning
Balance
resulting from:
Changes
of
transfers
and
Sales
in
Net
prices,
changes
Extensions,
discoveries,
less
related costs
gas
and
oil
development
additions
and
produced,
costs
and
improved
net
of
production costs
production
costs (a)
recovery,
2022
14,170
2021
(62)
(6,113)
23,215
(3,841)
7,681
2020
5,511
(447)
(8,661)
during
change
quantity
incurred
the year
estimates
costs
Development
of
Revisions
previous
Accretion
of discount
Net
Net change
at
Balance
(a) SEC rules require the company’s reserves to be calculated on the basis of average first-day-of-the-month oil and natural gas prices
during the reporting year. Future net cash flows are determined based on the net proved reserves as outlined in the “Net proved
reserves table”.
income taxes
of year
end
in
664
1,160
(4,431)
1,439
(4,550)
11,384
25,554
52
650
13,482
24
(3,816)
14,232
14,170
114
563
459
623
1,776
(5,573)
(62)
108
Net
proved
reserves
(a)
Liquids
(b) Natural
gas
millions of
barrels
billions of
feet
cubic
Synthetic
oil
crude
millions of
barrels
Total
oil-equivalent
basis
(c)
millions of
barrels
Bitumen
millions of
barrels
year 2020
of
Beginning
Revisions
Improved recovery
of
(Sale)
Discoveries
Production
of
End
year 2020
purchase
reserves
and extensions
purchase
Revisions
Improved recovery
(Sale)
of
Discoveries
Production
of
End
year 2021
reserves
and extensions
purchase
Revisions
Improved recovery
(Sale)
of
Discoveries
Production
of
End
year 2022
reserves
and extensions
in place
in place
in place
developed
reserves
included abo
ve,
as
of
proved
Net
January
December
December
December
1, 2020
31, 2020
31, 2021
31, 2022
41
(29)
—
—
—
(5)
7
13
—
—
—
(4)
16
—
—
(9)
—
(3)
4
22
7
14
4
581
(348)
—
(10)
—
(55)
168
165
—
(10)
—
(42)
281
(41)
—
(141)
2
(29)
72
291
167
205
60
415
(79)
—
—
133
(25)
444
17
—
—
—
(23)
438
(62)
—
—
—
(23)
353
415
311
326
248
2,939
(2,757)
—
—
1
(102)
81
2,239
2
—
—
(106)
2,216
(363)
—
—
67
(96)
1,824
2,609
76
1,957
1,691
3,492
(2,923)
—
(2)
134
(141)
560
2,297
2
(2)
—
(140)
2,717
(432)
—
(32)
67
(127)
2,193
3,095
422
2,331
1,953
as of
bove,
1, 2020
proved
reserves
included a
undeveloped
Net
397
January
138
December
386
December
240
December
(a) Net reserves are the company’s share of reserves after deducting the shares of mineral owners or governments or both. All reported
reserves are located in Canada. Reserves of natural gas are calculated at a pressure of 14.73 pounds per square inch at 60°F.
(b) Liquids include crude, condensate and natural gas liquids (NGLs). NGL proved reserves are not material and are therefore included
31, 2020
31, 2021
31, 2022
330
5
259
133
—
133
112
105
290
1
76
12
19
—
2
—
under liquids.
(c) Gas converted to oil-equivalent at six million cubic feet per one thousand barrels.
The information above describes changes during the years and balances of proved oil and gas reserves at
year-end 2020, 2021 and 2022. The definitions used are in accordance with the SEC Rule 4-10 (a) of
Regulation S-X.
Proved oil and natural gas reserves are those quantities of oil and gas, which, by analysis of geoscience and
engineering data, can be estimated with reasonable certainty to be economically producible – from a given date
forward, from known reservoirs, and under existing economic conditions, operating methods and government
regulations – prior to the time at which contracts providing the right to operate expire. In some cases,
substantial new investments in additional wells and other facilities will be required to recover these proved
reserves.
109
In accordance with SEC rules, the year-end reserves volumes, as well as the reserves change categories
shown in the proved reserves tables are required to be calculated on the basis of average prices during the 12-
month period prior to the ending date of the period covered by the report, determined as an unweighted
arithmetic average of the first-day-of-the-month price for each month within such period. These reserves
quantities were also used in calculating unit-of-production depreciation rates and in calculating the standardized
measure of discounted net cash flow.
Revisions in previously estimated volumes of proved reserves for existing fields can occur due to the evaluation
or re-evaluation of already available geologic, reservoir or production data; new geologic, reservoir or
production data; or changes in the average of first-day-of-the-month oil and natural gas prices and / or costs
that are used in the estimation of reserves. Revisions can also result from significant changes in either
development strategy or production equipment and facility capacity.
In 2020, downward revisions of proved bitumen reserves were a result of low prices. The 2.2 billion barrels of
bitumen at Kearl and 0.6 billion barrels of bitumen at Cold Lake no longer qualified as proved reserves under
the SEC definition of proved reserves. Downward revisions to proved synthetic crude oil reserves were a result
of lower prices, offset by the addition of proved undeveloped reserves associated with future development at
Syncrude. Changes to the liquids and natural gas proved reserves were the result of updated development
plans at the Montney and Duvernay unconventional assets and the divestment of conventional properties.
In 2021, upward revisions of proved bitumen reserves were a result of improved prices. The 1.7 billion barrels of
bitumen at Kearl and 0.5 billion barrels of bitumen at Cold Lake qualified as proved reserves under the SEC
definition of proved reserves. Upward revisions to proved synthetic crude oil reserves were a result of improved
prices. Changes to the liquids and natural gas proved reserves were the result of updated development plans
and divestments at the Montney and Duvernay unconventional assets.
In 2022, downward revisions of proved bitumen reserves were driven by a decrease of 0.2 billion barrels at
Kearl as a result of higher royalty obligations associated with pricing, and a decrease of 0.2 billion barrels at
Cold Lake due to an updated development plan. An increase to the bitumen reserves of 0.1 billion barrels is
associated with extensions at Cold Lake for the Grand Rapids Phase 1 SA-SAGD and Leming SAGD projects.
Downward revisions to proved synthetic crude oil reserves were a result of mine development plan updates and
higher royalty obligations at Syncrude associated with pricing. Changes to the liquids and natural gas proved
reserves were primarily a result of the sale of the company’s interest in the Montney and Duvernay
unconventional assets.
Under the terms of certain contractual arrangements or government royalty regimes, lower prices can also
increase proved reserves attributable to Imperial. The company’s operating decisions and its outlook for future
production volumes are not impacted by proved reserves as disclosed under the SEC definition.
Net proved reserves are determined by deducting the estimated future share of mineral owners or governments
or both. For liquids and natural gas, net proved reserves are based on estimated future royalty rates as of the
date the estimate is made incorporating the applicable governments’ oil and gas royalty regimes. For bitumen,
net proved reserves are based on the company’s best estimate of average royalty rates over the remaining life
of each of the Cold Lake and Kearl fields, and they incorporate the Alberta government’s oil sands royalty
regime. For synthetic crude oil, net proved reserves are based on the company’s best estimate of average
royalty rates over the remaining life of the project, and they incorporate the Alberta government’s oil sands
royalty regime. In all cases, actual future royalty rates may vary with production, price and costs.
Net proved developed reserves are those volumes that are expected to be recovered through existing wells,
facilities, or mining activities with existing equipment and operating methods or in which the cost of the required
equipment is relatively minor compared to the cost of a new well or facility. Net proved undeveloped reserves
are those volumes that are expected to be recovered as a result of future investments to drill new wells, to
recomplete existing wells and / or to install facilities to collect and deliver the production from existing and future
wells, facilities, or mining activities.
110
Proxy information section
Table of contents
Nominees for director
Director nominee tables
Majority voting policy
Corporate governance disclosure
Corporate governance disclosure at a glance
Statement of corporate governance practice
Composition of our board nominees
Tenure of our board nominees
Skills and experience of our board members and nominees
Independence of our board members and nominees
Committee membership of our board
Number of meetings
Attendance of our board members in 2022
Other public company directorships of our board members and nominees
Interlocking directorships of our board members
Director qualification and selection process
Director orientation, education and development
Board performance assessment
Board and committee structure
Director compensation
Share ownership guidelines of independent directors and chairman, president and chief executive officer
Ethical business conduct
Restrictions on insider trading
Diversity
Shareholder engagement
Largest shareholder
Transactions with Exxon Mobil Corporation
Company executives and executive compensation
Named executive officers of the company
Other executive officers of the company
Letter to shareholders from the executive resources committee on executive compensation
Compensation discussion and analysis
Overview
Compensation program design
Compensation decision making process and considerations for named executive officers
Executive compensation tables and narratives
Appendix
Appendix A – Board of director and committee charters
Page
112
112
116
117
118
119
119
120
121
122
123
123
124
125
125
126
127
128
128
139
146
147
148
148
150
151
151
153
153
154
155
156
157
161
166
172
179
179
111
Nominees for director
The director nominee tables on the following pages provide information on the seven nominees proposed for
election to the board of directors of the company. All of the nominees, with the exception of S.R. Driscoll,
J. Floren and G.J. Goldberg, are now directors and have been since the dates indicated. K.T. Hoeg, J.M. Mintz
and D.S. Sutherland are currently directors and are not standing for re-election in 2023 as they have all reached
the company's mandatory retirement age for directors. Ms. Driscoll, Mr. Floren and Mr. Goldberg are not
currently directors and are being nominated for election as directors for the first time.
Included in these tables is information relating to the director nominees’ biographies, independence status,
expertise, standing committee memberships, attendance, public board memberships and shareholdings in the
company. The information is as of February 8, 2023, the effective date of this circular, unless otherwise
indicated.
For more information on our director nominees, please see the Statement of corporate governance practice
starting on page 119.
Director nominee tables
David W. Cornhill
Calgary, Alberta, Canada
Nonemployee director (independent)
Age: 69
Director since: November 29, 2017
Skills and experience: Leadership of large organizations, Operations/technical, Project management,
Strategy development, Environment and sustainability, Audit committee financial expert, Financial expertise,
Executive compensation, Risk management
Mr. Cornhill is a director of AltaGas Ltd., and is the chairman of the board of directors of TriSummit Utilities Inc. (formerly
AltaGas Canada Inc.), a privately owned corporation. Mr. Cornhill is a founding shareholder of AltaGas (and its predecessors). He was chief executive officer
of AltaGas from 1994 to 2016 and served as interim co-chief executive officer from July to December 2018. Prior to forming AltaGas, Mr. Cornhill served in
various capacities with Alberta and Southern Gas Co. Ltd, including vice-president, finance and administration, treasurer and president and chief operating
officer. Mr. Cornhill is an experienced leader in the business community and is a strong supporter of communities and community collaboration, investment
and enhancement. He is a member of the Ivey Advisory Board at Western University. Mr. Cornhill holds a BSc (Hons.) degree and a MBA degree from
Western University, and he was awarded an honorary Doctor of Laws degree by the University in 2015.
Imperial Oil Limited Ownership and Value of Equity (a) (b) (c) (d)
Holdings as at February 8, 2023 (#)
IMO Common
Shares
(% of class)
12,500
(<0.01%)
IMO Deferred
Share Units
(DSU)
Total Vested
Equity Holdings
(Common + DSU)
Restricted
Stock Units
(RSU)
Total
Holdings *
(Common + DSU + RSU)
13,308
25,808
16,900
42,708
Total market value as at February 8, 2023 ($)
869,625
925,838
1,795,463
1,175,733
2,971,196
Year over year change (#)
0
2,355
2,355
2,000
4,355
*Meets
the
necessary
share
ownership
requirements
Board
and
Standing
Committee Membership
Limited board
Oil
Imperial
Audit committee
Executive
Safety
and
Nominations
Community
resources committee
sustainability committee
corporate
and
collaboration
governance
committee (Chair)
and
engagement committee
(100%)
(100%)
Meeting
Attendance 2022
8
5
6
3
6
1
of
of
of
of
of
of
8
5
7
4
6
1
(100%)
(100%)
(86%)
(75%)
Public
Years*
Company
Directorships
in
the
Past
Five
–
–
–
AltaGas
AltaGas
Alterra
(2010
Ltd.
Canada
– present)
(2018
(2008
– 2020)
– 2018)
Inc.
Corp.
Power
*no
public
board interlocks
Voting
Results
of
2022
Annual
General Meeting:
Votes
in Favour:
Votes Withheld:
540,497,248 (89.79%)
61,434,933 (10.21%)
Other
(position,
Positions
office
date
in
held,
the
and
Past
status
Five Years:
of employer)
–
AltaGas
Ltd.,
Chairman
of
the
board
(1994
– 2019)
–
AltaGas
Ltd.,
Interim
co-CEO
(July
to
December 2018)
112
Bradley W. Corson
Calgary, Alberta, Canada
Non-independent director
Age: 61
Director since: September 17, 2019
Skills and experience: Leadership of large organizations, Operations/technical, Project management,
Global experience, Strategy development, Environment and sustainability, Financial expertise, Government
relations, Executive compensation, Risk management
Mr. Corson was appointed as president and a director of Imperial Oil Limited on September 17, 2019, and assumed the
additional roles of chairman and chief executive officer on January 1, 2020. Mr. Corson has worked for Exxon Mobil Corporation and its predecessor
companies since 1983 in various upstream and downstream assignments, with responsibilities in the United States, Hong Kong and London. In his previous
position, Mr. Corson was vice-president of Exxon Mobil Corporation and president of ExxonMobil Upstream Ventures, a division of Exxon Mobil Corporation.
Imperial
Oil
Limited
Ownership
and
Value
of
Equity
(a)
(b)
(c) (d)
Holdings
as
Total market
Year
over
at
value
February
at
as
8,
February
2023 (#)
8,
year change (#)
IMO Common
Shares
(%
of class)
IMO
Share
Deferred
Units
(DSU)
0
0
0
0
0
0
2023 ($)
Total
Equity
(Common
Vested
Holdings
DSU)
+
0
0
0
Restricted
Units
Stock
(RSU)
323,600
22,512,852
89,000
Total
Holdings
DSU
+
*
+
(Common
RSU)
323,600
22,512,852
89,000
*Meets the
necessary
share
ownership
requirements
Board and Standing
Committee Membership
Oil
Imperial
Community
Limited
collaboration
board (Chair)
and
engagement committee
Voting
Results
of
2022
Annual
General Meeting:
Votes
in Favour:
Votes Withheld:
586,247,361 (97.39%)
15,684,820 (2.61%)
Meeting
Attendance 2022
8
1
of
of
(100%)
(100%)
8
1
Company
Public
Years*
None
Directorships
in
the
Past Five
*no
public
board
interlocks
Other
(position,
Positions
office
date
in
held,
the
and
Past
status
Five Years:
of employer)
–
President,
Imperial
Oil
Limited
(2019
– present)
–
President,
(2015
ExxonMobil
2019) (Affiliate)
–
Upstream Ventures
Matthew R. Crocker
Spring, Texas, United States of America
Non-independent director
Age: 49
Director since: May 4, 2021
Skills and experience: Leadership of large organizations, Operations/technical, Project management, Global
experience, Strategy development, Environment and sustainability, Financial expertise, Government relations,
Executive compensation, Risk management
Mr. Crocker is senior vice-president, product, strategy and new assets for ExxonMobil's Low Carbon Solutions business since
April, 2022 and is responsible for product development across the portfolio, creation and alignment on business strategies and has oversight for product
execution and start-up of new assets. Mr. Crocker has also held leadership positions within refining, upstream business development, chemicals and
controllers. Prior to his current position, Mr. Crocker was senior vice-president, fuels, at ExxonMobil Fuels and Lubricants Company, responsible for the global
fuels value chain, from crude to customer.
Imperial
Oil
Limited
Ownership
and
Value
of
Equity
(a)
(b)
(c) (d)
Holdings
as
Total market
Year
over
at
value
February
as
at
change (#)
year
8,
February
2023 (#)
8,
IMO Common
Shares
(%
of class)
0
0
0
IMO
Share
Deferred
Units
(DSU)
0
0
0
2023 ($)
Vested
Holdings
DSU)
+
Total
Equity
(Common
0
0
0
Restricted
Units
Stock
(RSU)
0
0
0
(Common
*
+
RSU)
Total
Holdings
+
DSU
0
0
0
*No
share
ownership guidelines
apply
Board
and
Standing
Committee Membership
Limited board
Oil
Imperial
Executive
and
Safety
Nominations
Community
resources committee
sustainability committee
corporate
and
collaboration
governance committee
and
engagement committee
Voting
Results
of
2022
Annual
General Meeting:
Votes
in Favour:
Votes Withheld:
577,063,393 (95.87%)
24,868,788 (4.13%)
Company
Public
Five Years*
None
Directorships in
the Past
*no
public
board
interlocks
Meeting
Attendance 2022
8 (100%)
8
of
7 (100%)
7
of
4 (100%)
4
of
of
6
6 (100%)
of 1(100%)
1
Other
(position,
Positions
office
date
in
held,
the
and
Past
status
Five Years:
of employer)
Senior
(2020
vice
president,
Present) (Affiliate)
–
fuels,
ExxonMobil
Fuels
&
Lubricants
Company,
Vice-president,
Upstream
Business
strategy
and
Development
portfolio
ExxonMobil
management,
2020) (Affiliate)
–
(2019
Company
Special
Upstream
assignment,
Business
strategy
and
Development
portfolio
Company
management,
ExxonMobil
(2019) (Affiliate)
Vice-president,
Chemical
Company
intermediates,
(2017
performance
2019) (Affiliate)
–
derivatives,
ExxonMobil
–
–
–
–
113
Sharon R. Driscoll
Vancouver, British Columbia, Canada
Nonemployee director (independent)
Age: 61
Director since: Not currently a member of the board; first nomination for election as director
Skills and experience: Leadership of large organizations, Project management, Global experience, Strategy
development, Environment and sustainability, Audit committee financial expert, Financial expertise, Executive
compensation, Risk management
Sharon Driscoll is the executive vice-president and advisor to the chief executive officer of Ritchie Bros. Auctioneers Incorporated.
Ms. Driscoll joined Ritchie Bros. in July 2015 as the chief financial officer where she led global financial operations including capital allocation, financing
strategies, treasury operations, risk management, investor relations and regulatory compliance. Ms. Driscoll also served as Co-CEO in 2019 to support the
company's planned CEO transition. Prior to joining Ritchie Bros., Ms. Driscoll served as the executive vice-president and chief financial officer for Katz Group
Canada Ltd. from 2013 to 2015 and senior vice-president and chief financial officer at Sears Canada Inc. from 2008 to 2013. Ms. Driscoll is a Chartered
Professional Accountant and has a Bachelor of Commerce (Honours) degree from Queen’s University. Ms. Driscoll also serves as a director of Empire
Company Limited.
Imperial
Oil
Limited
Ownership
and
Value
of
Equity
(a)
(b)
(c) (d)
IMO Common
Shares
(%
of class)
IMO
Share
Deferred
Units
(DSU)
Total
Equity
(Common
Vested
Holdings
DSU)
+
Holdings
as
at
February
8,
2023 (#)
Total market
value
as
at
February
8,
2023 ($)
Year
over
year
change (#)
0
0
0
0
0
0
0
0
0
Restricted
Units
Stock
(RSU)
0
0
0
Total
Holdings
+ DSU
*
+
(Common
RSU)
0
0
0
*Meets the necessary share ownership requirements
Board
and
Standing
Committee Membership
Not
currently
a
member
of
the
board
or
any
of
its
committees
Meeting
Attendance 2022
n/a
Company
Public
Years*
Directorships
in
the
Past Five
–
Empire
Company
Limited
*no
(2018
public
– Present)
board interlocks
Voting
Results
of
2022
Annual
General Meeting:
Votes
n/a
in Favour:
Votes
n/a
Withheld:
Other
(position,
Positions
office
date
in
held,
the
and
Past
status
Five Years:
of employer)
–
–
–
Bros.
Ritchie
and
president
Ritchie
Bros.
(2015 - 2022)
Ritchie
Bros.
Co-chief
and
Auctioneers
advisor
to
Auctioneers
CEO
Incorporated,
(2022
Incorporated,
– present)
Chief
Executive vice-
financial
officer
Auctioneers
executive
officer (2019)
Incorporated,
Chief
financial
officer
John Floren
Oakville, Ontario, Canada
Nonemployee director (independent)
Age: 64
Director since: Not currently a member of the board; first nomination for election as director
Skills and experience: Leadership of large organizations, Operations/technical, Project management, Global
experience, Strategy development, Environment and sustainability, Financial expertise, Government relations,
Information technology/cybersecurity oversight, Executive compensation, Risk management
Mr. Floren is the former president and chief executive officer of Methanex Corporation, and prior to that appointment held the
positions of senior vice-president, global marketing and logistics and regional director, marketing and logistics, North America. Mr. Floren was an employee of
Methanex for approximately 22 years and has worked in the chemical industry for over 37 years. He currently serves as a director of West Fraser Timber Co.
Ltd. Mr. Floren holds a Bachelor of Arts in Economics from the University of Manitoba and attended the Harvard Business School’s Program for Management
Development, the International Executive Program at INSEAD and completed the Directors Education Program at the Institute of Corporate Directors.
Imperial
Oil
Limited
Ownership
and
Value
of
Equity
(a)
(b)
(c) (d)
IMO Common
Shares
(%
of class)
IMO
Share
Deferred
Units
(DSU)
Total
Equity
(Common
Vested
Holdings
DSU)
+
Holdings
as
at
February
8,
2023 (#)
Total market
value
as
at
February
8,
2023 ($)
Year
over
year
change (#)
0
0
0
0
0
0
0
0
0
Restricted
Units
Stock
(RSU)
0
0
0
Total
Holdings
DSU
+
*
+
(Common
RSU)
0
0
0
*Meets
the
necessary
share
ownership
requirements
Board
and
Standing
Committee Membership
Not
currently
a
member
of
the
board
or
any
of
its committees
Meeting
Attendance 2022
n/a
Company
Public
Years*
Directorships
in
the
Past Five
–
–
Fraser
West
Methanex
Timber
Corporation
Co.
Ltd.
(2016
– present)
(2013 - 2022)
public
*no
board interlocks
Voting
Results
of
2022
Annual
General Meeting:
Other
(position,
Positions
office
date
in
held,
the
and
Past
status
Five Years:
of employer)
Votes
n/a
in Favour:
Votes
n/a
Withheld:
–
114
Methanex
officer
(2013
Corporation,
– 2022)
President
and
chief
executive
Gary J. Goldberg
Castle Pines, Colorado, United States of America
Nonemployee director (independent)
Age: 63
Director since: Not currently a member of the board; first nomination for election as director
Skills and experience: Leadership of large organizations, Operations/technical, Project management, Global
experience, Strategy development, Environment and sustainability, Financial expertise, Government relations,
Executive compensation, Risk management
Mr. Goldberg has more than 35 years of global experience in the mining industry, including in executive, operational and
strategic roles, and currently serves as a non-executive director of BHP Group Limited. Mr. Goldberg served as the chief executive officer of Newmont
Corporation from 2013 to 2019, and prior to that, was president and chief executive officer of Rio Tinto Minerals. Mr. Goldberg was also a non-executive
director of Port Waratah Coal Services Limited and Rio Tinto Zimbabwe, and served as vice-chair of the World Gold Council, treasurer of the International
Council on Mining and Metals, and chair of the National Mining Association in the United States.
Imperial
Oil
Limited
Ownership
and
Value
of
Equity
(a)
(b)
(c) (d)
IMO Common
Shares
(%
of class)
IMO
Share
Deferred
Units
(DSU)
Total
Equity
(Common
Vested
Holdings
DSU)
+
Holdings
as
at
February
8,
2023 (#)
Total market
value
as
at
February
8,
2023 ($)
Year
over
year
change (#)
0
0
0
0
0
0
0
0
0
Restricted
Units
Stock
(RSU)
0
0
0
Total
Holdings
DSU
+
*
+
(Common
RSU)
0
0
0
*Meets
the
necessary
share
ownership
requirements
Board
and
Standing
Committee Membership
Not
currently
a
member
of
the
board
or
any
of
its committees
Meeting
Attendance 2022
n/a
Company
Public
Years*
Directorships
in
the
Past Five
–
–
Group
BHP
Newmont
Mining
Limited
Corporation
Corporation)
(2020
– present)
(previously
–
2019)
public
(2013
*no
Newmont
board interlocks
Voting
Results
of
2022
Annual
General Meeting:
Votes
in Favour:
Votes Withheld:
n/a
n/a
Miranda C. Hubbs
Toronto, Ontario, Canada
Other
(position,
Positions
office
date
in
held,
the
and
Past
status
Five Years:
of employer)
–
–
–
Newmont
Newmont
Corporation,
Corporation,
Executive
Chief
advisor
(2019
– 2020)
executive
officer
(2018
– 2019)
Newmont
(2013
– 2018)
Corporation,
President
and
chief
executive
officer
Nonemployee director (independent)
Age: 56
Director since: July 26, 2018
Skills and experience: Global experience, Strategy development, Environment and sustainability, Audit
committee financial expert, Financial expertise, Information technology/cybersecurity oversight, Executive
compensation, Risk management
Ms. Hubbs is currently an independent director of Nutrien Ltd. and also serves as a director of PSP Investments (Public Sector
Pension Investment Board), New Self-Regulatory Organization of Canada and serves as vice-chair of the board of the Canadian Red Cross. Prior to
retirement in 2011, Ms. Hubbs was executive vice president and managing director of McLean Budden, one of Canada’s leading investment managers. Ms.
Hubbs holds a BSc from Western University and an MBA from Schulich School of Business at York University and is a CFA charterholder. Ms. Hubbs serves
on the ICD Climate Strategy Advisory Board and the Global Risk Institute Sustainable Finance Advisory Committee, holds the Fundamentals of Sustainability
Accounting credential from the Sustainability Accounting Standards Board, and has received her CERT Certificate in Cybersecurity Oversight issued by the
Software Engineering Institute at Carnegie Mellon University.
Imperial
Oil
Limited
Ownership
and
Value
of
Equity
(a)
(b) (c)
IMO Common
Shares
as
Holdings
Total market
Year
over
at
value
February
as
at
change (#)
year
8,
February
2023 (#)
8,
2023 ($)
(%
of class)
0
0
0
(d)
IMO
Share
Deferred
Units
(DSU)
16,735
1,164,254
2,352
Total
Equity
(Common
Vested
Holdings
DSU)
+
16,735
1,164,254
2,352
Restricted
Units
Stock
(RSU)
15,600
1,085,292
3,300
(Common
RSU)
*
+
Total
Holdings
+
DSU
32,335
2,249,546
5,652
*Meets
the
necessary
share
ownership
requirements
Board
and
Standing
Committee Membership
Meeting
Attendance 2022
Company
Public
Years*
Directorships
in
the
Past Five
Limited board
Oil
Imperial
Audit committee
Executive
resources committee
and
Safety
Nominations
Community
sustainability committee
corporate
and
collaboration
governance committee
and
engagement
committee (Chair)
Nutrien
Agrium
Ltd.
Inc.
(2018
(2016
– present)
– 2018)
*no
public
board interlocks
–
–
8
5
7
4
6
1
of
of
of
of
of
of
8 (100%)
5 (100%)
7 (100%)
4 (100%)
6 (100%)
1 (100%)
Voting
Results
of
2022
Annual
General Meeting:
Votes
in Favour:
Votes Withheld:
596,301,725 (99.06%)
5,630,456 (0.94%)
115
Positions
office
date
in
held,
the
and
Past
status
Five Years:
of employer)
Other
(position,
None
Footnotes to director nominee tables on pages 112 through 115:
(a) The information includes the beneficial ownership of common shares of Imperial Oil Limited, which information not being within the
knowledge of the company has been provided by the nominees individually.
(b) The company’s plan for restricted stock units for nonemployee directors is described on page 142. The company’s plan for deferred
share units for nonemployee directors is described on page 141. The company’s plan for restricted stock units for selected
employees is described on page 163.
(c) The numbers for the company’s restricted stock units represent the total of the outstanding restricted stock units received in 2016
through 2022 and deferred share units received since directors’ appointment.
(d) The value for Imperial Oil Limited common shares, deferred share units and restricted stock units is based on the closing price for
Imperial Oil Limited common shares on the Toronto Stock Exchange of $69.57 on February 8, 2023.
Director and nominee holdings in Exxon Mobil Corporation (a)
Director
XOM Common
Shares
(#)
XOM Restricted
Stock
(#)
(b)
Total Common
Shares and
Restricted Stock
(#)
Market
Total
Common
Shares
Value
of
and
Stock
Restricted
($)
(c)
B.W. Corson
120,676
73,850
194,526
29,759,204
M.R. Crocker
15,534
128,400
143,934
22,019,479
D.S. Sutherland
5,730
—
5,730
876,594
(a) Holdings as at February 8, 2023. The information includes the beneficial ownership of common shares of Exxon Mobil Corporation,
which information not being within the knowledge of the company has been provided by the nominees and directors individually.
None of these individuals own more than 0.01 percent of the outstanding shares of Exxon Mobil Corporation. Current directors D.W.
Cornhill, K.T. Hoeg, M.C. Hubbs and J.M. Mintz, and nominees S.R. Driscoll, J. Floren, G.J. Goldberg, do not own common shares
or hold restricted stock of Exxon Mobil Corporation.
(b) The numbers for Exxon Mobil Corporation restricted stock include outstanding restricted stock and restricted stock units granted
under its restricted stock plan which is similar to the company’s restricted stock unit plan.
(c) The value for Exxon Mobil Corporation common shares and restricted stock is based on the closing price for Exxon Mobil
Corporation common shares on the New York Stock Exchange of $113.92 U.S., which is converted to Canadian dollars at the daily
rate of exchange of $1.3429 provided by the Bank of Canada for February 8, 2023.
Majority voting policy
In 2022, amendments to the Canada Business Corporations Act came into force implementing majority voting
requirements for uncontested director elections. These amendments provide for the election of a director only if
the number of “for” votes represents a majority of the votes cast both “for” and “against” the director. Following
the implementation of these amendments, the company’s existing majority voting policy was rendered
redundant and was revoked by the board.
116
Corporate governance disclosure
Table of contents
Corporate governance disclosure
2022 Corporate governance highlights
Corporate governance at a glance
Statement of corporate governance practice
Composition of our board nominees
Tenure of our board nominees
Skills and experience of our board members and nominees
Independence of our board members and nominees
Committee membership of our board
Number of meetings
Attendance of our board members in 2022
Other public company directorships of our board members and nominees
Interlocking directorships of our board members
Director qualifications and selection process
Director orientation, education and development
Board performance assessment
Board and committee structure
Director compensation
Director compensation table
Outstanding share-based awards and option-based awards for directors
Incentive plan awards for directors - Value vested or earned during the year
Share ownership guidelines of independent directors and chairman, president and CEO
Ethical business conduct
Restrictions on insider trading
Diversity
Shareholder engagement
Largest shareholder
Transactions with Exxon Mobil Corporation
2022
Corporate governance highlights
117
117
118
119
119
120
121
122
123
123
124
125
125
126
127
128
128
139
144
145
145
146
147
148
148
150
151
151
•
•
•
Five of seven of our directors and our director nominees are independent and meet the criteria for
independence set by Canadian securities regulators, the SEC and the NYSE American LLC
The directors are highly qualified with diversity of gender, background, experience and skill
The company’s independent directors have significant stock ownership requirements, all of which have been
met. The independent directors collectively have more than $23.3 million in shareholdings in the company
The independent directors regularly meet in executive sessions without management present
•
• Shares of the company are listed on the TSX and trade on the NYSE American LLC and our corporate
•
•
governance practices comply with applicable policies and practices of each exchange
96% average vote in favour for the election of our directors at the 2022 annual meeting
Two of seven or 29% of the directors and director nominees, and 11 of 24 or 46% of the executive officers of
the company and its major subsidiaries are women
117
Corporate governance at a glance
Controlled company
Size of board
Number of independent directors (board and nominees)
Women on board (board and nominees)
Average attendance of directors at board and committee meetings
Independent chair of the executive sessions
In camera sessions of independent directors at every board meeting
Independent status of audit committee
Audit committee members financially literate
Independent status of executive resources committee
Independent status of nominations and corporate governance committee
Majority of independent directors on all committees
Individual director elections
Average tenure of director nominees (approximate)
Average age of director nominees (approximate)
Mandatory retirement age
Separate board chair and CEO
Number of board interlocks
No director serves on more than two boards of another reporting issuer
Share ownership requirements for independent directors
Share ownership requirements for chairman and chief executive officer
Board orientation and education program
Code of business conduct and ethics
Board and committee charters
Position descriptions for the chairman and chief executive officer and the chair of each committee
Skills matrix for directors
Annual board evaluation process
Annual advisory vote on executive compensation
Dual-class shares
Change of control agreements
Yes
7
5
2
99%
Yes
Yes
100%
All
83%
83%
Yes
Yes
2 years
60 years
72 years
No
None
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
118
Statement of corporate governance practice
The company continually reviews its governance practices and monitors regulatory changes.
This section provides information pertaining to our board, the committees of the board, ethics, diversity and
shareholder engagement. The company is committed to high corporate governance standards and best
practices. The company’s corporate governance policies and practices comply with and in most cases exceed
the requirements of National Instrument 52-110 Audit Committees (NI 52-110), National Policy 58-201
Corporate Governance Guidelines (NP 58-201) and National Instrument 58-101 Disclosure of Corporate
Governance Practices (NI 58-101). The company’s common shares trade on the Toronto Stock Exchange and
the NYSE American LLC and our corporate governance practices reflect the standards of these exchanges. In
accordance with NYSE American LLC requirements for non-U.S. companies, the company is in compliance with
NYSE American standards in all significant respects except as described on the company’s website at
www.imperialoil.ca.
Composition of our board nominees
More information on diversity, including on the board and among executive officers of the company, can be
found at page 148.
119
Gender71%29%MenWomenIndependence71%29%IndependentNot IndependentRegional association28.5%43%28.5%Eastern CanadaWestern CanadaUnited StatesPublic company board experience71%29%Public board experienceNo public board experienceEnergy industry experience57%43%Energy industry experienceNon-energy industry experienceCEO experience57%43%CEO experienceNo CEO experience
Tenure of our board nominees
The board charter provides that incumbent directors will not be re-nominated if they have attained the age of 72,
except under exceptional circumstances and at the request of the chairman. The company does not have term
limits for independent directors because it values the comprehensive knowledge of the company that long
serving directors possess and independent directors are expected to remain qualified to serve for a minimum of
five years.
K.T. Hoeg, J.M. Mintz and D.S. Sutherland are not standing for re-election in 2023 as they have reached the
company’s mandatory retirement age for directors. In anticipation of these retirements, the board undertook an
extensive director recruitment process resulting in S.R. Driscoll, J. Floren and G.J. Goldberg being nominated
for election to the board for the first time.
The following chart shows the current years of service of the nominees for the board of directors and the year
they would normally be expected to retire from the board.
Name
director
of
nominee
Years
of
service
board
on
the
Year
of
board
the
expected
retirement from
for
independent
directors
D.W. Cornhill
5 years
2026
B.W. Corson
3 years
M.R. Crocker
2 years
S.R.
Driscoll (a)
J.
Floren (a)
G.J.
Goldberg (a)
-
-
-
M.C. Hubbs
4 years
-
-
2034
2031
2031
2039
(a) S.R. Driscoll, J. Floren, and G.J. Goldberg are being nominated for election as directors at the annual meeting of shareholders and
are not currently directors.
120
Skills and experience of our board members and nominees
Our directors bring a wide range of skills, diversity and experience.
The current directors and director nominees collectively have the experience and expertise required to ensure
effective oversight, stewardship and governance of the company. The key areas of experience and skills for
each of the nominees for election as directors can also be found in each of the nominees tables on pages 112
through 116 of this circular.
The table below sets out the diverse skill set required of the board and identifies the particular experience,
qualifications, attributes, and skills of each director and nominee that led the board to conclude that such person
should serve as a director of the company.
D.W.
B.W.
M.R.
Cornhill
Corson
Crocker
S.R.
J.
G.J.
Driscoll
Floren
Goldberg
(a)
(a)
(a)
K.T.
Hoeg
(b)
M.C.
Hubbs
J.M.
Mintz
(b)
D.S.
Sutherland
(b)
Leadership of
large
organizations
Operations /
technical
Project
management
Global
experience
Strategy
development
Environment
and
sustainability
Audit
committee
financial
expert
Financial
expertise
Government
relations
Information
technology /
cybersecurity
oversight
Executive
compensation
Risk
management
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
ü
(a) S.R. Driscoll, J. Floren and G.J. Goldberg are being nominated for election as directors at the annual meeting of shareholders and
are not currently directors.
(b) K.T. Hoeg, J.M. Mintz and D.S. Sutherland are currently directors but are not standing for re-election at the annual meeting of
shareholders.
121
Independence of our board members and nominees
Five out of seven of the director nominees are independent.
The board is currently composed of seven directors, four of whom will be standing for re-election at the annual
meeting of shareholders on May 2, 2023. K.T. Hoeg, J.M. Mintz and D.S. Sutherland will not stand for re-
election in 2023 as they have reached the company's mandatory retirement age for directors. S.R. Driscoll, J.
Floren and G.J. Goldberg are being nominated for election as directors at the annual meeting of shareholders
and are not currently directors. The majority of the board and nominees (five out of seven) are independent. The
independent directors and nominees are not employees of the company.
The board determines independence on the basis of the standards specified by National Instrument 52-110
Audit Committees (NI 52-110), the U.S. Securities and Exchange Commission rules and the listing standards of
the NYSE American LLC. The board has reviewed relevant relationships between the company and each
nonemployee director and director nominee to determine compliance with these standards.
Based on the directors’ responses to an annual questionnaire, the board determined that none of the
independent directors has any interest, business or other relationship that could or could reasonably be
perceived to constitute a material relationship with the company. B.W. Corson is a director and chairman,
president and chief executive officer of the company and not considered to be independent. The board believes
that Mr. Corson’s extensive knowledge of the business of the company and Exxon Mobil Corporation is
beneficial to the other directors and his participation enhances the effectiveness of the board.
M.R. Crocker is also a non-independent director as he is an employee of Exxon Mobil Corporation. The
company believes that Mr. Crocker, although deemed non-independent under the relevant standards by virtue
of his employment, can be viewed as independent of the company’s management and that his ability to reflect
the perspective of the company’s shareholders enhances the effectiveness of the board.
Name
and
director
of
nominee
Management
Independent
Not
independent
Reason
for
non-independent status
B.W.
chief
Corson
is
executive
a
officer
director
of
and
Imperial
Oil Limited.
chairman,
president and
M.R.
Crocker
is
an
employee
of
Exxon
Mobil Corporation.
ü
ü
ü
D.W.
Cornhill
B.W.
Corson
M.R.
Crocker
S.R.
Driscoll (a)
J.
Floren (a)
G
G.J.
Goldberg (a)
K.T.
Hoeg (b)
M.C.
Hubbs
J.M.
Mintz (b)
D.S.
Sutherland (b)
ü
ü
ü
ü
ü
ü
ü
ü
(a) S.R. Driscoll, J. Floren and G.J. Goldberg are being nominated for election as directors at the annual meeting of shareholders and
are not currently directors.
(b) K.T. Hoeg, J.M. Mintz and D.S. Sutherland are current directors, but are not standing for re-election at the annual meeting of
shareholders.
122
Committee membership of our board
Each standing committee is chaired by a different independent director and
all of the independent directors are members of each committee.
The chart below shows the company’s current standing committee memberships and the chair of each
committee.
Director
D.W.
Cornhill
(c)
B.W.
Corson
(a)
M.R.
Crocker
(a)
K.T.
Hoeg
(c)
M.C.
Hubbs
(c)
J.M. Mintz
D.S.
Sutherland
(c)
Nominations
and corporate
governance
committee
Audit
committee
(b)
Safety
and
sustainability
committee
Executive
resources
committee
Community
collaboration
and
engagement
committee
ü
Chair
—
ü
ü
ü
ü
ü
ü
—
—
ü
Chair
ü
ü
ü
ü
—
ü
ü
ü
ü
Chair
ü
ü
—
ü
ü
ü
ü
ü
Chair
ü
ü
ü
ü
ü
Chair
ü
ü
(a) Not independent directors.
(b) All members of the audit committee are independent and financially literate within the meaning of National Instrument 52-110 Audit
Committees and the listing standards of the NYSE American LLC.
(c) Audit committee financial experts under U.S. regulatory requirements.
In addition to its standing committees, the board may establish ad hoc committees or special committees from
time to time. Two special committees of independent directors were active during 2022; one that was
established in September, 2021, and one that was established in September, 2022, both for the purposes of
considering certain matters. The special committees were chaired by D.W. Cornhill and consisted of the five
independent directors.
Number of meetings
The chart below shows the number of board and standing committee meetings held in 2022. This includes
seven regular meetings and one additional special meeting of the board. With restrictions related to COVID-19
easing throughout the year, the majority of the board meetings in 2022 returned to an in-person format. More
information on the board’s activities in relation to COVID-19 can be found in the Risk oversight section starting
on page 130.
Meetings of the board and standing committees in 2022:
Audit
committee
Executive
resources
committee
5
7
Board
8
Safety
and
sustainability
committee
4
123
Nominations
and
corporate
governance
committee
6
Community
collaboration
and
engagement
committee
1
Attendance of our board members in 2022
99% board and standing committee meeting attendance from all members.
The following chart provides a summary of the attendance record of each of the directors in 2022. The
attendance record of each director nominee is also set out in his or her biographical information on pages 112
through 116. The attendance chart also provides an overall view of the attendance per standing committee.
Senior management directors and other members of management periodically attend standing committee
meetings at the request of the committee chair.
Director
Board
Audit
committee
Executive
resources
committee
Safety
and
sustainability
committee
(a)
Nominations
and
corporate
governance
committee
Community
collaboration
and
engagement
committee
Annual
meeting
Total
Percentage
by director
D.W.
Cornhill
8
of 8
5
of 5
6
of 7
3
of 4
6
of 6
(chair)
1
of 1
1
of 1
30
of 32
94%
B.W.
Corson
8 of 8
(chair)
—
—
—
—
1 of 1
1 of 1
10
of 10
100%
M.R.
Crocker
8
of 8
—
7
of 7
4
of 4
6
of 6
1
of 1
1
of 1
27
of 27
100%
K.T.
Hoeg
8 of 8
5 of 5
(chair)
7 of 7
4 of 4
6 of 6
1 of 1
1 of 1
32
of 32
100%
M.C.
Hubbs
J.M.
Mintz
8
of 8
5
of 5
7
of 7
4
of 4
6
of 6
1
of 1
(chair)
1
of 1
32
of 32
100%
8 of 8
5 of 5
7 of 7
4 of 4
(chair)
6 of 6
1 of 1
1 of 1
32
of 32
100%
D.S.
Sutherland
8
of 8
5
of 5
7
of 7
(chair)
4
of 4
6
of 6
1
of 1
1
of 1
32
of 32
100%
Percentage
by committee
100%
100%
98%
96%
100%
100%
100%
195
of
197
Overall
attendance
99%
(a)
In 2023, the public policy and corporate responsibility committee was changed to the safety and sustainability committee.
124
Other public company directorships of our board members and nominees
No director or nominee serves on more than two boards of another reporting issuer.
The following table shows which directors and nominees serve on the boards of other reporting issuers and the
committee memberships in those companies.
Name of
director
nominee
or
Other
which
also
is
reporting
director
a director
issuers of
or nominee
Type
of company
Stock
symbol:
Exchange
Committee appointments
D.W. Cornhill
AltaGas Ltd.
Diversified
company
energy
ALA:TSX
No committees
B.W. Corson
—
M.R. Crocker
—
—
—
—
—
—
—
S.R. Driscoll
Empire
Company Limited
Food retailing
EMP.A:TSX
committee (chair),
Audit
and
Nominating
committee,
and
governance and
responsibility committee
governance
Corporate
social
J. Floren
West
Fraser
Timer
Co. Ltd
Basic
Materials-
Forest Products
WFG:TSX
Health,
committee
resources
committee,
and
safety
environment
and
(chair),
Human
and
and compensation
Governance
and
nominating committee
G.J. Goldberg
BHP
Group Limited
Materials-
industrial
Basic
Other
Metals and mining
BHP:ASX
Sustainability
and
Nominations
governance committee
committee
and
(chair)
K.T. Hoeg
New
Flyer
Industries Inc.
of
Manufacturer
heavy
buses
duty transit NFI:TSX
M.C. Hubbs
Nutrien Ltd.
Fertilizer
manufacturing
NTR:TSX,
NYSE
Audit committee
resources
Human
compensation
Safety
and
committee (chair)
and
committee
sustainability
and
J.M. Mintz
—
—
—
—
D.S.
Sutherland
GATX Corporation
United States
Steel Corporation
rail
Commercial
and
vehicles
aircraft
engines
shipping
GMT:NYSE
–
Compensation
(chair)
committee
Iron
and steel
X:NYSE
Chairman
of
the board
Interlocking directorships of our board members
As of the date of this proxy circular, there are no interlocking public company directorships among the directors
listed in this circular.
125
Director qualification and selection process
The nominations and corporate governance committee is responsible for identifying and recommending new
candidates for board nomination. The committee identifies candidates from a number of sources, including
executive search firms and referrals from existing directors. The process for selection is described in paragraph
10 (a) of the Board of Directors Charter found in Appendix A of this circular. The committee will consider
potential future candidates as required.
In considering the qualifications of potential nominees for election as directors, the nominations and corporate
governance committee considers the work experience and other areas of expertise of the potential nominees,
with the objective of providing for diversity among the nonemployee directors. The following key criteria are
considered to be relevant to the work of the board of directors and its committees:
Work experience
• Experience in leadership of businesses or other large organizations (Leadership of large organizations)
• Operations/technical experience (Operations / technical)
• Project management experience (Project management)
• Experience in working in a global work environment (Global experience)
• Experience in development of business strategy (Strategy development)
• Experience with environmental, health, community relations and/or safety policy, practices and
management (Environment and sustainability)
Other expertise
• Audit committee financial expert (also see the financial expert section in the audit committee table
starting on page 134)
• Expertise in financial matters (Financial expertise)
• Expertise in managing relations with government (Government relations)
• Expertise in information technology and cybersecurity oversight (Information technology / cybersecurity
oversight)
• Expertise in executive compensation policies and practices (Executive compensation)
• Expertise in oversight of risk management policies and practices (Risk management)
The nominations and corporate governance committee may consider the following additional factors in
assessing potential nominees:
•
•
•
possessing expertise in any of the following areas: law, science, marketing, administration, social/
political environment or community and civic affairs;
individual competencies in business and other areas of endeavour in contributing to the collective
experience of the directors; and
providing diversity of age, regional association, gender and other diversity elements (including
Aboriginal peoples, persons with disabilities and members of visible minorities).
The nominations and corporate governance committee assesses the work experience and other expertise each
existing director possesses and whether the candidate is able to fill any gaps in such experience, expertise and
diversity of age, regional association, gender and other diversity elements. More detailed information on
diversity of the board, including in connection with the director recruitment process in 2022, can be found at
page 148. Consideration is also given to whether candidates possess the ability to contribute to the broad range
of issues with which the board and its committees must deal, are able to devote the necessary amount of time
to prepare for and attend board and committee meetings and are free of any potential legal impediment or
conflict of interest.
Candidates are expected to remain qualified to serve for a minimum of five years and independent directors are
expected to achieve ownership of no less than 16,500 common shares, deferred share units and restricted
share units within five years of becoming an independent director.
When the committee is recommending candidates for re-nomination, it assesses such candidates against the
criteria for re-nomination as set out in paragraph 10 (b) of the Board of Directors Charter found in Appendix A of
this circular. Candidates for re-nomination are expected not to change their principal position, the thrust of their
involvement or their regional association in a way that would significantly detract from their value as a director of
the corporation. They are also expected to continue to be compatible with the criteria that led to their selection
as nominees. Under exceptional circumstances, the nominations and corporate governance committee, on the
126
request of the chairman, may continue to support the nomination of a director who has attained the mandatory
retirement age.
In anticipation of K.T. Hoeg, J.M. Mintz and D.S. Sutherland reaching mandatory retirement age, the board and
nominations and corporate governance committee began an extensive director recruitment process in 2021,
including engaging executive search firms to cultivate a diverse selection of potential nominees. The board
reviewed the recruitment process on a regular basis, including discussing numerous candidates, conducting
extensive interviews and ensuring that all board members had the opportunity to meet the candidates to ensure
a strong fit for the board. This process has resulted in three new nominees for the 2023 annual meeting, S.R.
Driscoll, J. Floren and G.J. Goldberg, to replace Ms. Hoeg, Mr. Mintz and Mr. Sutherland upon their retirement.
Ms. Driscoll brings extensive chief financial officer, chief executive officer and board experience through various
roles at Ritchie Bros. Auctioneers Incorporated, service as a director of Empire Company Limited and other
corporate experience. Mr. Floren is the former president and chief executive officer of Methanex Corporation,
with over 37 years experience in the chemicals industry and currently serving on the board of West Fraser
Timber Co. Mr. Goldberg has more than 35 years of global experience including substantial chief executive
officer experience in the mining industry, has served on various mining industry councils and organizations and
is currently a nonemployee director of BHP Group Limited. The board is pleased to welcome these highly
experienced and successful individuals as nominees, and looks forward to their leadership and oversight for the
company.
Director orientation, education and development
The company regularly provides in-depth presentations to the directors on relevant
and emerging issues and encourages continuing education opportunities.
The corporate secretary organizes an orientation program for all new directors. In a series of meetings over
several days, new directors are briefed by staff and functional managers on all significant areas of the
company’s operations, industry specific topics, risk oversight and regulatory issues. New directors are also
briefed on significant company policies, organizational structure, security, information technology management
and on critical planning and reserves processes. They also receive key governance and disclosure documents
and a comprehensive board manual which contains a record of historical information about the company, by-
laws, company policies, the charters of the board and its committees, other relevant company business
information, information on directors’ duties and additional board related activities and calendars. With S.R.
Driscoll, J. Floren and G.J. Goldberg being nominated for election for the first time this year, the corporate
secretary plans to commence an extensive orientation program shortly after their election to the board.
Continuing education is provided to board and committee members through regular presentations by
management, which focus on providing more in-depth information about key aspects of the business. Subject to
exceptional circumstances, each year the board has an extended meeting that focuses on a particular area of
the company’s operations and includes a visit to one or more of the company’s operating sites or a site of
relevance. These site visits help directors better understand the strengths and business opportunities unique to
various operations and markets across the country, and enhance the board’s perspective of the integrated
nature of the company’s business. In September 2022, the board visited the Sarnia refinery, chemical plant and
research centre for a tour of the facilities and presentations specific to the operations and research at Sarnia.
Throughout 2022, the board and its committees received regular presentations and updates that focused on
performance, strategy and opportunities for the business. Some of these presentations included ongoing
reviews of upstream and downstream performance, plans and strategies, internal audit reviews, a pension
management review, a review of harassment in workplace policy stewardship, community engagement strategy,
litigation reviews, conflict of interest and ethics reviews and a competition and anti-corruption review.
Recognizing the importance of cybersecurity oversight for the company, the board was also provided an
information technology and cybersecurity update including strategic cybersecurity priorities, key security
initiatives and mitigation efforts and system improvements throughout the year. The board continued to engage
with management on pandemic specific topics throughout 2022, such as response and mitigation plans and
actions, health and safety initiatives, strategic business actions and the company’s response to the gradual
lessening of restrictions across Canada over the year.
127
With strong market conditions and business performance throughout the year, the board focused on strategic
direction, operational priorities, capital allocation and prioritizing shareholder returns. This included reviews and
approval of the acceleration of the company's normal course issuer bid and the completion of two substantial
issuer bids during the year, as well as the sale of the company’s interests in XTO Energy Canada with proceeds
used to reduce the company’s outstanding debt.
The board also reviewed and discussed the company’s various environmental, social and governance initiatives
throughout the year, including the publication of the company’s advancing climate solutions and sustainability
reports. There was a continued focus by the board on the company’s progress with emissions reduction
initiatives, including the company’s founding membership in the Oil Sands Pathways to Net Zero initiative and
setting and tracking emissions reduction goals. The board also undertook reviews of disclosure and emissions
performance, safety performance and Canada climate policy updates. More information on the board’s role in
relation to the environment can be found in the Risk oversight section starting on page 130.
Members of ExxonMobil’s management also provide reviews of various aspects of ExxonMobil’s global
business. In 2022, the directors received a presentation on ExxonMobil’s cybersecurity update, as well as an
overview of ExxonMobil’s corporate strategy and the ExxonMobil Outlook for Energy.
Members of the board receive an extensive package of materials prior to each board meeting that provides a
comprehensive summary on each agenda item to be discussed. Similarly, the committee members also receive
a comprehensive summary on each agenda item to be discussed by that particular committee. Informational
communications and other written publications or reports of interest to the directors are also forwarded routinely.
The board members are canvassed as to whether there are any additional topics relevant to the board or to a
specific committee that they would like to see addressed, and management schedules presentations covering
these areas. In addition, at every meeting the board receives an extensive update from the chairman, president
and chief executive officer on business environment trends, relevant geopolitical activities, federal government
priorities, key provincial issues and competitor activities, as appropriate. Directors are encouraged to participate
in other continuing education programs and events to ensure their skills and knowledge remain current.
Board performance assessment
The board and its committees, as well as the performance of the directors, are assessed on an annual basis.
For 2022, the directors engaged in a performance assessment with the chairman, president and chief executive
officer, which includes discussion and evaluation of the board and each committee’s effectiveness in various
areas. The chairman, president and chief executive officer also meets regularly with directors individually to
discuss any outstanding issues. The nominations and corporate governance committee discuss a summary of
these assessment outcomes in the first quarter of each year.
Board and committee structure
Leadership structure
The company has chosen to combine the positions of chairman, president and chief executive officer. The
board believes the interests of all shareholders are best served at the present time through a leadership model
with a combined chairman and chief executive officer position. Through more than 39 years of experience with
ExxonMobil and Imperial, the current chief executive officer possesses an in-depth knowledge of the evolving
energy industry supply and demand fundamentals and the array of challenges to be faced by the company. The
board believes that the extensive experience and other insights put the chief executive officer in the best
position to provide broad leadership for the board as it considers strategy and exercises its fiduciary
responsibilities. Further, the board has demonstrated its commitment and ability to provide independent
oversight of management.
The company does not have a lead director. While the chairman of the board is not an independent director,
K.T. Hoeg, chair of the executive sessions of the board, provides leadership for the independent directors. The
duties of the chair of the executive sessions include presiding at executive sessions, reviewing and modifying, if
necessary, the agenda of the meetings of the board in advance to ensure that the board may successfully carry
out its duties, and acting as a liaison with the chairman of the board, including the provision of feedback, as
appropriate, from the executive sessions. The position description of the chair of the executive sessions, as well
as the purpose of those executive sessions, are fully described in paragraphs 9 (c) and (d) of the Board of
Directors Charter attached as Appendix A.
128
Independent director executive sessions
The executive sessions of the board are in camera meetings of the independent directors and are held in
conjunction with every board meeting. These meetings are held in the absence of management. The
independent directors held eight executive sessions in 2022. The purposes of the executive sessions of the
board include the following:
•
•
•
•
•
raising substantive issues that are more appropriately discussed in the absence of management;
discussing the need to communicate to the chairman of the board any matter of concern raised by any
committee or director;
addressing issues raised but not resolved at meetings of the board and assessing any follow-up needs
with the chairman of the board;
discussing the quality, quantity, and timeliness of the flow of information from management that is
necessary for the independent directors to effectively and responsibly perform their duties, and advising
the chairman of the board of any changes required; and
seeking feedback about board processes.
In camera sessions of the board committees
Various committees also regularly hold in camera sessions without management present. The audit committee
regularly holds private sessions of the committee members as well as private meetings of the committee with
each of the external auditor, the internal auditor and senior management as part of every regularly scheduled
committee meeting.
Committee structure
The board has created five standing committees to help carry out its duties. Each committee is chaired by a
different independent director and all of the independent directors are members of each committee. M.R.
Crocker is also a member of each committee, with the exception of the audit committee, which is composed
entirely of independent directors. B.W. Corson is also a member of the community collaboration and
engagement committee. In 2023, the name of the public policy and corporate responsibility committee was
changed to the safety and sustainability committee.
Board committees work on key issues in greater detail than would be possible at full board meetings, allowing
directors to more effectively discharge their stewardship responsibilities. The independent chairs of the five
committees are able to take a leadership role in executing the board’s responsibility with respect to a specific
area of the company’s operations falling within the responsibility of the committee he or she chairs. The board
and each committee have a written charter that can be found in Appendix A of this circular. The charters set out
the purpose, structure, position description for the chair, and the responsibility and authority of that committee,
and are reviewed and approved by the board annually.
In addition to its standing committees, the board may establish ad hoc committees or special committees from
time to time.
129
Risk oversight
The company is governed by a comprehensive and well-established risk management system, and the
company’s success in managing risk over time has been achieved through emphasis on execution of this
disciplined management framework.
The company’s risk management system includes a process for identifying, prioritizing, measuring, and
managing the principal risks across the company, as well as assessing the company’s response to these risks.
The system is implemented at multiple levels of the business through various policies, guidelines, processes
and systems, including:
•
•
•
•
•
•
•
•
•
•
•
energy outlook scenarios;
strategic planning;
risk management guidelines;
code of ethics and standards of business conduct;
delegation of authority guidelines;
credit risk assessment guidelines;
controls and operations integrity management systems;
capital project management systems;
IT risk management (including information technology, systems and cybersecurity);
guidelines for the management and protection of information; and
business continuity plans.
For a discussion on the company’s risk management in relation to executive compensation, see the
Compensation discussion and analysis section starting on page 156.
130
The chairman, president and chief executive officer is charged with identifying the company’s principal risks and
ensuring appropriate systems are in place to manage these risks. The board of directors is responsible for
reviewing the principal risks and overseeing the implementation of the risk management system, with the
various committees assisting in risk oversight for issues that fall under their responsibility. This integrated risk
management approach facilitates recognition and oversight of risk. For example, the audit committee oversees
the company’s system of internal accounting and financial controls, and the executive resources committee
oversees the compensation programs and practices in relation to risk management.
The safety and sustainability committee oversees the policies and practices that manage environment, health,
safety and security risk. This includes reviews of compliance with legislation and the assessment of public policy
impacts on corporate performance, health and safety systems and performance, and the risks, actions and
disclosure associated with climate change and the energy transition. As part of this assessment, the committee
reviews the company’s commitments to environmental sustainability priorities such as progressive reclamation,
decommissioning and remediation, water conservation and use, air quality improvement, waste management
and land use and biodiversity. Additionally, the committee and board provides oversight over the company's
emission reduction goals, including the company's announcement in 2022 to reduce greenhouse gas emissions
intensity (Scope 1, 2) for its operated oil sands facilities by 30 percent by 2030 relative to 2016 levels. As part of
the company’s efforts to provide solutions that lower the greenhouse gas emissions intensity of its operations
and to provide lower life-cycle emission products to its customers, Imperial has also implemented a company-
wide goal to achieve net-zero emissions (Scope 1, 2) by 2050 in its operated assets through collaboration with
government and other industry partners. The board of directors evaluates climate change risk in the context of
overall enterprise risk, including other operational, strategic, and financial risks. Imperial's board is actively
engaged and committed to overseeing the company's efforts as it pursues a strategy that is resilient to a wide
range of potential pathways for society’s energy transition while continuing to grow shareholder value.
The COVID-19 pandemic and market conditions within the energy industry starting in 2020 has placed a
significant emphasis on the board’s role in risk oversight. Throughout 2022, the board remained fully engaged
on the company’s business and emergency response plans, health and safety protocols, market conditions and
the company’s response to the gradual lessening of restrictions across Canada over the year.
131
The board and its committees carry out their risk oversight responsibility through regular reviews and
assessments. Topic-specific assessments, such as for compliance programs, controls, stewardship of business
performance, regulatory changes, the company’s energy outlook, and climate risk and sustainability are
conducted regularly and as necessary. The board carefully considers various factors and risks in connection
with specific proposals for capital expenditures, budget additions and strategic initiatives, as well as in
evaluating strategic plans. Members of the board ask questions of management to ensure risks are identified,
assessed, mitigated, and monitored. Each typical year, the board also visits one or more of the company’s
operating sites or locations of importance for the company to better understand issues associated with the
company’s business.
In the annual planning process, consideration is given to a diverse set of risks and other factors that may
influence future energy supply and demand trends, including technological advancements, regulation and
government policies, climate change, greenhouse gas restrictions, and other general economic conditions. It
also takes into account emerging industry and economic conditions and market and government policy
uncertainties in developing its strategic plans and longer-term price views. Further, the board is responsible for
ensuring the company’s strategic planning process is effective, and in doing so regularly reviews the process,
key issues and various alternatives for future strategy development to inform updates. Business plans and
strategies are reviewed on an annual basis and approved by the board.
The tables on the following pages provides additional oversight and other information about the board and its
five standing committees:
132
Board of directors
The board of directors is responsible for the stewardship of the corporation. The stewardship process is carried out by the
board directly or through one or more of the committees of the board. The formal mandate of the board can be found within
the Board of Directors Charter in Appendix A of this circular. The board is satisfied that its activities over the year have
fulfilled its mandate.
Directors
Number of
meetings
Board
highlights in
2022
Role in risk
oversight
● B.W. Corson (chair)
● D.W. Cornhill
● M.R. Crocker
● K.T. Hoeg
● M.C. Hubbs
● J.M. Mintz
● D.S. Sutherland
Eight meetings of the board of directors were held in 2022, which included one special meeting
of the board. The independent directors hold executive sessions of the board in conjunction with
every board meeting. These meetings are held in the absence of management. The independent
directors held eight executive sessions in 2022.
● Regularly discussed industry activity, market updates and company initiatives.
● Regularly discussed operational and project updates.
● Regularly discussed risk management and business controls environment.
● Regularly reviewed information technology, systems and cybersecurity strategies (including
trends, risks, preparedness, mitigation, response, system improvements and business
continuity strategies) to assess the security and integrity of the company’s information,
systems and assets.
● Discussed comprehensive company strategy for all business lines, including a focus on
●
capital allocation and discipline.
Implemented various mechanisms for enhancing shareholder returns, such as increasing the
dividend, renewing and accelerating the company’s normal course issuer bid program, and
two substantial issuer bids.
● Provided oversight in support of safety, environmental performance and sustainability.
● Regularly discussed climate change policies, risks, opportunities and the company’s climate
strategy, including the company’s founding partnership in the Oil Sands Pathways to Net
Zero initiative.
● Reviewed various stages of key projects such as Strathcona’s renewable diesel, Kearl in-pit
tailings, Kearl autonomous haul vehicles and Cold Lake Grand Rapids Phase 1.
● Approved the sale of the company's interest in XTO Energy Canada.
● Conducted site visit to Sarnia including refinery, chemical plant and research centre.
The company’s financial, execution and operational risk rests with management and the
company is governed by well-established risk management systems. The board of directors are
responsible for reviewing the company’s principal risks and overseeing the implementation of the
appropriate systems to manage these risks. The board carefully considers these risks in
evaluating the company’s strategic plans and specific proposals for capital expenditures and
budget additions. It also approves and monitors compliance with the code of ethics and business
conduct, and ensures that executive officers create a culture of integrity throughout the company.
The board reviews the company’s information technology, systems and cybersecurity to ensure
they adequately protect corporate information and assets. In 2022, the board’s role in risk
oversight included the company’s continued response to the COVID-19 pandemic and adaptation
to the gradual lessening of restrictions across Canada over the year.
Disclosure
policy
The company is committed to full, true and plain public disclosure of all material information in a
timely manner, in order to keep security holders and the investing public informed about the
company’s operations. The full details of the corporate disclosure policy can be found on the
company’s internet site at www.imperialoil.ca.
Independence
The current board of directors is composed of seven directors, the majority of whom (five of
seven) are independent. The five independent directors are not employees of the company.
133
Audit committee
The role of the audit committee includes selecting and overseeing the independent auditor, reviewing the scope and results
of the audit conducted by the independent auditor, and assisting the board in overseeing the integrity of the company’s
financial statements. In addition, the committee’s role includes overseeing the company’s compliance with legal and
regulatory requirements and the quality and effectiveness of internal controls, approving any changes in accounting
principles and practices, and reviewing the results of monitoring activity under the company’s business ethics compliance
program. The formal mandate of the committee can be found within the Audit Committee Charter in Appendix A of this
circular. The committee is satisfied that its activities over the year have fulfilled its mandate.
Committee
members
Number of
meetings
Committee
highlights in
2022
● K.T. Hoeg (chair)
● M.C. Hubbs (vice-chair)
● D.W. Cornhill
● J.M. Mintz
● D.S. Sutherland
Five meetings of the audit committee were held in 2022. The committee members met in camera
without management present and separately with the internal auditor and the external auditor at
all regularly scheduled meetings. A pre-audit meeting also occurs prior to every regularly
scheduled audit committee meeting with the chair of the audit committee and the chief financial
officer and both the internal and external auditors.
● Reviewed and recommended for approval the interim and full year financial and operating
results.
● Reviewed and assessed the company’s system of internal controls and auditing procedures,
and the results of the internal auditor’s audit program.
● Reviewed and assessed the external auditor plan, performance and fees.
● Reviewed evolving regulations and reporting obligations.
● Reviewed the committee’s mandate and completed the committee self-assessment.
● Performed external auditor performance evaluation.
● Ensured the effectiveness of controls and procedures and integrity of financial statements
was maintained.
Financial expertise
The company’s board of directors has determined that D.W. Cornhill, K.T. Hoeg, M.C. Hubbs and
D.S. Sutherland meet the definition of “audit committee financial expert”. The U.S. Securities and
Exchange Commission has indicated that the designation of an audit committee financial expert
does not make that person an expert for any purpose, or impose any duties, obligations or
liability on that person that are greater than those imposed on members of the audit committee
and board of directors in the absence of such designation or identification. All members of the
audit committee are financially literate within the meaning of National Instrument 52-110 Audit
Committees and the listing standards of the NYSE American LLC.
Role in risk
oversight
The audit committee also has an important role in risk oversight. The audit committee oversees
risks associated with financial and accounting matters, including compliance with legal and
regulatory requirements, and the company’s financial reporting and internal controls systems. In
addition, it reviews the scope of PricewaterhouseCoopers’ audit in light of risks associated with
the energy industry, the regulatory environment and company-specific financial audit risks. The
committee also reviews financial statements and internal and external audit results, and any
changes proposed to accounting principles and practices.
Independence
The audit committee is composed entirely of independent directors. All members met board
approved independence standards, as that term is defined in National Instrument 52-110 Audit
Committees, the U.S. Securities and Exchange Commission rules and the listing standards of
the NYSE American LLC.
134
Executive resources committee
The executive resources committee is responsible for corporate policy on compensation and for specific decisions on the
compensation of the chief executive officer and key senior executives and officers reporting directly to that position. In
addition to compensation matters, the committee is also responsible for succession plans and appointments to senior
executive and officer positions, including the chief executive officer. The formal mandate of the committee can be found
within the Executive Resources Committee Charter in Appendix A of this circular. The committee is satisfied that its activities
over the year have fulfilled its mandate.
Committee
members
Number of
meetings
Committee
highlights in
2022
● D.S. Sutherland (chair)
● D.W. Cornhill (vice-chair)
● M.R. Crocker
● K.T. Hoeg
● M.C. Hubbs
● J.M. Mintz
None of the members of the executive resources committee currently serves as a chief executive
officer of another company.
Seven meetings of the executive resources committee were held in 2022.
● Reviewed performance and approved compensation for CEO and other executive officers
● Approved overall compensation budget and incentive program for the company
● Approved changes to non-executive restricted stock unit program
● Reviewed a number of workforce and organizational changes
● Continued focus on succession planning for senior management positions.
Committee
members
relevant skills
and experience
D.W. Cornhill, K.T. Hoeg, M.C. Hubbs and D.S. Sutherland had extensive and lengthy
experience in managing and implementing their respective companies’ compensation policies
and practices in their past role as chief executive officers or members of senior management. Mr.
Cornhill, Ms. Hoeg, Dr. Mintz and Mr. Sutherland serve or have served on compensation
committees of one or more public companies. Accordingly, committee members are able to use
this experience and knowledge derived from their roles with other companies in judging the
suitability of the company’s compensation policies and practices.
Role in risk
oversight
The executive resources committee oversees the compensation programs and practices that are
designed to encourage appropriate risk assessment and risk management.
Independence
The members of the executive resources committee are independent, with the exception of M.R.
Crocker, who is not considered to be independent under the rules of the U.S. Securities and
Exchange Commission, Canadian securities rules and the rules of the NYSE American LLC due
to his employment with Exxon Mobil Corporation. However, the Canadian Coalition for Good
Governance’s policy, “Governance Differences of Equity Controlled Corporations”, views Mr.
Crocker as a related director and independent of management and who may participate as a
member of the company’s executive resources committee. Mr. Crocker’s participation helps to
ensure an objective process for determining compensation of the company’s officers and
directors and assists the deliberations of this committee by bringing the views and perspectives
of the majority shareholder.
135
Safety and sustainability committee
The role of the safety and sustainability committee is to review and monitor the company’s policies and practices in matters
of the environment, health, safety, security and sustainability. The committee monitors the company’s compliance with
legislative, regulatory and corporate standards in these areas, and reviews trends and current and emerging public policy. It
also assesses the potential impacts of public policy on corporate performance.
The committee reviews safety and environmental performance, incidents and trends on a regular basis to ensure the
company’s focus on the safety of its employees, contractors and stakeholders and on operating in an environmentally
responsible manner. It also provides oversight over sustainability and climate risk, including regular reviews and assessment
of sustainability performance and initiatives, as well as climate risk within the company’s risk management system and the
strategies to address these risks. The formal mandate of the committee can be found within the Safety and Sustainability
Committee Charter in Appendix A of this circular. The committee is satisfied that its activities over the year have fulfilled its
mandate.
Committee
members
Number of
meetings
Committee
highlights in
2022
Role in risk
oversight
● J.M. Mintz (chair)
● D.S. Sutherland (vice-chair)
● D.W. Cornhill
● M.R. Crocker
● K.T. Hoeg
● M.C. Hubbs
Four meetings of the safety and sustainability committee were held in 2022.
● Personnel and process safety systems, performance and incident review.
● Environmental performance review (greenhouse gas, other air emissions, water
consumption).
● Updates on Canadian policy, regulatory change, potential impacts and Imperial’s advocacy
strategies (air quality, plastics, UN Declaration on the Rights of Indigenous Peoples).
● Review of climate change policies, risks, potential impacts and Imperial’s advocacy and
climate strategies.
● Review of Imperial’s Advancing Climate Solutions and Sustainability Reports and related
environmental, social and corporate governance disclosures and Imperial’s disclosure
strategy and plans.
The safety and sustainability committee reviews and monitors the company’s policies and
practices in matters of environment, health, personnel and process safety and security, which
policies and practices are intended to mitigate and manage risk in these areas. This includes
specific reviews with respect to climate risk and the company’s strategies to address these
risks. It also includes pandemic and emergency response and continuity planning, which is a
significant focus of reviews and discussions in relation to the COVID-19 pandemic. The
committee receives regular reports from management on these matters.
Independence
The members of the safety and sustainability committee are independent, with the exception of
M.R. Crocker.
136
Nominations and corporate governance committee
The role of the nominations and corporate governance committee is to oversee issues of corporate governance as they
apply to the company, including the overall performance of the board, review potential nominees for directorship and review
the charters of the board and any of its committees. The formal mandate of the committee can be found within the
Nominations and Corporate Governance Committee Charter in Appendix A of this circular. The committee is satisfied that its
activities over the year have fulfilled its mandate.
Committee
members
Number of
meetings
Committee
highlights in
2022
● D.W. Cornhill (chair)
● J.M. Mintz (vice-chair)
● M.R. Crocker
● K.T. Hoeg
● M.C. Hubbs
● D.S. Sutherland
Six meetings of the nominations and corporate governance committee were held in 2022.
● Approval of the statement of corporate governance practices.
● Engagement in board and committee self-assessment.
● Recommendation of director compensation and increase to share ownership
requirements.
● Continued oversight of director recruitment process.
● Recommendation for special committees to consider certain matters.
Role in risk
oversight
The nominations and corporate governance committee oversees risk by implementing an
effective program for corporate governance, including board composition and succession
planning.
Independence
The members of the nominations and corporate governance committee are independent, with
the exception of M.R. Crocker, who is not considered to be independent under the rules of the
U.S. Securities and Exchange Commission, Canadian securities rules and the rules of the
NYSE American LLC due to his employment with Exxon Mobil Corporation. However, the
Canadian Coalition for Good Governance’s policy, “Governance Differences of Equity
Controlled Corporations”, views Mr. Crocker as a related director and independent of
management and who may participate as a member of the company’s nominations and
corporate governance committee. Mr. Crocker’s participation helps to ensure an objective
nominations process and assists the deliberations of this committee by bringing the views and
perspectives of the majority shareholder.
137
Community collaboration and engagement committee
The role of the community collaboration and engagement committee is to oversee all of the company’s community
investment activities, including charitable donations. The formal mandate of the committee can be found within the
Community Collaboration and Engagement Committee Charter in Appendix A of this circular. The committee is satisfied that
its activities over the year have fulfilled its mandate.
Committee
members
Number of
meetings
Committee
highlights in
2022
● M.C. Hubbs (chair)
● K.T. Hoeg (vice-chair)
● D.W. Cornhill
● B.W. Corson
● M.R. Crocker
● J.M. Mintz
● D.S. Sutherland
One meeting of the community collaboration and engagement committee was held in 2022.
●
●
●
●
Imperial invested more than $17M in Canadian communities in 2021 as reported using the
London Benchmark Group model – a global standard for measuring and reporting community
investment.
In 2022, Imperial paid more than $18M through community benefit agreements to Indigenous
communities.
Imperial surpassed $4 billion in spending with Indigenous business since 2008 and achieved
its highest annual Indigenous business spent in 2022.
In response to growing stakeholder expectations to demonstrate ESG in action and related
reporting standards, we further focused our social investment strategy and relationships to
align with our sustainability pillars: climate, Reconciliation, inclusion and diversity, mental
health and land conservation and water protection.
● Contributed $150K over three years to Quest Canada to support net-zero pathways
for Indigenous communities in our operating areas.
● Donated $300,000 to KidSport to improve access to sport and drive positive mental
health as part of our Fuel What Matters 3.0 campaign.
● Planted more than 25,000 trees in urban areas of Southern Ontario.
● Grew employee giving and volunteer matching ImpACT program – more than
$550,000 given to nearly 850 charities and non-profits across Canada in 2022.
● Raised nearly $2.7M in United Way campaign from employee/annuitant and corporate
donations.
Independence
The majority of the members of the community collaboration and engagement committee are
independent (five out of seven) with the exception of B.W. Corson and M.R. Crocker.
138
Director compensation
Director compensation discussion and analysis
Directors’ compensation is intended to align the long-term
financial interests of the directors with those of the shareholders.
Nonemployee director compensation levels are reviewed by the nominations and corporate governance
committee each year, and resulting recommendations are presented to the full board for approval. The
committee relied on an internally-led assessment to provide competitive compensation and market data for
directors’ compensation, which assisted the committee in making a compensation recommendation for the
company’s directors. The internally-led assessment included a review of industry survey data, with this data
being provided by an independent external consultant. The internal assessment maintained the compensation
design philosophy, objectives and principles, and was consistent with previous methodology used in this
analysis.
Employees of the company or Exxon Mobil Corporation receive no extra pay for serving as directors.
Nonemployee directors receive compensation consisting of cash and restricted stock units. Since 1999, the
nonemployee directors have been able to receive all or part of their cash directors’ fees in the form of deferred
share units. The purpose of the deferred share unit plan for nonemployee directors is to provide them with
additional motivation to promote sustained improvement in the company’s business performance and
shareholder value by allowing them to have all or part of their directors’ fees tied to the future growth in value of
the company’s common shares. The deferred share unit plan is described in more detail on page 141.
139
Compensation decision making process and considerations
The nominations and corporate governance committee relies on market comparisons with a group of major
Canadian companies with national and international scope and complexity. The company draws its
nonemployee directors from a wide variety of industrial sectors and, as such, a broad sample is appropriate for
this purpose. The nominations and corporate governance committee does not target any specific percentile
among comparator companies at which to align compensation for this group.
The comparator companies included in the benchmark sample are as follows:
Energy
Non-energy
Canadian
Natural
Resources Limited
Air
Canada
Cenovus
Energy
Inc.
Enbridge
Inc.
Ovintiv
Inc.
Bank
of
Nova
Scotia
BCE Inc.
Canadian
National
Railway Company
Parkland
Fuel
Corporation
Nutrien Ltd.
Suncor
Energy
Inc.
TC
Energy
Corporation
Royal
Bank
of Canada
Sun
Life
Financial Inc.
Teck
Resources
Limited
TELUS
Corporation
Thomson
Reuters
Corporation
The
Toronto-Dominion
Bank
Hedging policy
Company policy prohibits all employees, including executives, and directors, from being a party to derivative or
similar financial instruments, including puts, calls, or other options, future or forward contracts, or equity swaps
or collars, with respect to the company or Exxon Mobil Corporation stock.
For a discussion on the process by which the compensation of the company’s executive officers is determined,
see the Compensation discussion and analysis section starting on page 156.
Compensation details
Board retainer
The compensation of the nonemployee directors is assessed annually, and currently consists of a cash retainer
for board membership and a grant of restricted stock units.
In 2021, the nominations and corporate governance committee reviewed and recommended a change to the
annual grant of restricted stock units, increasing the grant from 3,000 to 3,300, with the annual retainer for
board membership remaining at $110,000 per year. The board subsequently approved this recommendation.
During 2022, the committee recommended and the board approved no changes to nonemployee director
compensation.
140
The following table summarizes the compensation terms for the nonemployee directors in 2022:
Annual
retainer
terms: (a)
Cash retainer:
Board membership
Committee chair
Equity
based compensation:
Restricted
stock units
Director compensation
$110,000 annually
None
3,300 units
(50%
of
vests
the grant)
on
each
of
the 5th
and
10th
anniversary
dates
(a) The nonemployee directors may elect to take all or a portion of the cash retainer in the form of deferred share units. Nonemployee
directors who are appointed to the board during any given year receive the full restricted stock unit grant and a prorated cash
retainer based on the date of appointment.
In addition to compensation for board membership, the board determines the compensation for special
committee membership when the committee is established. For the special committee established in
September, 2021, the board approved a 2022 cash retainer of $15,000 for the chair and $10,000 for members.
There was no cash retainer in connection with the special committee established in September, 2022.
Equity based compensation
Deferred share units
In 1999, an additional form of long-term incentive compensation (“deferred share units”) was made available to
nonemployee directors. Nonemployee directors may elect to receive all or a portion of their cash compensation
in the form of deferred share units.
The following table shows the portion of the retainer each nonemployee director elected to receive in cash and
deferred share units in 2022.
Director
D.W. Cornhill
K.T. Hoeg
M.C. Hubbs
J.M. Mintz
D.S. Sutherland
Election
for
director’s fees
2022
in cash
(%)
0
0
0
50
0
Election
2022
for
deferred
director’s
share units
(%)
fees in
100
100
100
50
100
The number of deferred share units granted to a nonemployee director is determined at the end of each
calendar quarter for that year, according to the following calculation:
(i)
the dollar amount of the nonemployee director’s fees for that calendar quarter that the director elected
to receive as deferred share units;
divided by
(ii) the average of the closing price of the company’s shares on the Toronto Stock Exchange for the five
consecutive trading days (“average closing price”) immediately prior to the last day of that calendar
quarter.
Those deferred share units are granted effective the last day of that calendar quarter.
141
A nonemployee director is also granted additional deferred share units to represent dividends on unexercised
deferred share units. These additional units are granted on the dividend payment dates for the company’s
common shares, according to the following calculation:
(i)
the cash dividend payable for a common share of the company divided by the average closing price
immediately prior to the payment date for that dividend;
(ii) the number of unexercised deferred share units held by the nonemployee directors on the dividend
multiplied by
record date.
A nonemployee director may only exercise deferred share units by the end of the calendar year following the
year of termination of service as a director of the company, including termination of service due to death. No
deferred share units may be exercised unless all of the deferred share units are exercised on the same date.
On the exercise date, the cash value to be received for the units is determined based on the company’s
average closing price immediately prior to the date of exercise.
Restricted stock units
In addition to the cash fees described above, the company pays a significant portion of director compensation in
restricted stock units to align director compensation with the long-term interests of shareholders. The restricted
stock unit plan is described in more detail beginning on page 163.
The number of restricted stock units granted annually was increased in 2016 from 2,000 units to 2,600 units, in
2018 to 3,000 units, and in 2021 to 3,300 units. Up until 2015, the vesting period for restricted stock units was
50 percent vesting on the third anniversary of the grant date (received in cash) and the remaining 50 percent
vesting on the seventh anniversary of the grant date (with an option to receive in cash or common shares). In
2016, in order to better align the long-term financial interests of the directors with those of the shareholders, the
vesting period was increased such that 50 percent vests on the fifth anniversary of the grant date and the
remaining 50 percent vests on the tenth anniversary of the grant date. For all the units to be vested, directors
may elect to receive one common share for each unit or a cash payment for the units. The vesting periods are
not accelerated upon separation or retirement from the board, except in the event of death.
In contrast to the forfeiture provisions for restricted stock units held by employees of the company, the restricted
stock units awarded to nonemployee directors are not subject to risk of forfeiture at the time a director leaves
the company’s board. This provision is designed to reinforce the independence of these board members.
However, while on the board and for a 24-month period after leaving the company’s board, restricted stock units
may be forfeited if the nonemployee director engages in direct competition with the company or otherwise
engages in any activity detrimental to the company. The board agreed that the word “detrimental” shall not
include any actions taken by a nonemployee director or former nonemployee director who acted in good faith
and in the best interest of the company.
Prior to vesting of the restricted stock units, the nonemployee directors receive amounts equivalent to the cash
dividends paid to holders of common shares. The amount is determined for each cash dividend payment date
by the following calculation:
(i)
the cash dividend payable for a common share divided by the average closing price immediately prior to
the payment date for that dividend;
(ii) the number of unvested restricted stock units held by the nonemployee directors on the dividend record
multiplied by
date.
Other reimbursement
Nonemployee directors are also reimbursed for travel and other expenses incurred for attendance at board and
committee meetings.
142
Components of director compensation
The following table sets out the details of compensation paid to the nonemployee directors in 2022.
Director
(a)
Annual
retainer for
board
membership
and special
committee
($)
(b)
Restricted
stock
units
(RSU)
(#)
Total
fees
paid in
cash
($)
(c)
Total value
of deferred
share units
(DSU)
($)
(d)
Total value
of
restricted
stock units
(RSU)
($)
(e)
All other
compen-
sation
($)
(f)
Total
compensation
($)
D.W. Cornhill
125,000
3,300
—
125,000
239,646
35,844
400,490
K.T. Hoeg
120,000
3,300
—
120,000
239,646
98,580
458,226
M.C. Hubbs
120,000
3,300
—
120,000
239,646
37,448
397,094
J.M. Mintz
120,000
3,300
55,000
65,000
239,646
91,213
450,859
D.S. Sutherland
120,000
3,300
—
120,000
239,646
87,492
447,138
(a) As directors employed by the company or Exxon Mobil Corporation in 2022, B.W. Corson and M.R. Crocker did not receive
compensation for acting as directors.
(b) D.W. Cornhill was chair of the special committees.
(c)
(d)
“Total fees paid in cash” is the portion of the “Annual retainer for board membership and special committee” that the director elected
to receive as cash. This amount is reported as “Fees earned” in the Director compensation table on page 144.
“Total value of deferred share units” is the portion of the “Annual retainer for board membership and special committee” that the
director elected to receive as deferred share units, as set out in the previous table on page 141. This amount plus the “Total value of
restricted stock units” amount is shown as “Share-based awards” in the Director compensation table on page 144.
(e) The values of the restricted stock units shown are the number of units multiplied by the closing price of the company’s shares on the
date of grant, December 5, 2022 ($72.62).
(f) Amounts under “All other compensation” consist of dividend equivalent payments on unvested restricted stock units and the value of
additional deferred share units granted in lieu of dividends on unvested deferred share units. In 2022, D.W. Cornhill received
$18,330 in dividend equivalent payments on restricted stock units and additional deferred share units valued at $17,514 in lieu of
dividends on deferred share units. K.T. Hoeg received $21,918 in dividend equivalent payments on restricted stock units and
additional deferred share units valued at $76,662 in lieu of dividends on deferred share units. M.C. Hubbs received $14,976 in
dividend equivalent payments on restricted stock units and additional deferred share units valued at $22,472 in lieu of dividends on
deferred share units. J.M. Mintz received $21,918 in dividend equivalent payments on restricted stock units and additional deferred
share units valued at $69,295 in lieu of dividends on deferred share units. D.S. Sutherland received $21,918 in dividend equivalent
payments on restricted stock units and additional deferred share units valued at $65,574 in lieu of dividends on deferred share units.
143
Director compensation table
The following table summarizes the compensation paid, payable, awarded or granted for 2022 to each of the
nonemployee directors of the company.
Name
(a)
Fees
earned
($)(b)
Share-
based
awards
($) (c)
Option-
based
awards
($)
Non-equity
incentive plan
compensation
($)
Pension
value
($)
All other
compensation
($) (d)
Total
($)
D.W. Cornhill
—
364,646
—
K.T. Hoeg
—
359,646
—
M.C. Hubbs
—
359,646
—
J.M. Mintz
55,000
304,646
—
D.S. Sutherland
—
359,646
—
—
—
—
—
—
—
35,844
400,490
—
98,580
458,226
—
37,448
397,094
—
91,213
450,859
—
87,492
447,138
(a) As directors employed by the company or Exxon Mobil Corporation in 2022, B.W. Corson and M.R. Crocker did not receive
compensation for acting as directors.
(b) Represents all fees awarded, earned, paid or payable in cash for services as a director. The nonemployee directors are able to
receive all or part of their directors’ fees in the form of deferred share units.
(c) Represents the value of the restricted stock units (calculated by multiplying the number of units by the closing price of the company’s
shares on the date of grant), plus the value of deferred share units (calculated by the portion of the “Annual retainer for board
membership and special committee” that the director elected to receive as deferred share units as noted on page 141).
(d) Amounts under “All other compensation” consist of dividend equivalent payments on unvested restricted stock units and the value of
additional deferred share units granted in lieu of dividends on unvested deferred share units. In 2022, D.W. Cornhill received
$18,330 in dividend equivalent payments on restricted stock units and additional deferred share units valued at $17,514 in lieu of
dividends on deferred share units. K.T. Hoeg received $21,918 in dividend equivalent payments on restricted stock units and
additional deferred share units valued at $76,662 in lieu of dividends on deferred share units. M.C. Hubbs received $14,976 in
dividend equivalent payments on restricted stock units and additional deferred share units valued at $22,472 in lieu of dividends on
deferred share units. J.M. Mintz received $21,918 in dividend equivalent payments on restricted stock units and additional deferred
share units valued at $69,295 in lieu of dividends on deferred share units. D.S. Sutherland received $21,918 in dividend equivalent
payments on restricted stock units and additional deferred share units valued at $65,574 in lieu of dividends on deferred share units.
Five-year
look
back
at
total
compensation
paid
to
nonemployee directors
Year
2018
2019
2020
2021
2022
Amount
($)
1,500,739
1,251,395
1,073,527
1,557,202
2,153,807
144
Outstanding share-based awards and option-based awards for directors
The following table sets forth all outstanding awards held by nonemployee directors of the company as at
December 31, 2022 and does not include common shares owned by the director.
Option-ba
sed awards
Share-based
awards
Number of
securities
underlying
unexercised
options
(#)
Option
exercise
price
($)
Option
expiration
date
Value of
unexercised
in-the-
money
options
($)
Number of
shares
or
units
of
shares that
have not
vested
(#) (b)
Market or
payout value
of share-
based
awards that
have not
vested
($) (c)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
30,208
1,992,218
72,602
4,788,102
32,335
2,132,493
66,945
4,415,023
64,894
4,279,759
Name
(a)
D.W. Cornhill
K.T. Hoeg
M.C. Hubbs
J.M. Mintz
D.S. Sutherland
(a) As directors employed by the company or Exxon Mobil Corporation in 2022, B.W. Corson and M.R. Crocker did not receive
compensation for acting as directors.
(b) Represents restricted stock units and deferred share units held as of December 31, 2022.
(c) Value is based on the closing price of the company’s shares on December 31, 2022 ($65.95).
Incentive plan awards for directors – Value vested or earned during the year
The following table sets forth the value of the awards that vested or were earned by each nonemployee director
of the company in 2022.
Name
(a)
D.W. Cornhill
K.T. Hoeg
M.C. Hubbs
J.M. Mintz
D.S. Sutherland
Option-based
vested
Value
awards –
the
during
year
($)
—
—
—
—
—
Share-based
vested
Value
awards
during
–
the
year
($) (b)
99,190
175,490
—
175,490
175,490
Non-equity
compensation
during
earned
($)
plan
incentive
–
Value
the year
—
—
—
—
—
(a) As directors employed by the company or Exxon Mobil Corporation in 2022, B.W. Corson and M.R. Crocker did not receive
compensation for acting as directors.
(b) Represents restricted stock units granted in 2015 and 2017, which vested in 2022. Value is based on the average of the weighted-
average price (as determined by the Toronto Stock Exchange) of common shares of the company on the vesting date and the four
consecutive trading days immediately prior to the vesting date.
145
Share ownership guidelines of independent directors and chairman, president and chief
executive officer
Independent directors are required to hold the equivalent of at least 16,500 shares of Imperial Oil Limited,
including common shares, deferred share units and restricted stock units within five years from the date of
appointment to the board.
The chairman, president and chief executive officer has separate share ownership requirements and must,
within three years of his appointment, acquire shares of the company, including common shares and restricted
stock units, of a value of no less than five times his base salary.
The board of directors believes that these share ownership guidelines will result in an alignment of the interests
of board members with the interests of all other shareholders. As of the date of this circular, the independent
directors currently have holdings of 335,484 shares which is more than three times the required guideline.
Minimum
requirement
share
ownership
Time to fulfill
Chairman,
officer
president
and
chief executive
5 x
base salary
Within
3
years
of
appointment
Independent directors
16,500 shares
Within
5
years
of
initial appointment
The chart below shows the shareholdings of the independent directors and the chairman, president and chief
executive officer of the company as of February 8, 2023, the record date of the management proxy circular.
Director
Director
since
Amount
acquired
since last
report
(February 16,
2022 to
February
8,
2023) (#)
Total
holdings
(includes
common shares,
deferred share
units and
restricted stock
units) (#)
Market
value of
total
holdings
(a) ($)
Minimum
shareholding
requirement
Minimum
requirement
met
D.W. Cornhill
November
29, 2017
4,355
42,708
2,971,196
16,500
B.W. Corson
September
17, 2019
89,000
323,600
22,512,852
Five
base
times
salary
K.T. Hoeg
May
1, 2008
4,241
72,602
5,050,921
16,500
M.C. Hubbs
July
26, 2018
5,652
32,335
2,249,546
16,500
J.M. Mintz
April
21, 2005
3,215
67,945
4,726,934
16,500
D.S. Sutherland
April
29, 2010
4,058
119,894
8,341,026
16,500
Total accumulated holdings
(#)
value
and
holdings ($)
of directors’
659,084
45,852,475
Yes
Yes
Yes
Yes
Yes
Yes
(a) The amount shown in the column “Market value of total holdings” is equal to the “Total holdings” multiplied by the closing price of the
company’s shares on the proxy circular record date February 8, 2023 ($69.57).
For information relating to compensation of the company’s named executive officers, see the Compensation
discussion and analysis section starting on page 156.
146
Ethical business conduct
The company is committed to high ethical standards through its policies and practices.
The company’s directors, officers and employees are responsible for developing, approving and implementing
plans and actions designed to achieve corporate objectives. In doing so, they are expected to observe the
highest standards of integrity in the conduct of the company’s business, with the methods employed to attain
results being as important as the results themselves.
The board has adopted a written code of ethics and business conduct (the “Code”) which can be found on the
company’s website at www.imperialoil.ca/en-CA/Investors/Investor-relations, including any applicable
amendments. The Code applies to each of the company’s directors, officers and employees, and consists of the
ethics policy, the conflicts of interest policy, the corporate assets policy, the directorships policy and the
procedures and open door communication. No person in the company has the authority to make exceptions or
grant waivers with respect to its foundational policies. There have been no material change reports filed in the
past 12 months pertaining to conduct of a director or executive officer that constitute a departure from the Code.
In addition, the directors of the company must comply with the conflict of interest provisions of the Canada
Business Corporations Act, as well as the relevant securities regulatory instruments, in order to ensure that the
directors exercise independent judgment in considering transactions and agreements in respect of which such
director has a material interest.
Under the company’s procedures and open door communication, employees are encouraged and expected to
refer suspected violations of the law, company policy or internal controls and procedures by various means,
including to their supervisors or the company’s ethics advisor, controller or general auditor. Imperial also has an
ethics “hotline” that is operated by a third-party service provider and offers confidential, anonymous reporting 24
hours a day, seven days a week. Suspected violations involving a director or executive officer, as well as any
concern regarding questionable accounting or auditing matters are to be referred directly to the internal auditor.
The audit committee initially reviews all issues involving directors or executive officers, and then refers all issues
to the board of directors. In the alternative, employees may also address concerns to individual nonemployee
directors or to nonemployee directors as a group. No action may be taken or threatened against employees for
asking questions, voicing concerns, or making complaints or suggestions in good faith.
Management provides the board of directors with a review of corporate ethics and conflicts of interest on an
annual basis. The company’s internal auditors audit each business line’s compliance with the program and
report to the audit committee. Directors, officers and employees review the company’s standards of business
conduct (which includes the Code) on an annual basis, with independent directors and all employees being
required to sign a declaration confirming that they have read and are familiar with the standards of business
conduct. In addition, every four years a business practices review is conducted in which managers review the
standards of business conduct with all employees in their respective work units.
The board, through its audit committee, examines the effectiveness of the company’s internal control processes
and management information systems. The board consults with the external auditor, the internal auditor and the
management of the company to ensure the integrity of the systems.
There are a number of structures and processes in place to facilitate the functioning of the board independently
of management. The board has a majority of independent directors. Each committee is chaired by a different
independent director and all of the independent directors are members of each committee. The audit committee
is composed entirely of independent directors. Each other committee (except the community collaboration and
engagement committee) is composed entirely of the independent directors and M.R. Crocker, who is an
employee of Exxon Mobil Corporation and although deemed non-independent under the relevant standards by
virtue of his employment, is viewed as independent of the company’s management. The agendas of each of the
board and its committees are not set by management alone, but by the board as a whole and by each
committee. A significant number of agenda items are mandatory and recurring. Board meetings are scheduled
at least one full year in advance. Any director may call a meeting of the board or a meeting of a committee of
which the director is a member. There is a board-prescribed flow of financial, operating and other corporate
information to all directors. The board may also utilize ad hoc or special committees when considering various
matters.
147
The independent directors conduct executive sessions in the absence of members of management. These
meetings are chaired by K.T. Hoeg, the independent director designated by the independent directors to chair
and lead these discussions. Eight executive sessions were held in 2022.
The company’s delegation of authority guide provides that certain matters of the company are reviewed by
functional contacts within ExxonMobil. The company’s employees are regularly reminded that they are expected
to act in the best interests of the company, and are reminded of their obligation to identify any instances where
the company’s general interest may not be consistent with ExxonMobil’s priorities. If such situations occur,
employees are expected to escalate such issues with successive levels of the company’s management. Final
resolution of any such issues is made by the company’s chairman, president and chief executive officer.
Restrictions on insider trading
Commitment to stringent safeguards with trading restrictions and reporting for company insiders.
Structures and processes are in place to caution, track and monitor reporting insiders, nonemployee directors
and key employees with access to sensitive information with respect to personal trading in the company’s
shares. The company has guidelines regarding insider trading prohibitions and trading bans that are applicable
to all directors, officers and employees.
Nonemployee directors are required to pre-clear any trades in the company’s shares. Reporting insiders are
required to give advance notice to the company of any sale of the company’s shares and advise the company
within five days of any purchase of the company’s shares. Reporting insiders are required, under securities
regulations, to publically disclose all transactions in the company’s shares on the System for Electronic
Disclosure by Insiders (SEDI).
From time to time, the company advises its directors and officers, and those of Exxon Mobil Corporation, and
employees in certain positions not to trade in the company’s shares. Trading bans occur in connection with the
directors’ pending consideration of the financial statements of the company, including the unaudited financial
statements for each quarter, and in connection with undisclosed pending events that constitute material
information about the business affairs of the company.
Diversity
The company has a long history of valuing diversity on the board and in its executive management.
Board diversity
The company has a longstanding commitment to diversity amongst its directors. Imperial has had at least one
woman on its board continuously since 1977, and 40 percent of the independent directors of the current board
and nominees for election at the annual meeting are women.
The company does not have a formal written policy relating to the identification and nomination of directors who
are women, Aboriginal peoples, persons with disabilities or members of visible minorities (the “designated
groups”, as defined under the Canada Business Corporations Regulations, 2001), and has not adopted a target
regarding members of the designated groups on its board. With the objective of fostering a diversity of
expertise, viewpoint and competencies, the board charter provides that the nominations and corporate
governance committee may consider a number of factors, including gender and membership in other
designated groups, in assessing potential nominees.
The nominations and corporate governance committee assesses the work experience, other expertise,
individual competencies and diversity of age, regional association and the designated groups that each existing
director possesses and whether each nominee is able to fill any gaps amongst the existing directors.
Additionally, the committee may consider any other factors that it believes to be relevant. The company does
not believe that any one of these dimensions should be considered in isolation and without due regard to all of
the other factors, in determining the ability of potential directors to contribute to the work of the board of
directors.
148
The board considers diversity through the annual nomination process, board assessment and other
discussions. The board and nominations and corporate governance committee also specifically consider
diversity through targeted director recruitment processes. With three of the company’s current directors retiring
in 2023, the board and nominations and corporate governance committee has been engaged in an extensive
director recruitment process since 2021. Diversity and the composition of the board has been a key
consideration throughout this process and the review of potential candidates, with the company instructing
executive search firms to cultivate a diverse selection of potential nominees. The result of this process is the
nomination of three new directors, S.R. Driscoll, J. Floren and G.J. Goldberg, bringing further experience and
diverse perspectives to the board and maintaining 40 percent of the independent directors being women.
As of the date of this proxy circular, the number and percentage of directors and nominees who are members of
the designated groups are:
Designated
group (a)
Number
Women
Aboriginal peoples
Persons
with disabilities
Members of
visible minorities
2
of
7
(board
and nominees)
2
of
5
(independent
directors
and nominees)
0 of 7
0 of 7
0 of 7
Percent
(%)
29
40
0
0
0
(a) Defined under the Employment Equity Act (Canada)
The above diversity disclosure relies on voluntary self-identification by directors and nominees, and therefore
only represents the information of individuals who have chosen to self-identify. The information has not been
independently verified by the company. The board nominee composition charts on page 119 show the diversity
of our board nominees with respect to gender, experience and regional association, but do not reflect
membership in other designated groups.
Executive officer diversity
The company believes inclusion and diversity are key competitive strengths that are critical to maintaining the
company’s position as an industry leader. To ensure commitment at all levels of the company, inclusion and
diversity, anti-harassment and equal employment opportunity performance is stewarded annually to the
company’s senior management. There is an in-depth succession planning process, which includes the
consideration of various aspects of diversity as well as plans to address gaps, if any, for key positions.
The company’s internal training programs emphasize the value of collaboration, appreciating differences and
sustaining an inclusive work environment, keeping inclusion and diversity top-of-mind with all employees.
Imperial also values external perspective and expertise. The company supports educational development and
recruiting practices that facilitate the employment of Indigenous peoples, and in 2021 achieved Silver
Certification in the Progressive Aboriginal Relations (PAR) program managed by the Canadian Council for
Aboriginal Business. Imperial maintains a supportive work environment though a range of development and
networking programs, including employee-led diversity networks that are focused on common interests. These
programs are conducted in both virtual and in-person formats to reach a broad range of employees.
In considering potential nominees for executive officer appointments, the executive resources committee
considers diversity of gender and the other designated groups, work experience, other expertise, individual
competencies and other dimensions of diversity in addition to the other factors described on page 160. The
company has not adopted a target regarding members of the designated groups in executive officer positions.
The company does not believe that any one of these dimensions should be considered, without due regard to
all of these other factors, in determining the ability of potential nominees to fill executive officers positions.
149
As of the date of this proxy circular, the number and percentage of executive officers of the company and its
major subsidiaries who are members of the designated groups are:
Designated
group (a)
Women
Aboriginal peoples
Persons
with disabilities
Members
of
visible minorities
Number
11
of 24
0
of 24
0
of 24
4
of 24
Percent
(%)
46
0
0
17
(a) Defined under the Employment Equity Act (Canada)
The above diversity disclosure relies on voluntary self-identification by executive officers, and therefore only
represents the information of individuals who have chosen to self-identify. The information has not been
independently verified by the company.
Shareholder engagement
Shareholder engagement strategy focuses on wide-ranging dialogue between shareholders and management.
The company’s senior management regularly meet with institutional investors and shareholders through
industry conferences, roadshows and company hosted investor events. In response to COVID-19 and to ensure
the health and safety of our employees, investors and shareholders, these meetings were held predominantly in
a virtual format for the balance of 2021. In 2022, these shifted in large part, back to in-person engagements.
Pertinent materials from these conferences and hosted events are available on the company’s website.
Also in response to COVID-19 and to ensure the health and safety of its shareholders, directors, officers and
stakeholders, the company took a number of steps to ensure active engagement through the annual meeting
that was held in a virtual only format. Shareholders were given the opportunity to register a proxyholder to
attend and ask questions in real time, and the company encouraged engagement from shareholders prior to the
event. This format also allowed shareholders who may not otherwise have been able to attend in person to log
in as a guest and follow the meeting. The webcast is available on the company website along with speeches
and presentations from the annual general meeting and the outcome of the voting on each resolution.
The company also hosts regular quarterly earnings calls in connection with earnings releases, and archives of
these calls (including transcripts) are available on Imperial’s website for one year after each call. These calls
allow the company to provide more insight and context regarding the company’s performance, as well as
directly address questions from the investment community.
The company annually solicits questions and comments from shareholders through the annual meeting of
shareholders. The comments received are reviewed by senior management providing them with an indication of
areas of interest to our shareholders, and those requiring a response are answered individually. In addition, the
company’s Investor Relations team proactively reaches out to shareholders to obtain their views on matters
identified broadly by shareholders, including with respect to environment, social and governance topics, as well
as optimal engagement approaches. The Investor Relations team is available to respond to shareholder and
investor queries throughout the year.
Communicating with the board
Shareholders, employees and others can contact the board directly by writing to:
Chair of the Board of Directors
c/o Corporate Secretary
Imperial Oil Limited
505 Quarry Park Blvd SE
Calgary, AB, Canada T2C 5N1
150
Largest shareholder
Exxon Mobil Corporation is the majority shareholder of the company, holding 69.6% of the company’s shares.
To the knowledge of the directors and executive officers of the company, the only shareholder who, as of
February 8, 2023, owned beneficially, or exercised control or direction over, directly or indirectly, more than five
percent of the outstanding common shares of the company is Exxon Mobil Corporation, 5959 Las Colinas
Boulevard, Irving, Texas 75039-2298, which owns beneficially 406,569,870 common shares, representing
approximately 69.6 percent of the outstanding voting shares of the company. As a consequence, the company
is a “controlled company” for purposes of the listing standards of the NYSE American LLC and a “majority
controlled company” for purposes of the TSX Company Manual.
Transactions with Exxon Mobil Corporation
The company has written procedures and controls that require any transactions between the company and
ExxonMobil and its subsidiaries to be reviewed by controllers, tax, treasurers and legal to ensure that each
agreement meets the company’s policies and procedures, is fair, and complies with legal and tax requirements.
These agreements may also be subject to review by the chairman, president, and chief executive officer. Annual
training is provided for key individuals to ensure awareness of the requirements for identifying related party
transactions, and procedures are in place to ensure reporting of these transactions is complete and accurate.
Related party transactions with ExxonMobil and its subsidiaries are analyzed and reviewed by management on
a quarterly basis to understand any significant variances from period to period, and reviewed with the board of
directors on an annual basis.
The company undertook a number of issuer bid transactions during 2022 that involved ExxonMobil. On June 29,
2021, the company implemented a 12-month “normal course” share purchase program, allowing the company
to purchase up to five percent of its outstanding common shares as of June 15, 2021, or a maximum of
35,583,671 shares. The program ended on January 31, 2022 upon the company purchasing the maximum
allowable number of shares, with 10,822,142 common shares purchased on the open market and a
corresponding 24,761,529 common shares purchased from ExxonMobil concurrent with, but outside of the
program to maintain its shareholding at approximately 69.6 percent.
On May 6, 2022, the company commenced a substantial issuer bid that offered to purchase up to $2.5 billion of
its common shares through a modified Dutch auction and proportionate tender offer. The substantial issuer bid
was completed on June 15, 2022, with the company purchasing 32,467,532 common shares at a price of
$77.00 per share, for an aggregate purchase of $2.5 billion and 4.9 percent of Imperial’s issued and outstanding
shares (as of the close of business on May 2, 2022). This included 22,597,379 shares purchased from
ExxonMobil by way of a proportionate tender to maintain its ownership percentage at approximately 69.6
percent.
On June 29, 2022, a further normal course issuer bid was implemented, enabling the company to purchase up
to five percent of its outstanding common shares as of June 15, 2022, or a maximum of 31,833,809 common
shares. Purchases under the program were accelerated and the program ended on October 21, 2022 upon the
company purchasing the maximum allowable number of shares, with 9,677,500 common shares purchased on
the open market and a corresponding 22,156,309 common shares purchased from ExxonMobil concurrent with,
but outside of the program to maintain its shareholding at approximately 69.6 percent.
On November 4, 2022, the company commenced a second substantial issuer bid in 2022 which offered to
purchase up to $1.5 billion of its common shares through a modified Dutch auction and proportionate tender
offer. The substantial issuer bid was completed on December 14, 2022, with the company purchasing
20,689,655 common shares at a price of $72.50 per share, for an aggregate purchase of $1.5 billion and 3.4
percent of Imperial’s issued and outstanding shares (as of the close of business on October 31, 2022). This
included 14,399,985 shares purchased from ExxonMobil by way of a proportionate tender to maintain its
ownership percentage at approximately 69.6 percent.
151
The amounts of purchases and revenues by the company and its subsidiaries for other transactions in 2022
with ExxonMobil and its affiliates were $3,719 million and $17,042 million, respectively. These transactions were
conducted on terms as favourable as they would have been with unrelated parties, and primarily consisted of
the purchase and sale of crude oil, natural gas, petroleum and chemical products, as well as technical,
engineering and research and development costs. Transactions with ExxonMobil also included amounts paid
and received in connection with the company’s participation in a number of upstream activities conducted jointly
in Canada. In addition, the company has existing agreements with affiliates of ExxonMobil to provide
information technology and customer support services to the company and to share common business and
operational support services to allow the companies to consolidate duplicate work and systems. The company
has a contractual agreement with an affiliate of ExxonMobil in Canada to operate certain western Canada
production properties owned by ExxonMobil. There are no asset ownership changes.
The company and that affiliate also have a contractual agreement to provide for equal participation in new
upstream opportunities. The company had an existing agreement with ExxonMobil to provide for the delivery of
management, business and technical services to Syncrude Canada Ltd. by ExxonMobil, which was terminated
in connection with the transfer of operatorship of Syncrude on September 30, 2021.
As at December 31, 2022, the company had an outstanding loan of $3,447 million under an existing agreement
with an affiliated company of ExxonMobil that provides for a long term, variable rate loan from ExxonMobil to the
company of up to $7.75 billion (Canadian) at market interest rates. The agreement is effective until June 30,
2025, cancellable if ExxonMobil provides at least 370 days advance written notice.
152
Company executives and executive compensation
Named executive officers of the company
The named executive officers of the company at year end 2022 are listed below, all of whom remain in their
positions as of February 8, 2023.
Bradley W. Corson, 61
Calgary, Alberta, Canada
Daniel E. Lyons, 60
Calgary, Alberta, Canada
Simon P. Younger, 47
Calgary, Alberta, Canada
Bruce A. Jolly, 55
Calgary, Alberta, Canada
Position held at the end of 2022 (date office held):
Chairman, president and chief executive officer
(2020 – Present)
Other positions in the past five years (position, date office held and status of employer):
President
(2019 – Present)
President, ExxonMobil Upstream Ventures
(2015 – 2019) (Affiliate)
Position held at the end of 2022 (date office held):
Senior vice-president, finance and administration, and controller
(2018 – Present)
Other positions in the past five years (position, date office held and status of employer):
Vice-president, downstream business services and downstream treasurer, Exxon Mobil Corporation
(2015 – 2018) (Affiliate)
Position held at the end of 2022 (date office held):
Senior vice-president, upstream
(2020 – Present)
Other positions in the past five years (position, date office held and status of employer):
Vice-president, production, upstream
(2019 – 2020)
Senior planning advisor, corporate strategic planning, upstream, Exxon Mobil Corporation
(2017 – 2019) (Affiliate)
Position held at the end of 2022 (date office held):
Assistant controller
(2019 – Present)
Other positions in the past five years (position, date office held and status of employer):
Upstream controller
(2018 – 2019)
Controller, United States upstream production, Exxon Mobil Corporation
(2016 – 2018) (Affiliate)
Jonathan R. Wetmore, 50
Calgary, Alberta, Canada
Position held at the end of 2022 (date office held):
Vice-president, downstream, chemicals and Western Canada fuels manager
(2022 – Present)
Other positions in the past five years (position, date office held and status of employer):
Vice-president, downstream and Western Canada fuels manager
(2018 – 2022)
153
Other executive officers of the company
In addition to the named executive officers listed on the previous page, the following individuals are executive
officers of the company as of February 8, 2023.
Sherri L. Evers, 46
Calgary, Alberta, Canada
Position held (date office held):
Vice-president, commercial and corporate development
(2021 – Present)
Other positions in the past five years (position, date office held and status of employer):
Fuels manager, Central and Eastern Canada, fuels and lubricants
(2018 – 2020)
Kitty Lee, 46
Calgary, Alberta, Canada
Position held (date office held):
Treasurer
(2020 – Present)
Other positions in the past five years (position, date office held and status of employer):
Financial advisor, treasurer’s, Exxon Mobil Corporation
(2019 – 2020) (Affiliate)
Benefits finance manager, treasurer’s, Exxon Mobil Corporation
(2018 – 2019) (Affiliate)
Global coordination manager, controller’s, Exxon Mobil Corporation
(2016 – 2018) (Affiliate)
Kristi L. Desjardins, 49
Calgary, Alberta, Canada
Position held (date office held):
Vice-president, human resources
(2020 – Present)
Other positions in the past five years (position, date office held and status of employer):
Human resources services manager, global human resources operations, Exxon Mobil
Corporation
(2018 – 2020) (Affiliate)
Manager, human resources services
(2017 – 2018)
Constance D. Gemmell, 56
Calgary, Alberta, Canada
Position held (date office held):
Director, corporate tax
(2018 – Present)
Other positions in the past five years (position, date office held and status of employer):
Manager, income tax planning and advice
(2013 – 2018)
Ian R. Laing, 49
Calgary, Alberta, Canada
Position held (date office held):
Vice-president, general counsel and corporate secretary
(2020 – Present)
Other positions in the past five years (position, date office held and status of employer):
Assistant general counsel, downstream and corporate departments and corporate secretary
(2019 – 2020)
Assistant general counsel, upstream
(2017 – 2018)
154
Letter to shareholders from the executive resources committee on
executive compensation
Dear fellow shareholders:
The executive resources committee (“committee”) continues to support the design of Imperial's executive
compensation program in that it achieves the goal of maximizing long-term shareholder value, while positioning
the company for long-term success in a lower-emissions future.
Business Perspective
Imperial's business involves investments that create shareholder value over long periods of time, requiring
executives to maintain a long-term view when making decisions across a broad range of business investments.
In 2022, Imperial delivered exceptional business results across a wide range of performance dimensions. The
company has remained focused on delivering long-term shareholder value and laying the foundation for future
success with strong financial and operating performance, and a demonstrated commitment to sustainability. For
more information on the 2022 key business results see page 167.
Compensation Decisions
The committee exercises oversight of a compensation program that aligns executives' pay with the results of
their decisions and the returns of our shareholders over the long term. The program design is aligned with the
core elements of the majority shareholder's compensation program, and is designed to drive long-term
accountability, reward the highest standard of performance, and promote retention.
The compensation discussion and analysis ("CD&A") section that follows describes the compensation program
for the company's named executive officers and how the program supports the business goals of the company.
Key decisions approved by the committee, reflective of strong business results in 2022, are as follows:
• The committee granted base salary increases to named executive officers, consistent with the salary
program for all executives.
• The 2022 bonus program awards were approved at higher levels than 2021, reflective of strong
business performance.
• The committee granted restricted stock unit awards in keeping with program design, with the value of
awards having increased year-over-year in line with increases in stock price.
The committee has reviewed and discussed the CD&A with management of the company and has
recommended to the board that the CD&A be included in the company’s management proxy circular for the
2023 annual meeting of shareholders and annual report of Form 10-K. On behalf of the committee, I encourage
you to read the comprehensive disclosure in the CD&A that follows. The committee is committed to overseeing
all aspects of the executive compensation program in the best interests of the company and all shareholders.
Original signed by
D.S. Sutherland,
Chair, executive resources committee
D.W. Cornhill, Vice-chair
M.R. Crocker
K.T. Hoeg
M.C. Hubbs
J.M. Mintz
155
Compensation discussion and analysis
Table of contents
Overview
Canadian business environment
Business model
Key business strategies
Key elements of the compensation program
Risk and governance
Other supporting compensation and staffing practices
Hedging policy
Business performance and basis for compensation
Succession planning
Compensation program design
Approach to executive compensation
Base salary
Annual bonus
Restricted stock units
Retirement plans
Compensation considerations
Benchmarking
Comparator companies
Business performance results for consideration
2022 key business results
Performance assessment considerations
2022 chief executive officer compensation assessment
Pay awarded to other named executive officers
Independent consultant
Performance graph
Frequently used terms
Executive compensation tables and narratives
Summary compensation table
Outstanding share-based awards and option-based awards for named executive officers
Incentive plan awards for named executive officers – Value vested or earned during the year
Equity compensation plan information
Restricted stock units as a percentage of outstanding shares
Annual burn rate
Status of prior long-term incentive compensation plans
Pension plan benefits
156
157
157
157
157
158
158
160
160
160
160
161
161
161
162
163
165
166
166
166
167
167
168
169
169
169
170
171
172
172
174
175
176
176
177
177
177
Overview
The company takes a long-term view to managing its business.
Our objective is to meet society’s needs with the products that are essential for modern life while playing a key
role in addressing the challenges of climate change. The company takes a long-term view in managing its
business rather than reacting to short-term business cycles. The company’s strategies provide the framework to
deliver on its commitments, create shareholder value throughout the commodity price cycle, and address the
dual challenge of meeting growing energy demand while reducing environmental impacts.
The compensation program design aligns with the long-term sustainability of the business and supports key
business strategies to maximize shareholder value:
Canadian business environment
•
Large, accessible upstream resources;
• Mature, competitive downstream markets;
• Evolving environmental, fiscal, and energy policies impacting global competitiveness; and
• Market access limitations and uncertainties.
Business model
•
Long-life, competitively advantaged assets;
• Disciplined investment and cost management;
• Value-chain integration and synergies;
• High-impact technologies and innovation; and
• Operational excellence and responsible growth.
Key business strategies
• Deliver industry-leading performance in safety, emissions reductions, environmental performance and
reliability;
• Grow profitable production and sales volumes;
• Disciplined and long-term focus on improving the productivity of the company’s asset mix; and
• Best-in-class cost structure to support industry-leading returns on capital and cash flow.
157
Key elements of the compensation program
The key elements of the company’s compensation program align with the business model and support key
business strategies.
Element
Base salary
Annual bonus
Restricted
stock units
Percent
of
compensation (a)
total
direct
•
10
to
30 percent
•
10
to
25 percent
•
50
percent
or more
Intent
•
Provide
base pay
competitive
Key
design features
•
•
by
determined
performance,
and
pay
Increase
individual
experience,
grade
Ties
benefits
savings plans)
directly
to
(pension
long-term
&
•
•
•
•
•
•
to
annual
earnings
pay
Link
company
performance
Provide
performance payment
near-term
•
•
to
pay
Link
shareholders
Encourages
through
returns
of
long-term
long-term
view
price cycle
commodity
Paid
in
year
award
Bonus
of
reflective
performance
Individual
determined
performance
grade
Full
clawback
award
of grant
pool
business
award
by
and
pay
subject
to
of
stock
vests
date;
in
50
5
•
•
•
•
•
in
the
form
Granted
units
50
percent
CEO:
grant
from
years
10 years
in
percent
All other executives:
from
vests
50
7 years
Long
with
applied
Significant
of
forfeiture
period
restriction
performance
at grant
portion
an
for
of time
3
in
percent
years
in
50
grant
percent
date;
periods
coupled
considerations
of
at
pay
extended
risk
Pay
at risk
•
Fixed pay
•
Variable
pay
at risk
•
Variable
pay
at risk
(a) Total direct compensation includes salary, the annual bonus, and the grant date fair value of the restricted stock unit award which
is equal to the price of the company’s common shares on the date of grant.
The above programs are underpinned by our pension and savings plans which provides for financial security
after employment.
Risk and governance
The company is governed by a comprehensive and well-established risk management system, and the
company’s success in managing risk over time has been achieved through emphasis on execution of this
disciplined management framework. The company operates in an industry in which effective risk management
is critical. The company’s risk management framework includes a process for identifying, prioritizing, measuring,
and managing the principal risks across the company, as well as assessing the company’s response to these
risks. For further discussion on the company’s risk management system and oversight, see “Risk oversight”
within the “Statement of corporate governance practice” on page 130.
The company’s long-term orientation and compensation program design encourage the highest performance
standards and discourage inappropriate risk taking. The compensation program design features described
below are designed to incent effective management of current and future operating and financial risks
associated with the company’s business, including risks related to climate change, in order to:
158
•
protect the safety and security of our employees, the communities, and the environment in which we
operate;
• manage risk and operate the business with effective business controls;
•
create sustainable value for shareholders by increasing shareholder return, net income, and return on
average capital employed*; while positioning the company for long-term success in a lower-emission
future; and
advance the long-term strategic direction of the company.
•
*non-GAAP financial measure – see Frequently used terms section on page 171 for definition.
The table below outlines the design features of our compensation programs that discourage inappropriate risk
taking:
Design feature
Risk management
Common
programs
• All executives employed by the company, including the named executive officers, participate
in common programs (the same salary, incentive, and retirement programs). Similar
compensation design features and allocation of awards within the programs discourage
inappropriate risk taking. Compensation is differentiated based on individual performance
assessment, experience and pay grade.
• All executives on assignment from an affiliate of the company, including the named
executive officers on assignment from Exxon Mobil Corporation and Esso Australia Pty Ltd.,
also participate in common programs that are administered by Exxon Mobil Corporation or
such affiliates. The named executive officers on assignment receive restricted stock units
from Imperial.
• The executive resources committee ("committee") reviews and approves annual
compensation recommendations for each named executive officer prior to implementation.
Executive stock
ownership
• Long holding periods on restricted stock units (RSUs) results in executives maintaining
significant stock ownership during employment and for 7 years into retirement, with a longer
holding period for the chairman, president and chief executive officer up to 10 years into
retirement.
Significant pay
at risk
Strong
forfeiture
provisions
Clawback policy
• Uniquely long restriction periods on RSUs substantially increase the percentage of career
compensation at risk well into retirement.
• Unvested RSUs cannot be used as collateral for any purpose.
• Unvested RSUs are at risk of forfeiture for resignation or detrimental activity, even if such
detrimental activity occurs or is discovered after resignation or retirement.
• The entire annual bonus is subject to recoupment (clawback) in the event of a material
negative restatement of the company's reported financial or operating results. This
reinforces the importance of the company's financial controls and compliance programs.
Clawback provisions also apply if an executive resigns or engages in detrimental activity.
No guaranteed
bonuses
• Bonus is subject to year-on-year changes in business performance; remains at risk
• Demonstrated by bonus program suspension in 2020; no award granted.
No additional
stock grants to
balance losses
in value
No accelerated
vesting at
retirement
• The committee does not support a practice of offsetting a loss or gain in the value of prior
restricted share units by the value of current year grants.
• Such a practice would minimize the risk/reward profile of stock-based awards and
undermine the long-term view that executives are expected to adopt.
• RSUs are not subject to acceleration, not even at retirement, except in the case of death.
• Unvested RSUs cannot be used as collateral for any purpose.
For more details about the aforementioned compensation components, see the “Compensation program design” section.
159
Other supporting compensation and staffing practices
• The company's defined benefit pension plan and supplemental pension arrangements are highly
dependent on executives remaining with the company for a career and performing at the highest levels
until retirement. This dimension of total compensation encourages executives to take a long-term view
when making business decisions and to focus on achieving sustainable growth for shareholders.
• The use of perquisites at the company is very limited, and mainly composed of financial planning for
senior executives and the selective use of club memberships which are largely tied to building business
relationships.
• Tax assistance is provided for employees on expatriate assignment. This assistance consists primarily
of a tax equalization component designed to maintain the employees’ overall income tax burden at
approximately the same level had they remained in their home country. The expatriate relocation
program is broad-based and applies to all executive, management, professional and technical
transferred employees.
• The company does not have written employment contracts or any other agreement with its named
executive officers providing for payments on change of control or termination of employment.
Hedging policy
Company policy prohibits all employees, including executives, and directors, from being a party to derivative or
similar financial instruments, including puts, calls, or other options, future or forward contracts, or equity swaps
or collars, with respect to the company or Exxon Mobil Corporation stock.
Business performance and basis for compensation
The assessment of employee performance is conducted through the company’s annual performance
assessment program. The process assesses performance against relevant business performance measures
and objectives, including the means by which performance is achieved. These business performance measures
include:
•
•
•
•
•
•
•
•
safety, health, and environmental performance;
risk management;
total shareholder return;
net income;
return on average capital employed*;
cash flow from operations and asset sales*;
operating performance of the upstream, downstream, and chemical businesses; and
progress on advancing government relations and long-term strategic interests.
*non-GAAP financial measure – see Frequently used terms section on page 171 for definition.
The performance assessment program includes a comparative assessment of employee performance using a
standard approach throughout the organization and at all levels. It is integrated with the compensation program,
which results in significant pay differentiation based on performance. The performance assessment program is
also integrated with the executive development process. Both have been in place for many years and are the
basis for planning individual development and succession for management positions.
Succession planning
A long established program of management development and succession planning is in place to reinforce a
career orientation and ensure continuity of leadership. The committee is responsible for approving specific
succession plans for the position of chairman, president and chief executive officer, and key senior executive
positions, including all officers of the company. It considers candidates for these positions from within the
company and certain candidates from Exxon Mobil Corporation and its affiliates. This in-depth review of
succession plans includes the consideration of various aspects of diversity as well as plans to address gaps, if
any, for key executives. The company has a long-standing practice of reviewing with senior management the
diversity of the organization with focus on women, Indigenous people, persons with disabilities, and visible
minorities. These reviews include recruitment, attrition, training and development. For more information
regarding executive officer diversity see page 149.
The chairman, president and chief executive officer also discusses the strengths, progress, and development
needs of key succession candidates regularly. This provides the board an opportunity to confirm a pipeline of
highly skilled and diverse talent exists to enable achievement of long-term strategic objectives. The committee
makes recommendations to the board of directors for selection of all officers of the company, as well as other
key senior executive positions reporting to the chairman, president and chief executive officer.
160
Compensation program design
The company’s compensation program is designed to reward performance,
promote retention, and encourage long-term business decisions.
Approach to executive compensation
The decisions that the company’s executives make and the risks they manage play out over multi-year time
horizons. Executives are required to carefully consider current and future risks, such as those related to climate
change, and to make decisions across a broad range of business investments that generate sustainable
shareholder value over the long term.
The company's executive compensation program design aligns executives' pay with the results of their
decisions and shareholder returns over the long term. The program is designed to drive long-term
accountability, reward the highest standard of performance, and promote retention.
Drive long-term accountability
The company's strategic objectives have been established to drive sustainable value while positioning the
company for long-term success in a lower-emissions future. These objectives are translated into annual plan
goals, which are reviewed and approved by the Board and provides the framework for the company's
commitments.
Reward outstanding performance
Performance is foundational to the company's executive compensation program design. The extent to which
executives achieve pre-established goals, assessed over near- and long-term horizons, is a key differentiating
factor in executives' pay deliberations. Performance evaluation directly impacts level of base salary, bonus, and
long-term incentive awards.
Promote retention
This long-term orientation also underpins how the company develops talent. It begins with recruiting exceptional
people, and continues with individually planned experiences and training, which leads to broad development
and a deep understanding of our business across the business cycle.
The compensation program is designed to attract and retain talent for a career through compensation that is
market competitive, highly differentiated by individual performance, and with long restriction periods that
promote retention. Career orientation among a dedicated and highly skilled workforce, combined with the
highest performance standards, contributes to the company's leadership in the industry and serves the interests
of shareholders in the long term. The average service of the named executive officers is 32 years which reflects
this on-going career orientation strategy.
The company’s executive compensation program is composed of base salaries, as well as near-term cash
bonus and long-term incentive compensation.
Base salary
Base salary represents 10 to 30 percent of total direct compensation, and is intended to provide competitive
base pay. It also directly affects the level of retirement benefits.
The company’s overall salary program is determined by annual benchmarking. Individual salary increases are
the result of individual performance, experience, and changes to pay grade, and reflects market analysis and
competitiveness at the time of the decision.
2022 decisions
• For 2022, the executive resources committee ("committee") granted salary increases to named
executive officers consistent with the salary program for all executives.
161
Annual bonus
The company’s annual bonus program represents 10 to 25 percent of total direct compensation, and is
intended to link executive pay to annual company earnings performance. The bonus program is established
annually by the committee based on earnings, and can be highly variable depending on these results.
In establishing the annual bonus program, the committee:
•
•
•
•
considers input from the chairman, president and chief executive officer on performance of the
company and from the company’s internal compensation advisors regarding compensation trends as
obtained from external consultants;
considers the linkage to the majority shareholder’s bonus program given the company’s working interest
is included in Exxon Mobil Corporation earnings;
considers annual net income of the company; and
uses judgment to manage the overall size of the annual bonus program taking into consideration the
cyclical nature and long-term orientation of the business.
2022 decisions
•
2022 bonus program awards were approved at higher levels than 2021, reflective of strong business
performance.
• This resulted in 53 executives receiving an annual bonus in 2022.
• The cost of the 2022 annual bonus program was $8.5 million versus $4.2 million in 2021 and $0 in
2020.
Starting in 2021, bonus awards are paid in full in the year of grant, rather than as a combination of cash and
earnings bonus units, consistent with market practice and resulting in a stronger link to earnings performance
and individual performance differentiation. While no earnings bonus units were granted in 2022, the company’s
executives, including the named executive officers, had outstanding earnings bonus units that vested in 2022.
• Earnings bonus units are cash awards that are tied to future cumulative earnings per share.
• Earnings bonus units pay out when a specified level of cumulative earnings per share (or
•
trigger) is achieved or in three years at a reduced level. The trigger is intentionally set at a level
that is expected to be achieved within the three-year period and reinforces the company’s
principle of sustained improvement in the company’s business performance and aligns the
interests of executives with those of long-term shareholders; and
If cumulative earnings per share do not reach the trigger within three years, the payment with
respect to the earnings bonus units will be reduced to an amount equal to the number of units
multiplied by the actual cumulative earnings per share over the three-year period. The amount
of the award, once vested, will never exceed the original grant value. The delayed payout of the
earnings bonus units puts part of the annual bonus at risk of forfeiture and thus reinforces the
performance basis of the annual bonus grant.
Forfeiture and claw-back
The annual bonus, including earnings bonus units, are subject to forfeiture and claw-back if:
• An executive retires before normal retirement time.
• The company has indicated its intention not to forfeit outstanding awards of employees who
retire at age 65. In other circumstances, where a recipient retires before age 65, the company
may determine that awards shall not be forfeited.
• An executive’s employment with the company terminates (for any reason, whether at initiative of
employee, the company or otherwise), with forfeiture and claw-back at the company's discretion.
• An executive, without the consent of the company, engages in any activity, during employment or after
retirement or termination of employment, which is detrimental to the company, including working for a
competitor; or
• There is a material negative restatement of the company’s reported financial or operating results. For
executive officers of the company, some or all of any unvested earnings bonus units granted in the
three years prior to the restatement are subject to forfeiture. In addition, any cash amounts received
from bonus or earnings bonus units that were paid out up to five years prior to the restatement are
subject to claw-back.
162
Restricted stock units
The vesting periods of the company’s long-term incentive program are greater
than those in use by comparator companies.
Restricted stock units represent over 50 percent of total direct compensation, and are intended to link executive
pay to the returns of long-term shareholders and encourage a long-term view through the commodity price
cycle. Restricted stock units are granted to select employees of the company, select employees of a designated
affiliate, and nonemployee directors of the company.
Employee group
Vesting
On
the
anniversary
of
the
date
of grant
For
the
chairman,
president
and
chief
executive officer
50
percent
in
5
years
and
50
percent
in
10 years
For
all
other executives
50
percent
in
3
years
and
50
percent
in
7 years
The vesting periods, which are typically greater than those in use by other companies, reinforce the company’s
focus on growing shareholder value over the long term by linking a large percentage of executive compensation
and the shareholding net worth of executives to the value of the company’s stock. The long vesting periods
ensure that a substantial portion of the compensation received by the chairman, president and chief executive
officer, as well as other key senior executives, will be received after retirement. The value of this compensation
is at risk in the event that their decisions prior to retirement negatively impact share market value after
retirement, with the objective to hold senior executives accountable for many years into the future, and even into
retirement, for investment and operating decisions made today. The design of our program removes employee
discretion in the timing of exercising restricted stock units, reinforces retention objectives, and supports
alignment with the long-term interests of shareholders.
The basis for the grant includes an annual assessment of individual performance including a review of business
performance results as noted on page 167. The amount granted is intended to provide an incentive to promote
individual contribution to the company’s performance and to retain employees. Grants may be adjusted
periodically based on an assessment of the program’s competitive orientation. An individual’s grant amount may
be reduced at time of grant, if recent performance is deemed to have changed significantly at that time. As a
matter of principle, the company does not offset losses on prior grants with higher share awards in subsequent
grants, nor does the company re-price restricted stock units. Restricted stock units are not included in pension
calculations. Restricted stock units cannot be assigned.
The number of common shares of the company issuable under the plan to any insiders (as defined by the
Toronto Stock Exchange) cannot exceed 10 percent of the issued and outstanding common shares, whether at
any time or as issued in any one year.
The company’s directors and officers as a group hold approximately 16 percent of the unvested restricted stock
units that give the recipient the right to receive common shares that represent about 0.05 percent of the
company’s outstanding common shares. Currently, the maximum number of common shares that any one
person may receive from the vesting of restricted stock units is 345,250 common shares, which is about 0.06
percent of the outstanding common shares.
Consistent with the program documentation, the board of directors may amend the plan without shareholder
approval for RSUs previously issued or to be issued in the future, unless the amendment is with respect to:
•
•
•
•
•
increasing the shares served for issuance;
increasing the vesting price;
extending eligibility to participate in the plan to persons not included in the plan;
extending the right of a grantee to transfer or assign RSUs; or
adjusting the vesting date for any RSUs previously granted.
163
2022 decisions
• The committee granted awards in keeping with program design.
• The value of long-term awards increased year-over-year, in line with increases in stock price; changes
in award grants for named executive officers reflect individual performance and/or change in pay grade.
In 2022, 1,020 recipients, including 62 executives, were granted 867,640 restricted stock units.
•
Exxon Mobil Corporation has a plan similar to the company’s restricted stock unit plan, under which grantees
may receive restricted stock or restricted stock units, both of which are referred to herein as Exxon Mobil
Corporation restricted stock. B.W. Corson holds Exxon Mobil Corporation restricted stock granted in 2018 and
previous years, as well as the company’s restricted stock units granted since 2019. D.E. Lyons holds Exxon
Mobil Corporation restricted stock granted in 2017 and previous years, as well as the company’s restricted stock
units granted since 2018. S.P. Younger holds Exxon Mobil Corporation restricted stock granted in 2019 and
previous years, as well as the company’s restricted stock units granted in 2020.
Forfeiture and claw-back
Restricted stock units are subject to forfeiture and claw-back if:
• A recipient retires before normal retirement time.
• The company has indicated its intention not to forfeit restricted stock units of employees who
retire at age 65. In other circumstances where a recipient retires before age 65, the company
may determine that restricted stock units shall not be forfeited.
• A recipient’s employment with the company terminates (for any reason, whether at initiative of
employee, the company or otherwise), with forfeiture and claw-back at the company's discretion.
• A recipient, without the consent of the company, engages in any activity, during employment or after
retirement or termination of employment, which is detrimental to the company, including working for a
competitor.
• With respect to executives, at any time prior to vesting of the outstanding awards.
• With respect to all other employees, for a period of up to three years after retirement or the
termination of employment.
Vesting of restricted stock units
The vesting period for restricted stock unit awards is not subject to acceleration, except in the case of death.
Upon vesting, each restricted stock unit entitles the recipient the right to receive an amount equal to the value of
one common share of the company, based on the five day average closing price of the company’s shares on
the vesting date and the four preceding trading days. For units granted to senior executives other than the
chairman, president and chief executive officer, 50 percent of the units vest as a cash payment on the third and
seventh anniversary of the grant date, except that for units vesting on the seventh anniversary that were
granted to Canadian residents, the recipient may receive one common share per unit or elect to receive a cash
payment for the units. For all units granted to the chairman, president and chief executive officer, upon vesting,
the recipient may receive one common share of the company per unit or elect to receive a cash payment for the
units. During the restricted period, the recipient will also receive cash payments equivalent to the cash dividends
paid to holders of regular common stock.
In the case of any subdivision, consolidation, or reclassification of the shares of the company or other relevant
change in the capitalization of the company, the company, in its discretion, may make appropriate adjustments
in the number of common shares to be issued and the calculation of the cash amount payable per restricted
stock unit.
Amendments to the restricted stock unit plan
In 2016, the restricted stock unit plan was amended to update provisions regarding forfeiture of restricted stock
units in the event of detrimental activity, extending the period from two years to the current periods noted above.
Further, the amendments provided a new vesting option in addition to the existing vesting options previously
described, such that the second 50 percent of the restricted stock units may vest on the tenth anniversary
following the grant date.
In 2020, the restricted stock unit plan was amended to update provisions regarding the vesting periods for the
units granted in 2020 and onwards to the chairman, president and chief executive officer such that 50 percent of
restricted stock units vest on the fifth anniversary and remaining 50 percent on the tenth anniversary. For
awards granted prior to 2020, the vesting of the tenth anniversary portion of the award is delayed until
retirement if later than 10 years.
164
As a result of an employee stock program expansion implemented in 2022, the restricted stock unit plan was
amended to include an additional vesting schedule, in which some new non-executive participants will be
eligible for awards granted that vest 100 percent after 3 years.
Retirement plans
The company's approach to talent development stems from the need to develop future leaders broadly and
deeply given the complexity and long-term nature of the business. Retirement plans support the company's
talent management approach and are designed to attract and retain talent for a career. Retirement plans
include:
• A company savings plan that is attractive to new hires who can begin building an account balance
immediately upon achieving eligibility; and
• Defined benefit plans, such as the company's pension plans, that help retain mid- and late-career
employees until retirement eligibility. These are viewed as the primary vehicle for retirement planning.
Named executive officers participate in the same pension plan, including supplemental pension arrangements
outside the registered plan, as other employees, except for B.W. Corson, D.E. Lyons and S.P. Younger who
participate in Exxon Mobil Corporation or respective affiliates’ pension plans.
Below are brief descriptions of the company's plans.
Plan
Description
Savings plan
Registered
pension plan
Supplemental
arrangement (SPA)
pension
•
•
•
•
•
•
•
•
•
•
•
Employees
of
percent
company
The
the
of
amount
arrangement
Employee
and
non-registered
savings
plan
with
normal
more
than
earnings
one
via
matching
of
service
year
payroll deductions.
contributions
up
which
and
contributions
employee participates
provides
employee
the
company
(tax-paid)
contributions
a
or
account,
contribution
can
be
registered
limits
any
in
(tax-deferred)
under
the
allocated
to
combination
a
to
retirement
group
Income
Tax Act.
(RRSP),
subject
may
contribute
between
1
and
30
to
6%
defined
which
benefit
pension
vary
depending
on
company
The
company if
is
Pension
be
can
that
pension
The
year
the
the
company
The
age,
subject
paid
provides
a
service,
to
from
registered
other
and
income
tax
a
provides
registered
for
plan
employee
not
does
reaches
grant
plan.
pension
the
age
additional
benefits
of
71.
pension
defined
provisions
pension
under
benefit
plan
the
limits
impose
when
are
on
met.
the
regulations
that
leaving
the
amounts
accrual
only
until
December
1st
in
service credit.
executive
an
addresses
plan
portions
any
due
to
officers
the
of
tax
income
receive
who
to
tied
benefit
sum
a
as
lump
an
payable if
are
defined
regulations.
annual
an
annual
or
employee
bonus.
an annuity.
annual
taken
be
amounts
SPA
registered
For
provide
SPA
No
before
SPA
may
reaching
retirement
eligibility.
benefit
that
cannot
be
paid
from
the
bonus,
the
company's
SPA
can
also
resigns
or
is
terminated
with
cause
The estimated benefits that would be payable upon retirement to each named executive officer under the
company’s pension plan and the supplemental pension arrangements can be found in the pension plan benefits
table starting on page 177.
165
B.A. Jolly and J.R. Wetmore participate in the 1.6 percent provision of the company’s pension plan. Key
features of this plan for these executives include:
• An annual benefit equal to 1.6 percent multiplied by final average earnings multiplied by years of
service, with a partial offset for applicable government pension benefits. Final average earnings
consists of base salary over the highest 36 consecutive months in the 10 years of service prior to
retirement.
• An option to forego a portion of the company’s matching contributions to the savings plan in order to
receive an additional 0.4 percent of final average earnings.
Key features of the SPA plan for the 1.6 percent provision of the pension plan include:
• Executive officers who receive an annual bonus, and meet the criteria of the SPA, can also receive an
annual benefit of 1.6 percent of final average bonus earnings multiplied by years of service.
• Final average bonus earnings include the average bonus for the three highest grants of the last five
bonus years awarded prior to retirement for eligible executives.
• Annual bonus could include the cash amounts that are paid at grant and the maximum settlement value
of any earnings bonus units received, as described starting on page 162. The value of the earnings
bonus units is expected to pay out, subject to forfeiture provisions, and are therefore included for
supplemental pension arrangement purposes in the year of grant rather than the year of payment.
B.W. Corson, D.E. Lyons and S.P. Younger are not participants in the company’s pension plan, but are
participants in the Exxon Mobil Corporation or respective affiliates’ pension and savings plans:
• Mr. Corson and Mr. Lyons participate in the Exxon Mobil Pension Plan (EMPP). Under this plan, the
pension is payable in U.S. dollars and is calculated based on final average base salary over the highest
36 consecutive months in the 10 years of service prior to retirement. They are also eligible for the
ExxonMobil Supplemental Pension Plan (SPP) for pension benefits that cannot be paid from the EMPP
due to IRS limitations. The ExxonMobil Additional Payment Plan (APP) provides a pension based on
the average annual bonus for the three highest grants of the last five awarded prior to retirement. The
SPP and APP are paid as a lump sum.
• Mr. Younger participates in the Esso Australia Pty Ltd. defined benefit plan. Under this plan, the pension
is payable in Australian dollars and is calculated based on final average base salary over the highest 12
consecutive months in the 10 years of service prior to retirement.
Compensation decision making process and considerations for named
executive officers
Benchmarking
In addition to the assessment of business and individual performance, the executive resources committee
("committee") relies on market comparisons to a group of major Canadian companies.
Comparator companies
The following criteria are used to select comparator companies:
• Canadian companies or Canadian affiliates;
large operating scope and complexity;
•
capital intensive; and
•
proven sustainability over time.
•
List of comparator companies:
• Energy: Canadian Natural Resources Limited, Cenovus Energy Inc., CNOOC International,
ConocoPhillips Canada, Crescent Point Energy, Enbridge Inc., Gibson Energy, Irving Oil Ltd., MEG
Energy, NOVA Chemicals Corporation, Nutrien Ltd., Ovintiv Inc., Parkland Corporation, Repsol Oil &
Gas Canada Inc., Shell Canada Limited, Suncor Energy Inc., TC Energy Corporation, Valero Energy
• Non-energy: BCE Inc., Canadian Pacific Railway Limited, Canadian Tire Corporation, Limited, General
Electric Canada, IBM Canada Ltd., Proctor & Gamble Inc., Royal Bank of Canada, Teck Resources
166
The company is a national employer drawing from a wide range of disciplines. Compensation trends based on
survey data are prepared annually by an independent external consultant with additional analysis and
recommendation provided by the company’s internal compensation advisors. Rather than targeting a specific
percentile, the committee applies well-informed judgment, using a broader and more flexible orientation,
generally a range around the median of the comparator energy companies’ compensation. This approach
applies to salaries and the annual incentive program that includes annual bonus and restricted stock units,
which are also considered in relation to the majority shareholder program.
This overall approach provides the company with the ability to:
•
better respond to changing business conditions;
• manage salaries based on a career orientation;
• minimize potential for automatic increasing of salaries, which could occur with an inflexible and narrow
target among benchmarked companies; and
differentiate executives’ salaries based on performance and experience levels.
•
The elements of Exxon Mobil Corporation and respective affiliates’ compensation programs for B.W. Corson,
D.E. Lyons and S.P. Younger, including salary, annual bonus and restricted stock units (long-term)
compensation considerations, are generally similar to those of the company.
Business performance results for consideration
The operating and financial performance results listed below and the company’s continued maintenance of
sound business controls and a strong corporate governance environment formed the basis for the salary and
incentive award decisions made by the committee in 2022. The committee considered the results over multiple
years, relative to the company’s proven business model and strategies, to deliver long-term shareholder value.
2022 key business results
In 2022, Imperial delivered exceptional business results across a wide range of performance dimensions.
• Delivered strong safety performance and effective enterprise risk management.
• Recognized as one of Canada’s top employers by Mediacorp Canada Inc. for the third consecutive year.
• Demonstrated clear commitment to sustainability:
◦ Published Imperial’s Advancing Climate Solutions and Corporate Sustainability Reports.
◦ Established the company's goal to reduce emissions intensity at its operated oil sands by 30% by
2030 compared with 2016 levels.
◦ Progressed Pathways initiatives including technical design studies, field environmental studies and
securing pore space for the Alliance to continue exploratory work to safely and permanently store
CO2.
◦ Entered into two of Imperial’s largest ever contracts with Indigenous-owned companies to provide
large-scale earthwork, land reclamation and mining support at our Kearl asset.
◦ Continued deployment of boiler flue gas emissions reduction technology at Kearl, starting up 1
additional boiler unit, and fully funding remaining additional units.
◦ Entered into a strategic collaboration with E3 Lithium to advance a lithium extraction pilot in Alberta.
◦ Signed agreement with Atura Power to study the potential for green hydrogen production in
Nanticoke, Ontario.
◦ Entered long-term contract with Air Products to supply low-carbon hydrogen for Imperial’s planned
renewable diesel complex near Edmonton, Alberta.
◦ Entered into a unique collaboration with FLO that will support Canada’s net-zero emissions goals by
expanding FLO’s charging network for electric vehicles.
◦ Progressed startup of world scale battery technology at Sarnia to optimize electricity consumption.
◦ Continued to progress a feasibility study for advanced plastic recycling at our Sarnia site.
• Strong financial performance:
◦ Record operating performance allowed Imperial to take advantage of high commodity prices to
realize record earnings and cash flow from operating activities for the year.
◦ Achieved net income of $7,340 million.
◦ Generated robust cash flow from operating activities of $10.5 billion and free cash flow1 of about
$9.9 billion, driven by portfolio optimization and disciplined capital spending.
167
◦
Increased quarterly dividend declared to $0.34 per share in the first quarter, and to $0.44 per share
in the fourth quarter of 2022, increasing the annual dividend paid for the 28th consecutive year. The
quarterly dividend of $0.44 per share represents a 63% increase year over year.
◦ Record shareholder returns of over $7.2 billion; including dividends of over $0.8 billion and share
repurchases of about $6.4 billion under two substantial issuer bids of $2.5 billion and $1.5 billion
respectively, and the accelerated completion of the company's normal course issuer bid.
◦ Reduced outstanding debt by $1 billion, further enhanced by the company's industry leading
balance sheet and improved financial flexibility.
• Strong Upstream operational performance:
◦ Produced 416,000 gross oil-equivalent barrels per day of full-year upstream production; driven by
strong operations and a continued focus on low capital high return investments.
◦ Kearl’s second half production was the highest in the asset’s history, bringing full-year production to
242,000 gross oil-equivalent barrels per day.
◦ Achieved best-ever single-day production at Kearl of 360,000 gross oil-equivalent barrels per day
on December 29, 2022, and matched best-ever quarterly production in the fourth quarter.
◦ Produced 144,000 gross oil-equivalent barrels per day of full-year production at Cold Lake, the
highest full-year production since 2018, which was driven by higher reliability and production
enhancement initiatives including field optimizations and drilling.
◦ Progressed construction of the Cold Lake Grand Rapids expansion project and accelerated phase
1 start-up to year-end 2023.
◦ Syncrude produced 77,000 gross oil-equivalent barrels per day (Imperial’s share) of full-year
production, the highest annual production in its history, supported by the interconnect pipeline.
◦ Optimized and focused portfolio by completing, together with ExxonMobil Canada, the sale of XTO
Energy Canada for total cash consideration of approximately $1.9 billion ($0.9 billion Imperial’s
share).
• Strong Downstream and Chemical operational performance:
◦ Achieved highest full-year capacity utilization in company history, increasing refinery capacity
utilization by 9 percent to 98 percent with monthly crude throughput records achieved at all three
refineries.
◦ Achieved highest ever distillate production as a percentage of our total refining crude capacity.
◦ Completed the Sarnia Products Pipeline project increasing capacity, improving reliability of supply,
lowering logistics costs, and increasing sales in the high-value Toronto market.
◦ Continued to progress plans to construct a world-class renewable diesel complex at Strathcona
refinery, with a final investment decision announced in January, 2023.
◦ Reliable operational performance supported Chemicals net income of $204 million.
1non-GAAP financial measure – see Frequently used terms section on page 171 for definition.
Performance assessment considerations
The company's business results form the context in which the committee assesses the individual performance
of each senior executive. Annually, the chairman, president, and chief executive officer reviews the performance
of the senior executives with the committee. Performance is evaluated based on accomplishments versus plan
goals and objectives, with performance results informing level of pay, including salary, bonus, and long-term
incentive awards.
The same long-term key business strategies noted on page 157 and the company’s business performance
results are key elements in the assessment of the chairman, president, and chief executive officer’s
performance by the executive resources committee.
In addition to the formal annual evaluation, the performance of all named executive officers is assessed by the
board of directors throughout the year during specific business reviews and board committee meetings that
provide information on strategy development, operating and financial results, safety, health, and environmental
results, business controls, and other areas pertinent to the general performance of the company.
The committee does not use quantitative targets or formulae to assess individual executive performance or
determine compensation. The committee does not assign weights to the factors considered. Formula-based
performance assessments and compensation typically require emphasis on two or three business metrics. For
the company to be an industry leader and effectively manage the technical complexity and integrated scope of
168
its operations, senior executives must advance multiple strategies and objectives in parallel, versus
emphasizing one or two at the expense of others that require equal attention.
Senior executives and officers are expected to perform at the highest level or they are replaced. If it is
determined that another executive is ready and would make a stronger contribution than one of the current
incumbents, a replacement plan is implemented.
2022 chief executive officer compensation assessment
B.W. Corson was appointed to the board and as president of the company on September 17, 2019 and
assumed the additional roles of chairman and chief executive officer on January 1, 2020. Mr. Corson worked for
Exxon Mobil Corporation and its predecessor companies since 1983. His level of salary in 2022 was determined
by the committee based on his individual performance and to align with that of his peers in ExxonMobil. For
2022, the committee approved an increase of $31,000 U.S. to $804,000 U.S. For 2023, the committee approved
a salary increase of $80,000 U.S. to $884,000 U.S. effective January 1, 2023.
Mr. Corson’s 2022 annual bonus was based on his performance as assessed by the committee. His long-term
incentive award was granted in the form of Imperial restricted stock units, not Exxon Mobil Corporation
restricted stock, to reinforce alignment of his interests with that of the company’s shareholders. His company
restricted stock units are subject to vesting periods longer than those applied by most companies. The purpose
of these long vesting periods is to reinforce the long investment lead times in the business and to link a
substantial portion of Mr. Corson’s shareholding net worth to the performance of the company. As such, the
realized value of the long-term incentive grants may differ from the amounts shown in the summary
compensation table, depending on company performance at time of future vesting. During these vesting
periods, the awards are subject to risk of forfeiture based on detrimental activity even after retirement.
The committee has determined that the total compensation of Mr. Corson was appropriate based on the
company’s financial and operating performance, and its assessment of his effectiveness in leading the
organization relative to the business performance measures outlined on page 160. Taking all factors into
consideration, the committee’s decisions on compensation of the chief executive officer reflect judgment, rather
than the application of formulae or targets.
Pay awarded to other named executive officers
Within the context of the compensation program structure and performance assessment processes previously
described, the value of 2022 incentive awards and salary adjustments align with:
•
•
•
•
performance of the company;
individual performance;
long-term strategic plan of the business; and
annual compensation of comparator companies.
Taking all factors into consideration, the committee’s decisions on pay awarded to other named executive
officers reflect judgment, rather than the application of formulae or targets. The committee approved the
individual elements of compensation and the total compensation as shown in the summary compensation table
on page 172.
Independent consultant
In fulfilling its responsibilities during 2022, the committee did not retain an independent consultant or advisor in
determining compensation for any of the company’s officers or any other senior executives. The company’s
management retained an independent consultant to provide an assessment of competitive compensation and
market data for all salaried levels of employees of the company. While providing this data, they did not provide
individual compensation recommendations or advice for the compensation of the chairman, president and chief
executive officer or other senior executives.
169
Performance graph
The following graph shows changes over the past 5 years in the value of $100 invested in (i) Imperial Oil
Limited common shares, (ii) the S&P/TSX Composite Index, and (iii) the S&P/TSX Composite Energy Index.
The S&P/TSX Composite Energy Index is currently made up of share performance data for 39 oil and gas
companies including integrated oil companies, oil and gas producers, and oil and gas service companies.
The year-end values in the graph represent appreciation in share price and the value of dividends paid and
reinvested. The calculations exclude trading commissions and taxes. Total shareholder returns from each
investment, whether measured in dollars or percent, can be calculated from the year-end investment values
shown beneath the graph.
During the past 5 years, the company’s cumulative total shareholder return was 92 percent, for an average
annual return of 14 percent. Total direct compensation for named executive officers generally reflects the trend
in total shareholder returns as the largest single component of executive compensation is awarded in the form
of restricted stock units with long holding periods. This design reinforces the long-term linkage between
executive compensation and the shareholding net worth of executives to the return on the company’s stock
realized by shareholders. Total direct compensation includes salary, the annual bonus grant, and the grant date
fair value of the restricted stock unit award which is equal to the price of the company’s common shares on the
date of grant.
170
Frequently used terms
The term total direct compensation is compensation granted during the year, including salary, the annual bonus,
and the grant date fair value of the restricted stock unit award which is equal to the price of the company’s
common shares on the date of grant.
The following definitions are used in the compensation discussion and analysis as several of Imperial’s
business and financial performance measures. These measures are not prescribed by U.S. Generally Accepted
Accounting Principles (GAAP). These measures constitute “non-GAAP financial measures” under Securities
and Exchange Commission Regulation G, and “specified financial measures” under National Instrument 52-112
Non-GAAP and Other Financial Measures Disclosure of the Canadian Securities Administrators. Non-GAAP
financial measures and specified financial measures are not standardized financial measures under GAAP and
do not have standardized definitions. As such, these measures may not be directly comparable to measures
presented by other companies, and should not be considered a substitute for GAAP financial measures. For
additional information and reconciliation with respect to the terms, see the “Frequently used terms” section of
the company’s most recent Annual Report on Form 10-K.
• Cash flow from operating activities and asset sales is a non-GAAP financial measure that is the sum of
the net cash provided by operating activities and proceeds from asset sales reported in the
consolidated statement of cash flows.
• Return on average capital employed is a non-GAAP financial measure that is a measure of capital
productivity, and equals net income excluding the after-tax cost of financing divided by total average
capital employed. Capital employed is property, plant and equipment, and other assets, less liabilities,
excluding both short-term and long-term debt, plus the company’s share of equity company debt.
• Free cash flow is a non-GAAP financial measure that is cash flows from operating activities less
additions to property, plant and equipment and equity company investments plus proceeds from asset
sales. The most directly comparable financial measure that is disclosed in the financial statements is
cash flows from (used in) operating activities within the company’s consolidated statement of cash
flows. This measure is used to evaluate cash available for financing activities (including but not limited
to dividends and share purchases) after investment in the business.
Reconciliation of free cash flow
millions
of
Canadian dollars
From
the
Consolidated
statement
of
cash flows
Cash
flows
from
(used
in)
operating activities
Cash
flows
from
(used
in)
investing activities
Additions
to
property,
plant
and equipment
Proceeds
from
asset sales
Additional investments
Loans
to
equity
companies - net
Free
cash flow
171
2022
10,482
(1,526)
904
(6)
10
9,864
Executive compensation tables and narratives
Summary compensation table
The following table shows the compensation for the chairman and chief executive officer; the senior vice-
president, finance and administration, and controller; and the three other most highly compensated executive
officers of the company who were serving as of the end of 2022.
The information in the Summary compensation table includes the Canadian dollar value of base salaries, cash
bonus awards and earnings bonus unit payments, long-term incentive compensation and certain other
compensation. Amounts in the table pertain to the named executive officers’ respective periods of assignment
with the company.
Name
position
and principal
end of
the
at
2022
Corson (a)
B.W.
Chairman, president
and
chief executive
officer (since
September
17, 2019)
D.E.
Lyons (a)
Senior vice-president,
finance and
administration, and
controller (since
1, 2018)
May
S.P.
Younger (a)
Senior vice-president,
upstream (since
1, 2019)
July
Year
Salary
($)
(b)
Share-
based
awards
($)
(c)
Option-
based
awards
($)
(d)
Non-equity
plan com
incentive
pensation
($)
Annual
incentive
plans
(e)
Long-term
incentive
plans
(f)
Pension
value
($)
(g)
All other
compensation
($)
(h)
Total
compensation
($)
(i)
2022
1,046,245
6,463,180
—
2,223,922
727,427
4,905,567
1,975,182
17,341,523
2021
968,956
3,447,056
—
956,421
2020
996,734
1,897,132
—
—
0
0
1,200,091
2,178,025
8,750,549
(340,046)
1,945,980
4,499,800
2022
688,388
1,917,168
—
890,089
298,642
1,850,528
1,798,933
7,443,748
2021
646,806
1,163,712
—
439,979
2020
689,307
553,128
—
—
0
0
463,757
784,104
3,498,358
(207,474)
1,516,702
2,551,663
2022
574,345
1,597,640
—
565,155
170,133
346,566
709,862
3,963,701
2021
545,996
714,096
—
250,449
2020
527,126
393,012
—
—
0
0
81,762
415,505
2,007,808
(299,441)
555,097
1,175,794
2022
472,500
1,234,540
—
469,657
140,448
1,306,400
118,315
3,741,860
B.A. Jolly
Assistant controller
August
(since
1, 2019)
2021
450,000
749,360
—
237,332
2020
444,500
393,012
—
—
0
0
268,900
91,487
1,797,079
23,300
76,767
937,579
J.R. Wetmore
Vice-president,
chemicals
downstream,
Western
and
Canada
manager (since
fuels
1, 2022)
June
2022
453,700
958,584
—
311,755
93,370
449,200
80,057
2,346,666
2021
432,100
581,856
—
157,555
2020
427,100
320,232
—
—
0
0
56,200
59,028
1,286,739
87,500
50,885
885,717
172
Footnotes to the Summary compensation table for named executive officers
(a) The compensation for B.W. Corson, D.E. Lyons, and S.P. Younger is paid directly by Exxon Mobil Corporation and respective affiliates,
with the exception of the compensation related to the vesting of the company’s restricted stock units and dividend equivalents on
outstanding restricted stock units. They also receive employee benefits under their respective affiliates’ employee benefit plans, and
not under the company’s employee benefit plans. The company reimburses the respective affiliates for applicable compensation paid
and employee benefits provided to them. The company does not reimburse Exxon Mobil Corporation for the cost of incentive awards
granted by Exxon Mobil Corporation.
(b) The amounts listed in the “Salary” column for each named executive officer on expatriate assignment (B.W. Corson, D.E. Lyons and
S.P. Younger) are paid in their local currency, but disclosed in Canadian dollars. Mr. Corson’s and Mr. Lyons’ salaries are paid in U.S.
dollars and were converted to Canadian dollars at the average 2022 exchange rate of 1.3013. In 2021 and 2020, the average
exchange rate was 1.2535 and 1.3415 respectively. Mr. Younger’s salary is paid in Australian dollars and was converted to Canadian
dollars at the average 2022 exchange rate 0.9032. In 2021 and 2020, the average exchange rate was 0.9421 and 0.9247.
(c) The grant date fair value equals the number of restricted stock units multiplied by the closing price of the company’s shares on the date
of grant. The closing price of the company’s shares on the grant date in 2022 was $72.62, which is the same as the accounting fair
value for the restricted stock units on the date of grant. The closing price of the company’s shares on the grant date in 2021 was
$44.08 and in 2020 was $24.26, which is the same as the accounting fair value for the restricted stock units on the date of grant. The
company chose this method of valuation as it believes it results in the most accurate representation of fair value.
(d) The company has not granted stock options since 2002. The stock option plan expired in 2012.
(e) The amounts listed in the “Annual incentive plans” column for each named executive officer represent their cash bonus. In 2021 and
2022, the bonus award was paid in full as a cash bonus in the year of grant rather than a combination of cash and earnings bonus
units. In 2020, the company suspended the annual cash bonus program, and therefore no cash payment was made. B.W. Corson,
D.E. Lyons, and S.P. Younger participate in Exxon Mobil Corporation’s annual cash bonus program, which is similar to the company’s
plan, and is paid in U.S. dollars, but disclosed in Canadian dollars. In 2021 and 2022, Exxon Mobil Corporation’s bonus award was
also paid in full as a cash bonus in the year of grant rather than a combination of cash and earnings bonus units. In 2020, Exxon Mobil
Corporation’s annual bonus program was also suspended. For amounts paid in 2022 and 2021 in U.S. dollars, they were converted to
Canadian dollars at the average exchange rate of 1.3013 and 1.2535 respectively.
(f) The amounts listed in the “Long-term incentive plans” column represent earnings bonus units related to prior year grants that paid out
in year. In 2020 and 2021, the maximum settlement value (trigger) or cumulative earnings per share was not achieved, therefore no
payments were made. B.W. Corson, D.E. Lyons, and S.P. Younger participate in Exxon Mobil Corporation’s program, which is similar
to the company’s program, and is paid in U.S. dollars, but disclosed in Canadian dollars. Under the Exxon Mobil Corporation’s
program, the maximum settlement value (trigger) or cumulative earnings per share was not achieved, therefore no payments were
made in 2020 and 2021. For amounts paid in 2022 in U.S. dollars, they were converted to Canadian dollars at the average exchange
rate of 1.3013.
“Pension value” is the “Compensatory change” in pensions as of December 31, 2022 as set out in the “Pension plan benefits” table on
page 177.
(g)
(h) The amounts listed in the “All other compensation” column include dividend equivalent payments on restricted stock units granted,
•
•
savings plans contributions, expatriate assignment costs, parking and the cost of perquisites including financial planning and business
club memberships, as well as security costs and costs associated with participation in Exxon Mobil Corporation’s executive life
insurance benefit plan, as applicable.
•
In 2022, B.W. Corson received $33,039 of senior executive life insurance premiums, $14,185 for financial planning services, and
$3,372 for club membership. For all other named executive officers, the aggregate value of perquisites received in 2022 was not
greater than $50,000 or 10 percent of the named executive officer’s base salary.
It is noted that in 2022, the actual dividend equivalent payments on the company restricted stock units were $281,520 for B.W.
Corson, $96,084 for D.E. Lyons, $37,422 for S.P. Younger, $87,023 for B.A. Jolly, and $72,578 for J.R. Wetmore. The dividend
equivalent payments on Exxon Mobil Corporation’s restricted stock were $406,526 for Mr. Corson, $66,522 for Mr. Lyons and
$91,930 for Mr. Younger; these amounts were paid in U.S. dollars and converted to Canadian dollars at the average 2022
exchange rate of 1.3013.
For the named executive officers on expatriate assignment (B.W. Corson, D.E. Lyons and S.P. Younger), “All other
compensation” also includes expatriate assignment costs which consist of expatriate allowances and the net effect of tax
equalization costs in the year. Tax equalization costs include the net effect of taxes paid by the companies to local taxing
authorities on behalf of the named executive officer offset by a withholding from their income that approximates the amount of tax
they would pay if they had not gone on expatriate assignment. Tax equalization is an integral part of the expatriate relocation
program and is designed to maintain an individual’s overall tax burden at approximately the same level it would have otherwise
been, had they remained in their home country. Tax equalization amounts vary from one year to the next and the net impact may
be positive or negative in the year.
(i)
“Total compensation” consists of the total dollar value of “Salary”, “Share-based awards”, “Option-based awards”, “Non-equity incentive
plan compensation”, “Pension value” and “All other compensation”.
173
Outstanding share-based awards and option-based awards for named executive officers
The following table sets forth all share-based and option-based awards outstanding for each named executive
officer of the company as at December 31, 2022.
Option-based awards
Share-based awards
Name
Number of
securities
underlying
unexercised
options
(#)
Option
exercise
price
($)
Option
expiration
date
Value of
unexercised
in-the-
money
options
($)
Number of
shares or
units of
shares that
have not
vested
(#)
(d)
Market or
payout value
of share-
based
awards
that
have not
vested
($)
(d)
of
payout
Market or
value
vested share-
based awards
out or
not
paid
distributed
($)
B.W.
Corson
(a)
—
D.E.
Lyons
(b)
—
S.P.
Younger
(c)
—
B.A. Jolly
—
J.R. Wetmore
—
—
—
—
—
—
—
—
—
—
—
—
323,600
21,341,420
—
—
94,800
6,252,060
—
54,400
3,587,680
—
73,800
4,867,110
—
60,400
3,983,380
—
—
—
—
(a) B.W. Corson was granted restricted stock units from 2019 to 2022 under the company’s plan. With respect to previous years, Mr.
Corson participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the company’s restricted stock unit plan.
Under that plan, Mr. Corson held 73,850 Exxon Mobil Corporation restricted stock whose value on December 31, 2022 was
$11,032,475 based on a closing price for Exxon Mobil Corporation shares on December 31, 2022 of $110.30 U.S., which was
converted to Canadian dollars at the December 31, 2022 close rate of 1.3544 provided by the Bank of Canada.
(b) D.E. Lyons was granted restricted stock units from 2018 to 2022 under the company’s plan. With respect to previous years, Mr. Lyons
participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the company’s restricted stock unit plan. Under that
plan, Mr. Lyons held 9,600 Exxon Mobil Corporation restricted stock whose value on December 31, 2022 was $1,434,147 based on a
closing price for Exxon Mobil Corporation shares on December 31, 2022 of $110.30 U.S., which was converted to Canadian dollars at
the December 31, 2022 close rate of 1.3544 provided by the Bank of Canada.
(c) S.P. Younger was granted restricted stock units from 2020 to 2022 under the company’s plan. With respect to previous years, Mr.
Younger participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the company’s restricted stock unit plan.
Under that plan, Mr. Younger held 13,600 Exxon Mobil Corporation restricted stock whose value on December 31, 2022 was
$2,031,708 based on a closing price for Exxon Mobil Corporation shares on December 31, 2022 of $110.30 U.S., which was converted
to Canadian dollars at the December 31, 2022 close rate of 1.3544 provided by the Bank of Canada.
(d) Represents the total of the outstanding restricted stock units received from the company plan in 2015 through 2022. The value is
based on the closing price of the company’s shares on December 31, 2022 of $65.95.
174
Incentive plan awards for named executive officers – Value vested or earned during the year
The following table sets forth the value of the incentive plan awards that vested in the year for each named
executive officer of the company.
Name
Option-based
vested
Value
awards –
during the
year
($)
B.W.
Corson
(a)
D.E.
Lyons
(b)
S.P.
Younger
(c)
B.A. Jolly
J.R. Wetmore
—
—
—
—
—
Share-based
vested
awards
the
during
($)
(d)
– Value
year
Non-equity
incentive plan
compensation
during
earned
($)
(e)
–
Value
the year
—
732,480
—
—
—
—
900,340
610,105
740,110
405,125
(a) Although B.W. Corson received restricted stock units under the company’s plan from 2019 to 2022, these restricted stock units have
not vested. In previous years, Mr. Corson participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the
company’s restricted stock unit plan. In 2022, restrictions were removed on 14,150 Exxon Mobil Corporation restricted stock having a
value of $2,040,020 based on the average of the high and low sale prices of Exxon Mobil Corporation common shares on the NYSE on
the date that the restrictions lapsed. B.W. Corson participates in Exxon Mobil Corporation’s annual bonus program, which is similar to
the company’s annual bonus program. In 2022, B.W. Corson received $2,223,922 with respect to the annual cash bonus. B.W. Corson
also received $727,427 for earnings bonus units granted in 2018 and 2019. All these amounts were paid in U.S. dollars and converted
to Canadian dollars at the average 2022 exchange rate of 1.3013.
(b) Prior to 2018, Mr. Lyons participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the company’s restricted
stock unit plan. In 2022, restrictions were removed on 4,800 Exxon Mobil Corporation restricted stock having a value of $706,887
based on the average of the high and low sale prices of Exxon Mobil Corporation common shares on the NYSE on the date that the
restrictions lapsed. D.E. Lyons participates in Exxon Mobil Corporation’s annual bonus program, which is similar to the company’s
annual bonus program. In 2022, D.E. Lyons received $890,089 with respect to the annual cash bonus. D.E. Lyons also received
$298,642 for earnings bonus units granted 2018 and 2019. All these amounts were paid in U.S. dollars and converted to Canadian
dollars at the average 2022 exchange rate of 1.3013.
(c) Although S.P. Younger received restricted stock units under the company’s plan from 2020 to 2022, these restricted stock units have
not vested. In previous years, Mr. Younger participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the
company’s restricted stock unit plan. In 2022, restrictions were removed on 6,300 Exxon Mobil Corporation restricted stock having a
value of $930,991 based on the average of the high and low sale prices of Exxon Mobil Corporation common shares on the NYSE on
the date that the restrictions lapsed. S.P. Younger participates in Exxon Mobil Corporation’s annual bonus program, which is similar to
the company’s annual bonus program. In 2022, S.P. Younger received $565,155 with respect to the annual cash bonus. S.P. Younger
also received $170,133 for earnings bonus units granted in 2018 and 2019. All these amounts were paid in U.S. dollars and converted
to Canadian dollars at the average 2022 exchange rate of 1.3013.
(d) These values show restricted stock units granted by the company that vested in 2022. The value is based on the five day average
closing price of the company’s shares, which includes the vesting date and the four preceding trading days. For D.E. Lyons, the values
represent restricted stock units granted in 2019. For B.A. Jolly and J.R. Wetmore, the values represent restricted stock units granted in
2015 and 2019, which vested in 2022.
(e) This column represents amounts paid by the company with respect to the annual cash bonus and earnings bonus units granted in prior
years that paid out in the current year. In 2022, the company granted an annual cash bonus and the maximum settlement value
(trigger) or cumulative earnings per share was achieved for earnings bonus units granted in 2018 and 2019.
175
Equity compensation plan information
The following table provides information on the common shares of the company that may be issued as of the
end of 2022 pursuant to compensation plans of the company.
Number
of
be
issued
exercise
securities
upon
of
to
Plan category
outstanding options,
and rights
warrants
(#)
(c)
Equity
security
compensation
holders (a)
plans
approved
by
—
Equity
approved
compensation
security
by
not
plans
holders (b)
1,762,425
Total
1,762,425
Weighted-average
price of
exercise
outstanding options,
and rights
warrants
($)
securities
Number
of
available
remaining
issuance
future
for
equity
under
compensation
plans
securities
the
(excluding
reflected
first column)
in
(#)
(c)
—
8,705,612
8,705,612
—
—
—
(a) The company’s stock option plan expired in 2012.
(b) This is a restricted stock unit plan, which is described starting on page 163.
(c) The Number of securities to be issued represents the total number of restricted stock units issued since 2012 and still outstanding
(4,036,355) minus the outstanding restricted stock units that are only eligible for cash (and not common shares) upon vesting
(2,273,930). The Number of securities remaining available for future issuance represents the restricted stock units not yet granted
(6,431,682) plus the number of outstanding restricted stock units that are only eligible for cash (and not common shares) upon vesting
(2,273,930).
Restricted stock units as a percentage of outstanding shares
The following table provides information on the restricted stock unit plan, expressed as a number and as a
percentage of the common shares of the company as of the end of 2022.
Maximum
restricted
number of
stock units
issuable
the plan
under
(b)
Total
restricted
number of
stock units
awarded and
outstanding
Total
of
number
restricted
units
for grant
stock
available
Number (#)
10,468,037
4,036,355
6,431,682
Percent
shares
of
(%) (a)
outstanding
common
1.79
0.69
1.10
(a) As of December 31, 2022, the number of common shares outstanding was 584,152,718.
(b) The maximum number of restricted stock units issuable under the company plan is the number as of December 31, 2021 (10,468,037)
minus the common shares issued in 2022 pursuant to the vesting of restricted stock units under the plan (0 common shares).
176
Annual burn rate
The following table provides the annual burn rate associated with the restricted stock unit plan for each of the
company’s three most recent fiscal years. The annual burn rate is the number of restricted stock units granted
as a percentage of the weighted-average number of outstanding shares of the company, which provides a
measure of how quickly a company is using its available shares for incentive purposes.
Number
stock
under
of restricted
units granted
the plan
(#)
(a)
outstanding
(#)
(b)
Weighted-average
number
of securities
Annual
burn
rate
2022
2021
2020
884,140
640,160,028
680,720
711,602,150
747,040
735,285,422
(%)
(c)
0.14
0.10
0.10
(a) The number of restricted stock units granted under the plan in the applicable fiscal year.
(b) The weighted-average number of securities outstanding during the period is the number of securities outstanding at the beginning of
the period, adjusted by the number of securities bought back or issued during the period multiplied by a time-weighting factor.
(c) The annual burn rate percent is calculated as the number of restricted stock units granted under the plan divided by the weighted-
average number of securities outstanding.
Status of prior long-term incentive compensation plans
The company’s only long-term incentive compensation plan is the restricted stock unit plan described starting
on page 163. There are no units outstanding for any historical plan.
Pension plan benefits
The following table provides information for each named executive officer of the company participating in a
defined benefit pension plan. Information for named executive officers on assignment from affiliates of the
company who participate in a plan provided by such affiliates is disclosed in the footnotes.
Name
Number
of years
credited
service
(as of
December
2022)
(#)
(a)
31,
B.W. Corson
D.E. Lyons
—
—
Annual benefits
payable
($)
At year-
end
(b)
At age
65
(c)
—
—
—
—
S.P.
Younger
(g)
—
—
—
Opening
present
value of
defined
benefit
obligation
($)
(d)
—
—
—
Compensatory
change
($)
(e)
Non-
compensatory
change
($)
(f)
—
—
—
—
—
—
Closing
present
value of
defined
benefit
obligation
($)
(d)
—
—
—
B.A. Jolly
31.5
310,500
409,400
5,747,500
1,306,400
(1,189,400)
5,864,500
J.R. Wetmore
28.5
269,500
426,100
5,036,900
449,200
(1,511,600)
3,974,500
177
Footnotes to the Pension plan benefits table for named executive officers
(a) B.W. Corson and D.E. Lyons participate in the Exxon Mobil Corporation defined benefit pension plan including tax-qualified and non-
qualified plans. Benefits under this plan are payable in U.S. dollars and have been converted to Canadian dollars at the average 2022
exchange rate of 1.3013. Under this plan, Mr. Corson had 39.5 years of credited service and Mr. Lyons had 32.5 years of credited
service. S.P. Younger participates in the Esso Australia Pty Ltd. defined benefit and defined contribution pension plans. Benefits under
these plans are payable in Australian dollars and have been converted to Canadian dollars at the average 2022 exchange rate of
0.9032. Under these plans, Mr. Younger had 25.8 years of credited service.
(b) For members of the company’s pension plan, the annual benefits include the amount of the accrued annual lifetime pension from the
company’s registered pension plan and supplemental pension arrangement. Benefits under the supplemental pension arrangement
can be paid as a lump-sum equivalent upon retirement. For members of the Exxon Mobil Corporation’s pension plan, the annual
benefits include the accrued annual lifetime pension from the tax-qualified and the annual amount calculated under the non-qualified
plans. For B.W. Corson this value was $1,451,751. For D.E. Lyons this value was $624,804. Non-qualified plan benefits are payable
only as a lump-sum equivalent upon retirement. For members of the Esso Australia Pty Ltd.defined benefit plan, benefits are payable
as lump-sum equivalent or annual lifetime pension upon retirement for participants age 55 and older. For S.P Younger, this is not
applicable as his age is under 55 years, and therefore he is not currently entitled to pension if leaving service.
(c) For members of the company’s pension plan, the annual benefits include the amount of the accrued annual lifetime pension from the
company’s registered pension plan and supplemental pension arrangement that would be earned to age 65 assuming final average
earnings as at December 31, 2022. Benefits under the supplemental pension arrangement can be paid as a lump-sum equivalent upon
retirement. For members of the Exxon Mobil Corporation’s pension plan, the annual benefits include the annual lifetime pension from
the tax-qualified and the annual amount calculated under the non-qualified plans that would be earned to age 65 assuming final
average earnings as at December 31, 2022. For B.W. Corson, this value was $1,594,323. For D.E. Lyons, this value was $717,072.
Non-qualified plan benefits are payable only as a lump-sum equivalent upon retirement. For members of the Esso Australia Pty. Ltd.
defined benefit plan, benefits are payable as an annual lifetime pension or a lump-sum equivalent upon retirement or a combination of
both, as elected by the participant upon leaving service. For S.P. Younger, the annual lifetime pension that would be earned to age 65,
assuming final average earnings as of December 31, 2022 was $375,224.
(d) For members of the company’s pension plan, the opening and closing defined benefit obligation is defined under U.S. Generally
Accepted Accounting Principles (GAAP) and values are calculated on a basis that is consistent with the valuation that was performed
for accounting purposes for the company’s plans. The value is calculated based on estimated earnings eligible for pension as
described previously and Yearly Maximum Pensionable Earnings (YMPE) as defined by the Canada Revenue Agency, projected to
retirement and pro-rated on service to the date of valuation. The calculations assume that the Canada Pension Plan offset is based on
the annual maximum benefit at retirement and the Old Age Security (OAS) offset is based on the OAS benefit at the date of valuation,
projected to retirement. For members of the Exxon Mobil Corporation and Esso Australia Pty Ltd. pension plan respectively, the
opening and closing defined benefit obligation is defined under GAAP and values are consistent with the valuation performed for
accounting purposes for the applicable affiliate plan. The values are calculated based on estimated earnings eligible for pension as
described previously. For B.W. Corson, the opening value was $16,009,185 and the closing value was $16,672,819. For D.E. Lyons
the opening value was $7,460,087 the closing value was $7,313,921. For S.P. Younger, the opening value was $2,981,299 and the
closing value was $2,592,841.
(e) The value for “Compensatory change” includes service cost for 2022 and the impact of change in earnings on the projected benefit
obligation. For members of the company’s plan, these values are calculated using the individual’s additional pensionable service in
2022 and the actual salary and bonus received in 2022. For members of the Exxon Mobil Corporation and Esso Australia Pty Ltd.
pension plans, these values are calculated using the individual’s additional pensionable service in 2022 and earnings as described
previously. For B.W. Corson, this value was $4,905,567. For D.E. Lyons, this value was $1,850,528. For S.P. Younger, this value was
$349,752.
(f) The value for “Non-compensatory change” includes the impact of experience not related to earnings, benefit payments and change in
measurement assumptions. With respect to the company’s pension plan, the discount rate used to determine the closing present value
of defined benefit obligation at the end of 2022 increased to 5.1 percent, from 3.0 percent at the end of 2021, which had a negative
impact on the non-compensatory change element. For members of the Exxon Mobil Corporation and Esso Australia Pty Ltd., the value
for “Non-compensatory change” includes the impact of experience not related to earnings or service. For the Exxon Mobil
Corporation’s plan, this includes the effect of interest based on a discount rate of 5.6 percent at the end of 2022, up from 3.0 percent at
the end of 2021. For the Esso Australia Pty Ltd. Plan, this includes the effect of interest based on a discount rate of 6.2 percent at the
end of 2022, up from 3.0 percent at the end of 2021. For B.W. Corson, this value was $(4,241,933). For D.E. Lyons, this value was
$(1,996,694). For S.P. Younger, this value was ($738,210).
(g) S.P. Younger participates in the Esso Australia Pty Ltd. defined contribution plan. Contribution limits under this plan have been
reached. The “Accumulated value at start of year” was $45,903, the “Compensatory value” was ($3,186) reflecting affiliate contribution
and investment earnings, and the “Accumulated value at year-end” was $42,717.
178
Appendix A – Board of director and committee charters
Board of Directors Charter
The structure, process and responsibilities of the board of directors of the corporation shall include the following
items and matters:
1. Responsibility
The directors shall be responsible for the stewardship of the corporation.
2. Duty of care
The directors, in exercising their powers and discharging their duties, shall:
(a)
(b)
act honestly and in good faith with a view to the best interests of the corporation; and
exercise the care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances.
3. Stewardship process
In order to carry out their responsibility for stewardship within their duty of care, the directors shall, directly or
through one or more committees of directors,
(a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(i)
(j)
(k)
contribute to the formulation of and approve strategic plans on at least an annual basis;
identify the principal risks of the corporation’s business where identifiable and oversee the
implementation of appropriate systems to manage such risks;
oversee succession planning for senior management, including the appointing, training and
monitoring thereof;
approve the corporate disclosure guidelines and monitor the external communications of the
corporation;
monitor the integrity of the corporation’s internal control and management information systems;
monitor the integrity of the corporation’s information technology and systems to ensure the security
and integrity of the corporation’s electronic information, systems and assets;
consider management’s recommendations regarding major corporation decisions and actions,
which have significant societal implications;
monitor compliance with major corporate policies;
charge the chief executive officer of the corporation with the general management and direction of
the business and affairs of the corporation;
monitor the performance of the chief executive officer;
satisfy itself as to the integrity of the chief executive officer and other executive officers and ensure
that the chief executive officer and the other executive officers create a culture of integrity
throughout the company;
(l)
annually review and approve the corporation’s code of ethics and business conduct;
(m) monitor compliance with the code of ethics and business conduct, provided that any waivers from
the code that are granted for the benefit of the issuer’s directors or executive officers should be
granted by the board only;
(n)
determine appropriate measures are in place for receiving feedback from stakeholders;
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(o)
(p)
(q)
(r)
(s)
(t)
by appropriate charter resolutions, establish the audit, executive resources, nominations and
corporate governance, safety and sustainability and community collaboration and engagement
committees of the board with specific duties defined and the corporation provide each board
committee with sufficient funds to discharge its responsibilities in accordance with its charter;
determine membership of each committee, including its chair and vice-chair, after receiving the
recommendation of the nominations and corporate governance committee;
direct the distribution to the board by management of information that will enhance their familiarity
with the corporation’s activities and the environment in which it operates, as set out in section 5;
review the corporation’s process in respect of employee conflicts of interest and directorships in
non-affiliated commercial, financial and industrial organizations and the disclosures thereof;
review the mandates of the board and of the committees and their effectiveness at least annually;
and
undertake such additional activities within the scope of its responsibilities as it may deem
appropriate.
4. Range of items to be considered by the board
The following categories and specific items shall be referred to the board for information or decision on a
regularly scheduled basis, to the extent appropriate:
Organization/legal
•
•
•
•
•
•
•
•
•
•
•
fixing of the number of directors
director appointments to fill interim vacancies
director slate for election by the shareholders
officer appointments
board governance processes
by-laws and administrative resolutions
changes in fundamental structure of the corporation
shareholder meeting notice and materials
non-employee director compensation
policies adopted by the board
investigations and litigation of a material nature
Financial
•
•
•
equity or debt financing
dividend declarations
financial statements and the related management discussion and analysis, annual and
quarterly
status of the corporation’s retirement plan and employee savings plan
•
Strategic/investment/operating plans/performance
near-term and long-range outlooks
•
capital, lease, loan and contributions budgets annually
•
budget additions over $250 million individually
•
quarterly updates of actual and projected capital expenditures
•
capital expenditures or dispositions in excess of $250 million individually
•
entering into any venture that is outside of the corporation’s existing businesses
•
•
financial and operating results quarterly
• Canadian and world economic outlooks
•
•
•
•
•
•
regional socio-economic reviews
corporate reputation reviews
risk management reviews
environment and sustainability reviews
personnel and process safety systems and performance reviews
information technology, systems and cybersecurity
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In addition to the items which are specific to the categories identified above, the chief executive officer shall
refer to the board for information or decision all other items of corporate significance; and any member of the
board may request a review of any such item. Items to be referred to the committees of the board are specified
in their respective charters.
5.
Information to be received by the board
Material shall be distributed to directors through the office of the corporate secretary. Corporate policies, board
calendars, contact information and other company processes, are updated on the board portal site and
accessible to all directors.
Material under the following general headings, including the specific items listed below and only other similar
items, shall be distributed to directors on a regular basis:
Organization/legal
•
•
•
•
•
•
articles of incorporation, by-laws and administrative resolutions
corporate policies
corporate data
board and management processes
financial and operating report
organization outline
Social/political/economic environment
•
•
•
•
public issues updates
economic outlook
external communications packages
information technology, systems and cybersecurity updates
Major announcements
•
•
•
press releases
speeches by management
organization changes
Communications to shareholders
Other significant submissions, studies and reports
6. Meetings of the board
(a) The board normally holds seven (7) regular meetings per year. Additional meetings may be scheduled
as required to consider the range of items charged for consideration by the board.
(b) An agenda for each board meeting and briefing materials will, to the extent practicable in light of the
timing of matters that require board attention, be distributed to each director approximately five to seven
days prior to each meeting. The chairman, in consultation with the chair of the executive sessions will
normally set the agenda for board meetings. Any director may request the inclusion of specific items.
(c) It is expected that each director will make every effort to attend each board meeting and each meeting
of any committee on which he or she serves. Attendance in person is preferred but attendance by
teleconference is permitted if necessary.
(d) Each director should be familiar with the agenda for each meeting, have carefully reviewed all other
materials distributed in advance of the meeting, and be prepared to participate meaningfully in the
meeting, and to discuss all scheduled items of business.
(e) The proceedings and deliberations of the board and its committees are confidential. Each director will
maintain the confidentiality of information received in connection with his or her service as a director,
and the chief executive officer, or those whom he or she has designated, will speak for the corporation.
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7.
Independent directors
(a) The board shall be composed of a majority of independent directors. The board may also include one or
more directors who are not independent, but who, as officers of the majority shareholder, may be
viewed as independent of the company’s management.
(b) In respect of each director to be appointed to fill a vacancy and each director to be nominated for
election or re-election by the shareholders, the board shall make an express determination as to
whether he or she is an independent director and, for a director who may become a member of the
audit committee, whether he or she is an audit committee financial expert or financially literate.
(c) The term “independent”, shall have the meaning as set out in applicable law, including on the basis of
the standards specified by National Instrument 52-110 Audit Committees, the US. Securities and
Exchange Commission rules and the listing standards of the NYSE American LLC.
(d) Independent directors will have full access to senior management of the corporation and other
employees on request to discuss the business and affairs of the corporation. The board expects that
there will be regular opportunities for directors to meet with the chief executive officer, and other
members of management in board and committee meetings and in other formal or informal settings.
(e) Compensation for independent directors will be determined by the board on the recommendation of the
nominations and corporate governance committee and will be reviewed annually. Non-employee
director compensation will be set at a level that is consistent with market practice, taking into account
the size and scope of the corporation’s business and the responsibilities of its directors. A substantial
portion of the compensation paid to independent directors for service on the board will be paid in
restricted stock units of the corporation.
8.
Independent legal or other advice
It is normally expected that information regarding the corporation’s business and affairs will be provided to the
board by the corporation’s management and staff and by its independent auditors. However, the board and, with
the approval of the board, any director, may engage independent counsel and other advisors at the expense of
the corporation. The fees and expenses of any such advisor will be paid by the corporation.
9. Meetings of the independent directors in the absence of members of management
(a) Meetings of the independent directors (“executive sessions of the board”) shall be held in conjunction
with all board meetings including unscheduled telephonic board meetings. Additional executive
sessions may be convened by the chair or the executive sessions at his or her discretion and will be
convened if requested by any other director. Any independent director may raise issues for discussion
at an executive session.
(b) The chair of the executive sessions of the board shall be chosen by the independent directors.
(c) The chair of the executive sessions of the board, or in the chair’s absence an independent director
chosen by the independent directors, shall
(i)
preside at executive sessions of the board;
(ii)
ensure that meetings of the independent directors are held in accordance with this charter;
(iii)
(iv)
review, and modify if necessary the agenda of the meetings of the board in advance to ensure
that the board may successfully carry out its duties; and
act as a liaison with the chairman, including providing feedback from the executive sessions to
the chairman, provided that each director will also be afforded direct and complete access to
the chairman at any time as such director deems necessary or appropriate.
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(d) The purposes of the executive sessions of the board shall include the following:
(i)
(ii)
(iii)
(iv)
to raise substantive issues that are more appropriately discussed in the absence of
management;
to discuss the need to communicate to the chairman of the board any matter of concern raised
by any committee or any director;
to address issues raised but not resolved at meetings of the board and assess any follow-up
needs with the chairman of the board;
to discuss the quality, quantity, and timeliness of the flow of information from management that
is necessary for the independent directors to effectively and responsibly perform their duties,
and advise the chairman of the board of any changes required; and
(v)
to seek feedback about board processes.
10. Selection and tenure of directors
The nominations and corporate governance committee shall recommend to the board a slate of director
candidates for election at each annual meeting of shareholders and shall recommend to the board directors to
fill vacancies, including vacancies created as a result of any increase of the size of the board.
The guidelines for selection and tenure of directors shall be as follows:
(a) Selection
In considering the qualifications of potential nominees for election as directors, the nominations and
corporate governance committee considers the work experience and other areas of expertise of the potential
nominees with the objective of providing for diversity among non-employee directors. The following key
criteria are considered to be relevant to the work of the board of directors and its committees:
Work Experience
• Experience in leadership of businesses or other large organizations (Leadership of large
organizations)
• Operations/technical experience (Operations / technical)
• Project management experience (Project management)
• Experience in working in a global work environment (Global experience)
• Experience in development of business strategy (Strategy development)
• Experience with environmental, health, community relations and/or safety policy, practices and
management (Environment and sustainability)
Other Expertise
• Audit committee financial expert
• Expertise in financial matters (Financial expertise)
• Expertise in managing relations with government (Government relations)
• Expertise in information technology and cybersecurity oversight (Information technology /
Cybersecurity oversight)
• Expertise in executive compensation policies and practices (Executive compensation)
• Expertise in oversight of risk management policies and practices (Risk management)
In addition, the nominations and corporate governance committee may consider the following
additional factors:
•
•
•
possessing expertise in any of the following areas: law, science, marketing, administration,
social/political environment or community and civic affairs;
individual competencies in business and other areas of endeavour in contributing to the
collective experience of the directors; and
providing diversity in age, regional association, gender and other diversity elements (including
Aboriginal peoples, persons with disabilities and members of visible minorities).
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The nominations and corporate governance committee shall then assess what work experience and
other expertise each existing director possesses. The nominations and corporate governance
committee shall identify individuals qualified to become new board members and recommend to the
board the new director nominees. In making its recommendations, the nominations and corporate
governance committee shall consider the work experience and other expertise that the board
considers each existing director to possess and which each new nominee will bring. The nominations
and corporate governance committee may also consider the additional factors noted above and any
other factors which it believes to be relevant.
A candidate may be nominated for directorship after consideration has been given as to his or her
degree of compatibility with the following criteria, i.e., as to whether he or she:
• will not adversely affect the requirements with respect to citizenship and residency for the
directors imposed by the Canada Business Corporations Act;
• will not adversely affect the corporation’s status as a foreign private issuer under U.S. securities
legislation;
•
possesses the ability to contribute to the broad range of issues with which the directors and any
one or all of the committees of directors must deal;
• will serve on the boards of other public companies only to the extent that such services do not
detract from the director’s ability to devote the necessary time and attention as a director;
•
is able to devote the necessary amount of time to prepare for and attend all meetings of the
directors and committees of directors, and to keep abreast of significant corporate
developments;
•
is free of any present or apparent potential legal impediment or conflict of interest, such as:
◦
◦
◦
serving as an employee or principal of any organization presently providing a significant
level of service to the corporation or which might so provide to the corporation, for
example, institutions engaged in commercial banking, underwriting, law, management
consulting, insurance, or trust companies; or of any substantial customer or supplier of
the corporation;
serving as an employee or director of a competitor of the corporation, such as
petroleum or chemical businesses, or of a significant competitor of corporations
represented by a director of this corporation;
serving as the chief executive officer or a top administrator of an organization that has
the chief executive officer or a top administrator of this corporation serving as director;
•
is expected to remain qualified to serve for a minimum of five years;
• will not, at the time that he or she stands for election or appointment, have attained the age of
72;
•
if an independent director, is, or will become within a period of five years of becoming a director,
the beneficial owner, directly or indirectly, of not less than 16,500 common shares, deferred
share units or restricted stock units of the corporation.
(b) Tenure
(i) Re-nomination
An incumbent director shall be supported for re-nomination as long as he or she:
•
does not suffer from any disability that would prevent the effective discharge of his or her
responsibilities as a director;
• makes a positive contribution to the effective performance of the directors;
•
•
regularly attends directors’ and committee meetings;
has not made a change with respect to principal position or thrust of involvement or regional
association that would significantly detract from his or her value as a director of the corporation;
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•
•
is not otherwise, to a significant degree, incompatible with the criteria established for use in the
selection process;
in a situation where it is known that a director will become incompatible with the criteria
established for use in the selection process within a three-month period of election, such as
retirement from principal position at age 65, this information would be included in the
management proxy circular, and where possible, information regarding the proposed
replacement would also be included;
• will not, at the time that he or she stands for re-election, have attained the age of 72; however,
under exceptional circumstances, at the request of the chairman, the nominations and
corporate governance committee may continue to support the nomination.
(ii) Resignation
An incumbent director will resign in the event that he or she:
•
•
•
•
experiences a change in circumstances such as a change in his or her principal occupation,
including an officer of the corporation ceasing to hold that position, but not merely a change in
geographic location;
displays a change in the exercise of his or her powers and in the discharge of duties that, in the
opinion of at least 75 percent of the directors, is incompatible with the duty of care of a director
as defined in the Canada Business Corporations Act;
has made a change in citizenship or residency that will adversely affect the requirements for
directors with respect to those areas imposed by the Canada Business Corporations Act;
has made a change in citizenship or residency that adversely affects the corporation’s status as
a foreign private issuer under U.S. securities legislation;
•
develops a conflict of interest, such as
◦
◦
◦
◦
assuming a position as an employee or principal with any organization providing a
significant level of service to the corporation, for example, institutions engaged in
commercial banking, underwriting, law, management consulting, insurance, or trust
companies; or with any substantial customer or supplier of the corporation;
assuming a position as an employee or director of any competitor of the corporation,
such as petroleum or chemical businesses, or of a competitor of corporations
represented by a director of this corporation;
assuming the position of chief executive officer or a top administrator of an organization
that has the chief executive officer or a top administrator of this corporation serving as a
director;
becomes unable to devote the necessary amount of time to prepare for and regularly
attend meetings of the directors and committees of directors, and to keep abreast of
significant corporate developments,
and the nominations and corporate governance committee will make a recommendation to the board
as to whether to accept or reject such resignation.
11. Director Orientation and Continuing Education
(a) Orientation
New non-employee directors will receive a comprehensive orientation from appropriate executives
regarding the corporation’s business and affairs.
(b) Continuing Education
Reviews of aspects of the corporation’s operations will be presented by appropriate employees from time
to time as part of the agenda of regular board meetings. The board will also normally conduct an on-site
visit to a location other than the corporation’s headquarters in conjunction with one or more regular board
meetings every year.
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12. Chairman and chief executive officer
The board currently believes that it is appropriate and efficient for the corporation’s chief executive officer to also
act as chairman of the board. However, the board retains the authority to separate those functions if it deems
such action appropriate in the future.
(a) Position description
The chairman and chief executive officer shall:
•
•
•
•
•
•
•
•
•
•
plan and organize all activities of the board of directors;
ensure that the board receives sufficient, timely information on all material aspects of the
corporation’s operations and financial affairs;
chair annual and special meetings of the shareholders;
conduct the general management and direction of the business and affairs of the corporation;
recommend to the board of directors a strategic plan for the corporation’s business and, when
approved by the board of directors, implement this strategic plan and report to the board of
directors on the implementation of this strategic plan;
develop and implement operational policies to guide the corporation within the limits prescribed
by the corporation’s by-laws and the directions adopted by the board of directors;
identify, for review with the board of directors, the principal risks of the corporation’s business,
where identifiable, and develop appropriate systems to manage such risks;
under the oversight of the board of directors, develop plans for succession planning for senior
management, including the appointing, training and monitoring thereof, and implement those
plans;
ensure compliance with the corporation’s code of ethics and business conduct so as to foster a
culture of integrity throughout the company; and
ensure effective internal controls and management information systems are in place.
(b) Minimum shareholding requirements
The chairman and chief executive officer shall hold, or shall, within three years after his appointment as
chairman and chief executive officer, acquire shares of the corporation, including common shares and
restricted stock units, of a value no less than five times his base salary.
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Audit Committee Charter
1. Purpose of the Committee
The primary purpose of the audit committee (the “committee”) is oversight. The committee shall assist the board
of directors (the “board”) in fulfilling its responsibility to oversee:
• management’s conduct of the corporation’s financial reporting process,
•
•
•
•
•
•
the integrity of the financial statements and other financial information provided by the corporation to
Canadian securities regulators, the United States Securities and Exchange Commission (the “SEC”)
and the public,
the corporation’s system of internal accounting and financial controls,
the corporation’s compliance with legal and regulatory requirements,
the performance of the corporation’s internal audit function,
the independent auditors’ qualifications, performance, and independence, and
the annual independent audit of the corporation’s financial statements.
The corporation’s management is responsible for preparing the corporation’s financial statements. The
independent auditors are responsible for auditing those financial statements. Management, including the
internal audit function, and the independent auditors, have more time, knowledge, and detailed information
about the corporation than do committee members. Consequently, in carrying out its oversight responsibilities,
the committee is not providing any expert or special assurance as to the corporation’s financial statements, or
any professional certification as to the independent auditors’ work, including with respect to auditor
independence. Each member of the committee shall be entitled to rely on the integrity of people and
organizations from whom the committee receives information and the accuracy of such information, including
representations by management and the independent auditors regarding non-audit services provided by the
independent auditors.
2. Committee Membership
The committee shall consist of no fewer than three members. Committee members shall be appointed by the
board from among its independent members who shall serve at the pleasure of the board, but only so long as
he or she continues to be a director of the corporation and is independent. Each member of the committee must
satisfy such criteria of independence as the board may establish and such additional regulatory or listing
requirements as the board may determine to be applicable or appropriate. Each member of the committee shall
serve only so long as he or she continues to be a director of the corporation and is independent. The actual
number of members shall be determined from time to time by resolution of the board.
Accordingly, each member of the committee shall be financially literate within a reasonable period of time after
appointment to the committee; must be “independent” as defined in the board charter; and may not serve on
more than two other public company audit committees unless the board determines that such simultaneous
service would not impair the ability of the member to serve effectively on the committee. In addition, at least one
member of the committee shall be an “audit committee financial expert” as defined by applicable laws.
3. Committee Structure and Operation
The chair and vice-chair of the committee shall be designated by the board from among the members of the
committee. The committee shall fix its own rules of procedure and shall meet where and as provided by such
rules or by resolution of the committee. In addition to the regular meeting schedule established by the
committee, the chair of the committee may call a special meeting at any time.
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The chair, or in that person’s absence, the vice-chair or in the vice-chair’s absence, an alternate designated by
the committee, shall:
(a) preside at committee meetings;
(b) ensure that meetings of the committee are held in accordance with this charter; and
(c) review, and modify if necessary the agenda of the meetings of this committee in advance to ensure that
the committee may effectively carry out its duties.
A majority of the members of the committee shall constitute a quorum thereof. Every question shall be decided
by a majority of the votes cast on the question and in the case of an equality of votes, the chair of the meeting
shall be entitled to a second or casting vote.
The committee shall designate its secretary.
Meetings of the committee may be called by any member or by the external auditors of the corporation, and
notice of every meeting shall be given to the external auditors.
The external auditors and the internal auditor of the corporation shall report directly to the audit committee.
The committee shall act only on the affirmative vote of a majority of the members at a meeting or by unanimous
written consent.
The committee may establish sub-committees to carry out such duties as the committee may assign.
4. Committee Activities
The following shall be the common recurring activities of the committee in carrying out its purposes. These
activities are set forth as a guide with the understanding that the committee may diverge from this guide as
appropriate given the circumstances.
The committee shall:
(a) recommend the external auditors to be appointed by the shareholders, review and recommend their
remuneration to the board, approve advances on such remuneration, which shall be paid by the
corporation, and oversee their work, including the resolution of disagreements between management
and the external auditor regarding financial reporting.
(b) approve the proposed current year audit program of the external auditors and assess the results of the
program after the end of the program period.
(c) approve in advance any non-audit services that are permitted by applicable law to be performed by the
external auditors after considering the effect of such services on their independence.
(d) receive from the external auditors a formal written statement delineating all relationships between the
external auditor and the corporation consistent with Independence Standards Board Standard 1, and
shall actively engage in a dialogue with the external auditor with respect to any disclosed relationships
or services that may impact the objectivity and independence of the external auditor and shall
recommend that the board take any appropriate action to oversee the independence of the external
auditor.
(e) maintain hiring policies for employees and former employees of the independent auditors.
(f) establish procedures for the receipt, retention and treatment of complaints received by the corporation
regarding accounting, internal accounting controls, or auditing matters and the confidential, anonymous
submission by employees of the corporation of concerns regarding questionable accounting or auditing
matters.
(g) approve the proposed current year audit program of the internal auditors and assess the results of the
program after the end of each quarter.
(h) review the adequacy of the corporation’s system of internal controls and auditing procedures.
(i) review the accounting and financial reporting processes of the corporation.
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(j) approve changes proposed by management in accounting principles and practices, and review changes
proposed by the accounting profession or other regulatory bodies which impact directly on such
principles and practices.
(k) review the quarterly news release of financial and operating results, the annual and quarterly financial
statements of the corporation, any accounting items affecting the statements and the overall format and
content of the statements, and the related management discussion and analysis, prior to approval of
such news release and financial statements by the board of directors.
(l) review the results of the corporation’s business ethics compliance program.
(m) review annually a summary of senior management expense accounts.
(n) evaluate, along with the other members of the board, management, the controller, and the general
auditor, the qualifications, performance and independence of the independent auditors, including the
performance of the lead audit partner.
(o) require attendances at its meetings by members of management, as the committee may direct.
(p) undertake such additional activities within the scope of its responsibilities as it may deem appropriate.
5. Committee Evaluation
The committee will annually complete a self-evaluation of the committee’s own performance and effectiveness
and will consider whether any changes to the committee’s charter are appropriate.
6. Resources and Authority of the Committee
The committee has exclusive authority with respect to the retention of the independent auditors described in
section 4 of this charter. In discharging its oversight role, the committee is empowered to investigate any matter
brought to its attention with full access to all books, records, facilities, and personnel of the corporation. The
committee also has the authority to retain outside advisors, including legal counsel, auditors, or other experts,
as it deems appropriate; to approve the fees and expenses of such advisors; and to incur such other ordinary
administrative expenses as are necessary or appropriate in carrying out its duties.
Safety and Sustainability Committee Charter
1. Purpose of the Committee
The primary purpose of the safety and sustainability committee (the ‘committee’) is to review and provide
advice, as the committee deems appropriate, regarding the corporation’s policies, programs and practices on
public issues of significance including their effects on safety, security, health and the environment. This includes
environmental, health, personnel and process safety, security and sustainability risks and performance,
including the risks associated with climate change. It also includes compliance with legislation and the
assessment of long term impacts of public policy, climate change and sustainable business practices on
corporate performance.
2. Committee Membership
The committee shall consist of no fewer than three members, to be appointed by the board of directors from
among (a) the independent directors; and (b) the non-independent directors who are not members of the
corporation’s management, who shall serve at the pleasure of the board, but only so long as he or she
continues to be a director of the corporation. The actual number of members shall be determined from time to
time by resolution of the board. Members of the committee should be suitably knowledgeable in matters
pertaining to public issues.
3. Committee Structure and Operation
The chair and vice-chair of the committee shall be designated by the board from among the members of the
committee. The committee shall fix its own rules of procedure and shall meet where and as provided by such
rules or by resolution of the committee.
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The chair, or in that person’s absence, the vice-chair or in the vice-chair’s absence, an alternate designated by
the committee, shall:
(a) preside at committee meetings;
(b) ensure that meetings of the committee are held in accordance with this charter; and
(c) review, and modify if necessary the agenda of the meetings of this committee in advance to ensure that
the committee may effectively carry out its duties.
A majority of the members of the committee shall constitute a quorum thereof. Every question shall be decided
by a majority of the votes cast on the question and in the case of an equality of votes, the chair of the meeting
shall be entitled to a second or casting vote.
The committee shall designate its secretary.
Meetings of the committee may be called by any member.
The committee shall act only on the affirmative vote of a majority of the members at a meeting or by unanimous
written consent.
The committee may establish subcommittees consisting of one or more members to carry out such duties as
the committee may delegate.
4. Committee Activities
The following shall be the common recurring activities of the committee in carrying out its purpose. These
activities are set forth as a guide with the understanding that the committee may diverge from this guide as
appropriate given the circumstances.
The committee shall:
(a) review and monitor the effectiveness of the corporation’s policies, programs and practices on
environment, health, safety, security and sustainability, including the impact, risks and disclosure
associated with climate change and greenhouse gas emissions, and make such recommendations to
the board with respect thereto as it may deem advisable.
(b) monitor the corporation’s compliance with legislative, regulatory and corporation standards for
environmental, health, safety, security and sustainability practices and matters, including the impact,
risks and disclosure associated with climate change and greenhouse gas emissions, and advise the
directors on the results and adequacy thereof.
(c) monitor trends and review current and emerging public policy issues relating to matters of significance
to the corporation, including environment, health, safety, security and sustainability issues and the
impact, risks and disclosure associated with climate change and greenhouse gas emissions, as they
may impact the corporation’s operations.
(d) review the impact of proposed legislation relating to matters of significance to the corporation, including
the impact of the environment, health, safety and security on the operations of the corporation and to
advise the directors and management as to the appropriate response of the corporation thereto.
(e) recommend to the directors and management desirable policies and actions arising from its review and
monitoring activity.
(f) require attendances at its meetings by members of management, as the committee may direct.
(g) undertake such additional activities within the scope of its responsibilities as it may deem appropriate.
5. Committee Evaluation
The committee will annually complete a self-evaluation of the committee’s own performance and effectiveness
and will consider whether any changes to the committee’s charter are appropriate.
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6. Resources and Authority of the Committee
The committee has the authority to retain such outside advisors, including legal counsel or other experts, as it
deems appropriate, and to approve the fees and expenses of such advisors.
Executive Resources Committee Charter
1. Purpose of the Committee
The primary purpose of the executive resources committee (the “committee”) is to discharge the board of
directors’ (the “board”) responsibilities relating to the evaluation and compensation of the corporation’s chief
executive officer (the “CEO”) and certain other key senior executive management positions reporting directly to
the CEO, including all officers of the corporation, and to discharge the responsibilities of the committee under
applicable rules and regulations. The committee also makes recommendations to the board regarding
succession planning and development for senior executives and positions as needed.
2. Committee Membership
The committee shall consist of no fewer than three members, to be appointed by the board of directors from
among (a) the independent directors; and (b) the non-independent directors who are not members of the
corporation’s management, who shall serve at the pleasure of the board, but only so long as he or she
continues to be a director of the corporation. The actual number of members shall be determined from time to
time by resolution of the board. Members of the committee should be suitably knowledgeable in matters
pertaining to executive compensation.
3. Committee Structure and Operation
The chair and vice-chair of the committee shall be designated by the board from among the members of the
committee. The committee shall fix its own rules of procedure and shall meet where and as provided by such
rules or by resolution of the committee.
The chair, or in that person’s absence, the vice-chair or in the vice-chair’s absence, an alternate designated by
the committee, shall:
(a) preside at committee meetings;
(b) ensure that meetings of the committee are held in accordance with this charter; and
(c) review, and modify if necessary the agenda of the meetings of this committee in advance to ensure that
the committee may effectively carry out its duties.
A majority of the members of the committee shall constitute a quorum thereof. Every question shall be decided
by a majority of the votes cast on the question and in the case of an equality of votes, the chair of the meeting
shall be entitled to a second or casting vote.
The committee shall designate its secretary.
Meetings of the committee may be called by any member.
The committee shall act only on the affirmative vote of a majority of the members at a meeting or by unanimous
written consent.
The committee may establish subcommittees consisting of one or more members to carry out such duties as
the committee may delegate.
4. Committee Activities
The following shall be the common recurring activities of the committee in carrying out its purposes. These
activities are set forth as a guide with the understanding that the committee may diverge from this guide as
appropriate given the circumstances.
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The committee shall:
(a) review and approve the corporate goals and objectives relevant to the compensation of the CEO.
(b) review data on competitive compensation practices and review and evaluate policies and programs
through which the corporation compensates its employees.
(c) at least annually evaluate the CEO’s performance as measured against the goals and objectives
outlined above.
(d) approve salaries and other compensation (including supplemental compensation such as cash bonuses
and incentive bonus units, long-term incentive compensation such as restricted stock units, and any
other payments for service), for the CEO and other key senior executive management positions
reporting directly to the CEO, including all officers of the corporation.
(e) at least annually review succession planning and development strategies for the CEO and key senior
executive management positions reporting directly to the CEO, including all officers of the corporation.
(f) review the executive development system to ensure that it foresees the corporation’s senior
management requirements and provides for early identification and development of key resources.
(g) review and approve an annual report on compensation for inclusion in the corporation’s management
proxy circular in accordance with applicable legal requirements.
(h) make recommendations to the board with respect to incentive compensation plans and equity-based
plans.
(i) review proposed terms of any new incentive program and any major amendment of an existing
program, and make such recommendations to the board with respect thereto as it may deem advisable.
(j) review and report on risks arising from the corporation’s compensation policies and practices for
employees as required by Canadian securities regulators and stock exchanges on which the
corporation’s stock trades.
(k) consider factors that could affect the independence or represent a conflict of interest on the part of any
compensation consultant, independent legal counsel, or other adviser the committee may retain and
report thereon as required by Canadian securities regulators and stock exchanges on which the
corporation’s stock trades.
(l) require attendances at its meetings by members of management, as the committee may direct.
(m) undertake such additional activities within the scope of its responsibilities as it may deem appropriate.
5. Committee Evaluation
The committee will annually complete a self-evaluation of the committee’s own performance and effectiveness
and will consider whether any changes to the committee’s charter are appropriate.
6. Resources and Authority of the Committee
The committee and, with the approval of the committee, any member, may engage independent counsel,
compensation consultants or other advisors at the expense of the corporation. The committee shall be directly
responsible for the appointment, compensation and oversight of the work of any independent legal counsel,
compensation consultant or other advisor retained by the committee. The committee may select outside legal
counsel, a compensation consultant or other advisor (an “Advisor”) to the committee only after taking into
consideration all factors relevant to the Advisor’s independence from management, including the following:
•
•
•
the provision of other services to the corporation by the person that employs the Advisor;
the amount of fees received from the corporation by the person that employs the Advisor as a
percentage of such that person’s total revenue;
the policies and procedures of the person that employs the Advisor that are designed to prevent
conflicts of interest;
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•
•
•
any business or personal relationship of the Advisor with a member of the committee;
any stock of the corporation owned by the Advisor; and
any business or personal relationship of the Advisor or the person employing the Advisor with an
executive officer of the corporation.
Nominations and Corporate Governance Committee Charter
1. Purpose of the Committee
The primary purpose of the nominations and corporate governance committee (the ‘committee’) is to monitor
compliance with good corporate governance standards; to identify individuals qualified to become board
members; to recommend to the board director nominees for election at the annual meeting of shareholders or
for election by the board to fill open seats between annual meetings; to recommend to the board committee
appointments for directors, including appointments as chair and vice chair of such committees; to review and
make recommendations to the board regarding non-employee director compensation; and to develop and
recommend to the board corporate governance guidelines applicable to the corporation.
2. Committee Membership
The committee shall consist of no fewer than three members, to be appointed by the board of directors from
among (a) the independent directors; and (b) the non-independent directors who are not members of the
corporation’s management, who shall serve at the pleasure of the board, but only so long as he or she
continues to be a director of the corporation. The actual number of members shall be determined from time to
time by resolution of the board. Members of the committee should be suitably knowledgeable in matters
pertaining to corporate governance.
3. Committee Structure and Operation
The chair and vice-chair of the committee shall be designated by the board from among the members of the
committee. The committee shall fix its own rules of procedure and shall meet where and as provided by such
rules or by resolution of the committee.
The chair, or in that person’s absence, the vice-chair or in the vice-chair’s absence, an alternate designated by
the committee, shall:
(a) preside at committee meetings;
(b) ensure that meetings of the committee are held in accordance with this charter; and
(c) review, and modify if necessary the agenda of the meetings of this committee in advance to ensure that
the committee may effectively carry out its duties.
A majority of the members of the committee shall constitute a quorum thereof. Every question shall be decided
by a majority of the votes cast on the question and in the case of an equality of votes, the chair of the meeting
shall be entitled to a second or casting vote.
The committee shall designate its secretary.
Meetings of the committee may be called by any member.
The committee shall act only on the affirmative vote of a majority of the members at a meeting or by unanimous
written consent.
The committee may establish subcommittees consisting of one or more members to carry out such duties as
the committee may delegate.
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4. Committee Activities
The following shall be the common recurring activities of the committee in carrying out its purpose. These
activities are set forth as a guide with the understanding that the committee may diverge from this guide as
appropriate given the circumstances.
The committee shall:
(a) oversee issues of corporate governance as they apply to the corporation, including the effectiveness of
the system of corporate governance, and the board’s relationship with management, and report to the
board on such matters.
(b) oversee the annual assessment of the effectiveness and contribution of the board, its committees and
each individual director.
(c) make recommendations to the board as to the appropriate size of the board with a view to facilitating
effective decision-making.
(d) review and recommend to the board of directors any modifications to the charters of the board or any of
its committees.
(e) review qualifications of existing directors and individuals suggested as potential candidates for director
of the corporation, including candidates suggested by shareholders, and consider for nomination any of
such individuals who are deemed qualified pursuant to the provisions of the board charter.
(f) recommend to the board the nominees to be proposed by the board for election as directors of the
corporation at the annual meeting of shareholders.
(g) recommend to the board candidates for election as directors of the corporation to fill open seats on the
board between annual meetings, including vacancies created by an increase in the authorized number
of directors.
(h) consider resignations tendered by directors in the event of a change of circumstance as described in
section 10(b)(ii) of the board charter.
(i) review the remuneration of independent directors and make such recommendations to the board with
respect thereto as it may deem advisable.
(j) review present plans, programs or arrangements, and any proposed terms of any new plans, programs
or arrangements, for the benefit of independent directors, and make such recommendations to the
board with respect thereto as it may deem advisable.
(k) review and recommend to the board guidelines to be adopted relating to tenure of independent
directors.
(l) provide recommendations to the board concerning committee structure of the board, committee
operations, committee member qualifications, and committee member appointment.
(m) review any allegation that an executive officer or director may have violated the corporation’s Standards
of Business Conduct and report its findings to the board and the general auditor.
(n) require attendances at its meetings by members of management, as the committee may direct.
(o) undertake such additional activities within the scope of its responsibilities as it may deem appropriate.
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5. Committee Evaluation
The committee will annually complete a self-evaluation of the committee’s own performance and effectiveness
and will consider whether any changes to the committee’s charter are appropriate.
6. Resources and Authority of the Committee
The committee has the authority to retain such outside advisors, including legal counsel or other experts, as it
deems appropriate, and to approve the fees and expenses of such advisors. Without limiting the foregoing, the
committee will have sole authority to retain and terminate any search firm to be used by the committee to
identify director candidates and any consultant used by the committee to evaluate non-employee director
compensation.
Community Collaboration and Engagement Committee Charter
1. Purpose of the Committee
The primary purpose of the community collaboration and engagement committee (the ‘committee’) is to review
and provide advice on the corporation’s guidelines, procedures and performance supporting public awareness
and consultation efforts, government, community and Indigenous relations, and community partnership and
investment programs.
2. Committee Membership
The committee shall consist of no fewer than three members to be appointed by the board from among its
members who shall serve at the pleasure of the board, but only so long as he or she continues to be a director
of the corporation. The actual number of members shall be determined from time to time by resolution of the
board. Members of the committee should be suitably knowledgeable in matters pertaining to issues relating to
corporate contributions and community investment.
3. Committee Structure and Operation
The chair and vice-chair of the committee shall be designated by the board from among the members of the
committee. The committee shall fix its own rules of procedure and shall meet where and as provided by such
rules or by resolution of the committee. In addition to the regular meeting schedule established by the
committee, the chair of the committee may call a special meeting at any time.
The chair, or in that person’s absence, the vice-chair or in the vice-chair’s absence, an alternate designated by
the committee, shall:
(a) preside at committee meetings;
(b) ensure that meetings of the committee are held in accordance with this charter; and
(c) review, and modify if necessary the agenda of the meetings of this committee in advance to ensure that
the committee may effectively carry out its duties.
A majority of the members of the committee shall constitute a quorum thereof. Every question shall be decided
by a majority of the votes cast on the question and in the case of an equality of votes, the chair of the meeting
shall be entitled to a second or casting vote.
The committee shall designate its secretary.
Meetings of the committee may be called by any member.
The committee shall act only on the affirmative vote of a majority of the members at a meeting or by unanimous
written consent.
The committee may establish subcommittees consisting of one or more members to carry out such duties as
the committee may delegate.
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4. Committee Activities
The following shall be the common recurring activities of the committee in carrying out its purpose. These
activities are set forth as a guide with the understanding that the committee may diverge from this guide as
appropriate given the circumstances.
The committee shall:
(a) review and monitor the effectiveness of the corporation’s programs and practices supporting public
awareness and consultation activities.
(b) monitor trends and review current and emerging issues related to government, stakeholder and
Indigenous relations.
(c) review and provide advice on the corporation’s overall community investment strategies and programs,
which consists of:
(i)
charitable contributions;
(ii)
local community contributions by business units on community-serving projects that also benefit
the corporation, which are charitable in nature;
(iii)
funding for public policy groups;
(iv)
university research awards;
(v)
(vi)
sponsorships whose primary purpose is to promote community support and corporate
recognition; and
expenditures required under socio-economic agreements to support the development of
mutually-beneficial long-term relationships.
(d) approve all grants or contributions for charitable contributions and local community contributions; as
described in section 4(c)(i) above, in excess of $300,000.
(e) require attendances at its meetings by members of management, as the committee may direct.
(f) undertake such additional activities within the scope of its responsibilities as it may deem appropriate.
5. Committee Evaluation
The committee will annually complete a self-evaluation of the committee’s own performance and effectiveness
and will consider whether any changes to the committee’s charter are appropriate.
6. Resources and Authority of the Committee
The committee has the authority to retain such outside advisors, including legal counsel or other experts, as it
deems appropriate, and to approve the fees and expenses of such advisors.
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IMPERIAL OIL LIMITED
Exhibit (31.1)
Certification
Pursuant to Securities Exchange Act Rule 13a-14(a)
I, Bradley W. Corson, certify that:
1.
I have reviewed this annual report on Form 10-K of Imperial Oil Limited;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 22, 2023
/s/ Bradley W. Corson
Bradley W. Corson
Chairman, president and
chief executive officer
(Principal executive officer)
IMPERIAL OIL LIMITED
Exhibit (31.2)
Certification
Pursuant to Securities Exchange Act Rule 13a-14(a)
I, Daniel E. Lyons, certify that:
1.
I have reviewed this annual report on Form 10-K of Imperial Oil Limited;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report,
fairly present in all material respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures
to be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of
internal control over financial reporting, to the registrant’s auditors and the audit committee of the
registrant’s board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 22, 2023
/s/ Daniel E. Lyons
Daniel E. Lyons
Senior vice-president, finance and
administration, and controller
(Principal financial officer)
IMPERIAL OIL LIMITED
Exhibit (32.1)
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, the undersigned, Bradley W. Corson, the chief executive officer of Imperial Oil Limited (the “company”),
hereby certifies that, to his knowledge:
(i) The annual report on Form 10-K of the company for the year ended December 31, 2022 as filed with the
Securities and Exchange Commission (the “Report”), fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the company.
Date: February 22, 2023
/s/ Bradley W. Corson
Bradley W. Corson
Chairman, president and
chief executive officer
(Principal executive officer)
IMPERIAL OIL LIMITED
Exhibit (32.2)
Certification of Periodic Financial Report
Pursuant to 18 U.S.C. Section 1350
For purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, the undersigned, Daniel E. Lyons, the chief financial officer of Imperial Oil Limited (the “company”),
hereby certifies that, to his knowledge:
(i) The annual report on Form 10-K of the company for the year ended December 31, 2022 as filed with the
Securities and Exchange Commission (the “Report”), fully complies with the requirements of section 13(a)
or 15(d) of the Securities Exchange Act of 1934; and
(ii) The information contained in the Report fairly presents, in all material respects, the financial condition and
results of operations of the company.
Date: February 22, 2023
/s/ Daniel E. Lyons
Daniel E. Lyons
Senior vice-president, finance and
administration, and controller
(Chief financial officer)