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, 2023
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 ☑
Accelerated filer ☐
Non-accelerated filer ☐
Smaller reporting company ☐
Emerging growth company ☐
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. ☑
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing
reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by
any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
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 2023 second fiscal quarter, the aggregate market value of the voting stock held by non-affiliates of the registrant was
Canadian $12,036,565,437 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 15, 2024, was 535,836,803.
1
Table
PART I
Item 1.
of contents
Business
Upstream
of reserves
Disclosure
undeveloped reserves
Proved
gas
Oil
production,
and
Drilling
other
and
Present activities
gas
Oil
exploratory
properties,
wells,
and
production
and
and
prices
development activities
production costs
operations
and acreage
and trading
Downstream
Supply
Transportation
Refining
Distribution
Marketing
capital resources
Chemical
Delivery commitments
Human
Competition
Government regulations
The
company online
staff comments
safety disclosures
II
for
Risk factors
Unresolved
Properties
Legal proceedings
Mine
Market
Management’s
Quantitative
Financial
Changes
Controls
Other information
Disclosure
Item 1A.
Item 1B.
Item 1C. Cybersecurity
Item 2.
Item 3.
Item 4.
PART
Item 5.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
SIGNATURES
Financial section
Proxy
Exhibits,
Form
information section
stockholder
issuer
purchases
of
equity securities
financial
condition
of operations
matters
and
and
results
registrant’s
discussion
common
and
equity,
analysis
disclosures
related
of
about
supplementary data
qualitative
and
disagreements
and
statements
in
and procedures
and
market risk
regarding
foreign
jurisdiction
that
prevents inspections
with
accountants
on
accounting
and
financial disclosure
and
corporate governance
officers
executive
Directors,
Executive compensation
Security
Certain
Principal
of
ownership
relationships
accountant
certain
and
fees
related
and services
beneficial
owners
transactions,
and
and
management
director independence
and
related
stockholder matters
financial
10-K summary
statement schedules
Page
6
6
7
7
8
9
11
13
14
16
16
16
16
16
17
17
18
18
18
19
21
22
31
31
32
32
32
33
33
34
34
35
35
35
35
35
36
36
36
37
38
39
40
40
41
42
43
112
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 roadmaps or future plans related to
carbon capture, transportation and storage, biofuel, hydrogen, and other future plans to reduce emissions and
emission intensity of the company, its affiliates and third parties are dependent on future market factors, such as
continued technological progress, policy support and timely rule-making and permitting, 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 development drilling program at Cold Lake; the
timing, cost, efficiency and production of the Leming SAGD and Grand Rapids Phase 1 projects at Cold Lake,
and associated emissions intensity reductions; the evaluation and pace of the Aspen project; the timing, pace
and results from the EBRT field pilot; the continued evaluation of other oil sands leases; future activities with
respect to Beaufort Sea licences; the ability for autonomous operations at Kearl to continue capturing
productivity improvements, reducing cost and enhancing safety; the impact of the Kearl Boiler Flue Gas heat
recovery unit on reducing greenhouse gas emissions; reduced greenhouse gas emissions from LASER
technology at Cold Lake; the ability of rail infrastructure to mitigate pipeline capacity constraints; human capital
resources strategy and impact; the measures required to comply with environmental regulations; anticipated
capital and operating expenditures, including with respect to environmental protection; the structure and
effectiveness of the cybersecurity program; continued evaluation of the company’s share purchase program;
being well positioned to participate in substantial investments to develop Canadian energy supplies 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 global events affecting supply and
demand, including inflation, and the company’s ability to mitigate cost impacts in all price environments;
upstream focus on optimization within existing assets, cost reduction opportunities and productivity
enhancements; 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; segment growth, competitive strategies and benefits from an
integrated business model; the impact of Downstream strategies and competitive position; the timing,
production and emissions reductions from the renewable diesel facility at Strathcona; potential impacts from
environmental risks, carbon policy, climate related regulations and biofuels mandates; Chemical competitive
position and the benefits 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 2024; earnings sensitivities; risks
associated with use of derivative instruments; the impact of any pending litigation, accounting standards and
unrecognized tax benefits; the effectiveness of the company’s compensation plan in long term performance and
mitigating risk; standardized measures of discounted future cash flows; the effectiveness of the company's
corporate governance practices, including with respect to risk management and oversight; and the progress and
impact of various initiatives including with E3 Lithium and using renewable diesel at Kearl.
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, the Leming, Grand Rapids and LASER projects at Cold Lake, and
autonomous operations at Kearl; 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, the
EBRT project, 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;
3
receipt of regulatory and third party approvals in a timely manner, especially with respect to large scale
emissions reduction projects; 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 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 and seasonal fluctuations
and resulting demand, price, differential and margin impacts; political or regulatory events, including changes in
law or government policy, applicable royalty rates, and tax laws including taxes on share repurchases;
environmental regulation, including climate change and greenhouse gas regulation and changes to such
regulation; environmental risks inherent in oil and gas activities; government policies supporting lower carbon
investment opportunities; failure, delay or uncertainty regarding supportive policy and market development for
the adoption of emerging lower-emission energy technologies and other technologies that support emissions
reductions; the receipt, in a timely manner, of regulatory and third-party approvals, including for new
technologies that will help the company meet its lower emissions goals; 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; project management and schedules and timely completion
of projects; transportation for accessing markets; commercial negotiations; unexpected technological
developments; the results of research programs and new technologies, the ability to bring new technologies to
commercial scale on a cost-competitive basis, and the competitiveness of alternative energy and other emission
reduction technologies; reservoir analysis and performance; the ability to develop or acquire additional reserves;
operational hazards and risks; cybersecurity incidents; currency exchange rates; the occurrence, pace, rate of
recovery and effects of public health crises, including the responses from governments; general economic
conditions, including inflation and 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 material to investors or require 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. 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.
Actions needed to advance the company’s 2030 greenhouse gas emission-reductions plans are incorporated
into its medium-term business plans, which are updated annually. The reference case for planning beyond 2030
is based on the ExxonMobil’s Global Outlook (the Outlook) research and publication. The Outlook is reflective of
the existing global policy environment and an assumption of increasing policy stringency and technology
improvement to 2050. However, the Outlook does not attempt to project the degree of required future policy and
4
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 the Company’s
business plans will be updated accordingly. References to projects or opportunities may not reflect investment
decisions made by the company. Individual projects or opportunities may advance based on a number of
factors, including availability of supportive policy, permitting, technological advancement for cost-effective
abatement, insights from the company planning process, and alignment with partners and other stakeholders.
Capital investment guidance in lower-emission investments is based on our corporate plan; however, actual
investment levels will be subject to the availability of the opportunity set, public policy support, and focused on
returns.
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.
5
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".
6
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, 2023, as detailed in
the "Supplemental information on oil and gas exploration and production activities" in the "Financial section" 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 ended
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, 2023 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
—
—
—
53
8
61
Synthetic
crude oil
millions of
barrels
242
112
354
Total
oil-equivalent
basis
millions of
barrels
1,957
218
2,175
Bitumen
millions of
barrels
1,706
105
1,811
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 2023 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.
7
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 the company’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 21
years of petroleum industry experience, including 12 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
18 persons with an average of 14 years of relevant technical experience in evaluating reserves, of whom 17
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 9 years
of relevant experience in evaluating and managing the evaluation of reserves.
Proved undeveloped reserves
As at December 31, 2023, approximately 10 percent of the company’s proved reserves were proved
undeveloped reflecting volumes of 218 million oil-equivalent barrels. Proved undeveloped reserves are
associated with Syncrude, Kearl and Cold Lake. This compared to 240 million oil-equivalent barrels of proved
undeveloped reserves reported at the end of 2022. The decrease of 22 million oil-equivalent barrels of proved
undeveloped reserves is mainly attributed to the migration of Cold Lake proved undeveloped reserves to proved
developed reserves following infill development drilling and the start-up of the Grand Rapids Phase 1 project.
As at December 31, 2023 there were no proved undeveloped reserves that have remained undeveloped for five
years or more.
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 $391 million during the year to progress the development of proved undeveloped
reserves at Cold Lake, Kearl and Syncrude. These investments represented about 35 percent of the $1,108
million in total reported Upstream capital and exploration expenditures.
8
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" 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,
2023 was as follows. All reported production volumes were from Canada.
thousands of barrels per day (a)
2023
2022
2021
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)
191
177
135
106
326
283
76
67
5
5
407
355
172
157
144
106
316
263
77
63
9
9
402
335
186
178
140
114
326
292
71
62
11
10
408
364
(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, 2023 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" 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)
2023
2022
33
32
11
85
83
50
2021
120
115
81
(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.
9
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)
2023
2022
2021
413
360
416
349
428
383
(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, 2023 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.
2023
67.42
105.57
59.30
2022
84.67
125.46
93.77
2021
57.91
81.61
59.41
2.58
5.69
3.83
In 2023, Imperial's average Canadian dollar realization for bitumen decreased generally in line with Western
Canada Select (WCS). The company's average Canadian dollar realizations for synthetic crude oil decreased
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 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.
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.
2023
32.41
62.57
38.51
2022
39.05
68.00
44.02
2021
29.06
61.97
34.32
In 2023, bitumen unit production costs decreased, primarily driven by lower energy costs and higher Kearl
production due to improved reliability, plant capacity utilization, and mine equipment productivity.
In 2023, synthetic crude oil unit production costs decreased, primarily driven by higher net production.
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.
10
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, 2023.
wells
Net
productive exploratory
Net
dry exploratory
Net
productive development
Net
dry development
Total
2023
2022
2021
—
—
32
—
32
—
—
24
—
24
—
—
13
—
13
In 2023, wells drilled to add productive capacity include 32 development wells at Cold Lake.
In 2022, wells drilled to add productive capacity include 24 development wells at Cold Lake.
Wells drilling
At December 31, 2023, the company was drilling the following development wells to add productive capacity at
Cold Lake. All wells were located in Canada.
Wells
Total
2023
Gross
11
Net
11
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 2023, additional wells were drilled on existing phases, as well as
development drilling to add productive capacity. In 2024, a 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 having commenced in 2023 and start-up planned in 2025.
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 Solvent Assisted - Steam Assisted Gravity
Drainage (SA-SAGD) technology, capable of producing 50,000 barrels per day before royalties. The company is
developing 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. The initial steam injection
phase started in December 2023 and is expected to last until the end of the first quarter of 2024, with production
ramping up over the following months.
The company also conducts experimental pilot operations to improve recovery of bitumen from wells by means
of new drilling, production or recovery techniques.
11
Aspen and other in-situ oil sands activities
In October 2018, the company received regulatory approval for the Aspen 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 due to continued market uncertainty. Aspen’s project pace will continue to be
evaluated and remains an important opportunity for Imperial. The Enhanced Bitumen Recovery Technology
(EBRT) field pilot on the Aspen lease received funding approval in 2023, with development work underway for
pilot startup by 2027. The pilot will test technology that has the potential to deliver higher bitumen production
rates and lower greenhouse gas emissions as compared to industry average SAGD operations.
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.
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. In 2023, the Western Arctic - Tariuq (Offshore) Accord was signed and prohibition was
extended to December 31, 2028. The Federal Government plans to co-develop a climate and marine science-
based review of the moratorium. The company continues to hold the licences while maintaining community
engagement and participation in the 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.
12
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 2023, the company’s share of Kearl’s net bitumen production was about 177,000 barrels per day and
gross production was about 191,000 barrels per day.
Total gross production for Kearl was about 270,000 barrels per day (191,000 barrels Imperial’s share), up
28,000 barrels per day (19,000 barrels Imperial's share) compared to 2022, as a result of improved reliability,
plant capacity utilization, and mine equipment productivity.
In 2023, Kearl completed its multiyear program to convert its 81 haul trucks to autonomous operation. Imperial
is now one of the largest autonomous mine fleet operators in the world and continues to capture productivity
improvements while also reducing costs and further enhancing operational safety.
In 2023, the company successfully completed its multiyear program to install six Boiler Flue Gas units. This
technology recovers waste heat from a boiler’s combustion exhaust to preheat process water and reduce
greenhouse gas emissions.
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.
In 2023, net bitumen production at Cold Lake was about 106,000 barrels per day. The gross production was
about 135,000 barrels per day, which is a decrease of about 9,000 barrels per day compared to 2022.
Cold Lake continues to utilize its commercial application of Liquid Addition to Steam for Enhanced Recovery
(LASER), with the technology now being applied to approximately 15 percent of production, resulting in reduced
greenhouse gas emissions compared to traditional Cyclic Steam Stimulation (CSS) technology.
Grand Rapids Phase 1 (GRP1) will be the first SA-SAGD project in the industry and is expected to reduce
greenhouse gas emissions intensity by up to 40 percent compared to existing CSS technology. The initial steam
injection phase started in December 2023 and is expected to last until the end of the first quarter of 2024, with
production ramping up over the following months.
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 2023, the company’s share of Syncrude’s net production was about 67,000 barrels per day. The gross
production was about 76,000 barrels per day, which is a decrease of about 1,000 barrels per day compared to
2022.
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.
13
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,
2023 and December 31, 2022, is disclosed 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 2023 primarily due
to the shut-in of multiple non-economical wells.
wells
Total (c)
Year
ended
December
31, 2023
Year
ended
December
31, 2022
Crude oil
Natural gas
Crude oil
Natural gas
Gross (a)
Net
(b)
Gross
(a)
Net
(b)
Gross
(a)
Net
(b)
Gross
(a)
Net (b)
4,084
4,080
2,411
770
4,277
4,264
2,419
774
(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 2023, the company had an interest in 12 gross wells with multiple completions (2022 - 12 gross wells).
Land holdings
At December 31, 2023 and December 31, 2022, 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
- gross (b)
Bitumen
-
net (c)
- gross (b)
- net (c)
Synthetic crude oil
- gross (b)
- net (c)
Canada lands (d):
Liquids and gas
- gross (b)
- net (c)
Atlantic offshore:
Liquids and gas
-
gross (b)
Total (e):
- net (c)
- gross (b)
- net (c)
Developed
Undeveloped
Total
2023
2022
2023
2022
2023
2022
422
253
196
182
119
30
441
260
196
182
119
30
185
135
584
255
100
25
185
135
584
255
100
25
607
388
780
437
219
55
626
395
780
437
219
55
2
2
2
2
1,803
1,803
1,805
1,805
496
495
498
497
65
6
804
473
65
146
146
211
6
22
22
28
211
28
823
2,818
2,818
3,622
3,641
480
933
932
1,406
1,412
(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).
14
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 388,000 net acres of developed and undeveloped land in the
western provinces related to crude oil and natural gas.
Crude oil and natural gas leases and licences from the western provinces have exploration periods ranging from
2 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.
15
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
The company currently transports its crude oil production and third-party crude oil required to supply refineries
by contracted pipelines, common carrier pipelines and rail. The company has rail infrastructure to mitigate
pipeline capacity constraints.
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, 2023, and the daily rated capacities of the refineries as at December 31, 2023, were as follows.
Refinery
throughput (a)
Rated
capacities (b)
Year
ended
December 31
at
December 31
thousands
of
barrels
per day
2023
2022
2021
Strathcona, Alberta
Sarnia, Ontario
Nanticoke, Ontario
Total
Utilization
of
refinery
capacity (percent)
186
110
111
407
94
195
113
110
418
98
172
106
101
379
89
2023
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) Refining capacity data is based on 100 percent of rated refinery process unit stream-day capacities to process inputs to atmospheric
distillation units under normal operating conditions, less the impact of shutdowns for regular repair and maintenance activities,
averaged over an extended period of time.
2023
Lower refinery throughput in 2023 primarily reflects the impact of planned turnaround activities at Strathcona
and Sarnia refineries.
2022
Improved refinery throughput in 2022 was primarily driven by increased demand and reduced turnaround
activity.
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.
16
Marketing
The company markets petroleum products throughout Canada under well-known brand names, most notably
Esso and Mobil, to all types of customers.
The company supplies petroleum products through Esso and Mobil-branded sites and independent marketers.
At the end of 2023, there were about 2,500 sites operating under a branded wholesaler model, in alignment with
Esso and Mobil brand standards, whereby the company supplies fuel to independent third parties.
The company 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, 2023, 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
2023
2022
2021
228
176
43
24
471
229
176
47
23
475
224
160
45
27
456
In 2023, lower petroleum product sales were primarily driven by lower wholesale customer volume.
In 2022, improved petroleum product sales primarily reflects increased demand.
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, 2023, were as
follows.
thousands
of tonnes
Total
petrochemical sales
2023
820
2022
842
2021
831
In 2023, sales volumes decreased primarily due to planned maintenance activities.
In 2022, sales volumes increased primarily due to higher sales of propylene and polyethylene, partially offset by
lower intermediates.
17
Delivery commitments
The company has no material commitments to provide a fixed and determinable quantity of oil or gas under
existing contracts and agreements.
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 the company's
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. The company’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 2023 (2022 - 5,300, 2021 - 5,400). Regular
employees are defined as active executive, management, professional, technical, administrative, 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.
18
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. In October 2023, the Supreme Court of Canada ruled that the new federal assessment
scheme was unconstitutional in part. Legislative and regulatory amendments have yet to be made to address
this decision. The impact of this legislation and its expected amendments is not fully apparent, but it may impact
the cost, manner, duration and ability to advance large energy projects and project expansions.
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 $5.6 billion on environmental protection and facilities. In 2023, the
company’s environmental capital and operating expenditures totalled approximately $1.7 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 $1.9 billion in 2024, with capital expenditures expected
19
to account for approximately 52 percent of the total. Costs for 2025 are anticipated to be approximately $1.5
billion, with capital expenditures expected to account for approximately 43 percent of the total.
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 2023 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.
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.
20
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.
21
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 the company’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 the company'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 the company.
Other demand-related factors
Factors that may affect the demand for crude oil, gas, fuels and petrochemicals, and therefore could impact the
company’s results include technological improvements in energy efficiency; seasonal weather patterns, which
affect the demand for the company's 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 or other critical areas that make wind, solar, hydrogen, nuclear or
other alternatives 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.
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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 exports, or
increase associated costs, including actions intended to reduce greenhouse gas emissions and previous
Government of Alberta curtailment regulations; the occurrence of wars or hostile actions, including disruption of
land or sea transportation routes; natural disasters; trade tariffs or broader breakdowns in global trade;
disruptions in competitors’ operations; and 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. In the past, increased differentials have 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,
may also be affected by the occurrence, severity, pace and rate of recovery of future public health epidemics or
pandemics, 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 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 the company’s existing operations and
planned projects. This includes actions by policy makers, regulators or other actors to delay or deny necessary
licences and permits, or 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 (including but not limited to in respect of climate change and greenhouse gas
emissions), regulatory interpretations that exclude or disfavour the company's products under government
policies or programs intended to support new or developing markets or technologies or that are otherwise not
technology-neutral, and increasing and expanding consultation with stakeholders and Indigenous communities,
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 or punitive taxes on oil, gas and
petrochemical operations) and changes in trade policies and agreements. Changes in taxation policy, such as
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the Government of Canada's proposed tax on repurchases of equity effective from January 1, 2024, could
impact the company’s financial 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. Governments are
also introducing bans on certain technologies that could impact demand for products, such as the Government
of Canada’s regulations to gradually reduce the proportion of permitted sales of new internal combustion engine
cars and light trucks from 2026-2034 and ban such sales 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. Of note, the first of two court cases brought
against the government by Indigenous groups regarding the assessment of cumulative impacts and
infringement on exercise of treaty rights in Alberta is scheduled to be heard in 2024. These cases may inform
future government decisions and policies regarding land use planning and resource development, and could
impact the requirements or willingness to grant regulatory licenses or approvals. 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, regional drought, 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 or have been 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.
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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.
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. A failure or perceived
failure to satisfy the requirements or if the company’s tailings management operations do not operate in the
manner anticipated by the company or third parties such as the events relating to the environmental protection
order at the company’s Kearl operations in 2023 could impact the company's ability to operate its assets, and
such impact could be material. 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. In October 2023, the Supreme Court of Canada ruled that the new federal assessment
scheme was unconstitutional in part. Legislative and regulatory amendments have yet to be made to address
this decision. The impact of this legislation and its expected amendments 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 operation or 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 and risks, including severe weather, drought, forest fires and geological events, may impact the
company’s operational performance. For example, the company's oil sands operations were particularly affected
by extreme cold weather in 2022 and wildfires in 2016. 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 as well as the use or support for different emission-
reduction technologies. 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 carbon dioxide (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 with
continued technology development and policy support, carries risks that the transition, including underlying
technologies, policies, and markets as discussed in more detail below, will not be available or 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 changes 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. Imperial’s
results may be impacted if the implementation pace and uncertainty of policy reduces the global
competitiveness of the Canadian oil and gas industry and the company’s crude oil and refined products.
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 percentage of priced emissions increased nominally 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. These percentages increase by 2 percent per year for 2023 to 2028 (inclusive), 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 put a price on 8 percent of a facility’s emissions in 2022. The price
increased by 2.4 percent in 2023 and will increase by 1.5 percent per year starting in 2024. British Columbia
has carbon pricing in place for all industrial emissions, with pricing that matches the federal carbon pricing
schedule since 2022. 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.
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 the Clean Fuel Regulations, which require the reduction
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in carbon intensity of liquid transportation fuels supplied in Canada starting in July 2023. The regulations require
fuel suppliers to reduce the carbon intensity of gasoline and diesel by reducing the GHG emissions within the
fossil fuel life cycle, blending in low carbon intensity renewables or fuel switching away from fossil fuels.
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. Uncertainty exists regarding federal overreach into provincial jurisdiction to
implement such changes and policies. In October 2023, the Supreme Court of Canada ruled that the Impact
Assessment Act was unconstitutional in part. Legislative and regulatory amendments have yet to be made to
address this decision, and the impact of this legislation and its expected amendments is not fully apparent.
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 the company's 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, in December 2023, the Government of Canada
published a regulatory framework to pursue a cap on greenhouse gas emissions from upstream 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. These actions include
delaying or blocking needed infrastructure, utilizing shareholder governance mechanisms against companies or
their shareholders or financial institutions in an effort to deter investments in oil and gas activities, and taking
other 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
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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. The company's operations and planned projects that have been developed with regard to
current or anticipated policies may become uneconomic or otherwise adversely impacted if such policies
change or are not adopted as anticipated. See also the discussion of "Supply and demand", "Government and
political factors" and "Management effectiveness" in this Item 1A.
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 the company’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. The company 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, as underlying inflationary pressures remained in Canada and other countries
throughout 2023, governments maintained elevated 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 the company's 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, including its
capital allocation into existing and new businesses. The extent to which the company 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
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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 ability to qualify for certain incentives available under supportive government policies for
emerging markets and technologies; the impact of general economic, business and market conditions; and the
company’s ability to prevent, to the extent possible, and respond effectively to unforeseen technical difficulties
that could delay project start-up or cause unscheduled downtime.
Operational efficiency
An important component of Imperial’s competitive performance, especially given the commodity-based nature of
the company’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 integration and 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), drought, forest fires 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. The company 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
The company is regularly subject to attempted cybersecurity disruptions from a variety of sources, including
state-sponsored actors. The company’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. See "Item 1C. Cybersecurity" for information on the company's
program for managing cybersecurity risks.
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The company has limited ability to influence third parties, including the company's partners, suppliers, service
providers (including providers of cloud-based services for the company's data or applications) and customers, to
implement strong cybersecurity controls, and the company is exposed to potential harm from cybersecurity
events that may affect their operations. During 2023, the company responded to several cyber-attacks on
suppliers and joint venture partners, none of which caused a material impact to Imperial. The company’s
response included giving technical assistance, loaning equipment, and taking additional defensive measures.
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. 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. The company 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.
Preparedness
The company’s operations have been and in the future may be disrupted by severe weather events, natural
disasters, human error, and similar events. The company's 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. The company's 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 include an operating incident or significant cybersecurity disruption; changes in consumer views
concerning the company’s products; a perception by the public that the company is not being fully transparent in
the sharing of information regarding its operations that is or may be relevant to community decision-making;
actions taken by the company's business partners; 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,
Indigenous rights 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
30
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.
Item 1B. Unresolved staff comments
None.
Item 1C. Cybersecurity
Imperial recognizes the importance of cybersecurity in achieving its business objectives, safeguarding its
assets, and managing its daily operations. Accordingly, the company integrates cybersecurity risks into its
overall enterprise risk management system. The board of directors oversees the company’s risk management
approach and structure, which includes an annual review of the company’s cybersecurity program.
The company’s cybersecurity program is managed by the Canada IT Manager, with support from cross-
functional teams led by information technology (IT) and operational technology cybersecurity operations
managers in the company and in Exxon Mobil Corporation and its affiliates (collectively, Cybersecurity
Operations Managers). The Cybersecurity Operations Managers are responsible for the day-to-day
management and effective functioning of the cybersecurity program, including the prevention, detection,
investigation, and response to cybersecurity threats and incidents. The Cybersecurity Operations Managers
collectively have many years of experience in cybersecurity operations.
IT management provides updates to the company’s senior management throughout the year, covering, as
appropriate, the company’s cybersecurity strategy, initiatives, key security metrics, penetration testing and
benchmarking learnings, and business response plans, as well as the evolving cybersecurity threat landscape.
The company’s cybersecurity program includes multi-layered technological capabilities designed to prevent and
detect cybersecurity disruptions and leverages industry standard frameworks, including the National Institute of
Standards and Technology Cybersecurity Framework. The cybersecurity program incorporates an incident
response plan to engage cross-functionally and report cybersecurity incidents to appropriate levels of
management based on potential impact. The company conducts annual cybersecurity awareness training and
routinely tests cybersecurity awareness and business preparedness for response and recovery, which are
developed based on real-world threats. In addition, IT management exchanges threat information with
governmental and industry groups and proactively engages independent, third-party cybersecurity experts to
test, evaluate and recommend improvements on the effectiveness and resiliency of its cybersecurity program
through penetration testing, breach assessments, regular cybersecurity incident drill testing, threat information
sharing, and industry benchmarking. The company takes a risk-based approach with respect to its third-party
service providers, tailoring processes according to the nature and sensitivity of the data or systems accessed by
such third-party service providers and performing additional risk screenings and procedures, as appropriate.
As of the date of this report, the company has not identified any risks from known cybersecurity threats,
including as a result of any prior cybersecurity incidents, that have materially affected, or are reasonably likely to
materially affect, the company including its business strategy, results of operations, or financial condition.
While the company believes its cybersecurity program to be appropriate for managing constantly evolving
cybersecurity risks, no program can fully protect against all possible adverse events. For additional information
on these risks and potential consequences if the measures the company is taking prove to be insufficient or if
the company's proprietary data is otherwise not protected, see “Item 1A. Risk factors: Operational and other
factors - Cybersecurity” in this report.
31
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.
32
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 15, 2024 there were 9,026 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 112. 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 169
of this report; and
• Entitled "Equity compensation plan information", within the "Compensation discussion and analysis", on
page 182 of this report.
33
Issuer purchases of equity securities
Total number of
shares purchased
Average price paid
per share
(Canadian dollars)
Total number of Maximum number
shares purchased of shares that may
as part of publicly
yet be purchased
announced plans under the plans or
programs (a) (b)
or programs
October 2023
(October 1 - October 31)
November 2023
(November 1 - November 30)
December 2023
11,722,035
81.72
11,722,035
—
—
—
(December 1 - December 31)
19,108,280
78.50
19,108,280
—
—
—
(a) On June 27, 2023, 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 29,207,635 common shares during the period June 29, 2023 to June 28, 2024. 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 19, 2023 as a result of the company purchasing the maximum allowable number of shares under
the program.
(b) On November 3, 2023, 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 13, 2023, with the company taking up and paying for 19,108,280 common shares at a price of $78.50 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 30, 2023. This included 13,299,349 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 2024 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 49 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 64 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.
34
Item 8. Financial statements and supplementary data
Reference is made to the table of contents in the "Financial section" on page 43 of this report:
• Consolidated financial statements, together with the report thereon of PricewaterhouseCoopers LLP
(PCAOB ID: 271), Calgary, Canada dated February 28, 2024, beginning with the section entitled
"Report of Independent Registered Public Accounting Firm" on page 72 and continuing through note 18,
"Divestment activities" on page 107;
"Supplemental information on oil and gas exploration and production activities" (unaudited) starting on
page 108.
•
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,
2023. 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 71 of this report for "Management’s report on internal control over financial
reporting" and page 72 for the "Report of Independent Registered Public Accounting Firm" on the company’s
internal control over financial reporting as of December 31, 2023.
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
During the three months ended December 31, 2023, none of the company's directors or officers adopted or
terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is
defined in Item 408(a) of Regulation S-K.
Item 9C. Disclosure regarding foreign jurisdiction that prevents
inspections
Not applicable.
35
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 112. 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 113 to 117 of this report
have been nominated for election at the annual meeting of shareholders to be held April 30, 2024. All of the
nominees, with the exception of N.A. Hansen, are now directors and have been since the dates indicated. M.R.
Crocker is a current director and has chosen not to stand for re-election. K.T. Hoeg, J.M. Mintz and D.S.
Sutherland retired from the board on May 2, 2023 as they reached the company's mandatory retirement age for
directors.
Reference is made to the section under "Nominees for director":
•
"Director nominee tables", on pages 113 to 117 of this report;
Reference is made to the sections under "Corporate governance disclosure":
"Skills and experience of our board members and nominees", on page 122 of this report.
•
•
"Other public company directorships of our board members and nominees", on page 127 of this report.
• The table entitled "Audit committee" under "Board and committee structure", on page 137 of this report;
•
•
"Ethical business conduct", starting on page 150 of this report;
"Largest shareholder", on page 154 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
156 to 157 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 112. 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 141 to 149 of this report; and
"Share ownership guidelines of independent directors and chairman, president and chief executive
officer", on page 149 of this report.
Reference is made to the following sections under "Company executives and executive compensation":
•
•
"Letter to shareholders", on page 159 of this report; and
"Compensation discussion and analysis", on pages 158 to 187 of this report.
36
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 112. 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 182 of this
report.
Reference is made to the section under "Corporate governance disclosure" entitled "Largest shareholder", on
page 154 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, 2023 is described in the sections under "Nominees for director"
starting on page 113, "Director compensation" starting on page 141 and "Company executives and executive
compensation" starting on page 156. 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 15, 2024.
Named
executive officer
B.W. Corson
D.E. Lyons
S.P. Younger
B.A. Jolly
S.L. Evers
Incumbent
as
officers
directors
group
a
and executive
(16 people)
Imperial
Oil Limited
Exxon
Mobil Corporation
Common
shares (a)
Restricted
units (b)
stock
Common
shares (a)
Restricted
units (b)
stock
—
—
—
13,498
2,922
410,400
114,400
66,100
76,300
39,600
129,044
10,780
11,025
—
—
59,700
4,800
10,300
—
—
40,921
853,450
175,823
225,123
(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 less than 0.01
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.
37
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 112. 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 123 of this report.
Reference is made to the section under "Corporate governance disclosure" entitled "Transactions with Exxon
Mobil Corporation", on page 154 of this report.
As an employee of Exxon Mobil Corporation, 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 finance committee under the relevant standards. Mr. Crocker has chosen
not to stand for re-election. Director nominee N.A. Hansen is an employee of Exxon Mobil Corporation and if
elected will also be deemed a non-independent director. As employees of Exxon Mobil Corporation, M.R.
Crocker is, and N.A. Hansen will be, independent of the company’s management and able to assist these
committees by reflecting the perspective of the company’s shareholders.
38
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, 2023 and December 31, 2022 were as
follows:
thousands
of
Canadian dollars
Audit fees
Audit-related fees
Tax fees
All
other fees
Total fees
2023
2,200
97
—
—
2022
2,190
92
—
—
2,297
2,282
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 2023. 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.
39
PART IV
Item 15. Exhibits, financial statement schedules
Reference is made to the table of contents in the "Financial section" on page 43 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) 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)).
(ii) 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 (File No. 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)
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 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)).
Amended Restricted Stock Unit Plan with respect to Restricted Stock Units granted in 2022
and subsequent years, as amended effective November 29, 2022 (Incorporated herein by
reference to Exhibit (10)(iii)(A)(7) of the company's Annual Report on Form 10-K for the year
ended December 31, 2022 (File No. 0-12014)).
(6)
Amended Short Term Incentive Program, as amended effective December 1, 2023.
(21)
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, 2023.
40
(31.1)
(31.2)
(32.1)
(32.2)
(97)
(101)
(104)
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.
SEC Rule 10D-1 Policy for the Recovery of Erroneously Awarded Compensation effective
December 1, 2023.
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.
41
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 28, 2024 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 28, 2024 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/ Sharon R. Driscoll
(Sharon R. Driscoll)
/s/ John N. Floren
(John N. Floren)
/s/ Gary J. Goldberg
(Gary J. Goldberg)
/s/ Miranda C. Hubbs
(Miranda C. Hubbs)
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
42
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)
43
Page
44
45
49
49
50
53
60
63
64
66
71
72
75
76
77
78
79
80
80
86
88
89
94
95
97
98
98
99
101
102
103
105
105
106
107
107
108
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
2023
50,702
2022
59,413
2021
37,508
2,512
2,301
164
(88)
4,889
864
41,199
4,011
4,132
3,851
22,222
3,734
8.51
8.49
1.94
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
44
Frequently used terms
Listed below are definitions of several of the company’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
2023
2022
2021
41,199
(6,482)
(8,363)
21
26,375
121
4,011
22,222
21
26,375
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
45
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
2023
2022
2021
Net income (loss)
Financing (after-tax) including Imperial’s share of equity companies
Net income (loss) excluding financing
4,889
66
4,955
7,340
55
7,395
2,479
40
2,519
Average capital employed
Return on average capital employed (percent) – corporate total
26,484
18.7
26,762
27.6
26,780
9.4
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
2023
2022
2021
Cash flows from (used in) operating activities
Proceeds from asset sales
Total cash flows from (used in) operating activities and asset sales
3,734
86
3,820
10,482
904
11,386
5,476
81
5,557
46
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
Non-service pension and postretirement benefit
Exploration
Subtotal
Imperial's share of equity company expenses
Total operating costs
2023
2022
2021
44,600
50,186
34,307
32,399
2,402
69
34,870
76
9,806
37,742
2,179
60
39,981
71
10,276
23,174
1,928
54
25,156
61
9,212
2023
2022
2021
6,879
857
1,907
82
5
9,730
76
9,806
7,404
882
1,897
17
5
10,205
71
10,276
6,316
784
1,977
42
32
9,151
61
9,212
47
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
2023
2022
2021
Net income (loss) (U.S. GAAP)
4,889
7,340
2,479
Less identified items included in Net income (loss)
Gain/(loss) on sale of assets
Subtotal of identified items
—
—
208
208
—
—
Net income (loss) excluding identified items
4,889
7,132
2,479
48
Management’s discussion and analysis of financial condition and results
of operations
Overview
The following discussion and analysis of the company’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; and pursuit of lower-
emission business opportunities including carbon capture and storage, and lower-emission fuels.
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 reportable 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, the
company’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 annual
company plan process establishes the economic assumptions used for evaluating investments and sets
operating and capital objectives. ExxonMobil's Global Outlook (the Outlook), developed annually, is the
foundation for the plan assumptions. Price ranges for crude oil, including price differentials, refinery and
chemical margins, volumes, operating costs including greenhouse gas emissions pricing, and foreign currency
exchange rates are part of the company plan assumptions developed annually. Company plan volume
projections are based on individual field production profiles, which are also updated at least annually. Major
investment opportunities are evaluated over a range of potential market conditions. All major investments are
reappraised to ensure we learn from our investment decisions, and the development and execution of the
project. Lessons learned are incorporated 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.
49
Business environment
Long-term business outlook
The "Long-term business outlook" is based on Exxon Mobil Corporation’s Global Outlook (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 relevant 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). Included in the range of these
scenarios are: the IPCC likely below 2°C scenarios and three scenarios from the IEA; IEA Stated Policies
Scenario (STEPS), which reflects a sector-by-sector assessment of current policy in place or announced by
governments; IEA Announced Pledges Scenario (APS), which reflects aspirational government targets met on
time and in full; and IEA Net Zero Emissions by 2050 Scenario (NZE), which the IEA describes as extremely
challenging, acknowledging 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.
Using the company's own experts and third-party sources, the company monitors a variety of signposts that
may indicate a potential shift in the energy transition. For example, the regional pace of the transition could be
influenced by the cost of new technologies compared to existing or alternative energy sources.
By 2050, the world’s population is projected to be 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
approximately 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 about 80 percent from 2021 to 2050, with
developing countries likely to account for over 75 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 to approximately 15 percent of the world’s electricity in 2050, versus approximately 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 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 20 percent and
10 percent, respectively, of global electricity supplies by 2050. Supplies of electricity by energy type will reflect
50
significant differences across regions reflecting a wide range of factors, including the cost and availability of
various energy supplies and policy developments.
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 more than 60 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 15 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 more than
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.
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. 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
greater than 75 percent 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 come 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 two thirds 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 continue as 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 500 percent
from 2021 to 2050, when they are projected to be around 10 percent of the world energy mix.
Decarbonization of industrial 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
51
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 projected demand under the Outlook and the IEA's 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 rapidly
declining demand for oil and gas envisioned in aggressive decarbonization scenarios.
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. The
company’s estimates of potential costs related to greenhouse gas emissions align with applicable provincial and
federal regulations. Additionally, the company 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 2015
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
successful achievement of 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 2022. The Outlook assumes
success of these NDCs, despite the 2023 United Nations Environment Programme (UNEP) Emissions Gap
Report projecting that the G20 members will fall short of their NDCs. The Outlook seeks to identify potential
impacts of climate related government policies, which often target specific sectors. For purposes of the Outlook,
a proxy cost on energy-related CO2 emissions is assumed, based on regional considerations and relative levels
of economic development, and by 2050, reaches up to $150 USD per metric ton for OECD nations and up to
$100 USD per metric ton for non-OECD nations. China and other leading non-OECD nations are expected to
trail OECD policy initiatives. Nevertheless, 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 28 in Dubai in 2023, 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.
The company 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.
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, the company 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
52
and regulatory frameworks will be needed to achieve this goal. This work builds on the company’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.
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. 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 through 2022.
Energy markets began to normalize in 2023, down from their 2022 highs. During the first half of 2023, the price
of crude oil declined, impacted by higher inventory levels. In the second half, crude oil prices increased
modestly from strong demand, and ongoing actions by OPEC+ oil producers to limit supply. In addition, the
Canadian WTI/WCS spread began to weaken in the fourth quarter, but remained in line with 2022 on an annual
basis. Throughout 2023, strong demand for gasoline and distillate combined with low inventories kept refining
margins strong, but short of 2022 levels on an annual basis. In the fourth quarter, refining margins dropped due
to higher inventory and lower seasonal demand.
The general rate of inflation in Canada and across many other major countries peaked in 2022, rising from
already elevated levels in 2021, due to additional impacts on energy and other commodities from the Russia-
Ukraine conflict. Inflation moderated in 2023 as major central banks tightened monetary policy aggressively and
global GDP growth slowed. In Canada, it currently remains higher than the Bank of Canada's inflation target.
Meanwhile, there are significant variations across OECD and non-OECD in the pace of change in inflation. 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 in Net income (loss)
Gain/(loss) on sale of assets
Subtotal of identified items1
2023
4,889
—
—
2022
7,340
208
208
2021
2,479
—
—
Net income (loss) excluding identified items1
4,889
7,132
2,479
2023
Net income in 2023 was $4,889 million, or $8.49 per share on a diluted basis, compared to $7,340 million, or
$11.44 per share in 2022.
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. 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.
1 non-GAAP financial measure - see "Frequently used terms" section for definition and reconciliation.
53
Upstream
Overview
The company produces crude oil and natural gas for sale predominantly into North American markets. The
company’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.
The company 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". The company
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.
The company 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, the company tests the resiliency
of its annual plans and all major investments across a range of price scenarios.
Key events
Upstream assets demonstrated strong operational performance in 2023. 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.
Upstream full-year production averaged 413,000 gross oil-equivalent barrels per day.
At Kearl, gross production was about 270,000 barrels per day (191,000 barrels Imperial’s share), up 28,000
barrels per day (19,000 barrels Imperial's share) compared to 2022, as a result of improved reliability, plant
capacity utilization, and mine equipment productivity.
At Cold Lake, annual production averaged 135,000 gross oil-equivalent barrels per day.
At Syncrude, annual production averaged 76,000 gross oil-equivalent barrels per day.
As described in more detail in "Item 1A. Risk factors", environmental risks and climate related regulations could
have negative impacts on the upstream business.
54
Results of operations
2023 Net income (loss) factor analysis
millions of Canadian dollars
Price – Lower bitumen realizations were primarily driven by lower marker prices. Average bitumen realizations
decreased by $17.25 per barrel, generally in line with WCS, and synthetic crude oil realizations decreased by
$19.89 per barrel, generally in line with WTI.
Volumes – Lower volumes were primarily driven by steam cycle timing at Cold Lake, and the absence of XTO
Energy Canada production, partially offset by improved reliability, plant capacity utilization, and mine equipment
productivity at Kearl.
Royalty – Lower royalties were primarily driven by weakened commodity prices.
Identified Items1 – Prior year results included favourable identified items1 related to the company's gain on the
sale of interests in XTO Energy Canada.
Other – Includes favourable foreign exchange impacts of about $380 million, and lower operating expenses of
about $380 million, primarily due to lower energy prices.
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 – 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
$60 million due to increased prices.
1 non-GAAP financial measure - see "Frequently used terms" section for definition and reconciliation.
55
3,645(2,340)(70)690(208)7952,5122022PriceVolumesRoyaltyIdentified Items¹Other20231,3953,140(80)(970)208(48)3,6452021PriceVolumesRoyaltyIdentified Items¹Other2022
Marker
prices
and
average
realizations
Canadian
dollars,
unless
otherwise noted
(US$
per barrel)
(US$
per barrel)
per barrel)
Intermediate
Select
(US$
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$)
2023
77.60
58.97
18.63
67.42
105.57
59.30
—
2.58
0.74
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
Crude
oil
and
natural
gas
liquids
(NGL) -
production
and
sales (a)
thousands
of
barrels
per day
2023
2022
2021
oil (b)
crude oil
oil production
for sale
crude
Bitumen
Synthetic
Conventional
Total
NGLs
Total
Bitumen
NGL
crude
available
crude
oil
sales,
sales (d)
and
including
NGL production
diluent (c)
Natural
gas -
production
and
production
available
for
sale
(a)
millions
of
cubic
feet
per day
Production
(e) (f)
Production
available
for
sale (g)
gross
326
76
5
407
—
407
442
—
net
283
67
5
355
—
355
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
2023
2022
2021
gross
net
gross
net
gross
33
85
32
11
120
83
50
net
115
81
(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)
2023
Higher bitumen production was mainly attributable to Kearl, and primarily driven by improved reliability, plant
capacity utilization, and mine equipment productivity.
2022
Lower bitumen production was mainly attributable to Kearl, and primarily a result of downtime in the first half of
the year.
56
Downstream
Overview
The company’s Downstream serves predominantly Canadian markets with refining, trading, logistics and
marketing activities. The company'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 the company’s businesses, selectively investing for resilient and advantaged returns,
operating efficiently and effectively, and providing quality, valued and differentiated products and services to
customers.
The company 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. The company's integration across the value chain, from refining to marketing, enhances overall
value across the fuels business.
Key events
Refining margins remained strong in 2023, driven by strong demand for gasoline and distillate due to relatively
low inventory levels, but short of 2022 levels on an annual basis. The company continues to closely monitor
industry and global economic conditions.
In January 2023, the company fully funded the Strathcona renewable diesel project, the largest such facility in
Canada, located at Strathcona refinery. The facility will use low-carbon hydrogen, locally sourced and grown
feedstocks and the company's own proprietary catalyst to produce more than one billion litres of renewable
diesel annually, and could help reduce greenhouse gas emissions. Facility construction commenced during the
year, and the project remains on-plan with renewable diesel production expected to begin in 2025.
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.
The company supplies petroleum products through Esso and Mobil-branded sites and independent marketers.
At the end of 2023, there were about 2,500 sites operating under a branded wholesaler model, in alignment with
Esso and Mobil brand standards, whereby the company supplies fuel to independent third parties.
Results of operations
2023 Net income (loss) factor analysis
millions of Canadian dollars
Margins – Lower margins primarily reflect weaker market conditions.
Other – Higher turnaround impacts of about $340 million, associated with the planned turnaround activities at
the Strathcona and Sarnia refineries, partially offset by favourable foreign exchange impacts of about $210
million, improved volumes of about $50 million, and lower operating expenses of about $50 million, primarily
due to lower energy prices.
57
3,622(1,300)(21)2,3012022MarginsOther2023
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.
Refinery utilization
thousands
of
barrels
per
day (a)
Total
refinery
throughput (b)
Rated
capacity
at
December
31 (c)
Utilization
of
total
refinery
capacity (percent)
2023
2022
407
433
94
418
433
98
2021
379
428
89
(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) Refining capacity data is based on 100 percent of rated refinery process unit stream-day capacities to process inputs to atmospheric
distillation units under normal operating conditions, less the impact of shutdowns for regular repair and maintenance activities,
averaged over an extended period of time.
2023
Lower refinery throughput in 2023 reflects the impact of planned turnaround activities at Strathcona and Sarnia
refineries.
2022
Improved refinery throughput in 2022 was primarily driven by increased demand and reduced turnaround
activity.
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
2023
2022
2021
228
176
43
24
471
229
176
47
23
475
224
160
45
27
456
(a) Volume per day metrics are calculated by dividing the volume for the period by the number of calendar days in the period.
2023
Lower petroleum product sales in 2023 were primarily driven by lower wholesale customer volume.
2022
Improved petroleum product sales in 2022 primarily reflects increased demand.
58
8952,3503773,6222021MarginsOther2022
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 2023, margins were adversely impacted by increased supply of polyethylene. Sales volumes decreased
primarily due to planned maintenance activities.
The company 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
2023 Net income (loss) factor analysis
millions of Canadian dollars
2022 Net income (loss) factor analysis
millions of Canadian dollars
Margins – Lower margins primarily reflect weaker industry polyethylene margins.
Sales
thousands of tonnes
Total petrochemical sales
Corporate and other
millions of Canadian dollars
Net income (loss)
2023
820
2022
842
2021
831
2023
(88)
2022
(131)
2021
(172)
59
204(30)(10)1642022MarginsOther2023361(110)(47)2042021MarginsOther2022
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. The company’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, 2022. The company contributed $148 million to the
registered retirement plans in 2023. 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 flows from (used in):
Operating activities
Investing activities
Financing activities
Increase (decrease) in cash and cash equivalents
2023
2022
2021
3,734
(1,694)
(4,925)
(2,885)
10,482
(618)
(8,268)
1,596
5,476
(1,012)
(3,082)
1,382
Cash and cash equivalents at end of year
864
3,749
2,153
Cash flows from operating activities
2023
Cash flows from operating activities primarily reflect unfavourable working capital impacts, including an income
tax catch-up payment of $2.1 billion, as well as lower Upstream realizations and Downstream margins.
2022
Cash flow generated from operating activities primarily reflects higher Upstream realizations, improved
Downstream margins, and favourable working capital impacts.
Cash flows used in investing activities
2023
Cash flows used in investing activities primarily reflect the absence of proceeds from the sale of interests in
XTO Energy Canada, and higher additions to property, plant and equipment.
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.
60
Cash flows used in financing activities
2023
At the end of 2023, total debt outstanding was $4,132 million, compared with $4,155 million at the end of 2022.
During the fourth quarter of 2023, the company extended the maturity dates of its two existing $250 million
committed lines of credit to November 2024 and November 2025, respectively.
The company has not drawn on any of its outstanding $500 million of available credit facilities.
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.
Share repurchases
millions
of
Canadian
dollars,
unless noted
Share
repurchases (a)
Number
of
shares
purchased
(millions) (a)
2023
3,800
48.3
2022
6,395
93.9
2021
2,245
56.0
(a) Share repurchases were made under the company's normal course issuer bid program for the periods disclosed. Substantial issuer
bids were undertaken and commenced on May 6, 2022 (expired on June 10, 2022), November 4, 2022 (expired on December 9,
2022), and November 3, 2023 (expired on December 8, 2023). 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.
2023
On June 27, 2023, the company announced that it had received final approval from the Toronto Stock Exchange
for a new normal course issuer bid to continue its then existing share purchase program. The program enabled
the company to purchase up to a maximum of 29,207,635 common shares during the period June 29, 2023 to
June 28, 2024. The program completed on October 19, 2023 as a result of the company purchasing the
maximum allowable number of shares under the program.
On November 3, 2023, 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 13, 2023, with the company
taking up and paying for 19,108,280 common shares at a price of $78.50 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
30, 2023. This included 13,299,349 shares purchased from Exxon Mobil Corporation by way of a proportionate
tender to maintain its ownership percentage at approximately 69.6 percent.
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.
61
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.
Dividends
millions
of
Canadian
dollars,
unless noted
Dividends paid
Per
share
dividend
paid (dollars)
Financial strength
2023
1,103
1.88
2022
851
1.29
2021
706
0.98
The table below shows the company’s consolidated debt-to-capital ratio. The data demonstrates the company’s
creditworthiness:
percent
At
December 31
Debt
to
capital (a)
2023
16
2022
16
2021
19
(a) Debt, defined as the sum of “Notes and loans payable” and “Long-term debt” on the Consolidated balance sheet, divided by capital,
defined as the sum of debt and “Total shareholders’ equity” on the Consolidated balance sheet.
Debt-related interest incurred in 2023, before capitalization of interest, was $203 million, up from $111 million in
2022. The weighted-average interest rate on the company’s debt was 4.9 percent in 2023, up from 2.2 percent
in 2022.
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-cancellable, or cancellable 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 2023 was $11.8 billion, of which $728 million is due in 2024, and $1,131 million
is due in 2025.
62
Litigation and other contingencies
As discussed in note 9 to the consolidated financial statements, 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, 2023, 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 the
company’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.
2023
1,108
472
23
175
2022
1,128
295
10
57
1,778
1,490
For the Upstream segment, capital and exploration expenditures were primarily related to sustaining activity in
support of the company’s oil sands and in-situ assets.
For the Downstream segment, capital expenditures were primarily for progressing the Strathcona renewable
diesel facility as well as other refinery and distribution projects to improve environmental performance, reliability,
and energy efficiency.
Total capital and exploration expenditures are expected to be approximately $1.7 billion in 2024.
Expected capital and exploration expenditures for 2024 includes firm capital commitments of $686 million for the
construction and purchase of fixed assets and other permanent investments. An additional $65 million of firm
capital commitments have been made for years 2025 and beyond.
Actual spending could vary depending on the progress of individual projects.
63
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.
The company’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. The
company’s integrated business model reduces its risk from changes in commodity prices. For instance, when
differentials between North American crude benchmarks and western Canadian prices widen, the company 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 the company’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.
The company 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 the company’s debt would not be material to
earnings or cash flow. The company 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.
64
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. The company maintains a system of controls that includes the
authorization, reporting and monitoring of derivative activity.
65
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. The
company 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.
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.
66
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.
In 2023, upward revisions of proved bitumen of 0.1 billion barrels were driven by lower royalty obligations
associated with lower pricing and minor technical revisions at Cold Lake and Kearl. A slight increase in proved
reserves for synthetic crude oil is associated with lower royalty obligations associated with pricing. Conventional
proved liquids reserves decreased to zero under existing pricing and operating conditions.
Under the terms of certain contractual arrangements or government royalty regimes, lower prices can also
increase proved reserves attributable to the company. 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.
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.
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.
67
In general, the company 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.
Global Outlook 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
Global Outlook (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 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.
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.
68
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
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 4.8 percent used
in 2023 compares to actual returns of 5.7 percent and 6.1 percent achieved over the last 10- and 20-year
periods respectively, ending December 31, 2023. 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 $75 million before tax. At the company,
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 2023.
69
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. 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.
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.
70
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,
2023.
PricewaterhouseCoopers LLP, an independent registered public accounting firm, audited the effectiveness of
the company’s internal control over financial reporting as of December 31, 2023, 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 28, 2024
71
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, 2023 and 2022, 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, 2023, 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,
2023, 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, 2023 and 2022, and the results of its operations and its
cash flows for each of the three years in the period ended December 31, 2023 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, 2023, 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.
72
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 Developed 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 consolidated upstream
property, plant and equipment (PP&E), net balance was $26,840 million as of December 31, 2023, and the
related depreciation and depletion expense for the year ended December 31, 2023 was $1,680 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
developed 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 developed oil and natural gas reserve volumes, and (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 developed oil and
natural gas reserve volumes.
73
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 developed oil and natural gas reserve
volumes. The work of management's specialists was used in performing the procedures to evaluate the
reasonableness of the proved developed 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 i) evaluating the methods and assumptions
used by management's specialists, ii) testing the completeness and accuracy of the data used by
management's specialists related to historical production volumes, and iii) evaluating management's specialists'
findings related to estimated future production volumes by comparing the estimate to relevant historical and
current period information, as applicable.
/s/PricewaterhouseCoopers LLP
Chartered Professional Accountants
Calgary, Canada
February 28, 2024
We have served as the Company’s auditor since 1934.
74
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)
Selling and general (c)
Federal excise tax and fuel charge
Depreciation and depletion
Non-service pension and postretirement benefit
Financing (d) (note 12)
Total expenses
2023
2022
2021
50,702
267
50,969
5
32,399
6,879
857
2,402
1,907
82
69
44,600
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
Income (loss) before income taxes
6,369
9,484
3,283
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).
1,480
2,144
804
4,889
7,340
2,479
8.51
8.49
13,544
4,125
473
169
11.47
11.44
17,042
3,795
460
78
3.48
3.48
8,777
2,737
420
28
The information in the notes to consolidated financial statements is an integral part of these statements.
75
Consolidated statement of comprehensive income (U.S. GAAP)
millions of Canadian dollars
For
Net
years
the
ended
income (loss)
December 31
2023
4,889
2022
7,340
2021
2,479
Other
comprehensive
income
(loss),
income taxes
net
of
adjustment
Postretirement
benefits
liability
(excluding amortization)
(206)
582
679
Amortization
included
of
in
postretirement
net
comprehensive
benefit costs
Total
other
income (loss)
benefits
liability
adjustment
41
(165)
83
665
133
812
Comprehensive
income (loss)
4,724
8,005
3,291
The
information
in
the
notes
to
consolidated
financial
statements
is
an
integral
part
of
these
statements.
76
Consolidated
balance
sheet
(U.S.
GAAP)
millions
of
Canadian dollars
At
December 31
2023
2022
Assets
Current assets
and
Cash
Accounts
Inventories
Materials,
cash equivalents
receivable -
oil
and
crude
supplies
of
net (a)
and
products
prepaid expenses
(note 11)
current assets
Total
Investments
and
long-term
receivables (b)
and equipment,
plant
accumulated
depreciation
and
depletion
(note 18)
including
intangibles - net
Property,
less
Goodwill
Other
assets,
Total assets
Liabilities
Current liabilities
Notes
and
loans
payable
(note 12)
Accounts
Income
payable
and
taxes payable
accrued
liabilities
(a)
(note 11)
Total
current liabilities
Long-term
debt
Other
long-term
income
Deferred
Total liabilities
(c)
(note 14)
obligations
tax
(note 5)
liabilities
(note 3)
Commitments
and
contingent
liabilities
(note 9)
stated
shares
Shareholders’ equity
Common
at
Earnings reinvested
Accumulated
other
shareholders’ equity
Total
value
(d)
(note 10)
comprehensive
income
(loss)
(note 17)
and
receivable -
and
shareholders’ equity
included
net
net
receivables
amounts
included
long-term
included
amounts
to
related
parties
Total
(a)
(b)
(c)
(d)
liabilities
Accounts
Investments
Long-term
of
Number
of
Number
debt
common
common
shares
shares
authorized
outstanding
(millions)
(millions)
(note
(note
10).
10).
receivable
amounts
(note
from
from
16).
related
related
parties
parties
(note
(note
16).
16).
864
4,482
1,944
1,008
8,298
1,062
30,835
166
838
41,199
121
6,231
251
6,603
4,011
3,851
4,512
18,977
992
21,907
(677)
22,222
41,199
1,048
283
3,447
1,100
536
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
1,079
21,846
(512)
22,413
43,524
1,108
288
3,447
1,100
584
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
W. Corson
Bradley
Chairman,
chief
president and
executive officer
Daniel
E. Lyons
Senior vice-president
and
finance
administration,
and controller
77
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
At end of year
Accumulated other comprehensive income (loss) (note 17)
At beginning of year
Other comprehensive income (loss)
At end of year
2023
2022
2021
1,079
(87)
992
21,846
4,889
(3,713)
(1,115)
21,907
(512)
(165)
(677)
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)
Shareholders’ equity at end of year
22,222
22,413
21,735
The information in the notes to consolidated financial statements is an integral part of these statements.
78
Consolidated
statement
of
cash
flows
(U.S.
GAAP)
millions
of
Canadian dollars
December 31
the
years
ended
For
Operating activities
Net
income (loss)
Adjustments
for
Depreciation
(Gain)
Deferred
loss
non-cash items:
and depletion
sales
asset
on
income
operating
taxes
assets
Changes
in
8, 18)
(note
and other
and liabilities:
Accounts receivable
Inventories,
materials,
supplies
and
prepaid expenses
Income
taxes payable
and
accrued liabilities
flows
from
(used
in)
operating activities
Accounts
other
items -
payable
net (b)
All
Cash
Investing activities
property,
to
Additions
Proceeds
asset
from
Additional investments
Loans
equity
Cash
to
flows
from
plant
sales
and equipment
8, 18)
(note
companies - net
(used
in)
investing activities
(note 12)
debt -
debt -
Financing activities
net
Short-term
reduction
Long-term
Finance
obligations -
lease
Dividends paid
Common
Cash
shares
from
purchased
in)
(used
flows
(note 14)
reduction
(note 14)
(note 10)
financing activities
Increase
and
Cash
(decrease)
cash
in cash
equivalents
and
at
cash equivalents
beginning
of year
Cash
(a)
and
is
months
cash
composed
equivalents
of
in
or less.
contributions
Cash
three
Included
cash
to
(b)
registered
end
at
bank
of
and
year (a)
cash
2023
2022
2021
4,889
7,340
2,479
1,907
(73)
(85)
237
(688)
(2,331)
81
(203)
3,734
(1,785)
86
—
5
(1,694)
—
—
(22)
(1,103)
(3,800)
(4,925)
(2,885)
3,749
864
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
with
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
equivalents
at
cost.
Cash
equivalents
are
all
highly
liquid
securities
maturity of
Income taxes
(paid),
Interest
(paid) refunded.
net
of capitalization.
pension plans.
(148)
(174)
(164)
(4,153)
(69)
(374)
(60)
58
(43)
The information in the notes to consolidated financial statements is an integral part of these statements.
79
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, 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 2023 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
The company 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.
80
"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.
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
The company 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 and 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 the company’s share of earnings since the investment was made, less dividends received. The
company’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. The company does not invest in these investments in order to remove liabilities from its balance
sheet.
81
Property, plant and equipment
Cost basis
The company 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.
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.
82
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, the company 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.
83
Global Outlook 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
Global Outlook (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.
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.
84
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. 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.
85
2. Business segments
The company operates its business in Canada, and its reportable segments are Upstream, Downstream and
Chemical. 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.
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.
86
millions
of
Canadian dollars
2023
2022
2021
2023
2022
2021
2023
2022
2021
Upstream
Downstream
Chemical
other income
and
(a) (b)
Revenues
Revenues
Intersegment
Investment
sales (c)
other
and
income
(note
8, 18)
and general
tax
excise
(note 12)
Expenses
Exploration
Purchases
Production
Selling
Federal
Depreciation
Non-service
Financing
Total expenses
Income
Income
Net
Cash
Capital
Property,
Cost
Accumulated
Net
property,
Total
(loss)
tax
income
flows
and
assets (c)
plant
(note 15)
of
oil
crude
and manufacturing
and
products
(c)
(note 11)
fuel charge
and
and depletion
pension
and
postretirement benefit
(note 11)
taxes
(note 3)
before
expense
(loss)
(c)
from
(used
exploration
income
(benefit)
(note 11)
in)
operating
expenditures (d)
activities (c)
and equipment
depreciation
plant
and
and depletion
equipment (e)
222
16,274
16
16,512
494
19,135
135
19,764
5,863
9,956
12
15,831
49,241
6,509
108
55,858
57,466
7,476
43
64,985
30,207
4,520
59
34,786
1,239
342
—
1,581
1,453
523
—
1,976
5
6,636
4,917
—
—
1,680
—
7
13,245
3,267
755
2,512
3,100
1,108
5
7,971
5,491
—
—
1,673
—
5
15,145
4,619
974
3,645
5,834
1,128
32
7,492
4,661
—
—
1,775
—
15
13,975
1,856
461
1,395
4,913
632
—
47,886
1,702
693
2,399
183
—
—
52,863
2,995
694
2,301
608
472
—
55,569
1,640
653
2,177
179
—
1
60,219
4,766
1,144
3,622
4,415
295
—
29,505
1,445
572
1,928
158
—
—
33,608
1,178
283
895
179
476
—
997
260
89
3
15
—
—
1,364
217
53
164
53
23
—
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
46,776
(19,936)
26,840
28,718
45,784
(18,835)
26,949
28,830
48,200
(20,389)
27,811
29,416
7,368
(4,301)
3,067
10,114
6,926
(4,143)
2,783
9,277
6,772
(4,096)
2,676
7,945
1,018
(757)
261
475
995
(741)
254
491
984
(721)
263
474
Corporate
and other
Eliminations
Consolidated
millions
of
Canadian dollars
2023
2022
2021
2023
2022
2021
2023
2022
2021
other income
and
Revenues
Revenues
(a)
Intersegment
Investment
and
(b)
sales (c)
other
income
(note
8, 18)
and general
tax
excise
(note 12)
Expenses
Exploration
Purchases
Production
Selling
Federal
Depreciation
Non-service
Financing
Total expenses
Income
Income
Net
Cash
Capital
Property,
Cost
Accumulated
property,
Net
Total
(loss)
tax
income
flows
and
assets (c)
plant
(note 15)
of
oil
crude
and manufacturing
and
products
(c)
(note 11)
fuel charge
and
and depletion
pension
and
postretirement benefit
(note 11)
taxes
(note 3)
before
expense
(loss)
(c)
(used
from
exploration
income
(benefit)
(note 11)
operating
in)
expenditures (d)
activities (c)
and equipment
depreciation
plant
and
and depletion
equipment (e)
—
—
143
143
—
—
—
80
—
29
82
62
253
(110)
(22)
(88)
(37)
175
—
—
79
79
—
—
—
150
—
27
17
54
248
(169)
(38)
(131)
(59)
57
—
—
10
10
—
(23,125)
—
(23,125)
—
(27,134)
—
(27,134)
—
(14,795)
—
(14,795)
50,702
—
267
50,969
59,413
—
257
59,670
37,508
—
82
37,590
—
—
—
128
—
26
42
39
235
(225)
(53)
(172)
(47)
24
—
(23,120)
—
(5)
—
—
—
—
(23,125)
—
—
—
10
—
—
(27,128)
—
(6)
—
—
—
—
(27,134)
—
—
—
16
—
—
(14,789)
—
(6)
—
—
—
—
(14,795)
—
—
—
10
—
5
32,399
6,879
857
2,402
1,907
82
69
44,600
6,369
1,480
4,889
3,734
1,778
5
37,742
7,404
882
2,179
1,897
17
60
50,186
9,484
2,144
7,340
10,482
1,490
32
23,174
6,316
784
1,928
1,977
42
54
34,307
3,283
804
2,479
5,476
1,140
1,038
(371)
667
2,366
863
(343)
520
5,312
806
(316)
490
3,196
—
—
—
(474)
—
—
—
(386)
—
—
—
(249)
56,200
(25,365)
30,835
41,199
54,568
(24,062)
30,506
43,524
56,762
(25,522)
31,240
40,782
87
Includes export sales to the United States of $8,982 million (2022 - $12,394 million, 2021 - $7,228 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
2023
44,465
6,237
50,702
2022
52,265
7,148
59,413
2021
34,275
3,233
37,508
(c)
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.
(d) 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 $3,251 million (2022 - $2,676 million, 2021 - $2,348 million).
(e)
3. Income taxes
millions of Canadian dollars
Current income tax expense (benefit)
Deferred income tax expense (benefit)
Total income tax expense (benefit)
Statutory corporate tax rate (percent)
Increase (decrease) resulting from:
Other (a)
Effective income tax rate (percent)
2023
1,556
(76)
1,480
24.1
(0.9)
23.2
2022
2,228
(84)
2,144
24.1
(1.5)
22.6
2021
711
93
804
24.0
0.5
24.5
(a) Other primarily relates to prior year adjustments, disposals, investment tax credits 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
2023
5,366
237
(168)
(655)
155
(406)
(69)
69
(60)
2022
5,388
236
(105)
(529)
127
(454)
(84)
73
(53)
Net deferred income tax liabilities
4,469
4,599
2021
5,284
331
(303)
(418)
120
(413)
(42)
—
(101)
4,458
88
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
2023
2022
2021
60
7
—
(20)
47
47
12
10
(9)
60
36
16
—
(5)
47
The unrecognized tax benefit balances shown above are predominantly 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 2023, 2022 and 2021 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 2023 are subject to examination by the tax authorities. Tax filings from 2009
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 2024. 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.
89
The benefit obligations and plan assets associated with the company’s defined benefit plans are measured on
December 31.
Pension benefits
2023
2022
Other postretirement
benefits
2023
2022
Assumptions used to determine benefit obligations at
December 31 (percent)
Discount rate
Long-term rate of compensation increase
4.60
4.00
5.10
4.00
4.60
4.00
5.10
4.00
millions
of
Canadian dollars
Change
in
benefit obligation
Benefit
obligation
at
January 1
Service cost
Interest cost
Actuarial
loss
(gain) (a)
Amendments
Benefits
paid (b)
Benefit
obligation
at
December 31
Accumulated
benefit obligation
at
December 31
7,374
9,850
162
373
514
184
(453)
8,154
280
295
(2,528)
—
(523)
7,374
7,449
6,820
589
12
28
(14)
—
(34)
581
818
23
24
(248)
—
(28)
589
(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.
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 5.80 percent in 2024 and gradually decline to 3.57 percent by 2043 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
assets
Plan
obligation
in excess
of
(less
at December 31
Funded plans
Unfunded plans
Total (b)
Pension
benefits
2023
2022
7,541
9,440
785
148
(420)
8,054
(1,594)
174
(479)
7,541
335
(435)
(100)
543
(376)
167
Other postretirement
benefits
2023
2022
(581)
(581)
(589)
(589)
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.
90
millions of Canadian dollars
Amounts recorded in the Consolidated balance sheet
consist of:
Other assets, including intangibles - net
Current liabilities
Other long-term obligations
Total recorded
Amounts recorded in accumulated other comprehensive
income consist of:
Net actuarial loss (gain)
Prior service cost
Total recorded in accumulated other
comprehensive income, before-tax
Pension benefits
2023
2022
Other postretirement
benefits
2023
2022
335
(34)
(401)
(100)
724
400
1,124
543
(35)
(341)
167
666
235
901
—
(28)
(553)
(581)
(89)
—
(89)
—
(28)
(561)
(589)
(84)
—
(84)
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 2023 long-term expected return of 4.8 percent used in the calculations of pension expense compares to an
actual rate of return of 5.7 percent and 6.1 percent over the last 10- and 20-year periods respectively, ending
December 31, 2023.
Assumptions used to determine net periodic
benefit cost for years ended December 31 (percent)
Discount rate
Long-term rate of return on funded assets
Long-term rate of compensation increase
millions of Canadian dollars
Components of net periodic benefit cost
Service cost
Interest cost
Expected return on plan assets
Amortization of prior service cost
Amortization of actuarial loss (gain)
Net periodic benefit cost
Changes in amounts recorded in accumulated other
comprehensive income
Net actuarial loss (gain)
Amortization of net actuarial (loss) gain included in
net periodic benefit cost
Prior service cost
Amortization of prior service cost included in net
periodic benefit cost
Total recorded in other comprehensive income
Total recorded in net periodic benefit cost and
other comprehensive income, before-tax
Pension benefits
Other postretirement
benefits
2023
2022
2021
2023
2022
2021
5.10
4.80
4.00
3.00
4.30
4.00
2.50
4.50
4.00
5.10
—
4.00
3.00
—
4.00
2.50
—
4.00
162
373
(373)
19
44
225
280
295
(412)
17
84
264
324
271
(427)
17
143
328
12
28
—
—
(9)
31
23
24
—
—
9
56
28
22
—
—
16
66
102
(522)
(817)
(14)
(248)
(83)
(44)
184
(19)
223
448
(84)
(143)
—
—
(17)
(623)
(359)
(17)
(977)
(649)
9
—
—
(5)
26
(9)
—
—
(257)
(201)
(16)
—
—
(99)
(33)
Costs for defined contribution plans, primarily the employee savings plan, were $44 million in 2023 (2022 - $43
million, 2021 - $47 million).
91
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
pension
Total
and other
postretirement benefits
2023
(218)
53
(165)
2022
880
(215)
665
2021
1,076
(264)
812
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 2023 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, 2023, 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
Other
Equities – Venture capital
Real Estate
Cash
Total plan assets at fair value
—
2,347
1,193
4,251
—
5
124
93
41
8,054
7
7
Net Asset
Value
—
2,347
1,193
4,251
—
5
124
93
34
8,047
92
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
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
funded
in
For
obligation
pension
excess
benefit
Projected
value
Fair
of
benefit
Projected
plan assets
obligation
projected
benefit
with
plans
of
obligation
plan
assets: (a)
less
fair
value
of
plan assets
Pension benefits
2023
2022
—
—
—
—
—
—
plans
covered
pension
benefit obligation
For unfunded
Projected
Accumulated benefit obligation
In 2023 and 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.
book reserves:
435
395
376
353
by
(a)
Cash flows
Benefit payments expected in:
millions
of
Canadian dollars
Pension benefits
Other postretirement
benefits
29
29
29
29
30
154
490
490
490
490
490
2,450
2024
2025
2026
2027
2028
2029 - 2033
In 2024, the company expects to make cash contributions of about $150 million to its pension plans.
93
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
2023
954
2,564
90
111
132
2022
902
2,150
101
151
163
3,851
3,467
(a) Total recorded employee retirement benefits obligations also included $62 million in current liabilities (2022 – $63 million).
(b) Total asset retirement obligations and other environmental liabilities also included $235 million in current liabilities (2022 – $116
million).
(c) For 2023, the asset retirement obligations were discounted at 6 percent (2022 - 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
2023
2,178
471
132
(78)
2022
1,721
415
101
(59)
2021
1,674
6
99
(58)
2,703
2,178
1,721
Estimated cash payments for asset retirement obligations are $169 million in 2024 and $162 million in 2025.
94
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, 2023 and December 31,
2022, the fair value of long-term debt ($3,447 million, 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, currency rates and interest 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" and in the Consolidated statement of
cash flows in "Cash flows from (used in) operating activities". The company’s commodity 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. 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
2023
(4,450)
(490)
2022
1,800
(350)
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
2023
2022
2021
(5)
—
(5)
148
—
148
(46)
(33)
(79)
The estimated fair value of derivative instruments, and the related hierarchy level for the fair value
measurement were as follows:
At December 31, 2023
millions of Canadian dollars
Assets
Derivative
assets (a)
Liabilities
Fair value
Level
1
Level 2
Level 3
Total
Effect of
counterparty
netting
Effect of
collateral
netting
Net
carrying
value
28
18
—
46
(16)
(12)
18
Derivative
liabilities (b)
16
31
—
47
(16)
—
31
(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”.
95
At December 31, 2022
millions of Canadian dollars
Assets
Derivative
assets (a)
Liabilities
Derivative
liabilities (b)
Fair value
Level
1
Level 2
Level 3
Total
Effect of
counterparty
netting
Effect of
collateral
netting
Net
carrying
value
17
32
—
49
(27)
—
22
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”.
At December 31, 2023, and December 31, 2022, the company had $24 million and $14 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.
96
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. Some
management, professional, and technical participants will receive 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, 2023:
Outstanding at January 1, 2023
Granted
Vested / Exercised
Forfeited and cancelled
Outstanding at December 31, 2023
Restricted
stock units
4,036,355
949,520
(651,175)
(421,390)
Deferred
share units
179,884
12,219
(154,781)
—
3,913,310
37,322
97
In 2023, the before-tax compensation expense charged against income for the restricted stock units and
deferred share units was $52 million (2022 - $103 million, 2021 - $89 million). Income tax benefit recognized in
income related to this compensation expense for the year was $13 million (2022 - $25 million, 2021 - $22
million). Cash payments of $68 million were made related to this compensation expense in 2023 (2022 - $65
million, 2021 - $48 million).
As of December 31, 2023, there was $169 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, 2023.
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)
2023
86
13
73
63
2022
904
746
158
241
2021
81
32
49
43
(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 the company 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-cancellable or cancellable 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 the remaining company-owned Esso retail sites, the company was
contingently liable at December 31, 2023, for guarantees relating to performance under contracts of other third-
party obligations totalling $13 million (2022 - $17 million).
98
10. Common shares
At December 31
thousands
of shares
Authorized
Outstanding
2023
2022
1,100,000
1,100,000
535,837
584,153
The most recent 12-month normal course issuer bid program came into effect June 29, 2023, under which
Imperial continued its existing share purchase program. The program enabled the company to purchase up to a
maximum of 29,207,635 common shares (5 percent of the total shares on June 15, 2023) 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 19, 2023 as a result of the company purchasing the maximum allowable number of
shares under the program.
On November 3, 2023, 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 13, 2023, with the company
taking up and paying for 19,108,280 common shares at a price of $78.50 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
30, 2023. This included 13,299,349 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
734,077
7
(56,004)
678,080
—
(93,927)
584,153
—
(48,316)
535,837
Millions of
dollars
1,357
—
(105)
1,252
—
(173)
1,079
—
(87)
992
at
as
Balance
under
Issued
at
Purchases
as
Balance
at
under
Issued
at
Purchases
as
Balance
at
under
Issued
at
Purchases
at
Balance
January
employee
stated value
December
employee
stated value
December
employee
stated value
December
as
1, 2021
share-based awards
31, 2021
share-based awards
31, 2022
share-based awards
31, 2023
99
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)
Weighted-average number of common shares outstanding,
assuming dilution (millions of shares)
Net income (loss) per common share (dollars)
2023
2022
2021
4,889
574.8
8.51
4,889
574.8
1.1
575.9
8.49
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
Dividends per common share – declared (dollars)
1.94
1.46
1.03
100
11. Miscellaneous financial information
LIFO inventory
In 2023, net income included an after-tax gain of $5 million (2022 – $62 million gain, 2021 – $13 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, 2023 by about $2.2 billion (2022 – $2.0
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
2023
979
579
66
320
1,944
2022
809
471
76
158
1,514
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 2023 were $84 million (2022 – $74 million, 2021 –
$89 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 $455 million at
December 31, 2023 (2022 – $458 million) and other miscellaneous current liabilities of $726 million at
December 31, 2023.
Government assistance
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 and
2023, government assistance was immaterial to the company’s financial results.
101
12. Financing and additional notes and loans payable information
millions of Canadian dollars
2023
2022
Debt-related interest (a)
Capitalized interest
Net interest expense
Other interest
Total financing (b)
203
(141)
62
7
69
111
(57)
54
6
60
2021
63
(24)
39
15
54
Includes related party interest with ExxonMobil.
(a)
(b) The weighted-average interest rate on short-term borrowings in 2023 was 4.9 percent (2022 – 2.0 percent, 2021 – 0.2 percent) and
on long-term borrowings, with ExxonMobil, in 2023 was 4.9 percent (2022 – 1.9 percent, 2021 – 0.6 percent).
During the fourth quarter of 2023, the company extended the maturity dates of its two existing $250 million
committed lines of credit to November 2024 and November 2025 respectively.
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.
102
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)
2023
2022
2021
Operating Finance
leases
leases
Operating Finance
leases
leases
Operating Finance
leases
leases
114
30
119
40
123
19
Amortization
of
right
of
use assets
Interest
on
lease liabilities
Total
lease cost
19
29
19
30
144
48
159
49
142
17
33
50
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
Included
in
Other
assets,
including
intangibles - net
Included
in
Property,
plant
and
equipment, less
accumulated
depreciation
and depletion
2023
2022
Operating
leases
Finance
leases
Operating
leases
Finance
leases
196
245
599
618
Total
right
of
use assets
196
599
245
618
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)
87
111
198
6
1.9
—
21
—
564
585
36
4.7
100
151
251
5
1.1
—
22
—
586
608
37
4.7
103
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
2024
2025
2026
2027
2028
2029
and beyond
Total
lease payments
Discount to
present value
Total
lease liability
2023
Operating
leases
Finance
leases
90
38
16
10
9
46
209
(11)
198
49
46
44
43
42
858
1,082
(497)
585
In addition to the operating lease liabilities in the table immediately above, at December 31, 2023, additional
undiscounted commitments for leases not yet commenced totalled $54 million (2022 - $14 million).
Estimated cash payments for operating and finance leases not yet commenced are $1 million in 2024 and $48
million in 2025.
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
Cash paid for amounts included in the measurement of
lease liabilities
2023
2022
2021
Operating
leases
Finance Operating
leases
leases
Finance Operating
leases
leases
Finance
leases
Cash flows from operating activities
Cash flows from financing activities
56
121
—
22
122
—
22
—
20
Non-cash right of use assets recorded for lease
liabilities
In exchange for lease liabilities during the year
61
—
117
—
176
123
104
14. Long-term debt
At December 31
millions
of
Canadian dollars
Long-term
debt
(a)
(b)
Finance
leases
(c)
Total
long-term debt
2023
3,447
564
4,011
2022
3,447
586
4,033
(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, cancellable 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 2023 (2022 – 4.7 percent). Total finance lease obligations also include $21 million in current liabilities (2022 - $22
million). Principal payments on finance leases of approximately $18 million on average per year are due in each of the next four years
after December 31, 2024.
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, 2023, 2022 and 2021.
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, 2023, 2022 and 2021.
105
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 2023, with ExxonMobil, were $4,026 million and
$13,544 million respectively (2022 - $3,719 million and $17,042 million respectively).
As at December 31, 2023, the company had an outstanding long-term loan of $3,447 million (2022 – $3,447
million) from ExxonMobil (see note 14, "Long-term debt", and note 12, "Financing and additional notes and
loans payable information" for further details). The amount of financing costs with ExxonMobil were $169 million
(2022 - $78 million).
Imperial has other related party transactions not detailed above in note 16, as they are not significant.
106
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
other
from
amounts
reclassified
comprehensive income
Amounts
reclassified
from
accumulated
other
comprehensive income
Balance
at
December 31
2023
(512)
2022
(1,177)
(206)
582
41
(677)
83
(512)
2021
(1,989)
679
133
(1,177)
Amounts reclassified out of accumulated other comprehensive income (loss) - before-tax income (expense):
millions
of
Canadian dollars
Amortization
included
of
in
postretirement
benefit
net
cost (a)
benefits
liability
adjustment
2023
(54)
2022
(110)
2021
(176)
(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
2023
2022
2021
(66)
13
188
27
(53)
215
221
43
264
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 included about
$0.9 billion (about $0.8 billion of property, plant and equipment) and about $0.2 billion total liabilities in the
Upstream segment.
107
Supplemental information on oil and gas exploration and production
activities (unaudited)
The information on pages 108 to 109 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
Income taxes
Results of operations
2023
2022
2021
6,420
3,220
9,640
5,015
5
1,475
733
2,412
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
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
incurred
costs
development
activities
in
property
acquisitions,
exploration
and
2023
2022
2021
—
—
5
1,580
1,585
—
—
5
1,602
1,607
—
—
32
576
608
(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.
108
Capitalized costs
millions of Canadian dollars
Property costs (a)
Proved
Unproved
Producing assets
Incomplete construction
Total capitalized cost
Accumulated depreciation and depletion
Net capitalized costs
2023
2022
1,840
493
39,759
2,683
44,775
(19,568)
25,207
1,840
493
39,075
2,375
43,783
(18,512)
25,271
(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 cash flows
Future production costs
Future development costs
Future income taxes
Future net cash flows
Annual discount of 10 percent for estimated timing of cash flows
Discounted future cash flows
2023
158,347
(101,640)
(24,074)
(7,016)
25,617
(11,615)
14,002
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
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,
2023
25,554
(4,918)
(16,908)
58
2022
14,170
(6,113)
23,215
664
2021
(62)
(3,841)
7,681
52
change
quantity
incurred
during the year
estimates
costs
Development
of
Revisions
previous
Accretion
of discount
Net
Net change
Balance at end of year
(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”.
1,182
2,146
2,535
4,353
(11,552)
14,002
1,160
(4,431)
1,439
(4,550)
11,384
25,554
650
13,482
24
(3,816)
14,232
14,170
income taxes
in
109
Net proved reserves (a)
Beginning
of
year 2021
purchase
Revisions
Improved recovery
of
(Sale)
Discoveries
Production
of
End
year 2021
reserves
and extensions
purchase
Revisions
Improved recovery
(Sale)
of
Discoveries
Production
of
End
year 2022
reserves
and extensions
purchase
Revisions
Improved recovery
(Sale)
of
Discoveries
Production
of
End
year 2023
reserves
and extensions
in place
in place
in place
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
7
13
—
—
—
(4)
16
—
—
(9)
—
(3)
4
(2)
—
—
—
(2)
—
7
14
4
—
168
165
—
(10)
—
(42)
281
(41)
—
(141)
2
(29)
72
2
—
(1)
—
(12)
61
167
205
60
53
444
17
—
—
—
(23)
438
(62)
—
—
—
(23)
353
26
—
—
—
(25)
354
311
326
248
242
81
2,239
2
—
—
(106)
2,216
(363)
—
—
67
(96)
1,824
90
—
—
—
(103)
1,811
76
1,957
1,691
1,706
560
2,297
2
(2)
—
(140)
2,717
(432)
—
(32)
67
(127)
2,193
114
—
—
—
(132)
2,175
422
2,331
1,953
1,957
developed
reserves
included abov e,
as
of
proved
Net
January
December
December
December
1, 2021
31, 2021
31, 2022
31, 2023
as of
bove,
1, 2021
proved
reserves
included a
undeveloped
Net
138
January
386
December
240
December
218
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, 2021
31, 2022
31, 2023
133
112
105
112
5
259
133
105
1
76
12
8
—
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 2021, 2022 and 2023. 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.
110
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 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.
In 2023, upward revisions of proved bitumen of 0.1 billion barrels were driven by lower royalty obligations
associated with lower pricing and minor technical revisions at Cold Lake and Kearl. A slight increase in proved
reserves for synthetic crude oil is associated with lower royalty obligations associated with pricing. Conventional
proved liquids reserves decreased to zero under existing pricing and operating conditions.
Under the terms of certain contractual arrangements or government royalty regimes, lower prices can also
increase proved reserves attributable to the company. 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.
111
Proxy information section
Table of contents
Nominees for director
Director nominee tables
Majority voting policy
Corporate governance disclosure
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 2023
Other public company directorships of our board members and nominees
Interlocking directorships of our board nominees
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
Compensation discussion and analysis
Executive summary
Compensation design
Determining compensation
Other compensation elements
Risk and governance
Executive compensation tables
Appendix
Appendix A – Board of director and committee charters
Page
113
113
117
118
119
120
120
121
122
123
124
125
126
127
127
128
129
130
130
141
149
150
151
151
153
154
154
156
156
157
158
159
160
167
171
173
177
188
188
112
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 N.A. Hansen, are
now directors and have been since the dates indicated. M.R. Crocker is a current director and has chosen not to
stand for re-election. Mr. Hansen is not currently a director and is being nominated for election as a director 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 15, 2024, the effective date of this circular, unless otherwise
indicated.
For more information on our director nominees, please see the Statement of corporate governance practice
section.
Director nominee tables
DAVID W. CORNHILL
Calgary, Alberta,
Canada
Age: 70
Nonemployee
director
(independent)
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.
Board and Standing Committee Membership
Attendance in 2023 Voting Results of Last Annual Meeting
Board
Audit
Executive resources
and sustainability
Safety
Nominations
and
Finance (Chair)
corporate governance
8
5
8
5
6
5
of
of
of
of
of
of
8 (100%)
5 (100%)
8 (100%)
5 (100%)
6 (100%)
5 (100%)
Votes For:
against:
Votes
477,220,521
(90.28%)
51,359,878 (9.72%)
Total
Votes: 528,580,399
Imperial Oil Limited Ownership and Value of Equity (a) (b) (c) (d)
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)
15,217
27,717
18,700
46,417
1,016,250
1,237,142
2,253,392
1,520,310
3,773,702
0
1,909
1,909
1,800
3,709
Holdings as at
February 15, 2024 (#)
Total market value as
at February 15, 2024
($)
Year over year change
(#)
*Meets the necessary share ownership requirements
Positions
Five Years
office
of employer)
in
held
Past
status
the
date
and
Other
(position,
–
AltaGas
Ltd.,
Chairman
of
the
board
(1994 - 2019)
Public
Company
Directorships
in
the
Past
Five Years*
–
–
AltaGas
AltaGas
Ltd.
Canada
(2010 - present)
(2018 -
Inc.
2020)
*no
public
board interlocks
113
BRADLEY W. CORSON
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.
Board and Standing Committee Membership
Attendance in 2023 Voting Results of Last Annual Meeting
Board (Chair)
8 of 8 (100%)
Votes For: 522,575,825 (98.86%)
Votes Against: 6,004,574 (1.14%)
Total Votes: 528,580,399
Imperial Oil Limited Ownership and Value of Equity (a) (b) (c) (d)
IMO Common
Shares
(% of class)
IMO Deferred
Share Units
(DSU)
Total Vested Equity
Holdings
(Common + DSU)
Restricted Stock
Units
(RSU)
Total Holdings*
(Common + DSU + RSU)
Holdings as at
February 15, 2024 (#)
Total market value as
at February 15, 2024
($)
Year over year change
(#)
0
0
0
0
0
0
Public
Company
Directorships
in
the
Past
Five Years*
–
None
*no
public
board interlocks
0
0
0
410,400
410,400
33,365,520
33,365,520
86,800
86,800
*Meets the necessary share ownership requirements
Five Years
Positions
office
of employer)
in
held
Past
status
the
date
and
Other
(position,
–
–
President,
Imperial
Oil
Limited
(2019
–
present)
President,
(2015
ExxonMobil
2019) (Affiliate)
–
Upstream Ventures
Calgary, Alberta,
Canada
Age: 62
Non-independent
director
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
SHARON R. DRISCOLL
Vancouver, British
Columbia, Canada
Age: 62
Nonemployee
director
(independent)
Director since:
May 2, 2023
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
Ms. Driscoll is currently an independent director of Empire Company Limited and also serves as a director of
Gildan Activewear Inc. Prior to her retirement in 2023, Ms. Driscoll held executive positions at RB Global
Incorporated, including chief financial officer, co-chief executive officer and executive vice-president and advisor
to the chief executive officer. Prior to joining RB Global, Ms. Driscoll served as the executive vice-president and
chief financial officer for Katz Group Canada Ltd. from 2013 to 2015 and was the 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.
Board and Standing Committee Membership
Attendance in 2023 Voting Results of Last Annual Meeting
Board
Audit (Chair)
Executive resources
Safety and sustainability
Nominations and corporate governance
Finance
Imperial
Ownership
Limited
and
Oil
Value
4 of 4 (100%)
2 of 2 (100%)
5 of 5 (100%)
4 of 4 (100%)
3 of 3 (100%)
5 of 5 (100%)
of
Equity
(a)
(b)
(c) (d)
IMO
Common
Shares
of class)
(%
IMO
Deferred
Share Units
(DSU)
Total
Vested
Holdings
Equity
(Common
+ DSU)
Votes For:
526,032,840 (99.52%)
Votes against: 2,547,559 (0.48%)
Total Votes: 528,580,399
Stock
Restricted
Units
(RSU)
Total Holdings*
(Common
+
DSU
+ RSU)
Holdings
February
as
15,
at
2024 (#)
market
February
value
15,
as
2024
Total
at
($)
over
year
change
Year
(#)
0
0
0
1,122
1,122
3,300
4,422
91,219
91,219
268,290
359,509
1,122
1,122
3,300
4,422
*Has 5 years from date of appointment to meet the necessary share ownership requirements
Public
Company
Directorships
in
the
Past
Five Years*
–
Gildan
Activewear
Ltd.
(2023 - Present)
–
Empire
Company
Limited
(2018
– Present)
*no
public
board interlocks
114
the
Positions
office
Other
(position,
date
Global
RB
Executive
in
held
(formerly
vice-president
and
–
Past
Five Years
status
of employer)
Ritchie
Bros.
and
advisor
Auctioneers
CEO
to
Incorporated)
– 2023)
(2022
–
–
Global
RB
financial
officer
(2015 - 2022)
(formerly
Ritchie
Bros.
Auctioneers
Incorporated),
Chief
Global
RB
financial
(formerly
and
officer
Ritchie
Co-chief
Bros.
executive
officer (2019)
Auctioneers
Incorporated),
Chief
JOHN N. FLOREN
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.
Board
and
Standing
Committee
Membership
Attendance
in 2023
Voting
Results
of
Last
Annual
Meeting
Board
Audit
Executive resources
Safety
Nominations
Finance
Imperial
and
Oil
Limited
sustainability (Chair)
corporate
and
governance
4
2
5
4
3
5
of
of
of
of
of
of
4 (100%)
2 (100%)
5 (100%)
4 (100%)
3 (100%)
5 (100%)
Votes For:
Votes against:
528,279,988 (99.94%)
300,411 (0.06%)
Total
Votes: 528,580,399
Ownership
and
Value
of
Equity
(a)
(b)
(c) (d)
IMO
Common
Shares
of class)
(%
IMO
Deferred
Share Units
(DSU)
Total
Equity
Vested
Holdings
(Common + DSU)
Stock
Restricted
Units
(RSU)
Total Holdings*
(Common +
DSU + RSU)
Holdings
February
as
15,
at
2024 (#)
market
February
value
15,
as
2024
Total
at
($)
over
year
change
Year
(#)
0
0
0
1,122
1,122
3,300
4,422
91,219
91,219
268,290
359,509
1,122
1,122
3,300
4,422
*Has
5
years
from
date
of
appointment
to
ownership
requirements
the
meet
Positions
office
necessary
in
held
Past
the
status
date
and
share
Five Years
of employer)
Other
(position,
–
Methanex
(2013
– 2022)
Corporation,
President
and
chief
executive
officer
Public
Company
Directorships
in
the
Past
Five Years*
–
–
Fraser
West
Methanex
Timber
Corporation
Co.
– present)
Ltd.
(2013
(2016
– 2022)
board interlocks
Oakville,
Canada
Ontario,
Age: 65
Nonemployee
director
(independent)
Director since:
May 2, 2023
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
GARY J. GOLDBERG
*no
public
Breckenridge,
Colorado, United
States of America
Age: 65
Nonemployee
director
(independent)
Director since:
May 2, 2023
:
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 40 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.
Board
and
Standing
Committee Membe
rship
Attendance
in 2023
Voting
Results
of
Last Annua l
Meeting
Board
Audit
Executive
Safety
Nominations
Finance
Imperial
Oil
resources (Chair)
and sustainability
and
corporate governance
4
2
5
4
3
5
of
of
of
of
of
of
4 (100%)
2 (100%)
5 (100%)
4 (100%)
3 (100%)
5 (100%)
Votes
Votes For:
against:
Votes:
Total
528,282,636 (99.94%)
297,763 (0.06%)
528,580,399
Limited
Ownership
and
Value
of
Equity
(a)
(b)
(c) (d)
IMO
Common
Shares
of class)
(%
IMO
Deferred
Share Units
(DSU)
Total
Equity
Vested
Holdings
(Common + DSU)
Stock
Restricted
Units
(RSU)
Total Holdings*
(Common +
DSU + RSU)
Holdings
February
as
15,
at
2024 (#)
market
February
value
15,
as
2024
Total
at
($)
over
year
change
Year
(#)
0
0
0
1,122
1,122
3,300
4,422
91,219
91,219
268,290
359,509
1,122
1,122
3,300
4,422
Public
Company
Directorships
in
the
Past
Five
Years*
*Has
5
years
from
date
of
appointment
to
ownership
requirements
the
meet
Positions
office
necessary
in
held
Past
the
status
date
and
share
Five Years
of employer)
Other
(position,
–
BHP
Group
Limited
(2020
– present)
–
Newmont
Corporation,
Executive
advisor
(2019
– 2020)
–
Newmont
Corporation)
Corporation
–
(2013
(previously
2019)
Newmont
Mining
–
Newmont
Corporation,
Chief
executive
officer
(2013
– 2019)
*no
public
board interlocks
115
NEIL A. HANSEN
Mr. Hansen is currently senior vice-president, energy products, for ExxonMobil Product Solutions Company and
has held that position since April, 2022. He is responsible for the global fuels and aromatics value chains. Mr.
Hansen has 24 years of financial and commercial experience across ExxonMobil's Upstream and Downstream
businesses in the Americas, Europe, and Asia Pacific regions. Prior to his current position, Mr. Hansen was vice-
president, fuels for Europe, Africa and Middle East based in Belgium and prior to that was vice-president investor
relations and corporate secretary at ExxonMobil.
Board
and
Standing
Committee
Membership
Attendance
in 2023
Voting
Results
of
Last
Annual
Meeting
currently
Not
committees
a
member
of
the
board
or
any
of
its
None
Votes For:
Votes against:
n/a
n/a
Total Votes: n/a
Imperial
Oil
Limited
Ownership
and
Value
of
Equity
(a)
(b)
(c) (d)
IMO
Common
Shares
of class)
(%
Holdings
February
as
15,
at
2024 (#)
market
February
value
15,
as
2024
Total
at
($)
over
year
change
Year
(#)
0
0
0
IMO
Deferred
Share Units
(DSU)
0
0
0
Public
Company
Directorships
in
the
Past
Five Years*
–
None
*no
public
board interlocks
Total
Vested
Holdings
Equity
(Common
+ DSU)
0
0
0
Stock
Restricted
Units
(RSU)
0
0
0
Total
(Common
Holdings*
DSU
+
+ RSU)
0
0
0
Other
(position,
Senior
–
Solutions
Positions
in
date
office
held
vice-president,
Company,
and
energy
–
(2022
share
ownership
guidelines apply
*
the
No
Past
Five Years
status
of employer)
products,
Exxon
present) (Affiliate)
Mobil
Product
–
Vice-president,
–
(2020
2022) (Affiliate)
fuels,
ExxonMobil
Fuels
&
Lubricants
Company,
The Woodlands,
Texas, United States
of America
Age: 49
Non-independent
director
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,
Financial expertise,
Government relations,
Executive
compensation,
Risk management
MIRANDA C. HUBBS
–
Vice-president,
Mobil
Corporation
investor
(2018
relations
–
and
2020) (Affiliate)
corporate
secretary,
Exxon
Toronto, Ontario,
Canada
Age: 57
Nonemployee
director
(independent)
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), Canadian Investment Regulatory Organization (CIRO) and serves as
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.
Board
and
Standing
Committee
Membership
Attendance
in 2023
Voting
Results
of
Last
Annual
Meeting
Board
Audit
Executive resources
Safety
Nominations
Finance
Imperial
and sustainability
and
Limited
Oil
corporate
8
5
7
5
5
5
of
of
of
of
of
of
8 (100%)
5 (100%)
8 (88%)
5 (100%)
6 (83%)
5 (100%)
governance (Chair)
Votes For:
Votes against:
515,973,536 (97.62%)
12,601,009 (2.38%)
Total
Votes: 528,574,545
Ownership
and
Value
of
Equity
(a)
(b)
(c) (d)
IMO
Common
Shares
of class)
(%
IMO
Deferred
Share Units
(DSU)
Total
Equity
Vested
Holdings
(Common + DSU)
Stock
Restricted
Units
(RSU)
Total Holdings*
(Common +
DSU + RSU)
Holdings
February
as
15,
at
2024 (#)
market
February
value
15,
as
2024
Total
at
($)
over
year
change
Year
(#)
0
0
0
18,736
18,736
17,400
36,136
1,523,237
1,523,237
1,414,620
2,937,857
2,001
2,001
1,800
3,801
Public
Company
Directorships
in
the
Past
Five Years*
the
*Meets
Positions
office
necessary
in
held
Past
the
status
date
and
Other
(position,
share
Five Years
of employer)
ownership
requirements
–
Nutrien
Ltd.
(2018
– present)
– None
*no
public
board interlocks
116
Footnotes to director nominee tables on pages 113 through 116:
(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 144. The company’s plan for deferred
share units for nonemployee directors is described on page 143. The company’s plan for restricted stock units for selected
employees is described on page 164.
(c) The numbers for the company’s restricted stock units represent the total of the outstanding restricted stock units received in 2017
through 2023 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 $81.30 on February 15, 2024.
Director and nominee holdings in Exxon Mobil Corporation (a)
Director
XOM Common
Shares
(#)
XOM Restricted
Stock
(#)
(b)
Total Common
Shares and
Restricted Stock
(#)
Market
Total
Common
Shares
Value
of
and
Stock
Restricted
($)
(c)
B.W. Corson
129,044
59,700
188,744
26,417,156
M.R.
Crocker (d)
22,433
149,000
171,433
23,994,258
N.A. Hansen
—
155,800
155,800
21,806,218
(a) Holdings as at February 15, 2024. 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. D.W. Cornhill, S.R.
Driscoll, J.N. Floren, G.J. Goldberg and M.C. Hubbs 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 $103.73 U.S., which is converted to Canadian dollars at the daily
rate of exchange of $1.3493 provided by the Bank of Canada for February 15, 2024.
(d) M.R. Crocker is a current director and has chosen not to stand for re-election. Mr. Crocker does not hold any Imperial Oil Limited
common shares, restricted stock units or deferred share units.
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.
117
Corporate governance disclosure
Table
of contents
governance disclosure
governance highlights
Corporate
governance
at
a glance
Corporate
2023
Corporate
Statement
governance practice
members
and nominees
and nominees
in 2023
board
our
of
board nominees
of
selection process
and development
members
and nominees
and
awards
directors -
option-based
or
vested
directors
awards
earned
and
for directors
during
chairman,
Value
the year
president
of
independent
board
members
our board
board nominees
members
directorships
our
of
company
directorships
and
education
our
our
corporate
of
board nominees
of
our
board
of
board
of meetings
membership
qualification
orientation,
of
Composition
our
of
Tenure
experience
Skills
and
Independence
our
of
Committee
Number
Attendance
public
Other
Interlocking
Director
Director
Board
Board
Director compensation
Director
Outstanding
plan
Incentive
ownership
Share
executive officer
Ethical
Restrictions
Diversity
Shareholder engagement
Largest shareholder
Transactions
business conduct
Exxon
compensation table
share-based
for
awards
guidelines
insider trading
with
on
performance assessment
and
committee structure
Mobil Corporation
118
118
119
120
120
121
122
123
124
125
126
127
127
128
129
130
130
141
146
147
148
149
150
151
151
153
154
154
and
chief
2023 Corporate governance highlights
• 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 company delivered extensive orientation programs to S.R. Driscoll, J.N. Floren and G.J. Goldberg upon their
election to the board for the first time in 2023.
• 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
(S.R. Driscoll, J.N. Floren and G.J. Goldberg were each elected to the board on May 2, 2023 and are expected to
meet the share ownership guidelines within five years from the date of their appointment). The independent
directors collectively have nearly $7.8 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.
• 97% average vote in favour for the election of our directors at the 2023 annual meeting.
• Two of seven or 29% of the director nominees, and 10 of 23 or 43% of the executive officers of the company and
its major subsidiaries, are women.
118
Corporate governance at a glance
Controlled company
Size of board
Number of independent directors
Women on board (board and nominees)
Average attendance of directors at board and committee meetings
Lead director
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, lead director 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
97%
Yes
Yes
100%
All
83%
83%
Yes
Yes
3 years
61 years
72 years
No
None
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Yes
No
No
No
119
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 151.
120
71%29%MenWomenGender71%29%IndependentNot IndependentIndependence28.5%43%28.5%Eastern CanadaWestern CanadaUnited StatesRegional association71%29%Public board experienceNo public board experiencePublic company board experience43%57%Energy industry experienceNon-energy industry experienceEnergy industry experience57%43%CEO experienceNo CEO experienceCEO 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.
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
of
director nominee
Years
of
service
board
on
the
D.W. Cornhill
6 years
B.W. Corson
4 years
S.R.
Driscoll
J.N.
Floren
G.J.
Goldberg
1 year
1 year
1 year
N.A.
Hansen (a)
—
M.C. Hubbs
5 years
Year
of
board
the
expected
retirement from
for
independent
directors
2026
—
2034
2031
2031
—
2039
(a) N.A. Hansen is being nominated for election as a director at the annual meeting of shareholders and is not currently a director.
121
Skills and experience of our board members and nominees
Our directors and nominees bring a wide range of skills, diversity and experience.
The current directors and director nominees 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 director nominee tables on pages 113
through 117 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.
Cornhill
B.W.
Corson
M.R.
Crocker
(a)
S.R.
Driscoll
J.N.
Floren
G.J.
Goldberg
N.A.
Hansen
(b)
M.C.
Hubbs
of
Leadership
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
(a) M.R. Crocker is a current director and has chosen not to stand for re-election at the annual meeting of shareholders.
(b) N.A. Hansen is not currently a director and is being nominated for election as a director at the annual meeting of shareholders.
122
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, six of whom will be standing for re-election at the annual
meeting of shareholders on April 30, 2024. M.R. Crocker is a current director and has chosen not to stand for
re-election. N.A. Hansen is not currently a director and is being nominated for election as a director. The
majority of the 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. Mr. Crocker
has chosen not to stand for re-election at the annual meeting of shareholders. Director nominee, N.A. Hansen,
holds the position of senior vice-president, energy products at ExxonMobil Product Solutions Company, a
division of Exxon Mobil Corporation, and if elected will also be a non-independent director. The company
believes that Mr. Crocker and Mr. Hansen, although deemed non-independent under the relevant standards by
virtue of their employment, can be viewed as independent of the company’s management and that their ability
to reflect the perspective of the company’s shareholders enhances the effectiveness of the board.
Name
and/or
of
director
nominee
Management
Independent
Not
independent
Reason
for
non-independent status
ü
D.W.
Cornhill
B.W.
Corson
M.R.
Crocker (a)
S.R.
Driscoll
J.N. Floren
G.J. Goldberg
N.A.
Hansen (b)
M.C.
Hubbs
ü
ü
ü
ü
ü
ü
ü
ü
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.
N.A.
Hansen
is
an
employee
of
Exxon
Mobil
Corporation.
(a) M.R. Crocker is a current director and has chosen not to stand for re-election at the annual meeting of shareholders.
(b) N.A. Hansen is not currently a director and is being nominated for election as a director at the annual meeting of shareholders.
123
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
Nominations
and corporate
governance
committee
Audit
committee
(b)
Safety
and
sustainability
committee
(d)
Executive
resources
committee
Finance
committee
(d)
D.W.
Cornhill
(c)
B.W.
Corson
(a)
M.R.
Crocker
(a)
S.R.
Driscoll
(c)
J.N.
Floren
G.J.
Goldberg
M.C.
Hubbs
(c)
ü
—
ü
ü
ü
ü
ü
Chair
ü
—
—
ü
Chair
ü
ü
ü
ü
—
ü
ü
ü
Chair
ü
ü
ü
—
ü
ü
ü
ü
Chair
ü
ü
Chair
—
ü
ü
ü
ü
ü
(a) Not independent directors. M.R. Crocker is a current director and has chosen not to stand for re-election.
(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.
(d)
In May 2023, the board of directors approved the creation of the finance committee, and dissolved the community collaboration and
engagement committee with the ongoing responsibilities of this committee being assumed by the safety and sustainability
committee. There were no meetings of the community collaboration and engagement committee in 2023 prior to its dissolution.
In addition to its standing committees, the board may establish ad hoc committees or special committees from
time to time. One special committee of independent directors was established in September, 2022 and remained
active during 2023 for the purposes of considering certain matters. The special committee was chaired by D.W.
Cornhill and consisted of the five independent directors. The special committee was dissolved in February, 2024.
124
Number of meetings
The chart below shows the number of board and standing committee meetings held in 2023. This includes seven
regular meetings and one additional special meeting of the board.
Meetings of the board and standing committees in 2023:
(a)
(b)
In February 2023, the public policy and corporate responsibility committee was changed to the safety and sustainability committee.
In May 2023, the board of directors approved the creation of the finance committee, and dissolved the community collaboration and
engagement committee with the ongoing responsibilities of this committee being assumed by the safety and sustainability
committee. There were no meetings of the community collaboration and engagement committee in 2023 prior to its dissolution.
125
Attendance of our board members in 2023
97% 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 2023. The
attendance record of each director nominee is also set out in their biographical information within the nominee
section. 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)(b)
Nominations
and
corporate
governance
committee
Finance
committee
(b)
Annual
meeting
Total
Percentage
by director
D.W.
Cornhill
B.W.
Corson
M.R.
Crocker
8 of 8
5 of 5
8 of 8
5 of 5
6 of 6
5
of 5
(chair)
1
of 1
38
of 38
100%
8 of 8
(chair)
—
—
—
—
—
1 of 1
9
of 9
100%
8 of 8
—
8 of 8
5 of 5
6
of 6
5 of 5
1 of 1
33
of 33
100%
S.R.
Driscoll (c)
4 of 4
2 of 2
(chair)
5 of 5
4 of 4
3 of 3
5 of 5
1 of 1
24
of 24
100%
J.N.
Floren (c)
G.J.
Goldberg (c)
K.T.
Hoeg (d)
M.C.
Hubbs
J.M.
Mintz (d)
D.S.
Sutherland (d)
Percentage
by committee
4 of 4
2 of 2
5 of 5
4
of 4
(chair)
3 of 3
5 of 5
1 of 1
24
of 24
100%
4 of 4
2 of 2
5 of 5
(chair)
4 of 4
3 of 3
5 of 5
1 of 1
24
of 24
100%
3 of 3
3 of 3
3 of 3
1 of 1
3 of 3
—
1 of 1
14
of
14
100%
8 of 8
5 of 5
7 of 8
5 of 5
5 of 6
(chair)
5 of 5
1 of 1
36
of 38
95%
3 of 3
3 of 3
3 of 3
1 of 1
3 of 3
—
1 of 1
14
of 14
100%
2 of 3
2 of 3
2 of 3
1 of 1
2 of 3
—
1 of 1
10
of 14
71%
98%
96%
96%
100%
94%
100%
100%
226
of
232
Overall
attendance
97%
(a)
(b)
In February 2023, the public policy and corporate responsibility committee was changed to the safety and sustainability committee.
In May 2023, the board of directors approved the creation of the finance committee, and dissolved the community collaboration and
engagement committee with the ongoing responsibilities of this committee being assumed by the safety and sustainability
committee. There were no meetings of the community collaboration and engagement committee in 2023 prior to its dissolution.
(c) S.R. Driscoll, J.N. Floren and G.J. Goldberg were elected to the board and its committees on May 2, 2023.
(d) K.T. Hoeg, J.M. Mintz and D.S. Sutherland retired from the board and its committees on May 2, 2023. Prior to retirement, K.T. Hoeg
was the chair of the audit committee, J.M. Mintz was the chair of the safety and sustainability committee, and D.S. Sutherland was
the chair of the executive resources committee.
126
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
Environment,
committee
health
and
safety
B.W. Corson
—
M.R.
Crocker (a)
—
—
—
—
—
—
—
Empire
Company Limited
Food retailing
EMP.A:TSX
S.R. Driscoll
Gildan
Activewear Inc.
Apparel
Luxury
and
GIL:TSX
J.N. Floren
West
Fraser
Timber
Co. Ltd
Basic
Materials-
Forest Products
WFG:TSX
G.J. Goldberg
BHP
Group Limited
Basic
Other
Metals
Materials-
industrial
and mining
BHP:ASX
committee
Audit
Nominating
Corporate
responsibility committee
(chair),
committee,
governance
and
and
social
finance
and
Audit
Compensation
resources committee
and
committee,
human
safety
Health,
committee
resources
committee,
nominating committee
and
(chair),
and
and
environment
Human
compensation
Governance
and
Sustainability
and
committee
Nominations
committee
and
(chair)
governance
N.A.
Hansen (b)
—
—
—
—
M.C. Hubbs
Nutrien Ltd.
Fertilizer
manufacturing
NTR:TSX,
NYSE
resources
Human
compensation
and
Safety
committee (chair)
and
committee
sustainability
and
(a) M.R. Crocker is a current director and has chosen not to stand for re-election at the annual meeting of shareholders.
(b) N.A. Hansen is not currently a director and is being nominated for election as a director at the annual meeting of shareholders.
Interlocking directorships of our board nominees
As of the date of this proxy circular, there are no interlocking public company directorships among the
nominees.
127
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
11 (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 137)
• 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 that was completed in 2023,
can be found at page 151. 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 11 (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
request of the chairman, may continue to support the nomination of a director who has attained the mandatory
retirement age.
128
Recently, the board and nominations and corporate governance committee completed an extensive director
recruitment process in early 2023 in anticipation of three of the then-current directors reaching mandatory
retirement age. Throughout this process, the board reviewed the recruitment progress 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. It also included
engaging executive search firms to cultivate a diverse selection of potential nominees. This recruitment process
resulted in three new directors being elected at the 2023 annual meeting, S.R. Driscoll, J.N. Floren and G.J.
Goldberg, all of whom are standing for re-election at the 2024 annual meeting. These new directors
complement the board’s existing skillsets and expertise by providing additional experience in energy, business
transition and capital allocation.
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. Shortly after
their election to the board, S.R. Driscoll, J.N. Floren and G.J. Goldberg completed an extensive orientation
program with the company’s corporate secretary and senior managers of various departments. Each new
director participated in comprehensive onboarding sessions, including in-depth reviews of the company’s
history, culture, practices, businesses and operations, risk framework, and ethics and other foundational
policies, and in-depth reviews of legal and regulatory requirements, the Canadian climate framework, the
company's emissions profile, emissions-related targets and plans for achieving such targets, and energy
industry dynamics in general. With N.A. Hansen being nominated for election for the first time this year, the
corporate secretary plans to provide an orientation shortly after his election to the board.
Board and committee members participate in continuing education and maintain oversight over company
operations through regular presentations by management, which focus on providing and discussing 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 2023, the
board visited the Calgary research centre ("CRC"), the Kearl site and the Strathcona refinery, for a tour of the
facilities and discussions specific to the operations and research at CRC, Strathcona and Kearl, including
reviewing the mitigations and community engagement in respect of the Kearl environmental protection order.
Throughout 2023, one way in which the board and its committees exercised oversight was through regularly
receiving and discussing presentations and updates that focused on performance, strategy and opportunities for
the business. Some of these sessions included ongoing reviews of upstream and downstream performance,
plans and strategies, regular reviews and consideration of the company’s monitoring, assessment, mitigations
and engagement relating to the Kearl environmental protection order, internal audit reviews, a pension
management review, 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 also reviewed and considered an information technology and cybersecurity update
including strategic cybersecurity priorities, the evolving threat landscape, key security initiatives and metrics,
business response plans, and mitigation efforts and system improvements throughout the year. The board also
reviewed presentations on the company’s risk assessment processes for forced labour and child labour in its
supply chain to support implementation of Canadian disclosure requirements on this subject.
129
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 renewal and acceleration of the company's normal course issuer bid and the completion of one
substantial issuer bid during the year.
The board also maintained oversight over the company’s various environmental, social and governance
initiatives throughout the year, including considering and discussing the publication of the company’s advancing
climate solutions and sustainability reports and reviewing the company's surplus site management process.
There was a continued focus by the board on the company’s progress with emissions reduction initiatives,
including the company’s continued participation 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, Canada climate policy updates and a review of the company's regulatory
compliance framework and management system. Please see the Risk oversight section for more information on
the board’s role in relation to the environment.
Members of ExxonMobil’s management also provide reviews of various aspects of ExxonMobil’s global
business. In 2023, the directors considered presentations on ExxonMobil’s global internal audit process and
strategy, cybersecurity, ExxonMobil’s corporate strategy, and its Global Outlook.
Prior to each board meeting, members of the board receive and review an extensive package of materials that
provides a comprehensive summary on each agenda item to be discussed. Similarly, the committee members
also receive and review 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 for discussion. 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. In 2023, one or more directors participated in continuing education provided by
third parties pertaining to, among other things, board oversight of climate change and the energy transition,
corporate disclosures, corporate governance and ethics, risk management, cybersecurity, artificial intelligence
and internal audit. Furthermore, the board recognizes the importance of the company's relationships with
Indigenous communities and acknowledges the calls to action of the Truth and Reconciliation Commission of
Canada, and all of the independent directors have completed the "4 Seasons of Reconciliation" course provided
by the Indigenous Continuing Education Centre of the First Nations University of Canada.
Board performance assessment
The board and its committees, as well as the performance of the directors, are assessed on an annual basis.
For 2023, 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. Beginning in 2024, the lead director and the
chairman, president and chief executive officer will together lead the annual performance evaluation of the
board. More information about the new lead director position can be found in the section that follows, under the
heading “Board and committee structure — Leadership structure”.
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 and an independent lead director selected by and
from the independent directors.
130
Through more than 40 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 position description of the chief
executive officer is fully described in paragraph 14 (a) of the Board of Directors Charter attached as Appendix A.
In February 2024, the board established a lead director position to further enhance independent board
leadership. D.W. Cornhill was appointed lead director. Prior to the formation of the lead director position, D.W.
Cornhill provided leadership for the independent directors in his capacity as chair of the executive sessions of
the board. It is normally expected that the same director will serve as lead director for a minimum of two years.
The duties and responsibilities of the lead director include:
•
•
•
•
•
act as liaison with the chairman, in consultation with the other directors, (provided however that each
director will also be afforded direct and complete access to the chairman at any time as such director
deems necessary or appropriate);
calls, chairs and sets agendas for executive sessions of the independent directors;
provides feedback to the chairman;
chairs meetings of the board in the absence of the chairman;
reviews and approves the schedule and agenda for all board and committee meetings and reviews
associated materials distributed to the directors;
advises the chairman as to the quality, quantity and timeliness of information flows;
•
• working together with the chairman, oversees the annual performance evaluation of the board; and
• working together with the chair of the executive resources committee, oversees the annual performance
review of the chief executive officer.
Compensation for the lead director is determined by the board on the recommendation of the nominations and
corporate governance committee and will be reviewed annually. Presently, the board has established the
compensation for acting as lead director at $45,000 per year. The position description of the lead director is fully
described in paragraph 8 of the Board of Directors Charter attached as Appendix A.
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 2023. Following the establishment of the lead director
position in 2024, the executive sessions of the board are chaired by the lead director. The purposes of the
executive sessions of the board include the following and are more fully described in paragraph 10 of the Board
of Directors Charter attached as Appendix A:
•
•
•
•
•
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.
131
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. Mr. Crocker has chosen not to stand for re-election at the annual meeting of
shareholders. It is anticipated that if elected, director nominee N.A. Hansen will also be a member of each
committee, with the exception of the audit committee. In February 2023, the public policy and corporate
responsibility committee was changed to the safety and sustainability committee. In May 2023, the board
dissolved the community collaboration and engagement committee, with the ongoing responsibilities of that
committee being assumed by the safety and sustainability committee. At the same time, the board of directors
approved the creation of the finance committee, reflecting the board’s responsibility for oversight of the
company’s capital structure and allocation, financial policies, practices and strategies and significant
investments.
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.
132
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.
133
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 company incorporates external input in
the identification and assessment of risks, including engaging directly with a variety of external stakeholders and
communities, including policy makers, investors, customers, regulators, academics, Indigenous peoples, non-
governmental organizations and industry associations on issues and opportunities of relevance to the company.
These risks included energy transition risks, operational risks, environmental and sustainability risks, and policy
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, the
executive resources committee oversees the compensation programs and practices in relation to risk
management, and the finance committee oversees risk management in connection with capital allocation and
expenditures.
The safety and sustainability committee oversees the policies and practices that manage environment, health,
safety and security risk. The committee regularly engages with senior management on climate matters and our
environmental practices and performance, including reviews of, and briefings from subject-matter experts on,
compliance with legislation and the assessment of public policy impacts on corporate performance, health and
safety systems and performance, new technology developments, and the risks, actions and disclosure
associated with climate change and the energy transition. In 2023, this included an in-depth review of the
company’s regulatory compliance framework and management processes through its operations integrity
management system. 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 provide oversight over the company's emission reduction goals and
performance, including the company's target 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.
134
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:
135
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
● B.W. Corson (chair)
● D.W. Cornhill
● M.R. Crocker
● S.R. Driscoll
● J.N. Floren
● G.J. Goldberg
● M.C. Hubbs
Eight meetings of the board of directors were held in 2023, 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 2023.
● Welcomed three newly elected directors to the board.
● Approved changes to the composition of the committees of the board and updated charters to
reflect mandates of those committees.
● Carried out site visits to Kearl, Stathcona refinery, and the Calgary research centre.
● Engaged in active oversight of company’s response to Kearl environmental protection order
● 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.
Board
highlights in 2023
● 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
one substantial issuer bid.
● 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 continued membership in the Oil Sands Pathways to Net
Zero initiative.
● Expanded existing mechanisms for recovering certain executive compensation in the event of a
material negative financial restatement, by adopting new policy in compliance with new Rule
10D-1 of the US Securities Exchange Act of 1934.
● Reviewed various stages of key projects such as Kearl in-pit tailings, Kearl autonomous haul
vehicles, Cold Lake Grand Rapids Phase 1, Enhanced Bitumen Recovery Technology pilot,
and approved Strathcona’s renewable diesel project.
Role in risk
oversight
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.
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.
136
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
meetings
of
Committee
highlights in
2023
Financial expertise
in
Role
oversight
risk
Independence
●
●
●
S.R.
M.C.
D.W.
Driscoll (chair)
Hubbs (vice-chair)
Cornhill
●
●
J.N.
G.J.
Floren
Goldberg
meetings
the
management
of
Five
without
all
scheduled
and
officer
regularly
held
audit
present
committee
and
meetings.
were
separately
pre-audit
A
meeting
the
with
and
2023.
in
with
the
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chair
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The
internal
also
the
audit
committee
auditor
and
to
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committee
the
every
and
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audit
both
committee
internal
the
members
met
external
in
auditor
camera
at
regularly
chief
the
financial
and
recommended
for
approval
the
interim
and
full
year
financial
and
operating
●
●
●
●
●
●
●
Reviewed
results.
Reviewed
and
the
Reviewed
Reviewed
Reviewed
Performed
Ensured
the
maintained.
and
results
and
evolving
the
external
assessed
of
the
assessed
the
internal
the
regulations
of
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system
audit program.
company’s
auditor’s
external
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and
mandate and
completed
performance evaluation.
and
of
procedures
controls
plan,
the
committee’s
auditor
effectiveness
internal
controls
and
auditing
procedures,
performance
and fees.
committee self-assessment.
and
integrity
of
financial
statements
was
of
that
determined
company’s
The
the
Hubbs
meet
has
Commission
person
make
are
person
directors
the
are
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board
definition
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greater
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literate
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expert
than
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directors
“audit
of
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that
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for
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D.W.
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The
has
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designation
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purpose,
on
imposed
or
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meaning
National
of
American LLC.
that
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of
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impose
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and
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52-110
and
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and
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also
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company’s
PricewaterhouseCoopers’
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principles
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and
audit
oversight.
including
The
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risks
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light
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financial
company-specific
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external
and
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and
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oversees
and
systems.
associated
risks.
audit
and
results,
any
In
with
The
committee
independence
is
The
audit
approved
Committees,
NYSE
U.S.
the
American LLC.
composed
standards,
and
Securities
of
entirely
as
term
that
Exchange
directors.
independent
is
in
defined
Commission
All
National
and
rules
members
Instrument
listing
the
board
met
52-110
standards
Audit
of
the
137
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
2023
Committee
members
relevant skills
and experience
in risk
Role
oversight
Independence
●
●
●
Goldberg (chair)
Cornhill (vice-chair)
G.J.
D.W.
M.R. Crocker
None
officer
of
of
members
the
the
another company.
of
●
●
●
S.R. Driscoll
J.N. Floren
M.C. Hubbs
executive
resources
committee
currently
serves
as
a
chief
executive
Eight
meetings
of
the
executive
resources
committee
were
held
in 2023.
and
approved
●
●
●
●
●
performance
overall
policy
new
recovering certain
Evaluated
Approved
Reviewed
for
restatement,
a
Reviewed
focus
Continued
and
number of
on
compensation
to
relating
executive
related
workforce
amendments
and
planning
succession
and
compensation
incentive
budget
Rule
new
compensation
to
organizational changes.
for
program
US
the
of
the event
term
10D-1
in
CEO and
for
Securities
of a
material
incentive plan.
the short
other
the company.
Exchange
negative
for
senior
management positions.
executive officers.
Act
1934
of
financial
members
had
companies’
extensive
and
compensation
respective
committee
All
their
executive
Goldberg
G.J.
more
public
knowledge
company’s
officers
and
or
M.C.
companies.
derived
from
compensation
of
members
serve
Hubbs
Accordingly,
their
roles
policies
in
practices
D.W.
on
experience
lengthy
policies
and
management.
senior
served
have
or
committee
other
with
and practices.
members
companies
Cornhill,
compensation
able
judging
are
in
to
the
managing
their
in
S.R.
and
implementing
chief
past
role
Driscoll,
committees
as
J.N.
one
of
experience
Floren
or
and
use
this
suitability
of
the
The
designed
executive
resources
to
encourage
committee
appropriate
oversees
risk
the
compensation
programs
risk management.
assessment
and
and
practices
that
are
of
is
employment
members
who
the
not
Commission,
with
The
Crocker,
Exchange
to
his
Governance’s
a
Crocker
the
member
ensure
objective
and
majority shareholder.
as
of
an
assists
policy,
related
the
executive
considered
the
the
with
Mobil
resources
be
to
Canadian
securities
Exxon
committee
independent
rules
Corporation.
of
of
committee.
compensation
bringing
are
under
and
the
However,
Equity
management
Mr.
of
the
Differences
independent
resources
committee
determining
this
and
executive
independent,
of
rules
the
of
the
Canadian
rules
the
Coalition
Corporations”,
Controlled
may
who
and
participation
Crocker’s
officers
the
perspectives
views
company’s
and
exception
Securities
American
for
views
participate
of
and
LLC
Good
Mr.
a
as
to
helps
directors
and
the
of
U.S.
NYSE
for
of
M.R.
due
“Governance
director
by
company’s
process
deliberations
138
Safety and sustainability committee
The role of the safety and sustainability committee is to oversee 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, climate change, and stakeholder and Indigenous relations on corporate
performance, and oversees the company's community investment activities including charitable donations.
The committee evaluates 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
2023
in risk
Role
oversight
●
●
●
Floren (chair)
Goldberg (vice-chair)
J.N.
G.J.
D.W. Cornhill
●
●
●
M.R.
S.R.
M.C.
Crocker
Driscoll
Hubbs
Five
meetings
of
the
safety
and
sustainability
committee
were
held
in 2023.
●
●
●
●
●
●
●
●
●
and
company’s
safety
for
Canadian
Alliance
material
Pathways
the
disclosure
process
guidance
protection order.
performance
Personnel
oversight
and
environmental
Environmental
on
Updates
on
Updates
Review
of
company’s
invested
The
the
Benchmark
community investment.
In
the
Indigenous communities.
$5
surpassed
The
annual
highest
achieving
of
years
Celebrated
Inuit
First
and
provided
Indspire
strategy
more
Group
company
London
company
the
Nations,
has
company
2023,
20
systems,
performance
mitigations
and
community
and
incident
engagement
review,
in
including
ongoing
respect of
the Kearl
review
gas,
(greenhouse
policy developments.
capture
carbon
utilization
Advancing
Climate
Solutions
and
and
storage
Sustainability
(CCUS) activities.
Reports
and
the
other
air
emissions,
water consumption).
than
and plans.
$17.5M
a
–
model
in
global
Canadian communities
in
measuring
2022
as
and reporting
reported
using
standard
for
contributed
over
$16.5M
through
community
benefit
agreements
to
in
billion
Indigenous
spending
business
for
people
support
Métis
scholarships
Indspire, an
Canada
than
more
in
to
with
Indigenous
spend
in
organization
in
2023.
500
2023.
that
Through
Indigenous students.
invests
the
in
company's
the
education
support,
of
business
since
2008,
safety
in
and
The
practices
policies
specific reviews
also
includes
pandemics
matters.
and
sustainability
and
matters
of
practices
committee
health,
to
environment,
intended
are
to
climate
emergency
The
committee
reviews
monitors
and
the
company’s
process
personnel and
safety
and
areas.
these
in
risk
manage
to
strategies
company’s
planning,
in
from
and
the
continuity
policies
security,
This
address
relation
management
reports
regular
and
receives
mitigate
risk
and
response
which
includes
these
to
health
and
on
these
pandemic
with respect
and
epidemics.
risks.
It
Independence
The
members
M.R. Crocker.
of
the safety
and
sustainability
committee
are
independent,
with
the
exception
of
139
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
meetings
of
Committee
highlights in
2023
in
Role
oversight
risk
Independence
●
●
●
Hubbs (chair)
Floren (vice-chair)
M.C.
J.N.
D.W. Cornhill
●
●
●
M.R. Crocker
S.R. Driscoll
G.J. Goldberg
Six
meetings
of
the
nominations
and
corporate
governance
committee
were
held
in 2023.
●
●
●
●
●
of
the
in
director
oversight
board
Approval
Engagement
of
Review
Continued
joining
the
Recommendation
recommendations
statement
and
board
corporate
of
committee self-assessment.
governance practices.
and
compensation principles.
completion
the
the
the
election
changes
changes
at
to
to
upon
for
for
director
process
of
2023
composition
charters
recruitment
shareholder meeting.
of
the
reflect
committees
of
mandates
to
with
three
new
directors
the
of
board
those committees.
and
The
program
nominations
for
and
corporate
corporate
governance,
governance
including
committee
board
oversees
composition
risk
and
by
an
implementing
succession planning.
effective
who
the
Crocker,
and
not
nominations
is
Commission,
employment
Exchange
to
due
his
Governance’s
Good
Crocker
members
of
M.R.
of
and
LLC
for
The
exception
Securities
American
Coalition
views
Corporations”,
as
a
participate
may
Mr.
committee.
Crocker’s
assists
deliberations
the
shareholder.
governance
to
be
securities
Mobil
corporate
considered
Canadian
Exxon
with
“Governance
director
policy,
related
a
as
nominations
company’s
the
to
helps
ensure
bringing
by
an
the
of
participation
of
Mr.
member
committee
this
the
with
U.S.
committee
independent
rules
and
Corporation.
of
Differences
and
independent,
are
of
rules
the
the
under
NYSE
of
the
the
rules
the
However,
Canadian
Controlled
Equity
management
of
governance
corporate
and
independent
who
and
objective
views
nominations
and
perspectives
process
the
of
and
majority
Finance committee
The role of the finance committee is to provide oversight and guidance regarding the corporation’s capital structure/capital
allocation, financial policies, practices and strategies. The formal mandate of the committee can be found within the Finance
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
2023
in
Role
oversight
risk
●
●
●
D.W.
S.R.
M.R.
Cornhill (chair)
Driscoll (vice-chair)
Crocker
●
●
●
J.N. Floren
G.J. Goldberg
M.C. Hubbs
Five
meetings
of
the
finance
committee
were
held
in 2023.
●
●
●
and
Review
capital budget.
Review
Review
and
and
recommendation
recommendation
recommendation
of
the
company’s
corporate
and
finance
plans
including
the
of
of
dividend declarations.
share
buyback programs.
The
and
specific
finance
procedures,
committee
by
capital
and
for
oversees
carefully
proposals
risk
by
considering
implementing
various
overseeing
other
and
factors
in
effective
and
risk
additions
expenditures,
budget
and
strategic
initiatives
policies,
connection
practices
with
and plans.
Independence
The
members
of
the
finance
committee
are
independent,
with
the
exception
of
M.R. Crocker.
140
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 data from benchmark companies,
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
143.
141
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.
BCE Inc.
Enbridge
Inc.
Ovintiv
Inc.
Canadian
National
Railway Company
Nutrien Ltd.
Parkland
Fuel
Corporation
Royal
Bank
of Canada
Suncor
Energy
Inc.
Teck
Resources
Limited
TC
Energy
Corporation
TELUS
Corporation
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 158.
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 2023, the committee recommended and the board approved no changes to
nonemployee director compensation.
142
The following table summarizes the compensation terms for the nonemployee directors in 2023:
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 elected or appointed to the board during the year receive the full restricted stock unit grant and
a pro-rated cash retainer based on the appointment or election date.
In addition to compensation for board membership, the board determines the compensation for special
committee membership when the committee is established. There was no cash retainer in connection with
the special committee that was in place during 2023.
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 2023.
Director
D.W. Cornhill
S.R.
Driscoll (a)
J.N.
Floren (a)
G.J.
Goldberg (a)
K.T.
Hoeg (b)
M.C. Hubbs
J.M.
Mintz (b)
D.S.
Sutherland (b)
Election
for
director’s fees
2023
in cash
(%)
0
0
0
0
0
0
0
0
Election
2023
for
deferred
director’s
share units
(%)
fees in
100
100
100
100
100
100
100
100
(a) S.R. Driscoll, J.N. Floren, G.J. Goldberg were elected to the board and its committees on May 2, 2023.
(b) K.T. Hoeg, J.M. Mintz and D.S. Sutherland retired from the board and its committees on May 2, 2023.
143
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.
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; multiplied by
(ii) the number of unexercised deferred share units held by the nonemployee directors on the dividend
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 164.
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; multiplied by
(ii) the number of unvested restricted stock units held by the nonemployee directors on the dividend
record date.
Other reimbursement
Nonemployee directors are also reimbursed for travel and other expenses incurred for attendance at board
and committee meetings.
144
Components of director compensation
The following table sets out the details of compensation paid to the nonemployee directors in 2023.
Director
(a)
Annual
retainer for
board
membership
($)
(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
110,000
3,300
—
110,000
254,496
58,331
422,827
S.R. Driscoll
82,500
3,300
—
82,500
254,496
673
337,669
J.N. Floren
82,500
3,300
—
82,500
254,496
673
337,669
G.J. Goldberg
82,500
3,300
—
82,500
254,496
673
337,669
K.T.
Hoeg (b)
55,000
—
—
55,000
—
85,346
140,346
M.C. Hubbs
110,000
3,300
—
110,000
254,496
62,032
426,528
J.M.
Mintz (b)
55,000
D.S. Sutherland (b)
55,000
—
—
—
55,000
—
80,009
135,009
—
55,000
—
102,176
157,176
(a) As directors employed by the company or Exxon Mobil Corporation in 2023, B.W. Corson and M.R. Crocker did not receive
compensation for acting as directors. S.R. Driscoll, J.N. Floren, G.J. Goldberg were elected to the board on May 2, 2023. and
their “Annual retainer for board membership” has been pro-rated accordingly.
(b) K.T. Hoeg, J.M. Mintz and D.S. Sutherland retired from the board on May 2, 2023 and their “Annual retainer for board
(c)
(d)
membership” has been prorated accordingly.
“Total fees paid in cash” is the portion of the “Annual retainer for board membership” that the director elected to receive as
cash. This amount is reported as “Fees earned” in the Director compensation table on page 146.
“Total value of deferred share units” is the portion of the “Annual retainer for board membership” that the director elected to
receive as deferred share units, as set out in the previous table on page 143. This amount plus the “Total value of restricted
stock units” amount is shown as “Share-based awards” in the Director compensation table on page 146.
(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 4, 2023 ($77.12).
(f) Amounts under “All other compensation” consist of dividend equivalent payments on unvested restricted stock units, the value
of additional deferred share units granted in lieu of dividends on unvested deferred share units, and the value of premiums paid
by the company for accidental death and dismemberment (AD&D) insurance. In 2023, D.W. Cornhill received $30,892 in
dividend equivalent payments on restricted stock units, additional deferred share units valued at $27,307 in lieu of dividends on
deferred share units and insurance premiums of $132. S.R Driscoll received additional deferred share units valued at $585 in
lieu of dividends on deferred share units and insurance premiums of $88. J.N. Floren received additional deferred share units
valued at $585 in lieu of dividends on deferred share units and insurance premiums of $88. G.J. Goldberg received additional
deferred share units valued at $585 in lieu of dividends on deferred share units and insurance premiums of $88. K.T. Hoeg
received $33,776 in dividend equivalent payments on restricted stock units, additional deferred share units valued at $51,526 in
lieu of dividends on deferred share units, and insurance premiums of $44. M.C. Hubbs received $27,876 in dividend equivalent
payments on restricted stock units, additional deferred share units valued at $34,024 in lieu of dividends on deferred share
units, and insurance premiums of $132. J.M. Mintz received $33,776 in dividend equivalent payments on restricted stock units,
additional deferred share units valued at $46,189 in lieu of dividends on deferred share units, and insurance premiums of $44.
D.S. Sutherland received $33,776 in dividend equivalent payments on restricted stock units, additional deferred share units
valued at $68,356 in lieu of dividends on deferred share units, and insurance premiums of $44.
145
Director compensation table
The following table summarizes the compensation paid, payable, awarded or granted for 2023 to each of
the nonemployee directors of the company.
Name
(a)
Fees
earned
($)(b)
Share-
based
awards
($) (c)
Option-
based
awards
($)
Non-equity
incentive plan
compensation
($)
Pension
value
($)
All other
compensation
($) (d)
Total
($)
D.W. Cornhill
—
364,496
S.R. Driscoll
—
336,996
J.N. Floren
—
336,996
G.J. Goldberg
—
336,996
K.T. Hoeg
—
55,000
M.C. Hubbs
—
364,496
J.M. Mintz
—
55,000
D.S. Sutherland
—
55,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
58,331
422,827
673
337,669
673
337,669
673
337,669
85,346
140,346
62,032
426,528
80,009
135,009
102,176
157,176
(a) As directors employed by the company or Exxon Mobil Corporation in 2023, B.W. Corson and M.R. Crocker did not receive
compensation for acting as directors. S.R. Driscoll, J.N. Floren, G.J. Goldberg were elected to the board on May 2, 2023. and
their compensation has been pro-rated accordingly. K.T. Hoeg, J.M. Mintz and D.S. Sutherland retired from the board on May
2, 2023 and their compensation has been pro-rated accordingly.
(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” that the director elected to receive as deferred share units as noted on page 143).
(d) Amounts under “All other compensation” consist of dividend equivalent payments on unvested restricted stock units, the value
of additional deferred share units granted in lieu of dividends on unvested deferred share units, and the value of premiums paid
by the company for accidental death and dismemberment (AD&D) insurance. In 2023, D.W. Cornhill received $30,892 in
dividend equivalent payments on restricted stock units, additional deferred share units valued at $27,307 in lieu of dividends on
deferred share units and insurance premiums of $132. S.R Driscoll received additional deferred share units valued at $585 in
lieu of dividends on deferred share units and insurance premiums of $88. J.N. Floren received additional deferred share units
valued at $585 in lieu of dividends on deferred share units and insurance premiums of $88. G.J. Goldberg received additional
deferred share units valued at $585 in lieu of dividends on deferred share units and insurance premiums of $88. K.T. Hoeg
received $33,776 in dividend equivalent payments on restricted stock units, additional deferred share units valued at $51,526 in
lieu of dividends on deferred share units, and insurance premiums of $44. M.C. Hubbs received $27,876 in dividend equivalent
payments on restricted stock units, additional deferred share units valued at $34,024 in lieu of dividends on deferred share
units, and insurance premiums of $132. J.M. Mintz received $33,776 in dividend equivalent payments on restricted stock units,
additional deferred share units valued at $46,189 in lieu of dividends on deferred share units, and insurance premiums of $44.
D.S. Sutherland received $33,776 in dividend equivalent payments on restricted stock units, additional deferred share units
valued at $68,356 in lieu of dividends on deferred share units, and insurance premiums of $44.
146
Five-year
look
back
at
total
compensation
paid
to
nonemployee directors
Year
2019
2020
2021
2022
2023
Amount
($)
1,251,395
1,073,527
1,557,202
2,153,807
2,294,893
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, 2023 and does not include common shares owned by the director.
Option-based 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
(#) (c)
Market or
payout value
of share-
based
awards that
have not
vested
($) (d)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
33,917
2,560,055
4,422
333,773
4,422
333,773
4,422
333,773
16,700
1,260,516
36,136
2,727,545
16,700
1,260,516
16,700
1,260,516
Name
(a)
D.W. Cornhill
S.R. Driscoll
J.N. Floren
G.J. Goldberg
K.T.
Hoeg (b)
M.C. Hubbs
J.M.
Mintz (b)
D.S.
Sutherland (b)
(a) As directors employed by the company or Exxon Mobil Corporation in 2023, B.W. Corson and M.R. Crocker did not receive
compensation for acting as directors. S.R. Driscoll, J.N. Floren and G.J. Goldberg were elected to the board on May 2, 2023.
(b) K.T. Hoeg, J.M. Mintz and D.S. Sutherland retired from the board on May 2, 2023.
(c) Represents restricted stock units and deferred share units held as of December 31, 2023.
(d) Value is based on the closing price of the company’s shares on December 31, 2023 ($75.48). For K.T. Hoeg, J.M. Mintz and D.S.
Sutherland, the value represents restricted stock units held as of December 31, 2023, as each of them exercised their deferred
share units by the end of the 2023.
147
Incentive plan awards for directors - Value vested or earned during the year
The following table sets forth the value of the awards that vested or were earned by each nonemployee
director of the company in 2023.
Name
(a)
Option-based awards –
Value vested during the
year
($)
Share-based awards –
Value vested during the
year
($) (b)
Non-equity incentive plan
compensation – Value
earned during the year
($)
D.W. Cornhill
S.R. Driscoll
J.N. Floren
G.J. Goldberg
K.T. Hoeg
M.C. Hubbs
J.M. Mintz
D.S. Sutherland
—
—
—
—
—
—
—
—
116,211
—
—
—
3,914,117
116,211
3,595,688
3,438,084
—
—
—
—
—
—
—
—
(a) As directors employed by the company or Exxon Mobil Corporation in 2023, B.W. Corson and M.R. Crocker did not receive
compensation for acting as directors. S.R. Driscoll, J.N. Floren and G.J. Goldberg were elected to the board on May 2, 2023. K.T.
Hoeg, J.M. Mintz and D.S. Sutherland retired from the board on May 2, 2023.
(b) Represents restricted stock units granted in 2016 and 2018, which vested in 2023. 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. For K.T. Hoeg, the value also includes 55,991.53
deferred share units that were exercised on May 3, 2023 after her retirement, at a price of $67.83 which was the weighted
average price of common shares of the company on the five consecutive trading days immediately prior to the exercise date. For
J.M. Mintz, the value also includes 50,237.90 deferred share units that were exercised on May 2, 2023 after his retirement, at a
price of $69.26 which was the weighted average price of common shares of the company on the five consecutive trading days
immediately prior to the exercise date. For D.S. Sutherland, the value also includes 48,551.19 deferred share units that were
exercised on July 28, 2023 after his retirement, at a price of $68.42 which was the weighted average price of common shares of
the company on the five consecutive trading days immediately prior to the exercise date.
148
Share ownership guidelines of independent directors and chairman, president and chief
executive officer
Independent directors are required to hold the equivalent of at least 16,500 shares of Imperial Oil Limited,
including common shares, deferred share units and restricted stock units, within five years from the date of
joining the board.
The chairman, president and chief executive officer has separate share ownership requirements and must,
within three years of his appointment, acquire shares of the company, including common shares and restricted
stock units, of a value of no less than five times his base salary.
The board of directors believes that these share ownership guidelines will result in an alignment of the interests
of board members with the interests of all other shareholders. As of the date of this circular, the independent
directors currently have holdings of 95,819 shares which meets the required guideline.
Minimum
requirement
share
ownership
Time
to fulfill
Chairman,
officer
president
and
chief
executive
5 x
base salary
Within
3
years
of appointment
Independent directors
16,500 shares
Within
5
years
of
initial appointment
The chart below shows the shareholdings of the independent directors and the chairman, president and chief
executive officer of the company as of February 15, 2024, the record date of the management proxy circular.
Director
Director
since
Amount
acquired
since last
report
(February 9,
2023 to
February
15,
2024) (#)
Total
holdings
(includes
common shares,
deferred share
units and
restricted stock
units) (#)
Market
value of
total
holdings
(a) ($)
Minimum
shareholding
requirement
Minimum
requirement
met
D.W. Cornhill
November
29, 2017
3,709
46,417
3,773,702
16,500
B.W. Corson
September
17, 2019
86,800
410,400
33,365,520
Five
base
times
salary
Yes
Yes
S.R. Driscoll
May
2, 2023
4,422
4,422
359,509
16,500
Yes (b)
J.N. Floren
May
2, 2023
4,422
4,422
359,509
16,500
Yes (b)
G.J. Goldberg
May
2, 2023
4,422
4,422
359,509
16,500
Yes
(b)
M.C. Hubbs
July
26, 2018
3,801
36,136
2,937,857
16,500
Yes
Total
value
accumulated
directors’
of
(#)
holdings
holdings ($)
and
506,219
41,155,606
(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 15, 2024 ($81.30).
(b) S.R. Driscoll, J.N. Floren and G.J. Goldberg were elected to the board on May 2, 2023 and are expected to meet the share ownership
guidelines for independent directors of 16,500 shares within the required five years from such date.
For information relating to compensation of the company’s named executive officers, see the Compensation
discussion and analysis section starting on page 158.
149
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 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. It is anticipated that if elected, director nominee N.A.Hansen will also be a member of
each committee, with the exception of the audit committee, and although Mr. Hansen will be deemed non-
independent under the relevant standards by virtue of his employment with Exxon Mobil Corporation, he will be
viewed as independent of the company’s management.
150
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.
The independent directors conduct executive sessions in the absence of members of management. In 2023
these meetings were chaired by D.W. Cornhill, the independent director designated by the independent
directors to chair and lead these discussions. Eight executive sessions were held in 2023. Following the
establishment of the lead director position in 2024, the executive sessions of the board are chaired by the lead
director.
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's code of ethics prohibits employees from securities transactions based on material, non-
public information learned through their positions with the company. The company also has guidelines regarding
corporate disclosure processes and procedures, as well as 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 publicly 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 board's independent directors 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
151
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.
The board considers diversity through the annual nomination process, board assessment and other
discussions. The board and the nominations and corporate governance committee also specifically consider
diversity through targeted director recruitment processes. With three of the company’s directors retiring in 2023,
the board and the nominations and corporate governance committee completed an extensive director
recruitment process in early 2023, with S.R. Driscoll, J.N. Floren and G.J. Goldberg being elected as directors
of the company at the annual meeting in 2023. Diversity and the composition of the board was 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 the recruitment
process brought further experience and diverse perspectives to the board and maintained 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)
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 120 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 through a range of development and
152
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. 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.
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
10 of 23
0 of 23
0 of 23
2 of 23
Percent
(%)
43
0
0
9
(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.
Understanding investor interests and concerns and obtaining their feedback is central to the company's
shareholder engagement program. This critical input not only informs how the company interacts and
communicates, but also helps identify what areas require additional focus to demonstrate ongoing progress and
performance.
The company’s senior management regularly meet with institutional investors and shareholders through
industry conferences, roadshows and company hosted investor events. In 2023, these events were largely held
as in-person engagements. Pertinent materials from these hosted events are available on the company’s
website.
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 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.
153
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 responds to shareholder queries throughout the year, and 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. In 2023,
shareholder engagement and discussion involved a broad range of topics including capital allocation strategy,
corporate guidance and operational performance, company growth plans, emission reduction plans and the Oil
Sands Pathways to Net Zero initiative, and corporate strategy including with respect to the energy transition.
Investor perspectives were a factor considered in decision making, and investor feedback was incorporated into
company disclosure improvement efforts.
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
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 15, 2024, 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, 22777 Springwoods
Village Parkway, Spring, Texas, 77389-1425, which owns beneficially 372,942,029 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 2023 that involved ExxonMobil. On June 27,
2023, 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, 2023, or a maximum of
29,207,635 shares. The program ended on October 19, 2023 upon the company purchasing the maximum
allowable number of shares, with 8,879,143 common shares purchased on the open market and a
corresponding 20,328,492 common shares purchased from ExxonMobil concurrent with, but outside of the
program to maintain its shareholding at approximately 69.6 percent.
On November 3, 2023, the company commenced a substantial issuer bid that 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 13, 2023, with the company purchasing 19,108,280 common shares at
a price of $78.50 per share, for an aggregate purchase of $1.5 billion and 3.4 percent of the company's issued
and outstanding shares (as of the close of business on October 30, 2023). This included 13,299,349 shares
purchased from ExxonMobil by way of a proportionate tender to maintain its ownership percentage at
approximately 69.6 percent.
154
The amounts of purchases and revenues by the company and its subsidiaries for other transactions in 2023
with ExxonMobil and its affiliates were $4,026 million and $13,544 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, 2023, 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.
155
Company executives and executive compensation
Named executive officers of the company
The named executive officers of the company at year end 2023 are listed below, all of whom remain in their
positions as of February 15, 2024.
Bradley W. Corson, 62
Calgary, Alberta, Canada
Position held at the end of 2023 (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 – 2020)
President, ExxonMobil Upstream Ventures
(2015 – 2019) (affiliate)
Daniel E. Lyons, 61
Calgary, Alberta, Canada
Position held at the end of 2023 (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):
No other positions in the last five years
Simon P. Younger, 48
Calgary, Alberta, Canada
Position held at the end of 2023 (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)
Bruce A. Jolly, 56
Calgary, Alberta, Canada
Position held at the end of 2023 (date office held):
Treasurer
(2023 – Present)
Other positions in the past five years (position, date office held and status of employer):
Assistant controller
(2019 – 2023)
Upstream controller
(2018 – 2019)
Sherri L. Evers, 47
Calgary, Alberta, Canada
Position held at the end of 2023 (date office held):
Senior vice-president, sustainability, commercial development and product solutions
(2023 – Present)
Other positions in the past five years (position, date office held and status of employer):
Vice-president, commercial and corporate development
(2021 – 2023)
Fuels manager, Central and Eastern Canada, fuels and lubricants
(2018 – 2020)
156
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 15, 2024.
Kristi L. Desjardins, 50
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)
Constance D. Gemmell, 57
Calgary, Alberta, Canada
Ian R. Laing, 50
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):
No other positions in the past five years
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)
Christopher Leyerzapf, 48
Calgary, Alberta, Canada
Position held (date office held):
Assistant controller
(2023 – Present)
Other positions in the past five years (position, date office held and status of employer):
Upstream controller
(2021 – 2023)
Upstream business analysis and reporting manager
(2019 – 2021)
Senior financial advisor, upstream corporate reporting, Exxon Mobil Corporation
(2018 – 2019) (affiliate)
Eloissa D. Wells, 43
Sarnia, Ontario, Canada
Position held (date office held):
Vice-president, chemicals and Sarnia site complex manager
(2023 – Present)
Other positions in the past five years (position, date office held and status of employer):
US and Canada commercial fuel sales and marketing manager, product solutions, fuels value
chain, Exxon Mobil Corporation (2021 – 2023) (affiliate)
Business analysis and reporting manager, controllers, Exxon Mobil Corporation
(2019 – 2021) (affiliate)
Baton Rouge fuels refinery process department head, Baton Rouge refinery, Exxon Mobil
Corporation (2017 – 2019) (affiliate)
157
Executive Compensation
Compensation discussion and analysis
Executive Summary
Letter to shareholders
Compensation design
Approach to executive compensation
Strong governance practices
Overview
Accountability and performance
Long-term award program
Bonus program
Salary program
Determining compensation
Annual benchmarking
2023 business performance
Performance graph
2023 compensation actions
Other compensation elements
Retirement plans
Award vesting and share utilization
Granting practices
Amendments
Risk and governance
Executive stock ownership
Forfeiture provisions
Clawback policies
Anti-hedging policy
Severance agreements
Change-in-control
Definitions and frequently used terms
Executive compensation tables
Summary compensation table
Outstanding equity awards
Incentive plan awards – Value vested or earned
Equity compensation plan information
RSUs as a percentage of outstanding shares
Annual burn rate
Status of prior long-term incentive plans
Pension plan benefits
Other compensation elements
159
159
160
160
160
161
162
164
166
166
167
167
168
169
170
171
171
172
172
172
173
173
173
173
173
174
174
175
177
177
180
181
182
182
183
183
184
187
158
The compensation and discussion
analysis and executive compensation
tables outline Imperial's executive
compensation program and process for
determining pay as it applies to the named
executive officers (NEOs).
For 2023, named executive officers were:
Brad W. Corson
Chairman, president,
and chief executive
officer
Daniel E. Lyons
Senior vice-president,
finance and
administration, and
controller
Simon P. Younger
Senior vice-president,
upstream
Bruce A. Jolly
Treasurer
Sherri L. Evers
Senior vice-president,
sustainability,
commercial
development, and
product solutions
Executive summary
Letter to shareholders
Fellow shareholders:
The executive resources committee (“committee”) supports the design and resulting pay outcomes of Imperial's
executive compensation program; we believe that it aligns well with the company’s business model and
considers the complexity of the business environment in which the company operates. Executive performance
is evaluated across multiple performance dimensions within the context of the company’s long-term strategy.
The design of the executive compensation program rewards performance and ensures the goal of maximizing
long-term shareholder value is achieved and the company is positioned for long-term success.
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. The executive compensation program design
reflects this and has proven to be adaptable to evolving strategic priorities.
In 2023, Imperial delivered strong business results across a wide range of performance dimensions. Through its
focus on strategic priorities and commitment to delivering reliable, affordable, and lower emission energy to
Canadians, the company is positioned for long-term success, and able to drive long-term shareholder value.
The company's disciplined approach and focus on cost efficiencies allows it to realize the full benefit of market
conditions and deliver strong financial performance. For more information on the 2023 key business results see
page 168.
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 are as follows:
• The committee approved competitive base salaries for named executive officers, consistent with the
salary program for all executives.
• The 2023 bonus program awards were approved at lower levels than 2022, reflective of changes in
year-on-year earnings performance and further differentiated by individual performance.
• The committee granted restricted stock unit awards in keeping with program design, with the value of
awards having increased year-on-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
2024 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.
G.J. Goldberg,
Chair, executive resources
committee
159
Compensation design
Approach to executive compensation
The decisions that our 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 the energy
transition, and to make decisions across a broad range of business environments 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 through a comprehensive process which incorporates corporate and functional plans. Goals are
incorporated in the corporate plan, which is reviewed and approved by the board and provides the framework
for the company's commitments.
Reward outstanding performance
Highly differentiated pay-for-performance is foundational to the company's 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
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.
Supported by strong governance practices
Key design features that discourage executives from taking inappropriate risk include:
✓ Extensive stock ownership
✓ Significant pay at risk
✓ Strong forfeiture provisions
✓ Clawback policy
✓ Anti-hedging policy
✓ Annual assessment of compensation design
✗ No severance agreements
✗ No change-in-control arrangements
✗ No guaranteed bonuses
✗ No additional stock grants to balance losses in value
✗ No accelerated vesting at retirement
160
Overview
Accountability and performance | Pages 162 - 163
•
Board reviews and approves corporate goals and objectives annually; integrated into company's plan cycle.
• Goals are cascaded at each level, tailored for area of responsibility; annual assessment versus planned goals results
in differentiated pay outcomes.
Compensation design | Pages 164 - 166
• Named executive officers participate in the same broad-based programs as all other executives.
• Restricted stock units for senior executives represent a higher percentage of total direct compensation1, reflective of
the impact of their decisions, and resulting in increased pay-at-risk.
Restricted
stock units
Annual bonus
Base salary
NEO
Percent
total
of
direct compensation1
Intent
Key
Design Features
•
•
•
•
•
•
•
•
Over
50 percent
of
to
pay
returns
Link
long-term shareholders
Encourage
view
commodity
price cycle
long-term
through
the
50
years
Granted
in
stock units
CEO:
5
percent
50
All
other
percent
from
percent
Long
coupled
metrics
Significant
of
risk
at
extended
grant
in
the
form
of
percent
from
in
vests
in
date;
grant
10 years
50
years
executives:
in
vests
date;
7 years
3
50
restriction
with
applied
periods
performance
at grant
of
for
of time
pay
portion
forfeiture
period
•
•
•
•
10
to
30 percent
Provide
base pay
competitive
Increase
individual
experience,
grade
Ties
benefits
directly
determined
by
performance,
and
pay
to
long-term
•
•
•
•
•
•
•
10
to
20 percent
to
annual
earnings
Link
pay
company
performance
Align
all functions
incentives
across
year
Paid
in
award
Bonus
reflective
of
performance
Individual
determined
performance
grade
award
Full
clawback
of grant
pool
business
award
by
further
individual
pay
and
subject
to
Determining compensation
Annual compensation benchmarking | Page 167
• Target pay around the median, considering tenure in position, individual and business performance
Performance Dimension
Measurement
Business performance | Page 168
•
toward
strategic objectives
•
Progress
–
–
–
–
Operations performance
Financial performance
Energy transition
Business portfolio
Demonstrated
established
to
leadership
goals
and
and objectives
accomplishments
relative
Pay deliberations and decisions | Pages 170 - 171
• Balances progress toward strategic objectives, business results, individual performance, and competitiveness of pay,
taking into account experience in position
1 Refer to definitions and frequently used terms on page 175
161
Accountability and performance
Executive compensation program design is aligned with business model and talent development approach -
long-term oriented, performance differentiated, and adaptable to evolving strategic priorities through goal
setting.
Strategic objectives
The company's long-term strategic objectives center around four key interdependent performance dimensions,
reflective of the company's priority focus areas. These objectives, fully integrated into the company's plan cycle,
provide the framework for the organization to deliver on its commitments.
Strategic objectives have been established to drive sustainable growth in shareholder value while positioning
the company for long-term success in a lower-emissions future.
Long-term strategic objectives
Operations performance
Deliver
industry-leading
performance
in
safety,
environmental
performance,
and reliability
Financial performance
Deliver
industry-leading
earnings
and
cash
flow growth
Energy transition
Reduce
GHG
emissions
intensity
at
our
operated
assets
and
in
hard-to-decarbonize sectors
Business portfolio
Optimize
existing
business
portfolio,
resilient
to
a
transitioning
energy system
Plan goals
The company's strategic objectives are translated into annual plan goals through a comprehensive process that
incorporates corporate and functional plans. Plan goals are endorsed by the board.
A disciplined approach to establishing goals aligns executives to deliver on the company's strategic objectives.
The chief executive officer ("CEO") is primarily responsible for executing the
company's long-term strategic objectives, as translated into annual plan
goals. CEO goals and objectives are supplemented with enterprise-wide
initiatives. These include risk management, corporate reputation, talent
management, research and technology, and management of major projects.
Plan goals and objectives are cascaded throughout the organization,
tailored to each executive's area of responsibility.
Goals and objectives are reviewed with senior management annually and
reinforced through periodic stewardship reviews and the performance
assessment process.
Leaders are held accountable to deliver on plan goals and objectives
across all performance dimensions within the context of the company's
strategic objectives. This sets a high performance threshold. Where faced
with trade-offs across different priorities, these are discussed with senior
management.
Design adaptable to evolving strategic priorities through integration in the company's plan process, corporate
goals & objectives approved by the board
162
Performance evaluation
The executive resources committee evaluates accomplishments across all business performance dimensions
within the context of the company's long-term strategy. Financial and operating metrics further support the
committee's assessment.
Relevant business performance measures include:
• Safety, health, and environmental performance;
• Risk management;
• Total shareholder return;
• Net income;
• Return on average capital employed1;
• Cash flow from operations and asset sales1;
• Operating performance of the upstream, downstream, and chemical businesses; and
• Progress on advancing long-term strategic interests.
1non-GAAP financial measure – see definitions and frequently used terms section on page 175.
Results of the annual performance evaluation inform level of pay, including salary, bonus, and restricted stock
unit award. For more details on pay deliberations for the CEO and other named executive officers, see pages
170 to 171.
Chief executive officer
The committee evaluates the CEO's performance based on progress against plan goals and objectives, which
are reflective of the company's strategic objectives and supported by financial and operating metrics.
The company's strategic objectives are interdependent, with long-term success determined by delivery in
each of the strategic objectives. As such, the committee assigns equal weight to each of the four strategic
objectives.
Recognizing the complexity and significant uncertainty inherent in a transitioning energy system, the
committee maintains its focus on balancing the energy transition objectives and meeting society's need for
affordable products that support modern life.
Progress is discussed throughout the year in various board and committee reviews. Financial and operating
metrics are assessed over near- and long-term time horizons, taking into account the broader business
environment. See page 168 for 2023 business performance.
Executive officers
The CEO reviews the performance of all other executive officers with the board during the annual executive
development review. Performance is evaluated based on accomplishments versus plan goals and objectives.
In addition to this formal annual assessment, the board evaluates the performance of all senior executives
throughout the year during specific reviews and board meetings.
The committee also takes into account demonstrated leadership in sustaining sound business controls and a
strong ethical and corporate governance environment.
The committee does not use quantitative targets or formulae to assess individual performance or determine
compensation. 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 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.
Disciplined approach holds executives accountable for business results and progressing strategic objectives,
balancing short- and long-term activities
163
Long-term award program
Through long restriction periods, Imperial executives are incentivized to take a long-term view in decision making
Restricted stock units represent over 50 percent of total direct compensation1, 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 granted to the CEO vest 50 percent in 5 years and 50 percent in 10 years. Restricted
stock units granted to all other executives vest 50 percent in 3 years and 50 percent in 7 years.
Program design
investment
model alignment
times
lead
risk management
Business
Long
complex
landscape
require
long-term view
and
of
Shareholder alignment
Majority
pay
units,
in
realized
with
long-term shareholders
executive
stock
level
restricted
pay
delivered
aligning
of
returns
Accountability
Restriction
forfeiture
shareholder
managing risk
drive
periods
focus
and
on
creation
risk
of
long-term
while
value
restriction
periods
in
any
standards
of
Longest
industry
Applying
grant
to
up
enables
10 years
performance
restriction
measures
periods
at
of
Highest
performance
Performance
pre-established
objectives,
award level
assessed against
goals
tie
and
directly
results
to
to
retain
Ability
Executives
significant
large
to
unable
portion
of
“buyout" hurdle
key talent
monetize
pay,
creating
Long restriction periods in line with investment lead times and risk profile
•
•
Investment decisions in a capital-intensive industry and management of risk play out over time horizons
often decades in length, through volatile commodity price cycles, requiring executives to maintain a long-
term view when making decisions.
Long restriction periods ensure that a significant portion of pay reflects the outcome of these decisions and
the experience of long-term shareholders.
• An alternate formula-based program would require a shorter time horizon to set meaningful, credible
targets. A shorter-term program could encourage short-term decision making, which is not aligned with the
long investment lead times and capital-intensive nature of the business.
• Example below shows net cash flow of a typical Imperial project aligning with the restricted stock program
design for the Imperial CEO. It illustrates that short-term vesting occurs prior to determination of project
financial success or failure and that longer-term vesting better aligns with shareholder returns resulting from
investment decisions.
1 Refer to definitions and frequently used terms on page 175
164
Share-denominated basis aligns award values with shareholder outcomes
• Uniquely long restriction periods result in a need to apply performance metrics at grant, versus at vest.
• Restricted stock award grant levels are established based on pay grade and individual performance.
• The executive resources committee does not adjust share grants to offset changes in share price, which
results in executives seeing a one-for-one change in compensation through share price.
• A share-denominated approach1 coupled with long restriction periods defines the risk/reward profile of
stock-based performance awards and results in a greater degree of volatility versus alternate programs with
a dollar-denominated approach.1
2023 decisions
• As in prior years, and as a matter of principle, the committee did not adjust share grants to offset changes in
the current share price, thus maintaining strong alignment in the experience of our executives and our long-
term shareholders.
• Changes in award grants for named executive officers reflect individual performance.
•
Long-term award value increased reflective of stock price, $77.12 at 2023 grant versus $72.62 in 2022, up
from $44.08 in 2021, and $24.26 in 2020.
Stock ownership1
•
It is Imperial's policy that executives maintain significant stock ownership, with no accelerated vesting at
retirement
• The chairman, president and chief executive officer must, within three years of his appointment, acquire
shares of the company, including common shares and restricted stock units, of a value no less than five
times his base salary
•
Long restriction periods result in stock ownership far exceeding ownership guidelines typical among other
companies across industries. This aligns the interests of our executives with those of long-term
shareholders and ensures focus on actions that create sustainable shareholder value over the long term
• At retirement, outstanding shares will continue to vest over a 7 to 10 year period
Exxon Mobil Corporation has a plan similar to the company’s restricted stock unit plan, under which grantees
may receive restricted stock units, 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 Imperial Oil
restricted stock units granted since 2019. D.E. Lyons holds Exxon Mobil Corporation restricted stock granted in
2017 and previous years, as well as Imperial Oil restricted stock units granted since 2018. S. P. Younger holds
Exxon Mobil Corporation restricted stock granted in 2019 and previous years, as well as Imperial Oil restricted
stock units granted since 2020.
1 Refer to definitions and frequently used terms on page 175
165
Bonus program
Annual bonus program represents 10 to 20 percent of total direct compensation1, and is intended to link
executive pay to annual company earnings performance.
Program design
• The executive resources committee ("committee") establishes the overall size of the bonus program. 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.
• A bonus award matrix is used to determine individual grant levels based on pay grade and individual
performance.
• Tie to year-over-year change in earnings coupled with individual performance defines the risk/reward profile
of the bonus program and results in greater degree of volatility versus market practice, aligned with our
approach to executive compensation as discussed on page 160.
• Bonus delivered in cash in year of grant.
• Full bonus award subject to clawback, see page 173.
2023 decisions
•
2023 bonus program awards were approved at lower levels than 2022, reflective of year-over-year changes
in earnings performance; individual awards for named executive officers further reflect individual
performance.
• CEO bonus $1.7 million, down from $2.2 million in 2022.
Salary program
Base salary represents 10 to 30 percent of total direct compensation1, and is intended to provide competitive
base pay and directly affect the level of retirement benefits, as salary is included in benefit formulas.
The overall size of the program is determined by annual benchmarking. Individual salary increases are the
result of individual performance, experience, and changes to pay grade.
2023 decisions
• For 2023, the committee approved competitive base salaries for named executive officers consistent with
the salary program for all executives.
•
Individual salary treatments take into account individual performance, level of responsibility and experience,
and reflect market analysis and competitiveness at the time of the decision in 2023.
1 Refer to definitions and frequently used terms on page 175
166
Determining Compensation
Annual benchmarking
The executive resources committee conducts annual benchmarking to assess market competitiveness of
executive pay and program design
Compensation benchmarking
In addition to the assessment of business and individual performance, the executive resources committee
("committee") benchmarks against a select group of major Canadian companies1.
Criteria for selecting benchmark companies1 include:
• Canadian companies or Canadian affiliates;
•
Large operating scope and complexity;
• Capital intensive; and
• Proven sustainability over time.
Pay orientation
In assessing the appropriateness of pay levels, the committee considers scale and complexity, and tenure in
position as relevant factors.
The committee focuses on a broad range around the median of compensation benchmark companies. This
provides the ability to:
• Differentiate compensation based on experience and performance levels among executives;
• Minimize the potential for automatic ratcheting-up of compensation that could occur within a narrow
target among benchmark companies; and
• Respond to changing business conditions
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.
1 Refer to definitions and frequently used terms on page 175
167
2023 business performance
In 2023, Imperial delivered strong business results across a wide range of performance dimensions.
• Delivered strong safety performance and effective enterprise risk management across the organization.
• Recognized as one of Canada's top employers by Mediacorp Canada Inc. for the fourth consecutive year, and
designated as a 2023 top employer for Canadians over 40 and for young people.
Commitment to sustainability
• Published Imperial's Advancing Climate Solutions and Corporate Sustainability Reports.
• Continued to progress the company's goals to reduce emissions intensity at its operated oil sands by 30% by
2030 compared with 2016 levels, and to achieve net zero (scope 1 and 2) by 2050 in operated assets through
collaboration with government and industry partners.
• Established Low Carbon Solutions organization, focused on leveraging our unique capabilities in lower-emission
technologies like renewable fuels, hydrogen and carbon capture and storage, to help customers meet their
sustainability goals.
• Progressed Pathways foundational carbon storage hub project to provide crucial infrastructure to support oil
• Achieved start-up of the final boiler flue gas units at Kearl. The six units now operating have the potential to
sands emission reductions.
reduce greenhouse gas emissions.
• Received first-ever shipment of renewable diesel at Kearl for use in mine fleet as part of the company's ongoing
effort to reduce emissions and demonstrate suitability for use in heavy equipment.
• Through Imperial's partnership, E3 Lithium commissioned the Direct Lithium Extraction field pilot plant and
began operations.
• Reached new milestone with $4.6 billion spent on Indigenous businesses since 2008.
Financial performance
• Strong operating performance and reliability performance.
• Achieved net income of about $4.9 billion.
• Generated substantial cash with $3.7 billion in cash flow from operating activities, and $6.4 billion in cash flow
from operating activities excluding the impacts of working capital.1
Increased quarterly dividend to $0.50 per share in the second quarter, increasing the annual dividend paid for
the 29th consecutive year. The dividend of $0.50 per share represents a 14% increase year over year.
•
• Total shareholder returns of $4.9 billion; including dividends of $1.1 billion and share repurchases of $3.8 billion
which includes a substantial issuer bid of $1.5 billion, and the accelerated completion of the company’s normal
course issuer bid.
Upstream operations performance
•
In response to off-lease seepage at Kearl, the company expanded monitoring, interception and collection
systems. The company also increased communications and engagement with local communities.
• Produced 413,000 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 full year production was the highest in the asset’s history, bringing full year production to 270,000 gross
oil-equivalent barrels per day (191,000 barrels Imperial's share).
• Achieved best-ever quarterly production at Kearl of 308,000 gross oil-equivalent barrels per day (218,000
barrels Imperial's share) in the fourth quarter, and best-ever single-day production at Kearl of 363,000 gross oil-
equivalent barrels per day (258,000 barrels Imperial's share) on December 25th.
• Completed conversion of last remaining haul trucks at Kearl to autonomous operation, which helped capture
significant improvements to truck productivity and workforce safety.
• Produced 135,000 gross oil-equivalent barrels per day of full-year production at Cold Lake.
• Started-up steam-injection at Cold Lake Grand Rapids Phase 1, which will be the first solvent-assisted SAGD
project in industry and is expected to reduce greenhouse gas emissions intensity by up to 40% compared to
existing cyclic steam simulation technology.
• Produced 76,000 gross oil-equivalent barrels per day of full-year production at Syncrude.
• Advanced field trial of our Enhanced Bitumen Recovery Technology at Aspen to validate the technology and
prepare for commercial use. This solvent technology has the potential to reduce greenhouse gas emissions
intensity by 60% versus SAGD production.
Downstream and Chemical operations performance
• Achieved average throughput of 407,000 barrels per day with refinery capacity utilization of 94 percent, while
completing significant turnaround activity on schedule and under budget at both the Strathcona and Sarnia
refineries.
• Achieved several full-year production records across the company's refineries.
• Approved $720 million project to construct largest renewable diesel facility in Canada, located at Strathcona
refinery, and commenced facility construction with renewable diesel production expected to begin in 2025.
• Reliable operational performance supported Chemicals net income of $164 million.
1non-GAAP financial measure – see definitions and frequently used terms section on page 175.
168
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 41 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 returns1 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 return1 was 151 percent, for an average
annual return of 20 percent. Total direct compensation1 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.
1 Refer to definitions and frequently used terms on page 175
169
2023 compensation actions
Chief executive officer
Mr. Corson is primarily responsible for executing the company's long-term strategic objectives while progressing
plan goals in support of these objectives. His level of salary in 2023 was determined by the committee based on
his individual performance and to align with that of his peers at Exxon Mobil Corporation. For 2023, the
committee approved an increase of $80,000 USD to $884,000 USD ($1.19 million CAD). For 2024, the
committee approved a salary increase of $35,400 USD to $919,400 USD. ($1.24 million CAD).
Mr. Corson’s 2023 annual bonus of $1.27 million USD ($1.71 million CAD) was based on his performance as
assessed by the committee. His long-term incentive award of 86,800 restricted stock units 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 remain at risk of forfeiture 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 163.
•
2023 total direct compensation1 down 1.4 percent versus 2022 reflective of lower bonus program offset by
an increase in share price.
• 70 percent of CEO total direct compensation1 delivered in the form of restricted stock units with long
restriction periods.
1 Refer to definitions and frequently used terms on page 175. Amounts are shown in Canadian dollars.
170
Other named executive officers
Within the context of the compensation program structure and performance assessment processes previously
described, the value of 2023 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.
Other compensation elements
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 plan, 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 savings and 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 plans. See the Pension Benefits section on page 184 for more details.
Plan
Description
Savings plan
Registered pension
plan
Supplemental
pension
arrangement
•
•
•
•
•
•
•
•
•
•
•
•
Employees
of
percent
The
company
of
the
amount
arrangement
and
Employee
non-registered
savings
plan
with
normal
more
than
earnings
one
via
matching
of
service
year
payroll deductions.
up
contributions
which
and
contributions
employee participates.
provides
employee
the
company
(tax-paid)
be
can
contributions
a
or
registered
account,
limits
contribution
any
in
(tax-deferred)
under
the
allocated
to
combination
a
to
retirement
group
Income
Tax Act.
(RRSP),
subject
may
contribute
between
1
and
30
6%
to
defined
which
benefit
pension
vary
depending
on
provides
company
The
company if
age,
available
Benefit
to
Subject
paid
from
Provides
employee
The
a
service,
in
income
a
for
reaches
does
various
tax
registered plan.
pension
benefits
of
age
grant
company
the
not
registered
other
and
annuity
defined
provisions
forms
regulations
that
upon
impose
retirement.
on
the
limits
pension
under
benefit
plan
the
when
are
met.
leaving
the
amounts
that
can
be
only
until
December
1st
in
the
year
the
accrual
71.
additional
pension
service credit.
portions
due
any
plan
officers
Addresses
registered
Executive
supplemental
be
May
taken
Not
payable if
retirement
to
who
pension
a
as
lump
an
employee
eligibility.
of
the
income
receive
benefit
sum
defined
tax
an
resulting
or
resigns
from
an annuity.
or
is
benefit
regulations.
annual
that
cannot
be
paid
from
the
bonus,
the
can
also
annual bonus.
receive
an
annual
terminated
with
cause
before
reaching
171
Award vesting and share utilization
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 19 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 72,500 common shares, which is about 0.01
percent of the outstanding common shares.
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. Units that vest on the third anniversary of the grant date
vest as a cash payment. Units that vest on the fifth, seventh, or tenth anniversary of the grant date vest as a
cash payment, except that for units granted to Canadian residents, the recipient may receive one common
share 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.
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.
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, at 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.
Granting practices
The executive resources committee ("committee") grants annual incentive awards to the company’s executive
officers at its regular November meeting. Incentive awards are granted to other eligible employees within the
parameters of the bonus and restricted stock award ceilings approved by the committee.
The company’s compensation program does not include granting stock options. No stock options have been
granted since 2002 and there are no plans to make such grants in the future.
Amendments
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 the later of 10 years or
retirement.
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 non-executive participants will be eligible for
awards granted that vest 100 percent after 3 years.
172
Risk and governance
Compensation program underpinned by strong governance practices that discourage inappropriate risk taking
Executive
stock ownership
Significant
pay
at risk
Strong
forfeiture provisions
Clawback policies
Anti-hedging/derivative policy
Annual
of
compensation design
assessment
Independent
consultant
compensation
•
•
•
•
•
•
•
•
•
•
•
holding
Long
maintaining
into
chief
retirement,
executive
periods
significant
with
a
officer
on
restricted
stock
ownership
holding
years
units
during
period
for
into retirement.
(RSUs)
employment
the
chairman,
results
10
stock
longer
to
up
in
and
executives
years
for
and
president
7
Uniquely
percentage
long
of
restriction
career
on
periods
compensation
RSUs
risk
at
substantially
well
into retirement.
increase
the
Unvested
assigned.
RSUs
cannot
be
used
as
collateral
for
any
purpose
and
cannot
be
RSUs
employment,
Unvested
of
detrimental
are
early
of
risk
at
retirement
is
or
forfeiture
and/or
discovered
in
event
detrimental
of
activity,
after retirement.
resignation,
even if
the
occurs
activity
termination
such
the
event
least
In
(i.e.,
at
resources
retention
vested,
of
55
retirement
of
years
committee,
in
awards.
of
prior
age
the
Forfeiture
that
those
including
to
with
case
65
least
an
age
at
of
provisions
post
vest
executive
remain
retirement.
but
10
after
years
eligibility
of
officer,
place
in
for
service),
must
until
early
the
approve
award
an
retirement
executive
the
has
event
In
the
financial
or
necessary
paid
bonus
of
a
operating
and
to
appropriate,
executive
an
including
officer.
material
negative
results,
the
Board
restatement
is
the
the
of
authorized
recoupment
company's
to
take
(clawback)
actions it
of
any
reported
deems
reflect
accounting
the
and
compliance
Policies
with
including
1934.
company's
ethical
standards
high
regulations
10D-1
Rule
other
with
applicable
US
the
of
compliance
and
to
public
Securities
strict
companies,
Exchange
Act
of
Company
being
from
calls,
puts,
collars,
policy
party
a
other
or
respect
prohibits
a
employees,
all
or
derivative
or
future
company
to
options,
the
to
similar
forward
Exxon
or
with
including
executives,
and
directors,
financial
instrument,
equity
or
Corporation
including
swaps
stock.
contracts,
Mobil
or
resources
executive
competitiveness
annual
The
and
approves
officer
the
compensation
to implementation.
prior
of
committee
compensation
("committee")
program
recommendations
reviews
design
each
for
the
annually,
named
effectiveness
and
executive
committee
The
practices
risk
system
is
are
that
management.
responsible
to
designed
further
For
see
oversight,
and
overseeing
for
encourage
discussion
the
appropriate
on
oversight"
the
on
"Risk
page 133.
compensation
risk
program
and
assessment
and
company's
risk
management
the
2023,
In
determining
senior
executives.
did
committee
compensation
not
for
retain
of
any
an
the
independent
company’s
consultant
officers
or
or
any
advisor
other
in
•
company’s
assessment
The
an
levels
of
provide
compensation
senior
employees
individual
of
executives.
management
competitive
of
the
compensation
chairman,
the
in
retained
compensation
an
company.
While
independent
and
market
this
providing
or
advice
executive
to
consultant
all
for
data
they
data,
for
the
officer
recommendations
chief
president,
and
provide
salaried
not
did
or
other
173
No
severance agreements
No
in
change
arrangements
control
•
•
company
The
agreement
in
change
does
with it' s
or
control
have
written
executive
not
named
termination
employment
officers
employment.
of
contracts
for
or
any
payments
other
on
providing
any
increases
Eliminates
and
performance
real
the
that
or
risk
does
perceived
and
not
consequences
the
meet
net"
to
with
the
highest standards.
respect
individual
"safety
to
for
job
security
No
guaranteed bonuses
•
Bonus
remains
at
risk,
subject
to
year-on-year
changes
in performance.
•
Demonstrated
by
bonus
program
suspension
in
2020;
no
award granted.
No
balance
additional
stock
grants
to
losses
in value
accelerated
No
retirement
vesting
at
•
•
•
The
not
value
committee
offset
of
sets
or
current-year grants.
the
gain
size
in
loss
a
of
the
the
value
restricted
prior
of
stock
unit
restricted
program
stock
units
and
by
does
the
a
Such
and
practice
undermine
would
the
minimize
the
risk/reward
long-term
view
that
executives
profile
are
stock-based
of
expected
to adopt.
awards
Restricted
retirement,
stock
except
units
in
(RSUs)
case
the
are
not
of death.
subject
to
acceleration,
not
even
at
•
Unvested
RSUs
cannot
be
used
as
collateral
for
any purpose.
174
Definitions and frequently used terms
Please also refer to the "Frequently used terms" section of the company's Annual Report on Form 10-K for
additional definitions and reconciliation of non-GAAP financial measures.
Compensation benchmark companies consist of 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, BCE Inc.,
Canadian Pacific Railway Limited, Canadian Tire Corporation, General Electric Canada, IBM Canada Ltd., and
Teck Resources.
Total reported pay is total compensation as reported in the summary compensation table.
Total direct compensation is compensation granted during the year, including salary, current year bonus, and
the grant date fair value of restricted stock units.
Non-GAAP financial measures
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 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, has been provided below or is available in the
“Frequently used terms” section of the company’s most recent Annual Report on Form 10-K. 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.
• Cash flow from operating activities and asset sales (CFOAS) 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 (ROCE) 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.
• Cash flows from (used in) operating activities excluding working capital is a non-GAAP financial
measure that is the total cash flows from operating activities less the changes in operating assets and
liabilities in the period. 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. Management believes it is useful for investors to consider these numbers in
comparing the underlying performance of the company’s business across periods when there are
significant period-to-period differences in the amount of changes in working capital. Changes in working
capital is equal to “Changes in operating assets and liabilities” as disclosed in the company’s
Consolidated statement of cash flows. This measure assesses the cash flows at an operating level, and
as such, does not include proceeds from asset sales as defined in Cash flows from operating activities
and asset sales in the Frequently Used Terms section of the company’s annual Form 10-K.
175
Reconciliation of cash flows from (used in) operating activities excluding working capital
millions
of
Canadian dollars
From
the
Consolidated
statement
of
cash flows
Cash
flows
from
(used
in)
operating activities
Less
changes
in
working capital
Changes
in
operating
assets
and liabilities
Cash
flows
from
(used
in)
operating
activities
excl.
working capital
2023
3,734
(2,701)
6,435
• 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
2023
3,734
(1,785)
86
—
5
2,040
Total shareholder return (TSR) measures the change in value of an investment in stock over a specified
period of time, assuming dividend reinvestment. TSR is subject to many different variables, including factors
beyond the control of management.
Share-denominated approach: annual equity grant is based on a fixed number of shares; aligns award values
with shareholder outcomes. Imperial uses this approach; results in a greater degree of volatility than a dollar-
denominated approach.
Dollar-denominated approach: annual equity grant is based on target dollar value with underlying units
adjusted to achieve target value. Market common approach; results in less volatility than a share-denominated
award.
Stock ownership includes vested shares, unvested restricted shares, and shares underlying unvested
restricted stock units.
Statements regarding plans, objectives, and other future events or conditions are forward-looking
statements. See the “Forward-looking statements” section for important additional information about these
statements, including factors that could cause actual results to differ materially.
176
Executive compensation tables
Summary compensation table
The following table shows the compensation for the chairman, president 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 2023.
The information in the summary compensation table includes the Canadian dollar value of base salaries, cash
bonus awards, long-term incentive compensation and certain other compensation.
Name
position
and principal
end of
the
at
2023
B.W. Corson (a)
Chairman, president
chief executive
and
officer (since
January
1, 2020)
D.E.
Lyons (a)
Senior vice-president,
finance and
administration, and
controller (since
May 1, 2018)
S.P. Younger (a)
Senior vice-president,
upstream (since
1, 2020)
July
B.A. Jolly
Treasurer
August
(since
1, 2023)
S.L. Evers
Senior vice-president,
sustainability,
development
solutions (since
May 1, 2023)
commercial
product
and
Year
Salary
($)
(b)
Share-
based
awards
($)
(c)
Option-
based
awards
($)
(d)
Non-equity
plan
incentive
compensation
($)
Annual
incentive
plans
(e)
Long-term
incentive
plans
(f)
Pension
value
($)
(g)
All other
compensation
($)
(h)
Total
compensation
($)
(i)
2023
1,193,135
6,694,016
—
1,707,371
—
2,461,764
2,775,244
14,831,530
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
—
1,200,091
2,178,025
8,750,549
2023
785,525
2,390,720
—
719,390
—
850,549
1,088,590
5,834,774
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
—
463,757
784,104
3,498,358
2023
581,618
1,526,976
—
406,935
—
65,136
665,966
3,246,631
2022
574,345
1,597,640
—
565,155
170,133
346,566
709,862
3,963,701
2021
545,996
714,096
—
250,449
—
81,762
415,505
2,007,808
2023
526,840
1,218,496
—
340,583
—
1,060,000
170,528
3,316,447
2022
472,500
1,234,540
—
469,657
140,448
1,306,400
118,315
3,741,860
2021
450,000
749,360
—
237,332
—
268,900
91,487
1,797,079
2023
411,877
1,033,408
—
294,650
—
427,300
84,710
2,251,945
2022
—
2021
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Refer to footnotes starting on page 178.
177
Total direct compensation
The following pro forma table displays total direct compensation, which includes salary, bonus, and stock award
value. In its pay deliberations, the executive resources committee considers total direct compensation as it
excludes the volatility that results from changes in pension value and all other compensation.
Name
Year
Salary
($)
(b)
Bonus
($)
(e)
Restricted
stock
units
($)
(c)
Total
direct
compensation
($)
(i)
2023
1,193,135
1,707,371
6,694,016
9,594,522
B.W.
Corson (a)
2022
1,046,245
2,223,922
6,463,180
9,733,347
2021
968,956
956,421
3,447,056
5,372,433
2023
785,525
719,390
2,390,720
3,895,635
D.E.
Lyons (a)
2022
688,388
890,089
1,917,168
3,495,645
2021
646,806
439,979
1,163,712
2,250,497
2023
581,618
406,935
1,526,976
2,515,529
S.P.
Younger (a)
2022
574,345
565,155
1,597,640
2,737,140
2021
545,996
250,449
714,096
1,510,541
2023
526,840
340,583
1,218,496
2,085,919
B.A. Jolly
2022
472,500
469,657
1,234,540
2,176,697
2021
450,000
237,332
749,360
1,436,692
2023
411,877
294,650
1,033,408
1,739,935
S.L. Evers
2022
2021
—
—
—
—
—
—
—
—
Footnotes to summary compensation and total direct compensation tables on pages 177 through 178
(a) Affiliate employees. 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) Salary. 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 2023 exchange rate of 1.3497. In 2022 and 2021, the
average exchange rate was 1.3013 and 1.2535 respectively. Mr. Younger’s salary is paid in Australian dollars and was converted to
Canadian dollars at the average 2023 exchange rate 0.8967. In 2022 and 2021, the average exchange rate was 0.9032 and 0.9421
respectively.
178
(c) Share-based awards. The valuation of stock awards in this table represents the grant date fair value, which is equal to the number of
restricted stock units multiplied by the closing price of the company’s shares on the date of grant.
Grant Date
December 4, 2023
December 5, 2022
December 6, 2021
Grant Price ($)
77.12
72.62
44.08
(d) Option-based awards. The company has not granted stock options since 2002. The stock option plan expired in 2012.
(e) Bonus. The amounts listed in the “Annual incentive plans” column for each named executive officer represent their cash bonus. 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, is paid in U.S. dollars, but disclosed in Canadian dollars. For amounts paid in U.S. dollars, they were converted to
Canadian dollars at the average exchange rates of 1.3497 for 2023, 1.3013 for 2022, and 1.2535 for 2021.
(f) Long-term incentive plans. The amounts listed in the “Long-term incentive plans” column represent earnings bonus units related to
prior year grants that paid out in the year. In 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, 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 2021. Amounts paid in 2022 in U.S. dollars were converted to Canadian dollars at the average exchange rate
of 1.3013. As of 2023, there are no outstanding earnings bonus units.
(g) Pension value. “Pension value” is the “compensatory change” in pensions as of December 31, 2023 as set out in the “Pension plan
benefits” table on page 184.
(h) All other compensation. 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 perquisites.
Perquisites. Use of perquisites is very limited, composed of financial planning for senior executives, selective use of club
memberships primarily for business, and costs associated with participation in Exxon Mobil Corporation's executive life insurance
benefit plan, as applicable. In 2023, B.W. Corson received $37,514 of senior executive life insurance premiums, $17,287 for club
memberships, and $14,713 for financial planning services. For all other named executive officers, the aggregate value of perquisites
received in 2023 was not greater than $50,000 or 10 percent of the named executive officer’s base salary.
Dividend equivalents. In 2023, the paid dividend equivalents on company restricted stock units were $569,208 for B.W. Corson,
$170,832 for D.E. Lyons, $92,592 for S.P. Younger, $136,456 for B.A. Jolly, and $57,536 for S.L. Evers. Dividend equivalent payments
on Exxon Mobil Corporation’s restricted stock were $366,805 for B.W. Corson, $47,682 for D.E. Lyons and $67,550 for S.P. Younger,
paid in U.S. dollars and converted to Canadian dollars at the average 2023 exchange rate of 1.3497.
Expatriate assignment costs. For the named executive officers on expatriate assignment (B.W. Corson, D.E. Lyons and S.P.
Younger), “All other compensation” also includes expatriate assignment costs which consist of expatriate allowances and the net effect
of tax equalization costs in the year. Tax equalization costs include the net effect of taxes paid by the companies to local taxing
authorities on behalf of the named executive officer, offset by a withholding from their income that approximates the amount of tax they
would pay if they had not gone on expatriate assignment. Tax equalization is an integral part of the expatriate relocation program and
is designed to maintain an individual’s overall tax burden at approximately the same level it would have otherwise been, had they
remained in their home country. Tax equalization amounts vary from one year to the next and the net impact may be positive or
negative in the year.
(i) Total compensation. “Total compensation” consists of the total dollar value of “Salary”, “Share-based awards”, “Option-based
awards”, “Non-equity incentive plan compensation”, “Pension value” and “All other compensation”. "Total direct compensation" is
compensation granted during the year, including salary, current year bonus, and the grant date fair value of restricted stock units.
179
Outstanding equity awards
The following table sets forth all share-based and option-based awards outstanding for each named executive
officer of the company as at December 31, 2023.
Option-based awards
Share-based awards
Name
Number of
securities
underlying
unexercised
options
(#)
Option
exercise
price
($)
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)
—
—
—
—
410,400
30,976,992
—
D.E.
Lyons
(b)
—
—
—
—
114,400
8,634,912
—
S.P.
Younger
(c)
—
—
—
—
66,100
4,989,228
—
B.A. Jolly
—
—
—
—
76,300
5,759,124
—
S.L. Evers
—
—
—
—
39,600
2,989,008
—
(a) B.W. Corson was granted restricted stock units from 2019 to 2023 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 59,700 Exxon Mobil Corporation restricted valued at $7,894,343 on December 31, 2023, at a closing
price for Exxon Mobil Corporation shares on December 31, 2023 of $99.98 U.S., and converted to Canadian dollars at the
December 31, 2023 close rate of 1.3226 provided by the Bank of Canada.
(b) D.E. Lyons was granted restricted stock units from 2018 to 2023 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 4,800 Exxon Mobil Corporation restricted stock valued at $634,721 on December 31, 2023, at a closing price for
Exxon Mobil Corporation shares on December 31, 2023 of $99.98 U.S., and converted to Canadian dollars at the December 31, 2023
close rate of 1.3226 provided by the Bank of Canada.
(c) S.P. Younger was granted restricted stock units from 2020 to 2023 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 10,300 Exxon Mobil Corporation restricted stock valued at $1,362,006 on December 31, 2023, at a
closing price for Exxon Mobil Corporation shares on December 31, 2023 of $99.98 U.S., and converted to Canadian dollars at the
December 31, 2023 close rate of 1.3226 provided by the Bank of Canada.
(d) Represents the total of the outstanding restricted stock units received from the company plan that have not vested, based on the
closing price of the company’s shares on December 31, 2023 of $75.48.
180
Incentive plan awards – Value vested or earned
The following table sets forth the value of the incentive plan awards that vested in the year for each named
executive officer of the company.
Name
Option-based
vested
Value
awards –
during the
year
($)
B.W.
Corson
(a)
D.E.
Lyons
(b)
S.P.
Younger
(c)
B.A. Jolly
S.L. Evers
—
—
—
—
—
Share-based
vested
awards
the
during
($)
(d)
– Value
year
Non-equity
incentive plan
compensation
during
earned
($)
(e)
–
Value
the year
—
883,204
627,539
—
—
—
1,028,709
340,583
402,148
294,650
(a) Although B.W. Corson received restricted stock units under the company’s plan from 2019 to 2023, 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 2023, restrictions were removed on 14,150 Exxon Mobil Corporation restricted stock having a
value of $1,993,858 based on the average of the high and low sale prices of Exxon Mobil Corporation common shares on the NYSE on
the date 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 2023, B.W. Corson received $1,707,371 with respect to the annual cash bonus. All these
amounts were paid in U.S. dollars and converted to Canadian dollars at the average 2023 exchange rate of 1.3497.
(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 2023, restrictions were removed on 4,800 Exxon Mobil Corporation restricted stock having a value of $668,231
based on the average of the high and low sale prices of Exxon Mobil Corporation common shares on the NYSE on the date 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 2023, D.E. Lyons received $719,390 with respect to the annual cash bonus. All these amounts were paid in U.S. dollars
and converted to Canadian dollars at the average 2023 exchange rate of 1.3497.
(c) Prior to 2020, Mr. Younger participated in Exxon Mobil Corporation’s restricted stock plan, which is similar to the company’s restricted
stock unit plan. In 2023, restrictions were removed on 3,300 Exxon Mobil Corporation restricted stock having a value of $459,409
based on the average of the high and low sale prices of Exxon Mobil Corporation common shares on the NYSE on the date 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 2023, S.P. Younger received $406,935 with respect to the annual cash bonus. All these amounts were paid in U.S.
dollars and converted to Canadian dollars at the average 2023 exchange rate of 1.3497.
(d) These values show restricted stock units granted by the company that vested in 2023. The value is based on the five day average
closing price of the company’s shares, which includes the vesting date and the four preceding trading days. For D.E. Lyons and S.P.
Younger, the values represent restricted stock units granted in 2020. For B.A. Jolly and S.L. Evers, the values represent restricted
stock units granted in 2016 and 2020, which vested in 2023.
(e) This column represents amounts paid by the company with respect to the annual cash bonus.
181
Equity compensation plan information
The information shown in the following table represents the common shares of the company that may be issued
as of the end of 2023 pursuant to compensation plans of the company.
Number
of
be
issued
exercise
securities
upon
of
to
Plan category
outstanding options,
and rights
warrants
(#)
(c)
Equity
security
compensation
holders (a)
plans
approved
by
—
compensation
plans
not
approved
Equity
by
security
holders (b)
Total
1,500,370
1,500,370
Weighted-average
price of
exercise
outstanding options,
and rights
warrants
($)
securities
Number
of
available
remaining
issuance
future
for
equity
under
compensation
plans
securities
the
(excluding
reflected
first column)
in
(#)
(c)
—
8,967,667
8,967,667
—
—
—
(a) The company’s stock option plan expired in 2012.
(b) This is a restricted stock unit plan, which is described starting on page 164.
(c) The Number of securities to be issued represents the total number of restricted stock units still outstanding (3,913,310) minus the
outstanding restricted stock units that are only eligible for cash (and not common shares) upon vesting (2,412,940). The Number of
securities remaining available for future issuance represents the restricted stock units not yet granted (6,554,727) plus the number of
outstanding restricted stock units that are only eligible for cash (and not common shares) upon vesting (2,412,940).
RSUs 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 2023.
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
3,913,310
6,554,727
Percent
shares
of
(%) (a)
outstanding
common
1.95
0.73
1.22
(a) As of December 31, 2023, the number of common shares outstanding was 535,836,803.
(b) The maximum number of restricted stock units issuable under the company plan is the number as of December 31, 2022 (10,468,037)
minus the common shares issued in 2023 pursuant to the vesting of restricted stock units under the plan (0 common shares).
182
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)
Weighted-average
number
of securities
outstanding
(#)
(b)
949,520
574,750,575
Annual burn
rate
(%)
(c)
0.17
884,140
640,160,028
0.14
680,720
711,602,150
0.10
2023
2022
2021
(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 164. There are no units outstanding for any historical plan.
183
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
2023)
(#)
(a)
31,
Annual benefits
payable
($)
At year-
end
(b)
At age
65
(c)
Opening
present
value of
defined
benefit
obligation
($)
(d)
Compensatory
change
($)
(e)
Non-
compensatory
change
($)
(f)
B.W. Corson
D.E. Lyons
—
—
S.P.
Younger
(g)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Closing
present
value of
defined
benefit
obligation
($)
(d)
—
—
—
B.A. Jolly
32.5
393,700 503,200 5,864,500
1,060,000
80,700
7,005,200
S.L. Evers
25.7
136,000 254,800 1,129,100
427,300
180,200
1,736,600
(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 2023
exchange rate of 1.3497. Under this plan, Mr. Corson had 40.5 years of credited service and Mr. Lyons had 33.5 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 2023 exchange rate of
0.8967. Under these plans, Mr. Younger had 26.8 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 $1,787,211. For D.E. Lyons this value was $749,962. 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, 2023. 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, 2023. For B.W. Corson, this value was $1,913,621. For D.E. Lyons, this value was $834,292.
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, 2023 was $379,975.
(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, as applicable. 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 $17,292,939 and the closing value was $19,928,162. For
D.E. Lyons the opening value was $7,585,952 and the closing value was $8,517,413. For S.P. Younger, the opening value was
$2,574,182 and the closing value was $3,160,518.
184
(e) The value for “Compensatory change” includes service cost for 2023 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
2023 and the actual salary and bonus received in 2023. 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 2023 and earnings as described
previously. For B.W. Corson, this value was $2,461,764. For D.E. Lyons, this value was $850,549. For S.P. Younger, this value was
$59,505.
(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 2023 decreased to 4.6 percent, from 5.1 percent at the end of 2022, which had a positive
impact on the non-compensatory change element. For members of 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 Exxon Mobil Corporation’s plan,
this includes the effect of interest based on a discount rate of 5.3 percent at the end of 2023, down from 5.6 percent at the end of 2022.
For the Esso Australia Pty Ltd. Plan, this includes the effect of interest based on a discount rate of 5.0 percent at the end of 2023,
down from 6.2 percent at the end of 2022. For B.W. Corson, this value was $173,459. For D.E. Lyons, this value was $80,912. For
S.P. Younger, this value was $526,831.
(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 $42,409, the “Compensatory value” was 5,631 reflecting affiliate contribution
and investment earnings, and the “Accumulated value at year-end” was $48,040.
Pension plan
B.A. Jolly participates in the 1.6 percent provision, and S.L. Evers participates in the three pension option (3PO)
provision of the company's pension plan. Key features of the plan provisions for these executives include:
Type
1.6%
calculation
provision
provision
3PO
calculation
Form
of payment
1.6
average
of
years
for
pension
of
the
portion
contributions
order
0.4
to
percent
of
•
•
•
•
•
a
to
with
government
benefit
multiplied
to
final
by
offset
savings
an
average
a
forego
matching
plan
in
additional
equal
by
multiplied
partial
Pension plan
Registered
An
annual
percent
earnings(a)
service,
applicable
benefits.
option
An
company's
to
the
receive
final
annual
An
or
2.0
average
of service.
years
elect
may
Employees
multiplier
percent
pension
Company
years.
every
savings
to
the
contributions
are
the
with
integrated
multiplier election.(c)
Benefit
in
retirement.
forms
earnings.
equal
multiplied
earnings(a)
available
percent
various
benefit
to
by
upon
five
to
•
•
Supplemental
pension
arrangement (SPA)
registered
any
benefit
Non-registered
Includes
pension
the
regulations.
Executive
bonus,
can
1.6%
multiplied
also
of
and
officers
meet
receive
final
by
who
the
an
average
years
portions
that
plan
of
the
cannot
to
due
defined
paid
be
income
tax
from
criteria
annual
an
receive
of
the
benefit
bonus earnings(b)
annual
SPA,
of
of service.
1.5
1.0,
final
by
multiplied
any
benefit
portions
that
plan
the
of
cannot
to
due
defined
be
paid
income
tax
registered
from
change
once
the
•
plan
pension
officers
meet
receive
final
by
who
the
an
average
years
criteria
annual
receive
an
the
of
benefit
bonus earnings(b)
annual
SPA,
of
of service.
Includes
pension
the
regulations.
Executive
bonus,
can
1.5%
multiplied
also
of
and
annuity
•
May
be
annuity
taken
lump
as
upon retirement.
a
sum
or
an
(a) Final average earnings consist of base salary over the highest 36 consecutive months in the 10 years of service prior to retirement.
(b) Final average bonus earnings include the average of the annual bonus for the three highest grants of the last five bonus years
awarded prior to retirement for eligible executives.
(c) For the 3PO provision, the company contribution to the savings plan is integrated with the pension multiplier election as follows:
Pension multiplier
Company
savings
plan match
1.5%
1.0%
2.0%
Up
to 6%
Up
to
6%
and
an
additional
company
contribution
of 2%
Forego
company
matching contribution
185
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.
Effect of early retirement or death
All company pension provisions require completion of 10 years of service and attainment of age 55 to be eligible
for early retirement.
The early retirement benefit under the 1.6 percent pension plan provision consists of an annuity benefit that is
undiscounted for retirement ages of 60 years or over, with a discount of 5 percent for each year under age 60.
Alternatively, pension will be undiscounted if member attains age 55 and 30 years of service.
The early retirement benefit under the 3PO pension provision consists of an annuity benefit that is undiscounted
for retirement ages of 62 years or over, with a discount of 5 percent for each year under age 57 and a discount
of 3 percent for each year between age 57 and 62.
In the event of death after pension commencement, a retirement benefit may be payable to the participant’s
beneficiary, in accordance with pension selection.
186
Other compensation elements
Termination
change-in-control
and
Common programs
Health
care benefits
Tax assistance
Payments
event
of death
in
the
•
•
•
•
•
•
•
•
company
The
agreement
in-control
have
does
with
its
termination
not
named
of
written
executive
employment;
employment
officers
see
providing
174.
page
or
contracts
or
any
other
for
payments
on change-
executives
All
officers,
retirement
performance
participate
employed
in
programs).
company,
programs
the
by
common
Compensation
experience
is
and
assessment,
including
same
(the
differentiated
grade.
pay
named
the
salary,
based
executive
and
individual
incentive,
on
on
executive
executives
All
named
Esso
administered
executive
Australia
by
officers
assignment
on
officers
also
Ltd.,
Mobil
Exxon
assignment
on
from
assignment
participate
in
Corporation
receive
Pty
an
affiliate
from
of
the
Exxon
company,
Mobil
programs
including
Corporation
the
and
that
are
named
affiliates.
stock
units
The
from
Imperial.
common
or
such
restricted
The
executive
compensation
implementation.
resources
recommendations
committee
for
(“committee”)
named
each
reviews
executive
and
approves
prior
officer
to
annual
Named
Company’s
the
care)
executive
health
same
on
officers
care
basis
are
programs
other
as
to
(medical,
employees;
participate
dental,
no
their
in
prescription
respective
and
drug,
provisions apply.
special
eligible
vision
is
consists
provided
for
primarily
assistance
Tax
assistance
maintain
level
had
program
and
the
they
is
technical
employees’
remained
broad-based
transferred
employees
tax
of
a
income
overall
home
in
their
and
to
applies
employees.
on
equalization
expatriate
assignment.
component
tax
country.
all
burden
The
executive,
approximately
at
expatriate
management,
This
to
same
designed
the
relocation
professional
The
only
restricted
event
stock
that
awards
results
in
is death.
acceleration
of
the
vesting
for
outstanding
Executive’s
death
savings
benefits
plan
estate
as
or
described
and
balances,
on
page
payment
be
a
would
186,
of
the
receive
to
entitled
the
distribution
executive’s
of
life insurance.
company-provided
applicable
beneficiaries
187
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 board of directors shall be responsible for the stewardship of the corporation and provide oversight of
management of the corporation, aimed at giving effect to the corporation’s strategy and sustainably
generating long-term value.
2. Duty of care
The directors, in exercising their powers and discharging their duties, shall:
(a) act honestly and in good faith with a view to the best interests of the corporation; and
(b) 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) contribute to the formulation of and approve strategic plans on at least an annual basis;
(b)
identify the principal risks of the corporation's business where identifiable and oversee the
implementation of appropriate systems to manage such risks;
(c) provide oversight regarding succession planning for senior management, including the appointing,
training and monitoring thereof;
(d) approve the corporate disclosure guidelines and monitor the external communications of the
corporation;
(e) provide oversight regarding the integrity of the corporation's internal control and management
information systems;
(f) provide oversight regarding 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;
(g) consider management's recommendations regarding major corporation decisions and actions,
which have significant societal implications;
(h) provide oversight regarding compliance with major corporate policies;
(i)
charge the chief executive officer of the corporation with the general management and direction of
the business and affairs of the corporation;
(j) monitor and assess the performance of the chief executive officer;
(k) 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) provide oversight regarding 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;
(o) annually determine the recommended candidates to stand for election as directors of the
corporation, and to make appointments of directors to the board to fill open seats between annual
meetings, including vacancies created by an increase in the authorized number of directors;
188
(p) annually review and approve the remuneration of independent directors;
(q) by appropriate charter resolutions, establish the audit, executive resources, nominations and
corporate governance, safety and sustainability, and finance 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;
(r) determine membership of each committee, including its chair and vice-chair, after receiving the
recommendation of the nominations and corporate governance committee;
(s) 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;
(t)
(u)
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
(v) 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
•
• corporate reputation reviews
•
risk management reviews
• environment and sustainability reviews
• personnel and process safety systems and performance reviews
•
information technology, systems and cybersecurity
regional socio-economic reviews
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.
189
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
•
• organization outline
financial and operating report
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 lead director 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 virtual
attendance 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.
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.
190
(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. Lead Director
The independent directors will annually select one independent director to serve as lead director. The
appointment of a lead director is intended to ensure that the board functions with appropriate independence
and to enhance the company’s corporate governance. It is normally expected that the same director will serve
as lead director for a minimum of two years.
The lead director’s duties and responsibilities will include:
(a) act as liaison with the chairman, in consultation with the other directors, (provided however that
each director will also be afforded direct and complete access to the chairman at any time as such
director deems necessary or appropriate);
(b) calls, chairs and sets agendas for executive sessions of the independent directors;
(c) provides feedback to the chairman;
(d) chairs meetings of the board in the absence of the chairman;
(e)
reviews and approves the schedule and agenda for all board and committee meetings and
reviews associated materials distributed to the directors;
(f) advises the chairman as to the quality, quantity and timeliness of information flows;
(g) working together with the chairman, oversees the annual performance evaluation of the board;
and
(h) working together with the chair of the executive resources committee, oversees the annual
performance review of the CEO.
Compensation for the lead director will be determined by the board on the recommendation of the
nominations and corporate governance committee and will be reviewed annually.
9. 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.
10. 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 virtual board meetings. Additional
executive sessions may be convened by the lead director 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 lead director, or in the lead director's absence, an independent director chosen by the
independent directors, shall preside at executive sessions of the board and ensure that meetings of
the independent directors are held in accordance with this charter.
(c) The purposes of the executive sessions of the board shall include the following:
(i)
(ii)
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;
191
(iii)
to address issues raised but not resolved at meetings of the board and assess any follow-up
needs with the chairman of the board;
(iv)
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.
11. 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
Indigenous peoples, persons with disabilities and members of visible minorities).
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;
192
• 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;
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.
193
(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.
12. Election of Directors
All directors will stand for election at the annual meeting of shareholders. If the majority shareholder’s
holdings were ever to fall below 50% for any non-contested elections of directors, any director nominee who
receives a greater number of votes “withheld” from his or her election than votes “for” in such election shall
tender his or her resignation. Within 90 days after certification of the election results, the board will decide,
through a process managed by the nominations and corporate governance committee and excluding the
nominee in question, whether to accept the resignation. Absent a compelling reason for the director to remain
on the board, the board shall accept the resignation. The board will promptly disclose and, if applicable, the
reasons for rejecting the tendered resignation.
13. 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.
14. 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.
194
(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.
Audit Committee Charter
1. Purpose of the Committee
The primary purpose of the audit committee (the "committee") is oversight of financial reporting, compliance
and controls. The independence of the committee is a critical component of corporate governance as the
committee holds the board and management accountable and fosters trust and confidence for all
stakeholders, which is vital for the generation of long-term value. 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,
195
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.
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.
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(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.
(j) provide oversight regarding the corporation’s tax compliance activities.
(k) 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.
(l) 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.
(m) review the results of the corporation's business ethics compliance program.
(n) review related party transactions to assess the commercial reasonableness of those transactions,
and to ensure that all such transactions are entered into in compliance with applicable laws and
regulations.
(o) provide oversight regarding the corporation’s anonymous ethics hotline.
(p) review annually a summary of senior management expense accounts.
(q) 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.
(r) require attendances at its meetings by members of management, as the committee may direct.
(s) 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.
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Safety and Sustainability Committee Charter
1. Purpose of the Committee
The primary purpose of the safety and sustainability committee (the 'committee') is to provide oversight and
guidance on matters related to safety, security, health and the environment, with a view to generation of long-
term value. 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, stakeholder and
Indigenous relations on corporate performance, while fostering long-term sustainability and responsible
business practices.
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.
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) provide oversight regarding 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.
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(b) provide oversight regarding 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 provide guidance to the board on the results and adequacy thereof.
(c) provide oversight regarding 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 provide guidance to the board and management as to the appropriate response of
the corporation thereto.
(e) provide oversight regarding current and emerging issues related to government, stakeholder and
Indigenous relations.
(f) provide oversight regarding implementation of the corporation’s Indigenous Relations Principles and
Guidelines.
(g) review and provide guidance on the corporation’s overall community investment strategies and
programs including approval of all grants or contributions for charitable contributions and local
community contributions in excess of $500,000.
(h) recommend to the board and management desirable policies and actions arising from its oversight
and guidance activity.
(i) require attendances at its meetings by members of management, as the committee may direct.
(j) 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.
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. The committee is
responsible for implementation and oversight of a compensation philosophy and program to incentivize the
creation of long-term value, and to develop appropriate performance-based evaluation for the CEO and senior
executives to support the corporation’s long-term value creation strategies.
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.
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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.
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) provide oversight regarding 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.
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(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) administer the company’s Policy for the Recovery of Erroneously Awarded Compensation.
(m) require attendances at its meetings by members of management, as the committee may direct.
(n) 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;
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. Long term value
creation requires strong corporate governance to ensure appropriate transparency and accountability. The
committee aims to build and maintain an engaged and diverse board whose composition is appropriate in light
of the corporation’s needs and strategy.
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.
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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 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) provide oversight regarding 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) provide oversight regarding 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:
i.
ii.
the majority shareholder’s holdings falling below 50%, for any non-contested election of
directors in the event a nominee standing for election by shareholders in a non-contested
election receives a greater number of votes withheld from his or her election than votes
for such election and, in any such case, refer the matter to the board with the committee's
recommendation whether such resignation should be accepted, or
a change of circumstance as described in section 10(b)(ii) of the board charter.
(i) review the remuneration of independent directors, including the lead director, and make such
recommendations to the board with respect thereto as it may deem advisable.
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(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) provide oversight and recommendations regarding director education.
(n) 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.
(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 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.
Finance Committee Charter
1. Purpose of the Committee
The primary purpose of the finance committee (the ‘committee’) is to provide oversight and guidance
regarding the corporation’s capital structure/capital allocation, financial policies, practices and strategies. The
committee is responsible for ensuring that such matters align with the corporation’s strategy and are aimed at
the generation of long-term value and shall take such action and make such reports and recommendations to
the board of directors as it deems advisable.
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 finance.
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.
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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, as the committee deems appropriate, the corporation’s capital structure / capital allocation,
and its financial policies, practices and strategies, which may include the following:
i.
ii.
iii.
iv.
v.
vi.
financial outlook and financing plan;
dividend policies and share repurchase programs;
investment of pension assets and the funding of pension obligations;
capital plan including significant capital appropriations;
issuance of equity or debt securities; and
significant investments, acquisitions and divestitures by the corporation, including discussion
of possible mergers and other transactions, and their financial impact.
(b) require attendances at its meetings by members of management, as the committee may direct.
(c) undertake such additional activities within the scope of its responsibilities as it may deem appropriate.
The committee will make such reports and recommendations to the board with respect thereto as it may deem
advisable.
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, in its sole discretion, to retain and oversee the work of such outside
advisors, including legal counsel, financial advisors or other experts, as it deems appropriate; to approve the
fees and expenses of such advisors with funding provided by the corporation; and to incur such other ordinary
administrative expenses as are necessary or appropriate in carrying out its duties.
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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 28, 2024
/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 28, 2024
/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, 2023 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 28, 2024
/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, 2023 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 28, 2024
/s/ Daniel E. Lyons
Daniel E. Lyons
Senior vice-president, finance and
administration, and controller
(Chief financial officer)