1998 Annual Report - Four Seasons Hotels and Resorts

the Board on courses of action that have been taken. The Board exercises its responsibility for oversight through theapproval of all significant decisions and initiatives. The Board is satisfied that the Chief Executive Officer has reported toand sought the consent of the Board where necessary and appropriate.B O A R DC O M P O S I T I O NThe Guidelines require careful consideration of the size, composition and relative independence of corporate boards.According to the Guidelines, an “unrelated” director is a director who is independent of management and is free from anyinterest and any business or other relationship that could, or could reasonably be perceived to, interfere materially with thedirector’s ability to act with a view to the best interests of the Corporation, other than interests and relationships arisingfrom shareholding. The Guidelines emphasize the ability to exercise objective judgment, independent of management,as a hallmark of an unrelated director.The Board has 14 members, and believes that its size promotes effectiveness and efficiency and falls within the rangesuggested by the Guidelines. The Board, in conjunction with the Corporate Governance Committee, has determined, afterreviewing the roles and relationships particular to each of the directors, that seven of the 14 directors of FSHI who servedin the 1998 financial year were related. The directors who are considered to be unrelated are Nan-b de Gaspé Beaubien,Charles S. Henry, Murray B. Koffler, J. Robert S. Prichard, Benjamin Swirsky, Shuichiro Tamaki and Simon Turner.While the Guidelines recommend that a corporation should be constituted with a majority of individuals who qualifyas unrelated directors, the Board believes that it has and continues to function independently of management.Mr. Isadore Sharp is a “significant shareholder” (as defined in the Guidelines) of FSHI since he controls sharescarrying the ability to exercise a majority of the votes for the election of the Board. The Guidelines suggest that where thereis a significant shareholder, the Board should include a number of directors who do not have interests in or relationshipswith either the Corporation or the significant shareholder and who fairly reflect the investment in FSHI by shareholdersother than the significant shareholder. Seven of the directors who served in the 1998 financial year are unrelated to thesignificant shareholder and are unrelated to the Corporation. The Board believes that, at present, this balance serves theCorporation’s needs.In 1997, the articles of FSHI were amended to permit holders of Limited Voting Shares, as a class, to elect twomembers of the Board. Accordingly, at each annual meeting of shareholders two members of the Board are elected byholders of Limited Voting Shares. At the Annual Meeting of the Shareholders on May 28, 1998, Nan-b de Gaspé Beaubienand J. Robert S. Pritchard were elected by the holders of the Limited Voting Shares.The Board has three committees. These Committees are generally composed of outside directors, a majority of whomare unrelated directors. In this regard, the Corporation complies with the Guidelines. The only member of managementrepresented on a committee is the Chief Executive Officer, who sits on the Compensation and Organization Committee.The Chief Executive Officer is not present when matters relating to his own compensation are being discussed.83Four Seasons Hotels Inc.