Form 6-K VERMILION ENERGY INC. For: Mar 20

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.      

VERMILION ENERGY INC.

TOTAL SHAREHOLDER RETURN (“TSR”) OUTPERFORMANCE

FUND FLOWS FROM OPERATIONS¹ (“FFO”)

ANNUAL PRODUCTION

RESERVES

CONSERVATIVE BALANCE SHEET

COMMODITY MIX

PRESIDENT AND CHIEF EXECUTIVE OFFICER (“CEO”) VARIABLE PAY

ADVISORY VOTE ON EXECUTIVE COMPENSATION

ANTI-HEDGING POLICY

CLAWBACK POLICY

ROBUST OWNERSHIP POLICY

EXECUTIVES VARIABLE PAY (OTHER THAN CEO)

DOUBLE TRIGGER EXECUTIVE AGREEMENTS

COMPENSATION RISK

SUSTAINABILITY COMMITTEE

DIRECTOR NOMINEES TENURE

BOARD REFRESHMENT

REPRESENTATION OF WOMEN

BOARD GAMES

CANADIAN COALITION FOR GOOD GOVERNANCE

ISS GOVERNANCE QUALITYSCORE

GREAT PLACE TO WORK^® INSTITUTE

CORPORATE KNIGHTS 2018 FUTURE 40

CDP DRIVING SUSTAINABLE ECONOMIES

FM-FSI COMPETITION FOR BEST SUSTAINABILITY REPORT

MSCI’S GOVERNANCE METRICS REPORT

ROBECOSAM

Invitation to Shareholders

Dear Vermilion Shareholder,

It is our pleasure to invite you to attend our annual general meeting to be held on Thursday, April 25, 2019 at 3:00 pm MDT (“Meeting”) in the Ballroom of the Metropolitan Centre, in Calgary, Alberta. At the Meeting you will hear about our 2018 performance and our future plans. You will also vote on the items of business and have the opportunity to meet management, members of the Board and other shareholders.

Please take some time to read this Notice of Meeting, Proxy Statement and Information Circular (“Circular”). It contains important information about the Meeting, voting, director nominees, our governance practices, and our director and executive compensation. It will help you to understand the Board’s role and responsibilities and explains our compensation in detail.

We appreciate your confidence in Vermilion and look forward to seeing you at the Meeting.

Vermilion

Vermilion Energy Inc. is an international energy producer that seeks to create value through the acquisition, exploration, development and optimization of producing properties in North America, Europe and Australia. Our business model emphasizes organic production growth augmented with value-adding acquisitions, along with providing reliable and increasing dividends to investors. Vermilion is targeting growth in production primarily through the exploitation of light oil and liquids-rich natural gas conventional resource plays in Canada and the United States, the exploration and development of high impact natural gas opportunities in the Netherlands, Germany and Central and Eastern Europe, and oil drilling and workover programs in France and Australia. Vermilion holds a 20% operated interest in the Corrib gas field in Ireland. Vermilion operates approximately 90% of its production on a worldwide basis. Vermilion pays a monthly dividend of Canadian $0.23 per share, which provides a current yield of approximately 8.0%.

Through the rest of this Circular we refer to Vermilion Energy Inc. as “we”, “our”, “Vermilion” and/or the “Company”.

We use the following abbreviations for the names of the committees in tables:

Canada Business Unit

Vermilion’s Canadian production is primarily focused in the West Pembina region of West Central Alberta and in southeast Saskatchewan and Manitoba. Vermilion's main targets in West Pembina are the condensate-rich Mannville and Cardium light oil plays, while our light oil targets in southeast Saskatchewan and Manitoba are primarily the Mississippian Midale, Frobisher/Alida and Ratcliffe formations. West Pembina is the Company's main NGL producing area.

Australia Business Unit

In 2005, Vermilion acquired a 60% operated interest in the Wandoo offshore oil field and related production assets, located on Western Australia's northwest shelf. In 2007, Vermilion acquired the remaining 40% interest in the asset. Production occurs from 20 well bores and five lateral sidetrack wells that are tied into two platforms, Wandoo 'A' and Wandoo 'B'.

France Business Unit

Vermilion entered France in 1997 and has completed three subsequent acquisitions. The Company is the largest oil producer in the country and represents approximately three-quarters of domestic oil production. Vermilion predominately produces oil in France and the Company's oil is priced with reference to Dated Brent.

Vermilion's main producing areas in France are located in the Aquitaine Basin southwest of Bordeaux, and in the Paris Basin, located just east of Paris. The two major fields in the Paris Basin area are Champotran and Chaunoy, and the two major fields in the Aquitaine Basin are Parentis and Cazaux.

Netherlands Business Unit

Vermilion entered the Netherlands in 2004 and is the country's second largest onshore natural gas producer (excluding state-owned energy company EBN). Vermilion's natural gas production in the Netherlands is priced off of the TTF index.

Germany Business Unit

Vermilion entered Germany in 2014 with the acquisition of a 25% non-operated interest in natural gas producing assets. In December 2016, Vermilion completed an acquisition of oil and gas producing properties that provided Vermilion with its first operated position in the country. We hold a significant undeveloped land position in Germany as a result of a farm-in agreement the Company entered into in 2015. Our natural gas production in Germany is priced with reference to the NCG and GPL indices which are both highly correlated to the TTF benchmark, and our oil production is priced with reference to Dated Brent.

Ireland Business Unit

Vermilion acquired an 18.5% non-operating interest in the offshore Corrib gas field located off the northwest coast of Ireland in 2009. The asset is comprised of six offshore subsea wells, an onshore natural gas processing facility and offshore and onshore pipeline segments.

In July 2017, Vermilion and Canada Pension Plan Investment Board ("CPPIB") announced a strategic partnership in Corrib, whereby CPPIB acquired Shell E&P Ireland Limited’s 45% interest in Corrib. At closing, we assumed operatorship of Corrib, and CPPIB transferred a 1.5% working interest to Vermilion, bringing our ownership interest in Corrib to 20%. The acquisition has an effective date of January 1, 2017 and closed in December 2018.

United States Business Unit

Vermilion entered the United States in 2014 in the East Finn oil field of northeastern Wyoming and expanded its position through the 2018 acquisition of mineral land and producing assets in the Hilight oil field located approximately 40 miles northwest of the existing assets. All of our working interest ownership in Wyoming is Company operated.

Central and Eastern Europe ("CEE") Business Unit

Vermilion established a CEE Business Unit in 2014 with a head office in Budapest, Hungary. The CEE Business Unit is responsible for business development in CEE, including managing the exploration and development opportunities associated with the Company's land holdings in Hungary, Slovakia and Croatia. We drilled our first well (1.0 net) in CEE in the South Battonya license of Hungary in Q1 2018.

Common Shares Outstanding

At the close of business on March 1, 2019, there were 152,894,656 Common Shares outstanding. Our Common Shares trade under the symbol VET on the Toronto Stock Exchange (“TSX”) and on the New York Stock Exchange (“NYSE”).

Owners of 10% or More of the Common Shares

To the knowledge of the directors and executives, no person or company owns or controls more than 10% of our Common Shares.

Interests in Meeting Business and Material Transactions

None of Vermilion, our directors and officers, any nominee for election as a director or anyone associated or affiliated with any of the above has a material interest in any item of business at the Meeting. A material interest is one that could reasonably interfere with the ability to make independent decisions.

No insider of Vermilion has or had, during 2018, a material interest in a material transaction or proposed material transaction affecting Vermilion.

Indebtedness

We do not make loans to our directors or executives. As a result, there are no loans outstanding to any of them.

Annual Report and Other Documents

We file our Annual Report and Annual Information Form with Canadian and U.S. securities regulators. Financial information is provided in our comparative annual financial statements and Management’s Discussion and Analysis for the most recently completed fiscal year. A copy of the Annual Report, including our annual financial statements, notes and Management’s Discussion and Analysis, the Annual Information Form and this Circular will be provided on request to registered and beneficial shareholders. You can also obtain copies by accessing our public filings at www.sedar.com, www.sec.gov or www.vermilionenergy.com.

If you prefer, you can address a written or an email request for documents to:

	Vermilion Energy Inc. 3500, 520 – 3rd Avenue SW Calgary, Alberta T2P 0R3 Attention: Cathy Arcuri
	[email protected]

Dividend Reinvestment Plan

Under the Premium Dividend™ and Dividend Reinvestment Plan (the “Plan”), eligible shareholders who elect to participate in the Dividend Reinvestment Component can reinvest their dividends in Common Shares at the Average Market Price (with no broker commissions or trading costs).

Participation in the Plan, which is explained in greater detail in the complete Plan document available on Vermilion’s corporate website at www.vermilionenergy.com (under the heading “Investor Relations” subheading “DRIP”), is subject to eligibility restrictions, applicable withholding taxes, prorating as provided for in the Plan, and other limitations on the availability of Common Shares to be issued or purchased in certain events. Participation in the Plan is available to Canadian residents and non-U.S. resident foreign shareholders who meet certain eligibility criteria as set forth in the complete Plan. U.S. resident shareholders are not currently permitted to participate in the Plan due to the requirement, under U.S. securities regulations, to maintain a continuous shelf registration for issuance of new equity to U.S. shareholders. At this time, Vermilion has not put in place the required shelf registration due to the high cost of establishing and maintaining such a shelf registration.

For more information on our Premium Dividend™ and Dividend Reinvestment Plan, defined meanings for capitalized terms above, eligibility restrictions, and enrollment information and forms among other details, please refer to the complete copy of the Premium Dividend^TM and Dividend Reinvestment Plan document as well as a related series of Questions and Answers available on Vermilion’s website at www.vermilionenergy.com (under the heading “Invest With Us” subheading “Dividends”) or contact our plan agent, Computershare Trust Company of Canada (“Computershare”):

	1.800.564.6253 (toll free)
	www.computershare.com
	[email protected]

Communicating with the Board

You may write to the Board or any member or members of the Board in care of:

Vermilion Energy Inc. 3500, 520 – 3rd Avenue SW Calgary, Alberta T2P 0R3 Attention: Cathy Arcuri

You may also communicate online with our Board as a group:

[email protected]

If an interested party wishes to communicate directly with the Chair of the Board, the Lead Director or the Company's independent directors as a group regarding any matter, such party can communicate his or her concerns anonymously or confidentially by postal mail. Any submissions should be marked confidential and addressed to: the Chair of the Board, the Lead Director or independent directors, as the case may be, at the above address.

Communications are distributed to the Board, or to any individual directors as appropriate, depending on the facts and circumstances outlined in the communication. In that regard, the Board has requested that certain items which are unrelated to the duties and responsibilities of the Board should be excluded from distribution, such as questions about day-to-day functions and operations and items that are commercial in nature (e.g. advertising).

Engaging Shareholders

The Company and our Board believe in the importance of regular and open dialogue with our stakeholders in accordance with the Company’s Disclosure Policy. To that end, our Board, executives and investor relations representatives engage with both institutional and retail shareholders and investors, sell-side research and sales representatives, government officials and other interested stakeholders across all regions and throughout the year:

In 2018, in addition to the ongoing quarterly and annual shareholder engagements listed above, we engaged with ISS and Glass Lewis to better understand their policies and guidelines in preparation for the 2019 Circular.

As a responsible oil and gas producer, we consistently seek to deliver long-term shareholder value by operating in an economically, environmentally and socially sustainable manner that is recognized as a model in our industry.

Vermilion understands our stakeholders’ expectations that we deliver strong financial results in a responsible and ethical way. As a result, we align our strategic priorities in the following order:

Reflecting these priorities, we have positioned Vermilion purposefully within the energy transition. Predictions differ about the manner and speed of the transition, but our own scenario analyses are clear that Vermilion can best contribute by focusing on producing energy safely and responsibly, and also reliably and cost-effectively. We also believe those stakeholders who are concerned about sustainability, including investors, governments, regulators, communities and citizens, should turn to best-in-class operators such as Vermilion to ensure our assets in oil and gas are strategic resources that can be deployed in the service of the energy transition and, indeed, of the framework for the planet’s health and wellbeing represented by the SDGs.

To support our strategy, we regularly communicate with our stakeholders, including via our sustainability reporting. In 2018, following a review of recommendations from the Task Force on Climate-related Financial Disclosures and the Sustainability Accounting Standards Board, we adopted a wider approach to reporting, including within this document and in our Management’s Discussion and Analysis.

For more information, please see references to sustainability throughout this document, including Corporate Governance on page 46, and the Sustainability Committee on page 56. For additional context, our Sustainability Report can be found on our website at www.vermilionenergy.com (under the heading “Our Responsibility”).

Registered Shareholder Voting

You are a registered holder if your shares are in your name and you have a physical certificate in your possession.

Voting Options

	In person at the Meeting (see below)
	By proxy (see below)
	By telephone (see enclosed proxy form)
	By internet (see enclosed proxy form)
	By smartphone (see enclosed proxy form)

Voting in Person

If you plan to attend the Meeting and want to vote your shares in person, do not complete or return the enclosed proxy. Your vote will be taken and counted at the Meeting. Please register with Computershare when you arrive at the Meeting.

Voting by Proxy

Whether or not you attend the Meeting, you can appoint someone else to attend and vote as your proxy holder. Use the enclosed proxy form to do this. The people named in the enclosed proxy are members of management. You have the right to choose another person to be your proxy holder by printing that person’s name in the space provided. Then complete the rest of the proxy, sign it and return it. Your votes can only be counted if the person you appointed attends the Meeting and votes on your behalf. If you have voted by proxy, you may not vote in person at the Meeting, unless you properly revoke your proxy.

Return your completed proxy in the envelope provided so that it arrives by 3:00 pm MDT on April 23, 2019 or if the Meeting is adjourned, at least 48 hours (excluding weekends and holidays) before the time set for the Meeting to resume.

Revoking your Proxy

You may revoke your proxy at any time before it is acted on. Deliver a written statement that you want to revoke your proxy to our Corporate Secretary on or before April 24, 2019 (or the last business day before the Meeting if it is adjourned or postponed), or to the Chair of the Meeting on April 25, 2019.

General Voting Information

Notice-and-Access Notification

The Company has elected to use the “notice-and-access” provisions under National Instrument 54-101 Communications with Beneficial Owners of Securities of a Reporting Issuer (“Notice-and-Access Provisions”) for the Meeting. The Notice-and-Access Provisions are rules developed by the Canadian Securities Administrators that reduce the volume of materials that must be physically mailed to shareholders by allowing a reporting issuer to post an Information Circular in respect of a meeting of its shareholders and related materials online. The Company has also elected to use procedures known as ‘stratification’ in relation to its use of the Notice-and-Access Provisions. Stratification occurs when a reporting issuer using the Notice-and-Access Provisions provides a paper copy of an Information Circular and, if applicable, a paper copy of financial statements and related Management’s Discussion and Analysis (“Financial Information”), to some shareholders together with a notice of a shareholder meeting.

In relation to the Meeting, registered shareholders and beneficial shareholders who have requested to receive a paper copy will receive a paper copy of the Circular and a form of proxy whereas all other beneficial shareholders will receive a voting instruction form and a Notice-and-Access Notification which will include a link to the Circular and the 2018 Annual Report (“Meeting Materials”). Non-objecting beneficial owners (“NOBOs”) of Common Shares will have their Meeting Materials delivered directly by the Company with the assistance of Broadridge, and the Company intends to pay for intermediaries to deliver proxy-related materials to objecting beneficial owners of Common Shares. Contact information is obtained in accordance with applicable securities regulatory requirements. By choosing to send Meeting Materials to NOBOs directly, the Company has assumed responsibility for (i) delivering these materials, and (ii) executing proper voting instructions. Beneficial owners are asked to please return their voting instructions as specified in the request for voting instructions.

A paper copy of the financial information in respect of the most recent financial year of the Company will be mailed to registered shareholders as well as to those beneficial shareholders who have previously requested to receive them.

Interactive Proxy

We are pleased to continue to provide our shareholders with an interactive format for reviewing our Circular. This online platform makes it easy for shareholders to access the content within an intuitive and easy-to-navigate framework. Presenting content online is a cost-effective and environmentally friendly alternative to printing.

To access our interactive format, please visit our website at www.vermilionenergy.com (under the heading “Invest With Us” subheading “Annual General Meeting”).

Date of Information

This information contained in this Circular is as of March 1, 2019, unless otherwise noted.

Mailing of Circular

The Meeting Materials and Notice-and-Access Notification will be mailed on March 20, 2019 to shareholders of record on March 11, 2019.

Request for Proxies

Our management is requesting your proxies for this Meeting and is paying for the costs incurred. No director of Vermilion has informed management in writing that he/she intends to oppose any action intended to be taken by management at the Meeting.

We will provide Meeting Materials to Broadridge and other intermediaries and request that those materials be forwarded promptly to our beneficial shareholders.

Record Date

The record date for the Meeting is March 11, 2019. If you held shares on that date, you are entitled to receive notice of, attend and vote at the Meeting. You may be entitled to vote your shares if you bought shares from a registered shareholder and notify our transfer agent at least 10 days before the Meeting that you want to vote at the Meeting.

Voting Securities and Votes

Vermilion’s only voting securities are its Common Shares. Each Common Share entitles the holder to one vote at the Meeting.

Voting Instructions

If you specify how you want to vote on your proxy form or voting direction, your proxy holder has to vote that way. If you do not indicate how you want to vote, your proxy holder will decide for you.

If you appoint Anthony W. Marino or Lars W. Glemser, the management members set out in the enclosed proxy or voting direction, and do not specify how you want to vote, your shares will be voted as follows:

Quorum

We can only conduct business at the Meeting if we have a quorum – where at least two people attend the Meeting in person and hold or represent by proxy at least 25% of the total outstanding Common Shares.

Amendments or Other Business

If amendments or other business are properly brought up at the Meeting, you (or your proxy holder, if you are voting by proxy) can vote as you see fit. We are not aware of any changes to the current business or new business to be considered at the Meeting.

Vote Counting and Confidentiality

Votes by proxy are counted by Computershare. Your vote is confidential, unless you clearly intend to communicate your vote to management or as needed to comply with legal requirements.

Voting Questions

You can contact Computershare directly by:

	9th Floor, 100 University Avenue Toronto, Ontario, Canada M5J 2Y1
	1.800.564.6253 (toll free)
	[email protected]

Annual BUSINESS

Financial Statements

The consolidated financial statements as at and for the year ended December 31, 2018 and the respective auditor’s report are included in the 2018 Annual Report which will be available at the Meeting. The Annual Report is also filed on SEDAR at www.sedar.com, and on the EDGAR section of the Securities and Exchange Commission (“SEC”) website at www.sec.gov, and is available on Vermilion’s website at www.vermilionenergy.com. Additional copies are available, free of charge, upon request by shareholders.

Fixing the Number of Directors of Vermilion

The articles of Vermilion provide for a minimum of one director and a maximum of 15 directors. The by-laws of Vermilion provide that the number of directors shall be fixed from time-to-time by the shareholders. At the Meeting, it is proposed that the number of directors of Vermilion to be elected to hold office until the next annual meeting or until their successors are elected or appointed be fixed at 10. Unless otherwise directed, it is the intention of management to vote proxies in favour of fixing the number of directors to be elected at 10.

Election of Directors

Each director will hold office until the close of the next annual general meeting or until his/her successor is duly appointed or elected. Director nominees are:

We feel these nominees are well qualified to be directors of Vermilion and each one has confirmed that he/she is eligible and willing to serve if elected (see pages 25 to 29 for more information on the nominees). As Mr. Macdonald has reached the age of 70, and the GHR Committee oversees nominations, it has been recommended and approved by the Board that he remains for an additional term, as his skill set and expertise in international oil and gas exploration, production and operations are critical to the Board and Vermilion’s growth and strategic plan. Our Board retirement guideline can be found on page 44.

If a nominee is not available to serve at the time of the Meeting (and we are not aware of any reason that would occur), the people named in the enclosed proxy will vote for a substitute if one is chosen by the Board.

We recommend that you vote FOR these appointments. The people named in the enclosed proxy will vote FOR these nominations unless you tell them to withhold your vote.

Majority Voting Policy

The Board adopted a Majority Voting Policy because we believe it reflects good corporate governance. Unless there is a contested election, a director who receives more “withhold” than “for” votes will offer to resign. The GHR Committee will then review the matter and recommend to the Board whether to accept the resignation. The director will not participate in any deliberations on the matter. Following deliberations, the Board will publicly announce its decision within 90 days of the particular annual general meeting. We expect to accept the resignation unless there are exceptional circumstances that warrant the director continuing on the Board. A copy of the policy is available on our website at www.vermilionenergy.com (under the heading “About Us” subheading “Governance”).

Appointment of Auditors

The Audit Committee recommends appointing Deloitte LLP as auditors of Vermilion for 2019. Deloitte LLP were first appointed as Vermilion’s auditors in 2000. In accordance with certain regulatory standards and as a means of ensuring the independence and integrity of the audit, lead partners on the audit are rotated every five years, including partners responsible for Vermilion’s material international subsidiaries.

We recommend that you vote FOR this appointment. The people named in the enclosed proxy will vote FOR the appointment of Deloitte LLP as auditors unless you tell them to withhold your vote.

Special Business

Security-Based Compensation Arrangements – Unallocated Entitlements

Vermilion has five security-based compensation arrangements: (i) the Vermilion Incentive Plan (“VIP”); (ii) the Employee Bonus Plan (“Bonus Plan”); (iii) the Employee Share Savings Plan (“Savings Plan”); (iv) the Five-Year Security-Based Compensation Arrangement (“Compensation Arrangement”); and (v) the Deferred Share Unit Plan (“DSU Plan”), which has been approved and adopted by the Board and is subject to shareholder approval at the Meeting. In this document the VIP and the Compensation Arrangement are referred to as “LTIP”. The features of each of these plans are described in more detail below.

Since the number of Common Shares issuable under the security-based compensation arrangements is based on a fixed percentage rather than a fixed maximum number of shares, the TSX requires a majority of the Board and shareholders to approve, every three years, all unallocated entitlements under the security-based compensation arrangements. In this Circular, unallocated entitlements refer to awards not granted and represent the balance between the reserve under each plan and the number of awards issued and outstanding.

In preparation for the 2019 approval and in connection with the adoption of the DSU Plan, Vermilion reviewed the share reserves

under its security-based compensation arrangements and determined that it is preferable to amend each of the security-based compensation arrangements to decrease the rolling reserve of the number of Common Shares issuable under all of the security-based compensation arrangements to 3.5% of the total number of issued and outstanding Common Shares (a decrease from the current 3.8% reserve), calculated on an undiluted basis, and to increase the maximum number of Common Shares that may be issued or granted in any calendar year pursuant to each of the Bonus Plan and Savings Plan to 500,000 from 300,000 Common Shares and pursuant to the Compensation Arrangement to 500,000 from 100,000 Common Shares. The maximum number of Common Shares that may be issued pursuant to the DSU Plan is 300,000 Common Shares. Vermilion considers the decrease of the rolling reserve for all of Vermilion’s security-based compensation arrangements from 3.8% to 3.5% of the issued and outstanding Common Shares, as prudent stewardship for shareholders.

If the proposed amendments are approved, the rolling reserve will be reduced to 3.5% (from 3.8%) of the total number of issued and outstanding Common Shares from time-to-time and the maximum number of Common Shares that may be issued or granted in any calendar year pursuant to each of the Bonus Plan, Savings Plan and the Compensation Arrangement will be limited to 500,000 Common Shares, and the DSU Plan will be limited to 300,000 Common Shares.

Assuming upon vesting all awards are settled in Common Shares issued from treasury, as of March 1, 2019: (i) 1,867,630 share awards were issued and outstanding under the VIP (equal to approximately 1.22% of our issued and outstanding Common Shares); (ii) 36,845 share awards were issued and outstanding under the Compensation Arrangement (equal to approximately 0.02% of our issued and outstanding Common Shares); and (iii) no awards were issued and outstanding under either the Savings Plan, the Bonus Plan, or the DSU Plan. As each of the security-based compensation arrangements is subject to the same 3.5% “rolling reserve” limit, 3,446,838 unallocated entitlements (equal to approximately 2.25% of our issued and outstanding Common Shares) remain available for future issuance under the security-based compensation arrangements. If the amendment to decrease the reserve from 3.8% to 3.5% is not approved by shareholders at the Meeting, 3,905,522 unallocated entitlements (equal to approximately 2.55% of our issued and outstanding Common Shares) would remain available for future issuance under the security-based compensation arrangements.

At the Meeting, shareholders will be asked to approve the unallocated entitlements under our security-based compensation arrangements. If approved, we will again be required to seek shareholder approval of unallocated entitlements under our security-based compensation arrangements by no later than the annual meeting of shareholders held in 2022.

If shareholder approval of the unallocated entitlements is not obtained at the Meeting, the existing 1,867,630 share awards will vest and be settled in accordance with the VIP, the existing 36,545 share awards will vest and be settled in accordance with the Compensation Arrangement and the remaining 3,446,838 unallocated entitlements (3,905,522 unallocated entitlements in case of the 3.8% reserve) will not be permitted to be settled with Common Shares issued from treasury until shareholder approval is obtained. If shareholders do not approve the unallocated entitlements, awards will be settled in cash or with Common Shares purchased on the secondary market (or a combination thereof).

Summaries of all five plans are included in the Schedules to this Circular and a full copy of each plan can be found on SEDAR at www.sedar.com under Vermilion’s profile (filed March 20, 2019 under “Other Securityholders Documents”). In consideration of the environment and savings associated with reduced printing, shipping and mailing costs, we have not included copies of the plans in this Circular.

Deferred Share Unit Plan

Approval of Deferred Share Unit Plan

The DSU Plan was recently approved by the Board with an effective date of January 1, 2019. The principal purposes of the DSU Plan are to: (i) align our director compensation structure with the best governance practice; (ii) strengthen the ability of the Company and its affiliates to retain qualified non-employee directors and other specified non-employee service providers which the Company and its affiliates require; (iii) provide a competitive long-term incentive program to attract qualified non-employee directors and other specified non-employee service providers which the Company and its affiliates require; and (iv) promote a proprietary interest in the Company through share ownership thereby aligning the interests of non-employee directors and other specified non-employee service providers with shareholders. A summary of the DSU Plan is set forth in Schedule "D" of this Circular and a full copy of the plan is available on SEDAR at www.sedar.com under Vermilion’s profile (filed on March 20, 2019 under “Other Securityholders Documents”).

The DSU Plan provides for grants of deferred share units (“DSUs”) to Designated Participants (as defined in the DSU Plan).

A non-employee director Designated Participant is required to elect (in respect of each calendar year) the amount of the aggregate annual retainer or fee to be received in the form of DSUs, cash, Common Shares purchased on the secondary market, or a combination thereof, subject to requirements imposed by the Board to receive a specified minimum value of his or her annual retainer in the form of DSUs. In accordance with our Share Ownership Policy, non-employee directors are subject to a mandatory 50% DSU election until their ownership requirements are met, and to a 25% mandatory DSU election after the ownership requirements are met. Our Board amended the DSU Plan on February 27, 2019 such that a Designated Participant may also elect (in respect of each calendar year) to receive any meeting fees, including any Board Chair fees, committee Chair fees, Board committee member fees and Board meeting fees, in the form of DSUs, cash, Common Shares purchased on the secondary market, or a combination thereof. The meeting fees are not subject to a mandatory DSU election.

The grant date with respect to a DSU will be the last day of each calendar quarter in a particular calendar year except in the case of the last calendar quarter where the grant date with respect to a DSU will be December 15. The first grant of DSUs will be on March 31, 2019. DSUs granted under the DSU Plan are to be settled at the election of the Board in cash, Common Shares issued from treasury (subject to shareholder approval of the DSU Plan at the Meeting and of unallocated entitlements thereunder every three years thereafter), or, at the election of the Board, or a combination of cash and Common Shares.

Vermilion believes DSUs and the DSU Plan aligns the interests of the Board of Directors with those of our shareholders, as it provides an effective retention mechanism in the competitive international environment in which the Company operates, and continues to reflect the Company’s prudent use of its cash resources while managing all Vermilion’s compensation arrangements with the 3.5% “rolling reserve”.

The DSU Plan constitutes a security-based compensation arrangement, which under TSX rules require approval (when instituted) by a majority of the Board and shareholders.

At the Meeting, shareholders will be asked to approve the DSU Plan and all unallocated entitlements under the DSU plan. Under the DSU Plan, the number of Common Shares reserved for issuance is subject to the same ‘rolling reserve’ limit applicable to entitlements under all other Vermilion security-based compensation arrangements (being the VIP, the Bonus Plan, the Savings Plan and the Compensation Arrangement) of 3.5% (assuming the amendments described above are approved) of the total number of issued and outstanding Common Shares, calculated on an undiluted basis, and will also be subject to an annual maximum of 300,000 Common Shares that may be issued or granted under the DSU Plan.

As of the date of this Circular, DSUs with an aggregate value of $447,589 (estimated 13,202 shares using a $33.90 share price as at March 1, 2019, represents 0.01% of total issued and outstanding Common Shares) are to be granted to Designated Participants on March 31, 2019 (subject to shareholder approval of the DSU Plan). If DSUs are settled with Common Shares issued from treasury, the number of underlying Common Shares to be issued will be determined based on the applicable five-day weighted average trading price of the Common Shares on the applicable exchange (being the TSX or the NYSE). If shareholders do not approve the DSU Plan, the DSUs granted will be settled with Common Shares purchased on the secondary market, a cash amount equal to the aggregate fair market value of Common Shares (as at the Redemption Date) or a combination thereof, but will not be settled with Common Shares issued from treasury.

Our Board has approved the DSU Plan as amended. At the Meeting the following ordinary resolution will be placed before shareholders for consideration and approval:

RESOLVED THAT:

We recommend that you vote FOR the approval of the DSU Plan and all unallocated entitlements under the DSU Plan. The people named in the enclosed proxy will vote FOR the approval of the DSU Plan and all unallocated entitlements under the DSU Plan unless you tell them to withhold your vote.

Vermilion Incentive Plan

The VIP provides employees, executives and service providers of Vermilion and its related companies with a stake in our future success and aligns their interests with those of shareholders. A summary of the VIP is set forth in Schedule "B" of this Circular and a full copy of the plan is available on SEDAR at www.sedar.com under Vermilion’s profile (filed on March 20, 2019 under “Other Securityholders Documents”).

Approval of Amendments to VIP

In conjunction with the approval of unallocated entitlements for a further three years and the adoption of the DSU Plan, Vermilion reviewed the share reserves under its security-based compensation arrangements and as previously mentioned is proposing, subject to receipt of shareholder approval at the Meeting, to decrease the rolling reserve under the VIP, being the percentage number of Common Shares reserved for issuance from time-to-time, from 3.8% of the total number of Common Shares issued and outstanding from time-to-time (calculated on an undiluted basis) to 3.5% of the total number of Common Shares issued and outstanding from time-to-time (calculated on an undiluted basis), which amendment will require shareholder approval.

It is also proposed that the VIP be amended, subject to receipt of shareholder approval at the Meeting, to amend the amendment provision to remove non-employee directors of the Company from the list of individuals who are eligible to participate in the VIP to reflect that non-employee directors now participate in the DSU Plan and no longer participate in the VIP Plan. All other amendment provisions of the VIP remain unchanged, including the requirement for shareholder approval in the case of any amendment to change the class of eligible participants to the VIP which would have the potential of broadening or increasing participation by insiders of Vermilion.

Our Board has approved the recommended amendments to the VIP and the restatement of the VIP as amended. The Board has approved certain amendments to the VIP which do not require shareholder approval due to their housekeeping and administrative nature (as described in Schedule “B” in this Circular). At the Meeting the ordinary resolution set forth below will be placed before shareholders for consideration and approval.

Approval of Unallocated Share Awards

Under our VIP, vested share awards are settled in Common Shares, in cash (equal to the value of the shares) or in a combination of both, as determined by the Board. The Board also determines whether Common Shares are issued from treasury or acquired through the TSX. It has been the practice of the Board to settle all share awards in Common Shares issued from treasury. The number of Common Shares reserved for issuance from treasury under our VIP is currently equal to 3.8% of the aggregate number of issued and outstanding Common Shares less any other Common Shares granted under any other security-based compensation plans of Vermilion, calculated on an undiluted basis.

The number of unallocated share awards to be approved is calculated by subtracting the number of outstanding share awards from the number that represents 3.5% of our issued and outstanding Common Shares, assuming the proposed amended rolling reserve is approved by shareholders. See “Security-Based Compensation Arrangements – Unallocated Entitlements” above.

Our Board has approved all unallocated share awards under our VIP. At the Meeting the following ordinary resolution will be placed before shareholders for consideration and approval:

RESOLVED THAT:

If the proposed amendments to the VIP are not approved by the shareholders at the Meeting or if the shareholders do not approve the unallocated share awards under the VIP: (i) the number of Common Shares reserved for issuance under the VIP will remain at 3.8% of the total number of Common Shares issued and outstanding from time-to-time; and (ii) the existing 1,867,630 share awards will vest and be settled in accordance with the VIP and all remaining unallocated share awards under the VIP will be settled in cash or with Common Shares purchased on the secondary market (or a combination thereof).

We recommend that you vote FOR the approval of the amendments to the Vermilion Incentive Plan and the unallocated share awards under the Vermilion Incentive Plan. The people named in the enclosed proxy will vote FOR the approval of the amendments to the Vermilion Incentive Plan and FOR the approval of the unallocated share awards under the Vermilion Incentive Plan unless you tell them to withhold your vote.

Employee Bonus Plan

Approval of Amendments to Vermilion's Employee Bonus Plan

The Bonus Plan provides bonuses for certain employees of Vermilion. Non-employee directors are not entitled to participate in the Bonus Plan. The Board assesses the performance of the employees overall and allocates a bonus in such amount as the Board determines appropriate. Payment of bonuses may be made in cash or in Common Shares or in a combination of cash and Common Shares as determined by the Board. A summary of our Bonus Plan is set forth in Schedule "E" of this Circular and a full copy of the plan is available on SEDAR at www.sedar.com under Vermilion’s profile (filed on March 20, 2019 under “Other Securityholders Documents”).

At the Meeting, shareholders will be asked to approve amendments to the Bonus Plan to decrease the rolling reserve from 3.8% to 3.5% of the total issued and outstanding Common Shares from time to time (shared with the VIP, the Savings Plan, the Compensation Arrangement and the DSU Plan) and to increase the maximum number of Common Shares that may be issued or granted in any calendar year pursuant to the Bonus Plan from 300,000 Common Shares to 500,000 Common Shares.

Our Board has approved the amendments to the Bonus Plan and the restatement of the Bonus Plan as amended and has approved certain amendments to the Bonus Plan which do not require shareholder approval due to their housekeeping and administrative nature (as described in Schedule “E” in this Circular).

Approval of Unallocated Entitlements

At the Meeting, shareholders will be asked to approve all unallocated entitlements under the Bonus Plan. Under the Bonus Plan, the number of Common Shares reserved for issuance is subject to the same ‘rolling reserve’ limit applicable to entitlements under all other Vermilion security-based compensation arrangements (being the DSU Plan, the VIP, the Savings Plan and the Compensation Arrangement) of 3.5% (assuming the amendments described above are approved) of the total number of issued and outstanding Common Shares, calculated on an undiluted basis, and will also be subject to an annual maximum of 500,000 Common Shares that may be issued or granted under the Bonus Plan (assuming the amendments described above are approved). As of the date of this Circular, no awards are outstanding under the Bonus Plan. See “Security-Based Compensation Arrangements – Unallocated Entitlements”.

Our Board has approved all unallocated entitlements under our Bonus Plan. At the Meeting the following ordinary resolution will be placed before shareholders for consideration and approval:

RESOLVED THAT:

If the proposed amendments to the Bonus Plan are not approved by the shareholders at the Meeting or if the shareholders do not approve the unallocated entitlements under the Bonus Plan: (i) the number of Common Shares reserved for issuance under the Bonus Plan will remain at 3.8% of the total number of Common Shares issued and outstanding from time-to-time and the annual cap will remain at 300,000 Common Shares per calendar year; and (ii) bonuses will be settled in cash or with Common Shares purchased on the secondary market (or a combination thereof).

We recommend that you vote FOR approval of the amendments to the Bonus Plan and the unallocated entitlements under the Bonus Plan. The people named in the enclosed proxy will vote FOR the approval of the amendments to the Bonus Plan and the unallocated entitlements under the Bonus Plan unless you tell them to withhold your vote.

Employee Share Savings Plan

Approval of Amendments to Vermilion's Employee Share Savings Plan

The Employee Share Savings Plan (“Savings Plan”) allows full-time and part-time employees (including NEOs) of Vermilion to elect to contribute a portion of their earnings to the plan for the purchase of Common Shares of Vermilion. Non-employee directors are not entitled to participate in the Savings Plan. The amount that a participant may contribute ranges from a minimum of 1% to a maximum of 7% of a participant's earnings. For each participant Vermilion makes an employer contribution equal to 1.5 times the amount of each participant's personal contribution. A participant may make excess contributions under the Savings Plan up to a maximum of such participant's earnings, however, excess contributions do not receive a corresponding employer contribution by Vermilion. The Savings Plan provides that, where directed in writing by the Board, the plan agent shall use all or any combination of personal, employer and excess contributions (that are made in cash) to acquire Common Shares directly from Vermilion through issuances from treasury. Vermilion considers the Savings Plan to be an integral element of its compensation program for employees and officers, as it strengthens Vermilion's ability to attract and retain qualified personnel while promoting investment in Vermilion, thereby aligning the interests of participating employees and officers with shareholders.

A summary of our Savings Plan is set forth in Schedule "F" of this Circular and a full copy of the plan is available on SEDAR at www.sedar.com under Vermilion’s profile (filed on March 20, 2019 under “Other Securityholders Documents”).

At the Meeting, shareholders will be asked to approve amendments to the Savings Plan to decrease the rolling reserve from 3.8% to 3.5% of the total issued and outstanding Common Shares from time to time (shared with the VIP, the Bonus Plan, the Compensation Arrangement and the DSU Plan) and to increase the maximum number of Common Shares that may be issued or granted in any calendar year pursuant to the Savings Plan from 300,000 Common Shares to 500,000 Common Shares.

Our Board has approved the amendments to the Savings Plan and the restatement of the Savings Plan as amended. At the Meeting the ordinary resolution set forth below will be placed before shareholders for consideration and approval.

Approval of Unallocated Entitlements

At the Meeting, shareholders will be asked to approve all unallocated entitlements under the Savings Plan. Under the Savings Plan, the number of Common Shares reserved for issuance is subject to the same ‘rolling reserve’ limit applicable to entitlements under all other Vermilion security-based compensation arrangements (being the DSU Plan, the VIP, the Bonus Plan and the Compensation Arrangement) of 3.5% (assuming the amendments described above are approved) of the total number of issued and outstanding Common Shares, calculated on an undiluted basis, and will also be subject to an annual maximum of 500,000 Common Shares that may be issued or granted under the Savings Plan (assuming the amendments described above are approved). As of the date of this Circular, no awards are outstanding under the Savings Plan. See “Security-Based Compensation Arrangements – Unallocated Entitlements”.

Our Board has approved all unallocated entitlements under our Savings Plan. At the Meeting the following ordinary resolution will be placed before shareholders for consideration and approval:

RESOLVED THAT:

If the proposed amendments to the Savings Plan are not approved by the shareholders at the Meeting or if the shareholders do not approve

the unallocated entitlements under the Savings Plan: (i) the number of Common Shares reserved for issuance under the Savings Plan will remain at 3.8% of the total number of Common Shares issued and outstanding from time-to-time and the annual cap will remain at 300,000 Common Shares per calendar year; and (ii) Savings Plan contributions will be settled in cash or with Common Shares purchased on the secondary market (or a combination thereof).

We recommend that you vote FOR approval of the amendments to the Savings Plan and the unallocated entitlements under the Savings Plan. The people named in the enclosed proxy will vote FOR the approval of the amendments to the Savings Plan and the unallocated entitlements under the Savings Plan unless you tell them to withhold your vote.

Five-Year Security-Based Compensation Arrangement

Approval of Amendments to Vermilion’s Five-Year Security-Based Compensation Arrangement

The Compensation Arrangement provides long-term incentive awards for our CEO, the sole participant under the plan. Compensation awards are settled with Common Shares issued from treasury, which combined with enhanced requirements for share ownership while employed (8 times) and post-retirement (2 times), further aligns the interests of our CEO with the long-term interests of shareholders. A summary of our Compensation Arrangement is set forth in Schedule "C" of this Circular and a full copy of the plan is available on SEDAR at www.sedar.com under Vermilion’s profile (filed on March 20, 2019 under “Other Securityholders Documents”).

At the Meeting, shareholders will be asked to approve amendments to the Compensation Arrangement to decrease the rolling reserve from 3.8% to 3.5% of the total issued and outstanding Common Shares from time to time (shared with the VIP, the Bonus Plan, the Savings Plan, and the DSU Plan) and to increase the maximum number of Common Shares that may be issued or granted in any calendar year pursuant to the Compensation Arrangement from 100,000 Common Shares to 500,000 Common Shares.

The Compensation Arrangement was also amended to change the name of the Compensation Arrangement to “Five-Year Security-Based Compensation Arrangement” (from “Security-Based Compensation Arrangement (for Five-Year Share Awards)”). Shareholder approval of the change in the name of the Compensation Arrangement is not required since this amendment is of a “housekeeping nature.”

If the amendments to the Compensation Arrangement are approved: (i) the number of Common Shares reserved for issuance from treasury by the Company pursuant to the Compensation Arrangement and all other security-based compensation arrangements of the Company will be equal to 3.5% of the aggregate number of issued and outstanding Common Shares, calculated on an undiluted basis; and (ii) the maximum number of Common Shares that may be issued or granted in any calendar year pursuant to the Compensation Arrangement will be equal to 500,000 Common Shares.

Our Board has approved the amendments to the Compensation Arrangement and the restatement of the Compensation Arrangement, as amended. At the Meeting the ordinary resolution set forth below will be placed before shareholders for consideration and approval.

Approval of Unallocated Entitlements

At the Meeting, shareholders will be asked to approve all unallocated share awards under the Compensation Arrangement. Under the Compensation Arrangement, the number of Common Shares reserved for issuance is subject to the same ‘rolling reserve’ limit applicable to entitlements under all other Vermilion security-based compensation arrangements (being the DSU Plan, the VIP, the Bonus Plan and the Savings Plan) of 3.5% (assuming the amendments described above are approved) of the total number of issued and outstanding Common Shares, calculated on an undiluted basis, and will also be subject to an annual maximum of 500,000 Common Shares that may be issued or granted under the Compensation Arrangement (assuming the amendments described above are approved). As of the date of this Circular, 36,845 share awards are outstanding under the Compensation Arrangement. See “Security-Based Compensation Arrangements – Unallocated Entitlements”.

Our Board has approved all unallocated share awards under the Compensation Arrangement. At the Meeting the following ordinary resolution will be placed before shareholders for consideration and approval:

RESOLVED THAT:

If the proposed amendments to the Compensation Arrangement are not approved by the shareholders at the Meeting or if the shareholders do not approve the unallocated entitlements under the Compensation Arrangement: (i) the number of Common Shares reserved for issuance under the Compensation Arrangement will remain at 3.8% of the total

number of Common Shares issued and outstanding from time-to-time and the annual cap will remain at 100,000 Common Shares per calendar year; and (ii) a cash incentive will be provided as an alternative to share awards under the Compensation Arrangement.

We recommend that you vote FOR approval of the amendments to the Compensation Arrangement and the unallocated entitlements under the Compensation Arrangement. The people named in the enclosed proxy will vote FOR the approval of the amendments to the Compensation Arrangement and the unallocated entitlements under the Compensation Arrangement unless you tell them to withhold your vote.

Advisory Vote on Executive Compensation

The Board believes that shareholders should have the opportunity to fully understand the objectives, philosophy and principles the Board has used in its approach to executive compensation decisions and to have an advisory vote on Vermilion’s approach to executive compensation. As part of Vermilion’s ongoing commitment to strong corporate governance practices, the Board has determined that it would be appropriate to hold an annual non-binding advisory vote at the Meeting on the approach to executive compensation, commonly referred to as a ‘Say on Pay’ advisory vote. This is the sixth year we are holding a ‘Say on Pay’ advisory vote, with 86% support in 2018 and a five-year average of 95%.

Shareholders will be asked at the Meeting to vote, on an advisory basis, on the acceptance of Vermilion’s approach to executive compensation as set forth in the section entitled “Executive Compensation” in this Circular. As the vote will be an advisory vote, the results will not be binding upon the Board. However, the Board will take the results of the vote into account, as appropriate, when considering future compensation policies, procedures and decisions. Vermilion will disclose the results of the shareholder advisory vote as a part of its report on voting results for the Meeting.

At the Meeting the following ordinary resolution will be placed before shareholders for consideration and approval:

RESOLVED THAT:

We recommend that you vote FOR the Company’s approach to executive compensation as set forth in this Circular. The people named in the enclosed proxy will vote FOR the advisory vote to accept the Company’s approach to executive compensation unless you tell them to vote against it.

The GHR Committee is responsible for reviewing and approving compensation paid to Vermilion’s directors and executive officers. Compensation is determined in light of current market conditions and competitive practices, having regard to our pay-for-performance compensation philosophy.

The GHR Committee terms of reference set out its full responsibilities (see page 57 for our Compensation Discussion and Analysis, and starting on page 85 for details of executive compensation).

2018 Compensation Structure

Prior to January 1, 2019, Vermilion provided its directors with a compensation package that included cash annual retainers, meeting fees and share awards under our VIP. In 2018, non-employee directors participated in the VIP on an adequately limited basis, as approved by shareholders at the 2016 annual general meeting. Directors do not participate in the Bonus Plan or the Savings Plan.

Each year, the GHR Committee reviews the compensation paid to directors against industry practices for oil and gas companies of similar business model, size and scope. The peer group used to measure directors’ compensation is the same group used to measure corporate performance; a full listing of our corporate performance peer group can be found on page 67. Retainers are targeted at the median of the market.

The total director compensation package recognizes the increasing responsibilities, time commitments and accountability of Board members. We conduct a review of director compensation annually to ensure we are providing a compensation package that allows us to attract and retain competent members to our Board.

Recommendations are then made to the Board. Changes to retainers (if any) are approved at the Board of Directors meeting in the first quarter of each year.

2019 Compensation Structure (Introduction of a Deferred Share Unit Plan)

As disclosed in the 2018 Circular, in the latter part of 2017 the Board initiated a review of the director compensation structure, which resulted in the Board’s approval of a change to the form of annual retainers – the first such change since 2007. As the review was finalized on February 28, 2018, the decision was made to start the new structure in 2019 to avoid mid-year adjustments.

Effective January 1, 2019, directors no longer participate in the employee long-term incentive plan (VIP) and they are no longer eligible to receive performance share unit grants. This change aligns the Corporation with best governance practices to eliminate the issuance of performance share awards to non-employee directors.

The revised structure replaces grants of performance share awards with deferred share units pursuant to the DSU Plan. All directors will receive at least 25% of their annual retainer in DSUs if they meet their share ownership requirement, and at least 50% if they do not yet meet their share ownership requirement. Directors may elect to receive all of their total compensation in the form of DSUs; therefore, a director may receive up to 100% of their total compensation in the form of DSUs.

The annual retainer will be paid quarterly in arrears, with the first payment scheduled for March 31, 2019. Canadian and U.S. directors will receive the same nominal face value in their respective currency of residence, to ensure we remain competitive and are able to attract and retain qualified directors across North America. The pricing to determine the number of DSUs will be based on the five-day volume-weighted average share price prior to the grant date, and Common Shares will be purchased through the TSX for Canadian resident directors and the NYSE for U.S. resident directors in each case that elect to receive shares purchased on the secondary market as payment of their annual retainer or meeting fees.

Shareholders will be asked to approve the DSU Plan at the Meeting. A summary of the DSUs is set forth in Schedule “D” of this Circular, and a full copy of the plan is available on SEDAR at www.sedar.com under Vermilion’s profile (filed on March 20, 2019 under “Other Securityholders Documents”).

Shareholders will be asked to approve an amendment to the VIP to amend the amendment provision to remove non-employee directors as eligible participants under the VIP. A summary of the VIP is set forth in Schedule “B” of this Circular, and a full copy of the plan is available on SEDAR at www.sedar.com under Vermilion’s profile (filed on March 20, 2019 under “Other Securityholders Documents”).

Retainers and Fees

Retainer and meeting fees have been kept flat from 2007 to 2018. The April 1, 2018 annual share award grant was kept flat to the 2017 grant level, providing for a zero percent increase. Since 2014, directors’ annual award grants were reduced by 15%. Meeting fees are payable for attending meetings in person or by conference call. Directors also receive reimbursement for out-of-pocket expenses to attend meetings.

Effective January 1, 2019, as a result of the compensation structure redesign, 2019 annual retainers increased, reflecting that the issuance of annual performance share awards (with a performance multiple) has been eliminated to balance the increase in the annual retainers. The table on the following page illustrates the compensation structure from 2017 to 2019.

Share Awards and Value Issued under the VIP

Effective January 1, 2019, directors no longer participate in the VIP program. The revised compensation structure eliminates the grant of share awards under the VIP to non-employee directors and introduces a retainer payable in DSUs, cash, Common Shares purchased on the secondary market, or a combination of all elements, with a mandatory portion of the retainer payable in DSUs. Outstanding share awards that were granted to directors under the VIP will continue to vest as scheduled and are subject to the performance factors described on page 65. The award date value of share awards in the table starting on page 33 assumes a performance factor of 1 times the amount granted, as the performance factor has not been established for future years. The value of Common Shares on the last trading day of 2018 (December 31, 2018) was calculated using the closing price of the shares on the TSX of $28.76.

Equity Compensation Limitation for Directors

Under the VIP, the maximum number of Common Shares that may be issued from treasury to non-employee directors upon vesting of share awards is limited to the lesser of $150,000 per annum and 0.50% of our Common Shares issued and outstanding immediately prior to the vesting date. The limit does not apply to the non-employee director initial share award grant made to a new non-employee director upon joining the Board.

Outstanding VIP grants will remain subject to the maximum participation limits.

On April 25, 2019, shareholders will be asked to approve an amendment to the VIP to amend the amendment provision to remove non-employee directors of the Company from the list of individuals who are eligible to participate in the VIP. Our Board has approved a housekeeping amendment to remove the non-employee directors’ participation limit in the VIP. These amendments coincide with the adoption of the DSU Plan. Vermilion believes that the introduction of a DSU Plan and exclusion of non-employee directors from the VIP are necessary changes to align the Board of Directors compensation program with best governance practices.

New Hire Share Awards Granted under the VIP

The new hire share award granted to directors under the VIP was based on the aggregate value of the standard annual grant for a three-year period.

Board members will only realize the value of granted awards if they are active Board members at the time of the regularly scheduled vesting. If a director resigns, all outstanding grants are cancelled.

There is no differential treatment in the pay structure between our current and new directors; therefore, the new hire share awards previously granted are not inducement grants but are prorated grants based on date of appointment.

BOARD TENURE

INDEPENDENCE AND ALIGNMENT WITH SHAREHOLDERS

2019 BOARD COMPENSATION CHANGE

SHARE OWNERSHIP REQUIREMENTS

INDIVIDUAL VOTING AND MAJORITY VOTING

2018 DIRECTOR VOTING RESULTS

SKILLS AND EXPERIENCE

BOARD AND EXECUTIVE OFFICERS DIVERSITY POLICY

FEMALE REPRESENTATION ON THE BOARD

FEMALE REPRESENTATION IN EXECUTIVE POSITIONS

RELATED PARTY TRANSACTIONS

BOARD ANNUAL PERFORMANCE EVALUATIONS

IN-CAMERA SESSIONS

MEETING ATTENDANCE

Governance Philosophy

We are committed to a high standard of corporate governance practices. Strong governance is in the best interests of our shareholders and promotes effective decision making at the Board level.

We monitor Canadian and U.S. regulations related to corporate governance, legal requirements and disclosure trends. As a Canadian company with Common Shares dual listed on the TSX and the NYSE, we are subject to Canadian rules and policies adopted by the TSX and Canadian Securities Administrators (‘‘CSA’’), and rules and listing standards applicable to “foreign private issuers” adopted by the NYSE and the U.S. Securities Exchange Commission (“SEC”), which give effect to provisions of the Sarbanes-Oxley Act of 2002 (“Act”).

With respect to the United States, we are required to comply with the provisions of the Act and the rules adopted by the SEC pursuant to that Act, as well as the governance rules of the NYSE, in each case as applicable to foreign private issuers. Most of the NYSE corporate governance standards are not mandatory for Vermilion as a non-U.S. issuer; however, we are required to disclose any significant differences between our corporate governance practices and the NYSE corporate governance standards applicable to U.S.-based issuers listed on the NYSE. Except those areas highlighted in a summary document available on the governance page of our corporate website at www.vermilionenergy.com (under the heading “About Us” subheading “Governance”), we remain in compliance with the NYSE corporate governance standards in all significant respects. Annually, we review the summary of significant differences to ensure our compliance is up-to-date.

This Statement of Corporate Governance Practices was approved by the Board and is made in accordance with CSA National Instrument 58-101 Disclosure of Corporate Governance Practices (‘‘NI 58-101’’), which requires disclosure of our approach to corporate governance. We consider Canadian corporate governance requirements, NYSE corporate governance rules and listing standards, and applicable SEC rules in determining our corporate governance practices. The Board of Directors has delegated responsibility to the GHR Committee, which is composed entirely of independent directors, to oversee our corporate governance practices. Our corporate governance practices and policies are described more fully in this section of the Circular.

The guidelines noted above and all of the governance documents are available on our website at www.vermilionenergy.com (under the heading “About Us” subheading “Governance”).

We also note that our governance approach fully aligns with SDG 16.6, to develop effective, accountable and transparent institutions, and its associated business disclosure recommendations.

Board and EXECUTIVE Diversity Policy

Vermilion is committed to diversity on its Board and in executive officer positions. The Board and Executive Diversity Policy embraces a broad

concept of diversity, encompassing factors including age, race, gender, personal attributes, skills, training, educational background and life experience.

We recognize the importance of equitable gender representation for Board and executive roles. In 2018, the Board approved an amendment to the Diversity Policy addressing gender diversity, which introduces a candidate selection step into our recruitment process for Board and executive positions. The candidate selection step requires reasonable efforts to ensure at least 50% of applicants are women. Our intent is to broaden each search process to ensure qualified candidates of both genders are available for consideration.

For executive positions, we will continue to develop our mentoring program, with a focus on identifying high potential female employees, developing their management skills and preparing them for senior leadership roles in the future.

This will be managed over time and in line with the market. We anticipate an implementation period of five years given our internal talent pipeline for executive positions as our preferred source, and market availability for Board and executive positions.

Accordingly, the current Board Diversity Policy does not include a formal target to be achieved by a specified date for the gender composition of the Board or executive officers.

The GHR Committee is responsible for annually reviewing the Board and Executive Diversity Policy and assessing its effectiveness in promoting a diverse Board. Our management is responsible for monitoring the effectiveness of the Diversity Policy for executive roles. A copy of the policy is available on our website at www.vermilionenergy.com (under the heading “About Us” subheading “Governance”)

As at March 1, 2019, two of ten (20%) of the Board nominees for election and one of five (20%) of the executive officers are women.

Nomination of Directors

The Board, with oversight from the Chair of the Board, is responsible for director succession planning. The GHR Committee, whose members are all independent, is responsible for nominating new directors considering the size of the Board and the requirements of current directors, current and desired skills mix, and the performance evaluations of the Board and its members. Our goal is to continuously develop a top-performing Board with diverse skills and deep expertise that add value to the business through governance oversight.

In 2018, we reviewed our size and composition and decided to recruit one additional Board member. To complement our Board, we successfully recruited Ms. Knickel, who brings forth diverse skills and expertise.

Our director search process includes:

Other Public Company Directorships

No director is, as at the date of the Circular, or has been within 10 years before the date of the Circular, a director or executive officer of any company (including the company in respect of which the Information Circular is being prepared) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any

proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets, other than the following: Mr. Macdonald was the Chair of the Board of NorthPoint Resources Ltd. from 2012 to 2016. NorthPoint Resources Ltd. went into receivership on May 30, 2016.

In addition, as of the date of the Circular, no director or proposed director of the Company has, within the ten years before the date of this Information Circular: (i) become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director; or (ii) had penalties or sanctions imposed on them by a court of regulatory authority.

Directors Serving Together

The Board’s approach to Board interlocks is aligned to CCGG principles limiting the number of the same public companies that Board members may sit on. The Board considers Board interlocks when considering new candidates and approving requests to join additional Boards.

There are no Board interlocks among the 2019 director nominees.

Board Assessments

The GHR Committee ensures that each member of the Board, the committees, the Chair of the Board, and the Lead Director are assessed annually in light of their relevant terms of reference.

Directors complete a number of different evaluations, including:

The assessments are done by way of a questionnaire conducted by our external legal counsel Norton Rose Fulbright. The assessments are treated on a confidential basis, with the results tallied on an anonymous basis for review. The results of the evaluation are analyzed by the GHR Committee and the Board, who decide whether any changes are needed to the Board’s processes, composition or committee structure. Management is advised of feedback on the Board processes applicable to them.

The evaluation carried out in 2018 indicated that all individuals and groups were effectively fulfilling their responsibilities.

Skills and Experience

Vermilion maintains a skills matrix to evaluate the skill set of the Board based on individual director self-assessments. The results are then evaluated for individual directors and for the Board as a whole. The skills matrix helps us identify gaps and is used when we search for new directors. In addition, we complete an annual peer evaluation of

performance and provide feedback to improve individual and team Board performance. In 2018, we updated the skills matrix to include sustainability skills and experience. The GHR Committee reviewed the completed skills matrix and evaluations and is satisfied that the Board has the appropriate experience and skills to ensure the Board is performing well. The Board completed a discussion on the results with the objective of continuously improving Board effectiveness.