Corporate Board Governance and Director Compensation in Canada

Corporate Board Governance and Director Compensation in Canada A Review of 2012

$110.00 per copy Š Korn/Ferry International, January 2013

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This report is also available in French.

Table of Contents

The Surveyed Companies

2

Special Report: Improving the Board Composition Planning and Director Selection Processes

6

Board Independence

18

Board Composition

26

Board Size

34

Board Assessments, Director Selection and Director Development

36

Meetings and Attendance

40

Board Committees

44

Director Compensation

48

Board Chair Compensation

54

Lead Director Compensation

58

Committee Chair Compensation

60

Committee Member Compensation

66

Stock-Based Compensation

70

Compensation Summary

74

Director Share Ownership

76

Company Data

81

End Notes

92

Korn/Ferry International

95

Patrick O’Callaghan and Associates

97

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 1

The Surveyed Companies

2 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

The Most Comprehensive Canadian Governance Study We are pleased to present the most comprehensive review of public issuer governance data available in Canada. This twentieth annual report examines governance in Canadian companies and includes our special report, Improving the Board Composition Planning and Director Selection Processes. Our commitment is to provide directors and trustees with accurate and relevant Canadian data across a wide spectrum.

•

The data is collected from publicly traded equities and income trusts that were on one or more of the following lists:

* The Financial Post Top 225 (June 2012)

* The Report on Business Top 225 (July 2012)

* The S&P/TSX Composite Index (at any time during 2011)

•

Income trusts have been included in the S&P/TSX Composite Index since 2005. We incorporated them into

this annual Review starting in 2006, at which time they comprised 24% of our sample. However, there has

been a decline in the number of income trusts in the sources from which we draw our sample, likely due to

the changes in income tax rules in 2011. Only 6% of the 298 organizations in this year’s Review are income

trusts, and, with this reduction, we are no longer comparing equities to income trusts. The 18 income trusts

that remain are incorporated into the data presented throughout this Review.

•

We draw data from annual reports, management proxy circulars and annual information forms for fiscal

year-ends in late 2011, or the first few months of 2012. All references to “2011” data include data for

year-ends in early 2012.

•

All figures reported in United States dollars have been converted to Canadian dollars at an exchange rate

of 0.99, which was the average exchange rate for 2011.

•

All fractions have been rounded off to the nearest whole number, thus all totals do not add up to exactly 100%.

•

Where this report uses comparative U.S. data, it is drawn from the following sources:

°

Director Compensation Report 2011-2012, a publication of the National Association of Corporate

Directors in collaboration with Pearl Meyer & Partners. This study is based on 1,400 companies with

fiscal year-ends between February 1, 2010 and January 31, 2011 with revenues over US$50 million.

2012-2013 Public Company Governance Survey, a publication of the National Association of Corporate

°

Directors. This study is based on insights from 1,000 public company directors and the proxy data from

2,800 public companies.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 3

Breakdown of Research Sample by Assets and Industry Group

<500M

500M to 1B

1B to 5B

>5B

ALL

Percent**

Consumer Discretionary

2

4

17 8 31 10%

Consumer Staple

0

1

6 4 11 4%

Energy

7

5

32 20 64 21%

Financials

1

0

19 33 53 18%

Health Care

3 1

1 1 6 2%

Industrials

1

7

14 6 28 9%

Information Technology

1

4

4 1 10 3%

Materials

19 23

29 10 81 27%

Telecommunication Services

0 0

2 2 4 1%

Utilities

0

0

5 5 10 3%

All

34

45

129 90 298 98%

Percent* * Asset group as a percentage of total

11% 15% **

43% 30% 100%

Industry group as a percentage of total

Terminology and Standards Used Throughout this Report • Size

Most tables in this report compare results between companies within asset groups. The short forms “M” for millions of dollars and “B” for billions of dollars are used in the tables.

• Comparisons

Where tables present data by year, the data is given for 2011, 2010 and 2002, or the first year we began tracking the particular subject. This allows readers to compare between the two most recent years, and also to see how the subject has changed over time.

• Regulatory Documents - Where we use “CSA disclosure requirements”, we are referring to the Canadian Securities Administrators’ National Instrument 58-101, Disclosure of Corporate Governance Practices.

- Where we use “CSA governance guidelines”, we are referring to the Canadian Securities Administrators’ National Policy 58-201, Corporate Governance Guidelines.

4 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

• Independent Directors

Where we refer to directors as “independent”, we are basing the categorization on the company’s assignment of the term to individual directors under the definition in the CSA disclosure requirements.

• Directors and Trustees

With the inclusion of income trusts, we are now including organizations with both directors and trustees.

For the sake of brevity in this document, where we refer to “director”, we are referring to both directors and trustees.

• Types of Organizations

Where we use “company” we are referring to any member of the research sample as a whole, which could be either an equity or an income trust.

• Income Trust Names

In some cases, income trusts presented governance data for a board other than its own board of trustees (e.g., for the board of an “Administrator” or “Manager”). The name cited is always the name we have drawn from one of the three sources we used to compile the research sample.

• Retainers

Whenever the term “retainer” is used alone, it refers to whatever combination of cash and shares is paid to directors by the company as a retainer for services, unless we refer specifically to the “cash portion of a retainer” or the “share portion of a retainer”.

• Compensation based on Shares, Trust Units and Equivalents

Where we discuss compensation in the form of shares, trust units, deferred share units, etc., we use “shares” unless referring to one specific type of compensation in this group. This does not include compensation in the form of stock or trust options.

Special Report: Improving the Board Composition Planning and Director Selection Processes • Korn/Ferry International and Patrick O’Callaghan and Associates surveyed 132 Board Chairs, Directors and CEOs to produce this special report, which can be found on pages 6 to 17. Respondents were either personally interviewed or completed an online survey.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 5

Special Report

Improving the Board Composition Planning and Director Selection Processes

6 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Introduction Board composition is at the heart of board effectiveness. Over the past 20 years, directors have told Korn/Ferry International and Patrick O’Callaghan and Associates that no matter what challenges the board is facing, its effectiveness depends on the right mix of skills, experience, backgrounds and personalities. As executive search professionals engaged in assisting boards in all aspects of the director selection process, we have observed significant changes in the director recruitment process over the last decade. This past Spring, we surveyed or interviewed 132 directors across Canada to assess their views and experience regarding the selection of directors, and gathered their comments about current and future challenges. The following are typical of the comments we heard: The board cannot be effective without the right people. “Governance” is pretty theoretical without directors who have the skills and understanding to provide effective oversight and add strategic value in a cooperative but challenging environment.

There has been a dramatic change in the manner in which boards recruit directors. In fact this may be one of the areas that has changed most significantly in the last fifteen years, and based on the board’s expanded role and impact, this was a necessary change and should be no surprise.

Dramatic and Significant Changes This survey was designed to look at change in the board composition planning and director recruitment processes. Directors reported that dramatic change has occurred in all aspects of these processes.

Early

Planning

87

%

observed improvements in the processes boards use to plan their ideal composition and to develop criteria for director selection.

Candidate Identification

65

New Candidate Pools

CEO Role

76

%

%

74

%

observed improvements in the processes used to identify potential candidates.

reported seeking director nominees in new or different pools of candidates.

reported the CEO’s role in planning the board’s composition and director selection process has changed.

Candidate Assessment

56

Candidate Attraction

%

42

observed improvements in how boards assess potential candidates.

%

reported boards have changed the processes they use to approach and attract potential candidates.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 7

These changes are entirely understandable.

Directors are more actively engaged in developing and approving corporate strategy and assessing risk.

They are expected to have a comprehensive understanding of the organization’s business and industry. Board leadership roles are much more demanding. Boards are being held more accountable for the performance of their organizations and their leaders. Compensation is significantly higher and the role of a director is more time consuming. There is growing recognition that board diversity brings valued, new perspectives and improves board decision-making.

Regulators and shareholders are increasingly interested in board composition and there is an emphasis on greater transparency and more comprehensive reporting around director backgrounds and the director selection process. Suncor Energy Inc. provides a particularly good example of comprehensive and effective disclosure of its practices in its Management Proxy Circular dated March 1, 2012. (visit www.sedar.com for a copy) Its report outlines both the breadth and depth of their process succinctly.

Regardless of which aspect of board composition planning and director selection we discussed with directors, there was a sense that the change has involved a movement from “a very relaxed and informal, almost ‘ad hoc’”, process to one that has become increasingly more “rigorous” or “disciplined”.

In fact, 58% considered director selection as one of the most critical functions of the board, so it is no surprise it is being approached with increasing formality and discipline.

We used to take a very casual approach to choosing directors. The process was led by the CEO and the board really just followed his lead.

Our board took control of the process in the late nineties but it wasn’t really until the last five years that we have really invested the time and effort that director selection deserves.

The improvement is not a change in process.

The same activities take place in terms of search, interviews, etc. but our board approaches the process with much greater depth and seriousness.

The majority of the directors we surveyed indicated their boards have adopted a more strategic, deliberate, structured and disciplined approach to director selection. The challenge is to ensure the new processes include mechanisms to allow boards to assess the softer behavioural qualities that ultimately determine how effective a particular director will be as part of the team, and how the new director will contribute to overall board effectiveness.

Early Planning - A Deeper and Wider Board Composition Assessment to Develop Criteria for New Directors Eighty-seven percent of directors reported improvement with regard to how boards plan their ideal composition and develop criteria for director selection.

The use of a board composition and planning matrix exemplifies the evolution of this process. The early matrices were a clear way to lay out some basic categories such as age, gender, geographic location, general field of experience/expertise and then develop a picture of how well the board was represented in those categories. Building and completing the matrix was a fairly quick process and the matrix was not frequently revisited, generally only when a director vacancy was imminent.

Today’s board composition and planning matrix has changed significantly. Most boards now begin the process using a “blue sky approach”. One director explained how her board begins the process: Several years ago, our governance committee looked at the company’s operations and strategy and then designed a board matrix based on the ideal skills and experience we required to provide effective oversight and to add value as management develops longer-term strategy and assesses risk.

We started with a blank sheet and each year since we have adjusted the matrix based on our long-term strategic objectives. We discuss this annually with the full board and outline our current and future gaps. This is the foundation document for planning director selection.

8 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Many directors indicated the descriptive categories, used to describe the required criteria, drill down to a much deeper level of detail than they had previously and are closely linked to the strategic objectives of the organization.

We’ve worked hard on our skills matrix over the past five years. It is updated annually with thought to our strategic direction. The matrix is constantly modified and is very detailed.

We are more conscious of keeping the skills matrices current, using input from the director self assessment process, the Chair, the CEO and senior management. We do this to ensure we have appropriate skill sets and they are consistent with our current plans and strategies. It has been almost revolutionary. In the last 10 years, nearly all the boards on which I have been a member have started to focus on well-defined skill sets in a more thoughtful and objective manner.

Of those noting improvement in the board composition planning and director selection planning processes, 58% told us the processes include the use of a matrix.

However, some directors cautioned that the value of this tool depends upon thoughtful implementation.

It can easily become a “box-ticking” process rather than something that truly adds insight. They cautioned boards to guard against defaulting to the hunt for a perfect “paper candidate” through the use of a matrix.

Fit with the culture and personality of the board is equally important.

Boards take the development of the skills matrix far more seriously than in the past. They look at the skills across the whole board and any holes are a serious issue. I have also seen a growing desire to add to the matrix the sense of culture fit with the board and management. No matter the skills, if the prospective director cannot fit with the board culture, he or she will not be a success.

Other key changes at the early planning stage include:

•

The role of the governance and nominating committee has expanded enormously over the past decade. This committee has the responsibility for leading the board through a comprehensive evaluation of the board’s current composition.

Many directors emphasized the need for a thorough review of board composition at least on an annual basis.

We look at board succession with the same

rigour as we look at management succession.

•

•

•

Many boards have a comprehensive map that is usually separate from the board skills matrix.

This map examines age, length of service, retirement date, terms, gender and any important representational requirements. Some boards combine this information into a master matrix.

The map provides an advanced alert system and a guide for the timing of potential changes. Boards are looking at their requirements two or three years ahead so that they can effectively plan for potential leadership and committee changes and begin identification of potential candidates much earlier than traditionally has been the case.

The ideal board composition plan is closely tied to the organization’s current operating activities, strategic objectives and the need for the director to understand and assess risk. What skills and experience are required on the board if the board is to add value? Directors have recognized that major or significant changes in strategic objectives have an impact on the ideal composition of the board.

For the first time in my experience as a director, our board early-retired two directors who simply didn’t have the knowledge and experience we needed at this stage in the company’s development.

Boards are much more open to considering a multitude of inputs when reviewing board composition. They consider input from board evaluations, committee and peer evaluations, the CEO, the board chair, the governance and nominating committee, executive search firms and, more frequently, the input from key shareholders and stakeholders.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 9

•

•

Boards are giving serious consideration to diversity issues. Directors widely reported a focus on diversity including age, gender and ethnic background as they recognize the benefits of a diverse board, the economic impact of diversity and the message diversity sends to employees, customers, shareholders and other stakeholders.

With the skills matrix we have more filters – geographic requirements, technical requirements, ethnic, gender – however we are careful not to compromise skill and experience requirements.

Annual disclosure regarding directors’ backgrounds, attendance, compensation and the manner in which the directors are appointed and assessed is becoming much more comprehensive. Suncor Energy Inc.’s 2012 Management Proxy Circular, mentioned previously, is an excellent example and provides a very thoughtful and informative description of their director recruitment process.

The improvement in disclosure documents has increased directors’ awareness around what constitutes an effective process.

Casting a Wider Net to Identify Prospective Directors Seventy-four percent of directors observed improvements in the processes used to identify potential director nominees. A rigorous planning process has led to an equally rigorous process to identify prospective directors. The carefully designed candidate profile is rarely filled today by a quick review of the current board’s networks. Most directors recognize that implementing a short-cut approach is a missed opportunity and may have a serious negative impact on the quality of the board. Directors used many ways to describe this change; they spoke of “casting a wider net” or “putting more horses in the race” or using a “wider lens” to describe their efforts to expand their searches, but they also broadened the field of people who contribute potential candidates for consideration.

We are evolving from choosing potential directors whom we know, to looking at people with deeper and broader experience than ourselves. There can be a reluctance to tamper with chemistry but we all recognize the need to reach out for more and better candidates.

Today’s best practices in identifying prospective directors involve a variety of steps and individuals.

The search starts with developing a candidate profile, a process that ensures the board is on the same page with regard to the skills, background and experience required. The next critical step is to develop a search strategy that casts a broad net over the candidate pools that may have potential directors with the identified criteria required.

The development of a search strategy is critical to a successful search. Our board engages an executive search firm to help us through all the stages of the director search and this inevitably leads us to casting a much broader net than we could using our own networks.

Directors are increasingly experienced at developing a search strategy that takes boards well beyond the traditional sources of candidates. Sixty-five percent of directors reported they are seeking candidates from different pools than they did in the past. Another 29% told us their boards are not yet looking at new pools of candidates, but they need to.

Historically we focused on people who had been a CEO of a large company. Today we look at second and third line executives with significant operating and/or functional responsibilities. We like at least half the board to have some kind of link to our industry, but it is important to have fresh perspectives of people from similar but different environments. We look at leaders of professional groups, associations, universities and politics.

Once the search criteria is established, we push ourselves to think as broadly as we can.

10 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Filling the Net: The Search Has Expanded, But Is It Easier?

Directors told us that although they are “casting their nets wider” to seek candidates, this broadening of the search has not necessarily made it easier to complete.

Fifty-one percent of directors told us it is more difficult to identify directors with the skills, experience and backgrounds they are targeting, and only 13% of directors are finding it easier than the old “ad hoc” process.

The difficulty is not surprising and stems from several reasons:

• • •

•

•

•

While the search can be difficult, especially for the smaller or lesser-known boards, there are steps boards can take to make it easier:

•

potential directors are taking on fewer board memberships, therefore more individuals are required to fill the vacancies; potential directors are scrutinizing potential directorships carefully and in some cases taking themselves out of the running; there is still some resistance to seeking people outside of a known network – the planning and preparation move along, but when it comes to actually looking outside the usual circles, some boards still end up reverting to familiar faces; looking to new pools of directors means that some candidates, who are considering their first major board memberships, are not yet “on the radar” so they are more difficult to locate and not effective at making themselves known; boards are still learning how to assess the more complex backgrounds they are seeking, compared to “generalist” directors. This takes more work and candidates can be overlooked; and

while boards recognize the need to broaden their search, there is still hesitation on the part of some to accept new sources, or below C-suite level executives, as viable places to find highly qualified and acceptable candidates.

• •

•

trust the process and resist the urge to say “we tried, but there is no one out there” – continue putting the same kind of discipline and scrutiny that was used to develop the candidate profile into identifying and seeking sources of candidates; directly challenge and test your own assumptions every time you determine a certain candidate pool isn’t appropriate; commit to early and continual planning, and maintain a regularly reviewed evergreen list; directors should always be on the lookout for potential new board members, even if they are looking several years ahead, and then work to develop relationships with those individuals; and seek expert assistance; the majority of directors we surveyed told us that search firms helped them to find the candidates outside their networks and ensure they truly looked at a wide range of viable candidates.

As you look into the future, what do you predict to be the new skills, experience and backgrounds that boards might be seeking in the next 10 to 15 years?

Global experience and contacts

28%

Risk management mindset / experience

18%

New technology / digital / social media / IT security Human resources / compensation

Strategic thinkers / strategy development experience Finance (especially complex issues)

24% 18% 15% 11%

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 11

Executive Search Firms Most directors indicated the use of an executive search firm assisted them in broadening the candidate pool and introducing candidates that would not have been identified by the board’s networks.

The use of search firms has taken the reach well outside those we know personally. This provides greater confidence that the right person will be picked after we have looked at a wide range of possibilities.

Half of the directors we interviewed told us the most significant change in how boards identify potential nominees is that they are using executive search firms. International executive search firms generally have offices throughout the world, and have the capacity to introduce candidates who aren’t the “usual suspects” from the expected sources. They also develop strong relationships with many potential directors and executives and have a good sense of who would be both a qualified and interested candidate.

We’ve had success with search firms. They have the extended networks to find the people who fit the bill and want to sit on a board, and the firms can check them out pretty extensively too.

In recruiting a director, the board seeks some combination of specific knowledge and skills that complements the board and adds proficiency.

Executive search firms work with boards to define these targeted experiences and to design research strategies that meet these objectives. Key considerations in the development of director candidates include the availability to serve on the designated dates, freedom from conflicts of interest, capacity for the time commitments to be successful and expectations matched with a candidate’s own ambitions. These are critical to vet early in the navigation process toward a potential director and search firms are organized to gather and develop this information as part of their process.

Finally, executive search firms have extensive resources to reference candidates from different perspectives, including the ability to get very candid feedback, and they can play an important role in the introduction, assessment and finally the director attraction process.

Search firms bring us individuals we would never have thought of or considered. They enable us to accumulate an evergreen list because they continually keep track of who is going where and what their ambitions are. We don’t place much emphasis on the board’s personal networks.

Usually names that originate here don’t correspond with gaps in our skills matrix.

When we recruited our last director, the search firm worked with us starting right from reviewing and updating our matrix. We really needed someone with specific international experience and connections, and we ended up with excellent candidates to consider, all of whom were completely outside our own networks.

Half of the directors we interviewed told us the most significant change in how boards identify potential nominees is that they are using executive search firms.

Starting Early Directors also discussed the value of identifying and approaching candidates well in advance of the time the board has an opening, or before that potential director is available for appointment.

We have an evergreen list of potential director candidates, but it goes beyond just putting some interesting names on a list. Whenever possible our board likes to begin conversations with potential candidates several years in advance. This allows us to indicate our interest early to an attractive candidate who may not be able to join our board immediately but may be retiring or coming free from some other commitment in the next few years. It also allows us to get to know the candidate over a longer period of time and with greater flexibility around meetings with current directors and the CEO. It helps us describe our story and it genuinely assists the potential director in learning about our company and gaining confidence in how he or she can make a contribution.

12 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Naturally, this can only be done if there has been thoughtful early planning and preparation by the governance and nominating committee. In fact, it requires a governance and nominating committee that is very proactive and well organized. These discussions must be approached carefully as they are not a promise from either party for a future board seat, but rather a discussion of mutual interest. Boards also need to make sure they don’t get too wedded to the idea of this being the perfect candidate. Thorough process is still important, even when there are strong candidates identified very early. It is important the full board understands this process and is kept well informed along the way.

Our governance committee and HR work together to develop a candidate database, and they also get input from our main shareholders and the senior management team. This is ongoing, not just for a specific search. It is always a work in progress.

The Role of the CEO There was widespread opinion that identifying a prospective director used to be almost entirely the CEO’s decision. However, 76% of directors told us today’s CEOs are less engaged in directing the process, although their views are important and have an impact on the selection process.

Before, the CEO used to drive the process.

Today, he/she is in the passenger seat (but not the back seat).

This does not mean the CEO is disconnected from the process. More than half of those who told us the CEO’s role has changed, noted the CEO is still relied upon to support the process and provide input.

In many cases the CEO is able to identify strong potential nominees. The candidate’s chemistry and fit with the CEO are still an important consideration, and several directors noted that their CEOs have a “soft” veto.

The Challenge of Attracting New Director Candidates Forty-two percent of directors reported boards have changed the processes they use to approach and attract potential candidates. Just identifying potential directors isn’t enough—boards also have to work to differentiate themselves from other organizations to attract talented candidates. Board work is more time consuming and more challenging than it used to be.

Directors want to focus their efforts where they will make a real contribution to an organization that has strong leadership, a well-planned strategic direction and effective, transparent governance.

I think you attract the best directors because you have a dynamic business, strong strategy, an excellent management team and a strong board. Near the end of the process, offer the candidate lots of access to senior management and other directors to help emphasize this.

As mentioned earlier, one way that boards differentiate themselves is through early contact with potential directors. Early identification and a long lead time demonstrate interest on behalf of both parties, and give both parties plenty of time to assure themselves there is a good fit. Early contact gives candidates the time to understand and assess the organization’s strategy and management team, which is especially important for smaller or newer companies that may not attract directors as easily as the “big names”.

We are more precise in defining the contribution of the prospective board member. There is a focus on the team and how the candidate will fit in. We are very specific about this.

The CEO continues to have an important role in helping to attract candidates. Even though the CEO doesn’t select the new director, it is widely recognized by both boards and candidates that the management/ board relationship has an enormous effect on the success of the organization and the effectiveness of the board.

76% of directors told us today’s CEOs are less engaged in directing the process, although their views are important and have an impact on the selection process.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 13

A companyâ&#x20AC;&#x2122;s reputation for transparency and strong governance practices is also essential. Candidates need to know the board is truly independent and the board has a good understanding of the major risks and risk management processes in place.

4 An effective governance framework and practices, a strong board chair and a board that works well together. Directors want to ensure that the board uses processes and practices that make sense, meet best practice guidelines and truly add value.

Competitive director compensation is seen as an important, but not deciding factor. Directors downplayed it as a real differentiator for a candidate.

While directors want to be compensated for their efforts, board compensation at public companies is generally competitive. Few directors are looking at compensation as the key factor that makes the difference as to whether or not to accept an invitation to join a new board.

5 Competitive compensation. Compensation should be fair and competitive with organizations of similar size and scope. Appropriate compensation demonstrates the board takes the contribution of its directors seriously and values the benefits of an effective board.

You have to demonstrate that it is a real functioning board with the right oversight of strategy and an excellent CEO. You have to give comfort as to reputation and integrity. The organization needs a solid grasp on risk management and director compensation needs to be realistic and fair.

Five Key Factors In Attracting Great Directors 1 Reputation is all-important. The organizationâ&#x20AC;&#x2122;s overall reputation in its industry and the community, the quality of its leadership and the depth of the management team and its commitment to integrity and strength of its board are all critical.

2 A compelling story and a great strategic plan.

Directors want to be part of a dynamic organization that captures their interest and has a plan for the future. Directors want to understand how they can contribute and add value to the board. They want to understand what the board expects from them and over what time period.

3 Risk management. Have the key risks been identified and how are they managed on an on-going basis? Is there transparency and a commitment to assessing and managing risk?

Directors want to be part of a dynamic organization that captures their interest and has a plan for the future.

Assessing Candidates More than half of the directors we surveyed observed improvements in how boards assess director candidates, and most say the key improvement is a more rigorous and disciplined process. This process includes more meetings with candidates, often all of the board members and key members of senior management, more in-depth interviews, better referencing and more thorough due diligence.

When directors are meeting candidates, they come well prepared with questions for interviews that are deliberate and probing.

There is more preparedness by board interviewers, rather than just a general conversation with the candidate.

Boards now handle directors as they would CEOs. Today it is more thorough, more in-depth. More like an executive hire.

There are many more preliminary meetings with the candidates than in the past. These meetings are now more interactive. Candidates ask just as many questions about the board, its members and its way of operating and about the company, as the committee members ask about the candidate and his/her experience. I find this development interesting for it promotes good dynamics amongst the board members.

14 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

About a third of directors have not yet observed changes, but think there should be improvements, particularly with regard to judging a candidate’s “fit” with the board culture and chemistry.

We need to bring the tools and methods of assessing executives to the boardroom. Fit and social dynamics are so important in the boardroom.

Personal behaviors are so key; how can we assess those? We depend exclusively on reference checking for this aspect of our assessment.

It would be great if we were able to more thoroughly assess the behavioural aspects of incoming directors. Chemistry at the table is crucial and often selection of a new director can threaten this. We could apply more rigour here.

Reference checking is increasingly a critical part of the assessment process. Historically, it was felt that such high profile corporate leaders didn’t require such in-depth reference checking. But as the pools of candidates have broadened, reference checking has become much more rigorous and extensive. Indeed, reference checking is one of the richest sources of information regarding style, behavioural traits, chemistry and potential fit.

We thoroughly reference all candidates. We do not leave reference checking exclusively to the executive search firms. We work with the firms to develop a range of references that we want to pursue, and some of our directors or the board chair will conduct references directly, as part of the assessment strategy.

Directors noted a significant improvement in the quality and relevance of the questions prospective directors ask. Attracting top-notch candidates requires that interviewers are lively and well-informed and represent the organization well. Candidates undertake much greater due diligence than ever before.

The biggest change is more interaction with senior management and with all the directors. Candidates want to get a sense of the capacity of senior management. Some years back, this would not have extended beyond the CEO. Also, candidates want to meet others on the board beyond the CEO and board chair.

Onboarding: The Process Stays Strong after Recruitment Once a new director is elected or appointed, boards are working to retain and make the most of their new members with a well-planned onboarding process.

This represents change as well. Directors told us that in the past, a director got a manual, perhaps a discussion with the chair and the CEO, and then basically observed for at least a year before really contributing. However, on today’s smaller and more deeply engaged board, there is no room for an “observing” director and new board members are expected to be contributing soon after they arrive.

This is the single most important part of the director recruitment process! It does not get the attention it deserves.

We asked directors to tell us about what they consider to be the most effective practices for the engagement, integration and orientation of a new director. The most frequently cited practices were designed to help the new director gain an in-depth knowledge of the organization and the board. New directors meet with the key senior management team members, preferably in person, to develop a variety of viewpoints. These meetings include a thorough review of the strategic plan as well as site visits.

Providing strong documentation is also key, but it does not replace the depth and breadth of the discussions with management and site visits.

Time is needed to understand an organization and to learn the issues. Provide new directors with context of past board decisions, critical successes and errors and any conflicts at the management and/or board level.

Once a new director is elected or appointed, boards are working to retain and make the most of their new members with a well-planned onboarding process.

Many directors noted that the process takes a big time commitment on the part of the new director, and that directors are expected to get up to speed and be engaged much faster than in the past. New directors must learn and engage quickly.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 15

When you bring on a new director, you have to get a commitment of time to spend in the office, field and with management. You have to close the information gap; it’s the feel of the business, issues, culture and interaction with the people.

The process is not that different from a CEO coming on board.

Getting new directors immediately involved with committees is also seen as essential to their orientation. Committees are the workhorses of the modern board and exposure to them is an efficient way to provide the new director with a working knowledge of the board’s key issues and how it operates. This involvement ranges from immediate membership on specific committees such as audit or compensation, to having a new director attend all committee meetings for at least a year following his or her election to the board.

A mentor or “buddy system” for the new director was reported to be effective to help usher the new board member through his or her first year. Some directors told us their new directors had both a board and a management mentor. This system provides a way for the new director to ask questions easily, without having to seek out someone specifically for that purpose, and to help them navigate the culture on the board and management teams, and between them.

Have the whole board reach out to welcome new directors. Quickly make them comfortable and help them understand where can they add value.

Help them to feel part of the team. Board chair leadership is crucial here.

A mentor or “buddy system” for the new director was reported to be effective to help usher the new board member through his or her first year.

Social time with directors and/or management was also noted as being an important part of bringing the new director into the culture of the organization and its board, and helping facilitate “fit” with the team.

One of the deterrents to reaching outside the board members’ networks is the risk that the “outsider” will not integrate well. My experience is that some 15% to 20% don’t work out as well as we had hoped. One of the keys to success has been where one board member has the lead in integrating the new member, from things as mundane as convenience of phone meetings for time zone differences, to connecting about agenda building to be sure to capture the key strategic input for which we choose the newcomer.

The Evolution in the Director Recruitment Process: What are Effective Boards Doing Now? Boards have undergone enormous change in how they organize themselves and undertake their responsibilities over the past 10 years. We believe that no aspect of board governance has changed as significantly as how boards plan for their composition and recruit directors. The key elements that have been embraced within today’s board composition planning and director selection process are: 1 Early planning is the foundation of a well-planned director search. Most boards are using a matrix that takes into account such factors as the organization’s long and short-term strategic objectives and operating environment. Categories on the matrix are defined in detail to develop a complete picture of complex needs of the board.

16 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Boards have undergone enormous change in how they organize themselves and undertake their responsibilities over the past 10 years. We believe that no aspect of board governance has changed as significantly as how boards plan for their composition and recruit directors.

2 Involvement in the board composition planning and director selection process is much wider than it used to be. The CEO is a participant, but not the driver. The process is led by the governance or nominating committee and involves all board members, members of the senior management team, major stakeholders and executive search firms at various stages. The extensive involvement of the different parties helps ensure that different perspectives are considered, assumptions are challenged and an exhaustive search extends far beyond the board and CEO’s personal networks.

3 Boards are looking to new pools of candidates in order to find the prospective directors who meet the complex profiles. There is more demand for directors with specialized backgrounds and skill sets, and boards cannot find these candidates looking in the same old places. This move outside the comfort zone is the area where boards are still finding difficulty.

4 Boards are identifying potential candidates very early, sometimes years in advance to establish a relationship over time, so both parties can assess potential fit. Reaching out to the members of a well-researched evergreen list has become an ongoing practice for boards, regardless of whether or not they have an imminent need for a new director.

5 Director candidates are focusing just as much scrutiny on prospective boards as the boards are on the candidates. This means that boards need to work to differentiate themselves from other potential board offerings to the candidates, who are taking on fewer boards and are very selective about the ones they accept.

6 Boards are doing much more exhaustive reference checking and due diligence about prospective directors. These inquiries are rigorous and well-planned, not just casual conversations.

7 Executive search firms are employed by just over half of the directors we interviewed, and are used extensively in all stages of the recruitment process.

These firms help address one of the most difficult parts of modern director recruitment: the extensive search into different pools of candidates that are beyond the board and CEO’s personal networks.

8 The disciplined and rigorous process extends into on-boarding new directors. Today’s boards are smaller and deeply engaged, so new members need to be up-to-speed and contributing quickly.

New directors go through a thorough and well-planned process that gives them an in-depth knowledge of how the board and organization function from several different perspectives.

As with all “best practices”, application will differ from board to board. However, the lesson from this year’s survey is that the director search process has evolved into a highly strategic activity that is disciplined and rigorous. It is a process that is ongoing, not one triggered by an imminent vacancy. While some are experiencing difficulty with certain aspects of the process, they continue to persevere; no one told us they want to go back to the old way of doing things.

The dedication of directors to these disciplined processes is a testament to how seriously this issue is being considered by boards across the spectrum in Canada.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 17

Board Independence

18 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • The level of independent directors on Canadian boards has been relatively stable with between 92% and 94% reporting a majority of independent directors since boards first started reporting under the CSA guidelines seven years ago • In 2011, 58% of boards had an independent chair and 34% had a lead director, compared to 30% of U.S. boards with an independent chair and 83% with a lead director 1 • The prevalence of lead directors is increasing rapidly in the United States, with 83% 2 of companies reporting them in 2011 compared to 65% in 2010 3 • 14% of companies combined the Chair/CEO in 2011, the lowest percentage since we first tracked this percentage in 1993. In the United States, 73% 4 of the largest 200 companies combined the Chair/CEO role

•

This was the seventh year that companies have disclosed their composition using the term “independent” under the disclosure requirements of the Canadian Securities Administrators (the “CSA”).

•

For the past two years, 94% of boards had a majority of independent directors. This percentage has stayed relatively stable at between 92% and 94% since boards first began reporting independence in 2005.

•

Larger boards have been the most consistently independent since 2005. In the $1B to $5B and over $5B categories, the percentage of boards with a majority of independent directors has remained between 92% and 97%, while the $500M to $1B and under $500M categories have fluctuated between 84% and 97% with a majority of independent directors.

Percentage of Sample with a Majority of Independent Directors

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

88% 91% 94% 97% 94%

2010

95% 90% 96% 94% 94%

2005

84% 94% 95% 92% 92%

2012-2013 Public Company Governance Survey, published by the National Association of Corporate Directors.

2012-2013 Public Company Governance Survey, published by the National Association of Corporate Directors.

2011 Public Company Governance Survey, published by the National Association of Corporate Directors.

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

1 2 3 4

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 19

Boards Without a Majority of Independent Directors

Bell Aliant Inc.

IGM Financial Inc.

BMTC Group Inc.

Kirkland Lake Gold Inc.

Canada Bread Company, Limited

Linamar Corporation

Cascades Inc.

Martinrea International Inc.

China Gold International Resources Corp. Ltd.

Northern Dynasty Minerals Ltd.

E-L Financial Corporation Limited

Sears Canada Inc.

Genworth MI Canada Inc.

SMART Technologies Inc.

Guyana Goldfields Inc.

Sprott Resource Corp.

High River Gold Mines Ltd.

Winpak Ltd.

Independent Director Meetings â&#x20AC;˘

The CSA guidelines recommend that the independent directors hold regularly scheduled meetings at which non-independent directors and members of management are not present. Ninety-four percent of boards reported that they held meetings of only the independent directors.

â&#x20AC;˘

Eighty-two percent of boards disclosed the number of meetings held by the independent directors.

The average number of these meetings has been seven for the past three years.

Number of Meetings of only Independent Directors Average

2011

7

2010

7

2005

6

Median

2011

6

2010

6

2005

5

2011

0 to 34

2010

0 to 35

2005

0 to 22

Range

20 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Inside Directors •

We define an inside director as a director who is an employee of the company on whose board that director sits.

•

The average number of inside directors is one, as it has been for the past five years. The median is also one, as it has been for the past nine years.

•

Eleven percent of boards had more than two inside directors in 2011. This compares to 12% last year and 22% in 2002. Most of these are larger boards, with 81% of boards with more than two inside directors coming from companies with more than $1 billion in assets.

•

Three percent of companies in our sample this year had no inside directors.

•

Boards with a significantly higher than average number of inside directors were:

6 Insiders Power Financial Corporation (20)

4 Insiders Barrick Gold Corporation (14)

Dorel Industries Inc. (10)

E-L Financial Corporation Limited (10)

Kirkland Lake Gold Inc. (8)

Pacific Rubiales Energy Corp. (12)

Power Corporation of Canada (21)

Rogers Communications Inc. (18)

Shaw Communications Inc. (16)

Transcontinental Inc. (15)

(Numbers in brackets indicate total number of directors on the board.)

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 21

Independent Board Leadership •

The CSA governance guidelines state that board chairs should be independent directors, and, where this is not appropriate, the board should appoint an independent lead director.

•

Boards are increasingly taking on some form of independent leadership. In 2011, only 11% had no independent leadership, down from 15% in 2010 and the lowest level since we began tracking this information in 2005.

Percentage of Boards with Independent Leadership*

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

65% 89% 94% 90% 89%

2010

65% 80% 91% 88% 85%

2005

78% 71% 84% 82% 80%

*

•

An independent board chair and/or independent lead director.

Independent board leadership practices differ between Canadian and U.S. boards, with more Canadian boards using an independent chair and more U.S. boards using lead directors:

°

In 2011, 58% of boards had an independent chair, which is the highest level since we began tracking this information in 2005. In the United States, 30% 5 of boards had an independent chair.

° Thirty-four percent of boards had a lead director, which is the highest level since we began tracking

this information in 2005. The prevalence of lead directors is increasing rapidly in the United States, with 83% 6 of companies reporting them in 2011 compared to 65% in 2010. 7 •

The way boards establish independent leadership has remained relatively stable since reporting on independence began in 2005. During this period:

°

Between 51% and 58% have had an independent chair.

°

Between 29% and 34% have had a lead director.

•

Eleven percent of boards had no independent leadership, down from 15% last year and 20% seven years ago.

Of this group:

°

32% had a combined CEO/chair;

°

26% had an executive chair;

°

38% had an outside but non-independent chair; and

°

3% had no chair.

2012-2013 Public Company Governance Survey, published by the National Association of Corporate Directors.

2012-2013 Public Company Governance Survey, published by the National Association of Corporate Directors.

2011 Public Company Governance Survey, published by the National Association of Corporate Directors.

5 6 7

22 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Independent Board Leadership

Independent Chair

2011

58%

2010 54%

2005

51%

2011

34%

Lead Director

2010 32%

2005

29%

Neither

2011

11%

2010 15%

2005

20%

Board Chairs •

In 2011, 14% of boards combined the roles of board chair and CEO, compared to 15% in 2010. The 2011 level is the lowest since we began tracking this information in 1993. The change in 2011 primarily comes from smaller companies; in 2011, 19% of companies with assets of less than $500 million combined their chair and CEO compared to 24% in 2010.

•

In the United States, 73% 8 of the largest 200 companies combined the chair/CEO role.

•

Of the boards that combine the CEO and chair, 74% had a lead director compared to 68% in the previous year.

Percentage of Boards That Have Separated the Board Chair and CEO

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

81% 89% 87% 84% 86%

2010

76% 90% 87% 83% 85%

2002

62% 60% 67% 75% 66%

8

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 23

Board Chairs

Independent Chair

2011

58%

2010 54%

2005

51%

2011

14%

Non-Executive, Not Independent

2010 15%

2005

17%

2011

14%

Combined Chair/CEO

2010 15%

2005

19%

2011

12%

Executive Chair

2010 14%

2005

12%

2011

2%

No Board Chair

2010 2%

2005

24 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

2%

Lead Directors

Percentage of Companies with a Combined Board Chair and CEO that have a Lead Director

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

33% 60% 94% 71% 74%

2010

44% 40% 88% 71% 68%

2003

33% 59% 72% 56% 54%

Percentage of Companies with an Executive Chair* that have a Lead Director

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

28% 100% 82% 80% 73%

2010

17% 60% 77% 75% 66%

2003

30% 38% 30% 56% 40%

*

An â&#x20AC;&#x153;Executive Chairâ&#x20AC;? is a chair who is not the CEO and whose compensation is disclosed as executive compensation, rather than as director compensation.

Percentage of Companies with a Non-Executive, Non-Independent Chair that have a Lead Director

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

25% 57% 76% 60% 64%

2010

43% 44% 74% 64% 61%

2005

71% 13% 53% 56% 50%

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 25

Board Composition

26 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • The average age of directors is 62 and the median age is 63. Ten years ago, the average and median age was 60 • In 2011, 17% of directors were 71 or older, compared to 12% in 2002 • In 2011, 52% of boards either disclosed a retirement age or specifically stated that they did not have one, compared to 48% in 2010 and 24% in 2005 • Women made up 10% of directors in 2011 for the third year in a row and 54% of boards had at least one female director, an increase from 52% in the previous year • In 2011, 77% of boards exceeded the CSA minimum requirements for disclosure about individual directors

Director Information •

Governance disclosure in proxy circulars has evolved in most cases to go far beyond the minimum regulatory requirements. One area that has grown in recent years is information about individual directors, both in content and format.

•

Manitoba Telecom Services Inc., which was one of the winners of the Canadian Coalition for Good Governance 2011 awards for Best Practice for Proxy Disclosure, is an excellent example of very thorough director information disclosure. Its full page profiles of each nominee are well designed to provide extensive information in an easy to read format.

•

In 2011, 32% of companies included a director skills matrix in their proxy circular, compared to 21% in 2010 and only 13% in the year prior.

•

In 2011, 77% of boards exceeded the CSA minimum requirements for disclosure about individual directors.

The most common elements beyond the required items were:

°

Age: 67%

°

Continuing education: 19%

°

Primary education (degree/diploma): 67%

°

Total compensation received: 10%

°

Other directorships: 67%

°

Board interlocks: 6%

°

Whether director meets shareholding requirements: 35%

°

Vote results from previous AGM: 4%

°

Areas of expertise: 34%

°

Date of mandatory retirement: 2%

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 27

Director Age •

While not mandatory, disclosing each director’s age is becoming common practice. In 2011, 67% of boards disclosed the ages of their directors.

•

Overall, we knew the age of 84% of directors of the boards studied, which is the highest level yet. In 2010, the age of 82% of directors was disclosed, up from 80% in 2009. In 2003, boards only disclosed the age of 63% of directors.

•

In both 2011 and 2010, the average age of directors was 62 and the median was 63. In 2002, the average and median age of directors was 60.

•

The prevalence of directors aged 71 or older continues to grow and is now the highest since we began recording this information. In 2011, 17% of directors fell into this category, which is an increase from 15% last year. In 2002, 12% of directors were at least 71 years old. This increase may be tied to the fact that more boards are raising director retirement ages above the age of 70, or getting rid of mandatory retirement altogether.

•

In the United States, the median age of directors at the largest 200 companies was 64, which is an increase from 63 the previous year. 9

Director Age Distribution

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

3%

<1%

1%

<1%

1%

2010

1%

<1%

1%

1%

1%

2002

3%

2%

2%

1%

2%

2011

6%

8%

10%

7%

8%

40 and younger

41 to 50

2010 8% 10% 9% 6% 8%

2002

22%

19%

12%

11%

15%

2011

31%

31%

33%

27%

30%

51 to 60

2010 32% 34% 34% 27% 31%

2002

31%

32%

30%

30%

31%

2011

42%

45%

39%

49%

44%

61 to 70

2010 41% 40% 41% 50% 45%

2002

33%

30%

44%

47%

40%

2011

17%

17%

17%

16%

17%

71 and older

2010 18% 16% 14% 16% 15%

2002

9

12%

16%

12%

10%

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

28 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

12%

Retirement Age â&#x20AC;˘

Retirement age policy is another area of non-mandatory disclosure that is becoming commonplace. In 2011, 52% of boards either disclosed a retirement age or specifically stated that they did not have one. This is the highest level of reporting that we have seen on this topic. In 2010, 48% of companies disclosed whether they had a director retirement policy, which is well up from 24% in 2005.

â&#x20AC;˘

In the United States, 83% of the largest 200 companies disclosed their director retirement age policies, which is an increase from 76% the previous year. 10

â&#x20AC;˘

In the last few years, the practice of disclosing that a board has no retirement age for directors has grown rapidly. In 2011, 26% of companies fell into this category, compared to 23% in 2010 and 5% in 2005.

Director Retirement Ages

2011

2010

2005

Retirement from the board at age 65

0 <1% 0

Retirement from the board at age 70

12% 12% 9%

Retirement from the board at age 71

<1% <1% <1%

Retirement from the board at age 72

7% 6% 3%

Retirement from the board at age 73

1% 1% 0

Retirement from the board at age 75

5% 4% 3%

Formal Policy, age not specified

Specify there is no director retirement age

26% 23% 5%

Combined retirement age/term limit

1% 1% 3%

No disclosure

48% 52% 76%

10

0 <1% 1%

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 29

Gender •

There has been a growing discussion regarding the importance of a diverse board over recent years.

While gender is not the only aspect of diversity that boards are considering, it is one of the most common issues being addressed. In 2011, 15% of boards addressed gender specifically when discussing their practices regarding board diversity.

•

We are starting to see a few boards state either specific quotas or less specific policies regarding proportionality of female directors. For example:

°

Emera Inc. has stated a policy that no fewer than 25% of its directors will be female. 11

°

National Bank of Canada states, “The Board feels that diversity among the members of the Board enriches discussion and therefore recognizes the importance of increasing the number of female directors and striving for parity between men and women on the Board... set an objective to have women nominees for half of all directorships that become vacant in the future.” 12

•

For the last three years, women have comprised 10% of the directors of the boards we studied.

In the 18 years we have tracked this information, 10% is the highest level reached. Prior to 2008, the percentage varied between 6% and 9%.

•

In 2011, 54% of boards had at least one female director, which is an increase of 2% over last year and is the highest percentage we have seen in this category since we began tracking this information.

•

In the United States 73% of boards have at least one female director, which is an increase from 67% in the previous year. 13

•

Eleven percent of boards had three or more female directors, a slight increase from 10% one year earlier.

In the United States, 12% of boards had three or more female directors. 14

Boards with at Least One Female Director

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

29% 29% 52% 79% 54%

2010

22% 34% 51% 80% 52%

2002

25% 37% 61% 78% 47%

11

Emera Inc. Proxy Circular, June12, 2012, p. 54

12

National Bank Proxy Circular, April 4, 2012, p. 22

13

2012-2013 Public Company Governance Survey, published by the National Association of Corporate Directors.

14

2012-2013 Public Company Governance Survey, published by the National Association of Corporate Directors.

30 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Boards with at Least One Female Director, by Industry

2011

2010

2002

Consumer Discretionary

87% 82% 62%

Consumer Staple

100% 92% 70%

Energy

38% 34% 36%

Financials

64% 60% 56%

83% 100% 31%

Health Care

Industrials

50% 42% 37%

50% 57% 26%

Information Technology

Materials

34% 32% 43%

100% 80% 67%

Telecommunication Services

Utilities

90% 100% 89%

ALL

54% 52% 45%

Female Directors Number of Female Directors

Percentage of Boards

2011 2010 2002

1

26% 28% 27%

2

18% 15% 14%

3

6% 6% 4%

4

3% 2% 1%

5

1% 2% 1%

6

1% 0 0%

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 31

Boards with More Than One Female Director Two Female Directors Advantage Oil and Gas Ltd.

Methanex Corporation

Agnico-Eagle Mines Limited

Metro Inc.

Agrium Inc.

Nordion Inc.

Alimentation Couche-Tard Inc.

North West Company Inc., The

BCE Inc.

Northland Power Inc.

Bombardier Inc.

Paramount Resources Ltd.

Cameco Corporation

Perpetual Energy Inc.

Canadian National Railway Company

Power Corporation of Canada

Canadian Tire Corporation, Limited

Power Financial Corporation

Canadian Western Bank

Quebecor Inc.

CGI Group Inc.

Research in Motion Limited

Chartwell Seniors Housing REIT

RONA Inc.

Cineplex Inc.

Russel Metals Inc.

Enbridge Inc.

Saputo Inc.

Equitable Group Inc.

Sears Canada Inc.

Great Basin Gold Ltd.

Shaw Communications Inc.

Great-West Lifeco Inc.

Stantec Inc.

Harry Winston Diamond Corporation

Stella-Jones Inc.

Home Capital Group Inc.

Sun Life Financial Inc.

Husky Energy Inc.

Suncor Energy Inc.

IGM Financial Inc.

Talisman Energy Inc.

Imperial Oil Limited

Teck Resources Limited

Ivanhoe Mines Ltd.

Thomson Reuters Corporation

Kirkland Lake Gold Inc.

TransAlta Corporation

Loblaw Companies Limited

Transat A.T. Inc.

Major Drilling Group International Inc.

Westport Innovations Inc.

Maple Leaf Foods Inc.

32 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Boards with More Than One Female Director Three Female Directors Astral Media Inc.

Manitoba Telecom Services Inc.

Bank of Nova Scotia

Open Text Corporation

Bell Aliant Inc.

Potash Corporation of Saskatchewan Inc.

Canadian Pacific Railway Limited

ShawCor Ltd.

Canadian Utilities Limited

SNC-Lavalin Group Inc.

EnCana Corporation

Tim Hortons Inc.

George Weston Limited

TMX Group Inc.

Industrial Alliance Insurance and Financial Services Inc.

TransCanada Corporation

Intact Financial Corporation

Four Female Directors Bank of Montreal

Rogers Communications Inc.

Canadian Imperial Bank of Commerce

Shoppers Drug Mart Corporation

Emera Inc.

Torstar Corporation

National Bank of Canada

Transcontinental Inc.

Five Female Directors Jean Coutu Group (PJC) Inc.

Manulife Financial Corporation

Laurentian Bank of Canada

Royal Bank of Canada

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 33

Board Size

34 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • Canadian boards have averaged nine members for seven years, after averaging 10 members for the eight years prior • 54% of boards had between six and nine members • The largest board in 2011 numbered 21 directors

•

The average and median board size have both been at nine since 2005.

•

There has been little change in average board size across all asset categories over the past few years. In each category, the average has remained the same or fluctuated by a single digit since 2003.

•

In 2011, the smallest board had three directors and the largest had 21.

•

In the United States, the average number of directors on a board is nine.15

Average Number of Board Members

2011 2010 2002

<500M 500M to 1B 1B to 5B >5B ALL 7 8 9 12 9 7 8 9 12 9 8 9 11 13 10

Percentage of Boards in Board Size Categories Board Size 5 or less 6 to 9 10 to 12 13 to 15 16 to 19 20 or more

<500M 500M to 1B 1B to 5B >5B ALL 15% 9% 5% 3% 6% 79% 78% 61% 21% 54% 6% 13% 25% 33% 23% 0 0 9% 28% 12% 0 0 0 12% 4% 0 0 0 2% 1%

Largest Boards 21 20 19 18 17

15

Power Corporation of Canada Power Financial Corporation Great-West Lifeco Inc. Manulife Financial Corporation Rogers Communications Inc. IGM Financial Inc. Royal Bank of Canada Toronto-Dominion Bank

16

Bank of Montreal Canadian Imperial Bank of Commerce Canadian Tire Corporation, Limited Empire Company Limited Shaw Communications Inc.

2012-2013 Public Company Governance Survey, published by the National Association of Corporate Directors.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 35

Board Assessments, Director Selection and Director Development

36 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • 91% of companies have a board assessment process • 87% of companies have a committee assessment process • 84% of companies had an individual director assessment process • We are seeing increased voluntary disclosure of assessment processes that are not required under the CSA disclosure requirements:

* 26% of boards with a committee assessment process reported a committee chair assessment,

* 39% of boards with a non-executive chair reported a board chair assessment, and

* 8% of boards with lead directors reported a lead director assessment

Percentage of Boards with Assessment Process

2011

2010

2002

Board Assessment

91% 91% 77%

Committee Assessment

87% 83% 67%

Individual Director Assessment

84% 84% 63%

Board Assessment •

For the past two years, 91% of companies had a board assessment process. In 2002, only 77% of companies assessed the board’s performance.

•

Larger companies are more likely to have board assessments. For the past three years, the percentage of boards at companies with assets of less than $1 billion that had a board assessment ranged between 71% and 80%, compared to 93% to 100% of boards at companies with assets of more than $1 billion.

•

In the United States, 92% 16 of companies conduct board assessments.

Committee Assessment •

In 2011, 87% of companies had a committee assessment process, up from 83% in 2010. In 2002, only 67% of boards assessed committee performance.

•

In the United States, 83% 17 of boards conduct committee assessments.

•

In 2011, 26% of boards with a committee assessment process in place stated that it included an assessment of each committee chair, up from 22%, 19% and 14% respectively in the previous three years. We believe that this growing practice reflects a recognition of the importance of the leadership role of committee chairs as committees are increasingly taking on a great deal of board work.

16

2012-2013 Public Company Governance Survey, published by the National Association of Corporate Directors.

17

2012-2013 Public Company Governance Survey, published by the National Association of Corporate Directors.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 37

Individual Director Assessment •

For the past four years, 84% of boards assessed individual directors. In 2002, only 63% assessed individual directors.

•

In the United States, 48% 18 of boards conduct individual director assessments.

Board Chair and Lead Director Assessment •

Companies are not required to disclose whether or not they assess the performance of their board chairs or lead directors; however, reporting this information is becoming a standard aspect of thorough board governance disclosure.

°

In 2011, 39% of boards with a non-executive chair reported a chair assessment, compared with 36%, 34% and 29% respectively in the previous three years.

°

Large companies are more likely to report board chair assessments. Sixty-two percent of companies with more than $5 billion in assets that had non-executive chairs stated that they assessed their chairs, compared with 11% with less than $500 million, 30% with $500 million to $1 billion and 33% with $1 billion to $5 billion.

°

In 2011, 8% of boards with lead directors reported that they assessed the lead director’s performance, compared with 7%, 4% and 8% respectively in the previous three years.

Assessment Methodology •

Of those companies that conducted a board assessment, 83% of them described the process used in 2011, compared with 86%, 81% and 79% respectively in the previous three years.

•

Of those companies that conducted committee assessments, 82% of them described the process used in 2011, compared with 87%, 81% and 80% respectively in the previous three years.

•

Of those companies that conducted individual director assessments, 83% described the process used in 2011, compared with 87%, 81% and 80% respectively in the previous three years.

•

The most prevalent methods reported are questionnaires and individual meetings between each director and the chair, lead director, or governance committee chair. Boards are increasingly using a combination of these methods and fewer are using only a questionnaire. In 2011, 31% of boards that reported their board assessment process used both methods, compared with 20% in 2008. In 2011, 58% used a questionnaire only, compared with 72% in 2007.

Percentage of Boards with Board Assessment Process that Report Methodology

2011

Questionnaire Only

58% 59% 72%

Individual Meetings Only

6%

6%

6%

Questionnaire and Individual Meetings

31%

30%

18%

18

2010

2012-2013 Public Company Governance Survey, published by the National Association of Corporate Directors.

38 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

2007

•

Committee assessment processes were almost identical to board assessments, with 60% of those that reported methodology using a questionnaire only, 5% using individual meetings only, and 30% using both individual meetings and questionnaires.

•

Of the boards that described their individual director assessment process, 44% used a peer evaluation, compared with 40% in 2010 and 33% in the previous two years.

Director Selection •

In 2011, 42% of boards identified the use of a matrix in their director selection process, compared to 32% last year.

•

Boards at larger companies were more likely to disclose their director skills matrix in their proxies. Fifty percent of those with over $5 billion in assets provided these matrices, compared with 32% of those with $1 billion to $5 billion, 16% of those with $500 million to $1 billion and 6% of those with less than $500 million.

Director Development •

The CSA disclosure rules require issuers to describe what measures, if any, a board takes to provide orientation and continuing education for its directors.

•

For the past three years, 98% to 100% of companies provided some detail on their orientation practices, and 94% to 99% provided some detail on their continuing education practices.

•

Boards are taking a very thorough approach to director orientation as part of a rigorous director recruitment process. Below is an excellent example of disclosure about orientation practices from Finning International Inc.’s 2011 management proxy circular:

In 2011 the Corporation began utilizing a secure board portal for the dissemination and distribution of

information to the Board of Directors. All new directors are provided with access and training on the board

portal, where information is maintained on historical and current board and committee meetings, in addition

to governance information regarding the responsibilities of directors, guidelines and terms of references, and

key policies and processes are explained.

New directors are also provided a detailed package of information describing Finning and its business.

In addition, all new directors meet with senior management for detailed briefings. Briefings and materials supplied include details on:

•

strategic plans;

•

governance structures and codes of conduct;

•

significant accounting and risk management issues, including any major litigation claims;

•

financial reporting and accounting and treasury policies and procedures;

•

key performance metrics utilized by Finning;

•

recent regulatory filings; and

•

past minutes of Board meetings.

The orientation program also involves direct visits to plant sites and facilities, where appropriate.

Note: for a more thorough description of current approaches and challenges in director selection and orientation, please see our special report, Improving the Board Composition Planning and Director Selection Processes, on pages 6 to 17.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 39

Meetings and Attendance

40 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • The overall board meeting attendance rate is 97%, with 78% of directors having a perfect attendance record • Attendance is even better at committee meetings, where the average attendance rate is 97% and 86% of members have perfect attendance • The average number of board meetings has stayed relatively constant, at either nine or ten per year since 1997

Attendance Records •

Ninety-eight percent of boards provided board meeting attendance records for each director.

•

Reporting of committee meeting attendance (which is not mandatory disclosure) has been declining in recent years. For the past three years, 84% of the boards studied disclosed committee meeting attendance for some or all board committees. This is down from 89% to 90% in the three years prior.

•

Directors generally maintain a strong attendance rate at board meetings, with 78% attending 100% of board meetings, and 20% with an attendance rate between 75% and 99%. In 2005, when boards were first required to report attendance rates, 68% of directors had a 100% attendance rate, and 28% had an attendance rate between 75% and 99%.

•

Committee meetings are even better attended, with 86% of directors attending 100% of committee meetings and an overall committee attendance rate of 97%.

Board and Committee Meeting Attendance Board Meetings

2011

2010

2005

Average Board Meeting Attendance Rate

97%

96%

95%

Percentage of Directors with 100% Attendance Rate at Board Meetings

78%

78%

68%

Percentage of Directors with 75% to 99% Attendance Rate at Board Meetings

20%

20%

28%

Committee Meetings Average Committee Meeting Attendance Rate

97%

97%

96%

Percentage of Directors with 100% Attendance Rate at Committee Meetings

86%

87%

78%

Percentage of Directors with 75% to 99% Attendance Rate at Committee Meetings

10%

10%

18%

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 41

Board Meetings •

Ninety-eight percent of boards reported the number of board meetings held.

•

The average number of board meetings held in 2011 was nine and the median was nine. This compares to an average of nine in 2010 and a median of eight.

•

In the United States, boards met an average of six times in person, in addition to an average of three telephone meetings. 19

Board Meetings Held

Average

Median

Range

Companies Reporting

2011

9

9

3 to 38

98%

2010

9

8

2 to 35

98%

2002

9

8

2 to 30

53%

Board Meeting Frequency Distribution* Number of Meetings

<500M

500M to 1B

1B to 5B

>5B

ALL

3 or fewer

9% 0 <1% 0 1%

4 to 6

28% 30% 29% 22% 27%

7 to 10

34% 48% 39% 46% 42%

11 to 15

28% 23% 24% 22% 24%

16 to 20

0

0

21 or more

0

0 2% 0 1%

*

19

5% 10% 5%

Percentages are based only on those boards that disclosed meeting frequency.

2012-2013 Public Company Governance Survey, published by the National Association of Corporate Directors.

42 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Committee Meetings â&#x20AC;˘

This year, there was a slight decrease in the percentage of boards that reported the number of meetings held by their audit, compensation and governance committees.

â&#x20AC;˘

Audit and compensation committees averaged five meetings in 2011, compared to an average of four meetings for governance committees.

Committee Meetings Held by Major Committees

Average

Median

Range

Boards Reporting*

Audit Committee

2011

5

5

2 to 12

88%

2010

6

5

0 to 25

89%

2003

6

5

1 to 12

66%

2011

5

4

1 to 15

89%

2010

5

4

1 to 17

90%

2003

4

4

1 to 16

65%

2011

4

4

0 to 15

89%

2010

4

4

0 to 19

91%

2003

4

3

0 to 16

67%

Compensation/HR Committee

Governance Committee

*

Percent of boards with the named committee type.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 43

Board Committees

44 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • For the past seven years, boards have averaged four committees each • In 2011, 40% of boards had an environment/safety committee, an increase from 34% in 2010 • In 2011, 95% of independent directors had at least one committee membership • In 2011, 49% of independent directors sat on two committees, up from 46% in 2010. This was the highest percentage of independent directors with two committee memberships since we began recording this information in 2005

Board Committees •

For the seventh year in a row, boards have averaged four committees each.

•

There was very little change in the committee landscape on Canadian boards in 2011. When looking at overall change, the only committee types that changed by 3% or more were:

°

In 2011, 98% of boards had a compensation committee, up from 95% the previous year. In the United States, 100% of the largest 200 companies have a compensation committee. 20

°

In 2011, 40% of boards had an environment/safety committee, an increase from 34% in 2010.

This category is at the highest level that we have ever seen it and has shown a steady increase from 21% in 1993. The biggest change was at smaller companies, with 32% of companies with assets below $500 million reporting these committees in 2011 compared to 18% in 2010, and 47% of companies with assets between $500 million and $1 billion reporting these committees in 2011, compared to 30% in 2010.

•

Environment/safety committees are much less prevalent in the United States, where only 5% 21 of the largest 200 companies have an environment, health and safety committee, up from just 4% 22 the previous year.

Number of Board Committees

2011

2010

2002

Average

4

4 3

Median

4

4 3

Range

1 to 7

1 to 7

1 to 7

20

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

21

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

22

Director Compensation Report 2010-2011, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 45

Average Number of Committees, by Asset Size

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

3

3 4 4 4

2010

3

3 4 4 4

2002

3

3 4 4 3

Technology

Strategic Planning

Risk

Reserves

Pension

Nominating*

Investment

Finance

Executive

Environment/Safety

Governance*

Conduct Review

Compensation/HR

Audit

Percentage of Boards with Types of Committees

<500 M

2011 100% 100% 0 91% 32% 3% 3% 6% 15% 0 9% 0 3% 12%

2010 100% 98% 0 90% 18% 5% 2% 2% 12% 0 18% 2% 2% 5%

2002 100% 87% 1% 74% 12% 7% 6% 1% 11% 2% 1% 0 4% 3%

500M - 1B 2011 100% 93% 0 84% 47% 9% 4% 4% 9% 2% 9% 11% 0 9%

2010 100% 92% 0 84% 30% 6% 6% 10% 6% 2% 10% 4% 0 10%

2002 100% 94% 0 78% 18% 10% 3% 2% 13% 2% 3% 6% 5% 0

1B - 5B

2011 100% 100% 0 95% 40% 6% 4% 8% 4% 4% 13% 5% 2% 1%

2010 100% 96% 0 95% 38% 9% 4% 8% 2% 4% 12% 9% 2% 1%

2002 100% 95% 1% 87% 30% 24% 4% 4% 6% 12% 2% 6% 1% 2%

>5B

2011

2010 100% 95% 12% 94% 39% 15% 10% 11% 12% 12% 17% 30% 2% 0

2002 100% 93% 13% 86% 40% 35% 13% 2% 0 28% 5% 28% 3% 0

ALL

2011 100% 98% 3% 93% 40% 9% 6% 7% 8% 5% 14% 14% 2% 3%

2010 100% 95% 3% 92% 34% 10% 6% 8% 7% 5% 14% 13% 2% 3%

2002 100% 92% 3% 80% 23% 17% 6% 2% 8% 9% 3% 8% 3% 2%

*

100% 97% 11% 94% 39% 14% 10% 9% 10% 11% 19% 33% 2% 0

“Governance” includes combined Governance and Nominating Committees. The “Nominating” column refers to stand-alone Nominating Committees, or Nominating Committees combined with a committee other than Governance.

46 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Committee Membership •

In 2011, 95% of independent directors had at least one committee membership.

•

Of the independent directors that had no committee memberships, 22% were board chairs and 14% had been on the board for a year or less.

•

Overall, directors in 2011 averaged two committee memberships. Independent directors averaged two committees each and non-independent directors averaged one committee each if they were outside directors or zero committees each if they were inside directors.

•

In 2011, 49% of independent directors sat on two committees, up from 46% in 2010. This was the highest percentage of independent directors with two committee memberships since we began recording this information in 2005.

Percentage of Directors with Committee Memberships Number of Percentage of Percentage of Non- Percentage of Non Committee Independent Directors Independent (Inside) Directors Independent (Outside) Directors Memberships 2011 2010 2011 2010 2011 2010

0

5% 6%

73% 73%

48% 48%

1

28% 30%

22% 21%

34% 35%

2

49% 46%

4% 5%

10% 10%

3

15% 15%

1% <1%

6% 5%

4

3% 3%

0 <1%

2% 2%

5

1% 1%

0 0

0 0

6

0 0

0 0

0 0

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 47

Director Compensation

48 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • The average 2011 retainer of $87,908 was an 11% increase over the 2010 average. Companies with over $5 billion in assets only increased board retainers by 1%, while the boards at smaller companies had much larger increases: 21% at companies with $500 million or less in assets, 16% at companies with assets between $500 million and $1 billion, and 13% at companies with assets between $1 billion and $5 billion • In 2011, 20% of companies paid a retainer greater than $125,000, compared to 17% in 2010 and 13% in 2009 • Boards continue to move toward paying only retainers, with fewer than ever using meeting fees. In 2011, 32% of companies chose the retainer-only option, compared with 28% in 2010 and 26% in 2009

Introduction •

In order to thoroughly account for the compensation paid to directors, we combine the cash amounts with values of shares, trust units or share/trust unit equivalents such as deferred share units. We refer collectively to all compensation in the form of shares, trust units or share/trust unit equivalents as “shares” or “share compensation”.

•

Where a board has not given a cash value of share equivalents, we have calculated based on the number of shares awarded and the fiscal year-end closing price.

•

We have not estimated the value of stock options. However, we do report on the number of boards that grant stock options to directors in the “Stock-Based Compensation” section, which begins on page 70.

Annual Retainers •

The average 2011 retainer of $87,908 was an 11% increase over the 2010 average. This compares to a 10% increase one year prior and 4% two years ago.

•

The 4% increase in 2009 was the only year since 2002 that we have not seen a double-digit percentage increase in board retainer value. We believe the small increase in 2009 reflected the financial difficulties of the previous year, and that the last two years of 10% to 11% increases are a reflection of a slightly improved Canadian economy. In the United States, the National Association of Corporate Directors predicts, “…director compensation increases in the near future will be in the low to mid-single-digits”.23

•

In the United States, directors at the largest 200 companies saw only a 1% increase in median total direct compensation, while boards at smaller companies saw increases ranging between 6% and 8%. The National Association of Corporate Directors hypothesizes that the relatively small increase on the largest 200 boards is “likely driven by boards that remain reluctant to give themselves a large pay increase as unemployment remains stubbornly high.” 24

23

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

24

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 49

•

In Canada, directors at the largest companies also had the smallest compensation increase. Companies with over $5 billion in assets only increased board retainers by 1%, while the boards at smaller companies had much larger increases: 21% at companies with $500 million or less in assets, 16% at companies with assets between $500 million and $1 billion, and 13% at companies with assets between $1 billion and $5 billion.

•

The median retainer value of $75,000 is a 25% increase over 2010’s $60,000 median retainer.

•

In the United States in 2011, the combined median cash retainer and value of share awards for the largest 200 companies was US$195,000. 25

•

In 2011, 20% of companies paid a retainer greater than $125,000, compared to 17% in 2010 and 13% in 2009.

•

In 2011, the percentage of boards paying a retainer between $25,001 and $75,000, went down to 40% compared to 49% in 2011. The percentage of boards paying a retainer between $75,001 and $125,000 went up to 28% in 2011 from 23% in 2010.

Annual Board Retainer

Average Median Range

2011 2010 2002 $87,908 $79,060 $20,929 $75,000 $60,000 $15,000 $9,000 to $333,179 $7,800 to $390,030 $2,500 to $78,520

Average Annual Board Retainer

2011 2010 2002

<500M 500M to 1B $48,260 $56,897 $40,010 $49,204 $15,117 $14,798

1B to 5B >5B ALL $81,838 $125,760 $87,908 $72,390 $123,940 $79,060 $22,269 $34,067 $20,929

Retainer Distribution

$25,000 or less 2011

2010 $25,001 to $75,000 2011

2010 $75,001 to $125,000 2011

2010 $125,001 to $175,000 2011

2010 over $175,000 2011

2010 No Retainer 2011

2010 25

<500M 26% 36% 50% 51% 20% 13% 0 0 0 0 3% 0

500M to 1B 16% 16% 53% 64% 24% 14% 2% 2% 0 0 4% 4%

1B to 5B 8% 7% 45% 59% 29% 21% 10% 11% 5% 2% 2% 1%

>5B 3% 2% 23% 24% 29% 35% 27% 27% 18% 12% 0 0

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

50 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

ALL 10% 11% 40% 49% 28% 23% 13% 13% 7% 4% 2% 1%

Largest Board Retainers

Total

Cash Portion

Share Based Portion*

Athabasca Oil Sands Corp.

$333,179

$35,000

$298,179

EnCana Corporation

$320,900

$30,000

$290,900

Cenovus Energy Inc.

$279,600

$30,000

$249,600

Valeant Pharmaceuticals International Inc.

$277,200 $59,400 $217,800†

Goldcorp Inc.

$267,780† $99,000† $168,780†

Crescent Point Energy Corp.

$262,275

$30,000

$232,275

Silver Wheaton Corp.

$236,830

$40,000

$196,830

Osisko Mining Corporation

$221,250

$70,000

$151,250

Onex Corporation

$217,500† $34,650† $182,850

Suncor Energy Inc.

$214,208

$50,000

$164,208

Enbridge Inc.

$210,000

$157,500

$52,500

Research in Motion Limited

$200,000

$100,000

$100,000

Talisman Energy Inc.

$200,000

$50,000

$150,000

Canadian Natural Resources Limited

$198,470

$40,000

$158,470

Barrick Gold Corporation

$198,000† $89,100† $108,900†

Canadian National Railway Company

$188,660

$14,850† $173,810

Imperial Oil Limited

$188,400

$100,000

$88,400

Kinross Gold Corporation

$185,000

$160,000

$25,000

Royal Bank of Canada

$185,000

$85,000

$100,000

Calfrac Well Services Ltd.

$183,750

$10,000

$173,750

Celestica Inc.

$183,150† $32,175† $150,975†

SXC Health Solutions Corp.

$180,180† $49,500† $130,680†

†

†

*

Where share values have not been provided, the value of shares has been calculated based on the number of shares awarded in fiscal 2011 and the fiscal year end closing share price.

†

Converted from $US at 0.99

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 51

Board Meeting Fees •

The average board meeting fee in 2011 was $1,602, a slight decrease over the average board meeting fee of $1,610 in 2010. There has been little change in meeting fees over recent years, with the annual averages fluctuating between $1,303 and $1,610 since 2002.

Average Board Meeting Fee

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

$1,219 $1,606 $1,555 $1,824 $1,602

2010

$1,491 $1,345 $1,586 $1,852 $1,610

2002

$1,193 $1,148 $1,386 $1,507 $1,303

How are Directors Compensated?

•

Boards continue to move towards paying only retainers, with fewer than ever using meeting fees. In 2011, 32% of companies chose the retainer-only option, compared with 28% in 2010 and 26% in 2009. Larger companies are more likely to compensate directors with only a retainer. In 2011, 65% of the companies that paid directors in this manner had assets of over $1 billion.

•

In the United States as well, fewer companies are paying board meeting fees. There was a decrease in the prevalence of paying meeting fees of 2% to 5% across all company sizes in 2011. Between 2% and 11% of U.S. boards pay meeting fees, with larger boards less likely to use them than smaller boards. 26

•

Annual retainers are significantly higher if they include a mandatory portion in shares or share equivalents.

•

The average retainer that included shares or share equivalents in 2011 was 120% higher in value than the average retainer that was cash-only or had only a voluntary portion in shares or share equivalents.

This compares to a differential of 103% last year.

26

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

52 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Forms of Compensation

Percent of Boards

Average Retainer $92,730

Average Meeting Fee

Retainer Only

2011

32%

2010

28% $84,473

Meeting Fee Only

2011

1%

$2,820

2010

<1%

$2,000

Retainer and Meeting Fee

2011

65%

$1,583

2010

70% $76,885 $1,608

Stock Options Only

2011

1%

2010

1%

$85,509

Average and Median Board Retainers, Including Cash and Shares

Mandatory Shares in Retainer

No Mandatory Shares in Retainer

Average Median

Average Median

<500M

2011

$87,120 $83,286

$31,365 $27,850

2010

$63,183 $50,000

$32,019 $25,000

2003

$22,090

$20,000

$17,461

$15,000

500M - 1B

2011

$87,713

$86,000

$47,559

$40,000

2010

$67,803 $63,220

$39,004 $30,000

2003

$20,685

$16,500

$20,830

$15,000

1B - 5B

2011

$108,944

$101,160

$51,056

$40,000

2010

$95,468 $45,000

$49,313 $41,200

2003

$42,049

$25,018

>5B

2011

$140,145 $140,000

$90,352 $99,000

2010

$134,858 $120,000

$98,172 $101,500

2003

$67,681

$43,572

ALL

2011

$119,317 $109,450

$54,272 $40,000

2010

$105,882 $100,000

$52,055 $40,000

2003

$50,054

$24,626

$37,500

$55,000

$39,370

$21,724

$40,000

$20,000

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 53

Board Chair Compensation

54 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • The 2011 average non-executive chair retainer of $229,063 was 5% higher than in 2010, following a 10% increase last year and increases between 2% and 4% in the previous three years • In 2011, the non-executive board chair retainer at companies with $500 million or less in assets rose by 20%. Increases in all other asset size categories ranged between less than 1% and 5% • Non-executive chair retainers are larger when there is a mandatory portion in shares or share equivalents. The average retainer that included shares or share equivalents in 2011 was 60% higher in value than the average retainer that was cash-only or had only a voluntary portion in shares or share equivalents

Introduction •

All compensation in this section represents non-executive board chairs. Executive chair compensation is not included due to the small number of executive chairs included in our sample and the high variability in compensation for executive chairs.

Non-Executive Chairs •

The 2011 average non-executive chair retainer of $229,063 was 5% higher than in 2010, following a 10% increase last year and increases between 2% and 4% in the previous three years. The median non-executive chair retainer was $200,000 in both 2011 and 2010.

•

In 2011, the non-executive board chair retainer at companies with $500 million or less in assets rose by 20%.

Increases in all other asset size categories ranged between less than 1% and 5%.

•

In 2011, 13% of boards paid their chairs more than $350,000. This was the same as last year and compared to 10% in 2009 and 8% in 2008.

•

Forty percent of the non-executive chairs that did not receive a retainer were non-independent chairs.

•

As with director retainers, non-executive chair retainers are larger when there is a mandatory portion in shares or share equivalents. The average non-executive chair retainer that included shares or share equivalents in 2011 was 60% higher in value than one that was cash-only or had only a voluntary portion in shares or share equivalents. This compares to a differential of 61% last year and 76% two years earlier.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 55

Non-Executive Chair Retainer

2011

2010

2002

Average

$229,063 $217,909 $124,861

Median

$200,000 $200,000 $99,500

Range

$15,000 to $1,086,352

$25,000 to $902,585

$7,500 to $1,570,400

Average Annual Non-Executive Chair Retainer

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

$115,174 $127,192 $203,401 $338,205 $229,063

2010

$96,379

$125,477 $192,846 $336,980 $217,909

2002

$60,618

$76,580

$132,585 $225,771 $124,861

Average and Median Non-Executive Chair Retainers, Including Cash and Shares

Mandatory Shares in Retainer Average

Median

No Mandatory Shares in Retainer Average

Median

2011

$274,610 $243,844

$171,442 $122,500

2010

$269,838 $230,758

$167,098 $127,500

2006

$251,241 $232,500

$129,460 $95,000

56 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Largest Non-Executive Board Chair Retainers

Total

Cash Portion

Share Based Portion*

Goldcorp Inc.

$1,086,352 $917,572 $168,780†

Teck Resources Limited

$660,276

$360,000

Bombardier Inc.

$600,000

$600,000

Thomson Reuters Corporation

$594,000† $594,000†

EnCana Corporation

$540,900

$250,000

$290,900

Cenovus Energy Inc.

$529,600

$280,000

$249,600

RioCan Real Estate Investment Trust

$528,470

$175,000

$353,470

Suncor Energy Inc.

$503,154

$250,000

$253,154

Saputo Inc.

$500,000

$500,000

Talisman Energy Inc.

$500,000

$200,000

$300,000

Nexen Inc.

$493,382

$250,000

$243,382

Calfrac Well Services Ltd.

$477,500

$130,000

$347,500

†

†

$300,276

*

Where share values have not been provided, the value of shares has been calculated based on the number of shares awarded in fiscal 2010 and the fiscal year end closing share price.

†

Converted from $US at 0.99

Non-Executive Board Chair Retainer Distribution*

$50,000 or less

2011

<500M

500M to 1B

1B to 5B

>5B

ALL

11%

17%

2%

0

5%

2010 23% 13% 2%

2011

56%

2010

41% 40% 28% 5% 25%

2011

11%

2010

18% 25% 32% 27% 28%

2011

0

6%

2010

0

3% 14% 29% 15%

2011

0

0

7%

32%

2010

0

0

7%

34% 13%

2011

21%

15%

5%

2010

18% 20% 16% 5% 14%

$50,001 to $150,000

$150,001 to $250,000 $250,001 to $350,000 Over $350,000 No Retainer

*

31% 22%

25%

28% 29% 18%

0 6% 5% 28% 31%

24% 26% 18% 13% 14%

Percentage of boards with a non-executive chair.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 57

Lead Director Compensation

58 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • 73% of boards with a lead director paid an additional fee to the lead director • Larger companies are more likely to pay a lead director retainer • In 2011, there was a 6% decrease in the average lead director retainer, following a 10% increase in 2010. However, the median lead director retainer in 2011 was 5% higher than in 2010

•

Seventy-three percent of boards with a lead director paid an additional fee to the lead director in 2011, compared with 77% and 73% respectively in the previous two years and only 38% in 2002.

•

Larger companies are more likely to pay a lead director retainer. In 2011, 81% of companies with more than $1 billion in assets that had a lead director paid an additional retainer to the lead director, compared with 45% of companies with assets of less than $1 billion.

•

In 2011, there was a 6% decrease in the average lead director retainer, following a 10% increase in 2010.

The board at the top of the range in lead director retainers in 2010 (Magna International Inc.) paid a retainer of $257,500, including cash and deferred share units. However, Magna International Inc. no longer had a lead director in 2011, which had a strong effect on the overall average.

•

The median lead director retainer in 2011 was 5% higher than in 2010.

Lead Director Additional Retainer*, Including Cash and Shares

2011

2010

2003

Average

$35,287 $37,329 $26,111

Median

$25,000 $23,750 $15,000

Range *

$2,500 to 101,534

$2,500 to $257,500

$1,500 to $105,113

Additional to director retainer.

Average Annual Lead Director Additional Retainer* Including Cash and Shares

<500M

2011

$21,620 $33,540 $31,875 $43,430 $35,287

2010

$29,542 $10,700 $34,000 $53,376 $37,329

2003

$15,172 $22,173 $26,067 $33,184 $25,112

*

500M to 1B

1B to 5B

>5B

ALL

Additional to director retainer.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 59

Committee Chair Compensation

60 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • 90% of companies paid a committee chair retainer that was higher than the committee member retainer. The larger the company, the more likely it is to pay a higher committee chair retainer • 82% of companies paid a higher retainer to the chair of the audit committee than to other committee chairs • In 2011, 22% of boards with a compensation committee paid a higher retainer to that committee chair than some other committees, compared to 13% in 2010, 9% in 2009 and 5% in 2008 and 2007 • Compared to five years ago, average committee chair retainers are 24% higher, and have more than doubled in the past 10 years

Committee Chair Retainer •

In 2011, 90% of companies paid a committee chair retainer that was higher than the committee member retainer. This compares to 89% in 2010 and 91% in the previous two years.

•

Larger companies are more likely to pay higher committee chair retainers. In 2011, 96% of companies with more than $5 billion in assets paid a committee chair retainer, compared to 92% at companies with $1 billion to $5 billion in assets, 80% at companies with $500 million to $1 billion in assets, and 76% at companies with $500 million or less in assets.

•

The National Association of Corporate Directors states, “Over the last several years, board work has been increasingly conducted at the committee level in an effort to manage workflow and maximize efficiency.

The burden of this work has fallen primarily on committee chairs.” 27 We believe that the same holds true for Canadian boards and this is represented in the large percentage of boards that pay a higher retainer to the committee chair than to committee members.

•

In the United States, 95% 28 of the largest 200 companies paid a committee chair retainer.

•

The average 2011 committee chair retainer was 4% higher than in 2010, following a 3% increase last year and a 1% increase in the previous year.

Committee Chair Retainer

2011

2010

2002

Average

$14,621 $13,997 $7,443

Median

$12,000 $10,000 $5,000

Range

$2,000 to $250,000

$2,000 to $250,000

$1,000 to $250,000

27

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

28

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 61

Average Annual Committee Chair Retainer

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

$9,848

$11,414 $13,041 $18,850 $14,621

2010

$10,709

$9,421

$13,152 $18,088 $13,997

2002

$3,571

$4,105

$6,167 $13,668 $7,443

Committee Chair Retainer Distribution in 2011*

<500M

500M to 1B

1B to 5B

>5B

ALL

$5,000 or less

29% 18% 26% 14% 21%

$5,001 to $10,000

62% 64% 71% 54% 63%

$10,001 to $15,000

38% 36% 45% 50% 45%

$15,001 to $20,000

3%

18% 21% 33% 24%

$20,001 to $25,000

6%

4% 6%

over $25,000

No Committee Chair Retainer *

0

26% 11%

4% 10% 24% 12%

24% 20% 8%

4% 10%

Percentage of companies in each asset category that have a committee chair retainer in each dollar value category. Totals are more than 100% because many boards have several different levels of committee chair retainers that span different dollar value categories.

62 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Differential Committee Chair Retainers •

The practice of paying different retainers to chairs of different committees has become commonplace:

°

Audit committee chairs remain the most likely to be paid a premium. In 2011, 82% of companies paid a higher retainer to audit committee chairs than other committee chairs. This compares to 80% last year, and for the previous three years this percentage has fluctuated between 76% and 78%.

°

Compensation committee chairs are also frequently paid at a premium rate. In 2011, 22% of boards with a compensation committee paid a higher retainer to that committee chair than some other committees, compared to 13% in 2010, 9% in 2009 and 5% in 2008 and 2007.

°

In 2011, 5% of risk committee chairs received a premium retainer, as well as 4% of governance committee chairs and 3% of environment, health and safety committee chairs.

•

This year, like last, the average premium audit committee chair retainer was 56% higher than the non-audit chair retainer. For the previous four years, this percentage ranged between 60% and 66%.

•

In 2011, there was a 5% increase in the average premium audit committee chair retainer over 2010 and this follows increases over the previous years of 1%, 2% and 5% consecutively.

•

In the United States, the median audit committee chair retainer at the largest 200 companies was US$20,000. 29

Average Premium Audit Committee and Non-Audit* Committee Chair Retainer

Percentage that Pay a Average Audit Committee Average Non-Audit Chair Premium Audit Committee Chair Retainer at Companies Retainer Chair Retainer that Pay a Premium

2011 82%

$18,500

$11,858

2010 80%

$17,545

$11,253

2003 38%

$14,583

$7,254

*

29

“Non-Audit” includes audit committees at those companies that do not pay a premium for audit committee membership.

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 63

Average Premium Audit Committee and Non-Audit* Committee Chair Retainer, By Board Size

% of Asset Group that Pay Average Audit Committee Premium Audit Committee Chair Retainer at Companies Chair Retainer that Pay a Premium

Average Non-Audit Committee Chair Retainer

<500M

74%

$12,467 $7,330

500M - 1B

73%

$14,672 $8,972

1B - 5B

83%

$18,036 $9,303

>5B

89%

$22,585 $16,551

ALL

82%

$18,500 $11,858

*

“Non-Audit” includes audit committees at those companies that do not pay a premium for audit committee membership.

Premium Audit Committee Chair Retainer vs. Non-Audit* Committee Chair Retainer

Audit Committee

Non-Audit Committee

Average

2011

2010 $17,545 $11,253

2003

$12,561

$7,254

Median

2011

$15,000

$10,000

2010 $15,000 $9,500

2003

$10,000

$5,000

2011

$3,660 to $70,000

$2,000 to $250,000

2010

$3,250 to $70,000

$2,000 to $250,000

2003

$3,000 to $75,000

$1,000 to $250,000

Range

*

$18,500

$11,858

“Non-Audit” includes audit committees at those companies that do not pay a premium for audit committee membership.

Committee Chair Meeting Fee •

In 2011, like last year, 4% of companies paid a higher meeting fee to committee chairs than to committee members. This is a decrease from 5% over the previous four years.

•

The average committee chair meeting fee in 2011 was $2,208 compared to $2,634 in 2010.

•

In the United States, 3% of the largest 200 companies paid higher meeting fees to committee chairs, which is the same percentage as the previous year. 30

30

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

64 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

engage attract

retain develop

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 65

Committee Member Compensation

66 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • For the third year in a row, there has been a decrease of 1% or less in the average value of committee member retainers • The average audit committee retainer was 46% higher than the average committee member retainer for other committees or at companies that did not pay a premium for audit committee membership • Paying a committee retainer only to audit committee members, and not to members of other committees, is a practice that is becoming more common. In 2011, 17% of boards that had more than one type of committee and paid a committee retainer, paid that retainer only to audit committee members, compared to less than 1% in 2002

Committee Member Retainer •

For the third year in a row, average committee member retainers have been relatively stagnant, with annual decreases of 1% or less.

•

Paying a committee retainer only to audit committee members, and not to members of other committees, is a practice that is becoming more common. In 2011, 17% of boards that had more than one type of committee and paid a committee retainer, paid that retainer only to audit committee members, compared to less than 1% in 2002. This practice is more common at larger companies; in 2011, 88% of those compensating directors in this manner were at companies with more than $1 billion in assets, and 12% were at companies with less than $1 billion in assets.

•

We believe that the stagnation in committee retainer value reflects a decreasing focus on compensating specifically for committee work and an increase in paying for board work overall. For example, director retainers have increased by double-digit percentages every year except one since 2002, and what we have also seen since 2002 is growth in the practice of paying only a board retainer, with no committee member compensation at all. In 2011, 18% of boards used this compensation practice, compared to 16% in 2010 and 6% in 2002.

It is possible that this stems from the fact that much of the board’s work is now done at the committee level and boards are unifying payment for director and committee responsibilities, with the addition of increased retainers for the extra work taken on by committee chairs. The exception to this trend is for members of audit committees, who are seeing an increase in both amount and prevalence of retainers.

•

In the United States, 42% of the largest 200 companies paid a committee member meeting retainer. 31

31

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 67

Committee Member Retainer

2011

2010

2002

Average

$5,826 $5,887 $3,389

Median

$5,000 $5,000 $3,000

Range

$1,000 to $28,500

$1,000 to $25,750

$750 to $15,704

Average Committee Member Retainer

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

$5,683 $4,874 $5,706 $7,196 $5,826

2010

$4,776 $3,827 $5,253 $6,967 $5,887

2002

$2,371 $1,824 $3,098 $4,724 $3,389

Committee Member Meeting Fee •

In 2011, the average committee meeting fee increased by less than 1% over the 2010 average. Over the previous six years, the annual increase in committee meeting fees ranged between less than 1% and 4%.

•

Of the boards that paid some form of committee member compensation, 43% paid committee members a meeting fee only, which is slightly lower than 46% in 2010.

•

Eleven percent of companies that paid committee meeting fees paid a higher meeting fee to audit committee members in 2011 compared with 12% in 2010 and 8% in 2009.

•

In the United States, 37% of the largest 200 companies paid a committee member meeting fee. 32

Committee Member Meeting Fees

2011

2010

2002

Average

$1,569 $1,568 $1,292

Median

$1,500 $1,500 $1,000

Range

32

$750 to 3,000

$500 to $4,000

$250 to $3,926

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

68 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Average Committee Member Meeting Fee

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

$1,203 $1,446 $1,579 $1,740 $1,569

2010

$1,340 $1,334 $1,596 $1,739 $1,568

2002

$1,032 $1,098 $1,271 $1,397 $1,292

Audit Committee Member Retainer •

In 2011, 25% of companies paid a higher committee retainer for audit committee members than for other committees, compared to 24% in 2010 and 1% in 2002.

•

The average audit committee retainer was 46% higher than the average committee member retainer for other committees or at companies that did not pay a premium for audit committee membership. This compares to 39% last year and 47% in the previous two years.

•

In the United States, the median audit committee retainer at the top 200 companies was $US10,000. 33

Committee Member Retainer: Audit Committee Premium Compared With Non-Audit* Committee

Audit Committee

Average

2011

2010 $7,171 $5,152

2003

$5,196

$3,236

Median

2011

$6,000

$4,950

2010 $6,000 $4,500

2003

$5,000

$3,000

2011

$2,000 to $25,000

$1,050 to $24,750

2010

$2,000 to $25,750

$1,000 to $25,750

2003

$3,000 to $10,000

$1,000 to $14,015

Range

*

33

$7,883

Non-Audit Committee $5,384

“Non-Audit” includes audit committees at those companies that do not pay a premium for audit committee membership.

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 69

Stock-Based Compensation

70 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • The use of stock-based compensation increased to 86% from 83% the previous year • The most prevalent way of providing share compensation to directors is to make a portion of compensation in shares or share equivalents mandatory, and to allow an option to take a further portion in the same manner. In 2011, 35% of boards chose this method, compared to 10% in 2002 • In 2011, 25% of companies provided directors with stock options or trust unit rights • While there has been some minor fluctuation over the years, prevalence of shares or trust units in director compensation has now trended down to 12% while prevalence of share equivalents has trended up to its highest level yet at 62% • The larger the company, the more likely it is to have both mandatory and optional share compensation for directors. In 2011, 60% of companies with more than $5 billion in assets used this method, compared to 12% at boards with less than $500 million in assets

Introduction •

We consider a company to have stock-based compensation when, during the year in question, directors receive at least one of stock or trust unit options, shares or trust units, or “share equivalents” (typically a form of deferred share or trust units).

•

We consider a company to have stock option compensation for directors in 2011 when options were actually granted to directors during the fiscal year.

Forms of Stock-Based Compensation •

In 2011, 86% of companies used some form of stock-based compensation for directors, which is an increase from 83% in 2010. There has been an increase in the percentage of boards using stock-based compensation every year since 2007, when 77% fell into this category.

•

There has been a corresponding increase in boards compensating directors with share equivalents along with a decrease in boards compensating with shares or trust units. In 2000, the prevalence of each was relatively equal, with 25% boards using shares or trust units, and 28% using share equivalents. While there has been some minor fluctuation over the years, prevalence of shares or trust units has now trended down to 12% while prevalence of share equivalents has trended up to its highest level yet at 62%.

•

In 2011, 25% of companies provided directors with stock options or trust unit rights. Over the past four years this percentage has fluctuated between 20% and 26%.

•

In the United States, director compensation at the largest 200 companies includes full-value shares at 9% of boards and stock options at 23%. 34

34

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 71

Percentage of Companies with a Stock Component in Director Compensation

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

91% 73% 84% 93% 86%

2010

82% 68% 82% 94% 83%

2002

56% 69% 81% 92% 72%

Percentage of Companies with Various Types of Stock-Based Director Compensation

Shares/Trust Units

Stock Options/ Trust Unit Rights

Share Equivalents

None

2011

12%

25%

62% 14%

2010

15%

23%

60% 17%

2002

19%

49%

31% 28%

Totals are more than 100% because some companies provide more than one form of stock-based compensation

Mandatory vs. Voluntary Compensation in Shares or Share Equivalents â&#x20AC;˘

The most prevalent way of providing share compensation to directors is to make a portion of compensation in shares or share equivalents mandatory, and to allow an option to take a further portion in the same manner.

In 2011, 35% of boards chose this method, compared to 10% in 2002.

â&#x20AC;˘ The larger the company, the more likely it is to have both mandatory and optional share compensation for directors. In 2011, 60% of companies with more than $5 billion in assets used this method, compared to 12% at boards with less than $500 million in assets.

72 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Percentage of Companies with Compensation in Shares or Share Equivalents

2011

2010

2002

Option to take all or part of compensation in shares or share equivalents

16%

17%

19%

no option of taking a further portion in the same manner

16%

19%

8%

At least a portion of compensation must be in share or share equivalents

35%

30%

10%

Must take all or part of compensation in shares or share equivalents,

Percentage of Companies with Compensation in Share or Share Equivalents, by Asset Size

<500M

500M to 1B

1B to 5B

>5B

ALL

Option to take all or part of compensation in shares or share equivalents

3%

13%

19%

19%

16%

Must take all or part of compensation in shares or share equivalents, no option of taking a further portion in the same manner

18%

7%

22%

11%

16%

At least a portion of compensation must be in share or share equivalents

12%

16%

30%

60%

35%

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 73

Compensation Summary

74 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • In 2011, the most significant change we saw was the 11% increase in average director retainers to $87,908 • Non-executive chair retainers increased by 5% over last year • The average 2011 committee chair retainer was 4% higher than in 2010 while committee member retainers showed a 1% decrease over last year • Meeting fees for both board and committee meetings showed minimal year over year change

Average Compensation

<500M

500M to 1B

1B to 5B

>5B

ALL

Director Retainer

2011

$48,260

$56,897

$81,838

$125,760

$87,908

2010 $40,010

$49,204 $72,390 $123,940 $79,060

2002

$15,117

$14,798

$22,269

$34,067

$20,929

Board Meeting

2011

$1,219

$1,606

$1,555

$1,824

$1,602

2010 $1,491 $1,345 $1,586 $1,852 $1,610

2002

$1,193

$1,148

$1,386

$1,507

$1,303

Non-Executive Chair Retainer

2011

$115,174

$127,192

$203,401

$338,205

$229,063

2010 $96,379

$125,477 $192,846 $336,980 $217,909

2002

$60,618

$76,580

$132,585

$225,771

$124,861

Lead Director Additional Retainer

2011

$21,620

$33,540

$31,875

$43,430

$35,287

2010 $29,542 $10,700 $34,000 $53,376 $37,329

2003 $15,172

$22,173 $26,067

$33,184 $25,112

Committee Chair Retainer

2011

$11,414

$18,850

2010 $10,709

$9,421 $13,152 $18,088 $13,997

2002

$3,571

$4,105

$6,167

$13,668

$7,443

Committee Member Retainer

2011

$5,683

$4,874

$5,706

$7,196

$5,826

2010 $4,776 $3,827 $5,253 $6,967 $5,887

2002

$2,371

$1,824

$3,098

$4,724

$3,389

Committee Member Meeting

2011

$1,203

$1,446

$1,579

$1,740

$1,569

2010

$1,340

$1,334

$1,596

$1,739

$1,568

2002

$1,032

$1,098

$1,271

$1,397

$1,292

Telephone Meeting*

2011

$896

$669

$864

$883

$853

2010

$1,023

$757

$881

$909

$871

2002

$612

$570

$721

$673

$648

*

$9,848

$13,041

$14,621

8% of boards stated that their in-person and telephone meeting fees were the same in 2011.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 75

Director Share Ownership

76 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Key Findings • In 2011, 95% of directors owned and/or controlled shares in the companies on whose boards they sit.

This category has fluctuated between 94% and 95% for the last four years, before which it rose steadily from 87% in 2002 • In 2011 the number of boards with an explicit shareholding guideline increased to 70% from 67% in 2010, and up from 18% in 2002 • The larger the company, the more likely the board is to have a shareholding guideline, either implicit or explicit. In 2011, 95% of companies with more than $5 billion in assets required directors to hold shares, compared to 35% of companies with less than $500 million in assets • Shareholding guidelines expressed as a dollar value equal to a multiple of the annual retainer have grown in popularity over recent years. Last year, the percentage of companies requiring directors to hold various multiples of the annual director retainer peaked at 70%, and in 2011 we saw a slight decrease to 69% of companies • In 2011, of those companies requiring directors to hold stock, 62% required the stock be valued at least three times their annual retainer, while 23% required directors to hold four times or more, and 14% required less than three times

Director Shareholding •

In 2011, 95% of directors owned and/or controlled shares in the companies on whose boards they sit.

This category has fluctuated between 94% and 95% for the last four years, before which it rose steadily from 87% in 2002.

•

Of those directors that did not own and/or control shares in 2011, 26% had been on their boards for less than one year.

Percentage of Directors Who Own and/or Control Shares Or Share Equivalents in the Companies on Whose Boards They Sit

<500M

500M to 1B

1B to 5B

>5B

ALL

2011

86% 88% 97% 98% 95%

2010

87% 89% 95% 98% 94%

2002

81% 84% 90% 95% 87%

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 77

Director Shareholding Guidelines •

When director compensation includes a mandatory portion in deferred share units that must be held as long as the director remains on the board, we consider this to be an implicit director shareholding guideline.

•

In 2011 the number of boards with an explicit shareholding guideline increased to 70% from 67% in 2010, and up from 18% in 2002.

•

The larger the company, the more likely the board is to have a shareholding guideline, either implicit or explicit.

In 2011, 96% of companies with more than $5 billion in assets required directors to hold shares, compared to 35% of companies with less than $500 million in assets. However, as shown on page 77, the lack of a requirement is not preventing many directors at smaller boards from holding shares, as 86% of directors at companies with less than $500 million in assets actually own shares. Shareholding at larger companies is more stable though. Since 2002, the percentage of directors that owned shares at companies with less than $500 million in assets ranged up and down between 81% and 92%, while the percentage of directors that owned shares at companies with more than $5 billion in assets ranged between 95% and 99% for the same period.

•

In the United States, 89% of the largest 200 companies have some form of shareholding guideline. 35

Percentage of Boards with a Director Shareholding Guideline

2011

2010

2002

Specified guideline only

70%

67%

18%

Including mandatory deferred share units that must be held until the director leaves the board

76%

74%

20%

35

Director Compensation Report 2011-2012, published by the National Association of Corporate Directors in collaboration with Pearl Meyer & Partners.

78 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Percentage of Boards with a Director Shareholding Guideline, by Asset Size

<500M

500M to 1B

1B to 5B

>5B

ALL

Specified guideline only

2011 26% 33% 78% 94% 70%

2010 22% 32% 76% 93% 67%

2002 2% 8% 24% 50% 18%

Including mandatory deferred share units that must be held until the director leaves the board

2011 35% 38% 84% 96% 76%

2010 35% 46% 82% 95% 74%

2002 4% 11% 27% 50% 20%

â&#x20AC;˘

The most common way to define mandatory shareholding limits are as a dollar value, either explicitly or as a multiple of the value of the director retainer. With some minor fluctuations over the years, both of these methods have increased in popularity to a combined 89% in 2011, from a combined 67% in 2003. At the same time, the practice of setting share ownership guidelines with a specific number of shares has declined from 30% in 2003 down to 10% in 2011.

Types of Director Share Ownership Guidelines, Shown as a Percentage of all Companies With a Specific Director Share Ownership Guideline

2011

2010

2003

Dollar value equal to a multiple of the annual director retainer

69%

70%

48%

Specific dollar value

20%

18%

19%

Specific number of shares or share units

10%

11%

30%

Highest of two of the variables listed above

0

0

2%

Multiple of annual retainer plus another item

2%

2%

0

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 79

Breakdown of Director Shareholding Guidelines Stated as a Dollar Value Equal to a Multiple of the Annual Director Retainer

2011

2010

2003

Equal to the retainer value

5%

4%

4%

Two times the retainer value

8%

8%

13%

Two and a half times the retainer value

1%

1%

0

Three times the retainer value

62%

65%

27%

Four times the retainer value

5%

5%

6%

Five times the retainer value

15%

16%

35%

Six times the retainer value

3%

1%

13%

Eight times the retainer value

0

0

2%

Value* of Director Share Ownership Guidelines

2011

2010

2003

Average value

$262,780 $240,656 $137,933

Median value

$210,000 $180,000 $108,850

Range of values *

$18,000 to $995,400

$5,875 to $1,023,300

$6,250 to $490,525

Where a guideline specified a number of shares or share units, a value was calculated based on the fiscal year-end closing price of the share. If a company had more than one class of share and did not specify one class in the shareholding guideline, the calculation was based on the class of share with the lower year-end closing price. Where a guideline specified a value equal to a multiple of the annual retainer, the value was calculated using the retainer amount for 2011.

â&#x20AC;˘

In 2003, 56% of companies required directors to hold shares valued at four or more times their retainer, while in 2011 only 23% of companies fell into this category.

â&#x20AC;˘

Despite this shift away from shareholding guidelines set at multiples greater than three times the director retainer, the overall value of share ownership guidelines continues to increase. In 2011, the median shareholding guideline value was $210,000, compared to $180,000 in 2010.

80 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Company Data The following pages contain data collected from annual reports, management proxy circulars and annual information forms regarding fiscal year-ends in late 2011 and early 2012. It is in alphabetical order by company name.

Any additional explanation required for entries is detailed in the Company Data Endnotes on pages 92 to 94.

Stock compensation is an increasingly important part of director compensation.

It is represented in the Appendix as follows: • Req’d:

“X” in this column indicates that directors must take all or some

of their compensation in either shares or share equivalents

• Elect:

“X” in this column indicates that directors can elect to take all or

some of their cash compensation in the form of shares or share equivalents

• Options:

Values of stock options are not stated, however we do indicate which

companies granted stock options to directors in fiscal 2011

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 81

Average Non Number of Number of Term **Director Executive

Assets *Board Number of Independent Female Served Shareholding Chair Board Company Name Trust ($000) Leadership Directors Directors Directors (years) Guideline?

Retainer Retainer

Advantage Oil and Gas Ltd.

1,972,789

IC

9

7

2

7

Aecon Group Inc.

1,984,095

CC, LD

8

7

0

14

Afferro Mining Inc.

62,033¹

IC

5

4

0

5

300,774 57 166,768 57

Yes

75,000

79,393¹

55,576¹

AGF Management Limited

5,231,159

CC, LD

9

5

1

10

Yes

Agnico-Eagle Mines Limited

4,983,919¹

IC

14

12

2

8

Yes

Agrium Inc.

13,008,600¹

IC

11

10

2

7

Yes

Aimia Inc.

4,931,733

IC

9

8

1

4

Yes

Air Canada

9,633,000

IC

10

9

0

4

Yes

325,000

Alacer Gold Corp.

1,784,883¹

IC

8

5

1

5

Yes

178,200¹

Alamos Gold Inc.

593,232¹

IC

7

6

0

4

Yes

40,000

18,000

Algoma Central Corporation

874,397

IC

9

6

0

11

22,500

Algonquin Power & Utilities Corp.

1,282,588

IC

6

4

0

2

150,000

60,000

Alimentation Couche-Tard Inc.

3,959,604¹

NIC, LD

10

6

2

13

Yes

229,500

50,000

2,154,552

IC

6

5

0

7

Yes

75,000 99 60,000 99

AltaGas Ltd.

3,542,420

CC, LD

9

8

1

5

Yes

Altius Minerals Corporation

313,819

NIC

6

4

1

8

Yes 125,000

ARC Resources Ltd.

5,323,900

IC

10

9

1

8

Yes

Artis Real Estate Investment Trust

3,167,588

IC

7

5

0

7

Astral Media Inc.

2,515,383

NIC, LD

14

10

3

19

Yes

ATCO Ltd.

12,453,000

NIC, LD

8

5

1

15

Yes

Athabasca Oil Sands Corp.

3,944,786

IC

5

4

0

4

Atlantic Power Corporation

3,215,943¹

IC

6

5

1

5

84,150¹

59,400¹

Atrium Innovations Inc.

817,684¹

IC

10

9

1

6

110,000

40,000

AuRico Gold Inc.

3,142,276¹

IC

9

7

0

1

Yes

175,000

75,000

Aurizon Mines Ltd.

418,381

NIC, LD

10

7

1

11

Yes

150,000

25,000

Avion Gold Corporation

353,505¹

IC

7

5

0

2

Allied Properties Real Estate Investment Trust

X

X

Yes

45,000

240,000

120,000

336,600¹

158,400¹

303,500 100 64,406 100

155,000 65,000 175,000

120,000

86,130¹

120,808 21

75,000

55,000 45,000

65,000 9

140,000 8

407,724 98 333,179 98

20,000 59

59

B2Gold Corp.

557,410¹

IC

7

6

0

4

25,000 25,000

Bank of Montreal

477,423,000

IC

16

15

4

9

Yes

300,000

100,000

Bank of Nova Scotia

575,256,000

IC

14

13

3

11

Yes

300,000

120,000

Bankers Petroleum Ltd.

654,604¹

IC

8

7

0

5

Banro Corporation

424,849¹

IC

7

4

0

10

56

30,000

29,700¹

Barrick Gold Corporation

48,395,160¹

NIC, LD

14

9

1

12

Yes

Baytex Energy Corp.

2,461,810

NIC, LD

8

6

0

9

Yes

BCE Inc.

39,426,000

IC

13

12

2

4

Yes

Bell Aliant Inc.

3,487,100

NIC, LD

10

4

3

5

Yes

Birchcliff Energy Ltd.

1,225,497

IC

5

4

0

5

50,000

Blackpearl Resources Inc.

606,521

IC, LD

5

4

0

3

Yes

40,000

BMTC Group Inc.

274,446

CC, LD

9

4

1

14

Yes

5,089,023

CC, LD

5

4

0

8

Yes

25,000 44

Bombardier Inc.

23,625,360¹

NIC, LD

14

9

2

15

Yes

150,000

Bonavista Energy Corporation

3,924,160

CC, LD

8

6

1

10

Yes

Bonterra Energy Corp.

364,176

CC

4

3

0

21

Boardwalk Real Estate Investment Trust

X

350,000

600,000

BPO Properties Ltd.

5,374,600

IC

3

2

0

9

Brookfield Asset Management Inc.

90,119,700¹

IC

15

11

1

13

Yes

350,000

Brookfield Properties Corporation

24,892,560¹

NIC, LD

11

6

1

9

Yes

CAE Inc.

3,183,700

IC

14

13

1

8

Yes

225,000

Calfrac Well Services Ltd.

1,405,121

IC

7

6

0

6

Yes

477,500

Calloway Real Estate Investment Trust

129,022

160,000 45

120,000

75,000

40,000

10,200 61

75,000

150,000

99,000¹

80,000 183,750

5,955,456

8

5

1

6

Yes

35,000 60

Cameco Corporation

7,801,831

IC

12

10

2

7

Yes

140,000 8

Canaccord Financial Inc.

5,762,723

NIC, LD

9

6

0

6

Yes

Canada Bread Company, Limited

964,475

NIC

7

3

1

13

NIC, LD

7

5

0

10

Canadian Apartment Properties Real Estate Investment Trust

X

198,000¹

X

3,804,650

Yes

340,000

100,000

120,000

75,000 55 55,000 55

Canadian Helicopters Group Inc.

332,956

IC

5

4

0

6

45,000

25,000

Canadian Imperial Bank of Commerce

353,699,000

IC

16

15

4

5

Yes

375,000

100,000

Canadian National Railway Company

26,026,000

IC

13

12

2

10

Yes

466,312

188,660

Canadian Natural Resources Limited

47,278,000

NIC

14

10

1

10

Yes

198,470

Canadian Oil Sands Limited

8,620,000

IC

9

8

0

7

Yes

320,500

Canadian Pacific Railway Limited

14,110,000

IC

15

14

3

5

Yes

350,000

3,301,337

IC

8

7

1

7

Yes

98,500 35 46,500 35

12,338,800

IC

16

12

2

7

Yes

344,000

Canadian Real Estate Investment Trust

X

Canadian Tire Corporation, Limited

* CC = combined CEO/Chair, IC = Independent Chair, NIC = Non-Executive, Non-Independent Chair, EC = Executive Chair, LD = Lead Director (if blank, there is no Board Chair or Lead Director)

155,000

140,000 8 120,000

** Includes guidelines to hold any type of shares or share units. Non-bold are specific guidelines. Bold are implicit shareholding policies where directors receive a mandatory portion of their compensation in share units, and those share units must be held as long as the director is a member of that board.

82 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

All amounts include cash and the value of shares and/or share units.

Board Meeting Fee

Lead Director Retainer Committee Retainer

Committee Meeting Fee

Committee Chair Fee Stock Component

Regular: Retainer

Bold: Meeting Fees

Req’d

Elect

Options

X 20,000²

X

1,500

X

85,000 20,000

4,000 2,000

1,500

3,000 10 4,000²

990¹

3,465¹

990¹

5,000

4,000

6,000 10 15,000² X

10,000

25,000²

1,485 1,2 6,435¹

1,500 2,500 5,000² 1,500

12,500

7,500

10,000 7 15,000²

X X

9,900¹

14,850 1,2

1,000

1,000

6,000

1,670

6,000

1,670

11,000

1,500

1,500

7,500

10,000²

X

1,530

1,530

6,000

12,000²

X

3,060

2,040²

10,000²

2,500

X X

10,000 26,40 10,000 20,000 26,40 X

30,000

1,500

60,000 4,000 1,250

1,500

X

9,900 1,7 14,850 1,2

7,500

5,000² X X

10,000

20,000²

7,500

15,000²

15,000

X

X

25,000 7

32,500²

X X X

X

2,000 58 2,000 2,000 58 5,000 15,000²

15,000 10,000 15,000² X

2,000 8,32

50,000 7,500² 1,500 31 8,500 20,000²

7,000 1,485¹

1,485¹

1,500

1,500

7,000

10,000

1,200

6,000

1,200

9,900 1,10 14,850 1,2

6,000

X X X X X

10,000² 15,000 2,10

X X X

10,000²

X

X

X 2,000 2,000

3,000

1,500

6,000 12 2,000

15,000 14 25,000 40,000²

X X

20,000 13 25,000 40,000 12

X X

10,000

X

7,425 1,10 9,900 1,2 14,850 1,10 22,275 1,2

2,970 1,2 14,850¹ 24,750 1,2

1,500

29,700¹

20,000

1,500

45

5,000

20,000²

X X X

X X

80,000 123 30,000 122

X X

1,250

45

1,250

X

X

1,500 44 20,000 44 5,000 44 1,500 44 8,000 44 15,000 16,44 X

15,000

5,000

10,000

20,000²

1,500

15,000

4,500

7,000

17,000²

8,000 2 1,500

X

X

X

19,800¹

15,000

25,000²

X

X

9,900 1,2 19,800 1,2 X 10,000

1,500

1,500

2,500²

25,000

X

5,000

X

1,500 1,500 2,000² 5,000

10,000²

X

7,500 24 10,000² X

1,500 8 5,000 8 1,500 8 2,000 2,8 11,000 8 20,000 2,7,8 X 1,500

40,000

1,500

10,000

20,000²

1,500

10,000

15,000²

X

X

10,000 7,000 X 1,400 2,000

2,500

1,400

5,000 27 2,000

7,000

X X X X

1,485¹

3,465¹

1,485¹

14,850¹

1,500

4,500

1,500

7,500

1,500

4,000

1,500

8,000

7,000²

12,000²

25,000 27 40,000 2,27 24,750 1,2,7 15,000²

X

X

12,000 24 20,000²

X

1,500 8 3,500 8 7,000 8,26 1,500 8 10,500 8 15,500 8,26

X X

1,600 1,600

5,000 34 10,000 X

2,000

11,000

2,000

2,750²

17,500 33,38 30,000² X

Stock Component: “Options” indicates if directors received stock options. “Req’d” indicates if directors are required to take all or a portion of their compensation in shares or share equivalents. “Elect” indicates if directors may choose to take all or a portion of their compensation in shares or share equivalents.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 83

Average Non Number of Number of Term **Director Executive

Assets *Board Number of Independent Female Served Shareholding Chair Board Company Name Trust ($000) Leadership Directors Directors Directors (years) Guideline?

Retainer Retainer

Canadian Utilities Limited

11,696,000

NIC, LD

12

8

3

10

Yes

175,000

Canadian Western Bank

14,772,035

IC

14

13

2

14

Yes

180,000

Canexus Corporation

781,517

IC

8

7

1

6

Yes

176,250

86,000

Canfor Corporation

2,401,600

IC

9

8

0

11

Yes

177,150

102,150

Canyon Services Group Inc.

407,330

IC

7

6

0

3

Yes 140,878 115 110,878 115

Capital Power Corporation

4,743,000

IC

12

11

1

2

Yes

Capstone Mining Corp.

1,405,340¹

IC

7

6

1

3

Cascades Inc.

3,731,000

CC, LD

12

6

1

21

Yes

CCL Industries Inc.

1,613,481

NIC, LD

10

7

0

10

Yes

Celestica Inc.

2,939,904¹

IC

8

6

1

6

Yes

Celtic Exploration Ltd.

1,079,923

IC

5

4

0

9

Cenovus Energy Inc.

22,194,000

IC

9

8

1

2

Yes

529,600

279,600

Centerra Gold Inc.

1,671,732¹

IC

12

9

1

4

Yes

297,500

140,000

CGI Group Inc.

4,685,543

NIC, LD

13

9

2

14

Yes

Chartwell Seniors Housing Real Estate Investment Trust

X

2,706,521

IC

8

6

2

7

Yes

Chemtrade Logistics Income Fund

X

1,075,602

IC

4

4

0

8

Yes

China Gold International Resources Corp. Ltd.

1,727,055¹

NIC, LD

9

4

0

3

Chorus Aviation Inc.

773,429

IC

9

8

1

3

Yes

CI Financial Corp.

3,084,982

NIC, LD

11

8

0

9

Yes

92,500

Cineplex Inc.

1,245,077

IC

9

8

2

2

Yes

70,000

CML Healthcare Inc.

440,797

CC

7

6

1

4

133,000

Cogeco Cable Inc.

2,735,500

IC

8

7

1

11

Yes

112,500

40,000 11

COGECO Inc.

2,897,254

Yes

112,500

40,000 11

Colossus Minerals Inc.

232,878

145,000 107 82,410¹

306,900¹

80,000

140,000 8 80,000

115,000

56,657¹ 51,579

79,575 8 183,150¹

75,000 8

32,500 62,63

62,63

85,000

12,000

150,000 46 95,000 46 110,000

88,000

IC

7

6

1

12

NIC

8

6

0

2

22,000

2,763,256

IC

9

6

1

9

25,000

Constellation Software Inc.

624,269¹

CC, LD

8

7

0

9

Corus Entertainment Inc.

2,170,752

NIC, LD

11

8

6

8

Yes

Cott Corporation

1,493,811¹

IC, LD

11

10

1

5

Yes

227,700 1,8 128,700 1,8

Crescent Point Energy Corp.

8,734,446

IC

7

5

0

8

Yes

347,590 52 262,275 52

Crew Energy Inc.

1,842,719

IC

5

4

0

6

10,000

Davis + Henderson Corporation

1,283,325

IC

7

6

1

8

65,000

30,000

Detour Gold Corporation

1,859,017¹

NIC, LD

10

7

1

3

40,000

Dollarama Inc.

1,407,741

CC, LD

9

5

0

5

Yes

40,000

Dorel Industries Inc.

2,075,603¹

LD

10

6

1

14

Yes

60,000

Dundee Corporation

3,481,599

NIC, LD

12

8

0

13

Yes

65,000

Cominar Real Estate Investment Trust

X

Dundee Precious Metals Inc.

Yes

Yes

75,000

415,000 49

918,662¹

IC

11

7

0

14

Yes

4,466,467

NIC

10

6

1

8

Yes 246,400 37 98,200 37

Eastern Platinum Limited

905,665¹

CC

8

6

0

5

E-L Financial Corporation Limited

14,599,583

IC

10

5

0

9

Eldorado Gold Corporation

3,920,801¹

IC

9

8

0

6

Emera Inc.

6,923,600

IC

12

11

4

4

Yes

Empire Company Limited

6,913,100

IC

16

9

1

15

Yes

Enbridge Inc.

34,343,000

IC

12

11

2

8

Yes

EnCana Corporation

33,578,820¹

IC

11

10

3

6

Yes

540,900

320,900

Endeavour Silver Corp.

246,531¹

CC, LD

7

5

0

6

24,000

Enerflex Ltd.

1,370,560

IC

8

7

0

0

Yes

200,000

40,000

Enerplus Corporation

5,723,312

IC

14

13

1

6

Yes

220,000

115,000 170,000

Dundee Real Estate Investment Trust

X

Yes

187,500

50,000

65,000 4,5

82,000

330,000 64 60,000 225,000 220,000 50 220,000

20,800 170,000 60,000 70,000

450,000 8 210,000 8

Ensign Energy Services Inc.

3,048,113

NIC

9

6

1

14

Yes

Equitable Group Inc.

10,257,013

IC

11

10

2

5

Yes

80,885

38,385

Evertz Technologies Limited

431,864

NIC

5

3

0

9

12,000

IC

10

9

1

12

Extendicare Real Estate Investment Trust

X

1,830,704

Yes

159,700 54 59,700 54

Fairfax Financial Holdings Limited

33,072,831¹

CC, LD

6

5

0

8

Yes

Finning International Inc.

4,085,400

IC

10

9

1

6

Yes

Yes

280,000

75,000 100,000

First Capital Realty Inc.

6,111,144

NIC, LD

8

6

1

9

First Majestic Silver Corp.

438,879¹

IC

7

5

0

9

First National Financial Corporation

11,927,270

CC

7

5

0

5

First Quantum Minerals Ltd.

5,245,020¹

CC, LD

8

5

0

8

Yes

FirstService Corporation

1,221,381¹

IC

7

5

0

15

Yes

92,500

40,000

Fortis Inc.

13,562,000

IC

11

10

1

6

Yes

230,000

105,000

Fortuna Silver Mines Inc.

268,890¹

NIC

7

5

0

5

74,250¹

29,700¹

* CC = combined CEO/Chair, IC = Independent Chair, NIC = Non-Executive, Non-Independent Chair, EC = Executive Chair, LD = Lead Director (if blank, there is no Board Chair or Lead Director)

58,300

70,050 30,800 25,000

138,600¹

** Includes guidelines to hold any type of shares or share units. Non-bold are specific guidelines. Bold are implicit shareholding policies where directors receive a mandatory portion of their compensation in share units, and those share units must be held as long as the director is a member of that board.

84 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

All amounts include cash and the value of shares and/or share units.

Board Meeting Fee

2,000 8,32

Lead Director Retainer Committee Retainer

Committee Meeting Fee

Committee Chair Fee Stock Component

Regular: Retainer

Bold: Meeting Fees

50,000 7,500 2,8 1,500 31 8,500 20,000² 8,000²

3,000²

Elect

Options

X X

1,500

4,000

7,500

15,000²

X

X

1,500

3,000

1,500

5,000

10,000²

X

X

2,000

5,000

2,000

10,000

20,000²

X

1,250 1,250

5,000

15,000²

X

1,500 1,500

5,000

7,500 70 10,000²

X X

10,000²

1,500

Req’d

1,500 2,000

2,000 8

5,638¹ 2,000

10,168 1,36 18,750 1,2 X 10,000²

2,500²

X

12,500 2,000 8 7,500 8 12,500²

X X

2,475 1,23 2,475 1,23 9,900 1,10,22 19,800 1,2

X X

1,500

1,500

7,500

15,000²

1,500

1,500

5,000

10,000²

1,500 8

15,000 2,000 8 2,500 8 10,000 12,500²

X

X

X

X

X

X X X

1,500 63 1,500 63 12,500 63 X

X

6,000 101

2,500 5,000 26 7,500 15,000 26

X X

32,500²

15,000

20,000²

X

5,000

10,000²

X

1,500

1,500

X

1,500 3,000 4,000 3

5,000² 1,500

7,000

10,000 3 15,000² X

1,500 3,000 4,000 3

5,000² 1,500

7,000

10,000 3 15,000² X

5,000

10,000²

5,000

15,000²

1,000

1,000

2,000²

1,500

1,500

X

7,500 7,000 10,000 3 12,500² X

29,700¹ 9,900 1,8 14,850 1,2,8 1,500 1,500

6,000

12,500²

X X

X

X

1,500

1,200

4,000

8,000²

1,500

1,500

7,500

15,000²

X

1,000

5,000

10,000²

X

1,500

10,000

15,000²

75,000

1,500 1,500

30,000

5,000² 3,000

5,000²

1,500 5,000² 1,500

10,000

15,000 10 35,000²

X X

1,500 10,000² 1,500

5,000

20,000²

X

X

X

X

X

X 1,230

1,230

1,500

1,500

1,750 3,000 5,000² 1,750 2,000

3,660² 8,000 8,000

12,000² 15,000 2,33

X

X

X X

3,000 104 5,000² 2,000 104 10,000 104 25,000 2,3 X

10,000 8 15,000 7 25,000 26 1,500

7,500

1,300

1,000

1,500

2,500² X

2,000

10,000

12,000 7 20,000² X X

1,500

1,500

10,000

20,000 16

1,250

1,250

5,000

5,000

2,000

5,000 2,500

1,300²

15,000²

X X

1,500

10,000²

1,500 117 1,500 117 5,000 15,000² 800

3,000

800

2,000 5,000² 2,000

10,000

1,500

40,000

1,500

7,500

3,000

7,500 24 10,000²

59,400¹

1,200²

X

X

20,000²

10,000

1,500 1,500

X

X

10,000²

1,500 1,000

X X

5,000

6,000²

1,500

X

10,000² 10,000 53 25,000²

5,000²

1,000

5,000 5,000

X

X

X

X X

5,500

16,500²

5,000

15,000²

X

9,900 1,109 14,850 1,2 19,800 1,10,39 29,700 1,2

1,750

1,750

5,000

10,000²

1,500

1,500

15,000

20,000²

990¹

990¹

1,485 1,2 4,950¹

X

X

X

9,900 1,2 X

Stock Component: “Options” indicates if directors received stock options. “Req’d” indicates if directors are required to take all or a portion of their compensation in shares or share equivalents. “Elect” indicates if directors may choose to take all or a portion of their compensation in shares or share equivalents.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 85

Average Non Number of Number of Term **Director Executive

Assets *Board Number of Independent Female Served Shareholding Chair Board Company Name Trust ($000) Leadership Directors Directors Directors (years) Guideline?

Retainer Retainer

Franco-Nevada Corporation

2,871,990¹

IC

7

6

0

4

Yes

Freehold Royalties Ltd.

423,440

IC

8

5

0

12

Yes 96,667

90,000

Gabriel Resources Ltd.

619,294

NIC, LD

10

8

0

3

75,000

Genivar Inc.

726,049

IC

7

5

0

4

130,000

45,000 56,667

40,000

75,000

Genworth MI Canada Inc.

5,393,477

CC, LD

9

4

0

2

Yes

George Weston Limited

21,323,000

NIC, LD

13

10

3

9

Yes

Gibson Energy Inc.

2,204,375

IC, LD

7

6

0

1

Yes

Gildan Activewear Inc.

1,870,803¹

IC

10

9

1

8

Yes

257,400¹

108,900¹

NIC

10

7

1

10

Yes

50,000

IC

10

7

0

6

Yes

50,000

NIC, LD

10

8

1

5

Yes

Gluskin Sheff + Associates Inc.

136,269

GMP Capital Inc.

1,267,753

Goldcorp Inc.

29,080,260¹

Golden Star Resources Ltd.

720,401¹

IC

8

7

0

6

Great Basin Gold Ltd.

850,310

IC

9

7

2

6

Great-West Lifeco Inc.

238,768,000

NIC

19

10

2

8

Guyana Goldfields Inc.

Yes

80,000

57,500 100,000 112,550

1,086,352 1,68 267,780 1,68 168,300¹ 200,000

108,900¹

50,000

100,000 8

192,110

LD

7

3

0

7

7,650,380

IC

5

4

0

14

Yes

45,000

1,614,627¹

CC, LD

9

7

2

6

Yes

81,117

High River Gold Mines Ltd.

1,007,827

IC

7

3

0

2

Home Capital Group Inc.

17,696,471

IC

8

7

2

10

Yes

120,000

HudBay Minerals Inc.

2,448,820

IC

8

7

0

2

Yes

335,000

Husky Energy Inc.

32,426,000

NIC

14

9

2

8

Yes

120,000

Iamgold Corporation

4,306,225¹

IC

10

9

0

9

Yes

100,170

Iberian Minerals Corporation

694,588¹

IC

5

3

0

6

H&R Real Estate Investment Trust

X

Harry Winston Diamond Corporation

39,375

325,000

28,125

65,000 100,000

IGM Financial Inc.

11,132,275

NIC

17

7

2

11

Yes

Imperial Oil Limited

25,429,000

CC

7

5

2

6

Yes

Industrial Alliance Insurance and Financial Services Inc.

37,441,000

IC

14

13

3

9

Yes

200,000

45,000

Inmet Mining Corporation

3,810,650

IC

9

8

0

6

Yes

325,000

115,000

Intact Financial Corporation

19,753,000

IC

11

10

3

7

Yes

245,000

4,768,067

NIC, LD

9

5

0

5

Yes

Inter Pipeline Fund

X

175,000

26,000 102

75,000 188,400 43

75,000 125,000

International Minerals Corporation

332,832¹

LD

7

4

0

10

Ivanhoe Energy Inc.

409,573¹

NIC, LD

9

5

0

6

Ivanhoe Mines Ltd.

6,075,432¹

IC

15

9

2

5

275,000

Jaguar Mining Inc.

654,059¹

IC

7

7

0

6

64,000

Jean Coutu Group (PJC) Inc.

1,072,800

NIC

13

7

5

16

Just Energy Group Inc.

1,543,044

NIC, LD

9

5

1

7

Yes

65,000

Keyera Corp.

2,233,559

IC

8

7

1

7

Yes

95,000

Killam Properties Inc.

1,329,531

IC

9

7

0

10

Yes

Kinross Gold Corporation

16,343,712¹

IC

10

9

1

9

Yes

420,000

185,000

Kirkland Lake Gold Inc.

270,329

NIC

8

4

2

5

24,000

Labrador Iron Ore Royalty Corporation

668,972

IC

7

4

0

13

Lake Shore Gold Corp.

1,033,999

IC

7

6

0

4

Laurentian Bank of Canada

24,490,451

IC

13

12

5

6

Legacy Oil + Gas Inc.

2,301,400

IC

7

5

0

3

Yes

Yes 190,000

30,000 39,600¹ 100,000

40,000 30,000

50,000 119 25,000 119

50,000

25,000

Yes

175,000

100,000

Yes

160,000

60,000

Leon’s Furniture Limited

595,339

NIC

8

5

1

268

Linamar Corporation

2,221,188

NIC

6

3

1

19

Yes

Lions Gate Entertainment Corp.

1,542,266¹

IC

12

10

1

8

Yes 91,080¹

Loblaw Companies Limited

17,428,000

NIC, LD

12

8

2

5

Yes

Lundin Mining Corporation

3,825,682¹

NIC, LD

8

6

0

9

230,000

31,500 39,600¹ 100,000

120,000

MacDonald, Dettwiler and Associates Ltd.

765,191

IC

8

7

0

7

Yes

194,200

Magna International Inc.

14,532,210¹

IC

10

8

1

10

Yes

396,000¹

148,500¹

80,000 8

150,000

50,000

Major Drilling Group International Inc.

685,973

IC

9

8

2

6

Yes

Manitoba Telecom Services Inc.

2,681,500

IC

11

10

3

8

Yes

Manulife Financial Corporation

462,102,000

IC

18

17

5

8

Yes

350,000

Maple Leaf Foods Inc.

2,940,459

IC

13

11

2

9

Yes

240,000

Mart Resources Inc.

198,021

CC

5

4

0

5

Martinrea International Inc.

1,417,494

NIC, LD

6

3

0

10

Yes

MEG Energy Corp.

6,201,049

CC, LD

10

8

0

5

Yes

Melcor Developments Ltd.

1,218,885

NIC, LD

8

5

1

17

20,000

Mercator Minerals Ltd.

606,814¹

NIC, LD

8

5

0

3

36,000

Methanex Corporation

3,360,060¹

IC

11

10

2

8

* CC = combined CEO/Chair, IC = Independent Chair, NIC = Non-Executive, Non-Independent Chair, EC = Executive Chair, LD = Lead Director (if blank, there is no Board Chair or Lead Director)

Yes

275,000 114 120,000 114

56,000

110,000 8

120,000 40,000 60,000 60,024 77

281,647 76 126,831 76

** Includes guidelines to hold any type of shares or share units. Non-bold are specific guidelines. Bold are implicit shareholding policies where directors receive a mandatory portion of their compensation in share units, and those share units must be held as long as the director is a member of that board.

86 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

All amounts include cash and the value of shares and/or share units.

Board Meeting Fee

Lead Director Retainer Committee Retainer

Committee Meeting Fee

1,500 1,500

1,000²

Committee Chair Fee Stock Component

Regular: Retainer

10,000

Bold: Meeting Fees

Req’d

Elect

Options

15,000 16 X

7,000

14,000²

6,000

7,500 10 10,000² X X

X

5,000

10,000²

15,000

2,000

5,000 73 12,000²

X X

2,000

50,000

5,000²

2,000

10,000

X X

1,500

10,000

1,500

10,000

1,485¹

1,485¹

8,910¹

1,500

1,500

25,000

1,500

1,500

10,000

1,485¹

4,000

5,000

99,000¹ 1,485¹

15,000 39 25,000 71 30,000² 20,000² 14,850 1,7 19,800 1,6

X

30,000²

9,900¹ 19,800 1,2,10 9,900¹

X X X

X

19,800 1,2 X

2,000 16 3,000 14 5,000 10,67 7,500 16 X

2,000 8 3,000 2,8 2,000 8 10,000 103 30,000² 40,000 34 50,000 22

X X

X 2,000 105 1,500

22,500 2,000 105 5,000 24,34 10,000² X 20,000

1,125

2,250

7,500²

1,500

5,000

10,000 7 15,000²

1,125

4,500

16,875²

5,000

30,000²

X

1,500

10,000

30,000²

X

12,500²

10,000

20,000²

1,500

5,000

X X

2,000

1,000

1,000

1,750

1,750

5,000

15,000 6,7

X

2,000 2,000²

10,000

X

20,000²

42 20,000 41 42 10,000 1,500

5,000²

1,500

3,000

1,500

1,500

10,000

1,500

X

X

X

X X

7,500 34,36 10,000² X 25,000²

X

X

6,000 3,16 1,500

9,000

18,000 3,16

1,500 1,500

12,500

20,000²

1,000

7,500

1,000

5,000

10,000²

990¹

39,600¹

990¹

4,950

9,900 1,2 X

2,000

2,000

2,000 2,000

3,000

X

4,500 39 7,500 3,000

3,500²

2,000

50,000 112 5,000² 2,000

1,500

15,000

X X X

20,000 14,39 40,000 2,10 X 9,500 39 12,500 38 15,000 10 17,500² X X 6,000

12,000²

5,000 10,000 30,113 15,000² 30,000

X

X X

45,000²

X

3,000 1,500 118 6,000 12,000² X

15,000

2,000

20,000 16 30,000 70,000 16 5,000²

X X

6,000 10,14 15,000² X

1,200

1,200

10,000

20,000²

1,500

1,500

5,000

15,000²

X

X

6,000 17 7,500 X

5,000 1,575

1,050

750

2,000

50,000

4,000

25,000

5,000

5,000²

X

1,500²

1,575

1,386¹ 1,386¹ 2,000

10,000 7 15,000²

2,625 9,900¹

14,850 1,2

10,000 15,000 39 25,000 38 30,000² 40

10,000

24,750¹

1,980¹

2,000

2,000

34,650 1,39 49,500¹ 5,000

X X X X

20,000 7 25,000²

1,500 8 5,000 8 1,500 8 2,500 2,8 10,000 8 17,500² 1,980¹

X

X X X X

10,000 10 15,000² X X

20,000 55,000²

X X

2,000 8 5,000 8,14,111 8,000 2,8,30,33 1,500 8 10,000 8,111 25,000 8,14 38,000 2,8,30,33 X

30,000

1,500

10,000

15,000²

X

1,000 116 1,000 116 X 1,500

40,000

1,500

10,000 1,000

1,200

4,000

2,500

1,000

4,000

1,500

6,000 1,200

1,500²

1,200

5,000

7,500²

1,000

8,000

12,000²

2,500 2,500

5,000

X

X X X

X X

Stock Component: “Options” indicates if directors received stock options. “Req’d” indicates if directors are required to take all or a portion of their compensation in shares or share equivalents. “Elect” indicates if directors may choose to take all or a portion of their compensation in shares or share equivalents.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 87

Average Non Number of Number of Term **Director Executive

Assets *Board Number of Independent Female Served Shareholding Chair Board Company Name Trust ($000) Leadership Directors Directors Directors (years) Guideline?

Retainer Retainer

Metro Inc.

4,958,800

NIC, LD

14

11

2

8

Yes 450,000

MI Developments Inc.

1,212,347¹

IC

7

6

0

0

Yes

Morguard Corporation

3,467,210

CC, LD

7

5

0

10

Yes

Morguard Real Estate Investment Trust

2,137,390

NIC

8

5

0

9

Mullen Group Ltd.

1,527,137

CC, LD

7

4

0

8

40,000

National Bank of Canada

156,297,000

IC

15

13

4

9

70,000

X

Yes

300,000 60,000 270,000 18

25,000 22,000

Nevsun Resources Ltd.

767,474¹

IC

5

4

0

12

New Gold Inc.

3,189,188¹

NIC

8

5

0

3

Yes

Nexen Inc.

20,068,000

IC

14

13

1

8

Yes

Niko Resources Ltd.

1,602,302¹

CC

5

3

0

10

Yes

Nordion Inc.

454,076¹

IC

9

8

2

4

Yes

North American Palladium Ltd.

416,045

IC

7

6

0

6

Yes

North West Company Inc., The

626,917

IC

11

10

2

5

Yes

Northern Dynasty Minerals Ltd.

145,241

NIC

9

4

0

8

35,000

1,333,073

IC, LD

6

5

0

9

Yes

60,000

35,000

Northland Power Inc.

2,254,028

NIC, LD

7

5

2

4

Yes

119,290

30,000

NovaGold Resources Inc.

725,694

IC

10

8

0

7

Yes

34,650¹

33,264¹

NuVista Energy Ltd.

1,373,705

IC, LD

7

6

0

7

Yes

30,000

OceanaGold Corporation

809,459¹

IC, LD

7

6

0

2

Onex Corporation

29,151,540¹

CC, LD

10

7

1

14

Yes

Open Text Corporation

2,419,850¹

NIC, LD

9

6

3

8

Yes

Northern Property Real Estate Investment Trust

X

75,000

55,000

125,000

493,382 242,688¹

62,500

50,000 145,022

25,000 87,368¹

180,000 28 120,000 28 145,000

42,500

216,458 1,97 95,305 1,96

301,250

217,500¹

69,305 1,110

Osisko Mining Corporation

2,069,242

IC

9

7

0

5

Yes

Pacific Rubiales Energy Corp.

5,394,317¹

NIC, LD

12

8

0

3

Yes

Paladin Labs Inc.

397,913

IC

7

5

0

11 120,000 66

221,250

99,000¹

Pan American Silver Corp.

1,932,278¹

IC

9

7

0

7

Paramount Resources Ltd.

1,725,713

CC, LD

12

7

2

17

89,100¹

Parkland Fuel Corporation

923,449

IC

8

6

0

8

Yes

213,700

85,000

Pason Systems Inc.

455,901

NIC, LD

6

5

0

12

Yes

120,000

Pembina Pipeline Corporation

3,339,202

IC

9

8

1

7

Yes

Pengrowth Energy Corporation

5,644,728

IC

8

7

0

8

Yes

195,000

110,000

Penn West Petroleum Ltd.

15,584,000

IC

10

8

1

7

Yes

250,000

125,000 25,000

20,000

180,000 72 105,000 72

Perpetual Energy Inc.

1,018,089

NIC

8

6

2

7

Yes

PetroBakken Energy Ltd.

6,477,282

IC

8

6

0

2

Yes

Petrobank Energy and Resources Ltd.

6,917,716

IC

9

5

0

7

Yes

Petrominerales Ltd.

2,204,235¹

NIC, LD

7

6

0

5

Yes

Peyto Exploration & Development Corp.

1,800,252

IC, LD

8

6

0

6

Yes

137,629

Potash Corporation of Saskatchewan Inc.

16,094,430¹

IC

13

11

3

10

Yes

356,400¹

205,994 86 153,652 86 80,000

50,000 89

75,000 50,000 92 92

85,283 95

173,250¹

Power Corporation of Canada

255,496,000

CC

21

12

2

13

Yes

100,000

Power Financial Corporation

252,678,000

NIC

20

11

2

13

Yes

100,000

Precision Drilling Corporation

4,427,874

IC

10

9

0

6

Yes

100,000

Premier Gold Mines Limited

315,983

IC

7

5

0

4

3,590,297

IC

7

6

1

5

Primaris Retail Real Estate Investment Trust

X

Yes

225,000 15,000

Primero Mining Corp.

618,450¹

NIC, LD

9

6

0

2

Progress Energy Resources Corp.

2,646,471

NIC

9

7

0

4

Yes

Progressive Waste Solutions Ltd.

3,046,828¹

IC

9

7

0

4

Yes

9,038,800

IC

7

5

2

11

Yes 310,000

Reitmans (Canada) Limited

633,861

CC, LD

9

7

0

17

Research in Motion Limited

13,593,690¹

IC

11

8

2

5

RioCan Real Estate Investment Trust

X

50,000

234,968 93 139,968 93

Quebecor Inc.

Yes

9,000

110,000 87 60,000 87

200,000

240,000

135,000 55,000

50,000

200,000

10,767,000

IC

9

6

1

12

Yes

Ritchie Bros. Auctioneers Incorporated

957,568¹

IC

7

6

1

6

Yes 198,000¹

528,470 69 136,401 69 94,050¹

Rogers Communications Inc.

18,362,000

NIC, LD

18

11

4

12

Yes

391,240

145,000

113,306¹

67,568¹

Romarco Minerals Inc.

260,697¹

IC

7

5

1

6

RONA Inc.

2,780,400

IC

13

10

2

6

Yes

250,000

Royal Bank of Canada

751,702,000

IC

17

16

5

10

Yes

460,000

Rubicon Minerals Corporation

280,134

LD

6

5

0

6

Yes

Russel Metals Inc.

1,538,400

IC

9

8

2

9

Yes

San Gold Corporation

238,998

Saputo Inc.

3,599,120

Savanna Energy Services Corp.

Sears Canada Inc.

175,000

53,000

185,000 30,000

55,000 8

NIC

7

4

0

3

NIC, LD

11

9

2

10

Yes

500,000

141,420

1,233,700

IC

6

5

0

5

Yes

155,000

125,000

2,834,400

NIC, LD

8

4

2

3

Yes

60,000

* CC = combined CEO/Chair, IC = Independent Chair, NIC = Non-Executive, Non-Independent Chair, EC = Executive Chair, LD = Lead Director (if blank, there is no Board Chair or Lead Director)

36,000

** Includes guidelines to hold any type of shares or share units. Non-bold are specific guidelines. Bold are implicit shareholding policies where directors receive a mandatory portion of their compensation in share units, and those share units must be held as long as the director is a member of that board.

88 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

All amounts include cash and the value of shares and/or share units.

Board Meeting Fee

1,750

Lead Director Retainer Committee Retainer

Committee Meeting Fee

20,000 2,500 5,000² 1,750

15,000

25,000²

Committee Chair Fee Stock Component

Regular: Retainer

Bold: Meeting Fees

Req’d

Elect

X X

30,000

X

50,000²

X

1,500

1,500

4,000

8,000²

1,000

1,000

2,500

10,000²

1,200

1,000

5,000

3,000

Options

5,000 10,000²

X

1,200

15,000 20,000 16 40,000 45,000 16

X X

X

X

1,800

9,100

1,800

15,000²

X

14,400

X

28,800²

X

1,456¹

3,883¹

5,824 1,6 1,456¹

X

6,310¹

9,708 1,7 14,561 1,6

X X

1,000 1,000

7,500

15,000²

X

X

1,500

1,500

8,000

12,000²

X

X

3,000

7,500²

10,000

15,000²

1,500

1,500

1,500

5,000

1,500

5,000

1,732¹

1,732¹

7,227¹

8,217 1,10 12,276 1,2

1,400

7,500

15,000²

1,400

15,000 7,500

4,000

6,000²

1,500

X

7,500 10 15,000² X X X X

X 1,980¹

39,600¹

4,455¹

14,850 1,94

X X

19,800¹

7,920¹ 14,850 1,10 24,750 1,2 13,860¹ 24,750 1,10 34,650 1,2

X X

1,500

74,250¹

5,000

7,425 1,94 1,980¹ 10,000²

990¹

10,000

20,000²

X

14,850¹

2,460 1,250

1,500

9,900¹

1,230

9,900¹ 5,940 1,2 990¹

X

1,476 X 4,950¹ 7,920 1,7,39 13,860 1,2 X X

10,000

1,250

1,500

1,500

12,000 24 15,000² 2,500

5,000

X X

1,000

1,000

5,000 14 10,000²

X X

1,200 5,000² 1,200

10,000

1,500

10,000

5,000

10,000 16 1,500

6,500²

18,000² 15,000 10 20,000 16

X

X X

1,500

1,500

7,500

15,000²

1,500

1,500

7,500

15,000²

X X

5,000 10,79 10,000²

7,500 79 12,500 10 15,000²

5,000 10,79 10,000²

7,500 79 12,500 10 15,000²

X X

2,000 5,000 10,000²

3,000 91 7,500 79 12,500 10 15,000²

X X

91

X

4,950¹

1,485 1,25 14,850¹ X

2,000

5,000

6,000²

2,000

15,000

25,000²

2,000

5,000

6,000²

2,000

15,000

25,000²

X

X

1,250

3,750

7,500²

1,250

7,500

15,000²

X

X

2,500²

X X

11,250 90 12,750 15,000² X

1,500 1,500 1,500

250,000 22

30,000

1,500

1,500 1,500

7,500 88

8,500 10,000²

X

5,000

10,000 3 20,000²

7,500

20,000²

10,000 10,14 20,000²

2,000 3,000 4,000² 2,000 3,000² 8,000

10,000²

X X X

X

5,000²

10,000

2,500 2,000 1,485¹ 1,485¹ 1,500

80,000

990¹ 1,500

4,950¹ 2,500

4,000²

50,000

5,000

1,500

68,210

X

14,850 1,2

X

10,000

20,000 10 30,000² 3,000 2,10

X X

990¹

7,920¹

11,880 1,2 X

1,500

5,000

1,500

2,000²

1,200

10,000²

10,000 15 25,000 50,000² 6,000

X

X

X X

15,000²

2,000 8 2,000 8 6,000 8,500 8,33 12,000²

X X

9,900¹

1,200

20,000 70 25,000 15

5,000 7 15,000²

6,0002,38 20,000² X 4,500²

1,500

7,500

53,210²

X

X

1,500

1,500

10,000

20,000²

X

X

1,500

1,500

10,000

20,000²

25,000

X

X X

3,000

5,000

Stock Component: “Options” indicates if directors received stock options. “Req’d” indicates if directors are required to take all or a portion of their compensation in shares or share equivalents. “Elect” indicates if directors may choose to take all or a portion of their compensation in shares or share equivalents.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 89

Average Non Number of Number of Term **Director Executive

Assets *Board Number of Independent Female Served Shareholding Chair Board Company Name Trust ($000) Leadership Directors Directors Directors (years) Guideline?

Retainer Retainer

Semafo Inc.

724,011

NIC, LD

7

5

0

6

Yes

Shaw Communications Inc.

12,525,877

NIC, LD

16

12

2

11

Yes

127,805 8

30,000

ShawCor Ltd.

1,223,265

NIC, LD

13

10

3

7

Yes

100,000 8

Sherritt International Corporation

6,497,500

CC, LD

10

9

1

7

Yes

Shoppers Drug Mart Corporation

7,300,310

IC

11

10

4

4

Yes

Silver Standard Resources Inc.

1,263,341¹

IC

6

5

0

3

Yes 230,000 105,000

Silver Wheaton Corp.

2,843,612¹

IC

8

7

0

5

Yes

Silvercorp Metals Inc.

569,680¹

CC

7

5

0

5

SMART Technologies Inc.

534,169¹

NIC, LD

7

3

1

8

Yes

97,317¹

SNC-Lavalin Group Inc.

8,354,001

IC

12

11

3

7

Yes

125,000

250,000

50,000

240,000

120,000

374,310 65 236,830 65

41,250 106

280,000

SouthGobi Resources Ltd.

911,120¹

NIC, LD

9

6

0

5

25,000

Sprott Resource Corp.

597,372

IC

6

3

0

6

25,000

Stantec Inc.

1,327,356

Stella-Jones Inc.

617,056

Sun Life Financial Inc. Suncor Energy Inc.

Yes

37,500

IC

9

7

2

6

NIC, LD

9

5

2

12

161,552

86,552

218,027,000

IC

14

12

2

4

Yes

345,000

110,000

74,777,000

IC

14

12

2

7

Yes

503,154

214,208

Superior Plus Corp.

2,193,400

NIC, LD

11

9

1

9

Yes

200,000

70,000

SXC Health Solutions Corp.

1,039,804¹

CC, LD

7

7

0

4

Yes 180,180¹

50,000

30,000

Tahoe Resources Inc.

912,785

IC

8

7

1

1

Yes

224,000

174,000

Talisman Energy Inc.

23,983,740¹

IC

11

10

2

3

Yes

500,000

200,000

Taseko Mines Limited

994,732

IC

9

8

0

10

Teck Resources Limited

34,219,000

NIC, LD

14

11

2

10

TELUS Corporation

19,931,000

IC

13

12

1

Tembec Inc.

1,107,000

IC

11

9

0

Thompson Creek Metals Company Inc.

2,964,258¹

CC, LD

7

6

Thomson Reuters Corporation

32,151,240¹

NIC

14

10

50,000

Yes

660,276

160,092

10

Yes

460,000

160,000

3

Yes 320,000 121 115,000 121

1

4

Yes

2

8

Yes

126,284 1,78

594,000 1,80 148,500¹

Tim Hortons Inc.

2,203,950

CC, LD

10

9

3

4

Yes

TMX Group Inc.

3,394,800

IC

12

11

3

9

Yes

275,000

90,000 80,000

Toromont Industries Ltd.

913,331

CC, LD

7

6

0

16

Yes

100,000

40,000

Toronto-Dominion Bank

686,360,000

IC

17

16

6

9

Yes

350,000

Torstar Corporation

1,484,767

IC, LD

13

12

4

5

Yes

Total Energy Services Inc.

434,617

IC

6

5

0

9

Yes

Tourmaline Oil Corp.

2,711,024

CC, LD

10

6

0

2

TransAlta Corporation

9,760,000

IC

11

10

2

6

Yes

Transat A.T. Inc.

1,221,965

CC, LD

11

8

2

12

Yes

TransCanada Corporation

48,995,000

IC

13

12

3

7

Yes

Transcontinental Inc.

2,453,600

NIC, LD

15

10

4

9

Yes

40,000

TransForce Inc.

2,100,407

CC, LD

8

7

0

7

Yes

50,000

165,000 19

275,000

55,000 8

150,000 120 80,000 120 302,048

112,176 50,000

410,000

155,000 8

Transglobe Energy Corporation

520,548¹

IC

8

6

0

10

Trican Well Service Ltd.

2,217,183

NIC, LD

7

4

0

9

Yes

Trilogy Energy Corp.

1,260,364

NIC, LD

8

5

0

6

Yes

Trinidad Drilling Ltd.

1,608,126

IC, LD

7

5

0

4

Yes

Uni-Select Inc.

1,234,728¹

IC

11

10

1

14

110,000

40,000

Uranium One Inc.

3,270,267¹

IC

9

5

0

3

250,000

100,000

Valeant Pharmaceuticals International Inc.

13,382,000

CC, LD

10

9

1

2

Yes

Veresen Inc.

3,737,088

IC

10

9

1

6

Yes 90,000 75 60,000 8,75

Vermilion Energy Inc.

2,735,187

IC

7

6

0

10

Yes

Vista Gold Corp.

178,797¹

CC

7

4

1

8

25,245¹

Viterra Inc.

7,012,631

IC

13

12

1

4

160,000

Yes

71,000

56,000

158,316

128,877 108 20,000

165,000

120,000

277,200 1,84

286,979 74 167,293 74

Yes

375,000

Wajax Corporation

589,926

IC

11

10

1

8

Yes

255,000

90,000

West Fraser Timber Co. Ltd.

2,537,300

CC, LD

9

8

1

16

Yes

68,750

WestJet Airlines Ltd.

3,473,678

NIC, LD

13

10

1

6

Yes

Westport Innovations Inc.

353,108¹

IC

8

7

2

7

Yes

Westshore Terminals Investment Corporation

X

400,000 85 124,123¹

569,091

CC

5

3

0

11

Wi-LAN Inc.

583,102¹

LD

8

6

0

4

Winpak Ltd.

561,943¹

NIC

7

3

0

12

Yamana Gold Inc.

10,662,240¹

Yellow Media Inc.

5,048,932

* CC = combined CEO/Chair, IC = Independent Chair, NIC = Non-Executive, Non-Independent Chair, EC = Executive Chair, LD = Lead Director (if blank, there is no Board Chair or Lead Director)

Yes

37,000 125,000

CC, LD

11

9

0

5

Yes

IC

10

9

0

6

Yes

260,000

30,000

83,286¹ 25,000 27,000

50,000 173,250¹

110,000

** Includes guidelines to hold any type of shares or share units. Non-bold are specific guidelines. Bold are implicit shareholding policies where directors receive a mandatory portion of their compensation in share units, and those share units must be held as long as the director is a member of that board.

90 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

All amounts include cash and the value of shares and/or share units.

Board Meeting Fee

1,250

Lead Director Retainer Committee Retainer

Committee Meeting Fee

15,000

1,250

Committee Chair Fee Stock Component

Regular: Retainer

6,000

Bold: Meeting Fees

Req’d

Elect

Options

7,500 36 10,000² X

1,500 8

75,000 3,000 8 1,500 8 10,000 40,000²

2,000

20,000 5,000 8 10,000 2,8 2,000 8 10,000 8 20,000²

X X

20,000

X

8

10,000

2,000 47 5,000 15,000 2,3

10,000

5,000

10,000

25,000 2,7

1,500 1,500

15,000

15,000² 30,000 2,3

X X

X X X X X

8,250 24,750² X

29,700¹

5,940¹ 11,880 1,2 11,880¹ 29,700 1,2

1,500

1,500

1,500

1,500

60,000

1,000

2,250²

5,000

1,000

1,800

1,800

16,000²

X X

X

25,000 10,38 40,000² X 10,000² 9,000

12,000 16

X

X

5,000²

1,500

5,000

1,500

5,000

6,000²

1,500

10,000

15,000 7 25,000²

X X

1,500

5,000

1,500

14,000

22,000²

2,000

X X

35,000

7,500 29,30

8,000

10,000² 1,500

20,000

30,000 2,29,30

X X

24,750¹ 4,950¹ 14,850 1,10 19,800 1,2

X

20,000

X

1,700

15,000

25,000²

X

3,000

7,500 16 X

1,700 1,500

100,000

1,500

6,000

10,000²

X

6,000

1,500

8,000

20,000²

X

5,000

1,500

10,000

15,000 7 20,000²

X X

5,000

15,000 36 35,000²

X

6,930 1,24,39 24,750 1,2

X

10,000²

2,000 2,500 7,500 36

3,000²

15,000² 2,000

1,485¹ 101,534 1,78 1,485¹

X

9,900¹ 19,800 1,2,3 X 1,500

100,000

3,000

1,500

8,000

1,500

3,000

1,500

10,000

20,000 6

2,000

5,000

2,000

10,000

12,000 7 20,000² X X

33,000

12,000 7 15,000² X X X

15,000 20 25,000 40,000²

X X

1,500 8

X X

10,000 3,000 8 1,250 8 6,500 8 18,000²

1,000 1,000 1,500² 2,500

5,000 10 10,000²

X

1,500

1,500

15,000

1,500

1,500

10,000

3,000

25,000 3,16 15,000²

1,500 8 5,500 8 1,500 8 12,000 8

X

X X X

X

X X

1,500

8,000

3,000

1,500

6,000

10,000 2,7 X

1,750

40,000

4,500

1,750

10,000

2,500 X

4,167

12,292²

6,000

6,875 79 X

1,200 1,200

5,000²

1,250

1,250

5,000

15,000²

1,500

3,000²

1,500

7,500

15,000²

1,750

1,750

8,000

12,000²

2,000

2,000

20,000

1,500

1,500 8 1,500 8 7,500 15,000 2,8 990

990¹

7,000

15,000²

X

X

50,000²

99,000¹ 9,900 1,14 12,375 1,81,82,83 14,850 1,16 14,850 1,14 19,800 1,81,82,83 24,750 1,16

1,500 1,500

X

X

X X X X

6,311 1,2 X 10,000

15,000 7 20,000² X

1,500

1,500

9,000

12,000 7 15,000²

1,500

50,000

1,500

10,000

1,250

20,000 1,250

4,000 5,568¹

1,500 1,980¹

5,000²

30,000

5,500

1,500 1,500

6,000 6,000

X

12,000 2,10 X 12,500²

2,228 1,2,10 12,375¹ 19,800 1,2,10

8,250²

X X

17,000²

1,500 1,732¹

X

15,000²

6,311 1,2,7 11,138¹ 14,850 1,2

1,500

7,000

X X

11,000

1,485¹

1,980 1,2,10

X

20,000²

Stock Component: “Options” indicates if directors received stock options. “Req’d” indicates if directors are required to take all or a portion of their compensation in shares or share equivalents. “Elect” indicates if directors may choose to take all or a portion of their compensation in shares or share equivalents.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 91

End Notes

1

Converted from U.S. Dollars at 0.99.

28

$48,000 of this amount ($72,000 in the case of the Chair) reflects the value of RSUs awarded to directors; RSUs vest immediately and may be exercised as to one-third on the date of grant, one-third on the first anniversary and one-third on the second anniversary.

2

Audit Committee.

3

Human Resources Committee.

4

$25,000 of this amount accounts for the fixed annual fee received as a board/committee meeting attendance fee.

29

Management Resources Committee.

30

Risk Review Committee.

5

Under the terms of the Deferred Share Unit Plan, each director may have his or her annual retainer(s) and attendance fees paid entirely in cash or up to 100% in DSUs. Directors may also receive up to 25% of the portion of the Annual Board Retainer they elect to be paid in DSUs in the form of additional DSUs, an incentive put in place to promote increased DSU ownership.

31

Committee Meeting Fee per day.

32

$800 is paid per meeting for routine administrative matters where the nature of the discussion is brief.

33

Management Resources and Compensation Committee.

6

Audit and Finance Committee.

34

Investment Committee.

7

Compensation and Human Resources Committee.

8

Directors not resident in Canada are paid in U.S. dollars.

9

$20,000 of this amount represents annual attendance fees at meetings.

35

$17,000 of this amount includes monetary amounts paid to the Trustees. Trustees are strongly encouraged to use the proceeds towards the purchase of CREIT units. The units are purchased on the open market.

10

Compensation Committee.

36

Human Resources and Corporate Governance Committee.

11

A director who serves on the Boards of both COGECO and the Corporation receives a lesser annual retainer from each entity in the amount of $25,000.

37

Directors also received a grant of Deferred Trust Units that vest over a five year period.

38

Governance Committee.

12

Audit and Conduct Review Committee.

39

Environmental, Health and Safety Committee.

13

Governance and Pension Committee.

40

Pension Committee.

14

Governance and Nominating Committee.

41

This amount is paid for membership on all board committees.

15

Governance and Public Policy Committee.

16

Audit and Risk Committee.

17

Per annum fixed compensation for a director sitting on more than one committee, except the Chairman of the Board.

42

Non-employee directors were not paid a fee for attending board and committee meetings on each of the eight regularly scheduled meeting days; however, they were eligible to receive a fee of $2,000 per board or committee meeting occurring on any other day.

18

The Bank also reimburses the Chair of the Board up to $25,000 annually for disbursements and accommodation expenses incurred for his business promotion activities on behalf of the Bank.

43

$88,400 of this amount represents the value of RSUs awarded to each director in 2011. 50% of RSUs vest in three years from the date of grant and the remaining 50% vest on the seventh anniversary of the grant date.

19

Includes any compensation for serving on one committee.

20

Additional committee fee is applied to directors who serve on more than one committee (includes observer attendees).

21

$80,808 of this amount reflects the value of Restricted Units awarded to directors in 2011.

44

Each Trustee may elect to receive between 60% and 100% of the annual retainer paid, together with committee fees, attendance fees, additional fees and retainers to committee chairs in the form of deferred units in lieu of cash, provided that Boardwalk shall match the elected amount for each participant such that the number of deferred units issued to each participant shall be equal in value to two times the elected amount.

22

Executive Committee.

23

Attendance fees are paid per day of meetings, regardless of whether a director attends more than one meeting in a single day, except that a separate attendance fee is paid for each Executive Committee meeting, even if it occurs on the same day as other meetings.

45

Director retainer amount for serving on one committee of the board is $160,000; $175,000 retainer for directors who serve on two committees; $200,000 retainer for Chair of the Corporate Governance Committee and Chair of the Pension Fund Committee; $225,000 retainer for Chair of the Management Resources and Compensation Committee and Chair of the Audit Committee.

24

Governance and Compensation Committee.

46

Non Executive Directors also receive an annual grant of travel reward miles.

25

This amount is a per diem fee provided such meetings were not held the same day as a Board meeting.

47

A maximum of $4,000 is paid for committee meetings in any two-day period.

26

Audit, Finance and Risk Committee.

27

Committee Chairs do not receive a committee member retainer for membership on the Corporate Governance Committee but receive a member retainer for other committee assignments. Any noncommittee chair appointed to the Corporate Governance Committee receives a committee member retainer.

48

Plus a payment of $150,000 in recognition of the “Helms-Burton” legislation in the United States.

49

In addition to this amount, the Chair receives a $12,000 travel allowance and a $35,000 matching contribution under the Company’s Share Purchase Plan.

50

Includes $35,000 cash paid for participation on the Board of Nova Scotia Power Inc.

92 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

End Notes

51

$99,022 of this amount represents the value of restricted and performance awards that were granted to directors in 2011.

70

Compensation, Nominating and Governance Committee.

52

$187,859 ($238,174 in the case of the Chair) of this amount represents the value of DSUs awarded to directors in 2011; in addition, $44,416 of this amount represents the value of RSUs awarded to directors in 2011; RSUs vest and are paid out in three equal tranches on the anniversary date of the date of grant.

72

$75,000 of this amount ($85,000 in the case of the Chairman) represents the value of Restricted Share Units (RSUs) awarded to Directors in 2010; RSUs vest in equal amounts over a three year period.

53

Human Resources, Governance and Nominating Committee.

73

Compensation and Nominating Committee.

54

$24,700 of this amount represents the value of Unit Appreciation Rights granted to Directors in 2011. UARs vest after 3 years.

55

Directors can elect to receive up to 100% of their board compensation in the form of deferred units, in lieu of cash, which such amount shall be matched by the trust.

74

$142,293 of this amount ($176,979 in the case of the Chair) represents the value of share awards granted to directors in 2011.

Share awards vest on April 1 of the third year after they were granted.

75

$30,000 of this amount represents the value of share-based awards under the LTIP granted to directors in 2011.

56

The Chair received a bonus of $300,000 in 2011, issued by way of RSUs, and vesting in 1/3 increments over three years.

57

$66,768 of this amount ($100,774 in the case of the Chair) represents the value of RSUs granted to directors in 2011; RSUs vest over a three year period.

76

$86,831 ($131,647 in the case of the Chair) of this amount reflects the long term incentive received by directors in 2011; directors can elect to receive their LTI in the form of RSUs (which vest at the end of 2 years) or in the form of DSUs.

58

Meeting fees were paid at a rate of $1,000 to $3,000 per meeting, dependent upon the location of meeting and whether it was attended in person or by teleconference.

77

$35,024 of this amount represents the value of RSUs awarded to directors in 2011. RSUs vest over a three year period.

78

$66,884 of this amount represents the value of RSUs awarded to directors in 2011.

59

The compensation paid to directors of the Corporation is determined on a case-by-case basis with reference to the role that each director provides to the Corporation. Directors may receive cash bonuses and, in addition, are entitled to participate in the Corporationâ&#x20AC;&#x2122;s stock option plan. Fees paid to directors in 2011 ranged between $20,000 and $30,000.

79

Reserves Committee.

80

Deputy Chair of the Board received a $297,000 retainer.

81

Talent and Compensation Committee.

82

Operations Committee.

60

Trustees can elect to receive up to 100% of their fees in deferred units in lieu of cash; Calloway will then match that amount such that the trustee, will, subject to certain vesting conditions, receive deferred units equal in value to two times the amount of the fees that the trustee elected to have placed in the deferred unit plan.

83

Finance and Transactions Committee.

84

$217,800 of this amount represents the value of RSUs granted to directors in 2011. These annual RSUs are deliverable one year following separation of service from the company.

61

Three outside directors received compensation with fees ranging between $10,200 and $11,000.

62

Under the LTIP, each Director is entitled to receive 12,500 LTIP units, the Chair of the board is entitled to receive an additional 7,500 LTIP units and the Chair of each committee is entitled to receive an additional 5,000 LTIP units. No units were awarded under the LTIP in 2011.

85

On February 10, 2009, Mr. Beddoe relinquished his role as Executive Chairman of Westjet in favour of acting solely as Chairman.

As compensation for this transition, Mr. Beddoe is to receive $25,000 per month, effective February 2009, for a period of five years (in addition to an annual retainer of $100,000).

63

Chartwell directors are entitled to elect to receive part or all of their fees in the form of Deferred Units. Effective July 1, 2010, Chartwell matches all Deferred Units earned on a one-for-one basis.

86

At the discretion of the company, certain of the compensation of the directors may be paid as deferred shares in accordance with their DCS plan. Directors are also granted Incentive Shares.

In 2011, directors received a grant of deferred shares and incentive shares - awards ranged between $103,652 and $125,994.

64

In addition to this amount, the Chair received a $200,000 bonus in 2011.

87

$30,000 of this amount represents the value of restricted units awarded to directors in 2011.

65

$196,830 of this amount ($284,310 in the case of the Chair) represents the value of Restricted Share Rights awarded to directors in 2011.

88

Distributions Committee.

66

In addition to this annual fee, the Chair also received approximately $100,000 to cover the administrative costs of running the Chairmanâ&#x20AC;&#x2122;s office.

89

At the discretion of the company, certain of the compensation of the directors may be paid as deferred shares in accordance with their DCS plan. Directors are also granted Incentive Shares.

In 2011, directors received a grant of deferred shares and incentive shares - awards ranged between $36,036 and $93,083.

67

Technical Committee.

68

$168,780 of this amount represents the value of RSUs granted to directors in 2011.

90

A director receives this amount if they are a member of more than one committee of the board.

91

Nominating Committee.

69

$96,401 of this amount ($353,470 in the case of the Chair) represents the value of Restricted Equity Units granted to directors in 2011. REUs vest three years from the date of issue.

92

At the discretion of the company, certain of the compensation of the directors may be paid as deferred shares in accordance with their DCS plan. Directors are also granted Incentive Shares. In 2011, directors received a grant of deferred shares and incentive shares awards ranged between $71,989 and $244,873.

71 Governance, Human Resources, Nominating and Compensation Committee.

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 93

End Notes

93

$99,968 of this amount represents the value of restricted share units granted to directors in 2011.

94

Audit and Governance Committee.

95

Director retainers range in value and are intended to recognize the time involved in various board activities. Annual retainers are paid in cash with half of the retainer being fixed and half being variable.

Total annual compensation for directors ranged between $85,283 and $97,046.

96

The Company paid its directors amounts ranging between $95,305 and $117,884; details of compensation breakdown were not provided.

97

The Chair was paid an additional amount of US$121,236 in 2011 for his interim role as the executive Chair of the Company.

98

$298,179 of this amount ($372,724 in the case of the Chair) represents the value of RSUs awarded to directors in 2011 in recognition for service in 2010 and 2011. The RSU grant vests over three years and has a five year life.

99

$15,000 of this amount represents the value of equity compensation received by trustees in 2011; trustees may elect to receive the equity component in restricted units or options.

100 Directors also received Aeroplan program membership privileges

and a discretionary travel award of up to $20,000 per year on

STAR Alliance carriers.

101 This amount is paid to one of the directors for chairing all of

the board committees.

102 Cash retainer paid to three independent directors in 2011;

one director received $28,000.

103 Conduct Review Committee.

104

Committee members who serve on both the Corporate Governance and Nominating Committees are paid one retainer covering both committees. One meeting fee is paid for the regular quarterly meetings of the committees, and separate meeting fees are paid for any additional meetings of either committee.

105

Meeting attendance fee for initial meeting each quarter is $3,000.

Attendance fees for attendance at REIT Trustee meetings are capped at eight meetings annually for each REIT Trustee. Attendance fees for attendance at Compensation and Governance Committee meetings are capped at two meetings annually for each REIT Trustee.

No compensation or meeting attendance fee is paid in connection with the Nominating Committee.

106 In addition, each director received a bonus in 2011 of $80,000.

107 This fee is paid to the non-Epcor elect Chair.

108 Directors were awarded DSUs in 2011; amounts ranged between

$108,877 and $113,034.

109 $130,680 of this amount represents the value of RSUs granted

in 2011; RSUs vest in half increments annually on each grant

date anniversary.

110 In 2011, directors received grants of DSUs as equity based

compensation awards; amounts ranged between $24,755 and

$115,934 (included in this amount is $24,755).

111 Conduct Review and Ethics Committee.

112 Lead Director and Vice Chair of the Board.

113 The Vice Chair of the Risk Committee receives an annual fee

of $2,500.

114 Non-management Directors also receive a cash allowance of

$7,200 per annum for the purposes of obtaining required

telecommunications services and certain other products and services.

115 $85,878 of this amount represents the value of incentive based units

awarded to directors in 2011. Units vest as to 1/3 on each of the

first, second and third anniversaries of the date of the grant.

116 This amount is paid for each full day meeting; $500 is paid for each

half day meeting.

117 This amount is paid for meetings that are more than two hours

in duration. $750 is paid for meetings that are two hours or

less in duration.

118 If committee meeting falls on the same day as a board meeting,

the meeting fee is $1000.

119 Directors may elect to receive between 0 and 100% of their annual

retainer paid by the Corporation through RSUs. The Corporation

matches all RSU payments made directly by each eligible participant.

120

Directors also participate in the Corporation’s Long Term Incentive Plan (LTIP). Each eligible director is responsible for purchasing his respective LTIP allocation in the open market and is reimbursed by the Corporation in respect of such purchases.

Each participant’s aggregate entitlement vests quarterly over three years. In 2011, the value of the Directors’ share allocation was $60,000 per participant ($120,000 in the case of the Chair).

121

In November 2010, the Board approved a special grant of DSUs to Non Executive Directors. The value of the grant was $195,000 for directors and $540,000 for the Chair; one-third of the DSUs vested on January 27, 2011 and the remaining two-thirds will vest equally over the next two years.

122 This amount is paid to the individual who is Chair of both the

Governance Committee and the Management Resources and

Compensation Committee.

123 The lead director is also the Chair of the Audit Committee and

the Pension Committee.

94 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Korn/Ferry International Since our inception, clients have trusted Korn/Ferry to help them recruit world-class leadership talent. Building on this heritage, today we are a single source for a wide range of leadership and talent consulting services.

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Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 95

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96 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

Patrick O’Callaghan and Associates

Patrick O’Callaghan and Associates specializes in board effectiveness and director recruitment in the public, private and not-for-profit sectors. Since 1992, Patrick O’Callaghan and Associates has provided board governance advice to organizations in a wide range of industries throughout Canada, including assignments with federal and provincial crown corporations.

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Suite 3300, 1055 Dunsmuir Street P.O. Box 49206, Bentall 4 Vancouver, BC V7X 1K8 Telephone: (604) 685-5880 Fax: (604) 684-1884 Internet: www.poca.net E-mail: gov@poca.net

Corporate Board Governance and Director Compensation in Canada A Review of 2012 | 97

98 | Corporate Board Governance and Director Compensation in Canada A Review of 2012

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