Corporate Board Governance and Director Compensation in Canada: A Review of 2011 by Korn Ferry

Corporate Board Governance and Director Compensation in Canada

A Review of 2011

In Partnership with Patrick Oâ&#x20AC;&#x2122;Callaghan and Associates

$110.00 per copy ÂŠ Korn/Ferry International, December 2011 All rights reserved. No part of the contents of this report may be reproduced or transmitted in any form or by any means without the written permission of the Publisher. This report is also available in French.

TABLE OF CONTENTS The Surveyed Companies

Special Report: Retirement Age and Term Policies â&#x20AC;&#x201C; A New Focus

Board Independence

Board Composition

Board Size

Board Assessments, Director Selection and Director Development

Meetings and Attendance

Board Committees

Director Compensation

Board Chair Compensation

Lead Director Compensation

Committee Chair Compensation

Committee Member Compensation

Stock-Based Compensation

Compensation Summary

Director Share Ownership

Company Data

Endnotes

Korn/Ferry International

101

Patrick Oâ&#x20AC;&#x2122;Callaghan and Associates

103

Women On Board

104

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 1

The Surveyed Companies

2 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

The Most Comprehensive Canadian Governance Study We are pleased to present the most comprehensive review of public issuer governance data available in Canada. This nineteenth annual report examines governance in Canadian companies and income trusts and includes our special report, Retirement Age and Term Policies – A New Focus. Our commitment is to provide directors and trustees with accurate and relevant Canadian data across a wide spectrum.

here we refer to “equities”, we are referring to all members of the research sample that are not income trusts. In this sixth year that we have included income trusts in our analysis, approximately 13% of the sample fall into this category. The reduction in this category (down from 20% last year and a high of 26% in 2007) can likely be attributed to changes in income tax rules affecting trusts that took place in January 2011.

• All figures reported in United States dollars have been converted to Canadian dollars at an exchange rate of 1.03, which was the average exchange rate for 2010.

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

* 2010-2011 Director Compensation Survey, 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, 2009, and January 31, 2010 with revenues over US$50 million.

* The Financial Post Top 250 (June 2011) * The Report on Business Top 250 (July 2011) * The S&P/TSX Composite Index (at any time during 2010) •

We draw data from annual reports, management proxy circulars and annual information forms for fiscal year-ends in late 2010, or the first few months of 2011. All references to “2010” data include data for year-ends in early 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:

* 2011 Public Company Governance Survey, a publication of the National Association of Corporate Directors. This study is based on insights from 1,300 public company directors and the proxy data from 2,400 public companies.

Breakdown of Asset Size Groups in the Research Sample, by Board Type

Percent Income Trusts

Percent Equities

All

<500M

95%

13%

500M to 1B

18%

82%

17%

1B to 5B

18%

82%

42%

>5B

94%

28%

All

13%

87%

100%

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 3

Breakdown of Industry Groups in the Research Sample, Comparing Equities and Income Trusts

Percent Income Trusts

Percent Equities

All

Consumer Discretionary

92%

13%

Consumer Staple

92%

Energy

16%

84%

20%

Financials

27%

73%

18%

Health Care

33%

67%

Industrials

12%

88%

11%

Information Technology

100%

Materials

100%

24%

Telecommunication Services

20%

80%

Utilities

22%

78%

All

13%

87%

Breakdown of Research Sample by Assets and Industry Group

<500M

500M to 1B

1B to 5B

>5B

All

Percent**

Consumer Discretionary

13%

Consumer Staple

Energy

20%

Financials

18%

Health Care

Industrials

11%

Information Technology

Materials

24%

Telecommunication Services

Utilities

All

125

299

99%

13%

17%

42%

28%

100%

Percent* * Asset group as a percentage of total.

** Industry group as a percentage of total.

4 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Terminology and Standards Used Throughout this Report • Size: Most tables in this report compare results between companies and income trusts within asset groups. The short forms “M” for millions of dollars and “B” for billions of dollars are used in the tables.

• 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.

• Comparisons: Where tables present data by year, the data is given for 2010, 2009 and 2001 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.

• 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.

• 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. • 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.

• 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: Retirement Age and Term Policies - A New Focus Korn/Ferry International and Patrick O’Callaghan and Associates surveyed 154 board chairs, directors and CEOs to produce this special report, which can be found on pages 7 to 18. Respondents were either personally interviewed or completed an on-line survey.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 5

Special Report 2011

6 | Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report

Special Report: Retirement Age and Term Policies - A New Focus INTRODUCTION The issues of retirement age and term limit policies on boards have received increased attention in recent years. We have been analyzing governance disclosure in proxy circulars for Canadaâ&#x20AC;&#x2122;s top 300 corporations since 19931. There was little disclosure regarding these policies in the nineties but by 2005, 24% of the corporations disclosed information regarding retirement ages or term limits. In 2010, 52% of the corporations provided disclosure on one or both of these issues and we expect to see this increase dramatically over the next few years.

anadian boards are getting older. In 1997, 8% of directors were 71 or older. In 2010, 15% of directors fell into this category. The 61 to 70 category has also increased, going from 39% in 1997 to 45% in 2010. In all other age categories, the numbers have decreased since 1997. An increased focus on retirement ages and term policies is not a surprise to us. It is consistent with the increased emphasis boards have placed on recruiting, attracting, selecting and retaining directors who have the skills, experience and background to provide effective oversight and add value to the corporation. Boards are increasingly engaged in strategy, risk assessment and management succession planning. Ensuring

the corporation has attractive compensation policies and board operating policies including a position on retirement and terms is ever more important in attracting and retaining the very best directors in a highly competitive market. We interviewed 154 Canadian directors and reviewed our proxy circular data of Canadaâ&#x20AC;&#x2122;s largest 300 corporations for 2010 in an effort to provide some perspectives on the use of policies to retire directors from the board when they have attained a specific age and/or have served a specific term length. Nearly all of the interviewed directors emphasized the need for active, engaged and experienced directors, but most argued this was not necessarily a function of having reached a particular age or having served on the board for a specific length of time.

Data in this Report derived from a survey of 154 directors, and Corporate Board Governance and Director Compensation in Canada: A Review of 2011,

published by Korn/Ferry International in Partnership with Patrick Oâ&#x20AC;&#x2122;Callaghan and Associates, as well as previous editions of this publication.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report | 7

Current Practice - Retirement Age Director Retirement Ages

2010

2009

2008

2007

2006

2005

Retirement from the board at age 65

<1%

Retirement from the board at age 70

12%

14%

11%

13%

Retirement from the board at age 71

<1%

Retirement from the board at age 72

Retirement from the board at age 73

Retirement from the board at age 75

Formal policy, age not specified

<1%

Specify there is no director retirement age

23%

18%

14%

Combined retirement age/term limit

<1%

No disclosure

52%

56%

64%

63%

76%

What they emphasized was the need for board renewal. A retirement age and/or term limit should be considered as one of a number of methods to refresh and add new experience to the board. The strongest theme that emerged is that there is not a single perfect age or policy that applies to all corporations. Directors emphasized that the history, culture and complexity of the company and the specific strategic challenges confronting the corporation, are key considerations in

In 2010, 25% of Canadaâ&#x20AC;&#x2122;s top 300 boards had a retirement age for directors and 23% had no retirement age (the remaining 52% did not disclose this information). For the actual practices of the corporations that disclosed their retirement age policy for 2010, please see the appendix on pages 12 to 18 at the end of this Special Report.

implementing such policies. Board chair leadership, director performance and the current age diversity of the board are equally important.

8 | Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report

Retirement Ages While the most common retirement age is 70, many of the interviewed directors indicated that their boards were examining the possibility of extending their retirement age. The most frequently mentioned target ages were 72 and 75. Directors indicated that an extension of the retirement age was important if they were to be competitive in recruiting CEOs in their early to mid sixties who were preparing to retire or who had just retired.

•

A fixed retirement age makes it easier for the board to plan its composition over a longer period of time. Mandatory retirement age is a great tool to drive renewal of the board. No one is irreplaceable, and with a policy in place you can plan for orderly and adequate succession on the board.

•

Directors mentioned that the real performance problems such as lack of preparation or attendance are relatively straightforward to address. The most difficult situations are where a director is well liked and has made a contribution historically, but whose performance has diminished or whose performance is just average; whose skills and background no longer fit the board’s changing composition needs; or who has become too close to management. Participants felt that while a strong chair can deal with an extreme performance issue, it is much more difficult to ask a well-liked director to leave for a less obvious reason. Having a retirement age provides the chair and the director with a way to deal with the situation gracefully.

Directors who supported the use of a retirement age made the following arguments: •

Boards need to have a mechanism in place that ensures board renewal. A retirement age provides a clear expectation for directors and assists the board in planning for transition in an explicit manner. They argued that it is extremely difficult to ask a director to resign, and having an explicit policy removes the awkwardness around transition.

•

Retirement ages do not have to be absolute and many corporations provide for annual extensions or exceptions beyond the retirement ages in specific cases.

•

Without a retirement age, there is too much dependence on the board chair’s ability to transition directors off the board at an appropriate time. While some board chairs are skilled in this area, they are seen to be more the exception than the rule. Therefore a retirement age removes this pressure from the board chair and provides a clear transition point. It also provides for consistent practice when board leadership changes.

•

Directors acknowledged that individual director evaluation has become more prevalent and ideally might replace the need for retirement ages at some point. But most felt that director evaluation processes are not yet refined or mature enough to depend on them for board renewal versus a retirement age.

No Retirement Age Directors who supported a no retirement age policy made the following arguments: •

It doesn’t make sense to lose experienced directors who are adding value to the board because of an arbitrary retirement age.

•

Having no retirement age helps to attract a broader range of candidates, especially recently retired CEOs because of the potential to have a longer tenure on the board. Potential directors find a no retirement age policy attractive, and a factor when comparing board opportunities. Having a fixed retirement age does not reflect the changing demographic of a healthy, engaged baby boomer generation moving into their mid sixties.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report | 9

•

A board with a strong and effective individual director evaluation process does not need a retirement age because directors are retired based on their performance, not on their age. Action can be taken in a timely fashion and there is no need to carry a director beyond their ability to make a significant contribution to the board.

•

Boards are doing a much more comprehensive review of the skills, experience and background that are required for a board. Undertaking this process leads directors and/or board chairs to recognize it may be time for an individual director to move off the board.

•

The role of an effective board chair is to coach directors and advise them when it is time for them to retire. Board chairs now recognize this is one of their critical roles and are becoming more skilled in undertaking this function.

As disclosure about retirement practices on boards has increased, some boards have gone beyond just stating what their practices are, and are providing narrative to help shareholders understand their position on this issue. In their 2007 information circular, TELUS Corporation provided a very comprehensive discussion for their decision to end their use of retirement age for directors: The Board removed the requirement that directors retire at the age of 70. This decision was based on an extensive review led by the Corporate Governance Committee. The Corporate Governance Committee examined the purpose for the requirement, the correlation between a director’s age and effectiveness, and the need for regular Board rejuvenation. It considered the profile and age of the current directors and their years of service, the Board renewal that has taken place organically, the robust annual evaluation of directors already in place, the need to keep crucial talent on the Board beyond age 70, the expectation of increased competition for qualified directors among large public companies, and the fact that five out of the 12 directors would reach age 70 before the 2010 annual general meeting including relatively new directors who would have served on the Board for well under ten years at that time. Maintaining a mandatory retirement age of 70 would cause the Company to lose qualified directors who

would have served on the Board for a relatively short tenure. The Corporate Governance Committee considered alternatives such as raising the mandatory retirement age to 72 or another age, setting maximum terms of service and creating an explicit discretion to waive the requirement on an exception basis. Ultimately, the Corporate Governance Committee concluded that, with a vigorous evaluation process in place, mandatory retirement is not the optimal means of ensuring Board renewal and age is not the optimal means of ensuring director effectiveness, and that with the present tenure and profile of the Board, maintaining a mandatory retirement age at 70 or another age is not in the best interests of the Company. This assessment was supported by data on market trends which indicate that more companies are waiving retirement age in order to retain board talent, shifting towards a reliance on competence assessment rather than age, and increasing the average age of directors to overcome increasing difficulty in recruiting current CEOs from other businesses to serve on boards.

Current Practice - Term Limits Few boards disclose their practices on term limits. We believe that this is because there is a very low percentage of boards with term limits. In 2010, only 14% of Canada’s top 300 corporations addressed the issue in their annual circulars, with 3% having a term limit and 11% stating they did not. Few of the corporate directors we surveyed for this special report had term limits although they were all familiar with them with respect to not-for-profit boards on which they were members. They indicated that most of the not-for-profit boards had terms rather than retirement ages. This is often because directors are prepared to provide their advice and counsel to not-for-profits for a limited period of time and generally without remuneration. The major Canadian banks often lead the way on various corporate governance practices and over the past few years a number of the banks have introduced term limits in addition to their retirement age policy. We expect that those banks without term limits will likely introduce them within the next few years.

10 | Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report

Term limits are often introduced in combination with a retirement age policy where a director leaves the board when reaching the age or the term limit, whichever comes first. Essentially the advantage of term limits versus retirement age applies when a director is appointed at a relatively young age. For examples of actual policies, see the appendix at the end of this special report. The advantages and disadvantages for term limits are essentially identical to those for retirement age. On the upside, term limits provide ongoing board renewal and on the downside, they can cause the board to lose a valued director prematurely.

Retirement Age and Terms Future Considerations As the focus on board effectiveness continues to grow, boards are concentrating on ensuring they have the board composition policies and procedures that meet the needs of the corporation and are consistent with its strategic objectives. Our survey participants were split on the role that retirement age and term limits play in this process. Some feel retirement age and term policies are an essential way to ensure that renewal happens and to focus the board on engaging in the composition planning and nomination process. Others feel they are a hindrance to optimal board composition in that they remove valuable, contributing directors at an arbitrary date. Regardless of the stance, in most cases the reasoning is tied to board composition needs and leadership far more than to a belief that after reaching a certain age or tenure, an individual is no longer a capable director. With this dichotomy in practices and opinions, what should boards be doing? The most intuitive answer may be that with strong individual director assessment coupled with an experienced and effective board chair, retirement and term limits may not be necessary. However, many directors we interviewed indicated that while individual director evaluation has come a long way in recent years, few boards truly have a robust enough evaluation process coupled with a board chair who has

the experience and inclination to deal with the more subtle and awkward director performance issues. There is clearly no single right answer that applies to all boards. Reaching a decision may involve some uncomfortable discussion. However, it is a discussion that is necessary in order to get to a decision that fits the board’s needs. Some of the questions a board might wish to ask itself include: •

Does our board regularly undertake a careful review of its current and future composition needs and adjust board succession and recruitment plans objectively? Is board composition planning flexible enough to react to changes in strategy and director performance?

•

Does the presence or lack of a retirement or term limit affect our ability to attract new directors? Does it send the appropriate signal to investors regarding our ability to manage director performance and board succession planning?

•

Is our individual director assessment program, including its follow-up component, truly robust enough to identify and address problems with director performance and contribution? Is our board culture such that directors participate in this assessment without reservation and are prepared to support the results?

•

Does our board chair have the experience, the will and the support of the board to handle the most obvious performance problems, and especially the more subtle and difficult decisions regarding director performance?

•

Would we ask a well-liked director who doesn’t want to leave the board to do so if there were a valid reason, even if there is no extreme performance problem? Do personal relationships and respect for a director preclude making the best decision with regard to board composition needs?

•

How do we value and balance regular rotation of fresh perspectives with long term experience and institutional knowledge on the board?

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report | 11

Appendix: Retirement and Term Limit Policies Disclosed in Proxy Circular Data for Fiscal 20102 Company Retirement Term Limit ACE Aviation Holdings Inc. Aecon Group Inc. Ag Growth International Inc. Agnico-Eagle Mines Limited Agrium Inc. Air Canada AltaGas Ltd. Alamos Gold Inc. ARC Energy Trust Astral Media Inc. ATCO Ltd. Aurizon Mines Ltd. Bank of Montreal

No Retirement Age

75* X 70 X 72 75 75 X 70 X 70 X 70 15 years for new directors (effective Jan 1/2010) and 20 years for current directors and chair. Scotiabank implemented new term Bank of Nova Scotia 70 limits in December 2010 (to become effective April 2011). Existing directors will retire at the earlier of ten years from April 1, 2011 or age 70, provided that if an existing director has not served a ten year term at the time of achieving age 70, their term will be extended for additional years in order to complete a minimum ten year term. For new directors, retirement will be the earlier of age 70 or 15 years, provided that if a director has not served a ten year term at the time of achieving age 70, their term will be extended for additional years in order to complete a minimum ten year term. Barrick Gold Corporation 72 Baytex Energy Corp. X BCE Inc. X Ten years, in certain circumstances, the ten year term limit can be extended. Bell Aliant Regional Communications Income Fund X Boardwalk Real Estate Nine years, may be extended under Investment Trust certain circumstances. 2

Derived from Corporate Board Governance and Director Compensation in Canada: A Review of 2011, published by Korn/Ferry International in Partnership with Patrick Oâ&#x20AC;&#x2122;Callaghan and Associates. Does not include those corporations that did not disclose their director retirement and/or term limit policies.

* Board states that it can make exemptions to the retirement age policy.

12 | Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report

No Term Limit X

Appendix: Retirement and Term Limit Policies Disclosed in Proxy Circular Data for Fiscal 20102 (Continued) Company Retirement Term Limit

No Retirement Age

Bombardier Inc. 72 BPO Properties Ltd. X Brookfield Asset Management Inc. X Brookfield Properties Corporation X Calfrac Well Services Ltd. X Calloway Real Estate Investment Trust X Cameco Corporation 72 Canada Bread Company, Limited Canadian Apartment Properties Real Estate Investment Trust X Canadian Imperial Bank 15 years, but the Corporate of Commerce X Governance Committee has the power to determine that it is in the best interests of CIBC to recommend for re-election a director who has served the maximum period. Canadian National Railway Company 75 Canadian Natural Resources Limited 75 Canadian Oil Sands Limited 72 Canadian Pacific Railway Limited 72 Canadian Real Estate Investment Trust X Canadian Utilities Limited 70 Canadian Western Bank 75 Canfor Corporation X Catalyst Paper Corporation 70 CCL Industries Inc. X Centerra Gold Inc. 72 2

No Term Limit X

X X

* Board states that it can make exemptions to the retirement age policy.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report | 13

Appendix: Retirement and Term Limit Policies Disclosed in Proxy Circular Data for Fiscal 20102 (Continued) Company Retirement Term Limit

No Retirement Age

CGI Group Inc. X Chartwell Seniors Housing Real Estate Investment Trust X Cineplex Galaxy Income Fund X CML Healthcare Income Fund X Cogeco Cable Inc. 72 COGECO Inc. 72 Cominar Real Estate Investment Trust X Corus Entertainment Inc. X Crescent Point Energy Corp. 75 Davis + Henderson Income Fund X Detour Gold Corporation X Dollarama Inc. X DundeeWealth Inc. Eldorado Gold Corporation 73 Emera Inc. 70 Empire Company Limited 70 3 Enbridge Inc. 70 4 EnCana Corporation 71 Enerplus Resources Fund 72 Ensign Energy Services Inc. 73* Equinox Minerals Limited X Finning International Inc. 70* First Capital Realty Inc. X FirstService Corporation X Fortis Inc. 70 12 years, or age 70, whichever comes first. Forzani Group Ltd. (The) 72 Franco-Nevada Corporation 72 Freehold Royalties Ltd. 2

Unless the member is a lineal descendent of John William Sobey.

Retirement age is increasing to 73 in 2011 and a director may be asked to remain on the board for an additional two years if the Board unanimously approves the extension; however, that director would not be eligible to serve as Chair of the Board or Chair of any of the Boardâ&#x20AC;&#x2122;s four standing committees.

* Board states that it can make exemptions to the retirement age policy.

14 | Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report

No Term Limit X

X X

Appendix: Retirement and Term Limit Policies Disclosed in Proxy Circular Data for Fiscal 20102 (Continued) Company Retirement Term Limit Gammon Gold Inc. Gildan Activewear Inc. Goldcorp Inc. Groupe Aeroplan Inc. H&R Real Estate Investment Trust Harry Winston Diamond Corporation Home Capital Group Inc. HudBay Minerals Inc. Husky Energy Inc. Iamgold Corporation IESI-BFC Ltd. Imperial Oil Limited Industrial Alliance Insurance and Financial Services Inc. Inmet Mining Corporation InnVest Real Estate Investment Trust Intact Financial Corporation Inter Pipeline Fund Ivanhoe Mines Ltd. Keyera Facilities Income Fund Kinross Gold Corporation Laurentian Bank of Canada Linamar Corporation 2

72 75* 75

No Retirement Age X X

X 70 X X X 70 70 70 70 70*

No Term Limit

X X X X X

* Board states that it can make exemptions to the retirement age policy.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report | 15

Appendix: Retirement and Term Limit Policies Disclosed in Proxy Circular Data for Fiscal 20102 (Continued) Company Retirement Term Limit MacDonald, Dettwiler and Associates Ltd. Magna International Inc. Major Drilling Group International Inc. Manitoba Telecom Services Inc. Manulife Financial Corporation Maple Leaf Foods Inc. Methanex Corporation Metro Inc. NAL Energy Corporation National Bank of Canada

No Retirement Age

No Term Limit

X X

70 72 72 X 70 72 15 years, exceptional circumstances may allow for a director to be reelected beyond the term limit. New Gold Inc. X Nexen Inc. 75 Nordion Inc. 70* 15 years Northgate Minerals Corporation X North West Company Fund 70 Onex Corporation 72 Pacific Rubiales Energy Corp. X5 Parkland Income Fund 70* Pason Systems Inc. X Pembina Pipeline Corporation 70 Pengrowth Energy Trust Penn West Energy Trust 656 Peyto Energy Trust 75 Potash Corporation of Saskatchewan Inc. 70 2

There is no set retirement age for directors although directors are expected, but not required, to retire at the age of 80. Reviewed on a case-by-case basis.

At this age directors offer their resignation and annually thereafter.

* Board states that it can make exemptions to the retirement age policy.

16 | Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report

X X

Appendix: Retirement and Term Limit Policies Disclosed in Proxy Circular Data for Fiscal 20102 (Continued) Company Retirement Term Limit

No Retirement Age

Precision Drilling Corporation X Primaris Retail Real Estate Investment Trust X Progress Energy Resources Corp. 70 Provident Energy Trust X Rogers Communications Inc. X RONA Inc. 70 Royal Bank of Canada 70* Rubicon Minerals Corporation Savanna Energy Services Corp. 12 years, but the board has discretion to waive this requirement. Sears Canada Inc. 70 ShawCor Ltd. Not Specified Sherritt International Corporation X Shoppers Drug Mart Corporation X Silver Wheaton Corp. X Sino-Forest Corporation X SNC-Lavalin Group Inc. 70 Stantec Inc. X7 Sun Life Financial Inc. 70 Suncor Energy Inc. Not Specified Superior Plus Corp. X 2

Although the board has not adopted a formal policy regarding the retirement age of directors, it believes that once a director reaches the age of 72 his or her continued service on the board should be reviewed by both the Corporate Governance and Compensation Committees and the board of directors as a whole.

No Term Limit

X X

* Board states that it can make exemptions to the retirement age policy.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report | 17

Appendix: Retirement and Term Limit Policies Disclosed in Proxy Circular Data for Fiscal 20102 (Continued) Company Retirement Term Limit Talisman Energy Inc.

Teck Resources Limited TELUS Corporation Thomson Reuters Corporation Tim Hortons Inc. Toromont Industries Ltd. Toronto-Dominion Bank

Torstar Corporation TransAlta Corporation Transat A.T. Inc. TransCanada Corporation Transcontinental Inc. Trican Well Service Ltd. Vermilion Energy Inc. Wajax Income Fund West Fraser Timber Co. Ltd. WestJet Airlines Ltd. Yamana Gold Inc. Yellow Media Inc. 2

No Retirement Age

Ten years, board has discretion to recommend renewal. Chair is reviewed every three years with a possible extension of Chair’s position up to a further three years. 75 X X X 72 70 If director has not served ten year term, the board may make a one time decision to extend director’s service until the end of the ten years term or age 75, whichever comes first. 70 15 years 72 X 7 years 70 X 70 70 70* 70* X 75 X

No Term Limit

Derived from Corporate Board Governance and Director Compensation in Canada: A Review of 2011, published by Korn/Ferry International in Partnership with Patrick O’Callaghan and Associates. Does not include those corporations that did not disclose their director retirement and/or term limit policies.

* Board states that it can make exemptions to the retirement age policy.

18 | Corporate Board Governance and Director Compensation in Canada A Review of 2011 | Special Report

Corporate Board Governance and Director Compensation in Canada

A Review of 2011

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 19

Board Independence

20 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • The level of independence 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 six years ago • In 2010, 54% of boards had an independent chair and 32% had a lead director, compared to 29% of U.S. boards with an independent chair and 65% with a lead director • 15% of companies combined the Chair/CEO in 2010, compared to the United States, where 70% of the largest 200 companies combined the Chair/CEO role •

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

•

In 2010, 94% of our sample had a majority of independent directors compared to 93% for the previous four years. This percentage has stayed relatively stable at between 92% and 94% since boards first began reporting independence in 2005.1

•

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 96%, 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

2010

95%

90%

96%

94%

2009

92%

88%

95%

93%

2005

84%

94%

95%

92%

Equities

Income Trusts

All

Board Independence Levels, by Board Type

Majority Independent

2010

94%

97%

94%

2009

93%

97%

93%

Equal Independent/Non-Independent

2010

2009

Minority Independent

2010

2009

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

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 21

Boards Without a Majority of Independent Directors •

Bell Aliant Regional Communications Income Fund

•

IGM Financial Inc.

•

Canaccord Financial Inc.

•

Kirkland Lake Gold Inc.

•

Canada Bread Company, Limited

•

Linamar Corporation

•

Craig Wireless Systems Ltd.

•

Martinrea International Inc.

•

Dollarama Inc.

•

Power Corporation of Canada

•

E-L Financial Corporation Limited

•

Sears Canada Inc.

•

European Goldfields Limited

•

Senvest Capital Inc.

•

Genworth MI Canada Inc.

•

Velan Inc.

•

High River Gold Mines Ltd.

Independent Director Meetings • 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-six percent of boards reported they held meetings of only the independent directors. • Eighty percent of boards disclosed the number of meetings held by the independent directors. The average number of meetings per year has been seven for the past three years.

Number of Meetings of Only Independent Directors, by Board Type

Equities

Income Trusts

All

Average

2010

2009

Median

2010

2009

Range

2010

0 to 35

3 to 16

0 to 35

2009

0 to 21

0 to 48

22 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Inside Directors

Independent Board Leadership

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

•

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.

•

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:

• The average number of inside directors is one, as it has been for the past four years. In addition, the median is one, as it has been for the past eight years. The only asset category to average more than one insider is companies with over $5 billion in assets, which averages two inside directors. • Equity boards continue to average two inside directors while income trusts average one inside director. These numbers have not changed over the past six years. • Twelve percent of boards had more than two inside directors in 2010. This is the same number as last year and compares to 11% in 2008 and 24% in 2001. Most of these are larger boards, with 75% of the boards with more than two directors coming from companies with more than $1 billion in assets. • Four percent of companies in our sample this year had no inside directors. Of these companies, 58% of them were income trusts. • Boards with a significantly higher than average number of inside directors were:

* In 2010, 54% of boards had an independent chair, compared to 29%2 in the United States. * Thirty-two percent of boards had a lead director, compared with 65%3 in the United States. •

* Between 51% and 54% had an independent chair. * Between 29% and 34% had a lead director. •

Fifteen percent of boards had no independent leadership, down from 16% last year and 20% six years ago.

•

Fifteen percent of boards had no independent leadership in 2010. Of this group:

5 Insiders Power Financial Corporation (19)

4 Insiders

Barrick Gold Corporation (14) Dorel Industries Inc. (10) E-L Financial Corporation Limited (10) Empire Company Limited (17) Kirkland Lake Gold Inc. (7) Pacific Rubiales Energy Corp. (12) Power Corporation of Canada (19) Rogers Communications Inc. (18) Shaw Communications Inc. (16) Transcontinental Inc. (13)

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

* 30% had a combined CEO/chair; * 30% had an executive chair; * 36% had an outside but non-independent chair; and * 4% had no chair.

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

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

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 23

Independent Board Leadership, by Board Type

Equities

Income Trusts

All

Independent Chair

2010

52%

68%

54%

2009

48%

72%

52%

Lead Director

2010

33%

21%

32%

2009

37%

21%

32%

Neither

2010

15%

13%

15%

2009

18%

16%

Board Chairs •

The percentage of boards with a combined Chair/CEO continues to slowly decline. In 2010, 15% combined the two roles, which is the lowest number since we have tracked this information. In 2009, 16% combined the roles, and the decline has been evident since 52% of boards had a Chair/CEO in 1993.

•

Of the boards that combine the CEO and chair, 68% had a lead director compared to 66% in the previous year.

•

In the United States, 70%4 of the largest 200 companies combined the Chair/CEO role, which is a decrease from 76% the previous year.

Percentage of Sample that have Separated the Board Chair and CEO

<500M

500M to 1B

1B to 5B

>5B

All

2010

76%

90%

87%

83%

85%

2009

67%

90%

87%

85%

84%

2001

57%

53%

68%

71%

62%

2010-2011 Director Compensation Report, published by the National Association of Corporate Directors

24 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Board Chairs

Equities

Income Trusts

All

Independent Chair

2010

52%

68%

54%

2009

48%

72%

52%

Non-Executive, Not Independent 2010

14%

21%

15%

2009

17%

12%

16%

Combined Chair/CEO

2010

16%

15%

2009

19%

16%

Executive Chair*

2010

15%

14%

2009

16%

15%

No Board Chair

2010

2009

* An “Executive Chair” is a chair who is not the CEO and whose compensation is disclosed as executive compensation, rather than as director compensation.

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

2010

44%

40%

88%

71%

68%

2009

38%

100%

81%

73%

66%

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

2010

17%

60%

77%

75%

66%

2009

80%

33%

78%

71%

74%

2003

30%

38%

30%

56%

40%

* An “Executive Chair” 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

2010

43%

44%

74%

64%

61%

2009

40%

25%

76%

67%

61%

2005

71%

13%

53%

56%

50%

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 25

Board Composition

26 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • The average age of directors is 62 and the median age is 63. Ten years ago the average was 59 and the median was 60 • More directors than ever are 71 or older, and this is true across all asset size groups. In 2010, 15% of directors were 71 or older, compared to 8% in 1996 • In 2010, 48% of boards either disclosed a retirement age or specifically stated that they did not have one, compared to 44% in 2009 and 24% in 2006 • While the overall representation of women in the director pool remained the same over the past two years at 10%, there is a slight drop across North America in the percentage of boards with at least one female director • In 2010, 21% of companies included a director skills matrix in their proxy circular, compared to 13% just one year earlier

Director Biographies

Director Age Distribution

• Boards are continuing to change the way they disclose biographical information about directors. They are adding information that goes beyond minimum disclosure requirements, such as areas of expertise they bring to the board. They are also providing the information in easily read formats such as tables. In 2010, 21% of companies included a director skills matrix in their proxy circular, compared to 13% just one year earlier.

• More boards than ever are disclosing their directors’ ages. In 2010, age was disclosed for 82% of the directors of the boards studied, which is the highest level yet. In 2009, the age of 80% of directors was disclosed, which was up from 75% in 2008. In 2003, boards only disclosed the age of 63% of directors.

• We believe that the reason for the expanded disclosure stems from a couple of sources. One is that directors and investors are more than ever aware of the critical importance of board composition. By providing more information about directors, boards are giving their stakeholders some perspective into this crucial aspect of board governance. Another reason driving the expanded biographies is simply the trend towards more transparency by boards. While they are required to disclose a lot of information by regulators, they are also going beyond those rules in an effort to provide more transparency to their shareholders. • An excellent example from the 2011 proxies is Nexen Inc., which provides specific sections on Areas of Expertise (and attributes required of board members), and Experience and Qualifications (including a skills matrix and how directors have rated themselves against this matrix). 5

2010-2011 Director Compensation Report, published by the National Association of Corporate Directors.

• The average age of directors in 2010 was 62 and the median was 63. Ten years ago the average was 59 and the median was 60. • More directors than ever are 71 or older, and this is true across all asset size groups. In 2010, 15% of directors were in this category, a percentage that has grown steadily since it was at 8% in 1996. Companies with less than $500 million in assets had the most older directors, with 18% of their board members falling into this category. • The group of directors aged 41 to 50 is making up a smaller proportion of boards, with 8% of directors falling into this category in 2010. The percentage of directors aged 41 to 50 has dropped steadily since it was at 15% in 1996. • In the United States, the median director age at the largest 200 companies is 63, which is up from 62 last year.5

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 27

Director Age Distribution

<500 M

500M to 1B

1B to 5B

>5B

All

40 and younger

2010

<1%

2009

<1%

2001

41 to 50

2010

10%

2009

11%

16%

11%

10%

2001

20%

14%

12%

15%

51 to 60

2010

32%

34%

27%

31%

2009

30%

41%

36%

30%

33%

2001

34%

31%

34%

32%

33%

61 to 70

2010

41%

40%

41%

50%

45%

2009

42%

32%

40%

51%

44%

2001

31%

33%

39%

45%

38%

71 and older

2010

18%

16%

14%

16%

15%

2009

16%

11%

12%

11%

12%

2001

11%

13%

12%

10%

11%

Retirement Age Note: For a more in-depth discussion on director retirement policy and term limits, please see our special report on this topic on pages 7 to 18. •

Companies are not required to disclose whether or not they have a retirement policy for directors, however, the practice of disclosing this information is becoming more common. In 2010, 48% 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 2009, 44% of companies disclosed whether they had a director retirement policy, which is well up from 24% in 2005.

•

In the United States, 76% of the largest 200 companies disclosed a director retirement policy, up slightly from 75% last year.6

•

In previous years, a few boards used a policy where a director left the board when either a retirement age or term limit was achieved, whichever came first. Three of the boards we studied used this method in 2010.

•

It is becoming more common for companies to state that they do not have a director retirement age. In 2010, 23% of companies fell into this category, compared to 18% in 2009 and 5% in 2005.

2010-2011 Director Compensation Report, published by the National Association of Corporate Directors.

28 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Director Retirement Ages

2010

2009

2005

Retirement from the board at age 65

<1%

Retirement from the board at age 70

12%

14%

Retirement from the board at age 71

<1%

Retirement from the board at age 72

Retirement from the board at age 73

Retirement from the board at age 75

Formal policy, age not specified

<1%

Specify there is no director retirement age

23%

18%

Combined retirement age/term limit

No disclosure

52%

56%

76%

Gender •

For the last two years, women have comprised 10% of the directors of the boards we studied. In the 17 years we have tracked this information, 10% is the highest level reached. Prior to 2008, the percentage varied between 6% and 9%.

•

While the overall representation of women in the director pool remained the same over the past two years, there is a slight drop across North America in the percentage of boards with at least one female director. In Canada, 52% of boards had at least one female director, a decrease of 1% from last year. In the United States, 67% of boards have at least one female director, which is a drop from 69% the previous year.7

•

Fifty-three percent of equity boards had at least one female director, compared to 55% in 2009 and 54% in 2008.

•

The percentage of women sitting on income trust boards continued to increase this year. Forty-seven percent of income trust boards had at least one female director in 2010, compared to 45% in 2009 and 42% in 2008.

•

Ten percent of boards had three or more female directors, a slight decrease from 11% one year earlier. In the United States, this category has improved, with 12% of boards reporting three or more female directors compared to 10% the previous year.8

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

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 29

Boards with at Least One Female Director

<500M

500M to 1B

1B to 5B

>5B

All

2010

22%

34%

51%

80%

52%

2009

32%

31%

48%

86%

53%

2001

18%

32%

60%

80%

44%

Boards with at Least One Female Director, by Industry

2010

2009

2001

Consumer Discretionary

82%

85%

64%

Consumer Staple

92%

87%

65%

Energy

34%

43%

29%

Financials

60%

57%

55%

Health Care

100%

63%

33%

Industrials

42%

38%

Information Technology

57%

40%

23%

Materials

32%

33%

Telecommunication Services

80%

100%

82%

Utilities

100%

89%

100%

All

52%

53%

44%

Percentage of Key Board Leadership Roles Held by Female Directors*

2010

2009

2003

Board Chair

Lead Director

Audit Committee Chair

Compensation Committee Chair

Governance Committee Chair

10%

* Percentage of individuals in the role for whom we know gender.

30 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Female Directors on Equity and Income Trust Boards Number of Female Directors

Percentage of Boards

Equities

Income Trusts

All

2010

26%

39%

28%

2009

26%

38%

28%

2010

16%

15%

2009

16%

14%

2010

2009

2010

2009

2010

2009

2010

2009

<1%

Female Directors Number of Female Directors

Percentage of Boards

2010

2009

2001

28%

27%

15%

14%

12%

<1%

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 31

Boards with More Than One Female Director

Two Female Directors

Advantage Oil and Gas Ltd.

Methanex Corporation

Agrium Inc.

Metro Inc.

Astral Media Inc.

Northland Power Income Fund

Bombardier Inc.

Perpetual Energy Inc.

Cameco Corporation

Power Corporation of Canada

Canadian National Railway Company

Power Financial Corporation

Canadian Tire Corporation, Limited

Russel Metals Inc.

CGI Group Inc.

Saputo Inc.

Chartwell Seniors Housing Real Estate Investment Trust

Sears Canada Inc.

Cineplex Galaxy Income Fund

Shaw Communications Inc.

DundeeWealth Inc.

Stella-Jones Inc.

Empire Company Limited

Sun Life Financial Inc.

Enbridge Inc.

Suncor Energy Inc.

George Weston Limited

Talisman Energy Inc.

Great-West Lifeco Inc.

Teck Resources Limited

Harry Winston Diamond Corporation

Thomson Reuters Corporation

Home Capital Group Inc.

TransCanada Corporation

Husky Energy Inc.

Transcontinental Inc.

IGM Financial Inc.

TVA Group Inc.

Imperial Oil Limited

Valeant Pharmaceuticals International Inc.

Loblaw Companies Limited

Westport Innovations Inc.

Major Drilling Group International Inc.

Yellow Media Inc.

Maple Leaf Foods Inc.

32 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Boards with More Than One Female Director

Three Female Directors

Bank of Nova Scotia

Manulife Financial Corporation

BCE Inc.

Open Text Corporation

Canadian Pacific Railway Limited

Potash Corporation of Saskatchewan Inc.

Canadian Utilities Limited

Royal Bank of Canada

EnCana Corporation

ShawCor Ltd.

Indigo Books & Music Inc.

SNC-Lavalin Group Inc.

Industrial Alliance Insurance and Financial Services Inc.

Tim Hortons Inc.

Intact Financial Corporation

TMX Group Inc.

Manitoba Telecom Services Inc.

TransAlta Corporation

Four Female Directors

Bank of Montreal

Rogers Communications Inc.

Canadian Imperial Bank of Commerce

Shoppers Drug Mart Corporation

Emera Inc.

Torstar Corporation

Five Female Directors

Corus Entertainment Inc.

National Bank of Canada

Jean Coutu Group (PJC) Inc.

Toronto-Dominion Bank

Laurentian Bank of Canada

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 33

Board Size

34 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • Canadian boards have averaged nine members for six years, after averaging ten members for the eight years prior • For the second year in a row, the largest boards numbered 19 directors. Prior to 2009, the largest boards in the study had more than 20 members in every year since we began tracking this data in 1993 •

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.

•

For the second year in a row, the largest boards numbered 19 directors. Prior to 2009, the largest boards in the study had more than 20 members in every year since we began tracking this data in 1993.

•

In the United States, the average number of directors on a board is nine members, which is an increase from eight members the previous year, but a return to the same average of nine members two years previous.9

Number of Directors on a Board, by Board Type

Equities

Income Trusts

All

Average

Median

Range

3 to 19

4 to 12

3 to 19

Average Number of Board Members

<500M

500M to 1B

1B to 5B

>5B

All

2010

2009

2001

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

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 35

Percentage of Boards in Board Size Categories Board Size

<500M

500M to 1B

1B to 5B

>5B

All

5 or less

25%

10%

6 to 9

70%

72%

65%

25%

56%

10 to 12

18%

24%

36%

24%

13 to 15

24%

10%

16 to 19

15%

Percentage of Boards in Board Size Categories, by Board Type Board Size

Equities

Income Trusts

All

5 or less

10%

6 to 9

53%

71%

56%

10 to 12

24%

18%

24%

13 to 15

12%

10%

16 to 19

36 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Largest Equity Boards

Great-West Lifeco Inc.

Power Corporation of Canada

Power Financial Corporation

Manulife Financial Corporation

Rogers Communications Inc.

Bank of Montreal

Empire Company Limited

IGM Financial Inc.

Brookfield Asset Management Inc.

Canadian Imperial Bank of Commerce

Canadian Tire Corporation, Limited

Shaw Communications Inc.

Toronto-Dominion Bank

Largest Income Trust Boards

Enerplus Resources Fund

Penn West Energy Trust

Dundee Real Estate Investment Trust

Extendicare Real Estate Investment Trust

North West Company Fund

Provident Energy Trust

Wajax Income Fund

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 37

Board Assessments, Director Selection and Director Development

38 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • 91% of companies had a board assessment process • 83% of companies had a committee assessment process • 84% of companies had an individual director assessment process • Over the past few years there is a corresponding increase in boards using both questionnaires and individual meetings and a decrease in those using only a questionnaire

Percentage of Boards with Assessment Process

2010

2009

2001

Board Assessment

91%

90%

72%

Committee Assessment

83%

82%

59%

Individual Director Assessment

84%

61%

Board Assessment •

In 2010, 91% of companies had a board assessment process, up slightly from 90% in 2009. In 2001, only 71% of companies assessed the board’s performance.

•

In the United States, 91% of companies conduct full board assessments, which is a slight increase from 90% last year.10

Committee Assessment •

•

In 2010, 83% of companies had a committee assessment process, up slightly from 82% in 2009. In 2001, only 59% of companies assessed committee performance.

•

More boards are disclosing the fact that they assess committee chairs. In 2010, 22% of boards with a committee assessment process in place stated that it included an assessment of each committee chair, up from 19%, 14% and 11% respectively in the previous three years.

Individual Director Assessment •

For the past three years, 84% of companies had an individual director assessment process. In 2001, only 61% assessed individual directors.

•

In the United States, 45% of boards conduct individual director assessments, down from 49% last year.12

In the United States, 83% of boards conduct committee assessments, up from 81% last year.11

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

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 39

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, yet more and more are providing this information:

* In 2010, 7% of boards with lead directors reported they assessed the lead director’s performance, compared with 4%, 8% and 8% respectively in the previous three years.

In 2010, 36% of boards with a non-executive chair reported a chair assessment, compared with 34%, 29% and 28% respectively in the previous three years. Large companies are more likely to disclose this information. Fifty-three percent of boards with non-executive chairs with more than $5 billion in assets stated that they assessed their chairs, compared with 27% with less than $500 million, 23% with $500 million to $1 billion and 33% with $1 billion to $5 billion.

Assessment Methodology •

More boards are reporting how they conduct their assessments:

* Of those companies that conducted a board assessment, 86% of them described the process used in 2010, compared with 81%, 79% and 77% respectively in the previous three years.

* Of those companies that conducted committee assessments, 87% of them described the process used in 2010, compared with 81%, 80% and 75% respectively in the previous three years.

* Of those companies that conducted individual director assessments, 87% described the process used in 2010, compared with 81%, 80% and 78% respectively in the previous three years.

• While boards report various methods for their assessments, the most prevalent are questionnaires and individual meetings between each director and the chair, lead director or governance committee chair. Over the past few years there has been a steady increase in companies using a combination of these methods and a decline in those using only a questionnaire. In 2010, 30% of boards that reported their board assessment process used both methods, compared with 18% in 2007. In 2010, 59% used a questionnaire only, compared with 72% in 2007.

Percentage of Boards with Board Assessment Process that Report Methodology

2010

2009

2008

2007

Questionnaire Only

59%

61%

70%

72%

Individual Meetings Only

Questionnaire and Individual Meetings

30%

27%

20%

18%

•

Committee assessment processes were almost identical to board assessments, with 59% of those that reported methodology using a questionnaire only, 5% using individual meetings only and 31% using both individual meetings and questionnaires.

•

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

40 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Director Selection •

Under the Canadian Securities Administrators governance disclosure requirements, issuers must describe their nomination process. We are continuing to see the disclosure of skills matrices in proxies and/or companies outlining their directors’ areas of expertise within the director biographies.

•

In 2010, 32% of boards identified the use of a matrix in their director selection process, compared to 23% last year. Twenty-one percent included the matrix in their proxy circular, compared to 13% in 2009.

•

Boards at larger companies were more likely to disclose their director skills matrix in their proxies. Thirty-two percent of those with over $5 billion in assets provided these matrices, compared with 25% of those with $1 to $5 billion, 8% of those with $500 million to $1 billion and none with less than $500 million.

Director Development •

The Canadian Securities Administrators governance 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 99% of companies provided some detail on their orientation practices, and 94% to 98% provided some detail on their continuing education practices.

•

Details and specific items vary greatly from company to company. One very descriptive example is that of Agrium Inc.: Continuing education is provided through a number of methods, including visits to our sites and facilities (which all of our directors are encouraged to attend to familiarize themselves with our business and to become acquainted with senior plant personnel and high potential employees), an annual comprehensive dedicated off-site strategy session, presentations from management, employees and outside experts to the Board and its Committees on topics of interest and developing issues within their respective responsibilities, and ongoing distribution of relevant information. The CG&N Committee, in consultation with the CEO and the Board Chair, also develops and maintains an evergreen list of continuing education topics which is periodically discussed with the Board members. This list includes topics of interest relating to the Corporation’s businesses, operations and strategy, regulatory developments, compliance initiatives, as well as international geopolitical and economic reviews. (Two directors) have completed the Directors’ Education Program developed by the Institute of Corporate Directors (ICD) and the Joseph L. Rotman School of Management, University of Toronto. In 2010, educational sessions offered to Board members included a presentation on International Financial Reporting Standards by our external auditors, economic presentations specific to agribusiness presented by investment professionals, political and economic updates on international agribusiness markets, a site visit to certain Agrium facilities, and numerous internal presentations and updates on a broad range of topics relating to our industry, businesses, operations and practices, including enterprise risk management, financial reporting and public disclosure developments, recent developments and emerging trends in corporate governance, environmental governance, major project governance and best practices, executive compensation practices, and information technology. In 2011, the Board also adopted formal external continuing education guidelines for our directors pursuant to which the Board explicitly encourages, and the Corporation provides funding for, the directors to attend external forums, conferences and education programs in order to maintain and update their knowledge of our industry, its regulatory environment, and other topical areas of interest to enhance their continuing development as directors and stewards of the Corporation. 13

Agrium Inc. Notice of Annual General Meeting of Shareholders and Management Proxy Circular, March 22, 2011.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 41

Meetings and Attendance

42 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • The overall board meeting attendance rate is 96%, with 78% of directors having a perfect attendance record • Attendance is even better at committee meetings where the average attendance is 97% and 87% 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 companies provided board meeting attendance records for each director.

•

While committee meeting attendance is not mandatory disclosure, many boards provide this information. However, fewer boards are reporting committee meeting attendance in recent years. In 2010 and 2009, 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 previous years.

•

Overall, Canadian directors maintain a very good attendance rate at board meetings, with 78% attending 100% of board meetings and an overall meeting attendance rate of 96%.

•

Committee meetings are even better attended, with 87% of directors attending 100% of committee meetings and an overall committee meeting attendance rate of 97%.

Board and Committee Meeting Attendance

Equities

Income Trusts

All

Average Board Meeting Attendance Rate

96%

97%

96%

Percentage of Directors with 100% Attendance Rate at Board Meetings

78%

76%

78%

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

20%

23%

20%

Average Committee Meeting Attendance Rate

97%

98%

97%

Percentage of Directors with 100% Attendance Rate at Committee Meetings

86%

88%

87%

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

10%

Board Meetings

Committee Meetings

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 43

Board Meetings •

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

•

The average number of board meetings held in 2010 was nine and the median was eight. For the previous four years, the average number of board meetings was ten and the median was nine.

•

In the United States, boards met an average of six times in person in 2010, in addition to an average of three telephone meetings.14

•

Equity boards held an average of nine meetings in 2010 and the median number of board meetings held was eight. Income trust boards held an average of ten meetings in 2010 and the median number of board meetings held was nine.

•

Twenty-five percent of equity boards held eleven or more board meetings in 2010, compared to 33% in 2009. Forty percent of income trust boards held eleven or more board meetings in 2010, compared to 38% in 2009.

Board Meetings Held

Average

Median

Range

Companies Reporting

2010

2 to 35

98%

2009

2 to 48

99%

2001

2 to 24

42%

Board Meetings Held, by Board Type

Equities

Income Trusts

All

Average

Median

Range

2 to 35

4 to 22

2 to 35

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

44 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Board Meeting Frequency Distribution* Number of Meetings

<500M

500M to 1B

1B to 5B

>5B

All

<1%

3 or fewer

4 to 6

44%

37%

22%

12%

24%

7 to 10

38%

43%

51%

54%

49%

11 to 15

15%

14%

19%

28%

20%

16 to 20

21 or more

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

Board Meeting Frequency Distribution*, by Board Type Number of Meetings

Equities

Income Trusts

All

3 or fewer

<1%

4 to 6

24%

27%

24%

7 to 10

51%

32%

49%

11 to 15

19%

32%

20%

16 to 20

21 or more

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

Committee Meetings â&#x20AC;˘

We continue to see an increase in boards reporting the number of meetings held by their compensation and governance committees.

â&#x20AC;˘

Audit committees averaged six meetings in 2010, compared to an average of five meetings for compensation committees and four meetings for governance committees.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 45

Committee Meetings Held by Major Committees

Average

Median

Range

Boards Reporting*

Audit Committee

2010

0 to 25

89%

2009

1 to 18

88%

2003

1 to 12

66%

Compensation/HR Committee

2010

1 to 17

90%

2009

0 to 22

89%

2003

1 to 16

65%

Governance Committee

2010

0 to 19

91%

2009

0 to 13

89%

2003

0 to 16

67%

* Percent of boards with the named committee type.

Committee Meetings Held by Major Committees, by Board Type

Average

Median

Range

Boards Reporting*

Equities

0 to 25

90%

Income Trusts

4 to 8

87%

All

0 to 25

89%

Equities

1 to 17

90%

Income Trusts

1 to 10

88%

All

1 to 17

90%

Equities

0 to 14

91%

Income Trusts

1 to 19

88%

All

0 to 19

91%

Audit Committee

Compensation/HR Committee

Governance Committee

* Percent of boards with the named committee type.

46 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 47

Board Committees

48 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • For the past six years, boards have averaged four committees each • In 2010, 90% of companies with less than $500 million in assets had a governance committee, compared to 80% one year earlier • In 2010, 94% of independent directors had at least one committee membership • Directors in 2010 averaged two committee memberships

Board Committees •

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

•

Since 2005, the average and median number of committees for equity boards has been at four, while for income trust boards it has been at three.

•

While the overall incidence of boards with governance committees has remained at 92% for the past three years, there has been a noticeable increase at the smallest companies. In 2010, 90% of companies with less than $500 million in assets had a governance committee, compared with 80% in 2009 and 78% in 2008. In the United States, 97% of the largest 200 companies have a nominating/ governance committee.15

•

In 2010, 34% of boards had an environment/safety committee, an increase from 30% over 2009. This category is at the highest level that we have seen it since 2008 and has shown a steady increase from 21% in 1993. In the United States, 4% of the largest 200 companies have an environment health/safety committee. 16

•

Executive committees have been regaining some popularity. In 1993, the earliest year for which we have data, 43% of boards had an executive committee. This dropped to 8% by 2008, and is up to 10% for the last two years. In the United States, 47% of the boards at the largest 200 companies have an executive committee. 17

Number of Board Committees, by Board Type

Equities

Income Trusts

All

Average

Median

Range

1 to 7

1 to 6

1 to 7

2010-2011 Director Compensation Report, published by the National Association of Corporate Directors.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 49

Investment

Nominating*

90%

18%

12%

2009

100%

88%

80%

14%

16%

2001

100%

93%

68%

13%

11%

500M to 1B

2010

100%

92%

84%

30%

10%

2009

100%

83%

88%

26%

10%

2001

100%

98%

64%

25%

19%

11%

1B to 5B

2010

100%

96%

95%

38%

2009

100%

95%

34%

10%

2001

100%

94%

68%

30%

22%

11%

>5B

2010

100%

95%

12%

94%

39%

15%

10%

11%

12%

30%

2009

100%

96%

16%

97%

38%

16%

13%

29%

2001

100%

97%

17%

81%

36%

41%

10%

25%

24%

All

2010

100%

95%

92%

34%

10%

13%

2009

100%

92%

30%

10%

13%

2001

100%

95%

69%

24%

20%

* “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.

50 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Strategic Planning

Finance

Risk

Executive

98%

Pension

Environment/Safety

100%

Conduct Review

2010

Compensation/HR

<500M

Audit

Governance*

Percentage of Boards with Types of Committees

Strategic Planning

2009 100% 92% 4% 92% 30% 10% 5%

5% 14% 13% 1%

Equity

2010

100% 96% 4% 92% 36% 11% 6%

5% 13% 13% 2%

2009 100% 94% 5% 93% 31% 12% 6%

6% 11% 12% 1%

Income Trusts 2010

100% 92%

92% 24%

2009 100% 84%

90% 28% 2%

32% 5%

2% 17% 7%

5% 18% 10%

2% 26% 14% 2%

Technology

5% 14% 13% 2%

Risk

Pension

Reserves

Nominating*

Finance

100% 95% 3% 92% 34% 10% 6%

Executive

2010

Governance*

All

Audit

Investment

Environment/Safety

Conduct Review

Compensation/HR

Percentage of Boards with Types of Committees, by Board Type

0 0

Committee Membership •

In 2010, 94% of independent directors had at least one committee membership.

•

Of the directors that had no committee memberships, 22% were board chairs and 19% had been on the board for a year or less.

•

Overall, directors in 2010 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.

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 2010 2009 2010 2009 2010 2009

73%

75%

48%

46%

30%

31%

21%

20%

35%

36%

46%

45%

10%

12%

15%

<1%

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 51

Director Compensation

52 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • The trend of paying directors with only an annual retainer continues to grow. In 2010, 28% of companies chose this option, compared with 26% in 2009 and 25% in 2008. This category has grown annually since it was at 8% in 2003. There is a corresponding decrease in paying both a retainer and meeting fee. In 2010, 70% chose this option, compared with 73% in 2009 and 72% in 2008. This category has decreased steadily from 89% in 2003 • The average 2010 retainer of $79,060 was a 10% increase over the 2009 average • The average director retainer on an equity board in 2010 was 41% higher than on an income trust board • In 2010, 17% of companies paid a retainer worth $125,000 or more, compared to 13% in 2009 • Annual retainers are significantly higher if they include a mandatory portion in shares or share equivalents

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”.

•

In the United States, the largest 200 companies saw an increase of 5% in median total direct compensation.18

•

The median retainer value is $60,000, which is a $10,000 increase over 2009. The median retainer value has increased by $5,000 on equity boards and increased by $1,039 on income trust boards.

•

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.

•

In 2010, as in 2009, the average director retainer on an equity board was 41% higher than on an income trust board.

•

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 “StockBased Compensation” section, which begins on page 75.

•

In 2010, 17% of companies paid a retainer worth $125,000 or more, compared to 13% in 2009.

•

The percentage of companies paying a retainer worth $25,000 or less dropped from 20% in 2009 to 11% in 2010.

•

In the United States in 2010, the combined average cash retainer and value of share awards for the largest 200 companies was US$190,000.19

•

Annual Retainers •

The increase in average director retainer between 2009 and 2010 was 10%, compared to 4% one year prior and 14% two years ago.

2010-2011 Director Compensation Report, published by the National Association of Corporate Directors.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 53

Annual Board Retainer, by Board Type

Equities

Income Trusts

All

Average

$82,055

$58,340

$79,060

Median

$60,000

$45,000

$60,000

Range

$7,800 to $390,030

$20,000 to $128,000

$7,800 to $390,030

Average Annual Board Retainer

<500M

500M to 1B

1B to 5B

>5B

All

2010

$40,010

$49,204

$72,390

$123,940

$79,060

2009

$34,696

$51,050

$65,615

$114,514

$71,512

2001*

$12,567

$13,544

$17,366

$25,974

$17,044

* 2001 amounts do not include the value of all compensation in shares or share units.

Retainer Distribution

<500M

500M to 1B

1B to 5B

>5B

All

$25,000 or less

2010

36%

16%

11%

2009

53%

26%

14%

20%

$25,001 to $75,000

2010

51%

64%

59%

24%

49%

2009

35%

50%

57%

27%

45%

$75,001 to $125,000

2010

13%

14%

21%

35%

23%

2009

17%

21%

35%

22%

$125,001 to $175,000

2010

11%

27%

13%

2009

24%

Over $175,000

2010

12%

2009

11%

No Retainer

2010

2009

54 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Retainer Distribution, by Board Type

Equities

Income Trusts

All

$25,000 or less

10%

14%

11%

$25,001 to $75,000

47%

62%

49%

$75,001 to $125,000

23%

22%

23%

$125,001 to $175,000

14%

13%

Over $175,000

No Retainer

Largest Equity Board Retainers

Total

Cash Portion

Share Based Portion*

Crescent Point Energy Corp.

$390,030

$30,000

$360,030

EnCana Corporation

$371,100

$30,000

$341,100

Valeant Pharmaceuticals International Inc.

$288,400†

$61,800†

$226,600†

Canadian National Railway Company

$257,774

$15,449

$242,325

Goldcorp Inc.

$255,565†

$103,000†

$152,565†

Advantage Oil and Gas Ltd.

$230,272

$100,000

$130,272

Cenovus Energy Inc.

$228,750

$30,000

$198,750

Suncor Energy Inc.

$210,532

$50,000

$160,532

Enbridge Inc.

$210,000

$157,500

$52,500

Thompson Creek Metals Company Inc.

$202,858†

$61,800†

$141,058†

Celestica Inc.

$190,550†

$33,475†

$157,075†

* 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 1.03

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 55

Largest Income Trust Board Retainers

Total

Cash Portion

Share Based Portion*

RioCan Real Estate Investment Trust

$128,000

$40,000

$88,000

Inter Pipeline Fund

$125,000

$50,000

$75,000

Penn West Energy Trust

$125,000

Bell Aliant Regional Communications Income Fund

$120,000

Bonavista Energy Trust

$117,818

$35,000

$82,818

Enerplus Resources Fund

$115,000

$35,000

$80,000

Pengrowth Energy Trust

$110,000

$30,000

$80,000

Provident Energy Trust

$100,000

$30,000

$70,000

* 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.

Board Meeting Fees •

The average board meeting fee in 2010 was $1,610, only a 1% increase over the average board meeting fee of $1,589 in 2009. There has been little change in meeting fees over recent years, with the annual averages fluctuating between $1,400 and $1,610 since 2003.

•

We believe that the lower percentage of increase in meeting fees compared to retainers likely relates to the reduction in companies that use them. There has been a steady decrease in companies paying a meeting fee, either as a sole point of compensation or in conjunction with retainers. Since 2004, the percentage of companies paying directors with only a meeting fee has been 1% or less, and the percentage of those paying meeting fees along with a retainer has dropped from 89% in 2003 to 70% in 2010. This is illustrated in the table, “Forms of Compensation” on page 57.

•

This year the average equity board meeting fee was 8% higher than the average income trust board meeting fee. Last year there was a 6% difference between equity and income trust board meeting fees.

Average Board Meeting Fee

<500M

500M to 1B

1B to 5B

>5B

All

2010

$1,491

$1,345

$1,586

$1,852

$1,610

2009

$1,400

$1,429

$1,517

$1,922

$1,589

2001*

$1,202

$1,134

$1,287

$1,466

$1,271

* 2001 amounts do not include the value of all compensation in shares or share units.

56 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Board Meeting Fee, by Board Type

Equities

Income Trusts

All

Average

$1,627

$1,509

$1,610

Median

$1,500

Range

$600 to $10,000

$1,000 to $2,500

$600 to $10,000

How are Directors Compensated? •

The trend of paying directors with only an annual retainer continues to grow. In 2010, 28% of companies chose this option, compared with 26% in 2009 and 25% in 2008. This category has grown annually since it was at 8% in 2003. There is a corresponding decrease in paying both a retainer and meeting fee. In 2010, 70% chose this option, compared with 73% in 2009 and 72% in 2008. This category has decreased steadily from 89% in 2003.

•

Equity boards are more likely to use a retainer-only compensation plan for directors than income trust boards. In 2010, 29% of equity boards chose this method compared with 24% of income trust boards.

•

Income trust boards are more likely to use a retainer and meeting fee method of compensation to pay their directors. In 2010, 76% of income trust boards used this method while only 69% of equity boards chose this method.

•

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 2010 was 103% 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 125% last year.

Forms of Compensation

Percent of Boards

Average Retainer

Average Meeting Fee

Retainer Only

2010

28%

$84,473

2009

26%

$84,957

2003

$46,140

Meeting Fee Only

2010

<1%

$2,000

2009

$967

2003

$1,663

Retainer and Meeting Fee

2010

70%

$76,885

$1,608

2009

73%

$66,882

$1,598

2003

89%

$27,927

$1,322

Stock Options Only

2010

2009

<1%

2003

No Compensation

2010

2009

2003

<1% 0 Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 57

Forms of Compensation, by Board Type

Percent of Boards

Average Retainer

Average Meeting Fee

Retainer Only

All

28%

$84,473

Equities

29%

$87,285

Income Trusts

24%

$57,757

Meeting Fee Only

All

<1%

$2,000

Equities

<1%

$2,000

Income Trusts

Retainer and Meeting Fee

All

70%

$76,885

$1,608

Equities

69%

$79,847

$1,625

Income Trusts

76%

$58,501

$1,509

Stock Options Only

All

Equities

Income Trusts

No Compensation

All

Equities

Income Trusts

Average and Median Board Retainers, Including Cash and Shares, by Board Type

Mandatory Shares in Retainer

No Mandatory Shares in Retainer

Average

Median

Average

Median

All

$105,882

$100,000

$52,055

$40,000

Equities

$109,611

$100,000

$53,177

$40,000

Income Trusts

$75,349

$57,440

$45,381

$35,000

58 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Average and Median Board Retainers, Including Cash and Shares

Mandatory Shares in Retainer

No Mandatory Shares in Retainer

Average

Median

Average

Median

<500M

2010

$63,183

$50,000

$32,019

$25,000

2009

$54,997

$50,000

$26,084

$20,000

2003

$22,090

$20,000

$17,461

$15,000

500M to 1B

2010

$67,803

$63,220

$39,004

$30,000

2009

$78,066

$74,840

$34,841

$30,000

2003

$20,685

$16,500

$20,830

$15,000

1B to 5B

2010

$95,468

$45,000

$49,313

$41,200

2009

$87,905

$69,915

$46,069

$40,000

2003

$42,049

$37,500

$25,018

$21,724

>5B

2010

$134,858

$120,000

$98,172

$101,500

2009

$130,861

$120,000

$76,843

$52,500

2003

$67,681

$55,000

$43,572

$40,000

All

2010

$105,882

$100,000

$52,055

$40,000

2009

$99,908

$93,888

$44,477

$35,000

2003

$50,054

$39,370

$24,626

$20,000

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 59

Board Chair Compensation

60 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • The 2010 average non-executive chair retainer of $217,909 was 10% higher than in 2009, after increases between 2% and 4% in the previous three years • In 2010, 13% of board chair retainers were more than $350,000, compared to 10% in 2009 and 8% in 2008 • The average non-executive chair retainer in 2010 was $132,305 for income trust boards and for equity boards was 77% higher at $233,926 • As is the case with director retainers, non-executive chair retainers are larger when there is a mandatory portion in shares or share equivalents

Introduction •

•

All compensation in this section represents board chairs who are not CEOs. We define “executive chairs” as those board chairs whose compensation is disclosed as executive compensation, and “non-executive chairs” as those chairs whose compensation is disclosed as director compensation. For the fifth year in a row, we have excluded executive chairs from our analysis and are only providing data for non-executive chairs. The decision to exclude data for executive chairs was taken in light of the small number of executive chairs included in our sample and the high variability in compensation for executive chairs, making it difficult to identify patterns or draw sensible conclusions from the data available.

Non-Executive Chairs •

The 2010 average non-executive chair retainer of $217,909 was 10% higher than in 2009, after increases between 2% and 4% in the previous three years. This was the first double-digit increase in this category since a 26% increase between 2003 and 2004.

•

There is steady growth in the category of boards that pay their chairs more than $350,000. In 2010, 13% fell into this category, compared to 10% in 2009 and 8% in 2008.

•

When looking at the overall average cash and share/ deferred share unit (DSU) portions of non-executive chair compensation, the average cash portion increased by 7% from the 2009 average, while the value of the share/DSU portion increased by 8%.

•

In 2010, the average non-executive chair retainer was 77% higher on equity boards than on income trust boards, compared to a 75% differential last year.

•

As is the situation with director retainers, 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 2010 was 61% 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 76% last year.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 61

Non-Executive Chair Retainer, by Board Type

Equities

Income Trusts

All

Average

$233,926

$132,305

$217,909

Median

$206,000

$107,500

$200,000

Range

$36,000 to $902,585

$25,000 to $439,000

$25,000 to $902,585

Average Annual Non-Executive Chair Retainer

<500M

500M to 1B

1B to 5B

>5B

All

2010 $96,379

$125,477

$192,846

$336,980

$217,909

2009 $87,324

$125,277

$176,972

$312,953

$198,861

2001* $63,318

$68,789

$128,045

$162,872

$111,445

* 2001 amounts do not include the value of all compensation in shares.

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

Mandatory Shares in Retainer

No Mandatory Shares in Retainer

Average

Median

Average

Median

All

$269,838

$230,758

$167,098

$127,500

Equities

$288,323

$267,500

$180,225

$160,000

Income Trusts

$168,165

$145,000

$98,836

$75,000

Largest Non-Executive Equity Board Chair Retainers

Total

Cash Portion

Share Based Portion*

Goldcorp Inc.

$902,585†

$750,020†

$152,565†

Canadian National Railway Company

$769,788

$123,588

$646,200

Teck Resources Limited

$659,132

$360,000

$299,132

Thomson Reuters Corporation

$618,000†

Bombardier Inc.

$600,000

EnCana Corporation

$591,100

$250,000

Saputo Inc.

$500,000

$341,100

62 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Largest Non-Executive Income Trust Board Chair Retainers

Total

Cash Portion

Share Based Portion*

RioCan Real Estate Investment Trust

$439,000

$175,000

$264,000

Penn West Energy Trust

$250,000

Pengrowth Energy Trust

$235,000

$75,000

$160,000

Parkland Income Fund

$226,213

$78,960

$147,253

Enerplus Resources Fund

$220,000

$120,000

$100,000

Dundee Real Estate Investment Trust

$193,600

$100,000

$93,600

* 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.

Non-Executive Board Chair Retainer Distribution*

2010

2009

2008

$50,000 or less

$50,001 to $150,000

25%

32%

34%

$150,001 to $250,000

28%

23%

19%

$250,001 to $350,000

15%

16%

17%

Over $350,000

13%

10%

No Retainer

14%

11%

14%

* Percentages are of boards with a non-executive chair.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 63

Lead Director Compensation

64 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • 77% 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 • The average lead director retainer for equity boards in 2010 was $38,667 and for income trust boards was $24,329 • In 2010, there was a 10% increase in the average lead director retainer, following a 1% decrease in 2009 and a 13% decrease in 2008. The 2010 average of $37,329 is still below the 2007 high of $39,337 •

Seventy-seven percent of boards with a lead director paid an additional fee to the lead director in 2010, compared with 73% in 2009 and only 38% in 2002.

•

Larger companies are more likely to pay a lead director retainer. In 2010, 84% of companies with more than $1 billion in assets that had a lead director paid an additional retainer to the lead director, compared with 52% of companies with assets of less than $1 billion.

•

Seventy-seven percent of equity boards with a lead director paid an additional fee to the lead director, compared to 75% of income trust boards.

•

In 2010, there was a 10% increase in the average lead director retainer, following a 1% decrease in 2009 and a 13% decrease in 2008. The 2010 average of $37,329 is still below the 2007 high of $39,337.

Lead Director Additional Retainer*, Including Cash and Shares

2010

2009

2003

Average

$37,329

$33,825

$26,111

Median

$23,750

$20,000

$15,000

Range

$2,500 to $257,500

$3,000 to $285,000

$1,500 to $105,113

* Additional to director retainer.

Lead Director Additional Retainer*, Including Cash and Shares, by Board Type

Equities

Income Trusts

All

Average

$38,667

$24,329

$37,329

Median

$28,875

$15,000

$23,750

Range

$2,500 to $257,500

$7,800 to $80,000

$2,500 to $257,500

* Additional to director retainer.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 65

Committee Chair Compensation

66 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • 89% of companies paid a committee chair retainer that was higher than the committee member retainer • The average equity board committee chair retainer was $14,299 compared to $11,964 at income trust boards • 80% of firms paid a higher retainer to the chair of the audit committee than to other committee chairs • Over the past five years, committee chair retainers have grown by 70% at companies with less than $500 million in assets, which is more than double the rate of growth than any other category • The average premium audit committee chair retainer was 56% higher than the average retainer paid to other committee chairs, or at companies that did not pay a premium for chairing the audit committee • After many years of seeing boards pay higher retainers to chairs of audit committees than to other committees, we are starting to see more boards where directors also receive a premium for chairing compensation committees. In 2010, 13% of boards with a compensation committee paid a higher retainer to that committee chair than some other committees, compared to 9% in 2009 and 5% in 2008 and 2007

Committee Chair Retainer •

In 2010, 89% of companies paid a committee chair retainer that was higher than the committee member retainer. For the previous two years, this statistic was 91%.

•

In the United States, 93% of the largest 200 companies paid a committee chair retainer.

•

Eighty-eight percent of equity boards paid a committee chair retainer, compared to 95% of income trust boards.

•

The average 2010 committee chair retainer was 3% higher than in 2009, following a 1% increase last year and 7% increases in the previous two years.

•

Average committee chair retainers have shown a great deal of year-to-year fluctuation, rather than steady growth, so it is helpful to look at change over a longer period. Compared to five years ago, they are 20% higher and the bulk of this growth comes from smaller companies. At companies with less than $500 million in assets, the increase is 70% over five years, compared to increases of 12% at companies in the $500M to $1B category and 33% in the $1B to $5B category. Average committee chair retainers went down at companies with more than $5 billion in assets, which experienced a 6% decrease over the past five years.

•

In 2010, the average equity board committee chair retainer was 20% higher than the average income trust board committee chair retainer. This differs from 2009 when the differential was 14% over the previous year.

Committee Chair Retainer, by Board Type

Equities

Income Trusts

All

Average

$14,299

$11,964

$13,997

Median

$10,300

$10,000

Range

$2,000 to $250,000

$2,500 to $45,000

$2,000 to $250,000

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 67

Average Annual Committee Chair Retainer <500M

500M to 1B

1B to 5B

>5B

All

2010

$10,709

$9,421

$13,152

$18,088

$13,997

2009

$9,046

$9,853

$12,394

$18,446

$13,567

2001*

$3,641

$3,869

$4,753

$13,484

$6,952

* 2001 amounts do not include the value of all compensation in shares or share units.

Differential Committee Chair Retainers •

After many years of seeing boards pay higher retainers to chairs of audit committees than to other committees, we are starting to see more boards where directors also receive a premium for chairing compensation committees. In 2010, 13% of boards with a compensation committee paid a higher retainer to that committee chair than some other committees, compared to 9% in 2009 and 5% in 2008 and 2007.

•

Larger companies are much more likely to pay a compensation committee premium. In 2010, 84% of those that paid a premium to compensation committee chairs had assets of more than $1 billion, and 16% were at smaller companies.

•

Other committee chairs that boards are starting to compensate with higher amounts are those that lead risk, governance and environment/health/safety committees. In 2010, 8% of risk committee chairs received a premium retainer, as well as 4% of governance and environment/health/safety committee chairs.

•

Audit committee chairs are still the most likely to receive a higher retainer. In 2010, 80% of companies paid a higher retainer to audit committee chairs than other committee chairs. For the previous three years, this percentage fluctuated between 76% and 78%.

•

This year, 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 2010, there was a 1% increase in the average premium audit committee chair retainer over 2009 and this follows increases over the previous years of 2%, 5% and 8% consecutively.

•

In 2010, 84% of income trust boards paid a premium audit committee chair retainer, a decrease of 2% over last year. Seventy-nine percent of equity boards paid such a premium, a 4% increase over last year.

•

The average premium audit committee chair retainer at equity boards was 19% higher than at income trust boards. This is an increase of 8% over last year.

•

In the United States, the median audit committee chair retainer at the largest 200 companies was US$20,000.21

Average Premium Audit Committee and Non-Audit* Committee Chair Retainer, by Board Type Percentage that Pay a Premium Audit Committee Chair Retainer

Average Audit Committee Chair Retainer at Companies that Pay a Premium

All

80%

$17,545

$11,253

Equities

79%

$17,924

$11,377

Income Trusts

84%

$15,093

$9,397

* “Non-Audit” includes audit committees at those companies that do not pay a premium for audit committee membership. 21

Average Non-Audit Chair Retainer

2010-2011 Director Compensation Report, published by the National Association of Corporate Directors.

68 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Average Premium Audit Committee and Non-Audit* Committee Chair Retainer, by Board Size % of Asset Group that Pay a Premium Audit Committee Chair Retainer

Average Audit Committee Chair Retainer at Companies that Pay a Premium

Average Non-Audit Committee Chair Retainer

<500M

62%

$13,148

$8,531

500M to 1B

82%

$11,924

$7,141

1B to 5B

80%

$17,817

$9,391

>5B

87%

$21,835

$15,646

All

80%

$17,545

$11,253

* “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

2010

$17,545

$11,253

2009

$17,432

$10,569

2003

$12,561

$7,254

Median

2010

$15,000

$9,500

2009

$15,000

$7,500

2003

$10,000

$5,000

Range

2010

$3,250 to $70,000

$2,000 to $250,000

2009

$3,000 to $75,000

$2,000 to $250,000

2003

$3,000 to $75,000

$1,000 to $250,000

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

Committee Chair Meeting Fee

•

In 2010, 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. Four percent of equity boards and 5% of income trust boards paid a higher meeting fee to committee chairs.

•

The average committee chair meeting fee in 2010 was $2,634 compared to $2,606 in 2009. The average equity board committee chair meeting fee was $2,689, and the average income trust board committee chair meeting fee was $2,250.

•

In the United States, 3% of the largest 200 companies paid higher meeting fees to committee chairs, compared to 6% to 10% in all smaller company size categories.22

2010-2011 Director Compensation Report, published by the National Association of Corporate Directors.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 69

Committee Member Compensation

70 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • The average committee member retainer for equity boards in 2010 was $5,812, and for income trust boards was $6,859 • The average committee meeting fee for equity boards in 2010 was $1,580, and for income trust boards was $1,482 • 24% of the companies surveyed paid a higher committee retainer for audit committee members than for other committees • Over the past five years, committee member retainers have grown by 47% at companies with less than $500 million in assets, which is more than three times the rate of growth than any other category

Committee Member Retainer •

The average 2010 committee member retainer of $5,887 is a decrease of less than 1% over 2009, following another 1% decrease in the previous year.

•

As with committee chair retainers, committee member retainers have fluctuated over the years rather than showing a steady growth pattern, so it is helpful to look at them over a longer period. Compared to five years ago, they are 16% higher, and as with committee chair retainers, the bulk of the growth comes from the smallest companies. At companies with less than $500 million in assets, committee member retainers are 47% higher than five years ago. The $500M to $1B category saw a 6% decrease over five years, and the $1B to $5B and the over $5B categories had respective increases of 9% and 13%.

•

Of the companies that paid committee member compensation, 34% paid both a retainer and meeting fee and 12% paid a retainer only. This breakdown has been relatively stable for the last seven years, with the percentage paying a retainer and meeting fee varying between 34% and 36%, and the percentage paying only retainers varying between 8% and 12%.

•

In the United States, 39% of the largest 200 companies paid a committee member meeting retainer.23

Committee Member Retainer, by Board Type

Equities

Income Trusts

All

Average

$5,812

$6,859

$5,887

Median

$5,000

Range

$1,000 to $25,750

$1,500 to $20,000

$1,000 to $25,750

2010-2011 Director Compensation Report, published by the National Association of Corporate Directors.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 71

Average Committee Member Retainer <500M

500M to 1B

1B to 5B

>5B

All

2010

$4,776

$3,827

$5,253

$6,967

$5,887

2009

$6,597

$4,167

$5,573

$6,475

$5,898

2001*

$2,402

$2,073

$2,871

$3,635

$3,065

* 2001 amounts do not include the value of all compensation in shares or share units.

Committee Member Meeting Fee •

In 2010, the average committee meeting fee increased by less than 1% over the 2009 average. Over the previous five years, the annual increase in committee meeting fees ranged between 1% and 4%.

•

In 2010, the average committee meeting fee on an equity board was 7% higher than on an income trust board, which is the same percentage as the previous year.

•

Of the boards that paid some form of committee member compensation, 46% paid committee members a meeting fee only, which is slightly lower than 48% in 2009.

•

Twelve percent of companies that paid committee meeting fees paid a higher meeting fee to audit committee members in 2010 compared with 8% in 2009 and 9% in 2008.

•

In the United States, 44% of the largest 200 companies paid a committee member meeting fee.24

Committee Member Meeting Fees, by Board Type

Equities

Income Trusts

All

Average

$1,580

$1,482

$1,568

Median

$1,500

Range

$500 to $4,000

$1,000 to $2,000

$500 to $4,000

Average Committee Member Meeting Fee <500M

500M to 1B

1B to 5B

>5B

All

2010

$1,340

$1,334

$1,596

$1,739

$1,568

2009

$1,382

$1,426

$1,524

$1,784

$1,561

2001*

$961

$1,051

$1,192

$1,317

$1,120

* 2001 amounts do not include the value of all compensation in shares or share units.

2010-2011 Director Compensation Report, published by the National Association of Corporate Directors.

72 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Audit Committee Member Retainer •

In 2010, 24% of companies paid a higher committee retainer for audit committee members than for other committees, compared to 21% in 2009.

•

Twenty-six percent of equity boards paid a premium for audit committee membership, compared to 22% in 2009. Eight percent of income trust boards paid a premium for audit committee membership, compared to 15% in 2009.

•

The average audit committee retainer was 39% 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 47% in the previous two years.

•

In the United States, the median audit committee retainer at the top 200 companies was US$10,000.25

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

Audit Committee

Non-Audit Committee

Average

2010

$7,171

$5,152

2009

$7,442

$5,058

2003

$5,196

$3,236

Median

2010

$6,000

$4,500

2009

$6,000

$4,000

2003

$5,000

$3,000

Range

2010

$2,000 to $25,750

$1,000 to $25,750

2009

$2,000 to $28,500

$1,000 to $28,500

2003

$3,000 to $10,000

$1,000 to $14,015

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

2010-2011 Director Compensation Report, published by the National Association of Corporate Directors.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 73

Stock-Based Compensation

74 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • In 2010, 85% of equity boards and 68% of income trust boards had at least one form of stock-based compensation for their directors • The use of stock-based compensation increased to 83% from 81% the previous year • In 2010, 23% of companies provided directors with stock options or trust unit rights • The larger the company, the more likely it is to have both mandatory and optional share compensation for directors. In 2010, 57% of companies with more than $5 billion in assets used this method, compared to 8% 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 2010 when options were actually granted to directors during the fiscal year.

•

In 2010, 85% of equity boards had at least one form of stock-based compensation for their directors, compared with 68% of income trust boards.

•

In 2010, 23% of companies provided directors with stock options or trust unit rights. Over the past four years this percentage has fluctuated between 20% and 26%.

•

There has been an increase in companies using share equivalents like DSUs, at the same time as there has been a decrease in actual stock awards. In 2010, 15% of companies used stock awards for director compensation, compared to 25% ten years earlier. In 2010, 60% of companies compensated directors with share equivalents, compared to 28% ten years ago.

•

In the United States, director compensation at the largest 200 companies includes full-value equity at 91% of the boards and stock options at 27%.26

Forms of Stock-Based Compensation •

In 2010, 83% of companies used some form of stock-based compensation for directors, which is an increase of 2% over 2009. This category has fluctuated, with between 77% and 83% of companies using stock-based compensation in each of the past six years.

Percentage of Companies with a Stock Component in Director Compensation <500M

500M to 1B

1B to 5B

>5B

All

2010

82%

68%

82%

94%

83%

2009

66%

69%

82%

95%

81%

2001

59%

64%

67%

83%

67%

2010-2011 Director Compensation Report, published by the National Association of Corporate Directors.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 75

Percentage of Companies with Various Types of Stock-Based Director Compensation, by Board Type Shares/Trust Units

Stock Options/ Trust Unit Rights

Share Equivalents

None

Equities

15%

25%

62%

14%

Income Trusts

16%

47%

32%

All

15%

23%

60%

17%

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

Percentage of Companies with Various Types of Stock-Based Director Compensation Shares/Trust Units

Stock Options/ Trust Unit Rights

Share Equivalents

None

2010

15%

23%

60%

17%

2009

15%

20%

58%

19%

2001

26%

67%

39%

33%

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 2010, 30% of boards chose this method, compared to 5% in 2002.

â&#x20AC;˘

The larger the company, the more likely it is to have both mandatory and optional share compensation for directors. In 2010, 57% of companies with more than $5 billion in assets used this method, compared to 8% at boards with less than $500 million in assets.

76 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Percentage of Companies with Compensation in Shares or Share Equivalents Option to take all or part of compensation in shares or share equivalents

2010

2009

2002

17%

19%

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

19%

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

30%

28%

Percentage of Companies with Compensation in Shares or Share Equivalents, by Asset Size Option to take all or part of compensation in shares or share equivalents

<500M

500M to 1B

1B to 5B

>5B

All

13%

23%

20%

17%

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

18%

23%

13%

19%

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

16%

26%

57%

30%

Percentage of Companies with Compensation in Shares or Share Equivalents, by Board Type Option to take all or part of compensation in shares or share equivalents

Equities

Income Trusts

All

17%

18%

17%

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

16%

34%

19%

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

34%

30%

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 77

Compensation Summary

78 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • In 2010, the most significant change we saw was the 10% increase in both average director retainers to $79,060 and average non-executive chair retainers to $217,909 • Meeting fees for both board and committee meetings showed minimal year over year change • Comparing director compensation for equity and income trust boards in 2010 reveals that meeting fees are very comparable, while director retainers are 41% higher and non-executive chair retainers are 77% higher at equity boards

Average Compensation, by Asset Size

<500M

500M to 1B

1B to 5B

>5B

All

Director Retainer

2010

$40,010

$49,204

$72,390

$123,940

$79,060

2009

$34,696

$51,050

$65,615

$114,514

$71,512

2001*

$12,567

$13,544

$17,366

$25,974

$17,044

Board Meeting

2010

$1,491

$1,345

$1,586

$1,852

$1,610

2009

$1,400

$1,429

$1,517

$1,922

$1,589

2001*

$1,202

$1,134

$1,287

$1,466

$1,271

Non-Exec Chair Retainer

2010

$96,379

$125,477

$192,846

$336,980

$217,909

2009

$87,324

$125,277

$176,972

$312,953

$198,861

2001*

$63,318

$68,789

$128,045

$162,872

$111,445

Committee Chair Retainer

2010

$10,709

$9,421

$13,152

$18,088

$13,997

2009

$9,046

$9,853

$12,394

$18,446

$13,567

2001*

$3,641

$3,869

$4,753

$13,484

$6,952

Committee Member Retainer

2010

$4,776

$3,827

$5,253

$6,967

$5,887

2009

$6,597

$4,167

$5,573

$6,475

$5,898

2001*

$2,402

$2,073

$2,871

$3,635

$3,065

Committee Member Meeting

2010

$1,340

$1,334

$1,596

$1,739

$1,568

2009

$1,382

$1,426

$1,524

$1,784

$1,561

2001*

$961

$1,051

$1,192

$1,317

$1,120

Telephone Meeting

2010

$1,023

$757

$881

$909

$871

2009

$850

$762

$884

$920

$863

2001*

$570

$708

$654

$666

$627

* 2001 amounts do not include the value of all compensation in shares or share units.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 79

Average Compensation, by Board Type

Equities

Income Trusts

All

Director Retainer

2010

$82,055

$58,340

$79,060

2009

$75,918

$53,886

$71,512

Board Meeting

2010

$1,627

$1,509

$1,610

2009

$1,610

$1,512

$1,589

Non-Exec Chair Retainer

2010

$233,926

$132,305

$217,909

2009

$220,894

$126,465

$198,861

Committee Chair Retainer

2010

$14,299

$11,964

$13,997

2009

$13,938

$12,169

$13,567

Committee Member Retainer

2010

$5,812

$6,859

$5,887

2009

$5,870

$6,060

$5,898

Committee Member Meeting

2010

$1,580

$1,482

$1,568

2009

$1,584

$1,474

$1,561

Telephone Meeting

2010

$873

$861

$871

2009

$852

$909

$863

80 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 81

Director Share Ownership

82 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Key Findings • 94% of directors owned and/or controlled shares in the companies on whose boards they sat in 2010. This figure has been above 90% for the past six years • In 2010, 67% of boards had an explicit shareholding guideline • Shareholding guidelines expressed as a dollar value equal to a multiple of the annual retainer have grown in popularity consistently for the past five years. In 2005, 51% of boards with shareholding guidelines used this model, and this percentage has increased each year since then and is 70% in 2010 • In 2010, of those companies requiring directors to hold stock, 65% required the stock be valued at least three times their annual retainer, while 22% required directors to hold four times or more, and 13% required less than three times

Director Shareholding •

In 2010, 94% of directors owned and/or controlled shares in the companies on whose boards they sit. For the past six years, more than 90% of directors fell into this category each year.

•

Ninety-four percent of directors on equity boards and 96% of directors on income trust boards owned and/or controlled shares in the companies on whose boards they sit.

•

Of those directors that did not own and/or control shares in 2010, 32% 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

2010

87%

89%

95%

98%

94%

2009

85%

91%

96%

99%

95%

2001

81%

86%

89%

93%

87%

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 83

Director Shareholding Guidelines â&#x20AC;˘

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.

â&#x20AC;˘

In 2010 the number of boards with an explicit shareholding guideline increased to 67%, up 1% from the previous year, and up from 13% in 2001.

Percentage of Boards with a Director Shareholding Guideline

2010

2009

2001

Specified guideline only

67%

66%

13%

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

74%

73%

18%

â&#x20AC;˘

While, historically, equity boards have been much more likely than income trust boards to have either an explicit or implicit shareholding guideline, the gap between the two continues to narrow.

Percentage of Boards with a Director Shareholding Guideline, by Board Type

Equities

Income Trusts

All

Specified guideline only

2010

67%

68%

67%

2009

68%

57%

66%

2008

68%

52%

64%

2007

66%

47%

62%

2006

60%

37%

54%

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

2010

75%

82%

74%

2009

74%

71%

73%

2008

74%

61%

71%

2007

71%

54%

67%

2006

68%

41%

61%

84 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

â&#x20AC;˘

Shareholding guidelines expressed as a dollar value equal to a multiple of the annual retainer have grown in popularity consistently for the past five years. In 2005, 51% of boards with shareholding guidelines used this model, and this percentage has increased each year since then and sits at 70% in 2010.

â&#x20AC;˘

At the same time, the practice of setting share ownership guidelines with a specific number of shares has declined, going from 22% in 2005 down to 11% in 2010.

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

2010

2009

2003

Dollar value equal to a multiple of the annual director retainer

70%

69%

48%

Specific number of shares or share units

11%

15%

30%

Specific dollar value

18%

16%

19%

<1%

Highest of two of the variables listed above Multiple of annual retainer plus another item â&#x20AC;˘

The percentage of companies requiring directors to hold various multiples of the annual director retainer remained relatively stable in 2010 over 2009. We continue to see companies shifting away from requiring directors to hold multiples greater than three times their retainers. In 2003, 56% of companies required directors to hold a multiple of four or more, while in 2010 only 22% of companies fell into this category. Over the same time period, companies requiring directors to hold a multiple of six or eight times their retainer value has dropped from 15% to 1%.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 85

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

2010

2009

2003

Equal to the retainer value

Two times the retainer value

13%

Two and a half times the retainer value

Three times the retainer value

65%

62%

27%

Four times the retainer value

Five times the retainer value

16%

20%

35%

Six times the retainer value

13%

Eight times the retainer value

Value* of Director Share Ownership Guidelines

2010

2009

2003

Average value

$240,656

$212,511

$137,933

Median value

$180,000

$150,000

$108,850

$5,875 to $1,023,300

$5,000 to $855,000

$6,250 to $490,525

Range of values

* 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 2010.

86 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

Company Data

The following pages contain data collected from annual reports, management proxy circulars and annual information forms regarding fiscal year-ends in late 2010 and early 2011. It is in alphabetical order by company name.

Any additional explanation required for entries is detailed in the Company Data Endnotes on pages 98 to 100. 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 2010.

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 87

Average Non Number of Number of Term **Director Executive Assets *Board Number of Independent Female Served Shareholding Chair Board Name Trust ($000) Leadership Directors Directors Directors (years) Guideline? Retainer Retainer

Aberdeen International Inc.

168,295

ACE Aviation Holdings Inc.

481,000

Advantage Oil and Gas Ltd.

1,842,571

Aecon Group Inc.

2,090,838

CC, LD

Yes

50,000

Ag Growth International Inc.

391,563

Yes

35,000

AGF Management Limited

5,253,867

CC, LD

Yes

Agnico-Eagle Mines Limited

5,667,058¹

Yes

240,000

Agrium Inc.

13,098,510¹

Yes

350,200 1

Air Canada

10,544,000

Yes

325,000

Alamos Gold Inc.

544,234¹

Yes

40,000

Alimentation Couche-Tard Inc.

4,119,588¹

NIC, LD

Yes

229,500

1,258,511

AltaGas Ltd.

2,751,700

CC, LD

Yes

57,518 18

ARC Energy Trust

4,946,500

Yes

152,055 45

52,055 45

Artis Real Estate Investment Trust

65,000

Allied Properties Real Estate Investment Trust

396,640 59 45,000

60,000

25,000 125

120,000

230,272 59

45,000

115,000 164,800 1

120,000 18,000 47,700

45,000

2,149,938

Yes

Astral Media Inc.

2,477,552

EC, LD

Yes

50,000 121

ATCO Ltd.

10,239,800

NIC, LD

Yes

140,000 4

Athabasca Oil Sands Corp.

2,566,822

Atlantic Power Corporation

1,043,402¹

Atrium Innovations Inc.

812,125¹

Aurizon Mines Ltd.

340,686

CC, LD

Yes

Bank of Montreal

411,640,000

Yes

300,000

100,000

Bank of Nova Scotia

526,657,000

Yes

300,000

120,000

Bankers Petroleum Ltd.

481,436¹

Barrick Gold Corporation

34,321,660¹

EC, LD

Yes

Baytex Energy Corp.

2,047,212

EC, LD

Yes

BCE Inc.

39,276,000

Yes

3,386,700

Yes

Bell Aliant Regional Communications Income Fund

Yes 110,000

350,000

35,000 41,200 1 40,000 20,000

30,000

169,950 1 30,000

160,000 40

NIC, LD

Birchcliff Energy Ltd.

995,391

40,000

Bird Construction Income Fund

482,714

NIC, LD

28,000

Blackpearl Resources Inc.

468,309

NIC, LD

25,000

BMTC Group Inc.

347,502

CC, LD

75,000

Boardwalk Real Estate Investment Trust

175,000

45,000

Bombardier Inc. Bonavista Energy Trust

Yes

2,326,802

CC, LD

Yes

25,000 60

24,132,900¹

NIC, LD

Yes

600,000

80,000 4

3,342,988

Yes

117,818 50

CC, LD

Bonterra Energy Corp.

335,144

7,800 114

BPO Properties Ltd.

4,665,100

75,000

Breakwater Resources Ltd.

731,356

Brick Group Ltd.

535,991

Brookfield Asset Management Inc.

78,131,000¹

Brookfield Properties Corporation

21,032,600¹

EC, LD

Brookfield Renewable Power Fund

105,000

120,000

60,000

40,000

Yes

77,500 116

57,500 116

Yes

350,000

Yes

3,740,600

CAE Inc.

2,857,900

Yes

225,000

Calfrac Well Services Ltd.

1,115,536

Yes

450,700

Calloway Real Estate Investment Trust

40,000

150,000

103,000 1,4

35,000

80,000 170,350

4,373,522

Yes

25,000 54

Cameco Corporation

7,671,368

Yes

340,000

140,000 4

Canaccord Financial Inc.

5,110,372

EC, LD

100,000

Canada Bread Company, Limited

1,032,139

NIC

Canadian Apartment Properties Real Estate Investment Trust X

2,353,420

NIC, LD

Yes

75,000 53

120,000

55,000 53

Canadian Imperial Bank of Commerce

352,040,000

Yes

375,000

100,000

Canadian National Railway Company

25,206,000

Yes

769,788

257,774

Canadian Natural Resources Limited

42,669,000

Yes

192,205

Canadian Oil Sands Limited

7,016,000

Yes

321,101

155,371

Canadian Pacific Railway Limited

13,675,900

Yes

330,000

140,000 4 45,000 58

Canadian Real Estate Investment Trust

2,164,585

Yes

96,500 58

Canadian Tire Corporation, Limited

8,764,100

Yes

344,000

120,000

Canadian Utilities Limited

9,415,300

NIC, LD

Yes

175,000

140,000

Canadian Western Bank

12,701,691

Yes

120,000

80,000

Canfor Corporation

2,778,300

Yes

128,075

48,075

* 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)

88 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

** 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 directors is a member of that board.

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

5,000

10,000 49

10,000

4,000

1,500

5,000

10,000 ²

3,000 14

4,000

15,000 ²

20,000

2,000

4,000 2

3,605 1 5,000

1,030 1

6,000

1,030 1

10,000

1,545 1,2

10,000 43,49

6,695 1

6,000 14

X X

25,000 ² 15,450 1,2

10,300 1,5

10,000 20,000 43,49

1,000

6,000

10,600 ²

1,530

5,775

11,295 ²

3,060

2,040 2

1,250

60,000

18,500 ²

6,028

12,500

30,000 ²

2,000

5,000

15,000 ²

15,000

7,500

15,000 ²

50,000

8,500

20,000 ²

2,000 2,000 4,35

5,000 ²

8,250

2,500

7,500 2

1,500 4

1,545 1

1,500

1,200

22,500 5

10,300 1,2,14

10,000 ²

1,200

6,000

10,000 ²

1,500

25,000

40,000 ²

15,000 19

2,000

20,000

40,000 16

25,000 10

10,000

10,300 1

1,500

30,900¹

3,090 1,2

20,000

1,500

5,000

20,000 ²

80,000 72 7,800

20,600 1,2

1,000 1,500

7,000

6,000 6,000 16

6,000

2,000 3,000

1,000

3,500

1,000 28,875

20,000 49

1,500

Options

30,000 37,41

1,000

5,000

6,500

11,000 ²

1,500 60

20,000 60

5,000 60

1,500 60

8,000 60

15,000 2,60

2,500 4

5,000 4

2,500 4

10,000 4

20,000 ²

1,400

6,000

1,400

15,000

4,000

7,500 2

15,000²

1,000

5,000

15,000 ²

1,250

6,000

10,000 ²

15,000

25,000 ²

20,600 1

10,300 1,2,4

20,600 1,2,4

X X

5,000

15,000

25,000²

5,000

10,000²

5,000

10,000²

10,000

1,500 1,000 1,500 4 1,500

40,000

1,500

5,000 4 1,500

1,500

2,500 2

1,000

1,500 2

1,500 4

2,000 2,4

7,500 33

11,000 4 20,000 2,4,5

1,500

10,000

20,000 ²

1,000 112

10,000

15,000 ²

10,000

7,000

5,000 31

2,000

25,000 31 40,000 2,31

1,545

3,605

1,545

19,054

1,500

4,500

1,500

7,500

15,000 ²

1,500

4,000

7,000 2

1,500

8,000 34

20,000 ²

1,500 4

3,500 4

7,000 2,4

1,500 4

10,500 4

15,500 ²

1,600

5,000

10,000 ²

2,000

11,000

30,000 ²

2,000 35

50,000

1,500 1,000 32

7,500 2 4,000

8,000 2

3,000

2,750 2

1,500

8,500

20,000 ²

1,500

7,500

15,000 ²

3,000 2

1,000 32

6,000

2,000

12,000 33

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 2011 | 89

Yes

Canyon Services Group Inc.

271,310

Capstone Mining Corp.

650,677 1

42,875 60,000

30,000

Cardiome Pharma Corp.

84,794 1

NIC, LD

103,000 1

25,750 1

Cascades Inc.

3,724,000

EC, LD

Yes

50,909

Catalyst Paper Corporation

1,696,200

Yes

160,000

60,000

CCL Industries Inc.

1,622,411

EC, LD

Yes

69,620 4

Celestica Inc.

3,196,708 1

Yes

Celtic Exploration Ltd.

723,025

319,300 1

37,875

190,550 1

Cenovus Energy Inc.

22,095,000

Yes

478,750

228,750

Centerra Gold Inc.

1,438,572 1

Yes

45,000 71

CGI Group Inc.

4,607,191

EC, LD

Yes

Chartwell Seniors Housing Real Estate Investment Trust

2,676,767

Yes

Chemtrade Logistics Income Fund

485,911

Yes

1,211,877

Yes

EC, LD

Yes

Chorus Aviation Inc. Churchill Corporation (The)

876,099

CI Financial Corp.

3,265,266

Cineplex Galaxy Income Fund

1,291,668

Cinram International Income Fund

657,980 1

CML Healthcare Income Fund

Yes

80,000 51,52 91,250 104 220,000

50,000 4 32,500 51,52 40,000

50,000 104 110,000

82,500 101

75,000

50,000

140,000

40,000

932,806

80,000

Cogeco Cable Inc.

2,702,819

Yes

75,000

38,000 3

COGECO Inc.

2,744,656

Yes

75,000

38,000 3

Colossus Minerals Inc.

35,000 98

165,720

22,000

1,985,900

Yes

25,000

Corus Entertainment Inc.

2,059,255

NIC, LD

Yes

Cott Corporation

1,575,076 1

IC, LD

Yes

Cominar Real Estate Investment Trust

75,000 236,900 1

35,000

133,900 1,30

Craig Wireless Systems Ltd.

63,367

Crescent Point Energy Corp.

7,866,102

Crew Energy Inc.

998,070

Davis + Henderson Income Fund

933,521

Yes

65,000

30,000

2,193,568

Yes

215,920

128,320

Yes

Daylight Energy Ltd.

Yes

453,251 73

25,000 390,030 73

Denison Mines Corp.

981,048 1

NIC, LD

60,000

30,000

Detour Gold Corporation

1,230,264

EC, LD

20,000

Dollarama Inc.

1,311,131

CC, LD

30,000

Dorel Industries Inc.

2,158,839 1

Yes

40,000

Dundee Corporation

4,058,453

Yes

65,000

Dundee Precious Metals Inc.

813,352

Yes

45,000

2,316,824

NIC

Yes

193,600

57,440

DundeeWealth Inc.

2,419,651

NIC, LD

Yes

245,000

45,000

E-L Financial Corporation Limited

9,267,419

20,000

Dundee Real Estate Investment Trust

415,000 61

Eastern Platinum Limited

1,160,784 1

Eldorado Gold Corporation

3,893,306 1

Yes

225,000 103

Emera Inc.

6,329,100

Yes

220,000 102

60,000

Empire Company Limited

6,555,400

Yes

215,000

53,750 4

280,000

60,000 170,000 103

Enbridge Inc.

30,120,000

Yes

450,000 4

EnCana Corporation

35,040,600 1

Yes

591,100

371,100

5,835,172

Yes

220,000

115,000

Ensign Energy Services Inc.

2,244,220

NIC

Yes

Equinox Minerals Limited

3,339,564 1

Yes

300,000

Equitable Group Inc.

4,453,466

Yes

92,229

European Goldfields Limited

740,377 1

Yes

409,862

1,698,010

Enerplus Resources Fund

Evertz Technologies Limited Extendicare Real Estate Investment Trust

Yes

154,000 63

210,000 4

72,361

150,000 49,729

79,500 100 12,000 54,000 63

Fairfax Financial Holdings Limited

32,690,346 1

CC, LD

Yes

Finning International Inc.

3,613,600

NIC, LD

Yes

280,000

100,000

First Capital Realty Inc.

4,120,713

Yes

66,264

First Majestic Silver Corp.

321,468

First Quantum Minerals Ltd.

5,416,358 1

CC, LD

FirstService Corporation

1,163,427 1

Yes

87,500

35,000

Flint Energy Services Ltd.

983,622

Yes

185,000

100,000

Fort Chicago Energy Partners LP

3,118,579

91,486 96

61,486 4,96

* 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)

90 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

58,300

Yes

75,000

30,800

123,600 1

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

Board Meeting Fee

Lead Director Retainer Committee Retainer Committee Meeting Fee

1,000

2,000

1,200

7,500 20

3,090 ¹

Committee Chair Fee Stock Component

Regular: Retainer

Bold: Meeting Fees

5,000 ²

Req’d

Elect

15,000 ²

15,450 1 25,750 1,2,14

77,250 ¹

3,090

1,500

2,000

10,000 ²

2,000

1,500

10,000

20,000 ²

7,500 4

12,500 ²

10,300 1,14,28 20,600 1,2

2,000 4

5,000

2,000 2

12,500

2,000 4

2,575 1,99

2,500 2

X X

1,500

1,250

1,500

15,000

2,500

1,500 52

1,500

2,500

7,500

1,750 2

2,000

15,000 ²

6,000 ²

12,500 ²

12,500 51,52

1,500

5,000 2

1,500

3,000 10,000

1,500

7,500

15,000 ²

5,000

10,000 ²

20,000 ²

15,000 ² 5,000

10,000 ²

1,000

5,000

10,000 ²

1,000

1,500 2

6,000

7,500 ²

1,000

1,500 2

6,000

7,500 ²

1,000

2,000 2

5,000

10,000 ²

1,500

5,000

10,000 ²

1,500

1,000

6,000

10,000 ²

5,000

1,500 2

30,900 1,30

1,000 1,500

500

10,300 1,30 15,450 1,2,30

1,000 2

1,500

4,000 4,000

2,000

1,200

4,000

X X X

1,500

7,500 ² 10,000 ²

Options

8,000 ²

10,000

2,000

20,000

30,000 ²

1,200

15,000

1,200

5,000

10,000 ²

1,500

15,000

1,500

5,000

10,000 ²

1,000

5,000

3,000 2

1,500

5,000

10,000 ²

5,000 2

1,500

10,000

35,000 ²

1,500

20,000

1,500

2,000

127

15,000 14

17,480 14,47,48 22,480 2,48

127

1,500

5,000 2

1,500

15,000

1,180

3,250 ²

125,000

35,000 ²

10,000 41

1,500

8,000

12,000 ²

1,750

3,000

5,000 2

1,750

8,000

15,000 2,37

2,000 4

3,000 4

5,000 2,4

2,000 4

10,000

15,000 2,10

10,000 4

25,000 ²

X X X

X X

7,500

15,000 ²

1,500

10,000

20,000 23

1,250

5,000

10,000 ²

15,000

20,000 ²

5,000

15,000 ²

1,200 115

7,950 100

800

3,000

800

5,000

10,000 ²

2,000

5,000 2

2,000

5,000

25,000 ²

10,000 40,000

1,500

5,000

10,000 ²

1,500

10,000

20,000 ²

5,000 2

1,500

7,500 33

10,000 ²

1,000

1,200 2

20,600 ¹

5,500

6,000 2

3,000

1,000

10,000 62

15,000 5

1,500

1,500 2,500

X X

16,500 ²

20,600 1,2,14

1,750

5,000

1,500

5,000

10,000 ² 7,500²

1,500 4

7,500

15,000 2,4

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 91

Fortis Inc.

12,903,000

Yes

Fortress Paper Ltd.

290,766

Yes

42,000

Forzani Group Ltd. (The)

740,115

NIC, LD

Yes

319,700

68,940

Franco-Nevada Corporation

2,067,206 ¹

Yes

40,000

30,000

Freehold Royalties Ltd.

407,460

Yes

90,000

50,000

Gabriel Resources Ltd.

661,892

NIC, LD

Gammon Gold Inc.

843,970

Yes

190,000

75,000 175,000

75,000

40,000

75,000

Genesis Land Development Corp.

354,866

Genworth MI Canada Inc.

5,398,201

CC, LD

George Weston Limited

20,854,000

EC, LD

Yes

100,000

Gildan Activewear Inc.

1,360,836 ¹

Yes

206,000 ¹

72,100 ¹

Gluskin Sheff + Associates Inc.

117,337

Yes

50,000

GMP Capital Inc.

1,441,612

Yes

80,000

Goldcorp Inc.

29,032,610 ¹

NIC, LD

Yes

902,585 1,80

Yes

Golden Star Resources Ltd.

825,499 ¹

175,100 ¹

Grande Cache Coal Corporation

434,379

50,000

Great Basin Gold Ltd.

818,043

NIC

Great-West Lifeco Inc.

131,514,000

NIC

Yes

198,288

Groupe Aeroplan Inc.

5,146,052

Yes

200,000

Guyana Goldfields Inc.

165,464

H&R Real Estate Investment Trust

Harry Winston Diamond Corporation

128

55,000

50,000 255,565 1,80

113,300 ¹ 30,000

50,000 98,288 30 61,009

20,000 74

5,546,975

Yes

45,000

1,666,037 ¹

CC, LD

Yes

77,746

High River Gold Mines Ltd.

812,332

Home Capital Group Inc.

7,712,239

Yes

120,000

39,375

60,000

28,125

335,000

80,000

HudBay Minerals Inc.

2,173,086

Yes

Husky Energy Inc.

29,133,000

NIC

Yes

85,000

Iamgold Corporation

3,599,795 ¹

Yes

46,120

220,000

IESI-BFC Ltd.

3,492,202 ¹

Yes

200,000

IGM Financial Inc.

8,892,563

NIC

Yes

175,000

135,000 75,000

IMAX Corporation

359,561¹

NIC

200,000

20,000 111

Imperial Metals Corporation

440,041

IC, LD

Yes

76,000 122

40,000

Imperial Oil Limited

20,580,000

Yes

174,640 26 20,000 123

Indigo Books & Music Inc.

516,180

CC, LD

Yes

Industrial Alliance Insurance and Financial Services Inc.

20,102,000

Yes

200,000

45,000

Inmet Mining Corporation

3,262,576

Yes

325,000

115,000

55,000

45,000

InnVest Real Estate Investment Trust

Intact Financial Corporation Inter Pipeline Fund

1,800,033

NIC

12,148,900

Yes

225,000

60,000

4,712,200

NIC, LD

Yes

125,000

Ithaca Energy Inc.

578,706 ¹

Ivanhoe Energy Inc.

421,872 ¹

CC, LD

95,508

CC, LD

Yes

55,713 41,200 ¹

Ivanhoe Mines Ltd.

3,314,952 ¹

Jaguar Mining Inc.

596,654 ¹

Jean Coutu Group (PJC) Inc.

1,045,400

Yes

Just Energy Group Inc.

1,588,644

EC, LD

Yes

50,000

Keyera Facilities Income Fund

1,972,004

Yes

130,000

65,000

Yes

202,500

40,000

103,500 25,000

Kinross Gold Corporation

16,889,013 ¹

385,000

160,000

Kirkland Lake Gold Inc.

162,207

12,000

Labrador Iron Ore Royalty Corporation

680,791

50,000

25,000

Lake Shore Gold Corp.

1,124,318

Yes

75,000

50,000

Laurentian Bank of Canada

23,800,003

Yes

160,000

Linamar Corporation

1,807,600

Yes

30,000

60,000

Lions Gate Entertainment Corp.

1,755,591 ¹

CC, LD

Yes

41,200 ¹

Loblaw Companies Limited

15,919,000

EC, LD

Yes

100,000

Lundin Mining Corporation

3,948,390 ¹

NIC, LD

200,000

MacDonald, Dettwiler and Associates Ltd.

1,371,834

Yes

175,000

77,500 4 154,500 ¹

Magna International Inc.

14,314,940 ¹

NIC, LD

Yes

206,000 ¹

Major Drilling Group International Inc.

482,265

Yes

150,000

Manitoba Telecom Services Inc.

2,875,300

Yes

275,000 83

Manulife Financial Corporation

217,672,000

Yes

350,000

Maple Leaf Foods Inc.

2,996,795

NIC, LD

Yes

300,000

* 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)

92 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

90,000

50,000

120,000 83 110,000 4

120,000

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 4,500 124 1,500

1,500

Committee Chair Fee Stock Component

Regular: Retainer

Bold: Meeting Fees

15,000 5,000

10,000 ²

1,500

7,500 19

15,000 ²

10,000 7,000

14,000 ²

1,000 2

6,000

10,000 ²

10,000

128

5,000 2

2,000

5,150 ¹

1,288 ¹

1,500

1,288 ¹

4,000

10,000 ²

10,000 43

30,000 ²

25,000 41

9,270 ¹

20,600

15,450

1,2

15,000 39 1,5

25,000

5,000

103,000 ¹

128

5,000

50,000

15,000

7,500 14

2,14

10,000

20,600 1,2

10,300 ¹

20,600

10,000

2,000 30 1,500

1,500

2,000 23 3,000 2,30 2,500

5,000 2

2,000 30 1,500

30,000 ²

10,300 ¹

1,500

X X

1,545 ¹

Options

128

1,500

1,545 ¹

1,000

1,500

2,000

1,500

Elect

15,000

128

Req’d

15,450 1,14

1,2

15,000 ²

5,000 14,68

7,500 23

10,000 29

30,000 ²

7,500

3,000 19 50,000 28

15,000 ²

2,000 70

22,500

2,000 70

1,500

5,000

1,125

4,500

5,000

2,250

7,500 2

1,500

5,000

5,000 33,69

15,000 ²

10,000

30,000 ²

10,000 2

7,000

15,000 ²

2,500

3,000

X X

20,000 ²

1,750

5,000

1,200

8,000 ²

1,000

20,000 24 3,000 123

1,500

3,500 123

X X

1,500

3,000

10,000 ²

1,500

10,000

25,000 ²

1,000

10,000

12,500 ²

7,500 20,69

3,000 23

1,500

5,000

10,000 10,23

1,500

10,000

15,000 ²

10,000 7,500 123 15,000 2,123

5,000 2

1,500

3,000

2,000 123

X X

20,000 ²

2,000 2

10,000 14,19

1,500

2,000 123

16,875 ² 30,000 2,38

1,500

1,750

10,000 ²

X X X

1,030 ¹

41,200 ¹

1,030¹

10,300 1,2,27

2,000

150,000

2,000

20,000 19 40,000 2,97

2,000 2,000

50,000

7,500

4,500 39

9,500 39

17,500 ²

12,500 41

15,000 14

2,500

2,000

5,000

10,000 ²

5,000 2

2,000

5,000

15,000 ²

10,000 9,75

15,000

30,000

45,000 ²

15,000

20,000 23

30,000

70,000 23

2,000 14

5,000 2

6,000 14

10,000 ²

1,200

10,000

20,000 ²

1,500

5,000

15,000 ²

1,500 1,442 ¹ 2,000

6,000 8 1,000

1,500 1,442 ¹

10,300¹

2,000

10,000 43

30,000 ²

15,000 42

10,000

25,000 ²

20,000 5

10,000

17,500 ²

51,500 ¹ 36,050 1,39

4,000

5,000

1,500 4

257,500 ¹

5,000 2 15,000 2

2,500

10,000 5

5,000 4

1,500

2,500 2,4

15,450 1,2 25,000 41

25,750 ¹

2,060 ¹

2,000

5,000

15,000 ²

20,000

55,000 ²

2,000 4

53,560 ¹ 50,000

2,060 ¹

7,500

30,000

5,000 4 8,000 2,4,9,37

1,500 4

1,500

10,000 14 X

5,000 46 30,000 2,4,9,37

10,000

15,000 2

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 93

Martinrea International Inc.

931,122

EC, LD

Yes

60,000

MEG Energy Corp.

5,017,631

CC, LD

Yes

60,000 119

MEGA Brands Inc.

282,016 ¹

NIC

Yes

103,000 ¹

Melcor Developments Ltd.

809,253

EC, LD

Methanex Corporation

3,162,264 ¹

Yes

314,497 82

Yes

200,000 110

20,000 159,600 82

Metro Inc.

4,821,600

NIC, LD

450,000

47,500

Migao Corporation

387,669

CC, LD

15,000

Morguard Corporation

2,057,911

CC, LD

Yes

25,000

Mullen Group Ltd.

1,941,000

40,000

NAL Energy Corporation

1,612,864

Yes

105,000

National Bank of Canada

145,301,000

Yes

270,000 21

Neo Material Technologies Inc.

375,332

173,040 ¹

Nevsun Resources Ltd.

366,865 ¹

60,000

New Gold Inc.

2,821,081 ¹

Nexen Inc.

21,907,000

Yes

Niko Resources Ltd.

2,273,728 ¹

Yes

Nordion Inc.

570,575 ¹

Yes

248,098 ¹

69,468 ¹

493,430

70,000

70,000 75,190 ¹

50,000

50,000 145,650

25,000

North West Company Fund

620,482

Yes

145,000

42,500

Northern Property Real Estate Investment Trust

918,728

Yes

55,000

30,000

Northfield Capital Corporation

149,056

Northgate Minerals Corporation

932,648

Yes

135,000

35,000

NIC, LD

Yes

30,000 34,608 ¹

Northland Power Income Fund

1,898,864

NovaGold Resources Inc.

801,740

Yes

NuVista Energy Ltd.

1,597,068

Yes

OceanaGold Corporation

1,075,058 ¹

EC, LD

Onex Corporation

27,078,000

CC, LD

Yes

Open Text Corporation

1,765,445 ¹

EC, LD

Yes

Osisko Mining Corporation

2,064,266

Pacific Rubiales Energy Corp.

3,970,738 ¹

EC, LD

Pan American Silver Corp.

2,134,786 ¹

839,689

Yes

Pason Systems Inc.

424,172

Yes

Pembina Pipeline Corporation

2,806,408

Parkland Income Fund

101,695 1,109

126

12,000

30,000

76,206 1,108 178,050 1

46,350 1

126

103,000 ¹

100,000

72,100 ¹

226,213 117

88,763 117

180,000 107

89,800 36 105,000 107

Pengrowth Energy Trust

5,042,766

Yes

235,000

110,000

Penn West Energy Trust

13,368,000

Yes

250,000

125,000

Perpetual Energy Inc.

1,038,206

NIC

Yes

PetroBakken Energy Ltd.

5,768,795

Yes

50,000 92

Petrobank Energy and Resources Ltd.

6,402,586

Yes

65,000

50,000 93

Peyto Energy Trust

1,454,575

Yes

175,479

Pinetree Capital Ltd.

796,695

15,000

Potash Corporation of Saskatchewan Inc.

16,087,879 ¹

Yes

Power Corporation of Canada

146,066,000

Yes

Power Financial Corporation

143,255,000

Yes

100,000

Precision Drilling Corporation

4,296,788

Yes

220,000

100,000

Primaris Retail Real Estate Investment Trust

355,350 ¹

10,000

164,800 ¹ 100,000

1,967,834

Yes

110,000 89

60,000 89

Progress Energy Resources Corp.

2,932,459

Yes

139,997 88

Provident Energy Trust

1,399,804

Yes

170,000 87

100,000 87

249,158

164,158 120

Quadra FNX Mining Ltd.

2,919,102 ¹

NIC, LD

Yes

Quebecor Inc.

8,793,000

Yes

Questerre Energy Corporation

268,956

NIC

Reitmans (Canada) Limited

657,624

CC, LD

Research in Motion Limited

12,875,000

CC, LD

320,816

75,000

30,000

6,859,000

Yes

439,000 64

128,000 64

Richelieu Hardware Ltd. RioCan Real Estate Investment Trust

Ritchie Bros. Auctioneers Inc.

896,942 ¹

Rogers Communications Inc.

17,330,000

Rogers Sugar Income Fund

584,805

120

310,000 36,000

Yes

55,000

22,000 67

50,000

150,000

Yes

206,000 ¹

97,850 ¹

NIC, LD

Yes

109,200

NIC

Yes

25,000

20,000

RONA Inc.

2,975,077

Yes

250,000

53,000

Royal Bank of Canada

726,206,000

Yes

395,000

120,000

Rubicon Minerals Corporation

227,923

Yes

30,000

* 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)

94 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

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

Board Meeting Fee

1,500 1,500

Lead Director Retainer Committee Retainer Committee Meeting Fee

6,000

Bold: Meeting Fees

Req’d

Elect

Options

4,000 118

1,500

6,000

1,000

1,200

5,150 1

7,725 1,2

2,500

2,500 1,750

Committee Chair Fee Stock Component

10,000

1,200

Regular: Retainer

20,000

1,000

2,500 6

5,000 2

15,450 1,2

X X

1,200

5,000

2,500

5,000

1,750 6

7,500 ² 10,000 ²

1,000

1,500

4,000

8,000²

3,000

1,000

5,000

1,200

1,500

10,000

15,000 23

X X

1,500

1,000

10,300 1

1,500 2

8,000

1,200

15,000

20,000

37,500

45,000 ²

2,060 ¹

1,030 ¹

2,060 1,2

5,150 ¹

20,600 1,2

2,060 ¹

1,800

9,100

1,800

15,000 ²

14,400

19,700 ²

1,488¹

3,970 1,13

1,488 ¹

4,962¹

14,886 1,13

1,500

1,985¹

1,500

8,000

12,000 ²

1,500

10,000

15,000 ²

1,500

12,000²

3,000 2

1,500

6,000

12,000 ²

5,000

1,500

10,000

20,000 ²

1,184 ¹

1,500 1,400

15,000 7,500

4,000

6,000 2

6,386 1,14,19 10,506 1,2

1,400

7,500

5,150 1,81

41,200

4,635 ¹

7,725 1,77

10,300 ¹

8,240 ¹

25,750 1,2

1,030 ¹

10,300 ¹ 15,450 1,77

10,300 1,14

14,420 ¹

20,600 1,14

X X

77,250 ¹

10,300 ¹

126

36,050 1,2

126

2,060 ¹

15,000 ²

2,060 ¹

126

6,180 1,2

1,030 ¹

5,150 ¹

14,420 1,2

1,500

10,000

15,000 ²

3,090 1,19 2,500

1,000

1,200

10,000

18,000 ²

10,000 2

1,500

10,000

12,000 ²

20,000

1,500

7,500

15,000 ²

1,500

1,500 1,500

5,000 2 5,000 65

5,000

15,000 14

10,000 ²

5,000 14, 91

10,000 2

7,500 14,91

12,500 ²

5,000

10,000 2

7,500 14,91

12,500 ²

1,000

5,150 1,2,14

1,000

5,000 ²

1,545 1,15

10,300 ¹ 15,450 1,2,14

2,000

5,000

6,000 2

2,000

15,000

25,000 ²

250,000 28

2,000

5,000

6,000

2,000

15,000

25,000 ²

X X

1,250

7,500

15,000 ²

1,500

8,500

10,000 ²

7,500 90

1,500

7,500

12,000 ²

1,500

5,000

1,500

7,500

10,000 ²

35,000

1,500

10,000

35,000 ²

2,000

8,000

10,000 ²

1,500

2,000

3,000

2,500 2

3,000 2

40,000

15,000 94

25,000 23

2,000

7,500

2,500

2,000

5,000 5

15,000 ²

1,545 ¹

10,300 ¹

15,450 1,2

2,000

3,000 2,14

74,600

1,500

2,000

10,000

1,000

1,500 2

10,000 ²

2,000 2

1,500

2,500

4,000 2

1,500

5,000

10,000 ²

2,000

3,000

6,000 2

1,500

10,000

50,000²

15,000

600

3,465

10,000²

600

5,000 ²

1,500

30,000 ²

20,000 14

25,000 9,10

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 95

Russel Metals Inc.

1,437,100

Yes

175,000

55,000 4

Saputo Inc.

3,664,309

NIC, LD

Yes

500,000

142,520

Savanna Energy Services Corp.

1,052,368

Yes

155,000

125,000

Sears Canada Inc.

2,509,800

NIC, LD

Yes

60,000

Semafo Inc.

599,532 ¹

EC, LD

Yes

20,000

Senvest Capital Inc.

515,631

Shaw Communications Inc.

10,153,965

EC, LD

Yes

47,000 65,000 4

ShawCor Ltd.

1,231,182

EC, LD

Yes

200,000

100,000 4

Sherritt International Corporation

10,721,500

CC, LD

Yes

50,000 57

Shoppers Drug Mart Corporation

7,122,210

Yes

240,000

Silver Standard Resources Inc.

1,299,878 ¹

Yes

226,516

Silver Wheaton Corp.

2,714,121 ¹

Yes

203,578 78

113,161 78

Sino-Forest Corporation

5,900,904 ¹

CC, LD

Yes

20,000 79

SNC-Lavalin Group Inc.

8,603,223

Yes

280,000

110,000

Sprott Inc.

342,037

EC, LD

50,000

Stantec Inc.

1,323,508

86,752

Stella-Jones Inc.

521,633

NIC, LD

Sun Life Financial Inc.

120,859,000

Yes

345,000

110,000

Suncor Energy Inc.

70,169,000

Yes

499,671

210,532

SunOpta Inc.

627,974 ¹

NIC

Superior Plus Corp.

2,449,600

CC, LD

SXC Health Solutions Corp.

840,798 ¹

Talisman Energy Inc.

24,193,000

Taseko Mines Limited

687,612

Teck Resources Limited

29,209,000

TELUS Corporation Tembec Inc.

Yes

161,752 50,000

Yes Yes

155,272 1,85 450,000 4

120,000

103,258

30,000

30,000 57,000 17

129,522 1,85 150,000 4

NIC

NIC, LD

19,599,000

Yes

360,000

139,000

1,104,000

Yes

140,000 113

50,000 113 202,858 1,95

Yes

659,132

50,000 161,177

Thompson Creek Metals Company Inc.

2,387,231 ¹

CC, LD

Yes

Thomson Reuters Corporation

36,596,930 ¹

NIC

Yes

Tim Hortons Inc.

2,481,516

EC, LD

Yes

TMX Group Inc.

3,281,919

Yes

275,000

80,000

Toromont Industries Ltd.

2,269,238

CC, LD

Yes

210,000 22

40,000

618,000 1,44

154,500 ¹ 90,000

Toronto-Dominion Bank

619,545,000

Yes

300,000

Torstar Corporation

1,573,199

Yes

265,000

45,000 4

TransAlta Corporation

9,893,000

Yes

305,160

115,280

Transat A.T. Inc.

1,189,458

EC, LD

Yes

TransCanada Corporation

46,589,000

Yes

360,000

142,000 4

Transcontinental Inc.

2,594,700

EC, LD

Yes

35,000

TransForce Inc.

1,623,600

CC, LD

Yes

42,000

Transglobe Energy Corporation

352,158 ¹

Trican Well Service Ltd.

1,450,722

EC, LD

Yes

156,821

127,372

Trinidad Drilling Ltd.

1,538,593

Yes

160,295

140,295

TVA Group Inc.

514,277

180,000

30,000

Uni-Select Inc.

831,210 ¹

90,000

35,000

Uranium One Inc.

3,470,129 ¹

Yes

110,000

Valeant Pharmaceuticals International Inc.

11,118,970 ¹

Yes

412,000 1,106

Valener Inc.

3,666,600

Vector Aerospace Corporation

432,349

NIC

Velan Inc.

521,230

Vermilion Energy Inc.

2,581,716

Viterra Inc.

6,116,882

515,338

Wajax Income Fund

Yes

50,000

55,000

165,000 11

42,000

35,000

60,000

288,400 1,106 25,000 30,000

286,983 66

167,279 66

Yes

275,000

115,000

Yes

145,000

50,000

Yes

50,000

West Fraser Timber Co. Ltd.

2,815,000

CC, LD

Westaim Corporation, The

1,270,426

WestJet Airlines Ltd.

3,562,844

NIC, LD

Westport Innovations Inc.

281,588¹

579,186

Winpak Ltd.

562,821 ¹

NIC

Yamana Gold Inc.

10,608,218 ¹

CC, LD

Yes

155,000

Yellow Media Inc.

9,300,248

Yes

110,000

Westshore Terminals Income Fund

* 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)

96 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

110,000

40,000

Yes

400,000 84

30,000

Yes

165,612 ¹ 125,000 260,000

108,962 ¹ 22,500

50,000

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

Board Meeting Fee

Lead Director Retainer Committee Retainer Committee Meeting Fee

2,000 4

Committee Chair Fee Stock Component

Regular: Retainer

Bold: Meeting Fees

Req’d

Elect

2,000 4

6,000

12,000 ²

8,600 4,37

4,500 2

1,500

7,500

53,760 ²

1,500

10,000

20,000 ²

1,500

25,000

5,000

1,500

10,000

20,000 ²

1,250

15,000

1,250

5,000

10,000 ²

1,500

68,760

3,000

Options

1,500 4

75,000

3,000 4

1,500 4

10,000 4

40,000 ²

2,000

20,000

5,000

10,000

2,000

10,000 4

20,000 ²

10,000

20,000

2,000 56

2,4

5,000

15,000 2,10

10,000

15,000 ²

25,000 ²

5,000

1,500

30,000

5,000

10,000 2

15,000 19

20,000 10

1,500

7,500

20,000 ²

1,500

8,000

16,000 ²

1,500

30,000

1,500

5,000

20,000 ²

1,800

6,000

12,000 ²

2,250 2

1,500

5,000

1,500

5,000

10,000 2

5,000 ²

1,500

20,000

6,000

1,500

10,000

25,000 ²

1,500

750

7,500

20,000 ²

1,500

14,000

19,000 ²

1,500

35,000

5,000

5,150 1,14

1,700

6,000

7,500 9

7,210 1,2 10,000

15,000 4

1,500

100,000

6,000

1,500

3,000

2,000

2,500

1,545 ¹

15,000 2

1,500

7,500

83,070 ¹

2,000

3,000 2

2,000 1,545 ¹

X X

20,000 ²

6,000

15,000 ²

5,000

25,000 ²

15,000 20

25,750 1,2

7,210 ¹

20,600 ¹

3,000

1,500

6,000

12,000 ²

1,500

3,000

1,500

10,000

20,000 13

4,000

2,000

9,000

18,000 ²

15,000 12

25,000

40,000 ²

X X

2,000

33,000

1,500 4

10,000

3,000 4

1,250 4

6,500 4

10,000 ²

1,500

15,000

25,000 ²

1,500

3,000 4

10,000 7

1,500 4

3,000

5,000 2

4,500 4

1,500 4

10,000 4

1,500

3,000

1,500

6,000

10,000 2,5

1,750

40,000

4,500

1,750

10,000

2,500

4,000 2

6,000

3,000

1,200 1,500

20,000

1,500

1,200

5,000²

1,500

7,500

1,500

5,000

8,000 ²

3,000

4,250 2

2,000 2

1,500

1,500 1,000

15,000 ²

25,000²

10,300 1,106 15,450 1,13,106 12,875 1,14,105,106

15,450 1,106

25,750 1,13,106

20,600 1,14,105,106

2,000

1,500

7,500

1,500

3,000

1,500

5,000

1,500

7,000

15,000 ²

1,500

4,000

1,500

10,000

20,000 ²

15,000 5

1,500

6,000

12,000 ²

10,000 5

1,500

2,000

1,500

10,000

5,000

4,000

15,000 ²

1,250

20,000

7,725 1,19,86

8,755 1,2,5

1,250

2,000

5,000 2

25,000

5,500

7,000 15,450 ¹

1,250

10,000 ² 7,500 ²

15,000 ² 20,600 1,2

X X X

15,000 ²

1,500

6,000

1,500

10,000

2,000 2,14

8,250 2

2,000

30,000

1,500

1,000

12,000 ²

1,500 2,000 2

51,000

7,500 ²

8,000

1,500

15,000 5

25,000 ²

3,000

1,500

6,000 2

30,000 2,9

10,300 1,14 15,450 1,2

1,700

2,4

11,000

12,500 ² 15,000 2,14

20,000 ²

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 97

Endnotes 1

Converted from U.S. Dollars at 1.03.

Audit Committee.

A Director who serves on the Boards of both Cogeco Cable and Cogeco Inc. receives a lesser annual retainer from each entity in the amount of $24,000.

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

Human Resources and Compensation Committee.

Members of the Executive Committee do not receive an annual retainer and their attendance fee is $2,000 when the meeting is held in person and half that amount when the meeting is held by telephone.

This amount is paid to each of the three lead directors who are also chairs of one committee each.

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

Risk Committee.

Human Resources Committee.

Includes compensation for serving on one committee.

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

Finance and Audit Committee.

Compensation Committee.

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

Audit and Conduct Review Committee.

$27,000 of this amount represents the value of RSUs granted in 2010.

$22,518 of this amount represents the value of Restricted Units granted to Directors in 2010.

Governance and Nominating Committee.

Human Resources and Corporate Governance Committee.

In addition to this amount, the Bank reimburses the Chairman up to $25,000 annually for accommodation expenses in serving as Chairman of the Board and for his business promotion activities on behalf of the Bank.

Amount stated is retainer amount paid to the Chair. Chair is also CEO of the company and receives additional compensation as an Officer.

Audit and Risk Management Committee.

This amount is paid as a retainer for membership on all board committees.

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.

$74,640 of this amount represents the value of Restricted Stock Units awarded to Directors in 2010; 50% of RSUs vest three years from date of grant and the remaining 50% vests on the seventh anniversary of the grant date.

This amount is paid for acting as the Chair of the Nominating and Corporate Governance Committee as well as Chair of the Compensation Committee.

Executive Committee.

Conduct Review Committee.

Amounts paid in the currency of the country of residence of the Director.

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 non-committee chair appointed to the Corporate Governance Committee receives a committee member retainer.

$2,000 for non-scheduled meetings.

Corporate Governance and Compensation Committee.

Reserves, Marketing Operations and Environmental, Health and Safety Committee.

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

$69,800 of this amount represents the value of RSUs awarded in 2010; RSUs vest over a three year period.

Management Resources and Compensation Committee.

This amount is paid for acting as the Chair of the Audit Committee for both Home Capital Group Inc. and Home Trust Company.

Health and Safety and Environmental Committee.

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.

Governance Committee.

Environmental Committee.

Pension Committee.

Deputy Chairs of the Board receive US$309,000.

In addition to this amount, the Directors received Restricted Share Units ranging in value between $80,124 and $212,630. RSUs vest over a three year period with one-third vesting annually.

Conduct Review and Ethics Committee.

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Governance and Environmental Committee.

This amount includes $12,480 of Deferred Trust Units; DTUs vest over a five year period with one-fifth of the DTUs vesting each year.

Audit, Finance and Risk Committee.

$82,818 of this amount represents the value of Restricted Trust Units (RTUs) awarded in 2010; RTUs vest over a three year period.

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 2010.

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.

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.

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.

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 $105,922 and $128,463.

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

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

$16,500 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.

$130,272 of this amount ($196,640 in the case of the Chair) represents the grant date fair value of Restricted Shares granted under the RSPIP; RSUs vest over a three year period.

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.

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.

Human Resources, Governance and Nominating Committee.

$19,000 of this amount represents the value of Unit Appreciation Rights granted to Directors in 2010. UARs vest after 3 years.

$88,000 of this amount ($264,000 in the case of the Chair) represents the value of the Restricted Equity Units granted in 2010; REUs vest three years from the date of issue.

Acquisitions & Divestments Committee.

$142,279 of this amount ($176,983 in the case of the Chair), represents the value of share awards granted to Directors in 2010; share awards vest over three years.

Directors received between $22,000 and $28,000 in fees; however, no detail on retainers, meeting fees, etc. was provided.

Technical Committee.

Investment Committee.

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.

In addition to this amount, directors also receive annually a payment of 40% of the retainer, chair and meeting fees payable in DSUs.

Lead Independent Director was also Chair of Audit Committee and Chair of Pension Committee and this amount reflects those additional responsibilities.

Restricted Shares with a three year vesting period were awarded to directors in 2010; amounts ranged between $360,030 and $399,251.

Cash retainers of $20,000, $25,000 and $30,000 were paid to three independent directors of the Company.

Vice Chair of the Risk Committee receives an annual fee of $2,500.

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.

Audit and Corporate Governance Committee.

$73,161 of this amount ($113,578 in the case of the Chair) represents the value of Restricted Share Rights granted to directors in 2010.

In addition to this amount, directors also receive a grant of DSUs equal to (but not in substitution for) the amount of annual retainer fees earned by the respective non-executive directors (excluding retainer fees for acting as Lead Director) and reflecting the amount of time spent on board-related matters.

$152,565 of this amount represents the value of RSUs granted to directors in 2010. RSUs vest over a three year period.

Environmental, Health, Safety and Sustainability and Technical Committee.

$119,600 ($164,497 in the case of the Chair) of this amount reflects the long term incentive received by directors in 2010; 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.

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.

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).

$93,472 of this amount represents the value of RSUs granted in 2010; RSUs vest in one-fourth increments annually on each grant date anniversary.

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Strategy Committee.

$70,000 of this amount ($100,000 in the case of the Chair) represents the value of director restricted trust units awarded to directors in 2010; DRTUs vest at the end of a three year period.

$99,997 of this amount represents the value of Restricted Units Awards provided to directors in 2010.

$30,000 of this amount represents the value of restricted units awarded to directors in 2010.

Distributions Committee.

Reserves Committee.

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 that vest in the fourth year from the date of grant. In 2010, directors received a grant of deferred shares and incentive shares - awards ranged between $41,393 and 53,658.

Compensation, Nominating and Governance Committee.

$141,058 of this amount represents the value of Restricted Share Units awarded to directors in 2010.

$31,486 of this amount represents the value of the LTIP award made for the 2008 plan year.

Compensation and Benefits Committee.

In addition to this amount, directors received payments in connected with prior SARs awards. Amounts ranged between $58,026 and $81,236.

Attendance fees are paid per day of meetings, regardless of whether a director attends more than one meeting in a single day.

100 Converted from pounds at 1.59. 101 Directors were awarded an additional $15,000 in 2010 in recognition of additional services rendered this past year as they were required to attend 14 meetings in 2010 rather than the average 6. 102 Includes $35,000 cash paid for participation on the Board of Nova Scotia Power Inc. 103 At the discretion of the board, each independent director may receive an annual grant of stock options, DSUs or a combination of stock options and DSUs to a maximum of $100,000. This amount has been included. 104 Directors also receive an annual grant of travel reward miles. 105 Transactions Committee. 106 Compensation amounts reflect the changes in compensation that occurred in September 2010 following the Company’s merger. 107 $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. 108 The Company paid its directors amounts ranging between $76,206 and $97,978; details of compensation breakdown were not provided. 109 The Chair was paid an additional amount of US$91,746 in 2010 for stepping in as Executive Chair upon the departure of the Company’s CEO. 110 The Chair is entitled to a salary of $200,000 per year; however, the Chair elected not to receive an direct compensation for his services. Instead, the Corporation has agreed to donate, on behalf of the Chair, an amount of $200,000 to children’s charities registered in Canada and the U.S. 111 Directors may elect to receive stock options in lieu of their cash annual retainer. 112 $800 if committee meeting is held on the same day as a board meeting. 113 The annual board retainer for directors is $100,000 ($280,000 for Chair); however, in April 2008, Directors received a front-loaded grant of DSUs representing 50% of their annual board retainer for the years 2008 to 2010. 114 Three outside directors received compensation with total amounts ranging between $7,800 and $10,200. 115 $600 if meeting is less than 2 hours in duration. 116 Directors receive an annual DSU grant of $17,500 plus 110% of the amount of the portion of the director’s retainer elected to be received in DSUs. 117 $63,763 of this amount ($127,513 in the case of the Chair) represents the value of RSUs awarded to directors in 2010. RSUs vest over a three year period. 118 One of the directors receives an $8,000 committee membership fee. 119 $35,000 of this amount represents the value of RSUs granted to directors in 2010; RSUs vest over a three year period. 120 $99,158 of this amount represents the value of RSUs granted to directors in 2010; RSUs vest one year after the grant date. 121 $15,000 of this amount represents attendance fees at meetings. 122 The Chair is paid $6,333/month for acting as Chair of the Company. A minimum of 14 days per month is spent on Company business. For any additional days required, the Chair is paid $400/day. 123 All compensation received by Indigo Directors for Board service is paid through equity-based compensation. There is no cash compensation paid to Directors. 124 Directors are paid this amount for each two day, scheduled Board meeting attended in person. $1,500 is paid for each unscheduled board meeting attended. 125 This amount reflects a discretionary bonus that was paid to each director in 2010. No fees were paid to Directors. 126 Breakdown of directors’ compensation was not provided; total fees received by individual directors ranged between $63,500 and $119,125. The Chair received total fees of $171,500. 127 Additional information regarding meeting fees, committee retainers and committee chair retainers paid was not provided. 128 Breakdown of directors’ compensation was not provided; total fees received by individual directors ranged between $5,000 and $96,417.

100 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

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. From our nearly 80 offices in 40 countries, we assist organizations in attracting, developing, retaining and sustaining their people. Services range from executive recruitment to leadership development programs, enterprise learning, succession planning and recruitment process outsourcing. More clients around the world trust Korn/Ferry than any other firm to deliver and develop the best executives to run their organizations, a responsibility we take seriously and work every day to meet with unsurpassed integrity and results.

, Korn/Ferry Canada s Board Services Practice Korn/Ferry’s Global Board Services team fields a core group of Board search specialists who focus their practice activity on recruiting directors for corporations. They are supported by senior professionals across the firm who provide in-depth local knowledge about current and “next generation” director candidates. In Canada, the Korn/Ferry Board Services Practice assists companies in the identification, qualification and attraction of directors from Canada, the United States and elsewhere around the world. It is Korn/Ferry’s mission to ensure its clients recruit Board members who have the ability and time to make a substantial contribution, and who have a strong track record of achievement.

Canada - Board Services Practice Leaders

•

Toronto 416-365-4043 Jeffrey Rosin, President, Canada, jeff.rosin@kornferry.com

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Calgary 403-215-2553 Bob Sutton, Office Managing Director and Senior Client Partner, bob.sutton@kornferry.com

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Montréal 514-788-3086 Jean-Claude Lauzon, Senior Client Partner, jean-claude.lauzon@kornferry.com

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Vancouver 604-608-6500 Kevin McBurney, Office Managing Director and Senior Client Partner, kevin.mcburney@kornferry.com

•

Louise Wells, Director of Research and Analysis, 2011 Corporate Board Governance and Director Compensation Report (Calgary 403-269-3277)

Corporate Board Governance and Director Compensation in Canada A Review of 2011 | 101

Korn/Ferry International The Americas Atlanta Buenos Aires Chicago Houston Los Angeles Minneapolis New York Princeton San Francisco Stamford Washington, D.C.

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For more information on the Korn/Ferry International family of companies, visit www.kornferry.com.

102 | Corporate Board Governance and Director Compensation in Canada A Review of 2011

, 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. Patrick O’Callaghan has been the primary author of the Governance and Compensation Report since 1992, including this year’s Special Survey Report - Retirement Age and Term Policies – A New Focus.

, Patrick O Callaghan and Associates Consulting Services •

Undertaking board, board chair, committee, committee chair, and individual director performance evaluations with a focus on practical methodology and actionable results.

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Defining and clarifying board roles and responsibilities that focus on optimizing the effectiveness of the board.

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Providing director recruitment and board composition strategy (in partnership with Korn/Ferry International).

Patrick O’Callaghan is a frequent speaker and seminar leader on corporate governance issues. He has first-hand experience as a director of public and private Canadian corporations and several not-for-profit organizations. Mr. O’Callaghan is Board Chair of Women On Board and a member of the Advisory Committee on Senior Level Retention and Compensation for the Treasury Board of Canada. Patrick O’Callaghan and Associates has completed hundreds of board governance assignments throughout Canada and the United States. The firm, in partnership with Korn/Ferry International, annually produces Canada’s most comprehensive governance review, Corporate Board Governance and Director Compensation in Canada – A Review. 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 2011 | 103

Women On Board Women On Board promotes the appointment of women to Canadian corporate boards. A not-for-profit organization established in 2007, our founders are Patrick O’Callaghan and Associates, Richard Ivey School of Business, and Korn/Ferry International Canada - each having played unique and integral roles to the formation and ongoing development of Women On Board. The flagship Women On Board Mentoring Program gives senior executive women with high potential for board membership the opportunity to be mentored by leading Canadian board chairs and CEOs. It aims to develop a cadre of women to add to Canada’s talent pool of potential director candidates, to facilitate the appointment of Women On Board mentees to Canadian corporate boards, and to reinforce the commitment of leading Canadian companies to having more women on boards. Launched in 2007 with 5 mentoring pairs, the program has successfully grown to its present 25 mentoring pairs and 29 alumni members. And now, as part of its commitment to advance its mentees and alumni, Women On Board also hosts the WomenOnBoard Knowledge Series and publishes WomenOnBoard Source. Women On Board is able to provide these important initiatives because of the invaluable contributions of its mentors and the generous funding and support of all its sponsors. Further information about Women On Board can be found at www.womenonboard.ca or by contacting: Thea M. Miller, Managing Director Women On Board Suite 3300, Four Bentall Centre, 1055 Dunsmuir Street  PO Box 49206 Vancouver, British Columbia V7X 1K8 Tel: 604-685-5277  Fax: 604-684-1884  Email: info@womenonboard.ca

104 | Corporate Board Governance and Director Compensation in Canada A Review of 2011