Information Circular - Industrial Alliance

Transcription

Annual
Meeting
of Shareholders and
Participating Policyholders
February 29, 2016
Dear Shareholder:
Dear Participating Policyholder:
As Chairman of the Board of Directors of Industrial Alliance Insurance and Financial
Services Inc., it gives me great pleasure to invite you to our upcoming Annual Meeting.
Enclosed you will find all the information you need with respect to this meeting, which
will be held at the Quebec City Convention Centre, 1000 René-Lévesque Boulevard East,
Quebec City, Quebec, on Thursday, May 5, 2016, at 2:00 p.m.
As a shareholder or participating policyholder, you will be called upon during the course
of the meeting to vote on certain matters specified in this Circular. If you are unable to
attend the meeting, please vote by completing the proxy form included with this mailing.
Your participation in the activities of our Company is important.
I would like to thank you for the confidence you have shown in our Company and I look
forward to seeing you at our Annual Meeting in May.
John LeBoutillier
Chairman of the Board
NOTICE OF THE 2016 ANNUAL
NNUAL MEETING OF SHA
SHAREHOLDERS
REHOLDERS AND PARTICIPATING
PARTIC
POLICYHOLDERS
Notice is hereby given to the Shareholders and Participating Policyholders of Industrial Alliance Insurance and
Financial Services Inc. (“iA
iA Financial Group
Group” or the “Company”)
”) that an Annual Meeting of Shareholders and
Participating Policyholders (the “Meeting
Meeting”) will be held at the Quebec City Convention
on Centre, 1000 RenéRené
Lévesque Boulevard East, Quebec City, Quebec, on Thursday, May 5, 2016, at 2:00 p.m. (local time), for the
purposes listed below, and which are more fully described in the accompanying management information circular
of the Company (the “Circular”)
”) dated February 29, 2016:
1)
to receive the consolidated financial statements of the Company for the year ended December 31, 2015,
and the report of the external auditor thereon;
2)
to elect directors for the ensuing year;
3)
to appoint the externall auditor for the ensuing year;
4)
to vote on an advisory resolution on the Company’s approach to executive compensation;
5)
to examine the proposals submitted by shareholders, set forth in Schedule C of the Circular; and
6)
to transact such other business as may properly be brought before the Meeting or adjournment or
adjournments thereof.
Jennifer Dibblee
Corporate
rporate Secretary
Quebec City, Quebec
February 29, 2016
HOLDERS OF COMMON SHARES AND PARTICIPATING POLICYHOLDERS WH
WHO
O DO NOT EXPECT TO BE PRESENT AT
THE MEETING ARE REQUESTED TO COMPLETE, DATE, AND SIGN THE ACCOMPANYING FORM OF PROXY AND TO
RETURN IT TO COMPUTERSHARE INVESTOR SERVICES INC. IN THE ENVELOPE ENCLOSED FOR THAT PURPOSE.
IN ORDER TO VOTE AT THE ANNUAL MEETIN
MEETING
G OR AT ANY ADJOURNMENT OR ADJOURNMENTS THEREOF, THE
COMPLETED FORM OF PROXY MUST BE MAILED SO AS TO REACH, OR MUST BE DEPOSITED WITH, THE COMPANY’S
TRANSFER AGENT AND REGISTRAR, COMPUTERSHARE INVESTOR SERVICES INC., 100 UNIVERSITY AVENUE, 9TH
FLOOR, TORONTO,
TO, ONTARIO, M5J 2Y1, AT LEAST TWO DAYS PRIOR TO THE COMMENCEMENT OF THE MEETING
(I.E., NO LATER THAN 5:00 P.M. [LOCAL TIME] ON MAY 2, 2016) OR ANY ADJOURNMENT OR ADJOURNMENTS
THEREOF.
Note – The masculine form used in this document designates both women and men.
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TABLE OF CONTENTS
INFORMATION CIRCULAR FOR THE SOLICITATION OF PROXIES....................................................................................................................... 5
APPOINTMENT AND REVOCATION OF PROXIES.............................................................................................................................................. 5
EXERCISE OF VOTE BY PROXY......................................................................................................................................................................... 5
OUTSTANDING VOTING SHARES .................................................................................................................................................................... 6
PRINCIPAL HOLDERS OF SECURITIES .............................................................................................................................................................. 6
PARTICIPATING POLICIES ............................................................................................................................................................................... 6
ELECTION OF DIRECTORS ............................................................................................................................................................................... 6
Process .......................................................................................................................................................................................... 6
Majority Voting ............................................................................................................................................................................. 6
Board Diversity .............................................................................................................................................................................. 7
Retirement Policy .......................................................................................................................................................................... 7
Nominees ...................................................................................................................................................................................... 7
Shareholders’ Directors Nominated for Election ........................................................................................................................... 9
Policyholders’ Directors Nominated for Election ......................................................................................................................... 14
Board Member Areas of Expertise ............................................................................................................................................... 17
Meeting Attendance of Directors with Board Tenures Ending in 2016........................................................................................ 18
Compensation of Directors .......................................................................................................................................................... 18
Director Orientation and Continuing Education .......................................................................................................................... 19
Director Share Ownership Policy ................................................................................................................................................. 20
Liability Insurance........................................................................................................................................................................ 20
CORPORATE GOVERNANCE...........................................................................................................................................................................20
REPORT OF THE INVESTMENT COMMITTEE ...................................................................................................................................................21
REPORT OF THE ETHICS COMMITTEE ............................................................................................................................................................21
REPORT OF THE AUDIT COMMITTEE .............................................................................................................................................................21
EXECUTIVE COMPENSATION .........................................................................................................................................................................23
LETTER TO SHAREHOLDERS AND POLICYHOLDERS.........................................................................................................................................23
(i)
(ii)
(iii)
(iv)
(v)
(vi)
(vii)
Our Compensation Policy .................................................................................................................................................. 23
Comments on 2015 Results ............................................................................................................................................... 24
Risk Management ............................................................................................................................................................. 24
Succession Planning .......................................................................................................................................................... 25
Compensation of the President and Chief Executive Officer ............................................................................................. 25
Amendments in 2016 ........................................................................................................................................................ 25
Conclusion ......................................................................................................................................................................... 26
REPORT OF THE HUMAN RESOURCES AND GOVERNANCE COMMITTEE .........................................................................................................27
COMPENSATION DISCUSSION AND ANALYSIS ...............................................................................................................................................27
Compensation Governance ......................................................................................................................................................... 27
Representation of Women in Executive Management ................................................................................................................ 28
Independent External Advisors .................................................................................................................................................... 28
Compensation Risk Management................................................................................................................................................ 28
Compensation Components ........................................................................................................................................................ 28
(i)
Base Salary........................................................................................................................................................................ 29
(ii)
Annual Bonus (Non-equity-based annual incentive plan ) ................................................................................................ 30
(iii) Deferred Share Units......................................................................................................................................................... 30
(iv) Mid-Term Incentive Plan ("MTIP") .................................................................................................................................... 30
(v)
Long-Term Incentive Plan (Stock Option Plan) .................................................................................................................. 31
(vi) Pension Plan Benefits ........................................................................................................................................................ 32
Comparator Group ...................................................................................................................................................................... 32
Executive Share Ownership Guidelines ........................................................................................................................................ 32
Recoupment (Clawback) Policy.................................................................................................................................................... 33
Compensation of Named Executive Officers................................................................................................................................ 33
PERFORMANCE GRAPH.................................................................................................................................................................................35
STATEMENT OF COMPENSATION OF NAMED EXECUTIVE OFFICERS ...............................................................................................................36
Summary Compensation Table.................................................................................................................................................... 37
Outstanding Awards as at the End of the Last Financial Year ..................................................................................................... 37
Incentive Plan Awards – Value Vested or Earned During the Year .............................................................................................. 39
Payment of PSUs Awards Granted in 2013.................................................................................................................................. 39
Calculation of the Performance Coefficient ................................................................................................................................. 40
Options Exercised ........................................................................................................................................................................ 40
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Retirement Plan for Named Executive Officers ........................................................................................................................... 40
Termination and Change of Control Benefits .............................................................................................................................. 41
Detailed Tables of Compensation of the Named Executive Officers ............................................................................................ 41
LONG-TERM INCENTIVE PLAN (STOCK OPTION PLAN)....................................................................................................................................43
LOANS TO SENIOR EXECUTIVES AND DIRECTORS...........................................................................................................................................44
ADVISORY VOTE ON EXECUTIVE COMPENSATION .........................................................................................................................................44
SHAREHOLDER PROPOSALS ..........................................................................................................................................................................45
APPOINTMENT OF THE EXTERNAL AUDITOR .................................................................................................................................................45
INSIDERS AND OTHERS WITH AN INTEREST IN MATERIAL TRANSACTIONS .....................................................................................................46
ADDITIONAL INFORMATION .........................................................................................................................................................................46
APPROVAL OF THE DIRECTORS .....................................................................................................................................................................46
SCHEDULE A – STATEMENT OF CORPORATE GOVERNANCE PRACTICES ..........................................................................................................47
SCHEDULE B – BOARD OF DIRECTORS CHARTER ............................................................................................................................................52
SCHEDULE C – SHAREHOLDER PROPOSALS ....................................................................................................................................................54
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INFORMATION CIRCULAR FOR THE SOLICITATION OF PROXIES
This Information Circular (the “Circular”) is provided in connection with the solicitation of proxies by the
management of Industrial Alliance Insurance and Financial Services Inc. (“iA Financial Group” or the “Company”) for use at
the Annual Meeting (the “Meeting”) of holders (the “Shareholders”) of common shares (the “Common Shares”) and
participating policyholders (the “Policyholders”) of the Company to be held at the Quebec City Convention Centre, 1000
René-Lévesque Boulevard East, Quebec City, Quebec, on Thursday, May 5, 2016, at 2:00 p.m. (local time) or any adjournment
or adjournments thereof for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders and
Participating Policyholders. The information contained herein is given as of February 29, 2016, except as otherwise noted.
The solicitation of proxies will be made primarily by mail. However, the management of the Company may solicit
Shareholders’ and Participating Policyholders’ proxies at nominal cost by telephone or in person. The Company will reimburse
brokers and other persons holding Common Shares or participating policies on behalf of others, their reasonable expenses for
sending proxy materials to beneficial owners or participating policyholders in order to obtain voting instructions. The Company
will pay all expenses in connection with the solicitation of proxies.
APPOINTMENT AND REVOCATION OF PROXIES
a) Registered Shareholders and Policyholders
The persons named in the accompanying forms of Shareholder proxy and Policyholder proxy are the Chairman of
the Company’s Board of Directors (the “Board” or “Board of Directors”) and the President and Chief Executive Officer of the
Company, who will represent Shareholders and Policyholders. Each Shareholder of the Company and each Policyholder has
the right to appoint a person (who need not be a Shareholder or Policyholder) other than the persons designated in the
accompanying forms of proxy to represent him at the Meeting. To exercise this right, the Shareholder or Policyholder must
enter the name of his proxyholder in the blank space provided on his form of proxy, or complete another proper form of proxy.
To be valid, proxies must be deposited with the Company’s Transfer Agent and Registrar, Computershare Investor Services Inc.,
100 University Avenue, 9th Floor, Toronto, Ontario, M5J 2Y1, AT LEAST TWO DAYS PRIOR TO THE COMMENCEMENT OF THE
MEETING (I.E., NO LATER THAN 5:00 P.M. [LOCAL TIME] ON MAY 2, 2016) OR ANY ADJOURNMENT OR ADJOURNMENTS
THEREOF.
A Shareholder or Policyholder giving a proxy may revoke the proxy: (a) by depositing an instrument in writing
executed by the Shareholder or Policyholder or by his attorney duly authorized in writing (i) with the Corporate Secretary of the
Company at 1080 Grande Allée West, P.O. Box 1907, Station Terminus, Quebec City, Quebec G1K 7M3, at any time up to and
including the last business day preceding the day of the Meeting at which the proxy is to be used or any adjournment or
adjournments thereof, or (ii) with the Chairman of the Meeting before the commencement of the Meeting or any adjournment
or adjournments thereof; or (b) in any other manner permitted by law. If the Shareholder is a corporation, the instrument
revoking the proxy must be executed by a duly authorized officer or attorney thereof.
b) Non-Registered Shareholders
Any individual who holds Common Shares through a securities broker or a financial institution (a “Beneficial
Owner”) and who personally wants to attend the Meeting and exercise his voting rights must contact his securities broker or
financial institution in order to obtain a proxy form to designate himself as a proxy to exercise his voting rights.
Beneficial owners are divided into two categories: those who object to their name being disclosed to the issuers of
the securities they own (called “Objecting Beneficial Owners” or “OBOs”) and those who do not object to having their name
disclosed (called “Non-Objecting Beneficial Owners” or “NOBOs”). The Company does not distribute proxy-related documents
directly to beneficial owners, regardless of whether they are OBOs or NOBOs. The Company intends to pay intermediaries for
the sending of proxy documentation to both OBOs and NOBOs.
EXERCISE OF VOTE BY PROXY
The Common Shares represented by each properly executed Shareholder proxy will be voted or withheld from voting
in accordance with the instructions of the Shareholder on any ballot that may be called for and, if the Shareholder has specified
a choice with respect to any matter to be acted upon at the Meeting, Common Shares represented by such proxies will be
voted accordingly. If no choice is specified by a Shareholder with respect to any matter referred to in paragraphs 2 to 5 of the
Notice of Annual Meeting, the persons designated in the enclosed form of Shareholder proxy will vote FOR the election of
the Shareholders’ directors, FOR the appointment of the external auditor, FOR the advisory resolution on the Company’s
approach to executive compensation, and AGAINST the Shareholder’s proposals. Except for the election of directors, the
accompanying proxy form confers on the persons named therein discretionary authority with respect to amendments that may
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be made to the matters referred to in the Notice of Meeting and the other matters that may be duly submitted to the Meeting
or any adjournment or adjournments thereof. As at the date hereof, the management of the Company knows of no such
amendment or matter to come before the Meeting. If any amendments or matters which are not known on the date hereof
should properly come before the Meeting or any adjournment or adjournments thereof, the persons named in the
accompanying form of proxy will vote on such matters according to their best judgement.
Proxyholders of the Policyholders mandated by each properly executed Policyholder proxy will vote or withhold from
voting in accordance with the instructions of the Policyholder on any ballot that may be called for, subject to applicable law. If
no choice is made by a Policyholder with respect to the matter referred to in paragraph 2 of the Notice of Annual Meeting,
the persons designated in a Policyholder’s proxy will vote FOR the election of the Policyholders’ directors.
OUTSTANDING VOTING SHARES
The Common Shares are the only securities of the share capital of the Company which carry voting rights. As of the
date of this Circular, the Company had 102,510,942 Common Shares issued and outstanding.
Holders of Common Shares of record as at the close of business on the record date fixed to receive the notice and to
vote, being March 14, 2016, will be entitled to attend the Meeting and will be entitled, in any ballot, to one vote for each
Common Share held by them in any ballot.
PRINCIPAL HOLDERS OF SECURITIES
The Act respecting Industrial Alliance Life Insurance Company (Quebec) prohibits the direct or indirect acquisition by
any person of 10% or more of the outstanding Common Shares of iA Financial Group. If a person contravenes to such restriction
on ownership, such person cannot exercise any of the voting rights attached to any of the Common Shares of the Company
held.
To the best of the knowledge of the directors and officers of the Company, no individual or corporation beneficially
owns, controls, or directs, directly or indirectly, 10% or more of the outstanding Common Shares of the Company.
PARTICIPATING POLICIES
As of the date of the Circular, there were approximately 72,784 Policyholders, who are entitled to attend the Annual
Meeting of the Company. The record date for final determination is March 14, 2016. Regarding the Meeting, their right to vote
only concerns the election of at least one-third of the members of the Board of Directors, in accordance with the Act respecting
insurance (Quebec).
ELECTION OF DIRECTORS
Process
In accordance with the Business Corporations Act (Quebec) and the Company’s By-Laws, directors are elected for a
one-year term, which ends on the date of the Annual Meeting following their election or when their successor is appointed. The
Articles and By-Laws of the Company currently allow for the election of a minimum of 9 and a maximum of 21 directors. Until
otherwise decided by resolution of the Board of Directors, 14 directors are to be elected at the Meeting.
At the Meeting, five of the Company’s directors are to be elected by the Policyholders (the “Policyholders’
directors”), while the remaining directors are to be elected by the Shareholders (the “Shareholders’ directors”) in accordance
with the Act respecting insurance (Quebec). The Policyholders’ directors will be elected by a separate vote of the Policyholders.
Each director elected at the Meeting or any adjournment or adjournments thereof will hold office until the close of
the next Annual Meeting of Shareholders and Policyholders, unless he or she resigns or otherwise vacates his or her office.
Majority Voting
The Company has adopted a policy under which a nominee for election as a director for whom the number of votes
withheld or abstentions exceeds the number of votes cast in his favour will be required to submit his or her resignation to the
Board. Within ninety (90) days following the date of the Annual Meeting at which a director does not receive a majority of the
votes cast, the Board of Directors, excluding the director who tendered his or her resignation, must decide if it will accept or
refuse the director’s resignation. Barring exceptional circumstances, the Board of Directors will accept the resignation. The
Company must promptly issue a news release announcing the Board’s decision. If the Board refuses the resignation, all the
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reasons underlying this decision must be disclosed in the news release. Otherwise, the resignation will take effect upon its
acceptance by the Board and the position will be filled in accordance with the Company’s By-Laws. This policy does not apply in
contested elections.
Board Diversity
iA Financial Group is a life and health insurance and wealth management company that conducts business across
Canada and in the United States. Its Board of Directors is made up of French-speaking and English-speaking men and women,
from various regions in Canada and the United States.
In evaluating director nominees, the Human Resources and Governance Committee considers the profiles of the
directors currently in place as well as emerging needs for monitoring the management of the Company and supporting its
development. Experience relating to financial institutions, risk management, financial and strategic management, governance
and governmental relations are some of the qualities sought after by the Committee. The Human Resources and Governance
Committee and the Board of Directors generally also take into account criteria such as availability, independence, geographic
location and gender balance.
For a number of years, at least 20% of the iA Financial Group Board of Directors has been made up of women. As at
December 31, 2015, the percentage of women serving on the Board was 28.6% and 30.8% in the case of the independent
directors. If the directors nominated by the Company in this Circular are elected, the percentage of women serving on the
Board will be 35.7% and 38.5% of the independent directors.
Retirement Policy
The Company has a policy in its By-Laws that requires a director to retire effective on the date of the Annual Meeting
following his or her 70th birthday, unless, in special circumstances, the Board of Directors, in its discretion, decides otherwise.
In this regard and concerning the term of Claude Lamoureux, who will be 73 years of age on the date of the upcoming Meeting,
the Board recommends that Policyholders re-elect Mr. Lamoureux at the 2016 Annual Meeting, given the importance of
maintaining certain required expertise within the Board of Directors and the fact that Mr. Lamoureux has only served on the
Board for six years. As well, John LeBoutillier will have reached 71 years of age on the date of the upcoming Meeting. With a
view to ensuring an orderly transition to a new Chairman of the Board, the Board recommends that Shareholders re-elect
Mr. LeBoutillier at the 2016 Annual Meeting.
As of December 31, 2015, the average age of the members of the Board of Directors is 63 years of age and the
average tenure of the directors is 9.11 years. After the Annual Meeting, if all the proposed persons are elected, the average
age of the directors and the independent directors will be 61.07 and 61.23 respectively and the average tenure of the directors
and the independent directors will be 7.4 years and 6.7 years respectively.
In addition, six of the 13 independent directors will have joined the Board since the May 2014 Annual Meeting.
Nominees
The following tables set forth the name and municipality, province, or state of residence of each nominee proposed to
serve as a Shareholders’ or as a Policyholders’ director, his or her principal occupation, the year in which he or she first became
a director, and the number and value of Common Shares and Deferred Share Units (“DSUs”) beneficially owned, controlled, or
directed, directly or indirectly by him or her, as at February 29, 2016, and February 27, 2015. Information relating to Common
Shares beneficially owned by each nominee for election as a director, or over which each nominee exercised control or
direction as at February 29, 2016, and February 27, 2015, being information not necessarily within the knowledge of the
Company, has been furnished by the nominees individually. The tables also contain biographical notes on the proposed
nominees, a list of the principal boards of directors on which they sit, their primary areas of expertise, and their attendance at
Board meetings and meetings of the committees of which they were a member for the financial year ended December 31,
2015. Lastly, the tables also specify the results regarding election votes obtained for each director during the 2015 Annual
Meeting.
Messrs. L.G. Serge Gadbois and Jim Pantelidis will be leaving the Board at the close of the Meeting. Two new
nominees, Ms. Agathe Côté and Mr. Louis Têtu, will be proposed for election.
To the knowledge of the directors and officers of the Company, no nominee for election as a director of the Company:
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a)
is, as at the date of the Circular, or has been, within 10 years before the date of the Circular, a director, chief executive
officer or chief financial officer of any company (including the Company) that:
(i)
(ii)
was subject to an order that was issued while such person was acting in that capacity; or
was subject to an order that was issued after such person ceased to be a director, chief executive officer or chief
financial officer and which resulted from an event that occurred while that person was acting in that capacity;
b)
is, as at the date of the Circular, or has been within 10 years before the date of the Circular, a director or executive officer
of any company (including the Company) that, while that person was acting in that capacity, or within a year of that
person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or
insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver,
receiver manager or trustee appointed to hold its assets; or
c)
has, within the 10 years before the date of the Circular, become bankrupt, made a proposal under any legislation relating
to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with
creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.
The only exceptions to the foregoing are:
i.
Mr. Robert Coallier was, from 1991 to 2007, but is no longer, a director of Quebecor World Inc. which filed and
obtained creditor protection under the Companies’ Creditors Arrangement Act (Canada) (the “CCAA”) on January 21,
2008. Quebecor World Inc. emerged from creditor protection on July 21, 2009;
ii.
Mr. John LeBoutillier was, from 2002 to 2010, but is no longer, a director of Shermag Inc., which filed for and obtained
creditor protection under the CCAA in April 2008. In August 2009, Shermag presented a plan of arrangement to its
creditors which was sanctioned by the Superior Court (district of Montreal) on September 15, 2009. Shermag entered
into a compromise with Groupe Bermex Inc. and implemented a plan of arrangement in October 2009 allowing it to
emerge from CCAA protection. The compromise enabled Groupe Bermex Inc. to take control over Shermag and to
pursue its restructuring and rebuilding plan.
Furthermore, to the knowledge of the Company, no director of the Company has been subject to any penalties or
sanctions imposed by a court relating to securities legislation or by a securities regulatory authority, or has entered into a
settlement agreement with a securities regulatory authority, or has been subject to any other penalties or sanctions imposed
by a court or regulatory body that would likely be considered important to a reasonable investor in deciding whether to vote
for the proposed director.
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Shareholders’ Directors Nominated for Election
The Honourable Jocelyne Bourgon is President and Chief Executive Officer of Public Governance international (PGI)
Inc. She served as Deputy Minister of Transport and of Consumer and Corporate Affairs, and as President of the
Canadian International Development Agency, before becoming Clerck of the Privy Council and Secretary to the
Cabinet of Canada. She has served on various boards including those of the Business Development Bank of Canada,
the Canada Mortgage and Housing Corporation and the National Film Board. She also possesses extensive
international experience, having served as President of the United Nations Committee of Experts in Public
Administration, President of the Commonwealth Association for Public Administration and Management (CAPAM)
and Canadian Ambassador to the OECD. Ms. Bourgon holds a degree in science and a master’s degree in Business
Administration (M.B.A.) She is a member of the Queen’s Privy Council for Canada, an officer of the Order of
Canada and Knight of the National Order of Merit of the Republic of France.
Board/Committee Membership
Jocelyne Bourgon,
P.C., O.C.
Age: 65
Residence:
Ottawa, Ontario
Canada
Director since:
May 2014
Attendance
Board of Directors
8/8
100%
Audit Committee
5/5
100%
Ethics Committee
1/1
100%
Areas of expertise
• Public Policy
• Governance
• Public Sector Management
Securities Held
Shareholders’
Director
Independent
3,441
Total Market Value of
Common Shares and
DSUs3
125,149*
Minimum
Ownership
Requirement4
$180,000
1,237
$52,511
$180,000
For
Abstentions
For (%)
73,934,405
40,162
99.95%
Common
Shares1
DSUs2
Total Common
Shares and DSUs
February 29, 2016
None
3,441
February 27, 2015
None
1,237
Result from the election held at the 2015 Annual Meeting
*
Publicly Traded Company Board Membership During Last
Five Years
N/A
Director since May 9, 2014.
Pierre Brodeur has over 25 years of experience in management positions in various companies that specialize in
the manufacturing and marketing of consumer goods and services. From 1997 to 2004, he was President and Chief
Executive Officer of Sico Inc. From 1994 to 1997, he was President and General Manager of Weston Bakeries Ltd.,
Quebec. From 1990 to 1994, he was President of Videotron International. From 1986 to 1990, he was employed by
Steinberg, where he was President of Steinberg Quebec from 1989 to 1990. Mr. Brodeur was a director of
Knowlton Development Corporation from 2007 to 2013.
Pierre Brodeur
Age: 68
Residence:
St-Bruno, Quebec
Canada
Director since:
January 1999
Shareholders’
Director
Independent
Attendance
Board of Directors
8/8
100%
Investment Committee
Human Resources and Governance
Committee
Areas of expertise
7/7
100%
5/5
100%
Five Years
Innergex inc.
2010-2011
• Strategic Management
• Retail
• International Markets
• Human Resources / Compensation
Securities Held
Common
Shares1
DSUs2
Total Common
Shares and DSUs
Common Shares and
DSUs3
Minimum
Ownership
Requirement4
February 29, 2016
30,500
-
30,500
$1,109,285
$180,000
February 27, 2015
30,500
-
30,500
$1,294,725
$180,000
For
Abstentions
For (%)
67,960,882
6,013,803
91.87%
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Yvon Charest is President and Chief Executive Officer of iA Financial Group, a position he has held since May 2000.
From 1996 to 1999, he was Executive Vice-President and Chief Operating Officer and was appointed to the position
of President and Chief Operating Officer in the spring of 1999. Mr. Charest began his career at iA Financial Group
after completing his studies in actuarial sciences at Université Laval. He held numerous positions in the actuarial,
administration, and marketing sectors before becoming Chief Actuary from 1992 to 1996. Mr. Charest is a director
of the principal subsidiaries of iA Financial Group such as, IA Clarington Investments Inc., Industrial Alliance Auto
and Home Insurance Inc. and IA American Life Insurance Company. Mr. Charest is also a director of the Canadian
Life and Health Insurance Association (CLHIA).
Attendance
Board of Directors
Yvon Charest
Age: 59
Residence:
Quebec City, Quebec
Canada
Director since:
May 1999
Shareholders’
Director
Non-independent
(management)
8/8
100%
Publicly Traded Company Board Membership During
Last Five Years
N/A
Areas of expertise
• Senior Executive
• Finance / Risk Management
• Actuarial
Securities Held
Common
Shares1
DSUs2
Total Common
Shares and DSUs
Common Shares and
DSUs3
Minimum
Ownership
Requirement*
February 29, 2016
120,082
94,103
214,185
$7,789,908
$2,426,517
February 27, 2015
116,932
85,351
202,283
$8,586,913
$2,359,932
For
Abstentions
For (%)
73,184,585
789,198
98.93%
*
Mr. Charest is required to hold Common Shares or DSUs for an amount equivalent to three times his annual base salary, in accordance with the Executive Share
Ownership Policy.
Denyse Chicoyne is a corporate director. She has worked in the securities industry as a top ranked analyst for brokerage
firms such as BMO Nesbitt Burns, Nesbitt Thomson, McNeil Mantha Inc. and was also a senior analyst and portfolio
manager for the Caisse de dépôt et placement du Québec. Ms. Chicoyne holds a master’s degree in Business
Administration (M.B.A.) in finance and international business from McGill University (1981) and has been a designated
Chartered Financial Analyst (CFA) since 1986. Ms. Chicoyne is a member of the Montreal Society of Financial Analysts, the
CFA Institute and the Institute of Corporate Directors.
Denyse Chicoyne
Age: 63
Residence:
Montreal, Quebec
Canada
Director since:
May 2014
Shareholders’
Director
Independent
Attendance
Board of Directors
8/8
100%
7/7
100%
Last Five Years
Richelieu Hardware Ltd.
2005–
TMX Group Limited
2008-
Deans Knight Income Corporation
2009–2014
Areas of expertise
• Regulated Industry
• Strategy
• Retail
• Financial Markets
Securities Held
Common
Shares1
DSUs2
Total Common
Shares and DSUs
Common Shares and
DSUs3
Minimum
Ownership
Requirement4
February 29, 2016
5,000*
3,393
8,393
$305,253
$180,000
February 27, 2015
5,000*
1,251
6,251
$265,355
$180,000
For
Abstentions
For (%)
73,943,472
31,175
99.96%
* Ms. Chicoyne also has control over 800 common shares. Those shares are not included in Ms. Chicoyne’s minimum ownership requirement because she does not
own the shares.
- 10 -
Michael Hanley is a chartered accountant and a member of the Ordre des comptables professionnels agréés du
Québec (CPA, CA). He has been a corporate director since 2012 and has chaired various audit and finance
committees. From 2009 to 2011, he was Senior Vice-President, Operations and Strategic Initiatives Office, with
National Bank of Canada. Mr. Hanley held a number of positions with Alcan Inc. over a 10-year period, including
that of Executive Vice President and Chief Financial Officer between 2005 and the company's acquisition by Rio
Tinto in 2007 and, from 2002 to 2005, President and Chief Executive Officer of the worldwide Bauxite and
Alumina business group. He was also Chief Financial Officer for two Canadian public companies in the pulp and
paper and energy industries, namely St. Laurent Paperboard Inc. from 1995 to 1997 and Gaz Métro Inc. from
1997 to 1998. Mr. Hanley has a degree in business administration from HEC Montréal.
Michael Hanley
Age: 50
Residence:
Town of Mount Royal,
Quebec, Canada
Director since:
May 2015
Last Five Years
BRP Inc.
2012–
Attendance
Board of Directors
4/4*
100%
Audit Committee
2/2*
100%
Orbite Aluminae Inc.
2012–2013
First Quantum Minerals Ltd.
2012–2015
ShawCor Ltd.
2015-
Areas of expertise
• Financial and Strategic Management
• Accounting
• Financial Markets and Corporate Finance
• Risk Management
Securities Held
Shareholders’ Director
Common
Shares1
DSUs2
February 29, 2016
4,600
575
February 27, 2015
4,600
-
Independent
5,175
Common Shares and
DSUs3
$188,215
Minimum
Ownership
Requirement4
$180,000
4,600
$195,270
$180,000
For
73,926,311
Abstentions
48,218
For (%)
99,93%
Total Common Shares
and DSUs
* Director since May 7, 2015.
John LeBoutillier has been the non-executive Chairman of the Board since May 2005. He holds a law degree from
Université Laval and an MBA from the Richard Ivey School at the University of Western Ontario. He was President and
Chief Executive Officer of Sidbec-Dosco Inc. (now ArcelorMittal Long Products Canada G.P.) from 1983 to 1996 and
President and Chief Executive Officer of the Iron Ore Company of Canada from 1996 to 2000. He is a member of the
Quebec Bar and was made a Member of the Order of Canada in 2003. In addition to his public company board
memberships, he is also Chairman of the Board of Groupe Deschênes Inc. He was a director of Société générale de
financement du Québec (1996–2010) and Chairman of the Board of Conseil du patronat du Québec (2006–2010).
John LeBoutillier,
C.M.
Age: 71
Residence:
Montreal, Quebec
Canada
Director since:
May 1997
Shareholders’
Director
Independent
Board of Directors (Chair)
Committee
Ethics Committee (President)
8/8
100%
Five Years
Mazarin Inc.
2004-
5/5
100%
Semafo Inc.
2006–
1/1
100%
Stornoway Diamond Corporation
2011–
NovX21 Inc.
2013–2015
Attendance*
Areas of expertise
• Corporate Governance
• Corporate Management
• Industrial and Mining Sectors
Securities Held
63,774
Common Shares and
DSUs3
$2,319,460
Minimum
Ownership
Requirement4
$600,000
60,865
$2,583,719
$600,000
For
65,306,234
Abstentions
8,668,413
For (%)
88.28%
Common
Shares1
DSUs2
Total Common
Shares and DSUs
February 29, 2016
34,001
29,773
February 27, 2015
33,898
26,967
* As Chairman of the Board, Mr. LeBoutillier has attended all meetings of the other committees.
- 11 -
Jacques Martin is a corporate director. He is currently a director of RGA Life Reinsurance Company of Canada. He
was Managing Partner at Cornerstone Capital Partners LP, an investment bank based in Toronto and Greenwich,
Connecticut, from 2011 to May 2012. He spent seventeen years at Goldman Sachs in London and New York where
he was Managing Director and Head of International Equities at the time of his departure in 2003. From 2004 until
2008, he was Senior Vice President, International Equities, based in New York, for the Caisse de dépôt et
placement du Québec. He holds a Bachelor of Commerce from McGill University, a Bachelor of Law from Université
de Montréal and an MBA from INSEAD. He is a member of the Quebec Bar.
Jacques Martin
Age: 60
Residence:
Larchmont,
New York, USA
Director since:
January 2011
Shareholders’
Director
Independent
Attendance
Board of Directors
8/8
100%
Investment Committee (President)
7/7
100%
Five Years
N/A
Areas of expertise
• Financial Services Industry
Securities Held
Common
Shares1
DSUs2
Total Common
Shares and DSUs
Common Shares and
DSUs3
Minimum
Ownership
Requirement4
February 29, 2016
5,500
-
5,500
$200,035
$180,000
February 27, 2015
5,000
-
5,000
$212,250
$180,000
For
Abstentions
For (%)
73,938,025
36,438
99.95%
Francis McGuire held several high-level positions in the New Brunswick public service before joining MITI
Information Technology Inc. in 1998. From August 2000 to September 2015, he was President and Chief Executive
Officer of Major Drilling Group International Inc., a company specialized in drilling that has operations around the
world. In addition to his public company board membership, Mr. McGuire is also a director of Populus Global
Solutions, as well as Chairman of the Wallace McCain Institute for Business Leadership at the University of New
Brunswick and of the New Brunswick Business Council.
Francis P. McGuire
Age: 64
Residence:
Fredericton,
New Brunswick,
Canada
Director since:
May 2001
Shareholders’
Director
Independent
Attendance
Five Years
Major Drilling Group International Inc.
Board of Directors
8/8
100%
Committee (Chair)
5/5
100%
Ethics Committee
0/0*
N/A
2000–
Areas of expertise
• Marketing and Communications
• International Markets (Asia, U.K., U.S.)
• Executive Compensation
Securities Held
Common
Shares1
DSUs2
Total Common
Shares and DSUs
Common Shares and
DSUs3
Minimum
Ownership
Requirement4
February 29, 2016
600
29,577
30,177
$1,097,537
$180,000
February 27, 2015
600
28,781
29,381
$1,247,223
$180,000
For
Abstentions
For (%)
66,885,466
7,088,971
90.42%
* Mr. McGuire was appointed to the Ethics Committee in May 2015. No meeting of the Ethics Committee has been held since his appointment.
- 12 -
A Fellow of the Institute of Chartered Accountants, Mary Ritchie spent many years with PricewaterhouseCoopers
and its predecessors before becoming an associate member of Arnold Consulting Group Ltd. She is currently
President of Richford Holdings Ltd., an investment consultation services company, and member of the Board of
Governors (Independent Review Committee) of RBC Global Asset Management. She has expertise in corporate
governance and as a member of audit committees. In particular, she is chair of the audit committees of Alaris
Royalty Corp. and Enwave Corporation.
Mary C. Ritchie
Age: 59
Residence:
Edmonton, Alberta
Canada
Director since:
May 2003
Shareholders’
Director
Independent
Attendance
Board of Directors
8/8
100%
Audit Committee
5/5
100%
Five Years
Alaris Royalty Corp.
2008–
Canadian Real Estate Investment Trust
2011–2013
Softchoice Corporation
2011–2013
Enwave Corporation
2014-
Areas of expertise
• Accounting and Corporate Finance
• Financial Services Industry
• Risk Management
Securities Held
Common
Shares1
DSUs2
Total Common
Shares and DSUs
Common Shares and
DSUs3
Minimum
Ownership
Requirement4
February 29, 2016
3,000
4,480
7,480
$272,048
$180,000
February 27, 2015
3,000
4,360
7,360
$312,432
$180,000
For
73,674,362
Abstentions
300,065
For (%)
99,59%
- 13 -
Policyholders’ Directors Nominated for Election
Since February 27, 2012, Robert Coallier is chief executive officer at Agropur cooperative, where he previously sat on
the Board of Directors and the Audit Committee as a guest member. From December 2010 to February 2012, he was a
corporate director in Canada and abroad. He was Senior Vice President and Chief Financial Officer of Dollarama L.P.
from August 2005 to December 2010. He was Global Chief Development Officer of Molson Coors Brewing Company
from February 2005 until June 2005. From July 2004 until February 2005, he was Executive Vice President, Corporate
Strategy and International Operations of Molson Inc., and from July 2002 until June 2004, he was President and Chief
Executive Officer of Cervejarias Kaiser (a brewing company in Brazil and a subsidiary of Molson Inc.). Mr. Coallier was
Executive Vice President and Chief Financial Officer of Molson Inc. and, previously, he was Vice President and Chief
Financial Officer of C-MAC Industries Inc. He has a bachelor’s degree (B.A.) in economics and a master’s degree in
Business Administration (M.B.A.) in finance. He also sat on the Board of Directors and several committees of the
privately owned companies Averna Technologies, ONO S.A., Sanimax and Ivanhoe Cambridge.
Robert Coallier
Age: 55
Residence:
Montreal, Quebec
Canada
Director since:
February 2008
Policyholders’
Director
Independent
Board of Directors
Committee
Audit Committee
Attendance
8/8
100%
5/5
100%
5/5
100%
Areas of expertise
• Finance and Risk Management
Securities Held
Five Years
N/A
• Consumer Products / Retail
Common
Shares1
DSUs2
Total Common
Shares and DSUs
February 29, 2016
4,520
840
5,360
Common Shares and
DSUs3
$194,943
February 27, 2015
4,520
231
4,751
$201,680
For
Abstentions
For (%)
416
32
92.86%
Minimum
Ownership
Requirement4
$180,000
$180,000
Agathe Côté was Deputy Governor of the Bank of Canada from July 2010 until her retirement in January 2016. As a
member of the Governing Council, she shared responsibility for decisions with respect to monetary policy and financial
system stability, and for setting the strategic direction of the Bank. Ms. Côté joined the Bank in 1982 as an economist.
After assuming a series of positions of increasing responsibility, Ms. Côté was appointed Deputy Chief of the
Department of Monetary and Financial Analysis in 2000 and, in 2001, Deputy Chief of the Financial Markets
Department. Ms. Côté was appointed Chief of the Bank’s Canadian Economic Analysis Department in 2003 and Advisor
to the Governor in 2008. Ms. Côté was also an ex-officio member of the Board of Directors of the Center for
Interuniversity Research and Analysis of Organizations (CIRANO) from 2010 to 2015 and an alternate ex-officio
member of the board of directors of the Canada Deposit Insurance Corporation from 2010 to 2013. She has also been a
member of Statistics Canada’s National Accounts Advisory Committee. Ms. Côté received a bachelor’s degree in
economics in 1981 and a master’s degree in economics in 1983, both from the University of Montréal.
Agathe Côté
Age: 57
Residence:
Ottawa, Ontario
Canada
New Nominee
N/A
N/A
Areas of expertise
• Economy
• Financial system
Securities Held
Policyholders’
Director
Independent
Attendance
February 29, 2016
Publicly Traded Company Board Membership During Last Five
Years
N/A
• Macroeconomic policy
Common
Shares1
DSUs2
Total Common
Shares and DSUs
Common Shares and
DSUs3
Minimum
Ownership
Requirement4
None
-
None
-
N/A
N/A
- 14 -
Claude Lamoureux was President and Chief Executive Officer of the Ontario Teachers’ Pension Plan until his
retirement in 2007. An actuary by profession, he was appointed to the position in 1990. Previously, he spent 25
years as an executive with Metropolitan Life in Canada and the U.S. He is a director of the Canadian Foundation for
Advancement of Investor Rights. He was a co-founder and board member of The Canadian Coalition for Good
Governance. Mr. Lamoureux holds a B.A. from Université de Montréal and a B. Comm. from Université Laval. He is
a Fellow of the Canadian Institute of Actuaries, the Society of Actuaries and the Institute of Corporate Directors.
Board of Directors
8/8
100%
6/7
86%
Last Five Years
Northumbrian Water Group plc
2007–2011
Atrium Innovations Inc.
2007–2014
Ethics Committee
0/0*
N/A
Xstrata plc
2008–2013
Maple Leaf Foods Inc.
2008–
Orbite Aluminae Inc.
2013–
Claude Lamoureux
Age: 73
Residence:
Toronto, Ontario
Director since:
May 2010
Policyholders’
Director
Independent
Attendance
Areas of expertise
• Insurance / Pensions
• Investment Management
Securities Held
• Risk Management
17,685
Common Shares and
DSUs3
$643,203
Minimum
Ownership
Requirement4
$180,000
16,494
$700,170
$180,000
For
397
Abstentions
51
For (%)
88.62%
Common
Shares1
DSUs2
Total Common
Shares and DSUs
February 29, 2016
8,000
9,685
February 27, 2015
8,000
8,494
* Mr. Lamoureux was appointed to the Ethics Committee in May 2015. No meeting of the Ethics Committee has been held since his appointment.
Danielle Morin has more than thirty-five years of experience in various sectors of the financial services industry.
After graduating from Université Laval in 1977, she worked for Sun Life Assurance Company of Canada until 1990
and for the Laurentian Imperial Company from 1990 until 1994, where she was Senior Vice-President and Chief
Operating Officer. She then worked for Desjardins Group in the group pensions and pooled investment funds
areas, joining Canagex, a Desjardins Group investment subsidiary, as Vice-President, Finance and Operations in
1999. In 2001, she joined the Public Sector Pension Investment Board as Senior Vice-President of Financial
Operations. She then worked as Senior Vice-President, Distribution and Client Services, at Standard Life
Investments Inc. from 2006 until 2013. Ms. Morin has been on the Boards of the Canadian Institute of Actuaries,
ASSURIS and Standard Life Investments Inc. She has also been on the Board of the Fondation de I'Université Laval
since 2010 and is a member of the Institute of Corporate Directors.
Danielle G. Morin,
FCIA
Age: 60
Residence:
Pointe-Claire,
Quebec
Director since:
May 2014
Attendance
Board of Directors
8/8
100%
Audit Committee
5/5
100%
Areas of expertise
• Insurance / Pension Plans / Investment Products
Securities Held
Five Years
N/A
• Marketing and Communications
• Operations, Financial and Risk Management
Common
Shares1
DSUs2
Total Common
Shares and DSUs
Common Shares and
DSUs3
Minimum
Ownership
Requirement4
Policyholders’
Director
February 29, 2016
4,104
1,881
5,985
$217,674
$180,000
Independent
February 27, 2015
2,418
943
3,361
$142,674
$180,000
For
420
Abstentions
26
For (%)
94.17%
- 15 -
Louis Têtu is president, chief executive officer and a member of the board of directors of Coveo Solutions Inc., an
intelligent search applications company. Mr. Têtu co-founded Taleo Corporation, which was acquired by Oracle in
2012, and held the position of chief executive officer and chairman of the board of directors from the company's
inception in 1999 through 2007. Prior to Taleo Corporation, Mr. Têtu was president of Baan SCS, an international
enterprise resource planning software company. Mr. Têtu is a mechanical engineering graduate from Laval
University and was honoured by the university in 1997 for his outstanding social contributions and business
achievements. He received the 2006 Ernst & Young Entrepreneur of The Year award in the Technology and
Communication category. Mr. Têtu is also chairman of the board of PetalMD, a developer of social platforms for
the medical sector, and serves on the boards of the Jean-Lesage International Airport in Quebec City and the
Fondation de l’Auberivière. Mr. Têtu also served on the board of directors of l’Entraide Assurance-vie, a mutual
insurance company, from 1998 to 2009, when it was acquired by Union Life, a mutual insurance company.
Louis Têtu
Age: 51
Residence:
Quebec City, Quebec
Canada
New Nominee
N/A
N/A
Five Years
N/A
Areas of expertise
• Technology
• Corporate Financing
Securities Held
Policyholders’
Director
Independent
Attendance
February 29, 2016
Common
Shares1
DSUs2
Total Common
Shares and DSUs
None*
-
None
Common Shares and
DSUs3
Minimum
Ownership
Requirement4
-
N/A
N/A
*Mr. Têtu also has the control over 300 common shares. Those shares are not included in Mr. Têtu’s minimum ownership requirement because
he does not own the shares.
1
“Common Shares” refers to the number of Common Shares beneficially owned or over which indirect control or direction is exercised by the director.
“DSUs” refers to the number of Deferred Share Units held by the director.
3
The “Total Market Value of Common Shares and DSUs” is determined by multiplying the closing price of the Common Shares on the Toronto Stock Exchange
("TSX") on February 29, 2016, ($36.37) and February 27, 2015, ($42.45) by the number of Common Shares and DSUs outstanding on February 29, 2016, and
February 27, 2015, respectively.
4
All directors, other than Mr. Charest, are required to hold Common Shares or DSUs for an amount corresponding to three times the annual retainer received as a
director. All new directors have three years to comply with this policy. As at the date of this Circular, the annual retainer was $60,000 and the value of the minimum
holding requirement was therefore $180,000.
2
- 16 -
Board Member Areas of Expertise
9
√
11
√
√
√
13
√
√
√
10
√
√
√
5
√
Danielle G. Morin
Francis P. McGuire
Jacques Martin
John LeBoutillier
Claude Lamoureux
Michael Hanley
Agathe Côté
Robert Coallier
√
√
7
10
Denyse Chicoyne
Yvon Charest
√
Louis Têtu
3
Mary C. Ritchie
Actuarial
Experience in the analysis of
risk and profitability of an
insurance company
Finance and Accounting
Experience in accounting,
financial management and
corporate financing
Corporate Management
Experience as an executive
with a major, public or
regulated corporation
Risk Management
Experience in identification,
assessment and control
measures for mitigating risks
Corporate Governance
Experience in corporate
governance practices
Financial Services
Operational experience in the
financial services sector
International/U.S. Markets
Experience as an executive in
a company with international
or U.S. operations
Sales, Marketing and
Distribution
Experience in sales force and
distribution channel
management
Government
Experience in public policy
Strategic Planning
Experience in strategic
planning and corporate
development
Human Resource Management
Experience in compensation
structure implementation,
leadership development,
talent management,
recruitment and succession
planning
Technology
Experience in information
technology
Pierre Brodeur
TOTAL
Area of Expertise
Jocelyne Bourgon
Director nominees offer a wide variety of knowledge and expertise to meet the Company’s needs. Each year, the Human
Resources and Governance Committee ensures that together the nominees possess an array of experience and skill sets that
will enable the Board to effectively fulfill its mandate. The following table presents the diversity of expertise essential to the
Company’s operations.
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
4
√
8
√
√
√
√
8
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
√
- 17 -
√
√
√
2
√
√
√
Meeting Attendance of Directors with Board Tenures Ending in 2016
The Board tenure of Messrs. L.G. Serge Gadbois and Jim Pantelidis will end on May 5, 2016. Between January 1, 2015,
and December 31, 2015, their attendance at meetings of the Board and the committees they sat on was as follows:
L.G. Serge Gadbois
Board of Directors
Audit Committee
8/8
5/5
100%
100%
Jim Pantelidis
Board of Directors
Committee
8/8
6/7
5/5
100%
86%
100%
Compensation of Directors
Except for the President and Chief Executive Officer of the Company, who does not receive any compensation as a
director for attending meetings of the Board or its committees, the directors receive the compensation set out in the following
chart. The Chairman of the Board is entitled to annual compensation of $200,000. The compensation of directors is paid to
them in full or in part, at their discretion, in cash or Deferred Share Units (“DSUs”). A DSU is an accounting entry corresponding
to the value of Common Shares credited to an account in the director’s name and payable in cash on a specific date after he or
she leaves the Board. The choice of compensation method is made by the director and, under the DSU plan, must be made
before May 31 for the twelve-month period starting on June 1 of the same year and ending on May 31 the following year.
Directors are also entitled to reimbursement for expenses incurred to attend Board or Board committee meetings. Other than
the President and Chief Executive Officer, directors do not receive a pension benefit and are not eligible for stock options.
In accordance with the current policy, directors’ compensation is analyzed and revised every two years. The last
revision was in 2014.
For comparison purposes regarding the compensation paid to the Company’s directors, the Human Resources and
Governance Committee consulted the information contained in the proxy solicitation circulars of the following Canadian
businesses:
National Bank of Canada
Laurentian Bank of Canada
BRP Inc.
CAE Inc.
Cogeco Inc.
Dollarama Inc.
E-L Financial Corporation Limited
TMX Group Limited
Intact Financial Corporation
The Jean Coutu Group (PJC) Inc.
Metro Inc.
Quebecor Inc.
RONA inc.
Transcontinental Inc.
The following table summarizes the various elements of compensation paid to the Company’s Board and committee
members for 2015:
From January 1, 2015 to
December 31, 2015 ($)
Annual Board Retainer
60,000
Annual Committee Chair Retainer
Audit Committee
10,000
10,000
Human Resources and Governance Committee
10,000
Ethics Committee
5,000
Annual Audit Committee Member Retainer
5,000
Annual Investment Committee Member Retainer
Annual Human Resources and Governance Committee
Member Retainer
Annual Ethics Committee Member Retainer
5,000
3,000
Board and Committee Attendance Fees*
1,500
Telephone Attendance Fees
1,000
5,000
* Depending on the travel time required to attend a meeting, certain directors get an additional indemnity of $1,000 for each meeting or
series of meetings.
- 18 -
Total amounts paid to directors by the Company for the year ended December 31, 2015, were as follows:
Name
Jocelyne Bourgon
Pierre Brodeur
Yvon Charest
Denyse Chicoyne
1
Fees Received in
Cash
($)
-
1
Fees Received as Percentage Taken
DSUs
as DSUs
($)
(%)
89,500
100%
Total
($)
89,500
103,167
-
-
103,167
-
-
-
-
-
87,000
100%
87,000
Robert Coallier
70,000
25,000
26.32%
95,000
L.G. Serge Gadbois
75,000
21,500
22.28%
96,500
2
Michel Gervais
36,000
-
-
36,000
Michael Hanley
29,375
23,958
44.92%
53,333
Claude Lamoureux
45,083
39,667
46.80%
84,750
John LeBoutillier
115,000
85,000
42.50%
200,000
Jacques Martin
104,833
-
-
104,833
Francis P. McGuire
103,333
-
-
103,333
Danielle G. Morin
47,917
37,583
43.96%
85,500
Jim Pantelidis
100,167
-
-
100,167
Mary C. Ritchie
97,000
-
-
97,000
Total
926,875
409,208
-
1,336,083
(1)
Including attendance fees.
(2)
For the 2015 fiscal year, Mr. Gervais was a director of the Company from January 1st, 2015, to May 7, 2015.
The Company has a group insurance policy providing $20,000 in complimentary life insurance for each director
currently serving on the Board and $10,000 in complimentary life insurance for each departing Board member with at least 10
years of service.
Director Orientation and Continuing Education
The Company has an orientation and continuing education program that enables directors to become familiar with
the Company’s operations and gives them timely access to the information they need to carry out their duties. New directors
attend information sessions with the Chairman of the Board, the President and Chief Executive Officer, the Executive VicePresident and Chief Actuary, and the Corporate Secretary. In order to keep Board members current with the Company’s
operations, information sessions and briefings are provided at Board and committee meetings on a regular basis and
occasionally at special meetings. These sessions relate to the Company’s business strategy, evolution in the Company’s business
operations, risk management and particular subjects of relevance to the Board or the particular committee involved.
The Company encourages its directors to attend training programs. To this end, the Company has registered the
Board of Directors as a member of the Institute of Corporate Directors, an association that provides continuing training sessions
and training activities to corporate directors. The Company has also adopted a policy to reimburse directors for reasonable
expenses when attending training sessions, subject to the prior approval of the Chairman of the Board.
In 2015, directors participated in orientation sessions on the topics outlined below:
- 19 -
Continuing Director Education for the Financial Year Ended December 31, 2015
Date
April 2015
Topic
Legal, accounting and regulatory constraints
affecting the Company’s investments in
infrastructure projects
Attended By
Investment Committee members
July 2015
Managing foreign exchange risk
July 2015
Digital strategy
Board of Directors
September 2015
Market expectations
Board of Directors
September 2015
Communication to investors
Board of Directors
October 2015
Interest rate environment
Director Share Ownership Policy
The Board has adopted a policy intended to encourage non-executive directors to hold Common Shares or DSUs for
an amount equivalent to three times the annual retainer received as a director. Directors have a period of three years from the
date of their appointment as a director or from the date of an increase in the annual retainer paid to directors to comply with
this policy. For the purposes of this Circular, the Common Shares and DSUs are valued at the closing price of the Company’s
Common Shares on the date of the Circular. The directors are forbidden from participating in monetization or other hedging
activities affecting the Company’s shares they hold and their share-based compensation.
Common Share or DSU Minimum Ownership
Requirement for Non-Executive Directors
3 x Annual Board Retainer
Liability Insurance
The Company has purchased civil liability insurance for its directors and officers. This insurance provides a guaranteed
overall limit of $70 million per year, subject to a $100,000 deductible per claim for the Company. This policy also provides direct
coverage with no deductible for each director and officer if he is not indemnified by the Company. The annual insurance policy
st
was renewed on July 1 , 2015. The annual premium is approximately $225,000, excluding applicable taxes.
CORPORATE GOVERNANCE
The Company recognizes the importance of upholding best governance practices in order to foster growth, increase
its share value and maintain the confidence of its clients and investors. The Company’s governance policies were designed to
promote a culture based on integrity and ethical behavior and a prudent approach to risk management, in order to uphold the
independence of the Board and its ability to effectively supervise the Company’s activities. The Company has implemented
policies concerning the directors and executive officers, including a Policy respecting Board Independence, a General
Governance Statement, a Code of Business Conduct of the Industrial Alliance Group of Companies (the “Code of Business
Conduct”), a Disclosure Policy, and an Insider-Trading Policy. Each director and officer has received a copy of these policies and,
on an annual basis, signs a form attesting he has received a copy of the Code of Business Conduct and agrees to adhere to it.
The Code of Business Conduct applies to employees, officers and directors of the Company and its subsidiaries. Its
main objective is to emphasise on the high behavioural standards required of them and the importance of always acting
ethically, honestly and with integrity. Every new employee is required to read and agree to abide by the Code of Business
Conduct prior to commencing to work for the Company. In addition, all Company directors, officers and employees are required
to confirm in writing on an annual basis that they have reviewed the Code and complied with it during the year. During 2014,
the Company revised its Code of Business Conduct to include, among other things, information related to a new reporting
mechanism that was introduced, as described below, and to adapt the Code to the growing presence of social media and its
effect on the obligations of those subject to the Code.
- 20 -
In their continued effort to adhere to best practices in ethics and governance, the Company’s Board of Directors and
senior management have enhanced the practices already in place by introducing a new reporting mechanism known as the
“Integrity Hotline.” The Integrity Hotline is a reporting tool that allows employees of the Company and its subsidiaries to
confidentially report any irregularities with respect to accounting, accounting controls, legislation or the Code of Business
Conduct. Reporting is done through an independent third party appointed by the Company and can be carried out in an
anonymous and confidential manner. All reports submitted are transferred to the Chief Anti-Financial Crime Officer.
The Company complies with the guidelines adopted by the Canadian Securities Administrators and with applicable
standards of other regulatory bodies. The statement of the Company’s corporate governance practices is set forth in Schedule A
to this Circular. Additional information on the Board and its committees is set forth in the following sections. The charter of the
Board of Directors is presented in Schedule B to this Circular.
A section of this Circular, entitled “Compensation Governance,” presents additional information on the mandate of
the Human Resources and Governance Committee and descriptions of the policies and practices of the Board of Directors and
the Human Resources and Governance Committee in respect to compensation for directors and Named Executive Officers, as
defined under the section “Compensation of Named Executive Officers” of this Circular.
REPORT OF THE INVESTMENT COMMITTEE
The Investment Committee is responsible for recommending to the Board the Company’s investment policies and
programs, recommending to the Board the securities portfolio buy and sell latitudes, exercising the investment powers that the
Board may delegate to it and reporting to the Board on the investments made under this delegation, ensuring that investments
are made in the best interests of the Company and its insureds, ensuring that the various investments are made within the
established rules and in compliance with standards of sound business practices, consulting external advisors in matters that fall
within the jurisdiction of the Committee, and performing the different mandates entrusted to it by the Board.
The Investment Committee is composed of five independent directors, namely Denyse Chicoyne, Pierre Brodeur,
Claude Lamoureux, Jacques Martin and Jim Pantelidis. Mr. Jacques Martin is the Committee Chair. The Chairman of the Board is
an ex officio member of the Investment Committee.
During the 2015 fiscal year, the Investment Committee held seven meetings. During each regularly scheduled
meeting, the Investment Committee reviews management reports on the valuation and nature of investments, the quality of
portfolios, and the investments that are at risk or that are being monitored. The Investment Committee reviews the investment
policy that is approved by the Board. Each year, the Investment Committee provides training sessions within its meetings.
Submitted on behalf of the Committee
Jacques Martin, Chair
REPORT OF THE ETHICS COMMITTEE
Pursuant to Sections 285.13 and following of the Act respecting insurance (Quebec), the Board has an obligation to
form an Ethics Committee. The mandate of the Ethics Committee is to adopt the necessary rules for compliance, by the
Company, with the provisions of said Act that concern ethics and conflicts of interest, make appropriate recommendations to
the Board on questions that fall under the Committee’s jurisdiction, including transactions with related persons, execute
mandates that are entrusted to it by the Board, consult external advisors on matters that fall under the Committee’s
jurisdiction, and provide the Autorité des marchés financiers with an annual report on its activities.
The four directors who serve on the Ethics Committee are independent. They are Jocelyne Bourgon, Claude
Lamoureux, John LeBoutillier and Francis P. McGuire. Mr. John LeBoutillier is the Committee Chair.
During the 2015 year, the Ethics Committee held one meeting to examine different statutory reports and to issue its
annual report to regulatory authorities.
John LeBoutillier, Chair
REPORT OF THE AUDIT COMMITTEE
The Audit Committee assists the Board of Directors in its responsibility of overseeing the financial controls and
reporting of the Company. The Audit Committee also oversees the Company's compliance with financial covenants and legal
and regulatory requirements governing matters of financial disclosure, financial risk management, and regulatory compliance.
- 21 -
The Audit Committee members are all independent, in accordance with the independence requirements prescribed
by applicable legislation and regulation which govern the Company. They are Jocelyne Bourgon, Danielle G. Morin, Mary C.
Ritchie, Robert Coallier, L.G. Serge Gadbois and Michael Hanley. Mr. L.G. Serge Gadbois is the Committee Chair. The Chairman
of the Board is an ex officio member of the Audit Committee. In the composition of the Audit Committee, the Board explicitly
seeks individuals with knowledge of financial management and corporate management matters. The Board has determined
that all the members of the Committee are “financially literate” within the meaning of audit committee rules adopted by the
Canadian Securities Administrators. The members of the Committee have acquired the necessary knowledge and experience to
adequately fulfill their duties as members of the Committee through having served as chief executive officers, chief financial
officers, members of senior management, or directors of other corporations or through their academic backgrounds.
During the 2015 year, the Audit Committee held five meetings. At the end of each meeting, the Audit Committee met
in camera separately with the external auditor and the internal auditors without management being present, and also met in
camera without the presence of management, the external auditor or the internal auditors.
In 2015, the Audit Committee, in accordance with its charter, accomplished the following: (i) it recommended the
appointment of the external auditor; (ii) reviewed the performance and the quality of the external audit, and discussed the
results with the external auditors; (iii) discussed reports by the internal auditors and external auditor and certain other reports
such as the review of standards of sound business and financial practices; (iv) reviewed the independence of the external
auditor; (v) reviewed the interim and annual financial statements and the management discussion and analysis reports and
press releases and recommended their approval to the Board; (vi) monitored the adequacy of internal controls; (vii) ensured
that there are adequate procedures for review of the Company’s disclosure to the public of financial information; (viii) reviewed
and approved the services performed by the external auditor and their fees; (ix) approved the internal audit charter;
(x) oversaw the activities of the internal auditors; (xi) recommended the appointment of the Vice-President, Internal Audit;
(xii) ensured coordination between the internal and external audits; (xiii) examined, in conjunction with the Company’s legal
department, any legal question that could have a material impact on the Company’s financial statements; (xiv) ensured that the
Company fulfills its obligations with respect to standards of sound business and financial practices; (xv) reviewed
correspondence exchanged with regulatory authorities and followed up on commitments with regard to these authorities; and
(xvi) made appropriate recommendations to the Board on questions that fall within the Committee’s jurisdiction.
Additional information on the Audit Committee can be found in the section entitled “Audit Committee” of the
Company’s Annual Information Form filed with the Canadian Securities Administrators, which can be found on the SEDAR
website: www.sedar.com.
L.G. Serge Gadbois, Chair
- 22 -
EXECUTIVE COMPENSATION
LETTER TO SHAREHOLDERS AND POLICYHOLDERS
Dear Shareholders and Policyholders,
We are aware of the importance of executive compensation disclosure for our Shareholders and Policyholders. It is
therefore appropriate to disclose the executive compensation policy adopted by the Board, which relies on sound risk
management and also on short, mid- and long-term succession plans for each key position.
(i)
Our Compensation Policy
The goal of the executive compensation policy for senior management positions is to provide a framework for
managing total compensation and support the Company’s position on managing performance and development. It aims to:
•
•
•
Attract and retain talented leaders
Motivate senior management to generate value for the Company and its Shareholders
Ensure external, internal and individual equity by providing competitive total compensation
The policy covers total compensation for the President and CEO, Executive Vice-Presidents and Senior Vice-Presidents
and equivalent positions, including Vice-Presidents. The Human Resources and Governance Committee has been tasked with
reviewing and making recommendations to the Board of Directors with respect to executive compensation and benefits,
including retirement plans.
The Company’s compensation policy aims to position target total compensation for executive officers at the median
of its reference market, i.e., Canadian insurance and financial services companies. To this end, the Committee reviews on an
annual basis the target total compensation for the Company’s executive officers based on what is offered by other companies
within its reference market. Changes may be made to the reference market to adjust to changes in financial, economic and
competitive conditions.
From time to time, the Human Resources and Governance Committee conducts a detailed analysis of the
compensation of the Company’s executives in comparison with current practices in the Canadian insurance and financial
services sectors. An analysis was conducted in 2012 and revealed a significant decline in the Company’s compensation policy,
which had fallen below the median, our objective. As such, a new mid-term incentive plan described later in this Circular was
implemented starting in 2012. The most recent analysis was conducted in late 2015 and gave rise to certain changes described
below.
We believe that the iA Financial Group executive compensation structure remains distinctive for its simplicity,
moderation and effectiveness.
•
Simplicity – The executive compensation system contains five components: base salary, an annual bonus plan, a
mid-term incentive plan based on Performance Share Units, a stock option plan, and a pension and benefits plan,
whose value is easy to calculate. There is no other mid- or long-term compensation plan that pays out bonuses in
years when results do not justify doing so.
•
Moderation – Executive compensation has always been modulated. It is set at the median range of financial
sector compensation even though the Company's shares have performed at the head of the pack since its
demutualization 16 years ago (an increase in share value of 460.4% as at December 31, 2015). The base salary is
positioned at the median of the reference market. The bonus plan has a maximum that limits the amounts that
can be paid to executives, regardless of the Company's performance. Performance Share Units are subject to
vesting conditions based on the Company’s performance with respect to its strategic objectives. Options granted
to executives are divided between several people, and are therefore not concentrated in the hands of the CEO or
a few executives. In addition, the number of options awarded annually is independent of the Common Share's
market price. In early 2016, the Human Resources and Governance Committee examined the possibility of linking
the value of the options awarded to an executive’s salary. The Committee rejected this approach as being too
generous should the share price decline. Lastly, the Human Resources and Governance Committee does not have
the discretionary power to increase executive compensation to take into account specific events during the year.
•
Effectiveness – Executive compensation is aligned with the Company’s performance and Shareholders’ interests.
The bonus plan is based on achieving simple and measurable objectives for three primary components: net
- 23 -
income, new business and cost control. One of the characteristics of the bonus plan, which distinguishes it in the
industry, is the fact that it contains a trigger mechanism tied to profitability, which prevents the payment of a
bonus if net income does not reach a minimum threshold, even if a bonus could have been warranted under the
new business or cost control objectives.
•
Internal equity in determining the compensation of the President and CEO.
These characteristics of our compensation system are demonstrated, among other things, by the evolution of the
annual bonus plan and the achievement of objectives with regard to the three primary components over the preceding ten
fiscal years.
Fiscal Year
Net
Income
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
0.7
2.0
2.0
2.0
0.0
1.3
1.1
0.0
1.8
2.0
0.8
0.7
1.0
0.9
1.3
0.7
1.1
1.5
0.6
1.0
1.2
0.9
0.9
1.4
1.0
1.6
0.8
0.6
1.4
1.6
Weighted Total
of the Target
Bonus
0.9
1.3
1.4
1.5
0.7
1.3
1.0
0.6
1.4
1.6
Five-Year Average (2011–2015)
Ten-Year Average (2006–2015)
1.3
1.3
0.9
1.0
1.1
1.1
1.2
1.2
Cost Control
New Business
After Trigger
Mechanism
0.9
1.3
1.4
1.5
0.0
1.3
1.0
0.0
1.4
1.6
1.0
1.0
The above table allows us to draw the following conclusions:
(ii)
•
With respect to the components for the determination of the bonus, in the course of the last five fiscal years, the
maximum result was reached only three times out of a possibility of fifteen (being 2012, 2013 and 2014 with
respect to net income).
•
Over a ten-year period, average results have been equal to the target, demonstrating clearly that the bonus
targets are set very high.
Comments on 2015 Results
In 2015, the Company achieved a net income attributable to Common Shareholders of $364.4 million, a decline of 9%
compared to 2014, decline mainly due to the changes in the actuarial assumptions. Diluted earnings per share were down from
$3.97 a year ago, at $3.57, and return on Shareholder equity was 10.2%. At December 31, 2015, the Company’s book value was
$36.76 per common share, up 9% over the end of the previous year, and the solvency ratio was 213%. Lastly, assets under
management and under administration reached $115.8 billion at December 31, 2015, compared with $109.5 billion in 2014.
(iii)
Risk Management
The Board of Directors fully understands the concerns of Shareholders who want to ensure that compensation
mechanisms do not actually encourage management to increase risk.
The Company has implemented an enterprise risk management program whose goal is to identify, assess, manage
and monitor the risks the Company is exposed to in the course of its operations. The enterprise risk management program is
also designed to provide the Board of Directors with reasonable assurance that sufficient resources and appropriate procedures
are in place within the Company to ensure sound risk management. The Board of Directors verifies and approves the global
policy governing this program as well as any changes that are made to it. Under this policy, senior management must report
annually on the key risks the Company is exposed to and the measures taken to manage them. The Board also approves the
overall level of risk the Company is willing to take as well as how far the Company is willing to deviate financially from its
objectives.
- 24 -
In addition, risk management has always benefited a great deal from the Company’s inherently conservative
philosophy. iA Financial Group has never gone after sensational results or quick profits, as illustrated by the following:
•
Our acquisitions—which have numbered over 15 during the past decade, small or average in size—have all been
well integrated and successful.
•
Our reserve policy is one of the most conservative. The same applies to guarantees for segregated-fund policies.
In 2011 and 2012, we paid particular attention to risk management where compensation is concerned. Risk associated
with our compensation policy and programs was analyzed, as described in the section entitled “Compensation Risk
Management” found on page 28 of this Circular. The Committee conducts an annual review of this risk. In the Committee’s
opinion, the fact that the actuarial reserves are included in determining net income for purposes of the bonus constitutes a
hindrance on excessive risk-taking.
(iv)
Succession Planning
Each year the Human Resources and Governance Committee devotes an entire meeting to succession planning.
During the 2015 fiscal year, the President and Chief Executive Officer presented to the Committee, for each of the 35 most
strategic executive positions, potential successors expressed in terms of immediate, mid-term (3–5 years), and long-term (over
5 years) replacement. Development plans for many of these executives were discussed. The Committee reviewed the
succession plan for the Chief Executive Officer position. The Committee reported to the Board which, in turn, reviewed the
succession plan for the most senior executive positions.
(v)
Compensation of the President and Chief Executive Officer
In 2015, the salary of the President and CEO was increased by 2.8% to $808,670, being the same percentage as
awarded to most of the executives. The bonus payable under the annual incentive plan was $641,189, less than the $888,404
bonus amount paid in 2014. It should be noted that the profitability objective for purposes of calculating the bonus includes the
changes in the actuarial assumptions, which had adversely affected net income in 2015.
In addition, one of the Human Resources and Governance Committee’s concerns in determining the compensation of
the President and CEO is internal equity. The Committee takes account of the President and CEO’s compensation as a multiple
of the compensation of the two other most highly paid executives and of the four other named executive officers. Furthermore,
the severance payable to the President and CEO in the event of a change of control has been reduced from thirty-six months to
twenty-four months of base salary.
(vi)
Amendments in 2016
The Committee pays attention to Shareholders’ communications and concerns in connection with executive
compensation, whether they are expressed in an advisory vote or otherwise. To this end, the Committee retained a firm of
compensation consultants to review executive compensation. Following this analysis, the following changes have been made
and are effective starting in the fiscal year 2016.
•
the comparator group to evaluate the market positioning of the total compensation of the named executive
officers now consists of 15 companies in the financial sector, excluding the five major banks, selected based on
earnings, net income and market capitalization;
•
the overlap between the financial objectives for purposes of the annual incentive plan and the mid-term
incentive plan has been eliminated. The net income objective in the annual incentive plan will in future be
replaced by a return on Shareholders’ equity objective;
•
a percentage of 25% of the bonus in the mid-term incentive plan will be in function of the total Shareholder
return over a three-year period relative to the comparator group; and
•
the severance payable to the President and CEO in the event of a change of control is reduced as further
explained under the section entitled “Termination and change of Control Benefits”.
- 25 -
(vii)
Conclusion
Many of our Shareholders and Policyholders, large and small alike, value good governance, fair compensation, and
sound risk management. The Board of Directors and management of iA Financial Group, both very aware of this, share the
opinion that the following
ng compensation report takes their concerns into consideration.
Francis P. McGuire
Chair of the Human Resources and Governance Committee
John LeBoutillier
- 26 -
REPORT OF THE HUMAN RESOURCES AND GOVERNANCE COMMITTEE
COMPENSATION DISCUSSION AND ANALYSIS
This compensation discussion and analysis provides a description and brief explanation of the Company’s executive
compensation and describes the policies and processes employed by the Human Resources and Governance Committee to
determine compensation for Named Executive Officers.
Compensation Governance
The Human Resources and Governance Committee’s mandate is to review compensation and employee benefits,
including the Company’s retirement plans, and make recommendations to the Board, including with respect to the
compensation of the President and Chief Executive Officer. It ensures that a succession plan is in place for the Company’s senior
officers and reviews and recommends to the Board the Company’s salary policy and employee benefits policies, ensures that
risks associated with remuneration are identified and managed, makes recommendations to the Board with respect to the
continuing education of the Board and its committees, the compensation of directors and members of committees, and the
performance of the Board and its committees, as well as ensuring the Company fulfills its obligations in matters of corporate
governance. It administers designated supplemental compensation programs in compliance with the mandates entrusted by
the Board (as is the case with the Company’s mid-term incentive plan and stock option plan), consults external advisors on
matters that fall under the Committee’s jurisdiction, and exercises the different mandates that may be entrusted to it by the
Board.
At December 31, 2015, the Human Resources and Governance Committee was made up of the following five
directors: Pierre Brodeur, Robert Coallier, John LeBoutillier, Francis P. McGuire and Jim Pantelidis. Mr. Francis P. McGuire is the
Committee Chair. All members of the Human Resources and Governance Committee are considered to be independent under
the applicable securities legislation. They all possess experience in the area of executive compensation, either as the past CEO
of publicly traded companies or as executives. The Board believes that the members of the Human Resources and Governance
Committee possess the combined knowledge, experience and backgrounds necessary to fulfill the Committee’s mandate.
The following table outlines the Committee members, their executive compensation experience, and their skills and
experience pertaining to decision making with respect to compensation policies and practices:
Independent
Direct and Relevant Experience:
Executive Compensation
Pierre Brodeur
Yes
Experience as President and CEO
Robert Coallier
Yes
John LeBoutillier
Yes
Experience as Senior VicePresident, CFO and CEO
Francis P. McGuire
Jim Pantelidis
Yes
Yes
Skills and Experience in Decision Making with
respect to Compensation Policies and
Practices
Chair of the Human Resources Committee from
2003 to 2007 for Van Houtte, and from 2007 to
2010 for Innergex Renewable Energy Inc.
Has been first level manager for several years
President or member of the Human Resources
Committee of several public and privately
owned companies from 1995 to the present
(St-Laurent Paperboard Inc., Novamerican Steel
Inc., Société générale de financement du
Québec, Groupe Deschênes Inc., Semafo Inc.
and Stornoway Diamond Corporation)
Has been first-level manager for several years
Chair of the RONA Inc. Human Resources and
Compensation Committee since 2004, and from
2008 to 2011 for EQUINOX Minerals Limited
In the 2015 fiscal year, the Human Resources and Governance Committee held five meetings. No recommendation
made by the Human Resources and Governance Committee was rejected or significantly modified by the Board, and the
recommendations of the Human Resources and Governance Committee were not subject to dissent by members of the
Committee.
- 27 -
Representation of Women in Executive Management
In 2014, the Company surveyed all of its employees. A key survey component covered culture, policies and employee
satisfaction with regard to the inclusion of women and minorities. The survey results revealed that the Company is above
average in most elements of culture that are conducive to the inclusion and advancement of women.
In 2015, on the heels of the initiatives undertaken in 2014 to increase the representation of women in executive
management, the Company appointed two women from its pool of candidates to vice-president positions left vacant by the
retirement of two male executives.
Also, responding to the needs of the organization, the Company followed a structured process, using job postings, to
fill another two vacancies at the vice-president level. The Company formed a selection committee and adopted a standard
evaluation approach supplemented with an external assessment of the four finalists (for two vacancies) so as to round out the
information used to make our final choices, the goal being to eliminate male bias and stereotyping in considering the
qualifications sought.
As a result of the above initiatives, the representation of women in executive management now stands at 25%.
For 2016, the Company intends to continue its efforts to raise awareness by capitalizing on already implemented
initiatives (such as the management circle for vice-presidents and a development path focused on self-conscious leadership) as
levers for achieving a greater gender balance.
Independent External Advisors
The Human Resources and Governance Committee possesses the authority to retain, when it deems appropriate, the
services of independent advisors to assist it in fulfilling its duties.
Executive compensation-related fees:
In 2015, the Committee retained the services of Towers Watson (Canada) Inc. for an analysis of the executive
compensation structure and to review the mid-term incentive plan. The Committee also retained the services of Hay Group
Limited to conduct a study of executive compensation trends.
Fees in the amount of $45,135 were paid to Towers Watson (Canada) Inc. and fees in the amount of $4,380 were paid
to Hay Group Limited for services rendered to the Committee during the fiscal year ended December 31, 2015. For the 2014 fiscal
year, fees in the amount of $7,926 were paid to Towers Watson (Canada) Inc. and $4,875 to Hay Group Limited.
Compensation Risk Management
The Human Resources and Governance Committee ensures that the Company’s compensation policies and programs
comply with applicable standards and regulations and allow compensation to be closely tied to the Company’s financial
performance and Shareholder return, while fostering sound risk management.
As a result, in 2011, the Committee tasked Mercer (Canada) Limited with reviewing the known risks related to its
compensation policies and practices to determine whether they were reasonably likely to have a material adverse effect on the
Company. Each of the policies and practices was analyzed by assigning a status code to corresponding risk levels: low, medium,
or high. The analysis showed that no part of the Company’s compensation programs carries a high level of risk. No external
consultation has been required since 2011.
The Committee pays particular attention to the revision of the compensation programs in order to better align them
with compensation best practices. More detail with regard to that matter may be found under “Amendments in 2016” on
page 25 of this Circular.
Compensation Components
The following table summarizes each of the five components of the executive compensation program for the fiscal
year ending December 31, 2015:
- 28 -
Compensation
Component
Base Salary
Cash
Compensation
Period
1 year
Annual Bonus
Cash
1 year
Deferred Share
Units
(DSU)
Until executive
retires or leaves
the Company
Mid-Term
Incentive
Plan
Performance
Share Units
(PSU)
3 years
Long-Term
Incentive
Plan
Stock options
10 years, with
25% vesting per
year over 4
years starting
1 year after the
grant date
Pension and
Benefits plan
Form
Group life and
health insurance
program, and
pension plan
Ongoing
Determination Basis
Objective
Based on reference market, individual
performance, and internal equity. Reflects
level of responsibility, skills and experience.
Based on reference market. Actual award
based on combination of Company,
divisional and individual performance.
Possibility for executives to defer some or
all of their annual bonus in DSUs. DSUs
redeemable for cash only upon termination
of employment, retirement or death.
Payment taking into account the
reinvestment of notional dividends over
the life of the DSUs and the fair market
value of Common Shares of the Company
at the time of redemption.
Awarded annually, based on individual
performance and Company performance
potential. Final payout value based on the
Common Share price on the date of vesting
and the level of performance achieved by
the Company.
Awarded annually, based on individual
performance and Company performance
potential. Final payout value based on the
difference between the Common Share
price on the date of grant and the date of
exercise.
Brings executive compensation in line with
increased value for Shareholders.
Based on reference market.
Retention
Short
Term
Long
Term
X
Retention and
differentiation
Recognize
executives’
contribution to and
involvement in the
Company’s results
X
Align the efforts of
the management
team toward the
achievement of
ambitious financial
performance
objectives
Long-term
retention and
differentiation
X
X
Employee
engagement
X
X
The compensation mix varies according to the level of the executive. A significant proportion of total compensation is
variable to ensure linkage with the interests of Shareholders and other key stakeholders. Payments made under the variable
compensation plans depend on the ability of the executive to influence short and long term business results and the level of the
executive.
The following table illustrates the breakdown of total direct compensation for the following four components: base
salary, annual bonus, mid-term incentive plan and long-term incentive plan. Retirement and employment benefits plans are not
included:
Level
President and Chief Executive
Officer
Executive Vice-President
Senior Vice-President and
equivalent
Vice-President
(i)
Stock
Options
Total Portion of
Pay that Is
Variable
15%
20%
65%
25%
15%
20%
60%
55%
25%
5%
15%
45%
70%
20%
0%
10%
30%
Base Salary
Target Annual Bonus
Performance
Share Units
35%
30%
40%
Base Salary
Base salary compensates employees for the roles they perform for the Company. Base salaries and salary ranges,
including the minimum, midpoint and maximum, are benchmarked against comparable roles in companies of its reference
market and internally against similar roles. Base salaries for all employees are reviewed annually and adjusted, as appropriate,
based on individual performance, competencies, accountabilities, and competitive market data. The Human Resources and
Governance Committee reviews and recommends for approval by the Board of Directors: (i) the actual base salary increases for
- 29 -
the President and Chief Executive Officer; as well as (ii) the recommendations made by the President and Chief Executive
Officer pertaining to salary increases of executive officers and the aggregate salary increase for all other staff.
(ii)
Annual Bonus (Non-equity-based annual incentive plan )
The annual bonus plan rewards executives for meeting short-term strategic and operational goals. It encourages the
attainment of superior results based on the achievement of pre-established annual corporate, divisional and individual
performance objectives. The plan’s objectives are as follows:
•
•
•
•
•
Promote the Company’s mission among executives;
Foster superior overall performance in terms of corporate goals;
Encourage increased productivity;
Recognize executive contributions to and involvement in attaining the Company’s goals;
Offer compensation that favourably positions the Company within its reference market.
The annual bonus plan is based on five key performance indicators. The following table outlines these indicators and
the reasons they were chosen.
Indicator
Net Income
New Business
Cost Control
Divisional Objectives
Individual Component
Indicator Justification
Alignment with the interests of Shareholders
Support growth objectives of the Company
Encourage sound management of expenses
Align objectives of each division with the business plan of the Company
Encourage strategic management by senior management of the Company
The target bonuses vary as a percentage of base salary and are based on median incentive targets of companies from
its comparator group. Target bonuses for all levels are reviewed annually to ensure ongoing market competitiveness. The
minimum award under the bonus plan is zero when corporate, business unit and/or individual performance is below minimum
performance thresholds. The maximum bonus available for exceeding individual performance objectives is based on the
Company’s business plan for the fiscal year and is intended to be challenging but achievable. The typical weighting for the 2015
annual bonus was as follows:
Level
President and Chief Executive
Officer
Executive Vice-President
Senior Vice-President and
equivalent
Vice-President
Business Performance Weighting
Company
Business Unit
Target Bonus
(% of Salary)
Maximum Bonus
(% of Salary)
80%
160%
85%
0%
15%
35% to 75%
70% to 150%
60%
25%
15%
30% to 75%
60% to 150%
60%
25%
15%
20% to 30%
40% to 60%
60%
25%
15%
Individual
Starting in 2016, the net income indicator will be replaced by a return on Shareholders’ equity indicator. This new
indicator will avoid any overlap between the annual bonus and mid-term incentive plan indicators.
(iii)
Deferred Share Units
Executives can elect to convert a portion or all of their annual bonus into DSUs. The executive makes the election
under the DSU Plan prior to May 31 of the calendar year for which the annual bonus is earned. When incentive awards are
determined, the amount elected is converted into DSUs that have a value equal to the average closing price of a Common Share
on the TSX for the five trading days preceding the date of conversion. The DSUs accrue notional dividends and are redeemable
in cash only upon termination of employment, retirement or death.
(iv)
Mid-Term Incentive Plan ("MTIP")
The Company’s executives are eligible for a mid-term incentive plan based on Performance Share Units (“PSUs”).
Participation is determined by the Human Resources and Governance Committee. The Committee’s objectives regarding the
plan are as follows:
- 30 -
•
•
•
•
To reinforce the philosophy of compensation based on the Company’s performance by rewarding those who
successfully execute its business strategy and achieve key objectives;
To ensure that the interests of the Company’s executives align with those of the Shareholders;
To measure mid-term performance as a complement to the measurement of annual performance under the
short-term incentive plan and the measurement of long-term performance under the stock option plan;
To offer competitive compensation for the purposes of attracting and retaining talented executive personnel.
Each PSU award is vested based on a performance cycle of three fiscal years beginning on January 1 the year it is
granted and ending on December 31 of the third year. Vesting is therefore subject to a performance requirement and only
occurs after a period of three years. The value of each PSU awarded is equal to the arithmetical average of the weighted
average closing prices of the Company’s Common Shares (listed on the Toronto Stock Exchange under the ticker symbol IAG) for
the first twenty business days of the reference period. Vesting is based on the Company’s performance, measured in terms of
its total net income over the three years. The total net income target is set annually with a view to each PSU award. The
following table presents, for the last three fiscal years, the PSUs awarded, the target to be reached in order to determine the
actual number of PSUs that will be awarded at the end of the reference period and the vesting calendar.
3-Year Target
(reference
period)
*
Number of
PSUs awarded
Number of
PSUs
outstanding as
of December
*
31, 2015
2015-2017
21,907
22,513
2014-2016
21,694
20,493
2013-2015
28,532
27,579
Performance Level
Maximum or above
Target
Threshold
Under threshold
Maximum or above
Target
Threshold
Under threshold
Maximum or above
Target
Threshold
Under threshold
Target
Net Income
Performance Scale
$1,500 million
$1,350 million
$1,100 million
$1,300 million
$1,150 million
$950 million
$950 million
$800 million
$650 million
-
Award
150 %
100 %
50 %
0%
150 %
100 %
50 %
0%
150 %
100 %
50 %
0%
An amount equivalent to the dividends paid on the Company’s Common Shares is converted into additional PSUs. This column indicates the number of
PSUs initially granted plus an additional number of PSUs granted as dividends.
The payout value of each vested PSU at the end of the performance period is equal to the arithmetical average of the
weighted average closing prices of the Company’s Common Shares for the last twenty business days of the same period.
Starting in 2016, vesting of PSUs will be subject to a twofold performance factor. Vesting will be based 25% on the
total Shareholders’ return relative to the target group and 75% on the Company’s net income performance.
(v)
Long-Term Incentive Plan (Stock Option Plan)
The Stock Option Plan allows the Human Resources and Governance Committee to grant stock options to the
Company’s executives as part of their long-term compensation. The goals of the Stock Option Plan are to:
•
•
•
•
Make available to the Company a share-based plan for attracting, retaining and motivating executives whose
abilities, performance and loyalty towards the Company and certain subsidiaries are essential to their success,
image, reputation, and operations;
Foster the successful development and implementation of the Company’s continuing growth strategy;
Associate a part of executive compensation with the creation of economic value for Shareholders;
Support the compensation policy designed to compensate executive performance.
Award levels are approved by the Human Resources and Governance Committee after considering the
recommendation of the President and Chief Executive Officer (except in the case of his own options). The number of options is
based on the expected impact of the employee on the Company’s performance and strategic development as well as market
benchmarking.
Since 2003, the Human Resources and Governance Committee grants, in February of each year, approximately
500,000 stock options irrespective of the prevailing price of the Common Shares. When new stock options are granted, prior
- 31 -
awards are not taken into consideration as the awards are designed to reward performance for the current year and align longterm interests of the executives with those of Shareholders. The Stock Option Plan is more fully discussed in the section of this
document entitled “Long-Term Incentive Plan (Stock Option Plan)” on page 43 of the Circular.
(vi)
Pension Plan Benefits
Executives participate in an employment benefit plan just like any other employee. The plan includes life insurance,
health and dental insurance, short and long term disability insurance, accidental death and dismemberment insurance and
emergency travel assistance. The majority of the costs associated with the plan are paid by the Company, but employees
(including executives) must also contribute to receive benefits. The Company’s benefit program is comparable to those offered
by other companies in its reference market. The Company’s executive officers also receive indirect benefits as part of their
compensation, the value of which varies depending on the position occupied and is comparable to what is offered by other
companies within the reference market.
Executive officers also participate in the Company’s registered defined benefit pension plans and qualify for
supplemental retirement benefits under the Company’s supplemental pension plans. Other sections of this Circular provide
further information on these plans.
Comparator Group
The Company’s positioning in the market with respect to total compensation for Named Executive Officers is assessed
based on a comparator group that serves as a reference group.
For fiscal 2015, the following businesses were included in the comparator group:
BMO Financial Group
Brandes Investment Partners and Co.
CIBC
CIBC Mellon
Fédération des caisses Desjardins du Québec
Fidelity Investments Canada Limited
Franklin Templeton Investments
HSBC Bank Canada
TD Bank Group
Empire Life Investments
Investors Group Inc.
Mackenzie Financial Corporation
Manulife Financial
National Bank Financial Group
RBC
Scotiabank
State Street Trust Company Canada
Sun Life Financial Canada
Starting in 2016, the comparator group will be modified to consist of companies in the financial sector, excluding the
five major banks, that are selected based on their earnings, net income and market capitalization. The following companies will
be included in the group:
Manulife Financial
Sun Life Financial Inc.
Great-West Lifeco Inc.
E-L Financial Corporation Limited
National Bank of Canada
CI Financial Corp.
Canadian Western Bank
Element Financial Corporation
Fairfax Financial Holdings Limited
Genworth MI Canada Inc.
Home Capital Group Inc.
IGM Financial Corporation Inc.
Intact Financial Corporation
TMX Group Limited
Executive Share Ownership Guidelines
The Company has adopted a policy requiring certain key executive officers to hold Common Shares, preferred shares
or DSUs equal to a multiple of their base salary as follows:
President and Chief Executive Officer
Executive Vice-President and equivalent
Senior Vice-President and equivalent
- 32 -
Multiple of Annual Base
Salary
3x
2x
1x
Each new executive officer has five years from the date of his hiring or appointment, whichever occurs last, to meet
this requirement. As of the date of this Circular, the Named Executive Officers (as defined below) comply with the policy. In
accordance with the Policy concerning executive share ownership, the executive officers are forbidden from participating in
monetization or other hedging activities related to the Company’s securities they hold as well as their share-based
compensation awards.
The President and Chief Executive Officer has agreed to hold for a two-year period the Common Shares that he will
hold upon retirement.
The following table shows the number and value of Common Shares, preferred shares and DSUs held by Named
Executive Officers as at February 29, 2016.
Common Shares
Yvon Charest
René Chabot
Normand Pépin
Michel Tremblay
Denis Ricard
(#)
120,082
15 603
173,557
28,000
-
$
4,367,382
567,481
6,312,268
1,018,360
-
Preferred Shares
(#)
5,000
-
$
82,300
-
DSUs
(#)
94,103
10,863
66,571
27,122
Complies with Share
Ownership Guidelines
$
3,422,526
395,081
2,421,187
986,427
Yes
Yes
Yes
Yes
Yes
Recoupment (Clawback) Policy
Beginning with the fiscal year ended December 31, 2010, if the Company’s financial statements have to be restated by
reason of fraud or misconduct, the Board or the Human Resources and Governance Committee may, in its sole discretion,
require the reimbursement under certain circumstances of all or a portion of variable compensation paid or vested in the past
twelve months (annual bonus, Deferred Share Units, Performance Share Units, and stock options) in favor of certain executive
officers.
Compensation of Named Executive Officers
The compensation policies described above apply to the Named Executive Officers. The term “Named Executive
Officers” refers to the President and Chief Executive Officer, the Chief Financial Officer, and the three other most highly
compensated executive officers of the Company. Their salary and bonus terms and conditions are established according to a
comparison with the compensation that is payable in the financial services industry in Canada. The objectives of each Named
Executive Officer are established at the beginning of the year. The Human Resources and Governance Committee evaluates the
performance of the President and Chief Executive Officer according to his objectives and after consultation with members of
the Board. The President and Chief Executive Officer evaluates the performance of the other Named Executive Officers.
The Named Executive Officers participate in an annual bonus plan, as does all Company management personnel. The
target bonus is based on four objectives: the achievement of corporate profitability objectives, business development, cost
control and pre-determined criteria specific to each Named Executive Officer. The pre-determined criteria for the President and
Chief Executive Officer are evaluated by each member of the Board of Directors. The pre-determined criteria for the other
Named Executive Officers are evaluated by the President and Chief Executive Officer. The weighting for the 2015 annual bonus
for each Named Executive Officer was as follows:
Named Executive Officer
Yvon Charest
René Chabot
Normand Pépin
Michel Tremblay
Denis Ricard
Target Bonus
(% of Salary)
80
57.5
75
75
57.5
Business Performance Weighting
(%)
Company
Business Unit
85
70
15
75
10
50
35
35
50
Individual
(%)
15
15
15
15
15
The target bonus objectives represent challenging but achievable objectives and are consistent with the Company’s
overall strategy. They are stress tested through modeling of various performance scenarios and their impact on bonus amounts
to ensure potential payouts are aligned with corporate strategy.
- 33 -
Payment of the bonus is also conditional on the attainment of a profit trigger: the bonus is reduced if the profit is
lower than 77% of the budget for the year and no bonus is payable if the profit is below 70% of the budget.
The target bonus is paid when the financial results are in line with the business plan and the qualitative evaluation
fully meets expectations. For each objective, the bonus paid may vary between 50% and 200% of the target bonus based on
pre-established minimums and maximums.
The determination of objectives for purposes of the bonus plan takes into account the business plan approved by the
Board, as well as the objectives communicated to the financial markets. The 2015 objectives were as follows:
Minimum
$336.4 M
2014 sales
103% of the budget
• Net Income to Common Shareholders
• New Business*
• Cost Control*
Target
$410.2 M
Budget
Budget
Maximum
$440.2 M
Industry + 5%
94% of the budget
* The amounts of the individual objectives of each executive officer pertaining to new business and cost control constitute confidential information whose
communication could greatly harm the Company’s interests. Communication of these amounts and quantitative results would provide highly confidential data to
the Company’s competitors, as well as key strategic information that is not known to the public and could influence the markets in an inappropriate manner.
These amounts are therefore not directly disclosed, but are instead represented as percentages.
The following tables summarize the calculation of the annual bonus of the Named Executive Officers for fiscal years
2014 and 2015, for each of the objectives.
Yvon Charest
Objective
Profitability
New Business
Cost Control
Qualitative Assessment
Total
Profit threshold met
Total bonus paid
Weighting (%)
2015
40
30
15
15
100
Bonus as a % of target
2015
2014
68.8
200.0
117.7
86.8
79.3
71.7
162.5
162.5
99.1
141.2
Yes
Yes
99.1
141.2
2015
178,058
228,460
76,962
157,709
641,189
Yes
641,189
Bonus ($)
Weighting (%)
2015
40
15
15
2015
2014
68.8
200.0
117.7
86.8
79.3
71.7
2015
61,722
39,597
26,678
2014
139,503
22,704
18,754
30
155.0
170.0
104,285
88,920
100
103.6
Yes
103.6
154.8
Yes
154.8
232,282
Yes
232,282
269,881
Yes
269,881
2014
503,451
163,874
67,683
153,396
888,404
Yes
888,404
René Chabot
Objective
Profitability
New Business
Cost Control
Divisional Objectives & Qualitative
Assessment
Total
Total bonus paid
- 34 -
Bonus ($)
Normand Pépin
Objective
Profitability
New Business
Cost Control
Assessment
Total
Total bonus paid
Michel Tremblay
Objective
Profitability
New Business
Cost Control
Assessment
Total
Total bonus paid
Weighting (%)
2015
35
30
10
2015
2014
68.8
200.0
121.9
90.2
79.3
71.7
2015
98,975
150,369
32,594
2014
279,848
108,181
28,664
25
164.9
153.0
169,408
152,904
100
109.8
Yes
109.8
142.5
Yes
142.5
451,346
Yes
451,346
569,597
Yes
569,597
2015
2014
68.8
200.0
117.7
86.8
79.3
71.7
2015
94,401
46,142
15,544
2014
266,924
33,098
13,670
50
179.7
167.5
352,178
319,448
100
129.6
Yes
129.6
166.0
Yes
166.0
508,265
Yes
508,265
633,140
Yes
633,140
2015
2014
68.8
200.0
79.3
71.7
2015
43,024
19,836
2014
92,701
13,293
65
148.8
135.5
241,943
163,329
100
121.9
Yes
121.9
145.3
Yes
145.3
304,803
Yes
304,803
269,323
Yes
269,323
Weighting (%)
2015
35
10
5
Bonus ($)
Bonus ($)
Denis Ricard
Objective
Profitability
New Business
Cost Control
Assessment
Total
Total bonus paid
Weighting (%)
2015
25
10
Bonus ($)
Named Executive Officers are eligible to be granted Performance Share Units and stock options. The details of the
options and PSUs granted from 2005 to 2015 can be found hereafter under the heading “Statement of Compensation of Named
Executive Officers – Outstanding Awards as at the End of the Last Financial Year.” Future grants will take into account the
Named Executive Officers’ performance but not previous grants.
PERFORMANCE GRAPH
Common Shares are listed on the TSX under the ticker symbol IAG. iA Financial Group shares were issued at an initial
price of $7.875 on February 3, 2000, taking into consideration the two-for-one split that occurred in 2005.
The graph below shows the Company’s cumulative total Shareholder return versus the cumulative total return of the
S&P/TSX composite index over the past five (5) fiscal years ended December 31, 2015. The graph assumes an initial $100.00
investment in the Company’s Common Shares and in the S&P/TSX composite index as at December 31, 2010.
The histogram at the bottom of the illustration shows the total compensation paid annually to the Named Executive
Officers over the given period. For more information on the identity of and compensation for the Named Executive Officers,
please refer to the “Summary Compensation Table.”
- 35 -
Cumulative Total Return on IAG Shares over the Past Five Years vs.
S&P/TSX Composite Index
Compensation
Value
(in $ millions)
Investment
Value
Total Compensation
of the Five Named
Executive Officers of
Industrial Alliance (in
$ millions)
Industrial Alliance
TSR
$20
$160
$133.0
$140
$15
$120
$100
$112.1
$10
$80
$9,3
$60
S&P/TSX
$40
$6,1
$9,7
$8,2
$8,5
$5
$5,1
$20
$0
$0
2010
2011
2012
2013
2014
2015
The trends apparent in the above graph show that, taking dividends into consideration, the Company’s total
Shareholder return increased during three of the past five fiscal years, namely those ended December 31, 2012, 2013 and 2015.
For those years, the total return on the Company’s shares matched or exceeded that of the S&P/TSX index. The Company’s
total Shareholder return was however below that of the S&P/TSX index during the fiscal years ended December 31, 2011 and
2014.
The graph also shows that the total compensation received by the Named Executive Officers and the total
performance of the common shares of the Company followed similar paths between 2010 and 2012 but somewhat different
paths between 2013 and 2015. During 2013 and 2015, the compensation of executives declined while equity returns have
increased while the reverse occurred in 2014 (slight decrease in the stock performance compared to an increase in
compensation). Over the last five years, the value of the total compensation paid to the Named Executive Officers increased by
40%, whereas the total return of the S&P/TSX Composite Index was 12% and that of the Company’s Common Shares was 33%.
As described in the “Compensation Discussion and Analysis” section of this Circular, a significant portion of the total
direct compensation that Named Executive Officers receive in any year is comprised of variable compensation provided under
the annual bonus and mid- and long-term incentive plans. These plans aim at aligning the interests of Named Executive Officers
with the interests of the Company’s Shareholders.
The following table shows the Named Executive Officers’ cash and equity compensation in 2013, 2014 and 2015 as a
percentage of the Company’s net income after tax.
2015
2014
2013
2.23%
1.83%
1.87%
STATEMENT OF COMPENSATION OF NAMED EXECUTIVE OFFICERS
The following table provides a summary of compensation earned during the fiscal year ended December 31, 2015, by
the Company’s Named Executive Officers, measured by total compensation during the Company’s most recently completed
financial year. Specific aspects of this compensation are dealt with in further detail in the following tables. For compensation
related to the years before 2013, please refer to the Company’s information circulars filed with the Canadian Securities
Administrators and available at www.sedar.com.
- 36 -
Summary Compensation Table
Name and Principal
Occupation
Year
Salary
ShareBased
(1)
Awards
OptionBased
Awards(2)
($)
($)
($)
Non-Equity Incentive Plan
Compensation
Annual
Long-Term
Incentive
Incentive
(3)
Plan
Plan
($)
($)
Pension
Value
All Other
Compensation
Total
Compensation
(4)
($)
($)
($)
YVON CHAREST
President and Chief
Executive Officer
iA Financial Group
2015
808,839
242,585
458,240
641,189
N/A
597,000
N/A
2,747,853
2014
786,644
236,004
657,920
888,404
N/A
947,000
N/A
3,515,972
2013
765,218
229,549
464,000
914,895
N/A
240,000
N/A
2,613,662
RENÉ CHABOT
Executive VicePresident, CFO and
Chief Actuary
iA Financial Group
2015
359,257
97,768
179,000
232,282
N/A
170,000
N/A
1,038,307
2014
317,036
95,114
257,000
269,881
N/A
276,000
N/A
1,215,031
2013
308,400
92,531
166,750
271,774
N/A
258,000
N/A
1,097,455
2015
548,094
164,379
350,840
451,346
N/A
05
N/A
1,514,659
2014
533,054
159,923
503,720
569,597
N/A
05
N/A
1,766,294
2013
518,535
155,571
355,250
557,910
N/A
89,000
N/A
1,676,266
2015
522,769
156,788
286,400
508,265
N/A
415,000
2014
508,424
152,529
411,200
633,140
N/A
401,000
N/A
2,106,293
2013
494,575
148,358
253,750
633,298
N/A
272,000
N/A
1,801,981
2015
392,511
103,941
179,000
304,803
N/A
365,000
2014
337,036
101,093
257,000
269,323
N/A
228,000
N/A
1,192,452
2013
308,400
92,531
166,750
252,222
N/A
248,000
N/A
1,067,903
NORMAND PÉPIN
Executive VicePresident and
Assistant to the
President
iA Financial Group
MICHEL TREMBLAY
Executive VicePresident and Chief
Investment Officer
iA Financial Group
DENIS RICARD
Executive VicePresident, Individual
Insurance and
Annuities
iA Financial Group
1,889,222
1,345,255
(1) Award date share value calculated at $41.71 for 2015, $45.64 for 2014 and $33.56 for 2013. In accordance with the mid-term incentive plan in effect, the initial
share price for a given performance period is determined by the average price of the Company’s Common Shares for the first 20 business days of the period.
The performance period is spread over three fiscal years; it begins on January 1 of the grant year and ends on December 31 of the third year.
(2) Award date fair value of stock options using the Black-Scholes model: $7.16 in February 2015, $10.28 in February 2014 and $7.25 in February 2013. The pricing
model assumes the following information: Risk-free interest rate 0.86% (1.81% in 2014 and 1.71% in 2013); expected volatility 28.45% (27.90% in 2014 and
25% in 2013); expected life 6.0 years (6.4 years in 2014 and 6.3 years in 2013); expected dividends 2.86% (2.34% in 2014 and 2.67% in 2013).
(3) The bonus is established according to a predetermined formula (see “Compensation of Named Executive Officers” on page 33) and is paid in cash or DSUs
during the first three months of the following year.
(4) The aggregate value of perquisites and benefits to the Named Executive Officers is less than the lesser of $50,000 and 10% of the Named Executive Officer’s
total annual salary.
(5) Normand Pépin’s accrued pension in 2015 is $0 as he is no longer accruing credited service in the registered and executive pension plans. The pension payable
to Mr. Pépin by these plans has reached the limit of 80% of average salaries and bonuses. It should be noted that, following a meeting of the board of directors
on November 4, 2009, it was decided that the ceiling for the pension payable to Mr. Pépin by the registered and supplemental pension plans, set at 70% of
average salaries and bonuses, would be increased to 80%.
Outstanding Awards as at the End of the Last Financial Year
At December 31, 2015, stock options to purchase Common Shares of the Company were awarded to the Named
Executive Officers and are outstanding as set out in the following table. All of the options awarded had an exercise price equal
to the weighted average price of the Common Shares traded on the TSX during the five trading days immediately preceding the
day on which the option was awarded. The options vest over four years at the rate of 25% per year, commencing one year
following the date of the award. The options may be exercised for a period of ten years from the date of the award.
PSU vesting is subject to a performance requirement and a three-year vesting period. The value of each PSU awarded
is equal to the average closing price of the Company’s Common Shares for the first 20 business days of the reference period.
PSUs also accumulate notional dividends.
- 37 -
Share-Based Awards
Option-Based Awards
Year of
Award
2007
2008
2009
2010
2011
Yvon Charest
2012
2013
2014
2015
Total
2007
2008
2009
2010
2011
René Chabot
2012
2013
2014
2015
Total
2007
2008
2009
2010
2011
Normand Pépin
2012
2013
2014
2015
Total
2008
2009
2010
2011
Michel Tremblay
2012
2013
2014
2015
Total
Number of
Securities
Underlying
Unexercised
Options
Option
Exercise
Price
(#)
($)
80,000
72,000
70,000
70,000
68,000
68,000
64,000
64,000
64,000
550,000
18,000
18,000
18,000
18,000
20,000
25,000
23,000
25,000
25,000
190,000
54,000
52,000
52,000
35.64
37.37
19.23
32.08
38.48
26.03
35.51
43.38
39.96
Feb. 7, 2017
Feb. 13, 2018
Feb. 6, 2019
Feb. 5, 2020
Feb. 11, 2021
Feb. 10, 2022
Feb. 8, 2023
Feb. 7, 2024
Feb. 6, 2025
35.64
37.37
19.23
32.08
38.48
26.03
35.51
43.38
39.96
Feb. 7, 2017
Feb. 13, 2018
Feb. 6, 2019
Feb. 5, 2020
Feb. 11, 2021
Feb. 10, 2022
Feb. 8, 2023
Feb. 7, 2024
Feb. 6, 2025
35.64
37.37
19.23
32.08
38.48
26.03
Feb. 7, 2017
Feb. 13, 2018
Feb. 6, 2019
Feb. 5, 2020
Feb. 11, 2021
Feb. 10, 2022
35.51
Feb. 8, 2023
Feb. 7, 2024
52,000
49,000
49,000
49,000
357,000
38,000
18,000
35,000
40,000
40,000
171,000
43.38
39.96
37.37
19.23
32.08
38.48
26.03
35.51
43.38
39.96
-
Option Expiry
Date
PSU
DSU
Market or
Market or
Payout Value Outstanding Payout Value
of Shareof ShareDSUs (All
based
These DSUs based awards
that Have
awards that
Have Fully
Vested (Not
Have Not
Vested
Paid or
Vested(2)
Value of
Unexercised
In-theMoney
Options(1)
Number of
Shares or
Share Units
that Have
Not Vested
($)
(#)
($)
5,441
5,977
11,418
2,193
2,409
4,602
-
244,029
268,068
512,097
98,356
108,044
206,400
165,362
181,642
347,004
157,693
173,255
330,948
Feb. 6, 2025
Feb. 13, 2018
Feb. 6, 2019
Feb. 5, 2020
Feb. 11, 2021
Feb. 10, 2022
Feb. 8, 2023
Feb. 7, 2024
Feb. 6, 2025
-
- 38 -
679,200
486,720
1,743,000
843,500
384,200
1,230,800
551,680
48,000
5,967,100
152,820
121,680
448,200
216,900
113,000
452,500
198,260
18,750
1,722,110
365,040
626,600
293,800
941,200
422,380
36,750
2,685,770
214,700
325,800
301,700
30,000
872,200
3,687
4,050
7,737
3,516
3,863
7,379
(#)
94,553
Distributed)
($)
4,172,624
10,863
479,384
66,571
2,937,778
-
-
Share-Based Awards
Option-Based Awards
Year of
Award
Denis Ricard
Number of
Securities
Underlying
Unexercised
Options
Option
Exercise
Price
(#)
($)
18,000
35.64
37.37
19.23
32.08
38.48
26.03
35.51
2007
2008
2009
2010
2011
2012
2013
2014
2015
Total
18,000
18,000
20,000
13,000
23,000
25,000
25,000
160,000
43.38
39.96
-
Option Expiry
Date
PSU
DSU
Market or
Market or
Payout Value Outstanding Payout Value
of Shareof ShareDSUs (All
based
These DSUs based awards
that Have
awards that
Have Fully
Vested (Not
Have Not
Vested
Paid or
Vested(2)
Value of
Unexercised
In-theMoney
Options(1)
Number of
Shares or
Share Units
that Have
Not Vested
($)
(#)
($)
(#)
152,820
-
121,680
216,900
-
104,501
114,860
219,361
27,122
Feb. 7, 2017
Feb. 13, 2018
Feb. 6, 2019
Feb. 5, 2020
Feb. 11, 2021
Feb. 10, 2022
Feb. 8, 2023
Feb. 7, 2024
Feb. 6, 2025
-
113,000
235,300
198,260
18,750
1,056,710
2,330
2,561
4,891
Distributed)
($)
1,196,894
(1) This amount is calculated based on the difference between the closing share price on December 31, 2015 ($44.13) and the option exercise price.
(2) The value of non-vested PSUs is based on a 100% target performance criteria and the average share price for the last 20 business days of 2015 ($44.85).
(3) These executive officers have elected to receive a percentage of their annual bonus in the form of DSUs. All these DSUs have fully vested. This amount is
calculated based on the closing price of the share on December 31, 205 ($44.13).
Incentive Plan Awards – Value Vested or Earned During the Year
The following table lists, for each of the Named Executive Officers, the values of incentive plan awards that were
earned or vested during 2015.
Name
Option-Based Awards –
Value Vested During
the Year
($)
Yvon Charest
René Chabot
Normand Pépin
Michel Tremblay
Denis Ricard
365,150
99,738
212,550
155,325
99,738
Share-Based
Awards – Value
Vested During
the Year(1)
($)
495,951
199,874
336,106
320,498
199,874
Non-Equity Incentive Plan
Compensation
Value Earned During the
Year(2)
($)
641,189
451,348
508,265
304,803
232,282
(1) Awards for 2013, for which the performance period was from January 1, 2013, to December 31, 2016, were paid on
February 25, 2016.
(2) The Named Executive Officer can choose to receive all or part of his annual bonus in “DSUs.” DSUs are redeemable for cash only
upon termination of employment, retirement or death of the Named Executive Officer.
Payment of PSUs Awards Granted in 2013
PSUs awarded to Named Executive Officers in 2013 vested on December 31, 2015 (the end of the three-year
performance evaluation period for purposes of PSUs).
The table below shows how the payment of PSUs was calculated.
•
•
•
•
The amount received by the Named Executive Officers is based on the number of units that have vested and the
share price at the time of vesting, as described below.
The number of units that have vested was determined based on the performance coefficient which was
calculated based on the Company’s performance during the three-year reference period (see below for more
details);
During the reference period, notional dividends were received by the Named Executive Officers as additional
units;
The vesting price corresponds to the arithmetic average of the weighted average prices of the Company’s shares
for the 20-day period before the end of the reference period, being the end of the fiscal year ended
December 31, 2015;
- 39 -
•
The difference between the value of the award and the value of the payment includes the effect of the notional
dividends received by the Named Executive Officers as additional units, the increase in the share price since the
award and the performance coefficient.
Number of
PSUs
awarded in
2013
Number of
Dividend
Equivalents
Received
Total
Number of
PSUs
Performance
Coefficient
%
Vesting Price
($)
Payment
Value on
Vesting
($)
Award
Value
($)
Difference
Between the
Award Value
and the
Payment
Value ($)
6,842
2,758
4,637
4,422
2,758
530
213
359
342
213
7,372
2,971
4,996
4,764
2,971
1.5
1.5
1.5
1.5
1.5
44.85
44.85
44.85
44.85
44.85
495,951
199,874
336,106
320,498
199,874
229,549
92,531
155,571
148,358
92,531
266,402
107,343
180,535
172,140
107,343
Yvon Charest
René Chabot
Normand Pépin
Michel Tremblay
Denis Ricard
Calculation of the Performance Coefficient
2013-2015
Threshold
50%
Target
100%
Maximum
150%
Actual
$650 M
$800 M
$950 M
$ 1,114.9 M
Performance
Coefficient for
the Period
1.5
Options Exercised
The following table lists, for each of the Named Executive Officers, the number and net value of options that were
exercised during 2015.
Name
Yvon Charest
René Chabot
Normand Pépin
Michel Tremblay
Denis Ricard
Total
Option Awards
Number of Shares
Acquired on Exercise (#)
Exercise Price
65,200
11,500
13,300
54,000
26,100
10,000
10,000
18,000
10,000
2,000
10,000
230,100
$30.22
$30.22
$30.22
$35.64
$19.23
$26.03
$26.03
$19.23
$30.22
$26.03
$26.03
-
Net Value Realized Upon
(1)
Exercise
$898,456
$181,470
$196,574
$489,240
$673,902
$189,129
$189,300
$421,200
$122,800
$34,239
$168,000
$3,564,310
(1) This amount is calculated based on the difference between the exercise price and the market price of the shares at the time of exercise.
Retirement Plan for Named Executive Officers
The Named Executive Officers participate in the Company’s registered pension plans and qualify for supplemental
retirement benefits under the Company’s supplemental pension plans. These plans are defined benefit plans.
Under these plans, the pension is calculated on the basis of a maximum of 2% of the average salary and performance
bonus for the best five years, multiplied by the number of credited years of service and is generally limited to 70% of the
average salaries and bonuses. The calculation of the annuity is subject to a maximum percentage of salary based on pension
credits for 2006 and subsequent years, this percentage being limited to 175%, or 200% for the Chief Executive Officer, of the
base salary for the last three years. The normal form of pension is a joint and last survivor pension for which the amount
payable to the spouse is reduced on the death of the pensioner to 60% of the amount paid to the pensioner before his death.
The annual retirement pension provided for under the registered pension plans is limited to the maximum amount
authorized by the tax authorities for each credited year of service. The annual retirement pension payable under the
- 40 -
supplemental pension plans is calculated according to the formula described below, less the pension payable under the
registered pension plans.
The following table sets forth the defined benefit plans for each of the Named Executive Officers that provide for
payments or benefits at, following, or in connection with retirement:
Number
of Years
Credited
Service
Yvon Charest
René Chabot
Normand Pépin
Michel Tremblay(1)
Denis Ricard
35.00
32.42
40.00
11.69
30.58
Annual Benefits
Payable
At Year
End
($)
At Age 65
(2)
($)
1,109,343
334,031
805,004
210,681
316,227
1,109,343
360,613
805,004
345,913
361,934
Opening
present
value of
defined
benefit
obligation
($)
Compensatory
Change
(3)
($)
NonCompensatory
Change
(4)
($)
Closing present
value of
defined benefit
obligation
($)
16,898,000
4,881,000
12,166,000
2,692,000
4,545,000
597,000
170,000
0
415,000
365,000
(13,000)
(69,000)
170,000
(34,000)
(84,000)
17,482,000
4,982,000
12,336,000
3,073,000
4,826,000
(1) Mr. Tremblay joined the Company in mid-career in March 2008. The Human Resources and Governance Committee reviewed this particular case and
established that, for each year of recognized service where he is employed by the Company, 1.5 years of service should be credited to him. The credited years
of service indicated in this table therefore include 3.9 years of additional service. The annual benefits payable to Mr. Tremblay for these additional years of
service totalled $70,222 as at December 31, 2015, and the projected additional annual benefits at the age of 65 total $115,300.
(2) Annual benefits payable at age 65 or at the end of the fiscal year if the member is over age 65.
(3) Compensatory change includes the cost for benefits accrued during the year, plan changes, and the impact on liabilities of differences between actual and
estimated earnings.
(4) Non-compensatory change includes the interest on the accrued obligation at the start of the year as well as the impact on liabilities of changes in assumptions.
Termination and Change of Control Benefits
In June 2000, the Company adopted an Indemnification Policy in the Event of a Change of Control of iA Financial
Group with the purpose of specifying the nature of the indemnities to be granted to certain eligible executives if their
employment was not maintained in the event of a change of control, as defined in the policy. This policy provides that, if a
change of control occurs and the Company terminates the employment of an executive without cause within 24 months
following the date of change in control, the executive shall be entitled to a lump-sum payment (subject to the customary
withholdings) equal to 24 months of base salary, all amounts (subject to the customary withholdings) to be paid to him under
the Stock Option Plan and the MTIP, a lump-sum payment (subject to the customary withholdings) equal to twice the average
bonuses for the previous three years, maintenance of employment benefits for up to 24 months, all vacation days earned but
not taken, credited service of up to 24 months for purposes of the supplemental pension plan and certain modified terms and
conditions related to early retirement. This policy was amended to change the payment to which the Chief Executive Officer
would be entitled with respect to the lump-sum payment as base salary, from 36 months to 24 months, which means that all
executives who are entitled to this payment will receive 24 months.
Other than this policy, there are no other contracts, agreements, plans, or mechanisms in place to provide an
indemnity in case of termination of the Named Executive Officer’s employment with iA Financial Group.
The following table sets out estimates of the payments and benefits to the Named Executive Officers eligible for
benefits under this policy that would have been triggered upon a change in control, assuming that the Named Executive
Officer’s employment had been terminated on December 31, 2015.
Name
Yvon Charest
Normand Pépin
Michel Tremblay
Salary
($)
Bonus
($)
Acceleration of
Unvested Options
($)
PSUs
Accrued
Vacation
($)
Pension
Benefits
($)
Total
($)
1,617,340
1,095,960
1,045,320
1,629,658
1,052,568
1,183,136
619,540
474,053
351,765
657,010
445,245
424,575
127,803
193,743
69,251
1,756,000
1,241,000
6,407,351
3,261,569
4,315,047
Detailed Tables of Compensation of the Named Executive Officers
The following tables present the estimated value of the total cash and equity compensation of the Named Executive
Officers relating to the most recently completed financial year. Estimated total compensation includes variable compensation,
whether paid in cash or stock-based, for each of the Named Executive Officers. For compensation paid in the years previous to
2013, please refer to the Company’s information circulars filed with the Canadian Securities Administrators and available at
www.sedar.com.
- 41 -
Yvon Charest
President and Chief Executive Officer
2015
Cash Compensation
Base Salary
Annual Bonus
Total Cash Compensation
Stock-Based Compensation
Stock Options(1)
DSU
PSU
Total Equity Value
Annual Cost of Retirement Benefits
Total Cost of Compensation
(1)
2014
2013
$808,839
$391,189
$1,200,028
$786,644
$638,404
$1,425,048
$765,218
$664,895
$1,430,113
$458,240
$250,000
$242,585
$950,825
$597,000
$2,747,853
$657,920
$250,000
$236,004
$1,143,923
$947,000
$3,515,972
$464,000
$250,000
$229,549
$943,549
$240,000
$2,613,662
Estimated value of stock options calculated using the Black-Scholes model: $7.16 in February 2015, $10.28 in February 2014 and $7.25 in February 2013.
Mr. Yvon Charest has been the President and Chief Executive Officer of the Company since May 2000. Since the
Company became a public company in February 2000, its market capitalization has increased from $591,735,674 to
$4,520,453,990 as at December 31, 2015. Mr. Charest’s total compensation since the Company became a public company
(2000) is $33,576,470 including the realized gains from options awarded during the period. This represents 0.74% of the
increase in market capitalization during this period.
One of the underlying guidelines of the Company's compensation objectives is the alignment of compensation with
Shareholder interests. Compensation related to the mid- and long-term incentive plans is one way this is achieved.
The following table shows the total direct compensation awarded to Mr. Charest during the past five years along with
the current actual value of this compensation in comparison with Shareholder value.
Year
2010
2011
2012
2013
2014
Total Direct Compensation
Initial Value ($)(1)
Actual Value ($) at
December 31, 2015(2)
1,836,367
1,287,820
2,222,222
2,373,752
2,568,972
Value of $100
Value ($) for Mr. Charest(3)
Shareholder Value ($)(4)
2,227,667
1,108,300
3,459,584
2,727,834
1,967,077
121.31
86.06
155.68
114.92
76.57
160.64
138.91
184.96
150.37
100.26
(1) Includes salary and variable compensation awarded at year-end for annual performance.
(2) The actual value as at December 31, 2015 includes the following:
- Salary and annual cash bonuses received during the award year;
- The actual value derived from PSUs and exercised options granted during the award year, at the time of vesting;
- The value at December 31, 2015 of the PSUs awarded during the award year that have not vested; and
- The in-the-money value at December 31, 2015 of stock options awarded during the award year that are not vested or that are vested but have not been
exercised.
(3) Represents the actual value for Mr. Charest of each $100 of total direct compensation awarded during the indicated year.
(4) Represents the cumulative value of a $100 share investment made the first trading day of the indicated year, assuming dividend reinvestment.
René Chabot
Executive Vice-President, CFO and Chief Actuary
2015
Cash Compensation
Base Salary
Annual Bonus
Stock Options(1)
DSU
PSU
Total Equity Value
Normand Pépin
Executive Vice-President and Assistant to the President
2014
$359,257
$116,141
$317,036
$269,881
$475,398
$586,917
$179,000
$116,141
$97,768
$392,909
$170,000
$1,038,307
$257,000
$0
$95,114
$352,114
$276,000
$1,215,031
Cash Compensation
Base Salary
Annual Bonus
Stock Options(1)
DSU
PSU
Total Equity Value
- 42 -
2015
2014
$548,094
$225,673
$533,054
$319,597
$773,767
$852,651
$350,840
$225,673
$164,379
$740,892
$0
$1,514,659
$503,720
$250,000
$159,923
$913,643
$0
$1,766,294
Michel Tremblay
Executive Vice-President and Chief Investment Officer
2015
Cash Compensation
Base Salary
Annual Bonus
Stock Options(1)
DSU
PSU
Total Equity Value
(1)
2014
$522,769
$508,265
$508,424
$633,140
$1,031,034
$1,141,564
$286,400
$0
$411,200
$0
$156,788
$443,188
$415,000
$152,529
$563,729
$401,000
$2,106,293
$1,889,222
Denis Ricard
Executive Vice-President, Individual Insurance and Annuities
Cash Compensation
Base Salary
Annual Bonus
Stock Options(1)
DSU
PSU
Total Equity Value
2015
2014
$392,511
$121,921
$337,036
$53,865
$514,432
$390,901
$179,000
$182,882
$257,000
$215,459
$103,941
$465,823
$365,000
$101,093
$573,552
$228,000
$1,192,453
$1,345,255
Estimated value of stock options calculated using the Black-Scholes model: $7.16 in February 2015 and $10.28 in February 2014.
LONG-TERM INCENTIVE PLAN (STOCK OPTION PLAN)
The Company has set up a Stock Option Plan for executives and full-time employees or other service providers of the
Company and its subsidiaries, who are designated from time to time by the Board of Directors or by any committee of the
Board having authority in this regard. Since the adoption of the Stock Option Plan, 11,350,000 options have been reserved for
grants under the Plan. Excluding options that were cancelled, a total of 8,285,200 options were granted by the Board of
Directors pursuant to the Plan and 3,760,750 were outstanding as at February 29, 2016, representing respectively 8.08% and
3.67% of the outstanding Common Shares as at February 29, 2016. As at such date, a total of 3,064,800 stock options remained
issuable under the Plan, representing 2.99% of the outstanding Common Shares.
The Human Resources and Governance Committee grants options and determines the number of Common Shares
subject to the options, the exercise price, the expiry date of the option, and the date from which it may be exercised. The
Committee generally anticipates that grants will be made to executives on a yearly basis in the month of February. The number
of options granted annually to each of the Named Executive Officers is based on the participant’s compensation, potential,
management level, and participation in the Company’s results. Grants are presented by the President and CEO, and reviewed
and approved by the Human Resources and Governance Committee. No option may be granted for a term of more than 10
years, and the exercise price of each option is equal to the weighted average price of the Common Shares traded on the TSX
during the five trading days immediately preceding the day on which the option is granted.
In addition, the Stock Option Plan provides that the maximum number of Shares which may be reserved for issuance
to any one person pursuant to the exercise of stock options granted under the Plan or of options granted pursuant to any other
share compensation arrangement may not exceed 1.4% of the outstanding issue at the time of the grant. Also, the Plan
provides that the total number of shares that may be issued to insiders at any time pursuant to the exercise of stock options
granted under the Plan and any other share compensation arrangements may not, without the approval of the Shareholders,
exceed 10% of the outstanding issue. It is also stipulated that the number of shares issued under the Plan and any other share
compensation arrangements in a one-year period shall not exceed 10% of the outstanding issue in the case of shares issued to
insiders, or 1.4% of the outstanding issue in the case of shares issued to any one insider and his associates.
Unless otherwise indicated by the Human Resources and Governance Committee, at the time of grant, options may
be exercised in whole or in part at any time, provided that (a) no option may be exercised prior to the first anniversary of the
grant and (b) a maximum of 25%, 50%, 75%, and 100% of the total number of optioned Common Shares may be purchased as
at the first, second, third, and fourth anniversary, respectively, of the grant.
Upon the exercise of options, the Company may avail itself of the right to subscribe for Common Shares or receive a
cash payment (subject to a maximum cash amount determined by the Committee).
In the event of a potential change in control of the Company (as defined in the Stock Option Plan), the Committee has
the discretion, without the need to obtain the agreement of any participant, to accelerate the dates on which options may be
exercised or will expire.
The Company does not have a policy of providing financial assistance to permit the exercise of options granted under
the Stock Option Plan. Under the Stock Option Plan, options are not transferable.
Upon the occurrence of certain events, options may not be exercised after the following dates (unless the Committee,
decides otherwise) and then, only in respect of the number of options vested on the date of the event giving rise to the early
expiry. In the event the participant resigns or is terminated for cause, the early expiry occurs on the date of resignation or
- 43 -
termination. In the event of death, it occurs six (6) months thereafter. Upon termination of employment for any other reason, it
occurs three (3) years after termination. The Committee may in such circumstances modify the number of options vested on
the relevant date.
The Committee may, subject to regulatory approval and, where applicable, Shareholder approval, at its discretion,
amend the Stock Option Plan and the terms of any option thereafter to be granted and, without limiting the generality of the
foregoing, make amendments to comply with applicable laws and regulations, provided always that any such amendment may
not alter the terms of any outstanding options or impair any right of the holder thereof. Shareholder approval is required for
the following types of amendments: a) an increase in the maximum number of shares reserved for issuance under the Plan; b)
an expansion of the class of eligible recipients of options under the Plan that would permit inclusion of non-employee directors;
c) the addition of a cashless exercise feature which does not provide for a full reduction of the number of shares reserved for
issuance; d) the addition of deferred or restricted share unit provisions or similar provisions by which participants in the Plan
may receive shares while no cash consideration is received by the Company; e) an expansion of the transferability of options,
other than for estate settlement purposes; f) a reduction in the exercise price of outstanding options or a cancellation for the
purpose of issuing new options with a lower exercise price to the same person; g) an extension of the expiry date of an option;
h) an increase in the maximum number of shares that are issued to insiders within any one-year period or issuable to insiders at
any time under all security-based compensation arrangements of the Company or to any one insider and such insider’s
associates in any one-year period; i) the addition of any form of financial assistance or an amendment to a financial assistance
provision which is more favourable to participants in the Plan; and j) an amendment to the Plan amendment procedure.
The Committee may, without Shareholder approval, but subject to receipt of regulatory approval, where required, in
its sole discretion, make all other amendments to the Plan or awards of stock options under the Plan that are not contemplated
in the Plan, including, without limitation, amendments of a “housekeeping” or clerical nature, amendments clarifying any
provision of the Plan and amendments required to comply with applicable securities laws, rules, regulations or policies, a
change to the vesting provisions of a stock option, a change to the termination provisions of a stock option which does not
entail an extension beyond its original expiry date, and suspending or terminating the Plan.
The following table provides the number of options outstanding and available for grant under the Stock Option Plan
as at December 31, 2015.
Options Outstanding for the Last Financial Year
Plan Category
Equity compensation plans
approved by Shareholders
Equity compensation plans not
approved by Shareholders
Number of Securities
Remaining for Future Issuance
under Equity Compensation Plan
(Excluding Securities Reflected in
the First Column)
Number of Securities to be Issued
upon Exercise of Outstanding
Options, Warrants, or Rights
Weighted-Average Exercise
Price of Outstanding Options,
Warrants, and Rights
3,299,650
$30.49
3,555,800
N/A
N/A
N/A
As at December 31, 2015, options to acquire 3,299,650 Common Shares were granted and outstanding, representing
approximately 3.2% of the total number of Common Shares issued and outstanding at that time. During the year ended
December 31, 2015, the Company granted 513,000 options, representing approximately 0.5% of the total Common Shares
issued and outstanding.
LOANS TO SENIOR EXECUTIVES AND DIRECTORS
In 2005, the Company adopted a policy to no longer make loans to senior executives and directors to acquire shares
of the Company. Consequently, since that day, no loan has been granted to the directors. All of the loans that had been
granted before the adoption of this policy have been reimbursed.
ADVISORY VOTE ON EXECUTIVE COMPENSATION
At its Annual Meeting in 2009, the Company announced it would request that its Shareholders voluntarily participate
in an advisory, non-binding vote on a resolution respecting executive compensation. The Company’s executive compensation
program is intended to attract, motivate, reward, and retain the senior management talent required to achieve the Company’s
objectives and increase Shareholder value. The Company’s compensation program is discussed in more detail in the section of
the Circular entitled “Compensation Discussion and Analysis”.
- 44 -
The Company is presenting this proposal, which gives you, as a Shareholder, the opportunity to endorse the
Company’s executive compensation program by voting on the following resolution:
BE IT RESOLVED, on an advisory basis and not to diminish the role and responsibilities of the Board of
Directors,
THAT the Shareholders accept the approach to executive compensation disclosed in the Information Circular of
the Company dated February 29, 2016.
The Board of Directors recommends that Shareholders endorse the compensation program for our executive officers
by voting FOR the above resolution. As indicated in the section “Compensation Discussion and Analysis” of this Circular, the
Board of Directors believes that executive compensation for 2015 is reasonable and appropriate, as justified by the
performance of the Company, and is the result of a carefully considered, largely formulaic approach.
Because your vote is advisory, it will not be binding upon the Board of Directors. However, the Human Resources and
Governance Committee will take into account the outcome of the vote when considering future executive compensation
arrangements.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADVISORY RESOLUTION ON THE COMPANY’S
APPROACH TO COMPENSATION AS DESCRIBED IN THE COMPENSATION DISCUSSION AND ANALYSIS AND ELSEWHERE IN THIS
CIRCULAR. PROXIES WILL BE VOTED IN FAVOUR OF THE RESOLUTION UNLESS OTHERWISE SPECIFIED.
SHAREHOLDER PROPOSALS
The Company has received, within the deadline prescribed by law, and included in this Circular four Shareholder proposals to
be submitted at the Meeting. The full text of the proposals submitted for vote by Shareholders has been set forth in Schedule C
of this Circular together with the Board of Directors’ response.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE AGAINST PROPOSALS 1, 2, 3 AND 4, DESCRIBED IN SCHEDULE C
OF THIS CIRCULAR, FOR THE REASONS STATED FOLLOWING EACH PROPOSAL. PROXIES WILL BE VOTED AGAINST THE
PROPOSALS UNLESS OTHERWISE SPECIFIED.
Proposals on any matters to be voted on at the 2017 Annual Meeting of Shareholders must be received by the Company no
later than November 29, 2016.
APPOINTMENT OF THE EXTERNAL AUDITOR
Deloitte LLP (formerly Samson Bélair / Deloitte & Touche LLP), and its predecessors have been the external auditor of
the Company since 1940.
In 2015 and 2014, the Company paid out the following fees to Deloitte LLP:
(1)
Audit fees
(2)
Audit-related fees
Tax fees
All other fees
Total
2015
(thousands of dollars)
2,503
85
2,588
2014
(thousands of dollars)
2,606
219
2,825
(1) These fees were incurred to audit the financial statements of Industrial Alliance Insurance and Financial Services Inc., several of its subsidiaries, and its
segregated funds.
(2) These fees were incurred for certification and revision services related to the issuance of capital, acquisition of businesses, and employee benefit plans.
During 2012, in the context of its analysis conducted in order to make a recommendation in respect to the
appointment of the external auditor for the 2013 fiscal year, the Audit Committee recognized the excellent quality of work that
has been carried out by Deloitte LLP over the past 70 years during which it has acted as the Company’s external auditor.
However, with a view to ensuring sound management of the auditing services obtained by the Company, the Audit Committee
proceeded with a request for proposals to several public accounting firms. Following this process, the Audit Committee has
recommended the renewal of Deloitte LLP’s mandate as external auditor of the Company.
- 45 -
For the 2016 financial year, and in accordance with the recommendation of the Audi
Auditt Committee, it is proposed that
Deloitte LLP,, be reappointed at the Meeting, or at any adjournment or adjournments thereof, as external auditor of the
Company, to hold office until the close of the next Annual Meeting of the Shareholders and Policyholders,
Policyholders and that their
compensation be determined by the Board of Directors.
During the 2015 financial year, the Audit Committee obtained written confirmation from Deloitte LLP confirming its
independence and objectivity in relation to the Company, according to the code of ethics of the Ordre des comptables
professionnels agréés du Québec.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE APPOINTMENT OF DELOITTE LLP AS EXTERNAL AUDITOR
OF THE COMPANY.
INSIDERS AND OTHERS WITH AN INTEREST IN MATERIAL TRANSACTIONS
To the best of the Company’s knowledge, none of the executive officers, directors, or nominee directors of the
Company or, as the case may be, any of its subsidiaries, or any of their associates or affiliates, had an interest, direct or indirect,
in a material transaction completed since the start of the last completed fiscal year of the Company or in a proposed
transaction that has materially affected or would materially affect the Company or any of its subsidiaries.
ADDITIONAL INFORMATION
Financial information about the Company can be found in the consolidated financial statements and Management’s Discussion
and Analysis of Results of Operations and Financial Position for its last completed fiscal year. To obtain free copies of the
Company’ss most recent Annual Information Form and Annual Report, including the consolidated financial statements and
Management’s Discussion and Analysis of Results of Operations and Financial Position thereon, please send a written request
to the Corporate Secretary
ary at 1080 Grande Allée West, P.O. Box 1907, Station Terminus, Quebec City, Quebec, G1K 7M3.
Additional information on the Company is also provided on the SEDAR website at www.sedar.com as well as on the Company’s
website www.ia.ca.
APPROVAL OF THE DIRECTORS
The contents and sending of this Circular have been approved by the Board of Directors of the Company.
Quebec City, Quebec, February 29, 2016
Jennifer Dibblee
Vice-President, Legal Services
Corporate Secretary
- 46 -
SCHEDULE A – STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Company is subject to the rules contained in National Instrument 58-101 and National Policy 58-201 of the Canadian Securities
Administrators, which require that the Company disclose information on its corporate governance practices, as described below.
For purposes of the following table, “issuer” means the Company. Unless otherwise indicated, the information hereafter mentioned is as of the
date of the Circular.
Corporate Governance Disclosure Requirement
1. Board of Directors
2.
Comments
(a)
Disclose the identity of directors who are
independent.
Thirteen of the fourteen directors nominated for election are independent in
accordance with the definition used by the Canadian Securities Administrators. They
are Jocelyne Bourgon, Pierre Brodeur, Denyse Chicoyne, Robert Coallier, Agathe Côté,
Michael Hanley, Claude Lamoureux, John LeBoutillier, Jacques Martin, Francis P.
McGuire, Danielle G. Morin, Mary C. Ritchie and Louis Têtu. None of these persons or
persons related to them have a direct or indirect relationship with the Company.
(b)
Disclose the identity of directors who are
not independent and describe the basis
for that determination.
A single director, Yvon Charest, has a direct relationship with the Company, being its
President and Chief Executive Officer since 2000.
(c)
Disclose whether or not a majority of the
directors are independent.
Over 90% (thirteen out of fourteen) of the directors whose election to the position of
director is proposed by management are independent.
(d)
If a director is presently a director of any
other issuer that is a reporting issuer (or
the equivalent) in a jurisdiction of
Canada or a foreign jurisdiction, identify
both the director and the other issuer.
All directors who hold the office of director with other public companies are
presented under the section on the election of directors-nominees in the Circular
(page 7 and following).
(e)
Disclose whether or not the independent
directors hold regularly scheduled
meetings at which non-independent
directors and members of management
are not in attendance. If the independent
directors hold such meetings, disclose
the number of such meetings, held since
the beginning of the issuer's most
recently completed financial year. If the
independent directors do not hold such
meetings, describe what the board does
to facilitate open and candid discussion
among its independent directors.
Independent directors systematically hold in camera meetings at the end of each
regular and special Board meeting, under the chairmanship of the Chairman of the
Board. The independent directors therefore met in camera after each of the eight
Board meetings held during the financial year ended December 31, 2015. The Board
committees also meet in the absence of management at the end of each regular and
special meeting.
(f)
Disclose whether or not the chair of the
Board is an independent director. If the
board has a chair or lead director who is
an independent director, disclose the
identity of the independent chair or lead
director, and describe his or her role and
responsibilities. If the board has neither
a chair that is independent nor a lead
director that is independent, describe
what the board does to provide
leadership for its independent directors.
The Chairman of the Board, John LeBoutillier, is an independent director. His role and
responsibilities are to ensure that the Board functions independently of management.
He manages the affairs of the Board and monitors its effectiveness, and chairs all
Board meetings including in camera sessions as well as annual meetings of
Shareholders and Policyholders. The Chairman is also responsible for ongoing director
education, for the continuous renewal of the Board, and for setting standards of
performance for Board and committee members.
(g)
Disclose the attendance record of each
director at all Board meetings since the
beginning of the most recently
completed financial year.
This information appears under the section on the election of directors-nominees in
the Circular (page 7 and following).
Board Mandate
Disclose the text of the Board’s written
mandate. If the board does not have a written
mandate, describe how the board delineates its
role and responsibilities.
The Board of Directors Charter is attached to the Circular in schedule B.
- 47 -
3.
4.
Position Descriptions
(a)
Disclose whether or not the Board has
developed written position descriptions
for the Chairman of the Board and the
Chairmen of each Board committee. If
the board has not developed written
position descriptions for the chair and/or
the chair of each board committee,
briefly describe how the board
delineates the role and responsibilities of
each such position
The Board has developed written position descriptions for the Chairman of the Board
(as summarized above) and for the Chair of Board committees. The latter is
responsible for the direction and effective functioning of the committee, the
performance of the tasks described in the committee’s mandate, and the execution of
any other responsibilities that the Chair may be assigned by the Board. The Chair of a
committee is an independent director appointed by the Board upon recommendation
of the Chairman of the Board, who consults the Human Resources and Governance
Committee.
(b)
disclose whether or not the Board and
chief executive officer (“CEO”) has
developed a written position description
for the CEO. If the board and CEO have
not developed such a position
description, briefly describe how the
board delineates the role and
responsibilities of the CEO.
The Board has developed a written description for the position of President and Chief
Executive Officer. He is responsible for the daily management of the Company within
the limits of the powers granted by the Board and in accordance with applicable laws
and regulations, with the aim of achieving the Company’s strategic business goals.
More specifically, the CEO formulates and submits to the Board the Company’s
strategic plan, establishes the Company’s organizational structure together with the
Board, and oversees its ongoing development and assessment. He delegates
responsibilities to the various executives and oversees their professional development
and motivation, all while ensuring coherence and collaboration within management.
Orientation and Continuing Education
(a)
Describe what measures the Board takes
to orient new directors regarding:
(i)
(ii)
(b)
5.
the role of the Board, its
committees, and its directors, and
the nature and operation of the
issuer’s business.
Briefly describe what measures, if any,
the Board takes to provide continuing
education for its directors. If the board
does not provide continuing education,
describe how the board ensures that its
directors maintain the skill and
knowledge necessary to meet their
obligations as directors
This information appears under the heading “Director Orientation and Continuing
Education” on page 19 of the Circular.
This information appears under the heading “Director Orientation and Continuing
Education” on page 19 of the Circular.
Ethical Business Conduct
(a)
Disclose whether or not the Board has
adopted a written code of ethics for its
directors, officers, and employees. If the
Board has adopted a written code:
The Company has adopted a Code of Business Conduct for directors, officers and
employees. A description of the Code of Business Conduct can be found in the
“Corporate Governance” section of the Circular.
(i)
disclose how a person may obtain
a copy of the code;
The Code of Business Conduct, which was revised in 2014, was filed with SEDAR on
November 7, 2014, and is available on its website (www.sedar.com).
(ii)
describe how the Board monitors
compliance with its code, or, if the
Board does not monitor
compliance, explain whether and
how the Board satisfies itself
regarding compliance with its
code; and
Management annually reports on compliance with the Code of Business Conduct to
the Ethics Committee.
(iii)
provide a cross-reference to any
material change report filed since
the beginning of the issuer’s most
recently completed financial year
that pertains to any conduct of a
director or executive officer that
constitutes a departure from the
code;
No material change report regarding director conduct has been required or filed.
- 48 -
6.
(b)
Describe the steps the Board takes to
ensure that the directors exercise
independent judgement in considering
transactions and agreements in respect
of which a director or executive officer
has a material interest.
The Chairman of the Board ensures that no director participates in the discussion of a
subject in which the director has a material interest or exercises his voting right on
this subject.
(c)
Describe any other steps the Board takes
to encourage and promote a culture of
ethical business conduct.
The Board has adopted a Policy for the Receipt, Retention, and Treatment of
Complaints regarding Accounting, Internal Accounting Controls, or Auditing Matters.
This Policy encourages employees to report any unethical or questionable practices
adopted by the Company or its employees. The Code of Business Conduct encourages
employees to make known allegations of misconduct such as improper conduct or
unethical behavior. A communications tool known as the “Integrity Hotline” has been
made available to all employees to facilitate reporting.
Nomination of Directors
(a)
Describe the process by which the Board
identifies new candidates for Board
nomination.
(b)
Disclose whether or not the Board has a
nominating committee composed
entirely of independent directors. If the
board does not have a nominating
committee composed entirely of
independent directors, describe what
steps the board takes to encourage an
objective nomination process.
(c)
7.
The responsibilities described in 6(a), (b), and (c) have been assigned to the Human
Resources and Governance Committee, which is composed of five independent
directors. Working closely with the Chairman of the Board, the Committee considers,
on an ongoing basis, the size, age, composition, diversity, and geographic
representation of the Board and the skills required to complement those of the
existing Board members.
If the Board has a nominating
committee, describe the responsibilities,
powers, and operations of the
nominating committee.
Compensation
(a)
Describe the process by which the Board
determines the compensation of the
issuer’s directors and executive officers.
The executive compensation philosophy is described in a letter signed by the
Chairman of the Board and the Chairman of the Human Resources and Governance
Committee, which is part of the Circular. The Human Resources and Governance
Committee examines the adequacy and form of directors’ compensation and makes
recommendations in this respect to the Board to ensure that such compensation
realistically reflects the responsibilities and risks at issue, without compromising the
independence of a director. The Committee regularly examines the compensation
practices of comparable corporations. Directors who are members of the Company’s
management are not compensated for their services as directors.
The Human Resources and Governance Committee is also responsible for
recommending the compensation of the Company’s senior executives to the Board.
The compensation of the President and Chief Executive Officer is approved by the
Board.
(b)
Disclose whether or not the Board has a
compensation committee composed
entirely of independent directors. If the
board does not have a compensation
committee composed entirely of
independent directors, describe what
steps the board takes to ensure an
objective process for determining such
compensation.
This responsibility has been assigned to the Human Resources and Governance
Committee, which is composed of five independent directors.
(c)
If the Board has a compensation
committee, describe the responsibilities,
powers, and operation of the
compensation committee.
The principal responsibilities, powers, and operation of the Human Resources and
Governance Committee are described below and in the “Letter to Shareholders and
Policyholders” on page 23 of this Circular. In addition, the Committee is responsible
for the Director Training Program and the Board member and executive evaluation
processes.
- 49 -
8.
Other Board Committees
If the Board has standing committees other
than the audit, compensation, and nominating
committees, identify the committees and
describe their function.
9.
The roles and responsibilities of the other committees are described in the Circular
under the headings “Report of th Investment Committee” (page 21) and “Report of
the Ethics Committee” (page 21).
Assessments
Disclose whether or not the Board, its
committees, and individual directors are
regularly assessed with respect to their
effectiveness and contribution. If assessments
are regularly conducted, describe the process
used for the assessments. If assessments are
not regularly conducted, describe how the
board satisfies itself that the board, its
committees, and its individual directors are
performing effectively.
The Board has implemented a formal process to evaluate the performance of the
Board, each Board committee, and each committee Chairman. The evaluation is made
through a detailed written questionnaire. The responses are reviewed by the
Chairman of the Board, who submits, anonymously, a comprehensive written
summary to the Human Resources and Governance Committee which, in turn,
presents a summary report to the Board along with its recommendations. The
evaluation process pertaining to the Chairman of the Board, which is also made
through a written questionnaire and on an anonymous basis, is under the
responsibility of the Chairman of the Human Resources and Governance Committee,
who reports to the Board.
The most recent evaluations, and the corresponding reports as described above, were
carried out in November/December 2015. The concerns of the directors were
reviewed by the Chairman of the Board and the President and Chief Executive Officer
and appropriate initiatives have been introduced.
10. Director Term Limits and Other Mechanisms of
Board Renewal
Disclose whether or not the issuer has adopted
term limits for the directors on its board or
other mechanisms of board renewal and, if so,
include a description of those director term
limits or other mechanisms of board renewal. If
the issuer has not adopted director term limits
or other mechanisms of board renewal,
disclose why it has not done so.
The individual evaluation process takes place through one-on-one meetings between
the Chairman of the Board and each independent director. At these meetings, the
workings of the Board and Board committees as well as the contribution of that
director and each other director are discussed. The Chairman of the Board
subsequently reports to the Human Resources and Governance Committee.
The Company has not adopted term limits for the directors on its Board, but has
adopted a policy under its By-Laws prescribing a set retirement age for its directors.
This policy is described in more detail under the section entitled “Retirement Policy”
on page 7 of this Circular. This prescribed retirement age has enabled, and will enable
in the coming years, the orderly renewal of the Board’s composition.
11. Policies Regarding the Representation of
Women on the Board
(a)
Disclose whether the issuer has adopted
a written policy relating to the
identification and nomination of women
directors. If the issuer has not adopted
such a policy, disclose why it has not
done so.
The Company has not adopted a written policy relating to the identification and
nomination of women directors. However, the approach used by the Human
Resources and Governance Committee to identify and select new directors is
described in the section entitled “Board Diversity” on page 7 of this Circular.
(b)
If an issuer has adopted a policy referred
to in (a), disclose the following in respect
of the policy:
Despite the absence of a written policy, the number of women directors on the
Company’s Board was increased from three to four at the Annual Meeting held in May
2014 and will be increased, if all nominees are elected, from four to five at the Annual
Meeting to be held in May 2016.
Not applicable
(i)
a short summary of its objectives
and key provisions;
(ii)
the measures taken to ensure that Not applicable
the policy has been effectively
implemented;
(iii)
annual and cumulative progress
by the issuer in achieving the
objectives of the policy; and
Not applicable
(iv)
whether and, if so, how the Board
or its nominating committee
measures the effectiveness of the
policy.
Not applicable
- 50 -
12. Consideration of Representation of Women in
the Director Identification and Selection
Process
Disclose whether and, if so, how the Board or
nominating committee considers the level of
representation of women on the Board in
identifying and nominating candidates for
election or re-election to the Board. If the
issuer does not consider the level of
representation of women on the Board in
identifying and nominating candidates for
election or re-election to the Board, disclose
the issuer’s reasons for not doing so.
13. Consideration Given to the Representation of
Women in Executive Officer Appointments
Disclose whether and, if so, how the issuer
considers the level of representation of women
in executive officer positions when making
executive officer appointments. If the issuer
does not consider the level of representation of
women in executive officer positions when
making executive officer appointments,
disclose the issuer’s reasons for not doing so.
When identifying candidates to fill the three and two vacant Board positions up for
election at the Company’s Annual Meetings in May 2014 and May 2016 respectively,
two of which had been occupied by women for the May 2014 meeting and none for
the May 2016 meeting, the Human Resources and Governance Committee set forth
the objective of at least maintaining the level of representation of women on the
Company’s Board, and increasing it, if possible, while taking into account the skills,
experience and diversity of the Board’s membership. As a result, the Company
increased the number of women director nominees from three to four and from four
to five at the May 2014 and the May 2016 meetings respectively. The Human
Resources and Governance Committee will continue to take diversity into account in
selecting and replacing outgoing directors and in nominating new directors.
The Company’s approach regarding succession planning for senior management is
explained under “Representation of Women in Executive Management” on page 28 of
this Circular.
14. Issuer’s Targets Regarding the Representation
of Women on the Board and in Executive
Officer Positions
(a)
a target regarding women on the issuer’s
board. If the issuer has not adopted a
target, disclose why it has not done so.
(b)
a target regarding women in executive
officer positions of the issuer. If the
issuer has not adopted a target, disclose
why it has not done so.
(c)
If the issuer has adopted a target
referred to in either (a) or (b), disclose:
The Company has not adopted a target regarding the representation of women on its
Board. The section entitled “Board Diversity” on page 7 of this Circular explains the
approach of the Company’s Board and the progress made with respect to the
representation of women thereon. Above all, it has been deemed preferable for
future nominations to take into account the Company's needs at any given point in
time.
The Company has not adopted a target regarding the representation of women in
senior management. Although the Company’s objective is to achieve a level of female
representation within the parity ratio (40–60) in the medium term, it believes that
disclosing a target or releasing progress reports could be counterproductive to its
action plan, which is based on a veritable change of mentality. This position reflects
the viewpoint of both management and its advisory committee on inclusion.
(i)
the target; and
Not applicable
(ii)
the annual and cumulative
progress of the issuer in achieving
the target.
Not applicable
15. Number of Women on the Board and in
Executive Officer Positions
(a)
(b)
Disclose the number and proportion (in
percentage terms) of directors on the
issuer’s board who are women.
Disclose the number and proportion (in
percentage terms) of executive officers
of the issuer, including all major
subsidiaries of the issuer, who are
women.
The Company’s Board of Directors is made up of 14 members, four of whom are
women, representing 28.6% of all directors and 30.8% of the independent directors.
If all the nominees for the May 2016 Meeting are elected, the Board of Directors will
still have 14 members, of which five will be women, representing 35.7% of its
members and 38.5% of the independent directors.
The Company’s senior management, including major subsidiaries, is made up of
32 executives, eight (25%) of whom are women.
- 51 -
SCHEDULE B – BOARD OF DIRECTORS CHARTER
STATEMENT OF PRINCIPLES
Mission
The Board of Directors (the “Board”) is responsible for independently supervising the strategic planning and management of
the commercial operations and internal affairs of Industrial Alliance Insurance and Financial Services Inc. (the “Corporation”).
Independence
The Board has adopted a policy on director independence.
Role and Responsibilities
The Board’s role has two fundamental components: decision making and oversight.
The decision-making function comprises the formulation, in conjunction with management, of fundamental policies and
strategic objectives as well as the approval of certain significant actions.
The oversight function relates to the review of management decisions, the adequacy of systems and controls, and the
implementation of policies.
In performing its duties, the Board shall have unrestricted access to management and the power to select, retain, terminate,
and approve the fees of any independent legal, accounting, or other advisor to assist it in fulfilling its role.
It is incumbent upon the Board to fulfill the duties outlined in this mandate, either directly or through a committee.
MANDATE
The responsibilities of the Board include:
A.
Ethics and Integrity
•
•
•
Promote a culture of integrity within the Corporation. To the extent feasible, satisfy itself as to integrity of the CEO
and other executive officers and ensure that they foster a culture of integrity throughout the Corporation.
Adopt the Code of Business Conduct of the Industrial Alliance Group Companies (the “Code”), which defines
standards that can reasonably be expected to promote integrity and prevent misconduct, notably with respect to
conflicts of interest, related party transactions, and the handling of confidential information.
Monitor compliance with the Code and receive reports confirming adherence to the Code.
Approve any waivers from the Code granted to a director or executive officer.
B.
Strategic Planning
•
•
Adopt a strategic planning process that includes capital management planning; oversee the development of the
Corporation’s strategic direction, plans, and priorities and approve, at least once per year, a strategic plan that takes
into account, among other things, the Corporation’s opportunities and risks.
Monitor the implementation and effectiveness of the approved strategic and operating plans.
Review and approve the Corporation’s financial objectives and operating plans as well as related measures taken by
the Corporation, including capital allocations, expenditures, and transactions exceeding the thresholds set by the
Board.
Approve major business decisions.
C.
Risk Management
•
•
Ensure implementation by management of processes to identify the main risks of Corporation operations. The Board
receives periodic reports on the status of risk management plans and initiatives.
Review the risk management measures implemented by management.
D.
Compliance
•
Ensure implementation by management of a comprehensive compliance management program that assures
compliance with applicable regulatory, corporate, and securities requirements.
•
•
•
- 52 -
E.
Succession Planning
•
•
•
•
Oversee the selection, appointment, development, evaluation, and compensation of the Board Chairman, directors,
President and CEO, and all executive officers.
Review annual performance targets and evaluate the annual performance of the CEO and all executive officers.
Oversee the establishment of Corporation guiding principles regarding human resources and compensation.
Review, on a regular and no less than annual basis, the succession plan for senior executives.
F.
Communications and Public Disclosure
•
Supervise communications and information intended for the public. The Board has adopted a disclosure policy that
governs the release of information about the Corporation, ensuring that it is disclosed in a timely, accurate, and fair
manner in compliance with all legal and regulatory requirements.
The CEO, Board Chairman, or any other director authorized by the CEO or Board Chairman may communicate with
Corporation Shareholders and partners on its behalf.
•
G.
Internal Controls
•
Oversee internal control and management information systems, monitor their integrity, and periodically review their
effectiveness and performance.
Review and approve annual and quarterly financial statements and management discussion and analysis, the annual
information form, the management proxy circular, and other disclosure documents before publication. To do so, the
Board will draw on the detailed analysis supplied by senior management and the audit committee.
Oversee compliance with applicable audit, accounting, and reporting requirements.
Approve dividends as well as capital allocations, expenditures, and transactions that exceed the thresholds set by the
Board.
•
•
•
H.
Governance
•
•
•
•
•
•
Develop a set of governance principles and guidelines.
Establish appropriate structures and procedures that enable the Board to act independently of management.
Review and approve Corporation governance policies and methods whenever they are updated.
Establish Board committees and define their mandates to assist the Board in fulfilling its role and responsibilities.
Define the responsibilities of directors, including attendance at, preparation for, and participation in meetings.
Regularly evaluate the Board, its committees, and its members and review its composition with a view to the
effectiveness and independence of the Board and its members.
I.
Duty of Care
•
In fulfilling their responsibilities as Board members, the directors shall act honestly and in good faith with a view to
the best interests of the Corporation, and exercise the care, diligence, and skill expected of a reasonable and prudent
person.
J.
Communication with Directors
•
Shareholders and other Corporation partners may communicate with directors by writing to the Board Chairman at
the following address:
Industrial Alliance Insurance and Financial Services Inc.
1080 Grande Allée West
Quebec City, Quebec
GIS 1C7
- 53 -
SCHEDULE C – SHAREHOLDER PROPOSALS
The following four Shareholder proposals have been submitted for consideration at the Annual Meeting. The Board of Directors' response,
including its voting recommendation, follows each of the proposals.
Dr. Johanne Elsener, 3657 Saint-Louis Street, Quebec City, Quebec, G1W 1T2, and Ms. Gabrielle Saint-Yves, 2612 Du Plaza Street, Plateau de
Sillery, Quebec City, Quebec, G1T 1V3, have submitted two proposals (Proposals 1 and 2). The Mouvement d'éducation et de défense des
actionnaires (MÉDAC), 82 Sherbrooke Street West, Montreal, Quebec, H2X 1X3, has submitted two proposals (Proposals 3 and 4). These
proposals along with supporting comments from Dr. Johanne Elsener, Ms. Gabrielle Saint-Yves and MÉDAC (all translated from French to
English) are set out below.
Proposal No. 1 – Strategy to counter risk related to illnesses caused by inadequate urban planning
It is well established in the medical field that trees, wooded areas and green walking spaces within cities decrease the incidence and number of
premature deaths related to cardiovascular diseases, respiratory problems, mental disorders and illnesses related to sedentary lifestyle such as
obesity, hypertension, diabetes and certain cancers. These beneficial effects on the population’s health are produced through the capture of
pollutants in the air, the local reduction of ambient temperature and the encouragement of exercise among the population. In order to reduce
the Company’s level of risk, it is hereby proposed that Industrial Alliance collaborate in the Des milieux de vie en santé [healthy environment]
project initiated by the Ministère de la Santé du Québec [Quebec Ministry of Health] by adopting a green urban development strategy based
on, among other things, exemplary actions that could have a viral effect and lead to a general change in behaviour within our society.
Arguments
According to data from a study conducted by the Institut national de santé publique du Québec [Quebec national institute of public health], air
pollution is responsible for over 300 premature deaths per year, over 500,000 days of severe respiratory symptoms per year and over 300,000
days of reduced activity per year in the Quebec City urban community.1 Air pollution has been associated with a 22–32% increase in mortality
among those suffering from diabetes, chronic obstructive pulmonary disease, congestive heart failure and inflammatory diseases such as
rheumatoid arthritis or lupus.2
The ability of urban forest areas to decrease the incidence of certain illnesses linked to air pollution was highlighted by a study conducted by
the U.S. Forest Service. This study showed that the massive loss of canopy cover caused by the spread of the emerald ash borer increased
deaths linked to respiratory problems by 6.8 per 100,000 residents/year, and deaths linked to cardiovascular problems by 16.7 per 100,000
residents/year.2
For an insurance company, an increase in premature deaths means an increase in claims adjudication risk. This is therefore a major problem
for the future profitability of a company like Industrial Alliance, which should develop a strategy to mitigate this risk. It would be poorly looked
upon by Industrial Alliance’s clients should the Company protect itself against this risk solely through increases in insurance premiums without
implementing a strategy to decrease the incidence of these illnesses. We therefore request that Industrial Alliance collaborate in the Des
milieux de vie en santé project initiated by the Ministère de la Santé du Québec [Quebec Ministry of Health] by adopting a green urban
development strategy based on, among other things, exemplary actions that could have a viral effect and lead to a general change in
behaviour within our society. One example could be the conservation of the old growth forest on the property that Industrial Alliance owns in
the Boisé Neilson, an exceptional urban woodland area in Quebec City.
_______________________________
1. Bouchard, Maryse and Audrey Smargiassi. 2008. Estimation des impacts sanitaires de la pollution atmosphérique au Québec : Essai d’utilisation du Air Quality
Benefits Assessment Tool (AQBAT) INSPQ, 59 pages.
2. Donovan, Geoffrey H., David Butry, Yvonne L. Michael, Jeffrey P. Prestemon, Andrew M. Liebhold and Demetrios Gatziolis. 2013. “The Relationship Between Trees
and Human Health: Evidence from the Spread of the Emerald Ash Borer.” American Journal of Preventive Medicine, vol. 44, no. 2, p. 139-145. Online:
http://donovan.hnri.info/Studies/donovan_et_al.EAB.pdf
COMPANY’S POSITION: FOR THE REASONS HEREAFTER MENTIONED, THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
AGAINST THE PROPOSAL.
In its social responsibility reports available on the Company’s website (a stand alone report in 2014 and included in the Annual Report for the
previous years), iA Financial Group has demonstrated its desire and commitment to actively contribute to the community. Specifically, the
Company’s environmental performance with respect to its head office, its waste management practices and its greenhouse gas emission
reduction efforts can be found therein. The Company therefore demonstrably contributes to environmental protection in a number of ways.
In their proposal, Dr. Elsener and Ms. Saint-Yves are specifically seeking a commitment from the Company on the Boisé Neilson. This project has
been of personal interest to Dr. Elsener for several years, as she has written to Company management numerous times and appeared at annual
Shareholder meetings on occasion to ask for this particular commitment from management regarding the Boisé Neilson in Sainte-Foy, of which
the Company is the sole owner.
Each time Company management has responded, it has been explained to Dr. Elsener that the Company's real estate investments and
initiatives are undertaken in accordance with democratic institutions such as municipal authorities. In 2009, Quebec City adopted a by-law
providing for a “comprehensive development program” for the Boisé Neilson. The city is therefore the project authority for the property and its
choices and decisions will be respected accordingly. The Company invites Dr. Elsener to address her proposal directly to the authorities
concerned.
- 54 -
For these reasons, the Board of Directors recommends that Shareholders vote AGAINST this proposal.
Proposal No. 2 – Strategy to counter risk related to the negative impacts of climate change
Climate change has increased the damage caused by natural disasters, the prevalence of many illnesses and the number of premature deaths,
which means an increase in claims adjudication risk. In order to reduce the Company’s level of risk related to the changing climate, it is hereby
proposed that Industrial Alliance adopt a strategy to fight climate change based on, among other things, exemplary actions that could have a
viral effect and lead to a general change in behaviour within our society.
Arguments
It is well established scientifically that climate change will amplify natural disasters:
The IPCC report sounds an alarm regarding climate change caused by greenhouse gas emissions generated by human activity. The results
of this report point toward an amplification of natural disasters.1
This amplification of natural disasters is confirmed in a Special Report by TD Economics published in April 2014 entitled Natural
Catastrophes: A Canadian Economic Perspective. This report confirms that, during the last 30 years in Canada, there has been an increase
in natural disasters leading to an increase in property damage, injuries and deaths. 2
For an insurance company, this means an increase in claims adjudication risk. This is therefore a major problem for the future profitability of a
company like Industrial Alliance, which should develop a strategy to mitigate this risk. It would be poorly looked upon by Industrial Alliance’s
clients should the Company protect itself against this risk solely through increases in insurance premiums without implementing a strategy to
decrease the incidence of natural disasters. This is not only a question of Company image, but also of Industrial Alliance’s social, if not ethical,
responsibility. Consequently, we propose that Industrial Alliance adopt a strategy to fight climate change based on, among other things,
exemplary actions that could have a viral effect and lead to a general change in behaviour within our society. Given that city trees capture
carbon dioxide, a primary cause of climate change, one example could be the conservation of the old growth forest on the property that
Industrial Alliance owns in the Boisé Neilson, an exceptional urban woodland area in Quebec City.
_______________________________
1. Stocker, Thomas et al., IPCC, Climate Change 2013, The Physical Science Basis, Working Group I Contribution to the Fifth Assessment Report of the
Intergovernmental Panel on Climate Change, Summary for Policymakers, IPCC, 2013, 27 pages, https://www.ipcc.ch/pdf/assessmentreport/ar5/wg1/WGIAR5_SPM_brochure_en.pdf.
2. Craig, Alexander and Connor McDonald, Natural Catastrophes: A Canadian Economic Perspective, TD Economics, April 14, 2014, 5 pages,
http://www.td.com/document/PDF/economics/special/NaturalCatastrophes.pdf.
Given that this proposal and its arguments are the same in scope as the previous proposal, we reiterate our previous response:
In its social responsibility reports available on the Company’s website (stand alone report and included in the Annual Report for the previous
years), iA Financial Group has demonstrated its desire and commitment to actively contribute to the community. Specifically, the Company’s
environmental performance with respect to its head office, its waste management practices and its greenhouse gas emission reduction efforts
can be found therein. The Company therefore demonstrably contributes to environmental protection in a number of ways.
In their proposal, Dr. Elsener and Ms. Saint-Yves are specifically seeking a commitment from the Company on the Boisé Neilson project. This
project has been of personal interest to Dr. Elsener for several years, as she has written to Company management numerous times and
appeared at annual Shareholder meetings on occasion to ask for this particular commitment from management regarding the Boisé Neilson in
Sainte-Foy, of which the Company is the sole owner.
Each time Company management has responded, it has been explained to Dr. Elsener that the Company's real estate investments and
initiatives are undertaken in accordance with democratic institutions such as municipal authorities. In 2009, Quebec City adopted a by-law
providing for a “comprehensive development program” for the Boisé Neilson. The city is therefore the project authority for the property and its
choices and decisions will be respected accordingly. The Company invites Dr. Elsener to address her proposal directly to the authorities
concerned.
Proposal No. 3 – Follow-up on advisory vote
It is hereby proposed that the Board of Directors disclose the corrective measures made to its compensation policy in order to respond to
the concerns of shareholders, who voted against its compensation policy at a rate of 15.53%.
At the last Annual Meeting, the shareholders expressed their dissatisfaction in two ways:
•
•
By voting against the compensation policy proposed by the Board of Directors at a rate of 15.53%.
By abstaining by a greater margin than for the other directors from voting in favour of renewing the terms of the five directors that
sit on the Human Resources and Governance Committee: Robert Coallier, Serge Gadbois, Francis P. McGuire, John LeBoutillier and
Jim Pantelidis.
- 55 -
These results are cause for concern and require corrective measures before the situation deteriorates and blemishes the Company's reputation.
The Board of Directors has duly noted that at the last annual meeting 15.53% of the Shareholders voted against the proposed compensation
policy and that a number of abstentions were recorded on the vote to renew the term of the directors who sit on the Human Resources and
Governance Committee. In this regard, the Board of Directors solicited the opinion of a number of institutional Shareholders and organizations
representing several large Shareholders and, through the Human Resources and Governance Committee, retained a firm of compensation
consultants to review the broad principles of executive compensation. As set out in the Circular, the following changes have been made and are
effective for the 2016 fiscal year:
•
the comparator group now consists of 15 companies in the financial sector, excluding major banks, that have been selected
based on earnings, net income and market capitalization;
•
the overlap between the financial objectives for purposes of the annual incentive plan and the mid-term incentive plan has
been eliminated. The annual incentive plan target will in future be expressed in terms of the return on Shareholders’ equity;
•
25% of the mid-term incentive plan bonus will be a function of the Company’s share performance over a three-year period
relative to the target group;
•
the severance payable to the President and Chief Executive Officer in the event of a change of control has been reduced from
thirty-six months to twenty-four months of base salary.
At its Annual Meeting in 2009, the Company announced that it would voluntarily invite Shareholders to participate in an advisory vote on a
resolution respecting executive compensation. This vote is not binding but allows Shareholders to express their opinion. The Board of Directors
has responded to certain recommendations made by Shareholders and will continue to be attentive to the results of the advisory vote and any
other comment received from Shareholders.
Proposal No. 4 – Dissatisfaction with certain directors
It is hereby proposed that the Board of Directors inform the shareholders of the efforts it has made during the past year to better
understand the concerns of policyholders regarding the directors who represent them.
During the last three years, the percentage of abstention votes expressed by policyholders regarding the election of their representatives
on the Board of Directors has been preoccupying:
Abstention rates
2015
2014
2013
7.14%
9.27%
6.36%
10.49%
10.35%
8.09%
Claude Lamoureux
11.38%
11.67%
10.12%
Danielle G. Morin
5.83%
5.96%
N/A
12.75%
12.78%
13.01%
Robert Coallier
Serge Gadbois
Jim Pantelidis
Given that these directors make up nearly 40% of the Board of Directors and that this situation has persisted for three years, such an
abstention rate, which is appreciably higher than for directors of other financial institutions, must give the Board pause, as its credibility
may be at risk. This situation is even more worrisome given that three of these directors sit on the Human Resources and Governance
Committee, which proposed a compensation policy that was rejected by over 15% of shareholders. Would it not be desirable to review
the composition of this committee?
COMPANY’S POSITION FOR THE REASONS HEREAFTER MENTIONED, THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE
This proposal is similar to the proposal made at the Annual Meeting held in May 2014, where 92.01% of Shareholders voted against the
proposal as well as the proposal made at the Annual Meeting in May 2015, where 92.72% of the Shareholders voted against.
- 56 -
At the last three Annual Meetings, all the Policyholders’ directors were generally elected with a smaller vote than the Shareholders’ directors.
At iA Financial Group, there are about 72,784 Policyholders whose sole voting right is to elect at least one third of the members of the Board of
Directors. As provided under the Quebec Act respecting insurance, an indication on premium notices serves as notice of the Annual Meeting to
Policyholders. However, experience has shown that, year after year, very few Policyholders take the trouble to cast their vote for the election of
the directors.
An analysis of the demographic profile of participating Policyholders shows that their average age is 67. The last participating policies were
issued by the Company and one of its subsidiaries about 30 years ago and those issued by another subsidiary were issued almost 20 years ago.
A large percentage of these policies are now fully paid up, meaning that premiums are no longer being paid. One may conclude from the
foregoing that participating Policyholders do not pay particular attention to the opportunity they have to vote for the election of a certain
number of directors at the annual meeting.
As it has been doing in recent years, management will make an effort to contact as many of the Policyholders as possible and invite them to
exercise their voting rights. In the opinion of the Board of Directors, it is difficult to conclude, based on a very small sample of Policyholders who
exercised their voting rights, that the vote is representative of the opinion of Policyholders as a whole.
It should be said that, in its relations with Shareholders and Policyholders, the Board of Directors did not receive any negative comments about
any Shareholders’ or Policyholders’ director. Moreover, in accordance with the majority voting policy adopted by the Board, any nominee who
receives more abstentions than votes in his or her favour in an uncontested election will be required to resign.
The Board of Directors is of the opinion that any efforts over and above the foregoing would be unwarranted.
The Board of Directors has addressed the comment about the three Policyholders’ directors who sit on the Human Resources and Governance
Committee in its response to the preceding proposal.
- 57 -
Industrial Alliance
Insurance and Financial Services Inc.
1080 Grande Allée West
PO Box 1907, Station Terminus
Quebec City, QC G1K 7M3
iA Financial Group is a business name and trademark of
Industrial Alliance Insurance and Financial Services Inc.
ia.ca
F99-18A(16-03)
Telephone: 418-684-5000

Information Circular - Industrial Alliance

Transcription

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