2020 PROXY SEASON REVIEW & OTHER TOPICS Hugessen TSX60 Webinar - PowerPoint PPT Presentation

2020 PROXY SEASON REVIEW & OTHER TOPICS Hugessen TSX60 Webinar

Speakers – Toronto Agenda Camil Cam ille Jo Jovanovic Brian Lee Bria Lees Manager Manager 1 Welcome Hugessen – Toronto Hugessen – Calgary 2 Highlights from 2020 Proxy Season Peter St Stephenson Mic ichelle Tan 3 Emerging Topics and Trends Partner Principal Hugessen – Toronto Hugessen – Toronto 4 Q&A 5 Closing Remarks Kathry ryn Nee eel Managing Director Semler Brossy - NYC If you have any questions, please submit them on Zoom. Questions will be addressed at the end of this presentation 2

Speakers – Calgary Agenda Rea eanna Dor Dorscher Bria Brian Lee Lees Principal Manager 1 Welcome Hugessen – Calgary Hugessen – Calgary 2 Highlights from 2020 Proxy Season Peter St Stephenson Sc Scott Munn 3 Emerging Topics and Trends Partner Partner Hugessen – Toronto Hugessen – Calgary 4 Q&A 5 Closing Remarks St Stephen Cha Charle lebois Principal Semler Brossy – L.A. If you have any questions, please submit them on Zoom. Questions will be addressed at the end of this presentation 3

Speakers – Montreal Agenda Mari ario Brin Brin Principal 1 Welcome Hugessen – Montreal 2 Highlights from 2020 Proxy Season Jea Jean-Francois s Malo lo 3 Emerging Topics and Trends Manager Hugessen – Toronto 4 Q&A 5 Closing Remarks Georges Soa Geor Soaré Partner Hugessen – Toronto If you have any questions, please submit them on Zoom. Questions will be addressed at the end of this presentation 4

EXECUTIVE COMPENSATION PERFORMANCE AND PAY Sc Scop ope of of Stud Study: y: • Companies in the TSX60 Index • 2020 Proxies commenting on Fiscal 2019 (n=59)

2019 & YTD 2020 Sector Performance Strong 2019 performance across most sectors, new reality in 2020 60% End of 2019 S&P/TSX Capped Materials Index 40% S&P/TSX 60 Index 20% 0% S&P/TSX Composite Index -20% -40% S&P/TSX Capped Financials Index -60% S&P/TSX Capped Energy -80% Index Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May 6

2018 – 2019 TSR A greater proportion of TSX60 constituents had positive TSRs in 2019 compared to 2018 TSX60 Index Constituents - 201 2019 Total Shareholder Return 450% -23% 375% 300% 40% 225% 150% 75% 0% Resource -75% Non-Resource TSX60 Index Constituents - 201 2018 Total Shareholder Return 450% 375% -19% 300% -11% 225% 150% 75% 0% -75% 7

2019 YoY Median CEO TDC by Industry Compensation in the majority of sectors saw YoY increases in median and average (excluding TSX:BB) TDC Yea ear-Over-Year Ch Change in n Med edian & Average TSX60 CE CEO TDC 40% Median 27% Average (with TSX:BB) 22% 30% Average (excluding TSX:BB) 20% 12% 10% 10% 0% -1% -10% -20% -30% -40% Energy (n=1 =10) Materia ials ls ( (n=9) All ll TSX SX60 ( (n=59) Other ( (n=30) Fin inancia ials ls ( (n=10) 8

Median CEO Pay YoY Median TSX60 compensation has seen a relatively stable increase over the last five years 5 Yea 5 ear Trend in n Med edian TSX 60 60 CE CEO TDC DC $12,000 Thousands 3% 4-yr CAGR 4% 4-yr CAGR 4% 4-yr CAGR $11,000 $10,000 3% YoY 12% YoY 6% YoY $9,000 $8,000 $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 $1,000 $0 All ll TSX60 (n=59) Same Constituent (n=52) Same Incumbent (n=37) 2015 2016 2017 2018 2019 9

Actual vs. Target Pay: Entire TSX60 Contrary to 2018, above target LTIP awards drive increase in median CEO pay 2018 vs. 201 s. 201 2019 Cha Change in n Actu ctual l an and Tar arget Com Compensatio ion TCC TDC $0 $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000 Compensation (CAD '000s) 2018 - Target 2019 - Target 2018 - Actual 2019 - Actual 10

Compensation Levels: Top 5 Pay Total top 5 pay increased year over year, CEO share of total remains stable Aggr gregate Top 5 5 Pay $35,000 CE CEO Pay as as a a Le Legend Multiple of of NEO Pay $30,000 P75 2018 2018 2019 2019 P50/ Median $25,000 P25 CFO CF 3.07x 2.88x $20,000 Average NEO3 2.10x 2.28x $15,000 $10,000 NEO4 2.78x 3.09x $5,000 NEO5 3.83x 3.68x $0 2018 2019 11

EXECUTIVE COMPENSATION PAY MIX AND PLAN DESIGN Sc Scop ope of of Stud Study: y: • Companies in the TSX60 Index • 2020 Proxies commenting on Fiscal 2019 (n=59)

Short Term Incentive Design: No Significant Change STIP design remains relatively stable year-over-year, ESG metrics may be focus in future. 2018 Cor 201 Corporate STIP Mix 201 2019 Cor Corporate STIP Mix Other Other ESG ESG 3% 4% 6% 6% Strategic Strategic 8% 7% Operational Operational 16% 13% Financial 67% Financial 69% 2018 STIP IP Metrics 2019 5.4 Number of metrics used, on average 5.3 60% 60% Scorecards with an individual component 63% 63% 16% 16% Board exercised discretion 17% 17% 13

Long Term Incentive Design: No Significant Change PSUs continued to increase in LTIP mix, with more performance metrics being added. 201 2018 Average Target LTIP Mix ix 2019 Average Target LTIP Mix 201 ix DSUs DSUs 1% 1% Options Options 28% 30% PSUs PSUs 49% 52% RSUs RSUs 18% 22% 2018 LTIP Metric ics 2019 2.1 Average number of metrics used in PSUs 2.4 65% 65% Relative TSR metric used 63% 63% 32% 32% Return metric used (e.g. ROE) 32% 32% 16% 16% Operational metric used (e.g. safety) 19% 19% 14

2020 SAY ON PAY RESULTS Sc Scop ope of of Stud Study: y: • Say on Pay results among the TSX Composite Index as of June 10, 2020 (n = 137)

Canadian Say on Pay Results The proportion of companies scoring below 90% decreased from 28% in 2019 to 20% in 2020 Canada Say-on-Pay Voting Results 2020 vs. 2019 100% 2019 90% 2020 80% 70% 60% 50% 40% 30% 20% 10% 0% >90% 80-90% 70-80% 50-70% Less than 50% Say-on-Pay Approval Rating 16

Canadian Say on Pay Results by Industry Say on Pay results increased across all sectors in 2020 compared to mixed results in 2019 Industry Say-on-Pay Voting Results 2018 to 2020 94.7% 95% 93.7% 94% Average Say-on-Pay Voting Result 93.0% 93% 92% 91.4% 91.3% 91.0% 90.6% 91% 89.8% 90% 88.8% 89% 88% 87% 86% 85% Materials Energy Financials 2018 2019 2020 17

Companies Responding to Low Say on Pay in 2020 Incentive design changes, shareholder engagement drive improved results Co Company Key Is Issue in in 2019 Response 2020 2020 SoP oP Result lt • Shareholder outreach Pay an and per performance 58% → 92% • Suspension of cash dis disconnect transaction bonuses • Pay an and per performance Shareholder outreach 72% → 95% • dis disconnect Changes to STIP program • Pay an and per performance Shareholder outreach 77% → 96% • disconnect dis Changes to LTIP program 18

EMERGING TOPICS AND TRENDS

Emerging Topics & Trends Two important topics related to the COVID-19 crisis, and how they impact compensation: Perf rform rmance Management and Potentia ial l Use se of Disc iscretio ion on In Incentiv ive Programs ▪ Impacts of COVID-19 on 2020 compensation programs and how to think about the use of discretion ▪ Assessing organization and key executive performance in light of a challenging year ▪ Spotlight on Board effectiveness Environmental, Social & Governance (“ESG”) ▪ Prevalence of ESG metrics in incentive programs ▪ COVID-19 has put significant focus on the social aspects of businesses, including human capital management of the broader workforce ▪ Pay equity implications

TSX60 Proxy Webinar and Discussion June 2020 Thank you for joining us. Please take a minute to complete our survey.