PAY FOR PERFORMANCE
• We provide appropriate annual base compensation commensurate with the responsibilities of the executive, and other compensation elements clearly linked to performance. The CEO’s responsibilities are set out in written position descriptions approved by the HR Committee and the Board. • Our pay-for-performance approach is designed to motivate employees through short-term and long-term incentives: - STIP outcomes are based on a combination of achieving corporate financial and operational goals and individual leadership and strategy contributions; and - LTIP outcomes are based principally on financial and strategic performance leading to value creation for shareholders, and designed to encourage executives to remain with CWB over the long term. • As described further on page 42, the structure of the fiscal 2024 STIP was revised to: 1) make the determination of executive STIP outcomes more a function of overall corporate performance, with more modest differentiation by individual executive; 2) introduce a formal risk review step in the evaluation of corporate performance. • STIP performance indicators will continue to emphasize financial performance with precise “target” financial performance goal s containing significant stretch, as well as strategic and operational performance goals. • Our objective is that a significant portion of compensation is “at risk” based on performance ; superior performance will result in superior compensation, and capable management is retained.
APPROPRIATE DISCRETION
• In accordance with the applicable plans, the HR Committee may exercise considered and informed discretion to adjust STIP and LTIP awards. • The HRC will retain the ability to apply informed business judgment over final performance evaluations and pay outcomes, in order to: - Not reward or penalize management for infrequent and unexpected events that are not within management’s control; - Align incentives with CWB’s risk appetite, long - term business strategy, and shareholders’ best interests; - Provide flexibility to deal with unexpected events – particularly after the performance year has begun – so that appropriately challenging targets can be set, rather than conservative targets that provide allowances for unexpected events; - See that similar fact patterns are handled consistently; and - See that awards are appropriate, taking into account CWB’s performance viewed holistically. In particular, the HR Committee will examine performance outcomes, by indicator, that differ materially from goals at “target” to align performance and payout outcomes with overall corporate performance. The HR Committee may reduce an STIP award to zero if it determines that this is warranted. Additionally, the HR Committee may reduce an LTIP award to zero prior to making grants of options, RSUs or PSUs. Once an LTIP grant has been made, payouts may be reduced, including to zero, in accordance with the compensation recoupment policy.
COMPENSATION MIX TARGETS
• Components of each executive's overall compensation vary with the position, based on the position’s ability to impact CWB's s uccess. • In line with our pay-for-performance approach, a significant portion of each executive's compensation is “ at risk ” and/or linked to CWB ’s share price to align compensation outcomes with performance, thereby motivating executives and aligning their interests with the creation of long-term shareholder value, while supporting executive retention. • Generally speaking, the more senior the position, the greater the executive's total compensation is “ at risk ” and deferred over time. • The following charts illustrate the relative proportions of salary, target STIP, target LTIP and “at risk” compensation for N EOs in 2023 (rounded) . “At risk” compensation means the portion of each executive’s total compensation that will be affected by CWB’s share price performance and /or the achievement of stated performance objectives.
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