3. LONG-TERM INCENTIVE
Long-Term Incentive Program (LTIP)
Purpose
• The LTIP is designed to attract, motivate, reward and retain employees by aligning our leaders’ interests to create medium - and long-term shareholder value, build a successful and sustainable business, and execute on our strategic direction. • The LTIP consists of awards under the SIP, the RSU Plan and the PSU Plan, each of which is discussed in greater detail below. • Amendments to any of the plans must be approved by the HR Committee. • Each December, the HR Committee determines the annual aggregate value of LTIP awards for all Participants, including the total value of individual grants to be awarded to the NEOs for that fiscal year (i.e., in December 2022, grants were awarded for the 2023 fiscal year). • In determining grants under the LTIP, grants are generally set at “target” levels with potential adjustments to these target values made on a case- by-case basis by the HR Committee, in its judgment, to address performance considerations or other exceptional circumstances. • Grants are not influenced by previous grants made to an executive. • The payout values of all stock options, RSUs, and PSUs are based on share price performance, aligning management and shareholder interests. • In addition, payout values for PSUs are based on achievement of performance against financial and strategic objectives established at the date of each grant. • The LTIP grant target values for the NEOs for fiscal 2023, together with the grant allocation between PSUs (75% of total LTIP) and stock options (25% of total LTIP), follow:
Form of Award
Grant Determination
Payouts
LTIP Allocation (1) PSUs
LTIP Value Target
Stock Options
President and CEO
170% of Base Salary
127.50%
42.50%
All other NEOs
100% of Base Salary
75%
25%
(1) As of fiscal 2021, RSUs were generally no longer granted as part of total executive compensation, except for special recruitment/retention purposes.
Share Incentive Plan (SIP)
Overview
Plan Category
The SIP is an equity compensation plan approved by shareholders.
Eligibility
Officers (a CEO, Chief Operating Officer, CFO, president, an executive vice president, a vice president, an assistant vice president, a treasurer, or an assistant treasurer, or any individual who performs a similar function) and employees of CWB Financial Group are eligible for grants under the SIP. The SIP does not limit insider participation. A maximum of 16,932,000 common shares may be issued under the SIP, subject to adjustment for a stock dividend, split, consolidation, or other change to the structure of CWB’s common shares. The SIP does not provide for a maximum number of common shares which may be issued to a Participant pursuant to the SIP (expressed as a percentage or otherwise).
All figures current to October 31, 2023
Plan Maximum
Overhang (number of stock options reserved for issuance plus stock options outstanding) Dilution (number of stock options outstanding and not exercised) Number of Securities to be Issued Upon Exercise of Outstanding Stock Options Weighted Average Exercise Price of Outstanding Stock Options Number of Securities Remaining Available for Future Issuance
6,109,401 common shares, representing 6.34% of all issued and outstanding common shares.
2,214,627 common shares, representing 2.30% of all issued and outstanding common shares.
Given the mandatory “Cashless Settlement of Stock Option s” described below, if all outstanding stock options (vested and unvested) were exercised at the October 31, 2023 share price, 63,873 common shares would be issued.
$30.25
3,894,774 common shares are available for issuance under future grants, representing 3.95% of all issued and outstanding common shares. 570,049 stock options were issued in fiscal 2023, representing 0.58% of all issued and outstanding common shares.
Stock Options Issued in 2023
2023
2022
2021
Burn rate (the number of stock options issued each year, expressed as a percentage of the weighted average number of issued and outstanding common shares for the relevant fiscal year)
0.59%
0.40%
0.41%
Grant Determination
• The estimated value of a stock option on a grant date is determined using a binomial stock option pricing model. The applicable allocation (based on a percentage of base salary as shown on the table on page 43) is then divided by the stock option value to arrive at the number of stock options that will be granted to the executive.
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