NOMINATION OF DIRECTORS, BOARD COMPOSITION AND BOARD RENEWAL
The GCR Committee is our Nominating Committee and is responsible for identifying new director candidates for consideration.
Our objective is for our Board to have a sufficient and diverse range of skills, expertise, and experience to ensure its responsibilities are carried out effectively. The GCR Committee annually reviews the size, composition and diversity of the Board and Board committees. The GCR Committee uses an expertise and skills matrix similar to the Director Skills and Experience table set out on page 14 to:
1. Assess the competencies and diversity of current directors; 2. Identify desirable skill sets to look for in new director candidates; and 3. C onsider whether the Board’s skills and experience need to be strengthened in any areas.
As part of the Board’s renewal process, the GCR Committee regularly analyzes these factors when considering whether the Board has the appropriate Board composition and recommending potential nominees for consideration.
The GCR Committee does not maintain a standing list of competencies, such as skills, expertise and experience, expected from new directors, since such competencies sought from director candidates will vary as the composition of the Board and its committees evolves over time. Similarly, the GCR Committee does not maintain an evergreen list, but may retain a third party recruitment and consulting firm from time to time to identify director candidates. Once it is determined that adding a director to the Board is desirable, the GCR Committee seeks out suitable candidates and assesses each potential candidate's skills, expertise, and experience against the needs of the Board and its committees, and the current complement of directors. The GCR Committee will also take into account such matters as a candidate's integrity, geographic location, and diversity criteria such as race, ethnicity, age, gender identity, sexual orientation, and abilities. Background checks are completed on all new director nominees.
DIRECTOR COMPENSATION COMPENSATION GOVERNANCE
The GCR Committee is responsible for reviewing director compensation and recommending to the Board the amount and structure of director compensation. Our director compensation program is designed to attract and retain qualified individuals to act as directors of CWB, and to compensate these individuals appropriately for their time and effort in overseeing the effective governance, management and operation of CWB. It is also designed to align with shareholder interests and to reflect market terms and best practices.
Mr. Fowler does not receive any fees for acting as a director because he is compensated in his role as President and CEO of CWB. Other than Mr. Fowler, directors are not eligible to participate in the ESPP, PSU Plan, RSU Plan, or SIP.
The GCR Committee has the authority to retain consultants, including a compensation consultant or advisor, as the committee may determine necessary or advisable to carry out its responsibilities.
The GCR Committee reviews director compensation on an annual basis to ensure that director compensation meets the objectives set out above. The GCR Committee benchmarks our director compensation levels against two market data references: the comparator peer group used to evaluate executive compensation described on page 41; and the Largest Canadian Banks. The Largest Canadian Banks are considered a relevant peer group for our director compensation, as these financial institutions all utilize the AIRB, model-enabled approach for capital and risk management. We have been developing the capability to become an AIRB bank for several years. As a result, the time and effort to exercise effective director oversight of a model-enabled financial institution has increased significantly as part of the required organizational evolution to support an AIRB transition. Director compensation will generally be positioned as a consistent percentage of the median director compensation value at the Largest Canadian Banks, taking differences in company size and breadth of business lines into account. The GCR Committee also considers the risks, responsibilities, workload, time commitment, and the skills required of the Board in light of the evolving complexity of our business and increased regulatory oversight and scrutiny. In 2022, management, with assistance from Meridian, reviewed benchmark compensation data related to director compensation, and potential changes to the compensation program for directors. Based on the benchmarking process described above, the Board approved certain changes to director compensation and the GCR Committee approved changes to director equity requirements, with changes to take effect on May 1, 2023, as outlined below. We believe that these changes are reflective of the increased responsibilities, workload, and time commitment required of CWB’s directors, given the increased complexity of CWB’s operations as a result of our extensive business and strategic transformation. The last material changes to director compensation and the compensation program for directors occurred in fiscal 2019.
CHANGES TO DIRECTOR AND COMMITTEE MEMBER COMPENSATION, EFFECTIVE MAY 1, 2023
The Board has approved the following changes to director compensation:
1. An increase to the annual retainer for the directors to $190,000 from $175,000. 2. An increase to the annual retainer for the Chair of the Board to $365,000 from $350,000. This increase reflects the same $15,000 increase in total compensation received by the other directors. 3. An increase to the annual retainers for the Chairs of the Audit and Risk Committee to $40,000 from $35,000.
4. An increase to the annual retainer for the Chair of the HR Committee to $30,000 from $25,000. 5. An increase to the annual retainer for the Chair of the GCR Committee to $30,000 from $20,000. 6. An increase to the annual retainer for the Chair of the LAP to $11,000 from $10,000. 7. An increase to the additional compensation for a director serving on both the Audit and Risk Committees to $16,500 from $15,000. 8. An increase to the meeting attendance fee for the LAP to $1,650 from $1,500.
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