9. An increase to the minimum portion of the annual director retainer and annual Chair retainer that must be taken in DSUs to 50% of the annual director retainer and 50% of the annual Chair retainer, respectively, from $80,000. Directors may choose to receive all or a portion of any cash compensation in the form of DSUs.
The Board has also approved, effective May 1, 2023, an increase in the minimum equity requirement for directors and for the Chair of the Board to $665,000 and $1,000,000, respectively, from $570,000, including the addition of a minimum shareholding requirement of 1,000 common shares of CWB.
These changes are further described in the following sections.
RETAINERS AND FEES
The Board believes in a simple, transparent, and easy to administer director compensation structure. We compensate directors on an annual flat fee basis to cover all aspects of their workload and responsibilities as directors of CWB. Directors provide services outside of Board meetings, including engaging with management, regulators, investors, external advisors, and other third parties (such as proxy advisory firms). They also review significant volumes of materials and are required to be available to advise management, engage with shareholders, and consider corporate opportunities. The flat fee structure better reflects these ongoing responsibilities. Meeting attendance fees apply for the LAP because the workload and number of meetings may vary significantly from year to year. Directors are reimbursed for travel and other expenses when they attend meetings or conduct business on behalf of CWB Financial Group. All directors are expected to serve on two committees (including one of either the Audit or Risk Committees) as part of their Board service and in exchange for their Board retainer. Any director serving on both the Audit and Risk Committees (other than the Chair of the Board) currently receives an additional $15,000 cash retainer in recognition of the significant workloads associated with each of those committees. Director compensation is paid after each quarter in arrears. The table below sets out our current director compensation structure for fiscal 2022 as well as the director compensation structure that the Board has approved to take effect May 1, 2023.
2023 (1) ($)
RETAINERS (annual)
2022 ($)
Director Retainer
Chair of the Board
350,000
365,000
Director
175,000
190,000
Committee Chair Retainers
Audit Committee, Risk Committee
35,000
40,000
HR Committee
25,000
30,000
GCR Committee
20,000
30,000
LAP
10,000
11,000
Committee Member Retainers
Audit Committee, Risk Committee
None
None
HR Committee
None
None
GCR Committee
None
None
Additional Retainer for director serving on both Audit and Risk Committees
15,000
16,500
Meeting Attendance Fee
LAP
1,500
1,650
(1) Effective May 1, 2023.
DEFERRED SHARE UNIT PLAN
The DSU Plan promotes a greater alignment of long-term interests between our directors and shareholders by linking a portion of annual director compensation to the future value of CWB common shares.
DSUs are only redeemable once a director ceases to serve as a director and are paid out in cash within 15 days of the redemption date(s) chosen by the former director, not later than December 14 of the calendar year, following the year in which they cease to be a director. The value of a DSU at the time of grant and at the time of redemption is equal to the average daily volume weighted trading price of a CWB common share on the applicable date and the four consecutive trading days immediately prior to that date. DSUs earn notional dividends at the same rate that dividends are paid on CWB's common shares. Notional DSU dividends are reinvested into additional DSUs.
DSUs are issued after each quarter in arrears. DSUs are fully vested when issued and are counted as common shares (on a one-for-one basis) for determining whether a director has met the minimum director equity requirement.
CURRENT
Under the current director compensation structure, each director and the Chair of the Board must receive a minimum of $80,000 of their annual director retainer in the form of DSUs, and may elect to receive all or part of any cash remuneration (excluding LAP Chair and meeting fees) in the form of DSUs.
EFFECTIVE MAY 1, 2023
Beginning May 1, 2023, each director must receive a minimum of 50% of their annual director retainer in the form of DSUs, and the Chair of the board must receive a minimum of 50% of her annual Chair retainer in the form of DSUs. Directors may elect to receive all or part of any cash remuneration (including LAP Chair and meeting fees) in the form of DSUs.
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