Share Incentive Plan (SIP)
Cashless Settlement of Stock Options
• In order to reduce dilution, all exercises of stock options must be settled under the cashless settlement method. The cashless settlement method allows for the value of stock options at the time of exercise to be settled by exchanging the stock options for “ Substituted Rights ” and the immediate conversion of those rights into common shares. • As the number of stock options exercised under the cashless settlement method always exceeds the number of common shares issued, the excess is returned to the pool of common shares reserved for issuance under stock options. • Under the cashless settlement method, the number of shares to be issued is determined by the following formula:
- “ Current Price ” means the closing price of CWB common shares on the TSX on the date the notice of exchange is delivered to CWB. - “ Exercise Price ” means the exercise price of the stock options. • The Board may amend the SIP without shareholder approval for certain types of amendments, including amendments to the vesting provisions and amendments necessary to comply with applicable law. • The following types of amendments to the SIP require shareholder approval: - amendments to the number of common shares issuable under the SIP, including an increase to a fixed maximum number of common shares or a change from a fixed maximum number of common shares to a fixed maximum percentage; - any amendment that reduces a stock option’s exercise price or purchase price; - any amendment extending a stock option’s term beyond its original expiry date, except as otherwise permitted by the SIP; - adoption of any stock option exchange involving the cancellation and reissuance of stock options; - an amendment which would permit stock options to be transferred or assigned to an arm's-length third party who is not an associate, affiliate, or legal representative of the stock option holder; - any amendment that expands Participants to include non-employee directors; and - amendments that must be approved by shareholders under applicable law (including, without limitation, the TSX rules, regulations, and policies).
Amendments
Performance Share Unit (PSU) Plan
Overview
• PSUs granted under the PSU Plan are bookkeeping entries credited to an account created for each Participant. • Each PSU represents a unit with an underlying value equivalent to the value of one CWB common share, subject to adjustment by the performance multiplier. • Notional dividends accrue to the PSU holder and are converted on the dividend date into additional PSUs that vest in accordance with the respective grant. • On the grant date for PSUs, the value of the applicable allocation (based on a percentage of base salary as shown on the table on page 44) is divided by the weighted average trading price of one CWB common share on the grant date and the four trading days preceding the grant date to arrive at the number of PSUs granted to the executive. • PSUs vest on a date specified by the HR Committee at the date of grant, typically three years but in no event later than December 31 of the third year after the grant. • If a Participant ceases to be an employee before a PSU's vesting date by reason of death or retirement, then the PSUs will vest in accordance with the terms of the PSU Plan as if the Participant was an employee on the PSU vesting date. • Subject to Board discretion, if a Participant's employment ceases for any reason other than death or retirement, all of the Participant's unvested PSUs are cancelled and no compensation is paid for those PSUs. • Upon a change of control, PSUs vest immediately if both of the following conditions are met: (i) the Participant’s office or position is eliminated or substantially changed, and (ii) the Participant leaves the employment of CWB Financial Group within 18 months of the change of control. • In the event of accelerated vesting on a change of control, the performance will be calculated as at the date of the accelerated vesting and compared to the targets to determine the awards to be paid. • Upon completion of the vesting period associated with granted PSUs, a performance multiplier is calculated based on performance over the period relative to performance goals, and then applied to the PSUs originally granted such that the total monetary payout per PSU that vests may be greater or less than the value of a CWB common share. For grants up to and including fiscal 2020, the maximum possible performance multiplier is 200% and the minimum is 0%. For grants made at the beginning of fiscal 2021 forward, the maximum possible performance multiplier is 150% and the minimum is 50% (subject to HR Committee discretion over final award multipliers). • The value of each common share underlying the value of a PSU on the vesting date is based on the average of the weighted average trading price of the common shares on the TSX on the vesting date of the PSU and the four trading days preceding the vesting date of the PSU. The value of each vested PSU is paid to Participants, in cash, no later than 60 days after vesting.
Grant Determination
Vesting
Payout
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