CWB-Management Proxy Circular-2023-EN

CWB TSR Percentile Relative to Peer Group

CWB Performance Multiplier

Weighted Performance Factor

CWB Performance


• Achieved greater representation of designated groups in our workforce and leadership ranks, supported by our People first approach, which expanded resources and support, and investment in people, culture and team member experience. • Significantly improved our leadership depth and effectively navigated senior leadership transitions. • Successfully introduced Flexible Work Arrangements in response to changing employee expectations and workplace trends. • Achieved certification from Great Place to Work Canada® in all three performance years, and improvement on the Best Workplaces TM list from #41 to #20 in fiscal 2022. Capital Transformation (AIRB) • Following OSFI’s decision to pause our application and require resubmission, we restructured our team, conducted an in-depth review, and launched an AIRB program to remediate OSFI’s observations. We have achieved several key milestones since the introduction of the program , which has the dual objectives to achieve AIRB approval and ensure CWB’s long - term sustainability as a model-enabled bank. We have materially completed the development of revised AIRB tools, incorporating targeted enhancements and the final 2023 Capital Adequacy Requirement guidelines. Next year, we will commence integration of our revised AIRB tools into our business processes and data. Once our AIRB tools have been successfully implemented across the business, we will operate them for a sufficient period of time to support a successful resubmission of our application. • The delay in our AIRB approval has had a direct negative impact on our profitability in the near-term. We have incurred incremental capital and net interest expense investments from the work under the program to redevelop our AIRB tools and processes. However, the enhancements we have been implementing will ensure we embed AIRB tools and processes and our capabilities fully support a sustainable model-enabled bank, prior to resubmitting our application to OSFI. Other Transformations (Funding, Funds Transfer Pricing, Geographic Diversification, Technology Transformation) • Continued to make strong progress on geographic diversification across our national footprint. • Focus on general commercial lending has resulted in this segment outpacing our other loan segments and driving full-service client growth. • Successfully funded all business growth and significantly improved our funding sources and diversification. Our branch-raised deposit growth momentum improved significantly, outpacing total loan growth and leading to a reduction in our broker-deposit reliance. • Expanded our accessibility across capital markets instruments by issuing inaugural non- viability contingent capital sub-debt, limited recourse capital notes, and initiating our At-the- Market offering program. • Materially progressed or completed several key deliverables centered on increasing the efficiency and scalability of our business, including credit support. • Achieved substantive risk management transformation, including ongoing full implementation of our three lines of defense framework. We have built a more operationally resilient and scalable organization, positioning us well to navigate through recessionary conditions, should they arise. • Increased our focus on sustainability to ensure we meet the evolving expectations of our stakeholders with an approach that drives value for our people, clients and investors. Published our inaugural Sustainability Report in March 2022.

Destination for Talent







Create Shareholder Value




Overall Performance Multiplier (potential of 0% - 200%)


2021 PSU Grant

The HR Committee approved changes to the PSU Plan in fiscal 2021. These changes moved our PSU Plan more in line with those of the Largest Canadian Banks, and other companies in our executive compensation peer group, supporting the attraction and retention of key executives. The changes to the PSU Plan are culturally aligned with CWB’s prud ent risk culture, with less downside risk and upside opportunity than previous PSU grants, while still driving differentiated pay for performance outcomes. Additionally, as discussed on page 40, the performing loan provision was excluded from all relevant compensation metrics used in STIP and LTIP (including all outstanding PSUs). The changes to the PSU Plan applied to PSUs granted in fiscal 2021, and going forward.

2021 PSU Changes

Performance Range

The PSUs have a performance payout range of 50- 150%. The HR Committee may reduce payouts to 0% if it determines that CWB’s performance, viewed holistically, warrants such an action.

Three-year Compound Growth in Adjusted EPS Eliminated

Reduced the number of different performance measures to simplify the plan. Strategic initiatives remain a 40% weighting, and EPS remains a significant metric in the STIP.

Relative TSR Weighting Increased from 30% to 60%

The increased weighting on relative TSR further aligns executive pay with the shareholder experience.

49 | Canadian Western Bank- Management Proxy Circular

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