Table of Contents
Letter to the Shareholders from the Chair of the Board and the President and CEO | i |
Company overview | iv |
Proxy Circular Summary | vii |
About CAE | ix |
Useful Information | xiv |
Notice of 2024 Annual Shareholders' Meeting | xv |
Section 1 About Voting Your Shares | 1 |
Section 2 Business of the Meeting | 7 |
Section 3 About the Nominated Directors | 13 |
Section 4 Corporate Governance | 31 |
Section 5 Board Committee Reports | 47 |
Section 6 Director Compensation | 53 |
Section 7 Executive Compensation | 58 |
Compensation Discussion and Analysis | 61 |
Executive Summary | 62 |
Shareholder Engagement | 67 |
Compensation Philosophy | 68 |
Executive Compensation Programs | 70 |
FY2024 Compensation Outcome | 83 |
Determination of NEOs' Individual Performance | 89 |
Compensation Governance | 94 |
Alignment of Compensation and Performance | 101 |
Compensation of our Named Executive Officers | 104 |
Summary Compensation Table | 104 |
Outstanding Share-Based Awards and Option-Based Awards | 106 |
Incentive Plan Awards - Value Vested or Earned During the Year | 107 |
Pension Arrangements | 108 |
Termination and Change of Control Benefits | 109 |
CAE INC. | 2024 | Management Proxy Circular
Section 8 Other Important Information | 114 |
Appendix A - Board of Directors' Charter | 116 |
Appendix B - Non-IFRS and Other Financial Measures | 120 |
Appendix C - Summary of the Employee Stock Option Plan | 127 |
Appendix D - Summary of the Omnibus Incentive Plan | 131 |
Appendix E - Summary of the Rights Plan | 138 |
CAE INC. | 2024 | Management Proxy Circular
Letter to the Shareholders from the Chair of the Board and the President and CEO
June 14, 2024
Dear fellow Shareholders,
It is our pleasure to invite you to attend CAE's 2024 Annual Shareholders' Meeting (the "Meeting"). This year, we continued to work as One CAE to foster innovation and excellence for our customers and one another. We have a positive outlook for FY2025, following a year where we worked hard to retire Legacy Contracts (as defined herein) in our Defense and Security business. While Defense and Security fell below expectations, we saw continued robust performance in our Civil Aviation segment.
This was a year of meaningful progress for our Company, both in terms of addressing challenges as well as continuing to grow and invest in our core markets. As we have for years, we further strengthened our competitive position and demonstrated market leadership with the introduction of new technologies and solutions for our customers around the globe. Our Civil business continued to perform exceptionally well with continued growth in revenues, record margins, and strong order intake.
During the year, we took decisive actions to re-baseline our Defense business, with the acceleration of risk recognition on the Legacy Contracts. These actions, paired with leadership changes, organizational structure simplification, and the installation of a Chief Operating Officer, give us confidence in an improved performance profile for the segment. Additionally, we completed the sale of CAE Healthcare, a decision that reflects our commitment to streamline our portfolio to focus on our core businesses. The sale of Healthcare accelerates CAE's deleveraging process and enables us to focus on securing growth opportunities in our larger core markets.
Board Leadership
CAE continues to focus on Board renewal to ensure that the Company and Shareholders benefit from fresh perspectives. Five new directors have joined the Board since 2022, with a sixth new nominee up for election at the Meeting. This is the result of a regular evaluation by the Board to ensure it reflects the appropriate skills and experience necessary to effectively oversee execution of CAE's strategy today and into the future.
Our two most recent director additions are Sophie Brochu, who joined in August 2023, and Patrick Decostre, who joined in May 2024. Sophie and Patrick impart extensive executive leadership and operational experience in companies with international exposure and external acquisition growth journeys.
Sophie has held the position of President and CEO at two major companies in Quebec's energy sector - Hydro-Québec and Energir. She brings significant experience to the Board in vital areas, including strategic leadership and management, government relations, human resources, executive compensation and sustainability, among others.
Patrick is President, CEO and a director of Boralex Inc., a provider of affordable renewable energy in North America and Europe. He brings to the Board several years of experience as a CEO and nearly two decades of experience building Boralex's business from the ground up in Europe.
With these changes, 38% of CAE's Board of Directors are now women, enabling us to reach our 2025 target of the Board's Diversity Policy ahead of schedule.
We wish to extend a warm thank you to Michael E. Roach, who recently retired from the Board of Directors, and to Andrew J. Stevens, who is retiring this August. Mike and Andrew have both made significant contributions during their time on the Board, and we will miss their valuable input.
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CAE INC. | 2024 | Management Proxy Circular
Stakeholder Outreach
The Board continued its commitment to shareholder engagement, offering to meet with shareholders who together account for approximately 50% of our ownership. The Shareholders with whom we met provided valuable feedback, including on our executive compensation programs. We remain focused on aligning our performance and compensation outcomes with the interests of our Shareholders.
Commitment to Sustainability
Over the past 12 months, CAE has made substantial progress on its sustainability mandate. Our aim is to continue delivering long-term business value across our strategy, through built-in environmental, social and governance pillars. Climate change is one of the biggest global challenges of our time and CAE is committed to supporting the decarbonization of our customers and our industry. We submitted our near-termscience-based reduction targets for approval to the Science Based Targets initiative, which solidly positions CAE on its net zero trajectory.
To cite a few examples of our efforts in this area, our training analytics capabilities allow for more efficient training, which reduces energy consumption. Our Flight Operations Solutions support the decarbonization of the aviation industry through the optimization of airlines' flight plans and catering services, reducing fuel consumption, generating significant carbon savings and reducing waste. Our development of training capabilities adapted to Advanced Air Mobility (AAM) challenges enables the development of a new, all-electric industry that contributes to making air transportation more sustainable.
CAE's sustainability strategy is also driven by our commitment to create social value and foster an inclusive and diverse culture. In fiscal 2024, we increased the percentage of women and other underrepresented groups in leadership positions, achieving a key target of our multi-year sustainability roadmap. More information regarding our sustainability efforts can be found at https://www.cae.com/sustainability/.
Closing words
This year, CAE took the appropriate measures to reset conditions for enhancing profitability and operational efficiency. We have streamlined our portfolio and invested in new technologies that will allow us to capture an extended share of our core markets. The appointment of Nick Leontidis, Civil Group President over the last decade and a 36-year CAE veteran, to Chief Operating Officer will drive additional synergies between our Defense & Security and Civil Aviation business segments and increase operational efficiency. These actions, along with CAE's excellent reputation, customer-centric approach, strong technical capabilities, long-standing customer relationships and global presence position us for long-term success and value creation.
To our Shareholders - thank you for your ongoing support and confidence in our noble mission to make the world a safer place. Your trust becomes even more paramount in periods of turbulence. The Board values your input and insights, and we look forward to continued dialogue.
And, to CAE employees, we extend our appreciation for their commitment to the company's core values and strategy which help ensure the continued satisfaction of our customers.
We will once again hold our Meeting in virtual format via live webcast available at https://web.lumiagm.com/461348319.Shareholders are encouraged to cast their vote in advance by proxy and participate from any geographic location in real time through a web-based platform or by telephone. We believe this is an important step to enhancing accessibility to our annual meeting for all our Shareholders and reducing the carbon footprint of our activities.
As in prior years, important matters affecting our Company will be considered at the Meeting. We will, as always, review CAE's financial position, including business operations and the value delivered to Shareholders. We will also respond to your comments and questions.
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CAE INC. | 2024 | Management Proxy Circular
This Circular gives you details about all the items for consideration and how to vote. It also contains profiles of the nominated Directors, information on the auditors, and sections on the Board committees and CAE corporate governance practices. Whether or not you plan to attend the Meeting, we encourage you to review the enclosed information, consider the resolutions put forth by the Board and vote your Shares.
The Board remains committed to acting in the best interests of the Company and all its Shareholders.
We thank you for your continued confidence in and support of CAE and look forward to hearing from you at this year's Meeting.
Alan N. MacGibbon, P.C., O.C. | Marc Parent, C.M. |
Chair of the Board | President and Chief Executive Officer |
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Proxy Circular Summary
This summary highlights some of the important information you will find in this Management Proxy Circular ("Circular"). These highlights do not contain all the information that you should consider, and you should read this entire Circular before voting your Shares.
Shareholder Voting Matters
Voting Matter
Board Vote Recommendation
Page Reference for More Information
FOR each nominee | 8 | |||||
Election of 13 Directors | ||||||
Appointing PricewaterhouseCoopers LLP (PwC) | FOR | 10 | ||||
as Auditors | ||||||
FOR | 11 | |||||
Advisory Vote on Executive Compensation | ||||||
Approving the Reconfirmation of CAE's Rights Plan | FOR | 12 | ||||
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CAE Inc. published this content on 21 June 2024 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 21 June 2024 20:05:29 UTC.