EX-99.3 4 y69599exv99w3.txt MANAGEMENT INFORMATION CIRCULAR EXHIBIT 3 CANWEST GLOBAL COMMUNICATIONS CORP. NOTICE OF ANNUAL MEETING OF SHAREHOLDERS NOTICE IS HEREBY GIVEN that the annual meeting of the shareholders of CanWest Global Communications Corp. (the "Company") will be held at the Design Exchange, 234 Bay Street, Toronto, Ontario, on Thursday, the 27th day of January, 2005 at the hour of 2:30 p.m. (Eastern Standard Time) for the following purposes: 1. to receive the annual report, including the financial statements of the Company for the fiscal year ended August 31, 2004, together with the report of the auditors thereon; 2. to elect directors for the ensuing year; 3. to appoint auditors for the ensuing year and to authorize the directors to fix the remuneration to be paid to the auditors; 4. to transact such other business as may properly come before the meeting and any adjournment thereof. DATED at Winnipeg, Canada this 24th day of November, 2004. By Order of the Board of Directors /s/ Gail S. Asper Gail S. Asper Secretary CANWEST GLOBAL COMMUNICATIONS CORP. MANAGEMENT INFORMATION CIRCULAR SOLICITATION OF PROXIES The information contained in this management information circular ("Circular") is furnished in connection with the solicitation of proxies to be used at the annual meeting of shareholders (the "Meeting") of the Company to be held on Thursday, January 27, 2005 at 2:30 p.m. (Eastern Standard Time) at the Design Exchange, 234 Bay Street, Toronto, Ontario, and at all adjournments thereof, for the purposes set forth in the accompanying notice of meeting. It is expected that the solicitation will be made primarily by mail but proxies may also be solicited personally by employees of the Company. THE SOLICITATION OF PROXIES BY THIS CIRCULAR IS BEING MADE BY OR ON BEHALF OF THE MANAGEMENT OF THE COMPANY AND THE TOTAL COST OF THE SOLICITATION WILL BE BORNE BY THE COMPANY. The information contained herein is given as at November 24, 2004, except as otherwise noted. PROXY INSTRUCTIONS As a shareholder of the Company it is important that you read this information carefully and then vote your shares, either by proxy or in person at the Meeting. A proxy form is included with this Circular. The persons who are named on the enclosed form of proxy are representatives of management of the Company and are directors and/or officers of the Company. These persons will vote the shares of the shareholder unless the shareholder appoints someone else to be his or her proxyholder. If a shareholder appoints someone else, he or she must be present at the Meeting to vote the shareholder's shares. A shareholder who wishes to appoint some other person to represent him/her at the Meeting may do so by inserting such person's name in the blank space provided in the form of proxy. Such other person need not be a shareholder of the Company. TO BE VALID, PROXIES MUST BE DEPOSITED WITH COMPUTERSHARE TRUST COMPANY OF CANADA ("COMPUTERSHARE") AT 9TH FLOOR, 100 UNIVERSITY AVENUE, TORONTO, ONTARIO, CANADA M5J 2Y1, OR COMPLETED OVER THE TELEPHONE OR INTERNET IN THE MANNER SET OUT IN THE ENCLOSED FORM OF PROXY, NOT LATER THAN THE CLOSE OF BUSINESS ON JANUARY 25, 2005 OR, IF THE MEETING IS ADJOURNED, 48 HOURS (EXCLUDING SATURDAYS AND HOLIDAYS) BEFORE ANY ADJOURNMENT OF THE MEETING. VOTING BY REGISTERED SHAREHOLDERS A shareholder is a registered shareholder if the shareholder's name appears on the shareholder's share certificate. By proxy: - By telephone: IF THE SHAREHOLDER CHOOSES THE TELEPHONE, THE SHAREHOLDER CANNOT APPOINT ANYONE OTHER THAN THE PERSONS NAMED ON THE PROXY FORM AS THE SHAREHOLDER'S PROXYHOLDER. - On the Internet: To vote by Internet, go to the following website: www.computershare.com/ca/proxy. - By mail: Sign and return the enclosed form of proxy to Computershare Trust Company of Canada at 9th floor, 100 University Avenue, Toronto, Ontario, Canada M5J 2Y1, so as to arrive not later than the close of business on January 25, 2005 or, if the Meeting is adjourned, 48 hours (excluding Saturdays and holidays) before any adjournment of the Meeting. - BY APPOINTING ANOTHER PERSON TO GO TO THE MEETING TO VOTE THE SHAREHOLDER'S SHARES ON THE SHAREHOLDER'S BEHALF: This person does not have to be a shareholder. You also have to make certain that the person who is appointed is aware that he or she is appointed and attends the Meeting. In person: - THE SHAREHOLDER DOES NOT NEED TO COMPLETE OR RETURN THE PROXY FORM. VOTING IN PERSON AT THE MEETING WILL AUTOMATICALLY CANCEL ANY PROXY COMPLETED EARLIER BY THE SHAREHOLDER. VOTING BY NON-REGISTERED SHAREHOLDERS A shareholder is a non-registered (or beneficial) shareholder if (1) an intermediary (such as a bank, trust company, securities dealer or broker, trustee or administrators of RRSPs, RRIFs, RESPs and similar plans) or (2) a clearing agency (such as The Canadian Depository for Securities Limited) of which the intermediary is a participant, holds the shareholder's shares for the shareholder ("Intermediary(ies)"). Only registered shareholders of Multiple Voting Shares, Subordinate Voting Shares or Non-Voting Shares of the Company, or the persons whom they appoint as their proxies, are permitted to attend the Meeting and only registered shareholders of Multiple Voting Shares and Subordinate Voting Shares, or the persons whom they appoint as their proxies, are permitted to vote at the Meeting. However, in many cases, Multiple Voting Shares, Subordinate Voting Shares or Non-Voting Shares of the Company beneficially owned by a shareholder may be registered in the name of an Intermediary. In accordance with the requirements of Canadian securities laws, the Company has distributed copies of the notice of meeting, this Circular, the form of proxy (except for holders of Non-Voting Shares) and the 2004 annual report (which includes management's discussion and analysis) (collectively, "meeting materials") to the Intermediaries for onward distribution to non-registered shareholders. Effective for annual meetings of shareholders taking place on or after September 1, 2004, the Company is permitted to distribute meeting materials directly to non-registered (or beneficial) shareholders who do not object to the issuers of securities they own knowing who they are. Accordingly, in accordance with applicable Canadian securities laws, meeting materials are being sent by the Company to registered shareholders and to non-registered (or beneficial) shareholders who have not objected to the disclosure of their name and address and information about their security holdings to the Company. Intermediaries are required to forward meeting materials to non-registered shareholders unless a non-registered shareholder has waived the right to receive them. Very often, Intermediaries will use service companies to forward the meeting materials to non-registered shareholders. Generally, non-registered shareholders (except for holders of Non-Voting Shares) who have not waived the right to receive meeting materials will either: A. be given a form of proxy which has already been signed by the Intermediary (typically by a facsimile, stamped signature) which is restricted as to the number of shares beneficially owned by the non-registered shareholder but which is otherwise uncompleted. This form of proxy need not be signed by the non-registered shareholder. In this case, the non-registered shareholder who wishes to submit a proxy should otherwise properly complete the form of proxy and deposit it with Computershare Trust Company of Canada at 9th Floor, 100 University Avenue, Toronto, Ontario, Canada M5J 2Y1 as described above; or B. more typically, be given a voting instruction form which must be completed, signed and delivered by the non-registered shareholder in accordance with the directions on the voting instruction form (which may, in some cases, permit the completion of the voting instruction form by telephone). 2 The purpose of these procedures is to permit non-registered shareholders to direct the voting of the shares that they beneficially own. Should a non-registered shareholder who receives a form of proxy wish to attend and vote at the Meeting in person (or have another person attend and vote on behalf of the non-registered shareholder), the non-registered shareholder should strike out the names of the persons named in the proxy and insert the non-registered shareholder's (or such other person's) name in the blank space provided, or, in the case of a voting instruction form, follow the information on the form. IN EITHER CASE, NON-REGISTERED SHAREHOLDERS SHOULD CAREFULLY FOLLOW THE INSTRUCTIONS THEY RECEIVE, INCLUDING THOSE REGARDING WHEN AND WHERE THE PROXY OR THE VOTING INSTRUCTIONS FORM IS TO BE DELIVERED. REVOCATION OF PROXIES A registered shareholder who has given a proxy may revoke the proxy (a) by completing and signing a proxy bearing a later date and depositing it with Computershare as aforesaid; or (b) by depositing an instrument in writing executed by him/her, or by his/her attorney authorized in writing (i) at the registered office of the Company at any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof, at which the proxy is to be used, or (ii) with the chairperson of the Meeting prior to the commencement of the Meeting on the day of the Meeting or any adjournment thereof; or (c) in any other manner permitted by law. A non-registered shareholder may revoke a voting instructions form or a waiver of the right to receive meeting materials and to vote given to an Intermediary at any time by written notice to the Intermediary, except that an Intermediary is not required to act on a revocation of a voting instruction form or of a waiver of the right to receive materials and to vote that is not received by the Intermediary at least seven days prior to the Meeting. VOTING OF PROXIES The management representatives designated in the enclosed form of proxy will vote, or withhold from voting, the shares in respect of which they are appointed by proxy on any ballot that may be called in accordance with the instructions of the shareholder as indicated on the proxy and, if the shareholder has specified a choice with respect to any matter to be acted upon, the shares will be voted accordingly. IN THE ABSENCE OF SUCH DIRECTION, SUCH SHARES WILL BE VOTED BY THE MANAGEMENT REPRESENTATIVES AS FOLLOWS: (a) for the election of directors; and (b) for the appointment of auditors and the authorization of the directors to fix the remuneration of auditors. The enclosed form of proxy confers discretionary authority upon the management representatives designated therein with respect to amendments to matters identified in the notice of meeting and with respect to other matters which may properly come before the Meeting. At the date of this Circular, management of the Company knows of no such amendments or other matters. VOTING SECURITIES AND PRINCIPAL HOLDERS OF VOTING SECURITIES The directors have established the close of business on December 15, 2004 as the record date ("Record Date") for determining the shareholders entitled to receive notice of the Meeting. In accordance with the provisions of the Canada Business Corporations Act ("CBCA"), the Company will prepare a list of the registered holders of Subordinate Voting Shares and Multiple Voting Shares as of the close of business on the Record Date. Each registered shareholder of Subordinate Voting Shares and Multiple Voting Shares will be entitled at the Meeting to vote the shares shown opposite the shareholder's name. HOLDERS OF SUBORDINATE VOTING SHARES AND MULTIPLE VOTING SHARES The holders of Subordinate Voting Shares and Multiple Voting Shares are entitled to receive notice of any meeting of shareholders of the Company and to attend and vote thereat, except those meetings where only the holders of shares of another class or of a particular series are entitled to vote. On November 24, 2004, the Company had outstanding 99,052,678 Subordinate Voting Shares and 76,785,976 Multiple Voting Shares. Each shareholder of record at the close of business on the Record Date will be entitled to one vote for each Subordinate Voting Share and ten votes per share for each Multiple Voting Share held by him/her on all matters proposed to come before the Meeting. HOLDERS OF NON-VOTING SHARES The Company also has authorized an unlimited number of Non-Voting Shares to facilitate foreign investment in the Company. Holders of Non-Voting Shares are entitled to receive notice of and attend any meeting of shareholders of the Company, except those meetings where only the holders of shares of another class or of a particular series are entitled to vote. The Company's outstanding Multiple Voting Shares and Subordinate Voting Shares are convertible on a one-for-one basis into Non-Voting Shares at the option of the holder, while the Non-Voting Shares are convertible on a one-for-one basis into Subordinate Voting Shares only if transferred to or held by a "Canadian" holder (as defined in "Restrictions on Issuance and Transfer of Shares" contained in the Articles of Amendment of the Company filed June 4, 1996). Generally speaking, a "Canadian" is a citizen or permanent resident of Canada or a corporation or other entity where the chief executive officer and 80% of the board members are Canadian, 80% of the voting shares are beneficially owned and controlled by Canadians, and, if it is a subsidiary, 66-2/3% of the voting shares of its parent corporation are held by Canadians, and, where relevant, the 3 parent does not influence any programming decisions of the subsidiary. On November 24, 2004, the Company had outstanding 1,441,965 Non-Voting Shares. PRINCIPAL HOLDERS OF VOTING SECURITIES As at November 24, 2004, the only persons or companies who owned of record, or who, to the knowledge of the directors and officers of the Company, owned beneficially, directly or indirectly, or exercised control or direction over, shares of the Company carrying more than 10% of the voting rights attached to any class of outstanding shares of the Company entitled to vote in connection with any matters being proposed for consideration at the Meeting were as follows:
TYPE OF NO. OF PERCENTAGE NAME AND ADDRESS CLASS OF SECURITIES OWNERSHIP SECURITIES OF CLASS ---------------- ------------------- --------- ---------- -------- CanWest Communications Multiple Voting Shares Direct 76,785,976 100.0% Corporation (1) Subordinate Voting Shares Direct 3,462,874 3.5% 31st Floor, CanWest Global Place 201 Portage Avenue Winnipeg, Manitoba, Canada R3B 3L7 AIM Funds Group Subordinate Voting Shares Direct 15,922,875 16.08% 120 Bloor Street East Toronto, Ontario M4W 1B7
(1) Indirectly owned and controlled by trusts for the benefit of members of the family of the late I.H. Asper, including David Asper, Gail Asper and Leonard Asper who are senior officers and directors of the Company and Mrs. Ruth M. Asper. Mrs. Ruth M. Asper and the relevant trusts indirectly own and control 100% of the voting shares of CanWest Communications Corporation ("CanWest Communications") (see "Voting Trust Agreement"). VOTING TRUST AGREEMENT All of the Company's Multiple Voting Shares and 3,462,874 of its Subordinate Voting Shares are held by CanWest Communications, the shares of which are indirectly owned and controlled by Mrs. Ruth M. Asper, and trusts for the benefit of members of the family of the late I.H. Asper, including his three children, David Asper, Gail Asper and Leonard Asper, who are senior officers and directors of the Company. CanWest Communications, certain of its affiliates, the trusts, Mrs. Ruth M. Asper and her three children (as voting trustees) have entered into a voting trust agreement which requires the Multiple Voting Shares held by CanWest Communications to be voted as Mrs. Ruth M. Asper and the three children together determine. The voting trust agreement also requires the Multiple Voting Shares held by CanWest Communications to be voted in favour of nominees to the Board of Directors (the "Board") who are nominated by David Asper, Gail Asper and Leonard Asper, and who, together, will be sufficient to constitute at least a majority of the Board, but as close to a simple majority as possible. For this purpose, each of David Asper, Gail Asper and Leonard Asper are entitled to nominate an equal number of the nominees making up that majority. Such nominees will be provided to the Governance and Nominating Committee of the Board which has overall responsibility for recommending nominees to the Board. STOCK EXCHANGE REQUIRED AGREEMENT REGARDING MULTIPLE VOTING SHARES In compliance with the rules of certain Canadian stock exchanges, CanWest Communications entered into a trust agreement dated October 9, 1991 with the Company and Montreal Trust Company of Canada (as trustee for the holders of the Subordinate Voting Shares, from time to time), as amended by a trust agreement amendment dated May 15, 1996 and a trust amendment dated January 29, 1998 (as amended, the "MVS Agreement"). The MVS Agreement provides the holders of Subordinate Voting Shares with certain rights in the event that a take-over bid having certain characteristics is made for the Multiple Voting Shares. A take-over bid, generally defined, is an offer to acquire outstanding equity or voting shares where, as a result thereof, the offeror would own more than 20% of the shares of the class which is the subject of the bid. Under applicable securities law, an offer to purchase Multiple Voting Shares would not necessarily require that an offer be made to purchase Subordinate Voting Shares. The MVS Agreement would prevent the sale, directly or indirectly, of Multiple Voting Shares owned by CanWest Communications pursuant to a take-over bid, at a price per share in excess of 115% of the then current market price of the Subordinate Voting Shares as determined under such legislation. This prohibition would not apply if (a) such sale is made pursuant to an offer to purchase Multiple Voting Shares made to all holders of Multiple Voting Shares and an offer identical in all material respects is made concurrently to purchase Subordinate Voting Shares, which identical offer has no condition attached other than the right not to take-up and pay for shares tendered if no shares are purchased pursuant to the offer for Multiple Voting Shares; or (b) there is a concurrent unconditional offer to purchase all 4 of the Subordinate Voting Shares at a price per share at least as high as the highest price per share paid pursuant to the take-over bid for the Multiple Voting Shares. The MVS Agreement will not prevent certain indirect sales resulting from the acquisition of shares of a corporation which, directly or indirectly, controls or is controlled by, CanWest Communications or the Company where the transferor and transferee are members of the Asper Family, the transferee is the child or grandchild of the transferor, and the sale is otherwise made in accordance with applicable law. The phrase "Asper Family" is defined to mean (i) the late I.H. Asper, (ii) Mrs. Ruth M. Asper, (iii) any issue of the late I.H. Asper (treating, for this purpose, any legally adopted descendant as a natural descendant), (iv) his estate, (v) any trust primarily for the benefit of the issue of the late I.H. Asper, spouses of such issue, and Mrs. Ruth M. Asper and (vi) any and all corporations which are directly or indirectly 100% controlled by one or more of the foregoing. "Spouse" includes a person's widow or widower. The MVS Agreement will also not prevent sales of Multiple Voting Shares, directly or indirectly, to The Asper Foundation Inc. or any other charitable foundation which is a registered charity for the purposes of the Income Tax Act (Canada) (a "Foundation"), provided that a majority of the directors of the Foundation at the time of the sale are one or more of a spouse, a child or grandchild, or a spouse of a child or grandchild of the transferor (where spouse includes a widow or widower), or certain indirect sales of Multiple Voting Shares in circumstances in which the purchaser would not, as a result of the sale, hold indirectly more than 20% of the Multiple Voting Shares. On January 20, 2000, shareholders approved an amended and restated trust agreement (the "Amended and Restated MVS Agreement") to which certain Asper family trusts would become a party. The amendment is pursuant to an estate plan which was prepared for the late I.H. Asper and his family which, if implemented, would result in the 76,785,976 Multiple Voting Shares and 3,462,874 Subordinate Voting Shares of the Company currently held by CanWest Communications Corporation becoming registered in the names of the trustees of three family trusts: The David Asper Trust, The Gail Asper Trust and The Leonard Asper Trust. The shares of the Company held by CanWest Communications would be split equally among the three trusts. The trustees of each of the trusts are Mrs. Ruth M. Asper, Fred de Koning and Richard Leipsic, and the beneficiaries of the trusts are members of the Asper family, the Asper Foundation and other charitable organizations. The Amended and Restated MVS Agreement contains terms and conditions very similar to the existing MVS Agreement except for a number of technical changes reflecting that the registered owners of Multiple Voting Shares will be the family trusts as opposed to CanWest Communications, and except for amendments to paragraphs 2(c) and 2(d) of the Trust Agreement which are designed to provide the Asper family with certain flexibility required to implement the proposed estate plan. This flexibility consists of (i) permitting Mrs. Ruth M. Asper and the issue of the late Mr. I.H. Asper to be eligible direct holders of Multiple Voting Shares; (ii) permitting Mrs. Ruth M. Asper and the issue of the late Mr. I.H. Asper to be eligible as beneficiaries of a trust which holds Multiple Voting Shares; (iii) permitting a trust which is primarily, rather than exclusively, for the benefit of the issue of the late Mr. I.H. Asper, spouses of such issue, or Mrs. Ruth M. Asper, to hold Multiple Voting Shares; and (iv) permitting a corporation which is 100% controlled by, rather than 100% owned and controlled by, Mrs. Ruth M. Asper, any issue of the late Mr. I.H. Asper or any trust primarily for the benefit of any issue of the late Mr. I.H. Asper or spouses of such issue to hold Multiple Voting Shares. The Amended and Restated MVS Agreement will be entered into and become effective upon the trusts becoming the registered owners of the Multiple Voting Shares and Subordinate Voting Shares currently registered in the name of CanWest Communications or on a date specified by the Board. No determination has been made to take these steps. CONSTRAINED SHARE PROVISIONS The Company's articles state, in effect, that (i) the maximum aggregate holdings of voting shares by non-Canadian holders are limited to 33 1/3% of the total number of voting shares of the Company; and (ii) the maximum individual holdings of the shares of the Company by any single shareholder and its associates are limited to (a) the maximum number of shares which a person may, in the opinion of the Board, own, beneficially own or control, without (I) changing the effective control of the Canadian broadcasting undertakings of the Company; (II) resulting in a person, or a person and its associates, who controls less than 30% of the issued voting shares of the Company or of any person that directly or indirectly has effective control of the Company, having control of 30% or more of such voting shares; (III) resulting in a person, or a person and its associates, who owns less than 50% of the issued shares of the Company or of any person that directly or indirectly has effective control of the Company, owning 50% or more of such issued shares; or (IV) conflicting with the conditions of the broadcasting licences held by the Company or its subsidiaries with respect to changes in the ownership or effective control of the Company's broadcasting undertakings (any of the events described in clauses (I), (II), (III) and (IV) being a "Change of Control Transaction") where the Change of Control Transaction does not have the prior approval of the Canadian Radio-television and Telecommunications Commission; and (b) the maximum number of voting shares that may be issued or transferred to a non-Canadian holder without non-Canadian holders, in the aggregate, holding voting shares in excess of the maximum aggregate holdings. The Company's articles also describe as the "Constrained Class" the class of persons to whom an issue or transfer of shares may, in the opinion of the Board, adversely affect the Company's ability to qualify under any law to carry on its business or to obtain or retain any broadcasting license, including in relation to the maximum aggregate holdings, a non-Canadian holder and, in relation to the maximum individual holdings, any person who is a non-Canadian holder or who, in the opinion of the directors, intends to engage in a Change of Control transaction without the prior approval of the Canadian Radio-television and Telecommunications Commission. In the event that an issuance or transfer of shares to a shareholder would cause the shareholder to hold shares in excess of the maximum individual holdings or would result in the number of shares held by persons in the Constrained Class exceeding the maximum aggregate holdings described above, then the articles of the Company authorize the Board to refuse to issue a share or register a transfer of a share to such shareholder. 5 Pursuant to the regulations under the CBCA, if Voting Shares held by or on behalf of a person in the Constrained Class exceed the maximum individual holdings, the Shares held by or on behalf of that person may not be voted. The regulations under the CBCA also provide that any corporation or trust which was not a person in the Constrained Class but becomes a person in the Constrained Class will no longer be permitted to exercise the voting rights attached to the voting shares that it holds. ELECTION OF DIRECTORS The number of directors to be elected at the Meeting has been set by the Board pursuant to the by-laws of the Company to be nine. The management representatives designated in the enclosed form of proxy intend to vote for the election as directors of the proposed nominees whose names are set out below. Except as indicated below, all such nominees are now directors and have been directors since the dates indicated below. Each director elected will hold office until the next annual meeting or until his/her successor is elected or appointed. In fiscal 2004, the Company had an Audit Committee, a Compensation Committee, a Pensions Committee and a Governance and Nominating Committee. The members of such committees are indicated below. DAVID A. ASPER EXECUTIVE VICE PRESIDENT OF THE COMPANY AND CHAIRMAN OF (1) Winnipeg, Manitoba THE NATIONAL POST Mr. Asper, a lawyer, joined the Company in 1992 and has 63,622 stock options Director since January 1997 had various responsibilities covering corporate development and broadcast operations. Mr. Asper has been Executive Vice-President (2) actively engaged in the planning and implementation of (4) broad corporate strategy. GAIL S. ASPER SECRETARY OF THE COMPANY (1) Winnipeg, Manitoba Ms. Asper, a lawyer, has been with the Company since 1989 serving as General Counsel until 1998 and as Corporate 33,850 stock options Director since February 1992 Secretary since 1990. While her primary responsibilities relate directly to the Company's Board, she is also Secretary (2) President of the CanWest Global Foundation. She is also managing director of The Asper Foundation, a private charitable foundation, and serves as a director on the boards of a number of major public companies, such as Great-West Life Assurance Company, Great-West Life Co. Inc., London Life Insurance Group Inc. and Canada Life Assurance Company. LEONARD J. ASPER PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE COMPANY 14,000 Subordinate Voting Shares (1) Winnipeg, Manitoba Mr. Asper, a lawyer, joined CanWest in 1991 as Associate General Counsel for the Company's Global Television Director since January 1997 station in Ontario. Thereafter, he held various positions 181,525 stock options in corporate development and was Chief Operating Officer. President and Chief Mr. Asper took over the Presidency of the Company in Executive Officer (2) 1999. He serves as Chairman of the board of the Global Television Network and various other CanWest Global subsidiaries. DR. LLOYD I. BARBER, PRESIDENT EMERITUS, UNIVERSITY OF REGINA 1,000 Subordinate Voting Shares C.C., S.O.M., LL.D. Dr. Barber is President Emeritus of the Regina, Saskatchewan University of Regina. He was appointed an Officer of the 46,706 stock options Order of Canada in 1978 and was elevated to Companion Director since February 1992 of the Order in 1993. He serves as a director of 6,394 DSUs several major public Canadian companies such as Teck Director (2)(3)(4)(5) Comihco Ltd., Greystone Capital Management and Fording Trust. RONALD J. DANIELS DEAN, FACULTY OF LAW, UNIVERSITY OF TORONTO 5,228 DSUs Toronto, Ontario Mr. Daniels is the Dean of the Faculty of Law, University of Toronto, a position he has held since Director since January 2004 1995. He is active in public policy reformation and has contributed to several public task forces. He Director (2)(3) was chair of the Ontario Task Force on Securities Regulation and is a member of the Toronto Stock Exchange Commission on Corporate Governance. He also serves as a director on the board of several public companies such as Great Lakes Power Inc., Rockwater Capital Corporation and ACS Income Trust.
6 DAVID J. DRYBROUGH, FCA BUSINESS CONSULTANT 7,500 stock options East St. Paul, Manitoba A Chartered Accountant by training, Mr. Drybrough was Vice President, Finance of Winnipeg-based Gendis Inc. 5,397 DSUs Director since March 2003 until December 2003, since his retirement in 1997 from the accounting firm PricewaterhouseCoopers LLP (then Director (2)(5) known as Coopers & Lybrand). Mr. Drybrough serves as a director and chair of the Audit Committee of Fort Chicago Energy Partners LP. He is on the Board's Audit Committee, increasing the strength of professional accounting expertise on that committee. PAUL V. GODFREY, C.M. PRESIDENT AND CHIEF EXECUTIVE OFFICER OF THE TORONTO BLUE 6,698 DSUs Toronto, Ontario JAYS BASEBALL CLUB Mr. Godfrey is President and Chief Executive Officer Director since January 2004 of the Toronto Blue Jays Baseball Club, a position he has held since September 1, 2000. From November 1992 until Director (2)(4) June 2000, Mr. Godfrey was President and Chief Executive Officer of The Toronto Sun. He serves as a director of a number of major public Canadian companies such as Astral Media Inc., The Hospital for Sick Children Foundation and the Molson Indy Board of Trustees and is actively involved in many charitable organizations. Mr. Godfrey has received many honours including the City of Toronto's highest award, the Civic Award of Merit, and is a member of the Order of Canada. FRANK W. KING, O.C., PRESIDENT OF METROPOLITAN INVESTMENT CORP. P. ENG. Mr. King has been an Investment Manager for more than Calgary, Alberta the past five years, and is President of Metropolitan Investment Corporation. He is the former Chairman and Director since November 2004 Chief Executive Officer of the XV Olympic Winter Games, which were held in Calgary in 1988. Mr. King, Director (2) 68, is a Director of the Calgary Chamber of Commerce, Acclaim Energy Inc., Networc Health Inc., The Westaim Corporation, Agrium Inc., and Wi-Lan Inc. and is a Trustee of Rio-Can Real Estate Investment Trust. THE HONOURABLE FRANK J. COUNSEL, MCINNES COOPER 2,000 Subordinate Voting Shares MCKENNA, P.C., Q.C. A lawyer, politician, and businessman, Mr. McKenna won Moncton, New Brunswick three mandates as Premier of New Brunswick and 33,797 stock options achieved national prominence for his leadership. After Director since July 1999 ten years as Premier, Mr. McKenna decided to leave 16,784 DSUs politics in 1997 and now devotes his time to the Chairman of the Board practice of law with McInnes Cooper, an Atlantic (2)(3)(5) Canada law firm. As well, he serves as a director on the board of a number of major public companies such as Bank of Montreal, Shoppers Drug Mart Corporation and Noranda Inc.
(1) Trusts for the benefit of members of the family of the late I.H. Asper, including David Asper, Gail Asper and Leonard Asper, and Mrs. Ruth M. Asper indirectly own and control CanWest Communications which, in turn, owns 100% of the Multiple Voting Shares and 3,462,874 Subordinate Voting Shares. See "Voting Securities and Principal Holders of Voting Securities". (2) Member of the Governance and Nominating Committee. (3) Member of the Compensation Committee. (4) Member of the Pensions Committee. (5) Member of the Audit Committee. Each of the foregoing directors, with the exception of Mr. King, were elected to his or her present term of office by the shareholders of the Company at a meeting in respect of which the Company circulated a management information circular to shareholders. Unless otherwise indicated, all the directors are resident in Canada. Ms. Bennett decided not to stand for re-election to the Board in 2005 and Mr. Strike and Mr. Camilleri resigned from the Board on November 2, 2004. 7 BOARD OF DIRECTORS MEETINGS HELD AND ATTENDANCE OF DIRECTORS The information presented below reflects Board and Committee meetings held and attendance of Directors for the year ended August 31, 2004 for those Directors that are nominated for election at the Meeting that were Directors during that period. Summary of Board and Committee Meetings Held: Board of Directors 8 (a) Audit Committee 5 (b) Compensation Committee 5 (c) Pensions Committee 2 (d) Governance and Nominating Committee 1 Summary of Attendance of Directors:
BOARD MEETINGS COMMITTEE MEETINGS ATTENDED ATTENDED David A. Asper 8 of 8 3 of 3 Gail S. Asper 8 of 8 1 of 1 Leonard J. Asper 8 of 8 1 of 1 Dr. Lloyd I. Barber 8 of 8 13 of 13 Ronald J. Daniels 3 of 3 3 of 3 David J. Drybrough 8 of 8 6 of 6 Paul V. Godfrey 3 of 3 3 of 3 The Hon. Frank J. McKenna 8 of 8 11 of 11
STATEMENT OF EXECUTIVE COMPENSATION SUMMARY COMPENSATION TABLE The Summary Compensation Table details compensation information for the three fiscal years ended August 31, 2004, for the Chief Executive Officer, the Chief Financial Officer and the three other most highly compensated executive officers of the Company (the "named executive officers") for services rendered in all capacities with respect to the fiscal year ended August 31, 2004. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION AWARDS ANNUAL COMPENSATION ------------ ------------------------------------------ SECURITIES ALL NAME AND OTHER ANNUAL UNDER OTHER PRINCIPAL SALARY BONUS COMPENSATION OPTIONS COMPENSATION POSITION YEAR $ $ $(1) GRANTED (2) $ -------- ---- ------- ------- ------------ ------------ ------------ D.A. Asper 2004 360,000 105,000 - 12,500 - Executive Vice President 2003 350,000 72,000 - 7,500 - CanWest Global 2002 350,000 - - 7,500 - Communications Corp. L.J. Asper 2004 650,000 73,125 - 30,000 - President & Chief 2003 650,000 678,906 - 60,000 - Executive Officer CanWest Global 2002 540,800 - - - - Communications Corp. R.C. Camilleri (3) 2004 600,000 73,800 - 20,000 - President 2003 600,000 360,000 - 50,000 - CanWest MediaWorks 2002 100,000 - - - - J.E. Maguire 2004 275,625 59,500 - 12,500 - Chief Financial Officer 2003 262,500 118,125 - 25,000 - CanWest Global 2002 250,000 17,000 - - - Communications Corp.
8 T.C. Strike(4) 2004 520,000 78,000 10,493 20,000 - President 2003 500,000 316,500 12,714 40,000 - CanWest MediaWorks 2002 500,000 60,000 13,278 - - International
(1) The value of perquisites and benefits for each named executive officer is less than the lesser of $50,000 and 10% of the total annual base compensation and bonuses. Amounts shown reflect imputed interest benefit on loans pursuant to other indebtedness. (2) Option exercise price per share is the market price per share of the Subordinate Voting Shares as at the date the options were granted. (3) Mr. Camilleri was appointed to the position of Chief Operating Officer (Operations) on July 1, 2002. He was appointed to his present position on October 4, 2004. (4) Mr. Strike was appointed to the position of Chief Operating Officer (Corporate) in September 1999. He was appointed to his present position on October 4, 2004. OPTIONS OPTIONS GRANTED DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR Information as to options granted in respect of fiscal 2004 to named executive officers of the Company under the Executive Stock Option Plan is shown in the table below:
Market Value of % of Total Subordinate Voting Subordinate Voting Options Granted Shares Underlying Shares Under to Employees Exercise Options on the Date Option in respect of Price of Grant Expiration Name # fiscal 2004 $/Security $/Security Date D.A. Asper 12,500 2.4% 12.90 12.90 November 2013 L.J. Asper 30,000 5.7% 12.90 12.90 November 2013 R.C. Camilleri 20,000 3.8% 12.90 12.90 November 2013 J. E. Maguire 12,500 2.4% 12.90 12.90 November 2013 T.C. Strike 20,000 3.8% 12.90 12.90 November 2013
AGGREGATED OPTION EXERCISES DURING THE MOST RECENTLY COMPLETED FINANCIAL YEAR AND FINANCIAL YEAR END OPTION VALUES Information as to options exercised during the year and unexercised and outstanding options to purchase Subordinate Voting Shares pursuant to the Executive Stock Option Plan in respect of the named executive officers of the Company is shown in the table below:
VALUE OF UNEXERCISED SECURITIES UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS ACQUIRED AGGREGATE AT AUGUST 31, 2004 AT AUGUST 31, 2004 ON VALUE EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE NAME # $ # # $ $ ---- -------- -------- ----------- ------------- ----------- ------------- D.A. Asper - - 49,588 12,500 19,125 - L. J. Asper - - 63,416 118,109 - 76,500 R.C. Camilleri - - 16,500 73,500 26,730 105,270 J.E. Maguire - - 41,356 55,129 - 31,875 T.C. Strike - - 30,932 88,526 - 51,000
9 DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE Named executive officers are entitled to retirement compensation benefits under a Retirement Compensation Arrangement as described below. RETIREMENT COMPENSATION ARRANGEMENT Certain senior executives of the Company are covered under a Retirement Compensation Arrangement (RCA). Under the RCA, the benefit accrual is equal to 2.25% of the executive's Final Average Earnings multiplied by the number of years the executive has been continuously employed by the Company. Final Average Earnings are defined as the average of the executive's salary plus incentive bonus in each of the best three consecutive years out of the last ten years of the executive's employment with the Company. Normal retirement is at age 62 and the pension is payable for only the lifetime of the executive. Participants can retire as early as age 50 with 5 years' service. Pensions payable on early retirement will be reduced by 0.5% for each month that retirement occurs prior to age 62. For purposes of the RCA benefits payable to the named executive officers indicated below, the Final Average Earnings are capped at $500,000. Benefits accrued under the RCA are not reduced by any social security or Canada Pension Plan benefits. The table below shows the pension amounts which would be payable at normal retirement based on various levels of compensation and service. PENSION PLAN TABLE YEARS OF CREDITED SERVICE
FINAL AVERAGE EARNINGS 15 20 25 30 35 -------- ---------- ---------- ---------- ---------- ---------- $125,000 42,187.50 56,250.00 70,312.50 84,375.00 98,437.50 150,000 50,625.00 67,500.00 84,375.00 101,250.00 118,125.00 175,000 59,062.50 78,750.00 98,437.50 118,125.00 137,812.50 200,000 67,500.00 90,000.00 112,500.00 135,000.00 157,500.00 225,000 75,937.50 101,250.00 126,562.50 151,875.00 177,187.50 250,000 84,375.00 112,500.00 140,625.00 168,750.00 196,875.00 300,000 101,250.00 135,000.00 168,750.00 202,500.00 236,250.00 400,000 135,000.00 180,000.00 225,000.00 270,000.00 315,000.00 500,000 168,750.00 225,000.00 281,250.00 337,500.00 393,750.00
The above table is applicable to D.A. Asper, L.J. Asper, R.C. Camilleri, J.E. Maguire and T.C. Strike. Credited service at January 1, 2005 will be as follows: Mr. D.A. Asper, 13.33 years Mr. L.J. Asper, 13.83 years; Mr. R.C. Camilleri, 2.50 years; Mr. J.E. Maguire, 14.33 years; and Mr. T.C. Strike, 18.42 years TERMINATION OF EMPLOYMENT, CHANGE IN RESPONSIBILITIES AND EMPLOYMENT CONTRACTS The Company has the following employment agreements with named executive officers: LEONARD J. ASPER The Company has entered into a management services agreement with CanWest Direction Ltd. ("Direction") with respect to the services of Leonard Asper. In respect of services provided by Leonard Asper as President and Chief Executive Officer ("CEO") of the Company, the agreement provides for a base annual fee of $650,000 and incentive fees up to 150% of base fee based upon agreed financial and personal objectives and includes health, life insurance, pension and similar benefits available to all the Company's executives. The agreement requires that Mr. Asper not engage or invest in, own, manage, operate, finance, control or participate in any business that competes with the Company for a period of 12 months following expiration of his employment with the Company. Should Direction terminate the agreement within six months following a change in control of the Company, Direction is entitled to receive 18 months basic fees and pro-rated incentive fees for the fiscal year in which the termination occurs. RICHARD C. CAMILLERI The Company has entered into an employment agreement with Richard C. Camilleri, its President, CanWest MediaWorks. For fiscal 2004, the agreement provides for a base annual salary of $600,000, incentive compensation up to 60% of base salary based upon agreed financial and personal objectives and includes health, life insurance, pension and similar benefits available to all the Company's executives. The 10 agreement provides the Company with the right to preclude Mr. Camilleri from employment by companies other than CanWest in the countries in which CanWest has operations for a period of up to 18 months subsequent to leaving CanWest. Under such circumstances, Mr. Camilleri is entitled to continue to receive salary and health benefits for a period up to 18 months. THOMAS C. STRIKE The Company has entered into an employment agreement with Thomas C. Strike, its President, CanWest MediaWorks International. For fiscal 2004, the agreement provides for a base annual salary of $520,000, incentive compensation up to 60% of base salary based upon agreed financial and personal objectives and includes health, life insurance, pension and similar benefits available to all the Company's executives. In the event of termination following a change of control of the Company, Mr. Strike is entitled to a payment equivalent to two years base salary. COMPOSITION OF THE COMPENSATION COMMITTEE During the year ended August 31, 2004, the following were members of the Company's Compensation Committee: The Hon. Frank J. McKenna, P.C., Q.C. (Chair), Dr. Lloyd I. Barber, C.C., S.O.M., LL.D. and Ms. Jalynn H. Bennett, C.M. REPORT ON EXECUTIVE COMPENSATION The Company's compensation policies are designed to recognize and reward the services of highly skilled executives, as well as provide compensation packages, with incentives, commensurate with industry standards. Compensation packages reflect responsibilities and the marketplace, designed to be competitive with that of other publicly traded companies which, similar to the Company, are involved in the media and entertainment industry and with other publicly traded companies of comparable size in terms of revenue. In addition, the Company has analyzed compensation surveys and studies to compare the compensation packages to generally accepted practices for publicly traded companies. The major elements of the executive compensation packages consist of base salary, annual performance-based incentives, long-term stock options and perquisites. The Compensation Committee (the "Committee") has the responsibility to annually review and recommend for approval by the Board, corporate goals and objectives relevant to the CEO's compensation package, as well as review and approve the CEO's compensation based on the Committee's evaluation of the CEO's performance. The Committee is also responsible to review, evaluate and recommend compensation packages for (i) the Chair of the Board, (ii) each executive officer who reports to the CEO, and (iii) any other employee that the Committee determines appropriate from time to time. Base salary has been determined for each named executive officer based upon individual performance and, in relation to comparable positions within the media industry. Base salary levels are intended to attract and retain executives, provide fair and competitive compensation commensurate to an executive's experience, as well as to reward individual performance and one's achievement of objectives. Annual performance-based incentives are designed to encourage and award improved performance from year to year. The amount of annual incentive payment is tied to two components: (i) achievement of improved financial results and (ii) achievement of personal objectives. The achievement of financial criteria and personal objectives have weightings of 75% and 25% respectively in the calculation of annual incentive payments. The financial criteria include a minimum year over year increase in the share price, a minimum year over year increase in net earnings and a minimum return on average shareholders' equity. The long term stock option program (Executive Stock Option Plan) is designed to reward executives for their performance and contribution to the Company. Under the Executive Stock Option Plan, the Board may grant options to acquire Subordinate Voting Shares or Non-Voting Shares (see "Securities Authorized for Issuance Under Equity Compensation Plans"). Each participant in the plan is entitled to receive an annual grant of options, 50% of which is performance-based and dependent upon the financial performance of the Company. Specifically, for these performance-based options to be granted, the Company had to achieve at least two of the following three performance criteria: a minimum year over year increase in the share price, a minimum year over year increase in net earnings/operating earnings (as applicable) and a minimum return on average shareholders' equity. For fiscal 2004, these performance criteria were not achieved and therefore 50% of the option entitlement was not awarded. Options granted to executives in fiscal 2004 vest as follows: 40% vest two years after the grant, with an additional 20% three, four and five years after. The Company has determined that the maximum dilutive impact of outstanding stock options shall not exceed 5% and, accordingly, believe this Plan to be more restrictive than the majority of such plans of companies in the comparison groups. Submitted by: Hon. Frank J. McKenna, P.C., Q.C. Dr. Lloyd I. Barber, C.C., S.O.M., LL.D. Jalynn H. Bennett, C.M. Ronald J. Daniels 11 COMPENSATION OF THE CEO In fiscal 2004, the CEO was paid a base salary of $650,000, a bonus of $73,125 and was granted options to acquire 30,000 Subordinate Voting Shares under the Executive Stock Option Plan. The annual performance based incentive of up to 150% of base salary was based upon agreed financial and personal objectives. In fiscal 2004, the incentive was based upon 60% achievement of personal objectives. The financial objectives were not fully achieved. The determination of the CEO's compensation is based on objectives determined and approved by the Board, as well as peer compensation (of other Chief Executive Officers of the media and entertainment companies on group and other Canadian company group). A comprehensive survey by a third party consulting firm was undertaken in 2004 in order to assist the Compensation Committee with its determination. As a result of the survey, the Compensation Committee will be implementing a new compensation package for the CEO. PERFORMANCE GRAPH The following graph shows changes over the past five year period in the value of $100 invested in: (1) CanWest's Subordinate Voting Shares; (2) the S&P/TSX Composite Index as of August 31, 2004; and (3) the TSX Media Index. CANWEST COMPARISON OF 5-YEAR TOTAL SHAREHOLDERS' RETURN SUBORDINATE VOTING SHARES TOTAL RETURN INDEX VALUES (SUBORDINATE VOTING SHARES) [PERFORMANCE GRAPH]
1999/8 2000/8 2001/8 2002/8 2003/8 2004/8 ------ ------ ------ ------ ------ ------ CanWest Global CGS.SV 100.0 95.33 68.76 34.81 56.88 52.03 S & P / TSX Composite Index 100.0 163.42 109.01 99.05 114.81 130.30 TSX Media Index 100.0 119.76 95.93 70.91 76.40 83.10
Assuming an investment of $100 and the reinvestment of dividends 12 CANWEST COMPARISON OF 5 YEAR TOTAL SHAREHOLDERS' RETURNS NON-VOTING SHARES The following graph shows changes over the past five year period in the value of $100 invested in (1) CanWest's Non-Voting Shares; (2) the S&P/TSX Composite Index as of August 31, 2004; and (3) the TSX Media Index. The Non-Voting Shares also trade on the New York Stock Exchange. TOTAL RETURN INDEX VALUES (NON - VOTING SHARES) [PERFORMANCE GRAPH]
1999/8 2000/8 2001/8 2002/8 2003/8 2004/8 ------ ------ ------ ------ ------ ------ CanWest Global CGS.NV 100.0 95.06 67.70 34.68 56.10 51.61 S & P / TSX Composite Index 100.0 163.42 109.01 99.05 114.81 130.30 TSX Media Index 100.0 119.76 95.93 70.91 76.40 83.10
Assuming an investment of $100 and the reinvestment of dividends COMPENSATION OF DIRECTORS Directors of the Company who are employees or otherwise retained by the Company are not entitled to receive any additional remuneration for serving as directors. All directors are entitled to receive an annual director's fee of $30,000 and a maximum of $1,500 for each meeting attended. The Chairman of the Board receives an additional annual fee of $120,000. The Chairman of each committee of the Board of Directors is entitled to an additional $5,000 per annum for acting as such and directors are entitled to $3,000 per annum for each committee on which they serve. All directors are reimbursed for travel and other reasonable expenses incurred in attending Board meetings. In fiscal 2004 aggregate remuneration to directors was $364,833 of which directors elected to receive $170,167 in cash and $194,666 in DSUs. Until fiscal 2004, the directors were also entitled to participate in the Executive Stock Option Plan. The Board has determined that directors will not receive grants of options in the future and have approved a Deferred Share Unit (DSU) Plan. The purpose of the plan is to promote a greater alignment of interests between the individual director and the shareholders of the Company. The Board has also introduced stock ownership guidelines which require non-executive directors to own stock equivalent to four times the annual directors' fee. Directors will have a period of five years to meet this guideline. Under the DSU Plan, non-executive directors may elect to receive their remuneration in cash, DSUs or a combination thereof. DSUs have a value equivalent to the value of the Company's Subordinate Voting Shares at any time. DSUs may only be redeemed for cash and are redeemable only at the time the director ceases to be a director or for a period of time thereafter. Directors will receive, in respect of their DSUs, an amount equivalent to the amount of any dividends paid on the Company's Subordinate Voting Shares in the form of additional DSUs. Until the stock ownership threshold is reached, directors will be required to receive 50% of their annual retainer in DSUs. On November 2, 2004, the Chairman of the Board was issued 6,600 DSUs with a value of $79,180 and the other non-executive directors were each issued 4,400 DSUs with a value of $52,787 in respect of the 2004 fiscal year. 13 DIRECTORS' AND OFFICERS' LIABILITY INSURANCE The Company has purchased, for the benefit of the Company, its subsidiaries and their directors and officers, insurance against liability incurred by the directors or officers in their capacity as directors or officers of the Company or any subsidiary. The following are particulars of such insurance: (a) the total amount of insurance is $30,000,000 and, subject to the deductible portion referred to below, up to the full face amount of the policy is payable, regardless of the number of directors and officers involved; (b) the annual premium for the current financial year is $722,925. The policy does not specify that a part of the premium is paid in respect of either directors as a group or officers as a group; and (c) the policy provides for deductibles as follows: (i) with respect to the directors and officers, there is no deductible applicable; and (ii) with respect to reimbursement of the Company, there is a deductible of $2,000,000 per occurrence. SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS EQUITY COMPENSATION PLAN INFORMATION
Number of securities remaining available for future issuance under Number of securities to Weighted-average equity compensation be issued upon exercise exercise price of plans (excluding of outstanding options, outstanding options, securities reflected in PLAN CATEGORY warrants and rights warrants and rights first column) ------------- ------------------- ------------------- ------------- EQUITY COMPENSATION PLANS APPROVED BY SECURITYHOLDERS 2,940,904 $13.33 10,988,758 EQUITY COMPENSATION PLANS NOT APPROVED BY SECURITYHOLDERS N/A N/A N/A TOTAL 2,940,904 $13.33 10,988,758
The Company has adopted an Executive Stock Option Plan as part of its Amended and Restated Combined Share Compensation Plan under which directors and eligible executives of the Company are entitled to receive options to acquire Subordinate Voting Shares or Non-Voting Shares, depending upon each executive's citizenship. The Executive Stock Option Plan is administered by the Board of the Company, which establishes the option price per share on the date on which any options are granted. In all cases, the option price per share has been the market value of the Subordinate Voting Shares as at the date the option was granted and in no case has the option term exceeded ten years. Options granted up to December 31, 1995 are exercisable in equal annual instalments over a five year period at any time in each year, unless the Board determines otherwise. Options granted from January 1, 1996 to January 1, 2000 vest in equal annual instalments over five years in the twelfth month of each year of the option with the exceptions of options granted to Directors which vest immediately. Options granted after January 1, 2000 and before November 2002 are exercisable over a six year period with one third of the options vesting after every two years. Options granted subsequent to November 2002 are exercisable over a five year period with 40% vesting after two years and 20% vesting each year thereafter. The aggregate number of Subordinate Voting Shares and Non-Voting Shares which have been reserved for issue under this plan, together with any Subordinate Voting Shares and Non-Voting Shares reserved for issue under any options for service or other employee stock purchase or option plans established from time to time, may not exceed an aggregate of approximately 13.8 million shares and no individual optionee may hold options to purchase an aggregate number of Subordinate Voting Shares and Non-Voting Shares in excess of 5% of the issued and outstanding Subordinate Voting Shares and Non-Voting Shares at the date of the grant of the option. Options granted to Executives since November 2002 have been granted according to a formula which is, in part, based upon achievement of specified financial objectives. Directors of the Company received options in November 2003 in respect of the fiscal year ended August 31, 2003. The Board has determined that directors will not receive grants of options in the future and have introduced a DSU Plan (see "Compensation of Directors"). INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS With the exception of certain senior executives, Company employees are eligible to participate in the Employee Share Purchase Plan or Management Share Purchase Plan, each of which are part of the Company's Amended and Restated Combined Share Compensation Plan. Participants may acquire, annually, Subordinate Voting Shares or Non-Voting Shares of the Company, depending upon the participant's 14 citizenship, with a purchase price equal to the market price per share of the relevant shares up to a maximum amount of 5% of their annual base compensation in the case of other participants in the Employee Share Purchase Plan; and 10% of their annual base compensation in the case of participants in the Management Share Purchase Plan. All participants are eligible to receive interest-free share purchase loans from the Company. Such loans are to be repaid in full by December 31 of the year in which the loans were made. AGGREGATE INDEBTEDNESS AGGREGATE INDEBTEDNESS ($)
To the Company or its Purpose Subsidiaries To Another Entity Share purchases 89,000 NIL Other (1) 519,393 NIL
(1) These loans, which are secured by mortgages, were outstanding prior to the enactment of the Sarbanes Oxley Act of 2002. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS UNDER SECURITIES PURCHASE AND OTHER PROGRAMS INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS UNDER (1) SECURITIES PURCHASE AND (2) OTHER PROGRAMS
Financially Largest Assisted Amount Securities Outstanding Amount Purchases Amount Forgiven During Year Outstanding During Year During Year Involvement of Ending August as at November Ending August Ending August Name and Company or 31, 2004 24, 2004 31, 2004 Security for 31, 2004 Principal Position Subsidiary ($) ($) (#) Indebtedness ($) Securities Purchase Programs N/A N/A - - - - - Other Programs (1) T.C. Strike Lender 384,765 350,000 - mortgage -
(1) This loan was outstanding prior to the enactment of the Sarbanes Oxley Act of 2002. APPOINTMENT OF AUDITORS The management representatives designated in the enclosed form of proxy intend to vote in favour of the reappointment of PricewaterhouseCoopers LLP as auditors of the Company to hold office until the next annual meeting of shareholders. PricewaterhouseCoopers LLP (or their predecessors Coopers & Lybrand) have served as auditors of the Company since 1985. The resolution to appoint PricewaterhouseCoopers LLP as auditors of the Company and to authorize the directors to fix the auditors' remuneration must be passed by at least 50% of the votes cast by the holders of the Multiple Voting Shares and Subordinate Voting Shares of the Company voting together as a group, either present in person or represented by proxy at the Meeting. AUDITORS' FEES For the year ended August 31, 2004, the Audit Committee has approved fees to PricewaterhouseCoopers LLP and its affiliates as follows:
$000'S Audit services 3,655.0 Audit related services 279.9 Tax services 426.8 ------- 4,361.7 =======
Prior to approval of any engagement of PricewaterhouseCoopers LLP, the Audit Committee ensures the provision of such services is compatible with maintaining the auditors' independence. 15 SHAREHOLDER PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING The CBCA permits certain eligible shareholders of the Company to submit shareholder proposals to the Company, which proposals may be included in a management proxy circular relating to an annual meeting of shareholders. The final date by which the Company must receive shareholder proposals for the annual meeting of shareholders of the Company to be held in 2006 is August 25, 2005. STATEMENT OF CORPORATE GOVERNANCE PRACTICES The Toronto Stock Exchange (the "TSX") requires that every listed company disclose its corporate governance practices annually and relate their corporate governance practices to each of the "TSX Guidelines for Effective Corporate Governance" (the "TSX Guidelines"). A description of the Company's corporate governance practices follows, referring to each of the guidelines established in the TSX Guidelines.
TSX GUIDELINES THE COMPANY'S GOVERNANCE PRACTICES -------------- ---------------------------------- 1. The Board should explicitly assume The general mandate of the Board is to responsibility for the Company's stewardship. supervise the management of the Company's business and affairs, to act with a view to the Company's best interests and to exercise the care, skill and diligence that a reasonably prudent person would exercise in comparable circumstances. In doing so, the Board acts in accordance with: - the CBCA, the Broadcasting Act, other laws that apply to media companies, as well as laws of general application - the Company's articles of incorporation and by-laws - written charters of the Board and Board committees - the Company's Code of Ethics and other internal policies Copies of the Company's Code of Ethics, its Board Mandate and committee charters are found at www.canwestglobal.com. As part of its overall stewardship responsibilities, the Board is responsible for the following matters: (a) General Strategic Direction and Significant - Reviewing and assessing the Initiatives Company's operations with a view to ensuring the best performance is achieved; - Reviewing and approving the Company's major development activities, including major acquisitions, investments and divestitures outside the ordinary course of business; - Adopting a strategic planning process and approving, on at least an annual basis, a strategic plan which takes into account, among other things, the opportunities and risks of the business; - Approving operating and capital budgets; - Reviewing and approving the dividend policy and declaration of dividends; and - Reviewing and approving major financing and any offering of our securities. (b) Risk Management - Identifying the principal risks of the Company's business (including financial, accounting and legal risks) and ensuring the implementation of appropriate systems to manage these risks;
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TSX GUIDELINES THE COMPANY'S GOVERNANCE PRACTICES -------------- ---------------------------------- - Reviewing and ensuring the integrity of the Company's internal control and management information systems; - Satisfying itself from time to time that the Company's operations are in material compliance with applicable laws and regulations; - Reviewing and approving the external auditor to be nominated for the purpose of preparing or issuing an auditor's report or performing other audit, review or attest services for the Company, taking into account the recommendations of the Audit Committee; and - Reviewing and approving the compensation of the external auditor, taking into account recommendations of the Audit Committee. (c) Human Resources and Compensation (including - Appointing the President and CEO; the President and CEO) - Reviewing and approving position descriptions for the Chair of the Board and the CEO, and, in the case of the CEO, taking into account the recommendation of the Compensation Committee; - Reviewing and evaluating the performance of (i) the Chair of the Board, (ii) each executive officer who reports to the CEO, and (iii) any other employee that the Compensation Committee determines appropriate from time to time, taking into account evaluations provided by the Compensation Committee; - Reviewing and approving compensation for (i) the Chair of the Board, (ii) each executive officer who reports to the CEO, and (iii) any other employee that the Compensation Committee determines appropriate from time to time, including base salary, long-term stock options and perquisites, taking into account the recommendations of the Compensation Committee; - Reviewing and approving the remuneration of each director, taking into account the recommendations of the Compensation Committee; - Reviewing and approving the Company's Amended and Restated Combined Share Compensation Plan and Deferred Share Unit Plan (the "Equity Plans") and Executive Annual Incentive Plan; - Reviewing and approving grants under the Equity Plans, taking into account the recommendations of the Compensation Committee; - Reviewing and approving any incentive or equity based compensation to be granted outside the Equity Plans or the Executive Annual Incentive Plan, taking into account recommendations of the Compensation Committee; - Reviewing and approving the Company's compensation and benefits programs for its executive officers generally, taking into account recommendations of the Compensation Committee; - Succession planning (including appointing, training and monitoring the Company's executive officers); - Satisfying itself as to the integrity of the CEO and other executive officers and that the CEO and other executive officers create a culture of integrity throughout the organization; and
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TSX GUIDELINES THE COMPANY'S GOVERNANCE PRACTICES -------------- ---------------------------------- - Overseeing and monitoring the Company's pension plans and other retirement arrangements, or, to the extent this function is delegated to the Pensions Committee, requesting updates and other relevant information from the Pensions Committee from time to time. (d) Communications and Disclosure - Reviewing with management from time to time the Company's procedures for receiving feedback from shareholders, including written and electronic feedback, and satisfying itself that appropriate procedures are in place or recommending changes where desirable; and - Reviewing and approving the Company's (i) quarterly and annual financial statements and accompanying management's discussion and analysis, (ii) annual report, (iii) annual information form, (iv) annual and quarterly press releases, and (v) annual notice of meeting, management information circular and proxy form, taking into account the recommendations of the Audit Committee, where applicable. (e) Corporate Governance - Reviewing and approving a set of corporate governance principles applicable to the Company, taking into account recommendations of the Governance and Nominating Committee. 2. The Board should be constituted with a The Company's Board currently majority of individuals who qualify as consists of ten directors. The Board "unrelated directors" (i.e. independent of has determined that the number of management and free from any business or other directors to be elected at the relationship which could, or could reasonably Meeting will be nine. The proposed be perceived to, materially interfere with the Board will consist of six unrelated director's ability to act with a view to the directors and three related Company's best interests other than interests directors. The six unrelated and relationships arising from shareholding). directors are: Dr. Lloyd I. Barber, C.C., S.O.M., LL.D.; Mr. Frank W. If the Company has a significant shareholder, King, O.C., P. Eng.; Mr. Ronald J. in addition to a majority of unrelated Daniels; Mr. David J. Drybrough, directors, the Board should include a number FCA; Mr. Paul V. Godfrey, C.M. and of directors who do not have interests in or The Hon. Frank J. McKenna, P.C., relationships with either the Company or the Q.C.. The remaining three directors significant shareholder and which fairly are related. Accordingly, the Board reflects the investment in the Company by will be constituted with a majority shareholders other than the significant of individuals who qualify as shareholder (a significant shareholder being a unrelated directors. shareholder with the ability to exercise a majority of the votes for the election of the The Company is indirectly controlled Board). by Mrs. Ruth M. Asper, David Asper, Gail Asper and Leonard Asper. Each of David Asper, Gail Asper and Leonard Asper are senior officers of the Company and proposed for election as directors. Mrs. Ruth M. Asper and trusts for the benefit of members of the late I.H. Asper's family including David Asper, Gail Asper and Leonard Asper, directly or indirectly own all of the Multiple Voting Shares of the Company and 3,462,874 Subordinate Voting Shares of the Company, which, together, represent approximately 89% of the total votes and 45% of the total equity and therefore, together, are a "significant shareholder" of the Company within the meaning of the TSX Guidelines. CanWest Communications, the Trusts, and the noted individuals have entered into a voting trust which governs how the Company's shares held by CanWest Communications are to be voted. (See "Voting Securities and Principal Holders of Securities" for further particulars.) The Subordinate Voting Shares which are held by shareholders ("public shareholders") other than the Corporation's significant shareholder and any of its affiliates represent approximately 11% of the total votes and together with the Non-Voting Shares which are held by public shareholders represent 55% of the total equity.
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TSX GUIDELINES THE COMPANY'S GOVERNANCE PRACTICES -------------- ---------------------------------- The directors believe that the six unrelated directors do not have interests in or relationships with either the Company or the significant shareholder. Approximately 55% of the equity shares of the Company are held by public shareholders and the directors therefore believe that the membership on the Board of these six unrelated directors, being two-thirds of the total number of directors, fairly reflects the investment in the Company by public shareholders. 3. The Board has responsibility for applying the In determining whether the directors definition of "unrelated director" to each were unrelated, the Board examined individual director and for disclosing the factual circumstances of each annually the analysis of the application of director and considered them in the the principles supporting this definition and context of many factors and whether the Board has a majority of unrelated concluded that a majority of the directors. directors in question were unrelated. 4. The Board should appoint a committee of The Governance and Nominating directors composed exclusively of outside Committee is responsible for (i.e. non-management) directors, a majority of considering and recommending whom are unrelated directors, with the nominees for election to the Board. responsibility for proposing new nominees to This committee is also responsible the Board and for assessing directors on an for establishing procedures to ongoing basis. evaluate the Board and each director and overseeing such evaluation. In considering nominees for election to the Board, the Governance and Nominating Committee takes into account geographic diversity and considers the primary markets in which the Company operates as well as the appropriate expertise and background to contribute support the Company's strategy and operations. Currently, all of the members of the Board are members of the committee. The Governance and Nominating Committee is composed of a majority of unrelated directors. Going forward, the Board has agreed that the Governance and Nominating Committee will be composed of three directors, all of whom will be unrelated. 5. The Board should implement a process to be The Governance and Nominating carried out by the appropriate committee for Committee is responsible for assessing the effectiveness of the Board, its reviewing annually the structure and committees and the contributions of individual mandates of each Board committee directors (including this committee) and assessing the effectiveness of each Board committee. In addition, issues regarding quality of information, suggestions regarding the appointment of new directors and issues regarding Board performance have also been raised and have been regularly explored at meetings of the Board. It is also the responsibility of the Chair of the Board to ensure effective operation of the Board and to ensure the Board discharges its responsibilities. 6. The Board should provide an orientation and New directors are given the education program for new directors opportunity to individually meet with senior management to improve their understanding of the Company's operations and tours are arranged of several of the Company's key operations for the new directors. New directors are also provided with a reference binder that contains information on the Company's organizational structure, the structure of the Board and its committees, Company policies, articles and by-laws, as well as Board materials for the preceding 12 months. On an ongoing basis, during regularly scheduled Board meetings, directors are given presentations on various aspects of the Company's activities and functions. In addition, regardless of whether a meeting of the Board is scheduled, all directors regularly receive information on the Company's operations including a report from the CEO, a report on corporate development activities, operations reports, a financial overview and other pertinent information. All executives are available for discussions with directors concerning any questions or comments which may arise between meetings.
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TSX GUIDELINES THE COMPANY'S GOVERNANCE PRACTICES -------------- ---------------------------------- 7. The Board should examine its size and, with a The Company's Board currently view to determining the impact of the number consists of ten directors. The Board upon effectiveness, undertake where has determined that the number of appropriate, a program to reduce the number of directors to be elected at the directors to a number which facilitates Board Meeting will be nine. The relatively effectiveness. small size of the Board has enabled it to be extremely flexible with regard to scheduling meetings, including unplanned meetings which are called in order to review new opportunities. The Board is thus able to act quickly and remain well informed at all times. Management has been able to liaise regularly with the Board to seek approval for any activities outside the normal course of business. The Board believes that its current size and range of expertise and skills facilitates Board effectiveness. 8. The Board should review the adequacy and form The Compensation Committee reviews of compensation of directors in light of the how directors are compensated for risks and responsibilities involved in being serving on the Board and its an effective director. committees and recommends any changes to the Board. In this regard, the Compensation Committee compares the directors' compensation to that of similar companies. 9. Committees of the Board should generally be The Board has four committees. The composed of outside directors, a majority of Chair of the Board is an ex-officio whom should be unrelated. member of all committees of the Board, subject to the limitations set out in the Company's by-laws. - The Audit Committee is composed entirely of outside directors, all of whom are unrelated. Under the terms of the Audit Committee charter, the committee is responsible for, among other things, reviewing the Company's financial reporting procedures, internal controls, recommending the appointment of the external auditors, as well as reviewing the performance of the Company's external auditors. The Audit Committee also establishes the external auditors' compensation. Since fiscal 2002, the Audit Committee has had in place a policy limiting the scope of the external auditors' services to audit and audit related activities, including tax services. Prior approval of any audit related expenses in excess of $50,000 is required. The Audit Committee is also responsible for reviewing the quarterly and the annual financial statements and related news releases, as well as Management's Discussion and Analysis of Financial Results prior to their approval by the Board. The Audit Committee also receives and reviews quarterly, managements' report on compliance with the Company's policy on full and non-selective disclosure of material information. The Company has an Internal Audit group which reports to the Audit Committee. - The Compensation Committee is composed entirely of outside directors, all of whom are unrelated directors. The Compensation Committee makes recommendations to the Board on, among other things, executive compensation, approves the compensation of the CEO, and reviews other aspects of executive compensation, such as the Company's share compensation plans. The Compensation Committee also ensures that the Company complies with corporate and securities legislation with respect to executive compensation disclosure in the annual information circular. - The Pensions Committee is composed of four members. Three of the members are outside directors, all of whom are unrelated directors. One member of the Pensions Committee is related. The Pensions Committee is responsible for overseeing matters relating to the investment policies and performance of the Company's pension funds.
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TSX GUIDELINES THE COMPANY'S GOVERNANCE PRACTICES -------------- ---------------------------------- - The Governance and Nominating Committee is currently composed of all members of the Board, a majority of whom are unrelated. (See items 4, 5 and 10 for the responsibilities of this Committee.) 10. The Board should expressly assume The Governance and Nominating responsibility for, or assign to a committee Committee is responsible for the general responsibility for, developing the developing and recommending to the Company's approach to governance issues. Board a set of corporate governance principles applicable to the Company. This Committee also monitors compliance with any rules, regulations, procedures or guidelines promulgated by regulatory authorities having jurisdiction over the Company (including applicable stock exchanges) relating to corporate governance. The Board is responsible for reviewing and approving the set of corporate governance principles recommended by the Governance and Nominating Committee. The Corporate Secretary, who is also a director, is responsible for ensuring all corporate governance matters are reviewed by the Board and the Governance and Nominating Committee, as appropriate. 11. The Board, together with the CEO, should A position description has been develop position descriptions for the Board developed for the CEO. The and for the CEO, including the definition of Compensation Committee is the limits to management's responsibilities. responsible for reviewing and The Board should approve or develop corporate approving the corporate objectives objectives, which the CEO is responsible for (financial and personal) which the meeting and assess the CEO against these CEO is responsible for meeting. This objectives. committee also conducts the annual assessment of the CEO's performance against these objectives. The results of the assessment are reported to the Board. In addition to those matters which must by law be approved by the Board, the Board reviews and approves dispositions, acquisitions or investments which are outside the ordinary course of business of the Company. The Board also reviews and approves operating and capital budgets. The Board also reviews the recommendations of the Compensation Committee as to the adequacy and form of compensation of the directors to ensure that compensation realistically reflects the responsibilities and risks involved in being an effective director. The Board also approves changes in senior management. The directors have access to management and the Company's advisors in order to assist in their understanding of proposed Board actions and the implications of voting for or against such actions. 12. The Board should have in place appropriate In order to ensure that the Board structures and procedures to ensure the Board can function independently from can function independently of management. management, the Company has separated the roles of Chair and CEO through the appointment of the Hon. Frank J. McKenna, P.C., Q.C. as Chair of the Board and Mr. Leonard Asper as CEO. The majority of the Board members are independent directors. At regularly scheduled Board and committee meetings, the independent directors meet separately from management. 13. The Audit Committee should be composed only of The Audit Committee is composed only unrelated directors. The roles and of unrelated and independent responsibilities of the Audit Committee should directors. The roles and be specifically defined so as to provide responsibilities of the Audit appropriate guidance to Audit Committee Committee are set out in its charter members as to their duties. The Audit (see item 9, Audit Committee, for Committee should have direct communication further particulars.) channels with the internal and external auditors to discuss and review specific issues All of the members of the Audit as appropriate. The Audit Committee duties Committee are financially literate. should include oversight responsibility for management reporting on internal controls. The Audit Committee has direct While it is management's responsibility to communications channels with the design and implement an effective system of internal and external auditors to internal controls, it is the Audit Committee's discuss and review specific issues responsibility to ensure that management has as appropriate. done so. The Audit Committee Charter is reviewed by the Board at least annually.
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TSX GUIDELINES THE COMPANY'S GOVERNANCE PRACTICES -------------- ---------------------------------- The Audit Committee meets with the Company's external and internal auditors absent management at all regularly scheduled meetings. The Audit Committee annually carries out a self-assessment by means of a questionnaire, the results of which are reported to the Chair of the Governance and Nominating Committee. 14. The Board should implement a system to enable Individual directors may, with the an individual director to engage an outside consent of the Chair of the advisor at the Company's expense in Governance and Nominating Committee, appropriate circumstances. The engagement of engage outside advisors at the the outside advisor should be subject to the expense of the Company. Committees approval of an appropriate committee of the of the Board are authorized by the Board. Board from time to time, and as appropriate, to retain outside advisors at the Company's expense. In addition, the Compensation Committee is permitted, without any separate approval being required, to retain consulting firms at the expense of the Company, to assist the committee in the evaluation of the CEO and other executive officers and in setting executive compensation.
SHAREHOLDER FEEDBACK The Company has a Director of Communications who, working with the Secretary and other senior executives of the Company, responds promptly to all shareholder inquiries. To date, the Company believes that all shareholder inquiries have been dealt with in a manner satisfactory to the particular shareholder. AVAILABILITY OF DISCLOSURE DOCUMENTS Copies of the Company's latest annual information form (together with the documents incorporated therein by reference), the comparative financial statements of the Company for the fiscal year ended August 31, 2004, together with the report of the auditors thereon, management's discussion and analysis of the Company's financial condition and results of operations for the fiscal year ended August 31, 2004, the interim financial statements of the Company for periods subsequent to August 31, 2004 and this Circular are available upon request from the Secretary of the Company, and without charge to security holders of the Company. Additional information related to the Company is on SEDAR at www.sedar.com. DIRECTORS' APPROVAL The contents of this Circular and the sending thereof to shareholders of the Company have been approved by the directors of the Company. By Order of the Board of Directors /s/ Gail S. Asper Gail S. Asper Secretary Winnipeg, Canada November 24, 2004 22