Title of each class
|
Name of each exchange on which registered
|
Subordinate Voting Shares without par value
|
NASDAQ
|
Subordinate Voting Shares without par value
|
TSX
|
Large accelerated filer ☐
|
Accelerated filer ☒
|
Non-accelerated filer ☐
|
Emerging growth company ☐
|
U.S. GAAP ☐
|
International Financial Reporting Standards as issued by the ☒
International Accounting Standards Board
|
Other ☐
|
Years ended August 31,
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||||||||
(in thousands of US dollars, except share
and per share data)
|
||||||||||||||||||||
Consolidated Statements of Earnings Data:
|
||||||||||||||||||||
Sales
|
$
|
243,301
|
$
|
232,583
|
$
|
222,089
|
$
|
230,806
|
$
|
242,150
|
||||||||||
Cost of sales (1)
|
94,329
|
87,066
|
85,039
|
86,836
|
92,469
|
|||||||||||||||
Selling and administrative (2)
|
86,256
|
82,169
|
82,200
|
86,429
|
88,756
|
|||||||||||||||
Net research and development
|
47,168
|
42,687
|
44,003
|
44,846
|
45,444
|
|||||||||||||||
Depreciation of property, plant and equipment
|
3,902
|
3,814
|
4,835
|
4,995
|
6,028
|
|||||||||||||||
Amortization of intangible assets
|
3,289
|
1,172
|
2,883
|
4,398
|
6,643
|
|||||||||||||||
Changes in fair value of cash contingent consideration
|
(383
|
)
|
‒
|
‒
|
‒
|
‒
|
||||||||||||||
Interest and other (income) expense
|
303
|
(828
|
)
|
(155
|
)
|
(326
|
)
|
(113
|
)
|
|||||||||||
Foreign exchange (gain) loss
|
978
|
(161
|
)
|
(7,212
|
)
|
(1,634
|
)
|
(4,082
|
)
|
|||||||||||
Unusual charge (2)
|
‒
|
‒
|
603
|
720
|
540
|
|||||||||||||||
Earnings before income taxes
|
7,459
|
16,664
|
9,893
|
4,542
|
6,465
|
|||||||||||||||
Income taxes
|
6,608
|
7,764
|
5,036
|
4,286
|
5,519
|
|||||||||||||||
Net earnings for the year
|
$
|
851
|
$
|
8,900
|
$
|
4,857
|
$
|
256
|
$
|
946
|
||||||||||
Basic net earnings per share
|
$
|
0.02
|
$
|
0.17
|
$
|
0.09
|
$
|
0.00
|
$
|
0.02
|
||||||||||
Diluted net earnings per share
|
$
|
0.02
|
$
|
0.16
|
$
|
0.08
|
$
|
0.00
|
$
|
0.02
|
||||||||||
Basic weighted average number of shares used in per share calculations (000's)
|
54,423
|
53,863
|
56,804
|
60,329
|
60,323
|
|||||||||||||||
Diluted weighted average number of shares used in per share calculations (000's)
|
55,555
|
54,669
|
57,457
|
61,015
|
61,110
|
|||||||||||||||
Other Consolidated Statements of Earnings Data:
|
||||||||||||||||||||
Gross research and development
|
$
|
53,124
|
$
|
47,875
|
$
|
50,148
|
$
|
52,423
|
$
|
54,334
|
||||||||||
Net research and development
|
$
|
47,168
|
$
|
42,687
|
$
|
44,003
|
$
|
44,846
|
$
|
45,444
|
As at August 31,
|
||||||||||||||||||||
2017
|
2016
|
2015
|
2014
|
2013
|
||||||||||||||||
(in thousands of US dollars)
|
||||||||||||||||||||
Consolidated Balance Sheets Data:
|
||||||||||||||||||||
Cash
|
$
|
38,435
|
$
|
43,208
|
$
|
25,864
|
$
|
54,121
|
$
|
45,386
|
||||||||||
Short-term investments
|
775
|
4,087
|
1,487
|
5,726
|
4,868
|
|||||||||||||||
Total assets
|
259,241
|
237,793
|
217,478
|
276,948
|
280,982
|
|||||||||||||||
Share capital
|
90,411
|
85,516
|
86,045
|
111,491
|
109,837
|
|||||||||||||||
Shareholders' equity
|
$
|
196,790
|
$
|
181,401
|
$
|
169,227
|
$
|
230,287
|
$
|
235,896
|
(1)
|
The cost of sales is exclusive of depreciation and amortization, shown separately.
|
(2)
|
Selling and administrative is exclusive of unusual charge, shown separately, which represents bad debt expenses.
|
·
|
difficulty in forecasting, budgeting and planning due to the uncertain spending plans of current or prospective customers;
|
·
|
increased competition for fewer network projects and sales opportunities;
|
·
|
increased pricing pressure that may adversely affect revenue and gross margin;
|
·
|
higher cost structure compared to revenue level;
|
·
|
increased risk of charges related to excess and obsolete inventories, write-offs of deferred tax assets and tax credits, and impairment of intangible assets and goodwill;
|
·
|
customers' financial difficulties and increased difficulty in collecting accounts receivable; and
|
·
|
additional restructuring costs.
|
·
|
issue shares that would dilute individual shareholder percentage ownership;
|
·
|
incur debt and be required to comply with debt covenants;
|
·
|
assume liabilities and commitments;
|
·
|
incur significant expenses related to acquisition costs;
|
·
|
incur significant expenses related to amortization of additional intangible assets;
|
·
|
incur significant impairment losses of goodwill and intangible assets related to such acquisitions; and
|
·
|
incur losses from operations.
|
·
|
the risk of not realizing the expected benefits or synergies from such acquisitions or alliances;
|
·
|
problems integrating the acquired operations, technologies, products and personnel;
|
·
|
risks associated with the transfer of acquired know-how and technology;
|
·
|
unanticipated costs or liabilities;
|
·
|
diversion of management's attention from our core business;
|
·
|
adverse effects on existing business relationships with suppliers and customers;
|
·
|
risks associated with entering markets in which we have no or limited prior experience; and
|
·
|
potential loss of key employees, particularly those of acquired organizations.
|
·
|
challenges in staffing and managing foreign operations due to the limited number of qualified candidates, employment laws and business practices in foreign countries, any of which could increase the cost and reduce the efficiency of operating in foreign countries;
|
·
|
fluctuations among currencies;
|
·
|
our inability to comply with import/export, environmental and other trade compliance regulations of the countries in which we do business, together with unexpected changes in such regulations, including NAFTA renegotiations;
|
·
|
measures to ensure that we design, implement and maintain adequate and effective controls over our financial processes and reporting in the future;
|
·
|
failure to adhere to laws, regulations and contractual obligations relating to customer contracts in various countries;
|
·
|
difficulties in establishing and enforcing our intellectual property rights;
|
·
|
inability to maintain a competitive list of distributors for indirect sales;
|
·
|
tariffs and other trade barriers;
|
·
|
economic instability in foreign markets, including Britain's decision to exit the European Union and the impact this choice may have on doing business in Europe;
|
·
|
wars, acts of terrorism and political unrest;
|
·
|
language and cultural barriers;
|
·
|
lack of integration of foreign operations;
|
·
|
potential foreign and domestic tax consequences;
|
·
|
technology standards that differ from those on which our products are based, which could require expensive redesign and retention of personnel familiar with those standards;
|
·
|
longer accounts receivable payment cycles and possible difficulties in collecting payments which may increase our operating costs and hurt our financial performance; and
|
·
|
failure to meet certification requirements.
|
·
|
difficulty in hiring and retaining appropriate engineering and manufacturing resources due to intense competition for such resources and resulting wage inflation;
|
·
|
exposure to misappropriation of intellectual property and proprietary information;
|
·
|
heightened exposure to changes in the economic, regulatory, security, and political conditions of these countries;
|
·
|
fluctuations in currency exchange rates;
|
·
|
changes in tax laws and regulations in India and China, including transfer pricing policies;
|
·
|
cash management and repatriation of profit; and
|
·
|
high inflation rates which could increase our operating costs.
|
·
|
properly identify and anticipate customer needs;
|
·
|
innovate and develop new products on a timely basis;
|
·
|
gain timely market acceptance for new products;
|
·
|
manufacture and deliver our new products on time, in sufficient volume and with adequate quality;
|
·
|
price our products competitively;
|
·
|
continue investing in our research and development programs;
|
·
|
anticipate competitors' announcements of new products; and
|
·
|
successfully transform the company into an end-to-end service assurance and analytics supplier.
|
·
|
increased competition for business;
|
·
|
reduced demand;
|
·
|
limited number of potential customers;
|
·
|
competition from companies with lower production costs, including companies operating in lower-cost environments;
|
·
|
introduction of new products by competitors;
|
·
|
greater economies of scale for higher-volume competitors;
|
·
|
large customers, who buy in high volumes, can exert substantial negotiating leverage over us; and
|
·
|
resale of used equipment.
|
·
|
costly repairs;
|
·
|
additional development and support costs;
|
·
|
product returns or recalls;
|
·
|
sales cancellations;
|
·
|
damage to our brand reputation;
|
·
|
loss of customers, failure to attract new customers or achieve market acceptance;
|
·
|
diversion of development and engineering resources;
|
·
|
legal actions by our customers, including claims for consequential damages and loss of profits; and
|
·
|
legal actions by governmental entities, including actions to impose product recalls and/or forfeitures.
|
·
|
length of the sales cycle for certain products, especially those that are higher priced and more complex;
|
·
|
sales cycle prolonged by lengthy customer acceptance;
|
·
|
timing of product launches and market acceptance of our new products as well as those of our competitors;
|
·
|
our ability to sustain product volumes and high levels of quality across all product lines;
|
·
|
timing of shipments for large orders;
|
·
|
effect of seasonality on sales and bookings; and
|
·
|
losing key accounts and not successfully developing new ones.
|
·
|
fluctuating demand for test, service assurance and analytics solutions;
|
·
|
changes in the capital spending and operating budgets of our customers, which may cause seasonal or other fluctuations in product mix, volume, timing and number of orders we receive from our customers;
|
·
|
order cancellations or rescheduled delivery dates;
|
·
|
pricing changes by our competitors or suppliers;
|
·
|
insufficient or excess inventory;
|
·
|
variations in the mix between higher and lower-margin products and services;
|
·
|
customer bankruptcies and difficulties in collecting accounts receivable;
|
·
|
restructuring and impairment charges;
|
·
|
foreign exchange rate fluctuations;
|
·
|
general economic conditions, including a slowdown or recession;
|
·
|
distorted effective tax rate due to non-taxable/deductible elements and unrecognized deferred tax assets; and
|
·
|
effects of recent acquisitions of businesses.
|
·
|
Layer 2-7 service performance monitoring and analysis for business and residential services;
|
·
|
mobile backhaul and metro Ethernet service activation and assurance;
|
·
|
IP/MPLS core monitoring and analysis;
|
·
|
IP video service assurance;
|
·
|
advanced data correlation and analysis engine with comprehensive northbound APIs;
|
·
|
advanced analytics and reports; and
|
·
|
custom solutions and back-office integration services.
|
·
|
market study and research feasibility;
|
·
|
product definition;
|
·
|
development feasibility;
|
·
|
development;
|
·
|
qualification; and
|
·
|
transfer to production.
|
·
|
Customer Relationship Management (CRM) Administration – Business ownership of our CRM toolset and evolution;
|
·
|
Sales Support – Leverage the effectiveness of our sales force by providing pre-sales and demo support, as well as guiding customers in purchasing the correct equipment for their respective applications, issuing quotations, and promoting our extended warranty service and support program;
|
·
|
Order Management – Accurately process customer orders from entry through fulfillment and delivery, and manage order changes;
|
·
|
Customer Service – Serve as a primary interface for inbound and outbound customer communication. Provide customers with one central point of contact and work with the customer from purchasing equipment to helping them arrange for service, if necessary;
|
·
|
Technical Support – Provide post-sales technical support to Test & Measurement product end-users, by providing software fixes and upgrades, troubleshooting malfunction or wrong usage of equipment and suggesting ways to improve equipment productivity and performance.
|
·
|
Field Support – Provide expert technical support and deliver product service worldwide. Support our Worldwide Service Centers and directly manage the Service Partner Program. Where applicable, furnish installation and on-site servicing for more complex equipment and applications;
|
·
|
Systems Services – Provide pre-sale, delivery, post-sale technical support, and systems actualization of customer's network monitoring and converged service assurance systems;
|
·
|
Education Services – Aggregate expertise, develop material, and deliver free and fee-based training;
|
·
|
Professional Services – Provide value-added solution services for our test and system customers.
|
·
|
Production. From production planning to product shipment, our production department is responsible for manufacturing high-quality products on time. Factories are organized in work cells; each cell consists of specialized technicians with equipment and has full responsibility over a product family. Technicians are cross-trained and versatile enough, so that they can carry out specific functions in more than one cell. This allows shorter lead times by alleviating bottlenecks.
|
·
|
Manufacturing and Test Engineering. This department, which supports our production cells, acts like a gatekeeper to ensure the quality of our products and the effectiveness of our manufacturing processes. It is responsible for the transfer of products from research and development to manufacturing, product improvement, documentation, metrology, and the quality control and regulatory compliance process. Quality control represents a key element in our manufacturing operations. Quality is assured through product testing at numerous stages in the manufacturing process to ensure that our products meet both stringent industry and customer performance requirements.
|
·
|
Supply-Chain Management. This department is responsible for sales forecasting, raw material procurement, material-cost reduction and vendor performance management. Our products consist of optical, electronic and mechanical parts, which are purchased from suppliers around the world. Approximately one-third of our parts are manufactured to our specifications. Materials represent the largest portion of our cost of goods. Our performance is tightly linked to vendor performance, requiring greater emphasis on this critical aspect of our business.
|
·
|
level of technical compliance and alignment to use-case;
|
·
|
product performance and reliability;
|
·
|
solution's contribution to productivity;
|
·
|
price and quality of products;
|
·
|
level of technological innovation;
|
·
|
product lead times;
|
·
|
breadth of product offerings;
|
·
|
ease of use;
|
·
|
brand-name recognition;
|
·
|
customer service and technical support;
|
·
|
strength of sales and distribution relationships; and
|
·
|
financial stability of supplier.
|
·
|
a method and apparatus for improved characterization of loss-inducing "events" along an optical fiber using an Optical Time Domain Reflectometer (OTDR). This invention describes how, by a judicious combination of OTDR data corresponding to different optical-pulse durations, the location and loss characteristics of an event can be quantified with much better accuracy and/or more rapidly than via conventional approaches. This invention is offered as an option for almost all of the current EXFO OTDR-based products;
|
·
|
a method for determining the optical signal-to-noise ratio on polarization-multiplexed signals used in high-bandwidth DWDM optical networks by employing an optical spectrum analyzer. This invention employs a reference trace acquired with one channel being turned off. This invention is a key value-added option to our FTB/IQS-5240S-P and FTB/IQS-5240BPseries of optical spectrum analyzers;
|
·
|
a method and apparatus to determine the theoretical and practical data rates for a cable under test. This invention uses a single test device to predict the performance of a pair of ADSL (Asymmetric Digital Subscriber Line) modems, and in case of problems, analyze the cause of the modems' failure to synchronize. It is a key functionality of our FTB-610, FTB-635, MaxTester 610, MaxTester 635 and MaxTester 635G;
|
·
|
a scalable system for monitoring network elements, for which only a non-redundant subset of the identified network information is stored, thereby enabling monitoring of a much larger group of network elements than is possible with conventional memory-constrained monitoring systems. Furthermore, this system employs a multi-threaded architecture that dynamically spawns an array of multi-technology monitoring sub-systems. This invention forms the basis of the web-based EXFO Xtract Open Analytics Platform, enabling the user, among other things, to leverage data from a multitude of sources and to define a sequence of activities based on templates in order to accomplish a given task;
|
·
|
a method for actively analyzing a data packet delivery path to provide diagnostics and root cause analysis of network delivery path issues, which is embedded in certain software applications of the EXFO Worx System of EXFO Service Assurance;
|
·
|
a distributed protocol analyzer for quality-of-service measurement. This invention underlies the combined QoS measurements offered in the NetHawk iPro and NetHawk M5 products; and
|
·
|
a communication methodology used to perform independent bi-directional protocol testing over a connection or connectionless network between two test instruments, wherein the transfer mechanism of status and intermediate test results during an active test and the transmission of the final results to one of the instruments enables the user to perform a bidirectional single-ended test. This invention is at the heart of the EXFO Datacom product families, including applications in conformity with our EtherSAM standard test suite.
|
Location
|
Use of Space
|
Square
Footage
|
% of Utilization
|
Type of Interest
|
436 Nolin Street
Quebec (Quebec) G1M 1E7 |
Occupied for manufacturing of products
|
44,000
|
95%
|
Owned
|
400 Godin Avenue
Quebec (Quebec) G1M 2K2 |
Occupied for research and development, customer services, repair/calibration services, manufacturing, management and administration
|
129,000 (1)
|
85%
|
Owned
|
2500 Alfred-Nobel
Montreal (Quebec) H4S 2C3 |
Occupied for research and development, management and administration
|
75,000
|
70%
|
Owned
|
2500 Alfred-Nobel
Montreal (Quebec) H4S 2C3 |
Leased to a third party
|
10,000
|
100%
|
Owned
|
2500 Alfred-Nobel
Montreal (Quebec) H4S 2C3 |
Available for rent
|
40,000
|
0%
|
Owned
|
160 Drumlin Circle
Concord (Ontario) L4K 3E5 |
Occupied for research and development, product management and administration
|
23,500
|
40%
|
Owned
|
250 Apollo Drive
Chelmsford, MA 01824 United States |
Occupied for research and development, manufacturing, management and administration
|
25,400
|
75%
|
Leased
|
(1)
|
Including the warehouse space. Premises without the warehouse are approximately 115,000 square feet.
|
Location
|
Use of Space
|
Square
Footage
|
% of Utilization
|
Type of Interest
|
4 rue de Louis de Broglie
Lannion 22300 France |
Occupied for research and development, manufacturing, management and administration
|
24,800
|
50%
|
Leased
|
Phoenix Yard
65-69 Kings Cross Raod London WC1X 9LW United Kingdom |
Occupied for research and development, management and administration
|
2,423
|
100%
|
Leased
|
Winchester House
School Lane Chandlers Ford, Eastleigh Hampshire SO53 4DG United Kingdom |
Occupied for European customer service, repair/calibration services, sales management and administration
|
13,000
|
85%
|
Leased
|
3rd Floor, Building 10
Yu Sheng Industrial Park (Gu Shu Crossing) No. 467, National Highway 107 Xixiang, Bao An District Shenzhen 518126 China |
Occupied for manufacturing of products, repair/calibration services
|
64,000
|
85%
|
Leased
|
Offices No 602, 603, 604, 701 and 702
Tower S-4 Cybercity Magarpatta , Hadapsar Pune 411 013 India |
Occupied for research and development
|
33,981
|
85%
|
Owned
|
Offices No 102
Tower S-4 Cybercity Magarpatta , Hadapsar Pune 411 013 India |
Leased to a third party
|
5,979
|
100%
|
Owned
|
Elektroniikkatie 2
FI-90590 Oulu Finland |
Occupied for research and development, manufacturing, management and administration
|
30,338
|
55%
|
Leased
|
Years ended August 31, | ||||||||||||||||||||||||
Consolidated statement of earnings data (1):
|
2017
|
2016
|
2015
|
2017
|
2016
|
2015
|
||||||||||||||||||
Sales
|
$
|
243,301
|
$
|
232,583
|
$
|
222,089
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||||||
Cost of sales (2)
|
94,329
|
87,066
|
85,039
|
38.8
|
37.4
|
38.3
|
||||||||||||||||||
Selling and administrative (3)
|
86,256
|
82,169
|
82,200
|
35.5
|
35.3
|
37.0
|
||||||||||||||||||
Net research and development
|
47,168
|
42,687
|
44,003
|
19.4
|
18.4
|
19.8
|
||||||||||||||||||
Depreciation of property, plant and equipment
|
3,902
|
3,814
|
4,835
|
1.6
|
1.6
|
2.2
|
||||||||||||||||||
Amortization of intangible assets
|
3,289
|
1,172
|
2,883
|
1.4
|
0.5
|
1.3
|
||||||||||||||||||
Change in fair value of cash contingent consideration
|
(383
|
)
|
–
|
–
|
(0.2
|
)
|
–
|
–
|
||||||||||||||||
Interest and other (income) expense
|
303
|
(828
|
)
|
(155
|
)
|
0.1
|
(0.4
|
)
|
(0.1
|
)
|
||||||||||||||
Foreign exchange (gain) loss
|
978
|
(161
|
)
|
(7,212
|
)
|
0.4
|
–
|
(3.2
|
)
|
|||||||||||||||
Unusual charge (3)
|
–
|
–
|
603
|
–
|
–
|
0.3
|
||||||||||||||||||
Earnings before income taxes
|
7,459
|
16,664
|
9,893
|
3.0
|
7.2
|
4.4
|
||||||||||||||||||
Income taxes
|
6,608
|
7,764
|
5,036
|
2.7
|
3.4
|
2.2
|
||||||||||||||||||
Net earnings for the year
|
$
|
851
|
$
|
8,900
|
$
|
4,857
|
0.3
|
%
|
3.8
|
%
|
2.2
|
%
|
||||||||||||
Basic net earnings per share
|
$
|
0.02
|
$
|
0.17
|
$
|
0.09
|
||||||||||||||||||
Diluted net earnings per share
|
$
|
0.02
|
$
|
0.16
|
$
|
0.08
|
||||||||||||||||||
Other selected information:
|
||||||||||||||||||||||||
Gross margin before depreciation and amortization (4)
|
$
|
148,972
|
$
|
145,517
|
$
|
137,050
|
61.2
|
%
|
62.6
|
%
|
61.7
|
%
|
||||||||||||
Research and development data:
|
||||||||||||||||||||||||
Gross research and development
|
$
|
53,124
|
$
|
47,875
|
$
|
50,148
|
21.8
|
%
|
20.6
|
%
|
22.6
|
%
|
||||||||||||
Net research and development
|
$
|
47,168
|
$
|
42,687
|
$
|
44,003
|
19.4
|
%
|
18.4
|
%
|
19.8
|
%
|
||||||||||||
Restructuring charges included in:
|
||||||||||||||||||||||||
Cost of sales
|
$
|
1,697
|
$
|
–
|
$
|
290
|
0.7
|
%
|
–
|
%
|
0.1
|
%
|
||||||||||||
Selling and administrative expenses
|
$
|
1,150
|
$
|
–
|
$
|
586
|
0.5
|
%
|
–
|
%
|
0.3
|
%
|
||||||||||||
Net research and development expenses
|
$
|
2,232
|
$
|
–
|
$
|
761
|
0.9
|
%
|
–
|
%
|
0.3
|
%
|
||||||||||||
Adjusted EBITDA (4)
|
$
|
22,041
|
$
|
22,039
|
$
|
13,779
|
9.1
|
%
|
9.5
|
%
|
6.2
|
%
|
||||||||||||
Consolidated balance sheet data (1):
|
||||||||||||||||||||||||
Total assets
|
$
|
259,241
|
$
|
237,793
|
$
|
217,478
|
(1)
|
Consolidated statement of earnings and balance sheet data has been derived from our consolidated financial statements prepared according with IFRS, as issued by the IASB, except for non-IFRS measures (4).
|
(2)
|
The cost of sales is exclusive of depreciation and amortization, shown separately.
|
(3)
|
Selling and administrative is exclusive of a one-time charge relating to an unusual bad debt in fiscal 2015.
|
(4)
|
Refer to page 55 for non-IFRS measures.
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Physical-layer product line
|
$
|
161,864
|
$
|
151,910
|
$
|
144,060
|
||||||
Protocol-layer product line
|
81,905
|
83,324
|
80,591
|
|||||||||
243,769
|
235,234
|
224,651
|
||||||||||
Foreign exchange losses on forward exchange contracts
|
(468
|
)
|
(2,651
|
)
|
(2,562
|
)
|
||||||
Total sales
|
$
|
243,301
|
$
|
232,583
|
$
|
222,089
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Physical-layer product line
|
$
|
165,886
|
$
|
155,320
|
$
|
144,673
|
||||||
Protocol-layer product line
|
86,348
|
87,631
|
80,948
|
|||||||||
252,234
|
242,951
|
225,621
|
||||||||||
Foreign exchange losses on forward exchange contracts
|
(468
|
)
|
(2,651
|
)
|
(2,562
|
)
|
||||||
Total bookings
|
$
|
251,766
|
$
|
240,300
|
$
|
223,059
|
Years ended August 31,
|
|||||||||
2017
|
2016
|
2015
|
|||||||
Americas
|
55
|
%
|
55
|
%
|
54
|
%
|
|||
EMEA
|
26
|
25
|
26
|
||||||
APAC
|
19
|
20
|
20
|
||||||
100
|
%
|
100
|
%
|
100
|
%
|
Expiry dates
|
Contractual
amounts
|
Weighted average
contractual
forward rates
|
||||||
September 2017 to August 2018
|
$
|
18,300,000
|
1.3407
|
|||||
September 2018 to August 2019
|
10,900,000
|
1.3426
|
||||||
Total
|
$
|
29,200,000
|
1.3414
|
Expiry dates
|
Contractual
amounts
|
Weighted average
contractual
forward rates
|
||||||
September 2017 to August 2018
|
$
|
3,400,000
|
69.49
|
|||||
September 2018 to February 2019
|
1,600,000
|
67.26
|
||||||
Total
|
$
|
5,000,000
|
68.78
|
(a)
|
Determination of functional currency
|
(b)
|
Determination of cash generating units and allocation of goodwill
|
(a)
|
Inventories
|
(b)
|
Income taxes
|
(c)
|
Tax credits recoverable
|
(d)
|
Impairment of non-financial assets
|
EXFO CGU
|
$
|
13,772,000
|
|||
Brix CGU
|
13,878,000
|
||||
Ontology CGU
|
7,427,000
|
||||
Total
|
$
|
35,077,000
|
(e)
|
Purchase price allocation in business combinations
|
i)
|
Growth rates
|
ii)
|
Discount rate
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
IFRS net earnings for the year
|
$
|
851
|
$
|
8,900
|
$
|
4,857
|
||||||
Add (deduct):
|
||||||||||||
Depreciation of property, plant and equipment
|
3,902
|
3,814
|
4,835
|
|||||||||
Amortization of intangible assets
|
3,289
|
1,172
|
2,883
|
|||||||||
Interest and other (income) expense
|
303
|
(828
|
)
|
(155
|
)
|
|||||||
Income taxes
|
6,608
|
7,764
|
5,036
|
|||||||||
Stock-based compensation costs
|
1,414
|
1,378
|
1,295
|
|||||||||
Restructuring charges
|
5,079
|
–
|
1,637
|
|||||||||
Change in fair value of cash contingent consideration
|
(383
|
)
|
–
|
–
|
||||||||
Unusual charge
|
–
|
–
|
603
|
|||||||||
Foreign exchange (gain) loss
|
978
|
(161
|
)
|
(7,212
|
)
|
|||||||
Adjusted EBITDA for the year
|
$
|
22,041
|
$
|
22,039
|
$
|
13,779
|
||||||
Adjusted EBITDA in percentage of total sales
|
9.1
|
%
|
9.5
|
%
|
6.2
|
%
|
Name and Municipality of Residence
|
Position with EXFO
|
|
PIERRE-PAUL ALLARD
Pleasanton, California |
Independent Director
|
|
STEPHEN BULL
Quebec City, Quebec |
Vice- President, Research and Development
|
|
STÉPHANE CHABOT
Quebec City, Quebec |
Vice President, Test and Measurement
|
|
FRANÇOIS CÔTÉ
Montreal, Quebec |
Independent Director
|
|
LUC GAGNON
St-Augustin-de-Desmaures, Quebec |
Vice President, Manufacturing and Global Services
|
|
GERMAIN LAMONDE
St-Augustin-de-Desmaures, Quebec |
Executive Chairman of the Board
|
|
ANGELA LOGOTHETIS
Bath, United Kingdom |
Independent Director
|
|
CLAUDIO MAZZUCA
LaSalle, Quebec |
Vice President, Systems and Analytics
|
|
PHILIPPE MORIN
Senneville, Quebec |
Chief Executive Officer
|
|
PIERRE PLAMONDON
Quebec City, Quebec |
Chief Financial Officer and Vice President, Finance
|
|
BENOIT RINGUETTE
Boischatel, Quebec |
General Counsel and Corporate Secretary
|
|
MICHAEL SCHEPPKE
Singapore, Singapore |
Vice President, Sales — Asia-Pacific
|
|
CLAUDE SÉGUIN
Westmount, Quebec |
Independent Director
|
|
WILLEM JAN TE NIET
Harfsen, Netherlands |
Vice President, Europe Middle East and Africa
|
|
RANDY E. TORNES
Frisco, Texas |
Independent Director
|
|
DANA YEARIAN
Lake Forest, Illinois |
Vice President, Sales — Americas
|
·
|
Mr. François Côté (Chairman)
|
·
|
Mr. Pierre-Paul Allard
|
·
|
Mr. Darryl Edwards (until January 10, 2017)
|
·
|
Ms. Angela Logothetis (since January 11, 2017)
|
·
|
Mr. Claude Séguin
|
·
|
Mr. Randy E. Tornes
|
Meeting
|
Main Activities of the Human Resources Committee
|
|
October 12, 2016
|
●
|
Review of the Business Performance Measures results for the financial year ended August 31, 2016;
|
●
|
Review of the Business Performance Measures for the financial year started September 1, 2016;
|
|
●
|
Review of the Short-Term Incentive Plan results for the financial year ended August 31, 2016;
|
|
●
|
Update on the Short-Term Incentive Plan for the financial year started September 1, 2016;
|
|
●
|
Review of the proposed salary scales and salary increases for the year started September 1, 2016;
|
|
●
|
Review of the compensation plans of executive officers for the financial year started September 1, 2016 being the Base Salary, the Short-Term Incentive Plan and the stock-based compensation delivered through the Long-Term Incentive Plan;
|
|
●
|
Review and approval of the stock-based compensation plan for the sales force delivered through the Long-Term Incentive Plan for the financial year started September 1, 2016;
|
|
●
|
Review and approval of the quantum for the stock-based compensation plan for the performing employees delivered through the Long-Term Incentive Plan for the financial year started September 1, 2016;
|
|
●
|
Review and approval of the executive compensation section of the Management proxy circular for the financial year ended
August 31, 2016;
|
|
●
|
Review and approval of the CEO objectives and compensation plan;
|
|
●
|
Selection of New Board Members;
|
|
●
|
Annual Sales Force Achievement and Key staffing update;
|
|
●
|
Review and approval of the retirement policy of the Corporation;
|
|
●
|
Annual Review of the Human Resources Committee Charter;
|
|
●
|
Review of the Risk Assessment of Executive Compensation disclosure obligations.
|
Meeting
|
Main Activities of the Human Resources Committee
|
January 10, 2017
|
●
|
Executive Chairman role, transition and compensation;
|
●
|
Review and approval of the Short-Term Incentive Plan of some executive officers for the financial year started September 1, 2016, including the CEO objectives;
|
|
●
|
Employee Survey Update;
|
|
●
|
Review of the quarterly results under the Short-Term Incentive Plan for the financial year started September 1, 2016 and being part of the Short-Term Incentive Plan;
|
|
●
|
Review and approval of the stock-based compensation for performing employees delivered through the Long-Term Incentive Plan for the financial year started September 1, 2016;
|
|
●
|
Global Compensation and Board Members Compensation Review;
|
|
●
|
Leadership program and Talent Management.
|
|
March 29, 2017
|
●
|
Review of the quarterly results under the Short-Term Incentive Plan for the financial year started September 1, 2016 and being part of the Short-Term Incentive Plan;
|
●
|
Succession Planning;
|
|
●
|
Executive Chairman role, transition and compensation;
|
|
●
|
Review of the Key Human Resources Initiatives;
|
|
●
|
Nomination and Compensation of new CEO;
|
|
●
|
Update on the key initiatives following Employee survey;
|
|
●
|
Board Members Compensation and stock ownership;
|
|
●
|
Review of the Talent Management and Leadership program.
|
|
June 29, 2017
|
●
|
Review of the quarterly results under the Short-Term Incentive Plan for the financial year started September 1, 2016 and being part of the Short-Term Incentive Plan;
|
●
●
|
Board Members stock ownership;
Update on Restructuring;
|
|
●
|
Update on the Global Compensation Review;
|
|
●
|
Update on the Management Structure Review;
|
|
●
●
|
Update on the Talent Management Review;
Update on the key initiatives following Employee survey;
|
|
●
|
Review of the Key Human Resources Initiatives.
|
|
October 11, 2017
|
●
|
Review of the Business Performance Measures results for the financial year ended August 31, 2017;
|
●
|
Review of the Business Performance Measures for the financial year started September 1, 2017;
|
|
●
|
Review of the Short-Term Incentive Plan results for the financial year ended August 31, 2017;
|
|
●
|
Update on the Short-Term Incentive Plan for the financial year started September 1, 2017;
|
|
●
|
Review of the proposed salary scales and salary increases for the year started September 1, 2017;
|
|
●
|
Review of the compensation plans of executive officers for the financial year started September 1, 2017 being the Base Salary, the Short-Term Incentive Plan and the stock-based compensation delivered through the Long-Term Incentive Plan;
|
|
●
|
Review and approval of the executive compensation section of the Management proxy circular for the financial year ended
August 31, 2017;
|
|
●
|
Review and approval of the CEO and Executive Chairman objectives and compensation plan;
|
|
●
|
Key staffing update;
|
|
●
|
Annual Sales Force Achievement;
|
|
●
|
Annual Review of the Human Resources Committee Charter;
|
|
●
|
Review of the Risk Assessment of Executive Compensation disclosure obligations.
|
Type of Fee
|
Financial 2016 Fees
|
Percentage of
Financial 2016 Fees |
Financial 2017 Fees
|
Percentage of
Financial 2017 Fees |
||||
Executive Compensation - Related Fees
|
CA$28,734
|
14%
|
CA$25,107
|
10%
|
||||
All Other Fees
|
CA$175,202
|
86%
|
CA$230,417
|
90%
|
||||
Total
|
CA$203,936
|
100%
|
CA$255,524
|
100%
|
·
|
Canada executives: For the executives based in Canada, the Corporation used the following comparator group: 5N Plus Inc., ACCEO Solutions, AgJunction Inc, Atos IT Services and Solutions, Inc., Avigilon Corporation, Callian Technologies Ltd., Ciena, COM DEV International Ltd., Constellation Software inc., Evertz Technologies Ltd., GTECH, Open Text Corporation, Redline Communications Group Inc., Sandvine Corporation, Sierra Wireless Inc., Smart Technologies Inc., Vecima Networks Inc., Vidéotron Ltée and Wi-Lan Inc.
|
·
|
United States executives: For the executives based in the United States, the Corporation used the following comparator group: AMETEK, Avangate, BMC Software, CDK Global, Communications Systems, Crown Castle, Intelsat, Itron, Keysight Technologies, Laird Technologies, MTS Systems, Plexus, SAS Institute, SunGard Data Systems, Teradata, TomTom, Total System Services, Truphone, Verint Systems.
|
·
|
United Kingdom executives: For the executives based in the United Kingdom, the Corporation used the following comparator group: BAE Systems Applied Intelligence, COLT Telecom, Flextronics, Fujitsu, Irdeto, McCain Foods, PepsiCo, Premier Food Group, QinetiQ, Qualcomm, Rentokil Initial, Talk Talk Group, Viacom.
|
·
|
Asia executives: For the executives based in Asia, the Corporation used a broader comparator group, based on general industry data: A.Menarini Asia-Pacific, Abbott Laboratories, AbbVie, Accenture, ACE Asia Pacific Services, ACE Insurance, ACE Life Insurance Company Ltd, ACR Capital Holdings, AIA Company, Aimia, Alcatel-Lucent, Amazon.com, ANZ Banking Group, ASML, AstraZeneca, Avanade, Aviva Ltd, AXA Insurance Singapore, AXA Life Insurance Singapore, Bank of New York Mellon, Baxter, Beckman Coulter, Becton Dickinson, BHP Billiton, Bio-Rad Laboratories, Biosensors, BT Global Services, Cerebos Pacific Limited, Chubb Pacific Underwriting, Cigna, CommScope, DHL, DHL Express, DHL GBS, DHL Global Forwarding, DHL Mail, DHL Supply Chain, Discovery Communications, Experian, Federal Insurance Company, Fujitsu, GE Energy, GE Healthcare, General Electric, Great Eastern Life Insurance, Hap Seng Consolidated, HSBC Holdings, IHS Global, IMI, Ingenico, Intel, Intercontinental Hotels Group, International Flavors & Fragrances, ITT Corporation, Johnson & Johnson, Lexmark, Liberty Insurance, M1 Limited, Manulife, MasterCard, Merck KGaA, Microsoft, Molex, MSD International GMBH (Singapore Branch), National Australia Bank, NBC Universal, NCR, Overseas Assurance Corporation, Pfizer, Pramerica Financial Asia HQ, Proximus, Prudential Assurance Company, Prudential Services, QBE Insurance, Qualcomm, Reinsurance Group of America, RELX Group, Rio Tinto, Roche Pharmaceuticals, Sabre Holdings, Sealed Air, Smiths Group, Spirax Sarco, Standard Chartered Bank, StarHub, Starwood Hotels & Resorts, Straits Developments, Swiss Reinsurance International, Teva Pharmaceutical Industries, Thermo Fisher Scientific, Trayport, TUI, UBS, Unilever, United Overseas Bank, Verizon, Zurich Insurance Company, Zurich Life Insurance.
|
a)
|
Similar industry: Technology Hardware and Equipment, Telecommunications Equipment and Services or Software and Services; and
|
b)
|
Comparable in size: revenues under CA$1 billion. Only one publicly traded company had revenues above the equivalent of CA$1 billion. The compensation market comparison is done using the regression analysis which is a method to predict the "size-adjusted" competitive level of compensation to reflect the size of the Corporation in relation to that of the other companies of the reference group. This method mitigates the impact that larger companies may have on the competitive compensation levels for the Corporation.
|
·
|
Performance-based: Executive compensation levels reflect both the results of the Corporation and individual results based on specific quantitative and qualitative objectives established at the beginning of each financial year in keeping with the Corporation's long-term strategic objectives.
|
·
|
Aligned with shareholder interests: An important portion of incentive compensation for executives is composed of equity awards to ensure that executives are aligned with the principles of sustained long-term shareholder value growth.
|
·
|
Market competitive: Compensation of executives is designed to be externally competitive when compared against executives of comparable peer companies, and in consideration of the Corporation's results.
|
·
|
Individually equitable: Compensation levels are also designed to reflect individual factors such as scope of responsibility, experience, and performance against individual measures.
|
Name & Position
|
Annual Incentive Target as % of Base Salary
|
Germain Lamonde, Executive Chairman
|
65.0%
|
Philippe Morin, CEO
|
51.0%
|
Pierre Plamondon, CFO and Vice President, Finance
|
45.0%
|
Willem Jan te Niet, Vice President, Sales — EMEA
|
67.0%
|
Dana Yearian, Vice President, Sales — Americas
|
90.0%
|
Base Salary
|
X
|
Annual Incentive Target (%)
|
X
|
Business Performance Measures (%)
|
X
|
Individual Performance Measures (%)
|
Business Performance Measures (1)
|
Weight
|
Result in % of the Weight
|
Result of the Metrics
|
||
Consolidated revenues (2)
|
30%
|
14.66%
|
US$243.3 million
|
||
Profitability (3)
|
45%
|
13.64%
|
US$23.0 million
|
||
Quality (4)
|
15%
|
13.95%
|
101%
|
||
Net Promoter Score (5)
|
5%
|
4.65%
|
67%
|
||
On-time delivery (6)
|
5%
|
2.43%
|
93.8%
|
||
Total
|
100%
|
49.33%
|
(1)
|
The corporate Profitability result for the year must be positive (above 0) for the whole Business Performance Measure to trigger a payout. The corporate Profitability represents net earnings before interest, income taxes, depreciation and amortization, restructuring charges, change in fair value of cash contingent consideration, stock-based compensation costs, foreign exchange gain and certain one-time items.
|
(2)
|
For consolidated revenues metric, results will be based on the achievement from 25% to 125%, calculated on a pro-rated basis, from the revenues attained in the previous financial year (US$232.5 million) up to the target defined at the beginning of the financial year (US$277.8 million).
|
(3)
|
For Profitability metric, results will be based on the achievement from 25% to 125%, calculated on a pro-rated basis, from the corporate Profitability attained in the previous financial year (US$22.0 million) up to the target defined at the beginning of the financial year (US$41.7 million).
|
(4)
|
For quality, results will range from nil to 100% of the weight upon attainment of a minimum threshold of 50% up to the annual target defined at the beginning of the financial year (106.25%) and from 100% to 125% of the weight from such annual target to the maximum threshold of 125%.
|
(5)
|
For Net Promoter Score metrics, results will range from nil to 100% of the weight upon attainment of a minimum threshold of 50% up to the annual target defined at the beginning of the financial year (68.75%) and from 100% to 125% of the weight from such annual target to the maximum threshold of 75%.
|
(6)
|
For on-time delivery, results will range from nil to 100% of the weight upon attainment of a minimum threshold of 92%, up to the annual target defined at the beginning of the financial year (97.78%) and from 100% to 125% of the weight from such annual target to the maximum threshold of 99.7%.
|
Germain Lamonde, Executive Chairman
|
||||
Elements of Individual Performance Measures1
|
Weight
(from 0% to 160%) |
Result
(%) |
||
Financial objectives
|
||||
Corporate revenues
|
From 0% to 40%
|
27.58%
|
||
Corporate EBITDA
|
From 0% to 50%
|
19.72%
|
||
Strategic contribution
|
||||
Merger and Acquisition activities aiming towards a Solutions oriented company
|
From 0% to 20%
|
20.00%
|
||
Establishment and implementation of a strategic plan that will result in revenue growth in identified services and
products family
|
From 0% to 20%
|
20.00%
|
||
Employee Satisfaction
|
From 0% to 20%
|
20.00%
|
||
Customer Satisfaction
|
From 0% to 10%
|
7.00%
|
||
Total
|
114.30%
|
|||
Total of Business Performance Measures (49.33%) X Individual Performance Measures (114.30%)
|
56.38%
|
|||
(1)
|
If the minimum level of the Corporate EBITDA, as determined at the beginning of the financial year, is not achieved, payment of any variable compensation to the Executive Chairman will be at the discretion of the Human Resources Committee.
|
Philippe Morin, CEO
|
||||
Elements of Individual Performance Measures1
|
Weight
(from 0% to 150%) |
Result
(%) |
||
Financial objectives
|
||||
Corporate EBITDA
|
From 0% to 40%
|
17.72%
|
||
Corporate revenues
|
From 0% to 30%
|
20.51%
|
||
Strategic contribution
|
||||
Expending corporate revenues, profitability and positioning in selected strategic markets
|
From 0% to 30%
|
12.57%
|
||
Delivering the strategies and objectives under the NEO's responsibility as set forth in the Corporation's strategic plan
|
From 0% to 30%
|
25.63%
|
||
Positioning and transforming the Corporation to allow significant growth in Corporate EBITDA and revenues
|
From 0% to 20%
|
15.50%
|
||
Total
|
91.93%
|
|||
Total of Business Performance Measures (49.33%) X Individual Performance Measures (91.93%)
|
45.35%
|
|||
(1)
|
If the minimum level of the Corporate EBITDA, as determined at the beginning of the financial year, is not achieved, payment of any variable compensation to the CEO will be at the discretion of the Human Resources Committee.
|
Pierre Plamondon, CFO and Vice President, Finance
|
||||
Elements of Individual Performance Measures
|
Weight
(from 0% to 150%) |
Result
(%) |
||
Financial objectives
|
Weight
|
From 0% to 70%
|
32.18%
|
|
Corporate EBITDA
|
40%
|
|||
Corporate revenues
|
30%
|
|||
Strategic contribution
|
Weight
|
From 0% to 80%
|
58.60%
|
|
Delivering the strategies and objectives under the NEO's responsibility as set forth in the Corporation's
strategic plan
|
30%
|
|||
Delivering the objectives under the NEO's responsibility as set forth in the Corporation's operational plan
|
30%
|
|||
Delivering a Strategic Contribution and Support in the Corporation's information technology management,
investors relations and legal services
|
20%
|
|||
Total
|
90.78%
|
|||
Total of Business Performance Measures (49.33%) X Individual Performance Measures (90.78%)
|
44.78%
|
Willem Jan te Niet, Vice-President, Sales — EMEA
|
|||||
Business Performance Measures
|
Incentive Targets (US$)
|
Results (US$)
|
|||
Contribution Margin Bonus (1)
|
88,280
|
73,527
|
|||
Bonus on Billings (2)
|
29,427
|
22,727
|
|||
Bonus on Strategic Sales Objectives (3)
|
29,427
|
7,840
|
|||
Total
|
147,134
|
104,094
|
|||
(1)
|
The amount of bonus for the attainment of the quarterly contribution margin targets for the territory of the EMEA is based on the percentage of achievement up to 100% of the quarterly and annual contribution margin targets defined at the beginning of the financial year. An accelerated amount of bonus based on the percentage of attainment of the quarterly and annual contribution margin targets above 100% is also payable.
|
(2)
|
The amount of bonus for the attainment of the billings targets for the territory of the EMEA is based on the percentage of achievement up to 100% of the quarterly and annual billings targets defined at the beginning of the financial year. An additional amount of bonus based on the percentage of attainment from above 100% to 125% of the quarterly billings targets is also payable. Upon percentage of achievement above 125% of the quarterly billings targets, such corresponding exceeding portion of percentage achievement is added to the next quarter for the calculation of the amount of bonus and capped to 150% of achievement. An additional amount of bonus based on the percentage of attainment from above 100% of the annual billings target is also payable.
|
(3)
|
The amount of bonus for the attainment of the specific product lines bookings targets for the territory of the EMEA is based on the percentage of achievement from above 50% to 100% of the annual bookings targets of the specific product lines defined at the beginning of the financial year. An accelerated amount of bonus based on the percentage of attainment of the specific product lines bookings targets for the territory of the EMEA above 100% is also payable.
|
Dana Yearian, Vice-President, Sales — Americas
|
|||||
Business Performance Measures
|
Incentive Targets (US$)
|
Results (US$)
|
|||
Contribution Margin Bonus (1)
|
128,593
|
113,694
|
|||
Bonus on Billings (2)
|
42,864
|
39,340
|
|||
Bonus on Strategic Sales Objectives (3)
|
42,864
|
3,641
|
|||
Total
|
214,321
|
156,675
|
|||
(1)
|
The amount of bonus for the attainment of the quarterly contribution margin targets for the territory of the Americas is based on the percentage of achievement up to 100% of the quarterly and annual contribution margin targets defined at the beginning of the financial year. An accelerated amount of bonus based on the percentage of attainment of the quarterly and annual contribution margin targets above 100% is also payable.
|
(2)
|
The amount of bonus for the attainment of the billings targets for the territory of the Americas is based on the percentage of achievement up to 100% of the quarterly and annual billings targets defined at the beginning of the financial year. An additional amount of bonus based on the percentage of attainment from above 100% to 125% of the quarterly billings targets is also payable. Upon percentage of achievement above 125% of the quarterly billings targets, such corresponding exceeding portion of percentage achievement is added to the next quarter for the calculation of the amount of bonus and capped to 150% of achievement. An additional amount of bonus based on the percentage of attainment from above 100% of the annual billings target is also payable.
|
(3)
|
The amount of bonus for the attainment of the specific product lines bookings targets for the territory of the Americas is based on the percentage of achievement from above 50% to 100% of the annual bookings targets of the specific product lines defined at the beginning of the financial year. An accelerated amount of bonus based on the percentage of attainment of the specific product lines bookings targets for the territory of the Americas above 100% is also payable.
|
Name & Position
|
Grant Levels (1) (% of Previous Year Base Salary)
|
||
Philippe Morin, CEO
|
50.0%
|
||
Pierre Plamondon, CFO and Vice President, Finance
|
45.0%
|
||
Willem Jan te Niet, Vice President, Sales ─ EMEA
|
30.0%
|
||
Dana Yearian, Vice President, Sales ─ Americas
|
42.5%
|
||
(1)
|
Actual grant value may differ from the grant level guidelines as the stock price may vary between the time of the grant and its approval.
|
Financial
Year Ended |
Grant Date
|
RSUs
Granted (#)
|
Fair Value
at the Time of Grant
(US$/RSU) |
Vesting Schedule
|
|
August 31, 2017
|
October 19, 2016
|
38,300
|
4.01
|
50% on each of the third and fourth anniversary dates of the grant.
|
|
January 18, 2017
|
153,700
|
5.10
|
|||
April 5, 2017
|
123,110
|
4.89
|
|||
October 19, 2016
|
207,269
|
4.01
|
100% on the fifth anniversary date of the grant subject to early vesting of up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation, are fully attained.
|
||
April 5, 2017
|
4,764
|
4.89
|
|||
Total
|
527,143
|
||||
August 31, 2016
|
October 15, 2015
|
36,900
|
3.23
|
50% on each of the third and fourth anniversary dates of the grant.
|
|
November 9, 2015
|
109,890
|
3.43
|
|||
January 13, 2016
|
151,400
|
3.00
|
|||
July 7, 2016
|
2,500
|
3.30
|
|||
August 15, 2016
|
10,000
|
3.33
|
|||
October 15, 2015
|
206,373
|
3.23
|
100% on the fifth anniversary date of the grant subject to early vesting of up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation, are fully attained.
|
||
November 9, 2015
|
54,945
|
3.43
|
|||
Total
|
572,008
|
||||
August 31, 2015
|
October 16, 2014
|
29,150
|
3.71
|
50% on each of the third and fourth anniversary dates of the grant.
|
|
January 14, 2015
|
163,400
|
3.55
|
|||
March 31, 2015
|
5,000
|
3.78
|
|||
July 2, 2015
|
12,299
|
3.27
|
|||
October 16, 2014
|
197,726
|
3.71
|
100% on the fifth anniversary date of the grant subject to early vesting of up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation, are fully attained.
|
||
July 2, 2015
|
1,946
|
3.27
|
|||
Total
|
409,521
|
Financial
Year Ended |
Grant Date
|
RSUs
Granted (#)
|
Fair Value
at the Time of Grant
(US$/RSU) |
Vesting Schedule
|
|
August 31, 2014
|
October 16, 2013
|
36,950
|
5.28
|
50% on each of the third and fourth anniversary dates of the grant.
|
|
January 15, 2014
|
132,000
|
4.36
|
|||
July 3, 2014
|
29,502
|
4.77
|
|||
October 16, 2013
|
138,233
|
5.28
|
100% on the fifth anniversary date of the grant subject to early vesting of up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation, are fully attained.
|
||
Total
|
336,685
|
||||
August 31, 2013
|
October 16, 2012
|
30,006
|
5.06
|
50% on each of the third and fourth anniversary dates of the grant.
|
|
January 16, 2013
|
145,750
|
5.61
|
|||
October 16, 2012
|
140,404
|
5.06
|
100% on the fifth anniversary date of the grant subject to early vesting of up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation, are fully attained.
|
||
Total
|
316,160
|
Name
|
RSUs
Granted (#) |
Percentage of Total
RSUs Granted to Employees in Financial Year (%) (1) |
Fair Value
at the Time of Grant (US$/RSU) (2) |
Grant Date
|
Vesting Schedule (3)
|
|
Philippe Morin
|
47,529
|
9.02%
|
4.01
|
October 19, 2016
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained. (4)
|
|
38,110
|
7.23%
|
4.89
|
April 5, 2017
|
50% on each of the third and fourth anniversary dates of the grant.
|
||
4,764
|
0.90%
|
4.89
|
April 5, 2017
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained. (4)
|
||
Pierre
Plamondon
|
25,162
|
4.77%
|
4.01
|
October 19, 2016
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained. (4)
|
|
Willem Jan
te Niet
|
16,681
|
3.16%
|
4.01
|
October 19, 2016
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained. (4)
|
|
Dana Yearian
|
24,744
|
4.69%
|
4.01
|
October 19, 2016
|
100% on the fifth anniversary date of the grant subject to early vesting up to 1/3 on the third anniversary date of the grant and up to 50% of the remaining units on the fourth anniversary date of the grant if performance objectives namely related to long-term growth of revenue and profitability, as determined by the Board of Directors of the Corporation are fully attained. (4)
|
(1)
|
Such percentage does not include any cancelled RSUs.
|
(2)
|
The fair value at the time of grant of a RSU is equal to the market value of Subordinate Voting Shares at the time RSUs are granted. The grant date market value is equal to the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ Global Select Market on the last trading day preceding the grant date, using the noon buying rate of the Bank of Canada from September 1, 2016 to January 31, 2017 and the daily exchange rate of the Bank of Canada since February 1, 2017 on the grant date to convert either the NASDAQ Global Select Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required.
|
(3)
|
All RSUs first vesting cannot be earlier than the third anniversary date of their grant.
|
(4)
|
Those RSUs granted in the financial year ended August 31, 2017 vest on the fifth anniversary date of the grant but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives, as determined by the Board of Directors of the Corporation. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant. The early vesting shall be subject to the attainment of performance objectives. Such performance objectives are based on the attainment of a sales growth metric combined with profitability metric. The sales growth metric is determined by the Compound Annual Growth Rate of sales of the Corporation for the period described below (SALES CAGR). The profitability metric is determined as the Cumulative Corporation's IFRS net earnings before interest, income taxes, depreciation of property, plant and equipment, amortization of intangible assets, foreign exchange gain or loss, change in fair value of cash contingent consideration, and extraordinary gain or loss over the Cumulative Sales for the same period (LTIP EBITDA). Accordingly, the first early vesting performance objectives will be attained, calculated on a pro-rated basis as follows: i) 100% for a SALES CAGR of 20% or more and 0% for a SALES CAGR of 5% or less for the three-year period ending on August 31, 2019; cumulated with ii) 100% for a LTIP EBITDA of 15% and 0% for a LTIP EBITDA of 7.5% or less for the three-year period ending on August 31, 2019. The second early vesting performance objectives will be attained on the same premises as described above but for the four-year period ending on August 31, 2020.
|
Number of
RSUs (#) |
% of Issued and
Outstanding RSUs |
Weighted Average Fair Value at
the Time of Grant ($US/RSU) |
||||
Executive Chairman (one (1) individual)
|
–
|
–
|
–
|
|||
CEO (one (1) individual)
|
255,238
|
15.84%
|
3.78
|
|||
Board of Directors (five (5) individuals)
|
–
|
–
|
–
|
|||
Management and Corporate Officers (nine (9) individuals)
|
578,088
|
35.88%
|
4.08
|
DSUs
Granted (#) |
Weighted Average Fair Value
at the Time of Grant (US$/DSU) |
Total of the Fair Value
at the Time of Grant (US$) |
Vesting
|
45,058
|
4.36
|
196,453
|
At the time director ceases to be a member of the Board
of Directors of the Corporation
|
Number of
DSUs (#) |
% of Issued and
Outstanding DSUs |
Total of the Fair Value at
the Time of Grant (US$) |
Weighted Average Fair Value
at the Time of Grant (US$/DSU) |
|
Board of Directors (five (5) individuals)
|
174,279
|
100%
|
4.09
|
712,801
|
Long-Term Incentive Plan (LTIP) - RSUs
|
|||
Date of Grant
|
Vesting Date
|
% of Early Vesting Achievement (1)
|
|
October 16, 2013
|
October 16, 2017
|
3%
|
|
October 16, 2014
|
October 16, 2017
|
6%
|
|
(1)
|
The vesting schedules are provided in the table under the heading "Long-Term Incentive Plan".
|
Compensation Elements
|
2017(1)
|
2016
|
2015
|
Three-Year Total
|
|||||
Cash
|
|||||||||
Base Salary
|
CA$717,500
|
CA$700,000
|
CA$615,332
|
CA$2,032,832
|
|||||
Short-Term Incentive
|
CA$262,962
|
CA$331,115
|
CA$101,022
|
CA$695,099
|
|||||
Equity
|
|||||||||
Long-Term Incentive
|
–
|
–
|
–
|
–
|
|||||
Total Direct Compensation
|
CA$980,462
|
CA$1,031,115
|
CA$716,354
|
CA$2,727,931
|
|||||
Contribution to DPSP
|
–
|
–
|
–
|
–
|
|||||
All Other Compensation
|
–
|
–
|
–
|
–
|
|||||
Total Compensation
|
CA$980,462
|
CA$1,031,115
|
CA$716,354
|
CA$2,727,931
|
|||||
Annual Average
|
–
|
–
|
–
|
CA$909,310
|
|||||
Total Market Capitalization (CA$ millions) as at August 31 (2)
|
322.3
|
231.9
|
217.6
|
257.3
|
|||||
Total Cost as a % of Market Capitalization
|
0.30%
|
0.44%
|
0.33%
|
0.35%
|
|||||
(1)
|
On April 1, 2017, Mr. Germain Lamonde stepped down as CEO and became Executive Chairman of the Corporation.
|
(2)
|
In fiscal year 2015, the Corporation redeemed 6,521,739 subordinate voting shares under its substantial issuer bid.
|
Compensation Elements
|
2017(1)
|
2016(2)
|
2015
|
Three-Year Total
|
|||||
Cash
|
|||||||||
Base Salary
|
CA$512,500
|
CA$394,231
|
–
|
CA$906,731
|
|||||
Short-Term Incentive
|
CA$118,531
|
CA$142,590
|
–
|
CA$261,121
|
|||||
Equity
|
|||||||||
Long-Term Incentive
|
CA$531,256
|
CA$749,999
|
–
|
CA$1,281,255
|
|||||
Total Direct Compensation
|
CA$1,162,287
|
CA$1,286,820
|
–
|
CA$2,449,107
|
|||||
Contribution to DPSP
|
CA$14,346
|
CA$9,135
|
–
|
CA$23,481
|
|||||
All Other Compensation
|
–
|
–
|
–
|
–
|
|||||
Total Compensation
|
CA$1,176,633
|
CA$1,295,955
|
–
|
CA$2,472,588
|
|||||
Annual Average
|
–
|
–
|
–
|
CA$1,236,294
|
|||||
Total Market Capitalization (CA$ millions) as at August 31
|
322.3
|
231.9
|
–
|
277.1
|
|||||
Total Cost as a % of Market Capitalization
|
0.37%
|
0.56%
|
–
|
0.45%
|
|||||
(1)
|
Mr. Philippe Morin was nominated CEO on April 1, 2017.
|
(2)
|
Mr. Philippe Morin was nominated COO on November 9, 2015.
|
Name and
Principal Position |
Financial
Year |
Salary (1) (2)
($) |
Share-Based
Awards (2) (3) ($) |
Option-
Based Awards ($) |
Non-Equity Incentive
Plan Compensation ($) |
Pension
Value ($) |
All Other
Compensation ($) (2) (5) |
Total
Compensation ($) |
||||||
Annual
Incentive Plans (2) (4) |
Long-Term
Incentive Plan |
|||||||||||||
Germain Lamonde,
Executive Chairman (6) |
2017
|
543,067 (US)
717,500 (CA) |
─ (US)
─ (CA) |
–
|
199,032 (US)
262,962 (CA) |
–
|
–
|
–
|
742,099 (US)
980,462 (CA) |
|||||
2016
|
527,188 (US)
700,000 (CA) |
─ (US)
─ (CA) |
–
|
249,371 (US)
331,115 (CA) |
–
|
–
|
–
|
776,559 (US)
1,031,115 (CA) |
||||||
2015
|
508,833 (US)
615,332 (CA) |
─ (US)
─ (CA) |
–
|
83,537 (US)
101,022 (CA) |
–
|
–
|
–
|
592,370 (US)
716,354 (CA) |
||||||
Philippe Morin,
CEO (7) |
2017
|
387,905 (US) (8)
512,500 (CA) |
402,101 (US)
531,256 (CA) |
–
|
89,715 (US)
118,531 (CA) |
–
|
–
|
10,858 (US)
14,346 (CA) |
890,579 (US)
1,176,633 (CA) |
|||||
2016
|
296,905 (US) (8)
394,231 (CA) |
564,844 (US)
749,999 (CA) |
–
|
107,388 (US)
142,589 (CA) |
–
|
–
|
6,879 (US)
9,135 (CA) |
976,016 (US)
1,295,954 (CA) |
||||||
Pierre Plamondon,
CFO and Vice President, Finance |
2017
|
228,841 (US)
302,345 (CA) |
100,176 (US)
132,352 (CA) |
–
|
46,116 (US)
60,928 (CA) |
–
|
–
|
11,006 (US)
14,541 (CA) |
386,139 (US)
510,166 (CA) |
|||||
2016
|
221,502 (US)
294,110 (CA) |
91,220 (US)
121,122 (CA) |
–
|
82,291 (US)
109,266 (CA) |
–
|
–
|
9,064 (US)
12,035 (CA) |
404,077 (US)
536,533 (CA) |
||||||
2015
|
235,665 (US)
284,990 (CA) |
95,847 (US)
115,907 (CA) |
–
|
31,095 (US)
37,603 (CA) |
–
|
–
|
12,212 (US)
14,768 (CA) |
374,819 (US)
453,268 (CA) |
||||||
Willem Jan te Niet,
Vice President, Sales — EMEA (9) |
2017
|
226,587 (US)
299,367 (CA) 206,625 (€) |
66,891 (US)
88,376 (CA) 60,998 (€) |
–
|
104,094 (US)
137,529 (CA) 94,923 (€) |
–
|
–
|
7,912 (US)
10,454 (CA) 7,215 (€) |
405,484 (US)
535,726 (CA) 369,761 (€) |
|||||
2016
|
9,160 (US) (10)
12,162 (CA)
8,250 (€) |
32,384 (US)
43,000 (CA) 29,168 (€) |
–
|
–
|
–
|
–
|
–
|
41,544 (US)
55,162 (CA) 37,418 (€) |
||||||
Dana Yearian,
Vice President, Sales — Americas |
2017
|
238,134 (US)
314,623 (CA) |
99,223 (US)
131,094 (CA) |
–
|
156,675 (US)
206,999 (CA) |
–
|
–
|
7,049 (US)
9,314 (CA) |
501,081 (US)
662,030 (CA) |
|||||
2016
|
233,465 (US)
309,995 (CA) |
97,087 (US)
128,913 (CA) |
–
|
181,465 (US)
240,949 (CA) |
–
|
–
|
7,049 (US)
9,360 (CA) |
519,066 (US)
689,217 (CA) |
||||||
2015
|
228,439 (US)
276,251 (CA) |
95,369 (US)
115,330 (CA) |
–
|
156,372 (US)
189,100 (CA) |
–
|
–
|
7,049 (US)
8,525 (CA) |
487,229 (US)
589,206 (CA) |
(1)
|
Base salary earned in the financial year, regardless when paid.
|
(2)
|
The compensation information for Canadian residents has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$1.3212 = US$1.00 for the financial year ended August 31, 2017, CA$1.3278 = US$1.00 for the financial year ended August 31, 2016 and CA$1.2093 = US$1.00 for the financial year ended August 31, 2015. The compensation information for the Netherlands resident has been converted from Euros to US dollars based upon an average foreign exchange rate of €0.9119 = US$1.00 for the financial year ended August 31, 2017 and €0.9007 = US$1.00 for the financial year ended August 31, 2016 and the conversion from US dollars to Canadian dollars is made as described above.
|
(3)
|
Indicates the dollar amount based on the grant date fair value of the RSUs awarded under the LTIP for the financial year. The grant date fair value is equal to the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ Global Select Market on the last trading day preceding the grant date, using the noon buying rate of the Bank of Canada from September 1, 2016 to January 31, 2017 and the daily exchange rate of the Bank of Canada since February 1, 2017 on the grant date to convert either the NASDAQ Global Select Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars. Grants of RSUs to NEOs are detailed under section "Compensation Discussion and Analysis – Long-Term Incentive Plan".
|
(4)
|
Indicates the total bonus earned during the financial year whether paid during the financial year or payable on a later date:
|
Name
|
Paid during the
Financial Year Ended August 31, 2017 (i) ($) |
Paid in the First Quarter
of the Financial Year Ending on August 31, 2018 (i) ($) |
Total Bonus Earned during
the Financial Year Ended August 31, 2017 (i) ($) |
||||
Germain Lamonde
|
‒ (US)
‒ (CA) |
199,032 (US)
262,962 (CA) |
199,032 (US)
262,962 (CA) |
||||
Philippe Morin
|
‒ (US)
‒ (CA) |
89,715 (US)
118,531 (CA) |
89,715 (US)
118,531 (CA) |
||||
Pierre Plamondon
|
‒ (US)
‒ (CA) |
46,116 (US)
60,928 (CA) |
46,116 (US)
60,928 (CA) |
||||
Willem Jan te Niet
|
61,371 (US)
81,084 (CA) 55,964 (€) |
42,723 (US)
56,445 (CA) 38,959 (€) |
104,094 (US)
137,529 (CA) 94,923 (€) |
||||
Dana Yearian
|
92,480 (US)
122,185 (CA) |
64,195 (US)
84,814 (CA) |
156,675 (US)
206,999 (CA) |
(i)
|
Refer to note 2 above.
|
(5)
|
Indicates the amount contributed by the Corporation during the financial year to the DPSP as detailed under section "Compensation Discussion and Analysis – Deferred Profit-Sharing Plan", the 401K plan as detailed under section "Compensation Discussion and Analysis – 401K plan", as applicable, for the benefit of the NEOs. Mr. Lamonde is not eligible to participate in the DPSP.
|
(6)
|
Mr. Lamonde stepped down as CEO as of April 1, 2017 and was nominated Executive Chairman of the Corporation.
|
(7)
|
Mr. Morin was promoted from Chief Operating Officer of the Corporation to CEO of the Corporation as of April 1, 2017. He joined the Corporation as COO on November 9, 2015.
|
(8)
|
This amount represents the salary paid to Mr. Philippe Morin from November 9, 2015 to August 31, 2016 which is based on an annual salary of US$376,563 (CA$500,000) for the financial year ended August 31, 2016.
|
(9)
|
Mr. Willem Jan te Niet joined the Corporation as Vice President, Sales — EMEA on August 15, 2016.
|
(10)
|
This amount represents the salary paid to Mr. te Niet from August 15, 2016 to August 31, 2016 which is based on an annual salary of €198,000 (US$219,829, CA$291,889) for the financial year ended August 31, 2016.
|
Name
|
Outstanding Option-Based Awards (Options)
|
Outstanding Share-Based Awards (RSUs)
|
|||||||
Number of
Securities Underlying Unexercised Options (#) |
Option
Exercise Price |
Option
Expiration Date |
Value of
Unexercised "in-the-money" Options |
Number of
Shares or Units of Shares that Have Not Vested (#) |
Market or
Payout Value of Share-Based Awards that Have Not Vested (US$) (1) |
Market or
Payout Value of Vested Share- Based Awards Not Paid Out or Distributed (US$) |
|||
Germain Lamonde
|
–
|
–
|
–
|
–
|
–
|
–
|
–
|
||
Philippe Morin
|
–
|
–
|
–
|
–
|
255,238
|
1,199,619
|
–
|
||
Pierre Plamondon
|
–
|
–
|
–
|
–
|
121,516
|
571,125
|
–
|
||
Willem Jan te Niet
|
–
|
–
|
–
|
–
|
26,681
|
125,401
|
–
|
||
Dana Yearian
|
–
|
–
|
–
|
–
|
116,178
|
546,037
|
–
|
(1)
|
The value of unvested RSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2017, which was US$4.70 (CA$5.89). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ Global Select Market on August 31, 2017 using the daily exchange rate of the Bank of Canada to convert either the NASDAQ Global Select Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
Name
|
Share-Based Awards – Value
Vested during the Year (US$) (1) |
Non-Equity Incentive Plan Compensation –
Value Earned during the Year (US$) (2) |
|||
Germain Lamonde
|
247,698
|
199,032
|
|||
Philippe Morin
|
‒
|
89,715
|
|||
Pierre Plamondon
|
68,380
|
46,116
|
|||
Willem Jan te Niet
|
‒
|
104,094
|
|||
Dana Yearian
|
71,384
|
156,675
|
|||
(1)
|
The aggregate dollar value realized is equivalent to the market value of the Subordinate Voting Shares underlying the RSUs at vesting. This value, as the case may be, has been converted from Canadian dollars to US dollars based upon the daily exchange rate of the Bank of Canada on the day of vesting.
|
(2)
|
Includes total non-equity incentive plan compensation earned by each NEO in respect to the financial year ended on August 31, 2017 (as indicated under the "Summary Compensation Table").
|
Named Executive Officer
|
Termination Payment Event
|
|||||
Without Cause ($) (1) (2)
|
Change of Control ($) (2) (3) (4)
|
Voluntary ($)
|
||||
Germain Lamonde
|
1,672,966 (US)
2,097,230 (CA) |
(5)
|
1,672,966 (US)
2,097,230 (CA) |
0
|
(6)
|
|
Philippe Morin
|
837,045 (US)
1,049,144 (CA) |
1,608,442 (US)
2,015,852 (CA) |
–
|
|||
Pierre Plamondon
|
550,685 (US)
690,213 (CA) |
1,063,640 (US)
1,333,146 (CA) |
–
|
|||
Willem Jan te Niet
|
164,517 (US)
206,228 (CA) 139,115 (€) |
261,991 (US)
328,381 (CA) 221,538 (€) |
–
|
|||
Dana Yearian
|
527,739 (US)
661,445 (CA) |
1,175,436 (US)
1,473,303 (CA) |
–
|
(1)
|
The aggregate amount disclosed includes an evaluation of the amount that the NEO would have been entitled to should a termination of employment without cause have occurred on August 31, 2017 and includes, as the case may be for each NEO, the base salary that would have been received and total value of RSUs and options that would have vested (with the exception of Mr. Lamonde's evaluation which is described in note 6 below and includes: the base salary, STIP compensation, and total value of RSUs and options that would have vested). The amount for base salary compensation is calculated according to those amounts provided under the section entitled "Summary Compensation Table" included in this Annual Report. The amount for the total value attached to the vesting of RSUs and options determined pursuant to the LTIP as described in the section entitled "Long-Term Incentive Compensation – Long-Term Incentive Plan" for termination without cause.
|
(2)
|
The aggregate amount for Canadian residents has been converted from Canadian dollars to US dollars based upon a foreign exchange rate of CA$1.2536 = US$1.00 as of August 31, 2017. The aggregate amount for Netherlands resident has been converted from Euros to US dollars based upon a foreign exchange rate of €0.8456 = US$1.00 as of August 31, 2017.
|
(3)
|
"Change of Control" is defined as a merger or an acquisition by a third party of substantially all of the Corporation's assets or of the majority of its share capital.
|
(4)
|
The aggregate amount disclosed includes, as the case may be for each NEO, an evaluation of the amount that the NEO would have been entitled to should a termination of employment for Change of Control have occurred on August 31, 2017 and includes, as the case may be, namely, the base salary, STIP or SIP compensation and total value of RSUs and options that would have vested. The amount for base salary and STIP or SIP compensation are calculated according to those amounts provided under the section entitled "Summary Compensation Table" included in this Annual Report, the total value attached to the vesting of RSUs and options is calculated according to those amounts provided in the columns named "Value of unexercised "in-the-money" options" and "Market or payout value of share-based awards that have not vested" of the table included under the heading entitled "Outstanding share-based awards and option-based awards".
|
(5)
|
The aggregate amount disclosed includes an evaluation of the amount that Mr. Lamonde would have been entitled to should a termination of employment without cause have occurred on August 31, 2017 and includes: the base salary, STIP compensation, and total value of RSUs and options that would have vested. The amount for base salary and STIP compensation are calculated according to those amounts provided under the section entitled "Summary Compensation Table" included in this Annual Report; the total value attached to the vesting of RSUs and options are calculated according to those amounts provided in the columns named "Value of unexercised "in-the-money" options" and "Market or payout value of share-based awards that have not vested" of the table included under the heading entitled – "Outstanding share-based awards and option-based awards".
|
(6)
|
Mr. Lamonde did not hold any RSUs or options on August 31, 2017.
|
From September 1, 2016
to February 28, 2017 |
From March 1, 2017
to August 31, 2017 |
||||||||
Annual Retainer for Directors (1)
|
CA$57,000
|
(2)
|
US$43,143
|
(2)
|
CA$63,500
|
(3)
|
US$48,062
|
(4)
|
|
Annual Retainer for Lead Director
|
CA$8,000
|
US$6,055
|
CA$9,000
|
US$6,812
|
(4)
|
||||
Annual Retainer for Audit Committee Chairman
|
CA$8,000
|
US$6,055
|
CA$10,000
|
US$7,569
|
(4)
|
||||
Annual Retainer for Audit Committee Members
|
CA$4,000
|
US$3,028
|
CA$4,250
|
US$3,217
|
(5)
|
||||
Annual Retainer for Human Resources Committee Chairman
|
CA$6,000
|
US$4,541
|
CA$6,500
|
US$4,920
|
(4)
|
||||
Annual Retainer for Human Resources Committee Members
|
CA$3,000
|
US$2,271
|
CA$3,750
|
US$2,838
|
(5)
|
||||
(1)
|
All the Directors elected to receive 100% of their Annual Retainer for Directors in form of DSUs except Mr. Pierre-Paul Allard who elected to receive 50% of his Annual Retainer in form of DSUs and Mr. François Côté, Ms. Angela Logothetis and Mr. Claude Seguin who elected to receive 50% of their Annual Retainer in form of DSUs until March 1, 2017 and Mr. François Côté who elected to receive 75% of his Annual Retainer in form of DSUs starting March 1, 2017.
|
(2)
|
The Annual Retainer for Mr. Pierre-Paul Allard, Ms. Angela Logothetis and Mr. Randy E. Tornes is US$57,000 (CA$75,308).
|
(3)
|
The Annual Retainer for Mr. Pierre-Paul Allard, Ms. Angela Logothetis and Mr. Randy E. Tornes is US$63,500 (CA$83,896).
|
(4)
|
The compensation information has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$1.3212 = US$1.00 for the financial year ended August 31, 2017.
|
(5)
|
The Annual Retainer for Audit Committee Members is CA$4,250 for Mr. François Côté and Mr. Claude Séguin and US$4,250 (CA$5,615) for Mr. Pierre-Paul Allard, Ms. Angela Logothetis and Mr. Randy Tornes since March 2017. The Annual Retainer for Human Resources Committee Members is CA$3,750 for Mr. François Côté and Mr. Claude Séguin and US$3,750 (CA$4,955) for Mr. Pierre-Paul Allard, Ms. Angela Logothetis and Mr. Randy Tornes since March 2017.
|
Name
|
Fees
Earned (1) ($) |
Share-Based
Awards ($) |
Option-
Based Awards ($) |
Non-Equity
Incentive Plan Compensation ($) |
Pension
Value ($) |
All Other
Compensation ($) |
Total
($) |
Pierre-Paul Allard
|
62,899 (US)
83,102 (CA) |
–
|
–
|
–
|
–
|
–
|
62,899 (US)
83,102 (CA) |
François Côté
|
59,889 (US)
79,125 (CA) |
–
|
–
|
–
|
–
|
–
|
59,889 (US)
79,125 (CA) |
Darryl Edwards
|
17,627 (US)
23,289 (CA) |
–
|
–
|
–
|
–
|
–
|
17,627 (US)
23,289 (CA) |
Angela Logothetis
|
42,343 (US)
55,944 (CA) |
–
|
–
|
–
|
–
|
–
|
42,343 (US)
55,944 (CA) |
Claude Séguin
|
54,969 (US)
72,625 (CA) |
–
|
–
|
–
|
–
|
–
|
54,969 (US)
72,625 (CA) |
Randy E. Tornes
|
66,899 (US)
88,387 (CA) |
–
|
–
|
–
|
–
|
–
|
66,899 (US)
88,387 (CA) |
(1)
|
The compensation information has been converted from Canadian dollars to US dollars based upon an average foreign exchange rate of CA$1.3212 = US$1.00 for the financial year ended August 31, 2017 except for compensation amounts paid to Mr. Pierre-Paul Allard and Mr. Randy E. Tornes which were paid in US dollars for the portion of their annual retainer for Directors. Since March 1st, 2017, the compensation amounts paid to Mr. Pierre-Paul Allard, Ms. Angela Logothetis and Mr. Randy E. Tornes were paid in US dollars. The fees are always payable in cash, but executives are provided the opportunity to elect to exchange all or a portion of their Annual Retainer for Directors into DSUs. The following table identifies the portion of the fees earned by the directors that were paid in DSUs and the portion that were paid in cash.
|
Name
|
Fees Earned
|
||||||
DSUs ($) (i)
|
Cash ($)
|
Total ($)
|
|||||
Pierre-Paul Allard (ii)
|
30,125 (US)
39,801 (CA) |
32,774 (US)
43,301 (CA) |
62,899 (US)
83,102 (CA) |
||||
François Côté (iii)
|
31,080 (US)
41,063 (CA) |
28,809 (US)
38,062 (CA) |
59,889 (US)
79,125 (CA) |
||||
Darryl Edwards (ii)
|
7,850 (US)
10,371 (CA) |
9,777 (US)
12,918 (CA) |
17,627 (US)
23,289 (CA) |
||||
Angela Logothetis (iv)
|
38,686 (US)
51,112 (CA) |
3,657 (US)
4,832 (CA) |
42,343 (US)
55,944 (CA) |
||||
Claude Séguin (iv)
|
35,550 (US)
46,969 (CA) |
19,419 (US)
25,656 (CA) |
54,969 (US)
72,625 (CA) |
||||
Randy E. Tornes (v)
|
60,250 (US)
79,602 (CA) |
6,649 (US)
8,785 (CA) |
66,899 (US)
88,387 (CA) |
(i)
|
The estimated value at the time of grant of a DSU is determined based on the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ Global Select Market on the last trading day preceding the grant date, using the noon buying rate of the Bank of Canada from September 1, 2016 to January 31, 2017 and the daily exchange rate of the Bank of Canada since February 1, 2017 to convert either the NASDAQ Global Select Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars, as required. The value at vesting of a DSU is equivalent to the market value of a Subordinate Voting Share when a DSU is converted to such Subordinate Voting Share.
|
(ii)
|
Elected to receive 50% of his Annual Retainer for Directors in form of DSUs.
|
(iii)
|
Elected to receive, until March 1, 2017, 50% and, thereafter, 75% of his Annual Retainer for Directors in form of DSUs.
|
(iv)
|
Elected to receive, until March 1, 2017, 50% and, thereafter, 100% of his Annual Retainer for Directors in form of DSUs.
|
(v)
|
Elected to receive 100% his Annual Retainer for Directors in form of DSUs.
|
Name
|
Outstanding Share-Based Awards (DSUs)
|
|||||
Number of Shares or Units of
Shares that Have Not Vested (#) |
Market or Payout Value of
Share-Based Awards that Have Not Vested (US$) (1) |
Market or Payout Value of
Vested Share-Based Awards Not Paid Out or Distributed (US$) |
||||
Pierre-Paul Allard
|
55,452
|
260,624
|
‒
|
|||
François Côté
|
17,730
|
83,331
|
–
|
|||
Angela Logothetis
|
8,639
|
40,603
|
–
|
|||
Claude Séguin
|
29,855
|
140,319
|
–
|
|||
Randy E. Tornes
|
62,603
|
294,234
|
–
|
|||
(1)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2017, which was US$4.70 (CA$5.89). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ Global Select Market on August 31, 2017 using the daily exchange rate of the Bank of Canada to convert either the NASDAQ Global Select Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
Name
|
Number of DSUs Converted
|
Aggregate Value Realized (US$) (1)
|
|||
Darryl Edwards (2)
|
29,456
|
147,380
|
|||
Darryl Edwards (2)
|
450
|
2,631
|
|||
(1)
|
The aggregate value realized is equivalent to the market value of the securities underlying the DSUs at conversion.
|
(2)
|
Mr. Edwards ceased to be a member of the Board of Directors as of January 10, 2017.
|
Plan Category
|
Number of Securities to Be
Issued upon Exercise of Outstanding Options, RSUs and DSUs (#) (a) |
Weighted-Average Exercise
Price of Outstanding Options, RSUs and DSUs (US$) (b) |
Number of Securities Remaining
Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (#) (c) |
|||
LTIP – RSUs
|
1,611,330
|
n/a (1)
|
435,024(2)
|
|||
LTIP – Options
|
–
|
–
|
||||
DSU Plan – DSUs
|
174,279
|
n/a (1)
|
||||
(1)
|
The value of RSUs and DSUs will be equal to the market value of the Subordinate Voting Shares of the Corporation on the date of vesting.
|
(2)
|
Following the approval of the proposed increase of the aggregate number of Subordinate Voting Shares reserved for issuance under the LTIP and DSU Plan, the number of securities remaining available for future issuance under such plans would be 5,702,101. See "Amendments to the Long-Term Incentive Plan and the Deferred Share Unit Plan - Increase in Shares Reserved for Issuance".
|
August 31,
|
||||||||||||||||||||||||
2012
|
2013
|
2014
|
2015
|
2016
|
2017
|
|||||||||||||||||||
EXFO Subordinate Voting Shares (CA$)
|
$
|
100
|
$
|
99
|
$
|
98
|
$
|
84
|
$
|
89
|
$
|
120
|
||||||||||||
S&P/TSX Composite Index (CA$)
|
$
|
100
|
$
|
106
|
$
|
131
|
$
|
116
|
$
|
122
|
$
|
127
|
||||||||||||
NEOs' total compensation (in millions of CA$)
|
$
|
2.5
|
$
|
2.3
|
$
|
2.6
|
$
|
2.6
|
$
|
4.1
|
$
|
3.9
|
·
|
Despite the relative stability of the Corporation's share price as at August 31, 2013 compared to the previous financial year, total compensation to the NEOs decreased. This decrease in NEOs compensation reflected financial results below expectations for financial 2013 and consequently was aligned with shareholders' interests.
|
·
|
The Corporation's share price remained relatively flat as at August 31, 2014 compared to the previous financial year, but total NEO compensation increased for that year. This rise in NEO compensation can be explained mainly by the progressive adjustment of the CEO's base salary, as he no longer received equity-based compensation, as well as adjustments to align executive compensation with the Target Compensation Positioning offered within a reference market of comparable companies similar in size to the Corporation. This was deemed necessary to maintain a competitive position within the marketplace and retain key executives.
|
·
|
The Corporation's share price decreased as at August 31, 2015 compared to the previous financial year, while total NEO compensation as expressed in Canadian dollars remained flat for the same period. It should be noted, however, three out of five NEOs were remunerated in currencies other than the Canadian dollar. On a constant currency basis, total NEO compensation would have decreased by about CA$100,000 year-over-year. As a result, total compensation received by the NEOs for this period was aligned with share price performance.
|
·
|
The Corporation's share performance increased from September 1, 2015 to August 31, 2016. Total compensation received by the NEOs during this period also increased but at a higher rate than the Corporation's share price. It should be noted that the Corporation hired an executive to the newly created position of Chief Operating Officer in the early part of the financial year, which also contributed to the increase in total compensation received by the NEOs during this period.
|
·
|
The Corporation's share performance increased from September 1, 2016 to August 31, 2017. Total compensation received by the NEOs decreased during this period as certain financial targets were not met, which consequently was aligned with shareholders' interests.
|
GERMAIN LAMONDE
|
||||||
|
St-Augustin-de-Desmaures,
Quebec, Canada Director since
September 1985 Not Independent
(Management) Principal Occupation:
Executive Chairman of the Board of Directors of the Corporation
since April 1, 2017
President and Chief Executive
Officer of the Corporation
until April 1, 2017
|
Germain Lamonde, a founder of EXFO, is Executive Chairman of the Board and served as the company's Chief Executive Officer (CEO) for over 30 years. During his tenure as CEO, Mr. Lamonde grew the company from the ground up into a global leader in the test, service assurance and analytics markets. Today, he is actively involved in leading the acquisition strategy, defining the company's growth strategies, customer outreach, select projects and corporate governance policies. Mr. Lamonde has served on the board of directors of several organizations, including the Canadian Institute for Photonic Innovations, Quebec City's economic development corporation (Québec International), the National Optics Institute (INO) and Université Laval in Quebec City. Germain Lamonde holds a bachelor's degree in engineering physics from the Université de Montreal's school of engineering (Polytechnique Montréal), a master's degree in optics from Université Laval, and is a graduate of the Ivey Executive Management Program offered by Western University.
|
||||
Board/Committee Membership
|
Attendance (1)
|
Board Memberships of Another Reporting Issuer
|
||||
Chairman of the Board of Directors
|
10/10
|
100%
|
–
|
|||
Securities Held
|
||||||
As at
|
Subordinate
Voting Shares (#) |
Multiple Voting
Shares (#) |
RSUs (#)
|
Total Shares (2)
and RSUs (#) |
Total Market Value (3)
of Shares (2) and RSUs (US$) |
|
August 31, 2017
|
3,769,508 (4)
|
31,643,000 (5)
|
‒
|
35,412,508
|
166,438,788
|
(1)
|
From September 1, 2016 until November 1, 2017, Mr. Lamonde attended six (6) board meetings in person and four (4) board meetings by telephone.
|
(2)
|
Includes both Subordinate Voting Shares and Multiple Voting Shares.
|
(3)
|
The value of unvested RSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2017, which was US$4.70 (CA$5.89). The market value of the Subordinate Voting Shares and Multiple Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ Global Select Market on August 31, 2017 using the daily exchange rate of the Bank of Canada to convert either the NASDAQ Global Select Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting of RSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(4)
|
Mr. Lamonde exercises control over 3,000,000 Subordinate Voting Shares through 9356-9036 Québec Inc., a company controlled by Mr. Lamonde. Mr. Lamonde exercises control over 400,000 Subordinate Voting Shares through 9356-9010 Québec Inc., a company controlled by Mr. Lamonde. Mr. Lamonde exercises control over 316,247 Subordinate Voting Shares through 9356-8988 Québec Inc., a company controlled by Mr. Lamonde.
|
(5)
|
Mr. Lamonde exercises control over 24,743,000 Multiple Voting Shares through G. Lamonde Investissements Financiers Inc., a company controlled by Mr. Lamonde. Mr. Lamonde exercises control over 5,000,000 Multiple Voting Shares through 9356-9036 Québec Inc., a company controlled by Mr. Lamonde. Mr. Lamonde exercises control over 1,900,000 Multiple Voting Shares through Fiducie Germain Lamonde, a family trust for the benefit of Mr. Lamonde's family.
|
FRANÇOIS CÔTÉ
|
||
|
Montreal, Quebec, Canada
Director since
January 2015 Lead Director
Independent
Principal Occupation:
Director |
François Côté was appointed a member of our Board of Directors in January 2015. Mr. Côté is a director as a full-time occupation, for corporations in the public, private and non-profit sectors, bringing his expertise in strategy, M&A, governance and passion for growth. Mr. Côté held a variety of executive positions at Bell Canada prior to becoming President and Chief Executive Officer of Emergis. Following the acquisition of Emergis by TELUS in January 2008, he was appointed President of TELUS Quebec, TELUS Health and TELUS Ventures. In this role, Mr. Côté was responsible for broadening TELUS Quebec's presence and driving the company's national health strategy through timely investments in information technology and innovative wireless solutions. Mr. Côté holds a Bachelor's degree in Industrial Relations from Laval University. In 2007, he was named Entrepreneur of the Year by Ernst & Young, in the Corporate Restructuring category for the province of Quebec. Mr. Côté serves on the boards of Alithya, Aspire Food Group, CPU and of the Fondation Martin Matte. Mr. Côté is also on the Consultative Committee of Medfar Solutions and serves on the Advisor Committee of Groupe Morneau. Mr. Côté is also acting as advisor to different companies' CEO's.
|
Board/Committee Membership
|
Attendance (1)
|
Board Memberships of Another Reporting Issuer
|
|
Board of Directors
Audit Committee Human Resources Committee Independent Board of Directors |
9/10
6/6 5/5 5/5 |
90%
100% 100% 100% |
–
|
Securities Held
|
||||
As at
|
Subordinate
Voting Shares (#) |
DSUs (#)
|
Total Shares
and DSUs (#) |
Total Market Value (2)
of Shares (3) and DSUs (US$) |
August 31, 2017
|
6,500
|
17,730
|
24,230
|
113,881
|
(1)
|
From September 1, 2016 until November 1, 2017, Mr. Côté attended six (6) board meetings in person and three (3) board meetings by telephone.
|
(2)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2017, which was US$4.70 (CA$5.89). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ Global Select Market on August 31, 2017 using the daily exchange rate of the Bank of Canada to convert either the NASDAQ Global Select Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(3)
|
Refers to Subordinate Voting Shares.
|
ANGELA LOGOTHETIS
|
||
|
Bath
United Kingdom Director since
January 2017 Independent
Principal Occupation:
Vice-President, Head of Technology and Services
Amdocs (1) |
Angela Logothetis has more than twenty-five (25) years of international experience in the telecommunications industry. She has been strategically engaged in the industry's major network transformations. Ms. Logothetis has an outstanding software pedigree having worked for market-leading software companies including Amdocs, Cramer, PricewaterhouseCoopers and Accenture as well as start-up software companies Clarity and Time Quantum Technology. She has held senior leadership positions in ANZ, APAC and EMEA and has held global responsibility for the past ten (10) years. Ms. Logothetis is the Head of Network Strategy, Technology and Services for Amdocs. Amdocs is the market leader in customer experience software solutions and services for the world's largest communications, entertainment and media service providers. Ms. Logothetis has held several senior leadership positions at Amdocs including Head of OSS Product and Technology, Vice-President of OSS Product Management and Executive Site Lead for Amdocs Bath. She has chaired high-caliber software forums in Amdocs including the Divisional Leadership Team, the Technical Advisory Council, and has served as an executive on the Product Business Management Team and the Product Leadership Forum. Ms. Logothetis holds a Bachelor of Science degree, with first class honors, in Business Information Technology from the University of New South Wales, Australia. She completed dual majors in accountancy and information technology.
|
Board/Committee Membership
|
Attendance (2)
|
Board Memberships of Another Reporting Issuer
|
|
Board of Directors
Audit Committee Human Resources Committee Independent Board of Directors |
4/5
3/3 3/3 3/3 |
80%
100% 100% 100% |
–
|
Securities Held
|
||||
As at
|
Subordinate
Voting Shares (#) |
DSUs (#)
|
Total Shares
and DSUs (#) |
Total Market Value (3)
of Shares (4) and DSUs (US$) |
August 31, 2017
|
–
|
8,639
|
8,639
|
40,603
|
(1)
|
Amdocs is a market leader in software solutions and services for communications, media and entertainment service providers.
|
(2)
|
From January 11, 2017 until November 1, 2017, Ms. Logothetis attended three (3) board meetings in person and one (1) board meeting by telephone.
|
(3)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2017, which was US$4.70 (CA$5.89). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ Global Select Market on August 31, 2017 using the daily exchange rate of the Bank of Canada to convert either the NASDAQ Global Select Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(4)
|
Refers to Subordinate Voting Shares.
|
PHILIPPE MORIN
|
||
|
Montreal, Quebec
Canada Proposed nominee for Director
to the January 2018
shareholders' meeting
Not Independent
(Management) Principal Occupation:
CEO of the Corporation since April 1, 2017
|
Philippe Morin was appointed Chief Executive Officer (CEO) of EXFO in April 2017. He has more than twenty-five (25) years of experience in the telecommunications industry, and became EXFO's Chief Operating Officer (COO) in November 2015, leading the company's global sales leadership, market development, marketing and product strategy. Before joining EXFO, Mr. Morin was Senior Vice-President of Worldwide Sales and Field Operations at Ciena. He previously held senior leadership roles at Nortel Networks, including President of Metro Ethernet Networks and Vice-President and General Manager of Optical Networks. Philippe Morin holds a bachelor's degree in electrical engineering from Université Laval in Quebec City, Canada, and a master's degree in business (MBA) from McGill University in Montreal, Canada.
|
Board/Committee Membership
|
Attendance (1)
|
Board Memberships of Another Reporting Issuer
|
|
Board of Directors
Audit Committee Human Resources Committee Independent Board of Directors |
N/A
N/A N/A N/A |
N/A
N/A N/A N/A |
–
|
Securities Held
|
||||
As at
|
Subordinate
Voting Shares (#) |
RSUs (#)
|
Total Shares
and RSUs (#) |
Total Market Value (2)
of Share (3) and RSUs (US$) |
August 31, 2017
|
600,000
|
255,238
|
855,238
|
4,019,619
|
(1)
|
Mr. Morin, if elected, will join our Board of Directors on January 10, 2018. Hence, from September 1, 2016 until November 1, 2017, Mr. Morin did not attend any meetings as a board member.
|
(2)
|
The value of unvested RSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2017, which was US$4.70 (CA$5.89). The market value of the Subordinate Voting Shares and Multiple Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ Global Select Market on August 31, 2017 using the daily exchange rate of the Bank of Canada to convert either the NASDAQ Global Select Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting of RSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(3)
|
Refers to Subordinate Voting Shares.
|
CLAUDE SÉGUIN
|
||
|
Westmount, Quebec,
Canada Director since
February 2013 Independent
Principal Occupation:
Special Advisor to the Founder and Executive Chairman,
CGI Group Inc. (1) |
Claude Séguin was appointed a member of EXFO's Board of Directors in February 2013. He brings to EXFO nearly forty (40) years of corporate, financial, executive and provincial government experience gained through senior management positions in major corporations and government departments. Mr. Séguin is currently Special advisor to the Founder and Executive Chairman at CGI Group Inc., a global leader in information technology and business process services. He was, until October 2016, Senior Vice-President, Corporate Development and Strategic Investments. In this position, he was responsible for all merger and acquisition activities. Prior to joining CGI in 2003, he served as President of CDP Capital—Private Equity, and prior to this position, he served as Teleglobe Inc.'s Executive Vice-President, Finance and Chief Financial Officer, a position that he held from 1992 to 2000. Mr. Séguin also has extensive senior-level government experience, having served as Deputy Finance Minister of the Province of Quebec from 1987 to 1992, in addition to Assistant Deputy Finance Minister in prior years. Prior to that, he has been Director of Planning and Assistant Director of Social Programs at the Province of Quebec Treasury Board. Mr. Séguin is a member of the boards of HEC-Montréal and Centraide of Greater Montreal Foundation as well as being Chairman of the Board of Finance – Montreal, an organization regrouping financial institutions in the Province of Quebec. He also serves on the board of directors of Fonds de solidarité FTQ, a trade union sponsored investments fund. Claude Séguin graduated from HEC-Montréal and earned a master's and a Ph.D. in public administration from Syracuse University in New York State. He also followed the Advanced Management Program at Harvard Business School.
|
Board/Committee Membership
|
Attendance (2)
|
Board Memberships of Another Reporting Issuer
|
|
Board of Directors
Audit Committee Human Resources Committee Independent Board of Directors |
10/10
6/6 5/5 5/5 |
100%
100% 100% 100% |
–
|
Securities Held
|
||||
As at
|
Subordinate
Voting Shares (#) |
DSUs (#)
|
Total Shares
and DSUs (#) |
Total Market Value (3)
of Shares (4) and DSUs (US$) |
August 31, 2017
|
–
|
29,855
|
29,855
|
140,318
|
(1)
|
CGI Group Inc. is an information technology consulting, systems integration, outsourcing and solutions company.
|
(2)
|
From September 1, 2016 until November 1, 2017, Mr. Séguin attended six (6) board meetings in person and four (4) board meetings by telephone.
|
(3)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2017, which was US$4.70 (CA$5.89). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ Global Select Market on August 31, 2017 using the daily exchange rate of the Bank of Canada to convert either the NASDAQ Global Select Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(4)
|
Refers to Subordinate Voting Shares.
|
RANDY E. TORNES
|
||
|
Frisco, Texas, USA
Director since
February 2013 Independent
Principal Occupation:
Vice-President Strategic Alliances,
Juniper Networks (1)
|
Randy E. Tornes was appointed a member of EXFO's Board of Directors in February 2013. He brings to EXFO over thirty (30) years of telecommunications experience gained through senior management positions at leading network equipment manufacturers. Mr. Tornes is Vice-President, Strategic Alliances at Juniper Networks, a worldwide leader in high-performance networking and telecommunications equipment. Prior to his current role at Juniper, he was the Operating Area Leader for AT&T and responsible for all sales, service and support of Juniper products and services. Prior to joining Juniper Networks in May 2012, he spent two (2) years at Ericsson, where he was Vice-President Sales (AT&T account). Previous to that position, he worked for Nortel for twenty-six (26) years, holding various sales management positions, including Vice-President Sales, GSM Americas. Mr. Tornes also served as member of the Board of Governors at 3G Americas LLC. Randy E. Tornes holds a Bachelor of Science degree in business—organizational development and production and operations management, from the University of Colorado in Colorado Springs.
|
Board/Committee Membership
|
Attendance (2)
|
Board Memberships of Another Reporting Issuer
|
|
Board of Directors
Audit Committee Human Resources Committee Independent Board of Directors |
10/10
6/6 5/5 5/5 |
100%
100% 100% 100% |
–
|
Securities Held
|
||||
As at
|
Subordinate
Voting Shares (#) |
DSUs (#)
|
Total Shares
and DSUs (#) |
Total Market Value (3)
of Shares (4) and DSUs (US$) |
August 31, 2017
|
–
|
62,603
|
62,603
|
294,234
|
(1)
|
Juniper Networks is a manufacturer of networking equipment.
|
(2)
|
From September 1, 2016 until November 1, 2017, Mr. Tornes attended six (6) board meetings in person and four (4) board meetings by telephone.
|
(3)
|
The value of unvested DSUs at the financial year-end is the market value of the Subordinate Voting Shares on August 31, 2017, which was US$4.70 (CA$5.89). The market value of the Subordinate Voting Shares was calculated by using the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and on the NASDAQ Global Select Market on August 31, 2017 using the daily exchange rate of the Bank of Canada to convert either the NASDAQ Global Select Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars as required. The actual gains on vesting of DSUs will depend on the value of the Subordinate Voting Shares on the date of vesting. There can be no assurance that these values will be realized.
|
(4)
|
Refers to Subordinate Voting Shares.
|
a)
|
is, as at the date hereof, or has been, within ten (10) years before the date hereof, a director, chief executive officer or chief financial officer of any company that (i) was subject to an order that was issued while such individual was acting in the capacity as director, chief executive officer or chief financial officer, or (ii) was subject to an order that was issued after such individual ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer;
|
b)
|
is, as at the date hereof, or has been within ten (10) years before the date hereof, a director or executive officer of any company that, while such individual was acting in that capacity, or within a year of that individual ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets;
|
c)
|
has, within the ten (10) years before the date hereof, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold his assets; or
|
d)
|
has been subject to (i) any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or (ii) any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable security holder in deciding whether to vote for such individual.
|
Name
|
Subordinate Voting
Shares Owned |
Currently Exercisable Options
Owned as at November 1, 2017 |
Total Subordinate
Voting Shares Beneficially Owned (1) |
Multiple Voting Shares
Beneficially Owned (1) |
Total
Percentage of Voting Power
|
||||||||
"In-the-money"
|
Out-of-the-money
|
||||||||||||
Number
|
Percent
|
Number
|
Percent
|
Number
|
Percent
|
Number
|
Percent
|
Number
|
Percent
|
Percent
|
|||
Germain Lamonde
|
3,769,508
|
(2)
|
16.23
|
–
|
*
|
–
|
*
|
3,769,508
|
16.23
|
31,643,000
|
(3)
|
100
|
94.27
|
Philippe Morin
|
600,000
|
2.58
|
–
|
*
|
–
|
*
|
600,000
|
2.58
|
–
|
–
|
*
|
||
Pierre Plamondon
|
136,772
|
(4)
|
*
|
–
|
*
|
–
|
*
|
136,772
|
*
|
–
|
–
|
*
|
|
Pierre-Paul Allard
|
8,000
|
*
|
–
|
*
|
–
|
*
|
8,000
|
*
|
–
|
–
|
*
|
||
François Côté
|
6,500
|
*
|
–
|
*
|
–
|
*
|
6,500
|
*
|
–
|
–
|
*
|
||
Angela Logothetis
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
–
|
*
|
||
Claude Séguin
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
–
|
*
|
||
Randy E. Tornes
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
–
|
*
|
||
Willem Jan te Niet
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
*
|
–
|
–
|
*
|
||
Dana Yearian
|
34,181
|
*
|
–
|
*
|
–
|
*
|
34,181
|
*
|
–
|
–
|
*
|
||
Other executive officers
as a group
|
75,161
|
*
|
–
|
*
|
–
|
*
|
75,161
|
*
|
–
|
–
|
*
|
||
All of our Directors and
executive officers
as a group
|
4,630,122
|
19.94
|
–
|
*
|
–
|
*
|
4,630,122
|
19.94
|
31,643,000
|
100
|
94.53
|
* |
Less than 1%.
|
(1) |
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Options that are currently exercisable or exercisable within sixty (60) days as at November 1, 2017 (including options that have an exercise price above the market price) are deemed to be outstanding and to be beneficially owned by the person holding such options for the purpose of computing the percentage ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Accordingly, DSUs and RSUs are not included.
|
(2) |
The number of shares held by Germain Lamonde includes 3,000,000 subordinate voting shares held of record by 9356-9036 Québec Inc., 400,000 subordinate voting shares held of record by 9356-9010 Québec Inc., 316,247 subordinate voting shares held of record by 9356-8988 Québec Inc.
|
(3) |
The number of shares held by Germain Lamonde includes 24,743,000 multiple voting shares held of record by G. Lamonde Investissements Financiers Inc., 5,000,000 multiple voting shares held of record by 9356-9036 Québec Inc. and 1,900,000 multiple voting shares held of record by Fiducie Germain Lamonde.
|
(4) |
The number of shares held by Pierre Plamondon includes 6,874 subordinate voting shares held of record by Fiducie Pierre Plamondon.
|
Name
|
DSUs
|
RSUs
|
|||||||||||
Number
|
Percentage
|
Estimated Average
Value at the time of
grant US$/DSU (1)
|
Number
|
Percentage
|
Fair Value at the
time of grant
US$/RSU (2)
|
||||||||
Germain Lamonde
|
–
|
–
|
–
|
–
|
–
|
–
|
|||||||
Philippe Morin
|
–
|
–
|
–
|
109,890
|
(3)
|
6.56
|
%
|
3.43
|
|||||
–
|
–
|
–
|
54,945
|
(4)
|
3.28
|
%
|
3.43
|
||||||
–
|
–
|
–
|
47,529
|
(5)
|
2.84
|
%
|
4.01
|
||||||
–
|
–
|
–
|
38,110
|
(6)
|
2.27
|
%
|
4.89
|
||||||
–
|
–
|
–
|
4,764
|
(7)
|
0.28
|
%
|
4.89
|
||||||
–
|
–
|
–
|
51,353
|
(8)
|
3.07
|
%
|
4.00
|
||||||
Pierre Plamondon
|
–
|
–
|
–
|
19,541
|
(9)
|
1.17
|
%
|
5.28
|
|||||
–
|
–
|
–
|
27,174
|
(10)
|
1.62
|
%
|
3.71
|
||||||
–
|
–
|
–
|
29,046
|
(11)
|
1.73
|
%
|
3.23
|
||||||
–
|
–
|
–
|
25,162
|
(5)
|
1.50
|
%
|
4.01
|
||||||
–
|
–
|
–
|
27,266
|
(8)
|
1.63
|
%
|
4.00
|
||||||
Pierre-Paul Allard
|
55,452
|
(12)
|
31.82
|
%
|
4.34
|
–
|
–
|
–
|
|||||
François Côté
|
17,730
|
(12)
|
10.17
|
%
|
3.79
|
–
|
–
|
–
|
|||||
Angela Logothetis
|
8,639
|
(12)
|
4.96
|
%
|
4.48
|
–
|
–
|
–
|
|||||
Claude Séguin
|
29,855
|
(12)
|
17.13
|
%
|
4.02
|
–
|
–
|
–
|
|||||
Randy E. Tornes
|
62,603
|
(12)
|
35.92
|
%
|
3.92
|
–
|
–
|
–
|
|||||
Willem Jan te Niet
|
–
|
–
|
–
|
10,000
|
(13)
|
0.60
|
%
|
3.33
|
|||||
–
|
–
|
–
|
16,681
|
(5)
|
1.00
|
%
|
4.01
|
||||||
–
|
–
|
–
|
20,153
|
(8)
|
1.20
|
%
|
4.00
|
||||||
Dana Yearian
|
–
|
–
|
–
|
17,411
|
(9)
|
1.04
|
%
|
5.28
|
|||||
–
|
–
|
–
|
25,192
|
(10)
|
1.50
|
%
|
3.71
|
||||||
–
|
–
|
–
|
30,058
|
(11)
|
1.79
|
%
|
3.23
|
||||||
–
|
–
|
–
|
24,744
|
(5)
|
1.48
|
%
|
4.01
|
||||||
–
|
–
|
–
|
25,302
|
(8)
|
1.51
|
%
|
4.00
|
||||||
Other executive officers as a group
|
–
|
–
|
–
|
77,521
|
(5)
|
4.63
|
%
|
4.01
|
|||||
–
|
–
|
–
|
87,081
|
(8)
|
5.20
|
%
|
4.00
|
||||||
–
|
–
|
–
|
41,842
|
(9)
|
2.50
|
%
|
5.28
|
||||||
–
|
–
|
–
|
57,510
|
(10)
|
3.43
|
%
|
3.71
|
||||||
–
|
–
|
–
|
74,247
|
(11)
|
4.43
|
%
|
3.23
|
||||||
–
|
–
|
–
|
1,925
|
(14)
|
0.11
|
%
|
4.36
|
||||||
–
|
–
|
–
|
5,000
|
(15)
|
0.30
|
%
|
3.55
|
||||||
–
|
–
|
–
|
1,946
|
(16)
|
0.12
|
%
|
3.27
|
||||||
–
|
–
|
–
|
2,500
|
(17)
|
0.15
|
%
|
3.00
|
||||||
–
|
–
|
–
|
4,000
|
(18)
|
0.24
|
%
|
4.01
|
||||||
–
|
–
|
–
|
2,500
|
(19)
|
0.15
|
%
|
5.10
|
||||||
Total
|
174,279
|
100
|
%
|
4.09
|
960,393
|
57.32
|
%
|
3.90
|
Name | DSUs | RSUs | |||||||||||
Number | Percentage |
Estimated Average
Value at the time of
grant US$/DSU (1)
|
Number | Percentage |
Fair Value at the
time of grant
US$/RSU (2)
|
||||||||
All of the directors and executive
officers as a group
|
–
|
–
|
–
|
109,890
|
(3)
|
6.56
|
%
|
3.43
|
|||||
–
|
–
|
–
|
54,945
|
(4)
|
3.28
|
%
|
3.43
|
||||||
–
|
–
|
–
|
191,637
|
(5)
|
11.44
|
%
|
4.01
|
||||||
–
|
–
|
–
|
38,110
|
(6)
|
2.27
|
%
|
4.89
|
||||||
–
|
–
|
–
|
4,764
|
(7)
|
0.28
|
%
|
4.89
|
||||||
–
|
–
|
–
|
211,155
|
(8)
|
12.60
|
%
|
4.00
|
||||||
–
|
–
|
–
|
78,794
|
(9)
|
4.70
|
%
|
5.28
|
||||||
–
|
–
|
–
|
109,876
|
(10)
|
6.56
|
%
|
3.71
|
||||||
–
|
–
|
–
|
133,351
|
(11)
|
7.96
|
%
|
3.23
|
||||||
–
|
–
|
–
|
10,000
|
(13)
|
0.60
|
%
|
3.33
|
||||||
–
|
–
|
–
|
1,925
|
(14)
|
0.11
|
%
|
4.36
|
||||||
–
|
–
|
–
|
5,000
|
(15)
|
0.30
|
%
|
3.55
|
||||||
–
|
–
|
–
|
1,946
|
(16)
|
0.12
|
%
|
3.27
|
||||||
–
|
–
|
–
|
2,500
|
(17)
|
0.15
|
%
|
3.00
|
||||||
–
|
–
|
–
|
4,000
|
(18)
|
0.24
|
%
|
4.01
|
||||||
–
|
–
|
–
|
2,500
|
(19)
|
0.15
|
%
|
5.10
|
||||||
Total
|
174,279
|
100
|
%
|
4.09
|
960,393
|
57.32
|
%
|
3.90
|
(1)
|
The estimated average value at the time of grant of a DSU is the average of the estimated value at the time of grant of a DSU which is determined based on the highest of the closing prices of the Subordinate Voting Shares on the Toronto Stock Exchange and the NASDAQ Global Select Market on the last trading day preceding the grant date, using the daily exchange rate of the Bank of Canada on the last trading day preceding the grant date to convert either the NASDAQ Global Select Market closing price to Canadian dollars or the Toronto Stock Exchange closing price to United States dollars, as required. The value at vesting of a DSU is equivalent to the market value of a Subordinate Voting Share when a DSU is converted to such Subordinate Voting Share.
|
(2)
|
The fair value at the time of grant of a RSU is equal to the market value of Subordinate Voting Shares at the time RSUs are granted.
|
(3)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in November 2015.
|
(4)
|
Those RSUs will vest on the fifth anniversary date of the grant in November 2015 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(5)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2016 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(6)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in April 2017.
|
(7)
|
Those RSUs will vest on the fifth anniversary date of the grant in April 2017 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(8)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2017 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(9)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2013 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(10)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2014 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(11)
|
Those RSUs will vest on the fifth anniversary date of the grant in October 2015 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(12)
|
Those DSUs will vest at the time Director ceases to be a member of the Board of the Corporation.
|
(13)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in August 2016.
|
(14)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2014.
|
(15)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2015.
|
(16)
|
Those RSUs will vest on the fifth anniversary date of the grant in July 2015 but are subject to early vesting on the third and fourth anniversary date of the grant on the attainment of performance objectives as determined by the Board of Directors. Accordingly, subject to the attainment of performance objectives, the first early vesting is up to 1/3 of the units on the third anniversary date of the grant and the second early vesting is up to 50% of the remaining units on the fourth anniversary date of the grant.
|
(17)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2016.
|
(18)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in October 2016.
|
(19)
|
Those RSUs will vest at a rate of 1/2 annually commencing on the third anniversary date of the grant in January 2017.
|
Multiple Voting Shares
Beneficially Owned (1)
|
Subordinate Voting Shares
Beneficially Owned (1)
|
Total Percentage
of Voting Power
|
||||||||||||||||||
Name
|
Number
|
Percent
|
Number
|
Percent
|
Percent
|
|||||||||||||||
Germain Lamonde (2)
|
31,643,000
|
100.00
|
%
|
3,769,508
|
16.23
|
%
|
94.27
|
%
|
||||||||||||
9356-8988 Quebec Inc. (3)
|
–
|
–
|
316,247
|
1.36
|
%
|
*
|
||||||||||||||
9356-9010 Quebec Inc. (3)
|
–
|
–
|
400,000
|
1.72
|
%
|
*
|
||||||||||||||
9356-9036 Quebec Inc. (3)
|
5,000,000
|
15.80
|
%
|
3,000,000
|
12.92
|
%
|
15.60
|
%
|
||||||||||||
Fiducie Germain Lamonde (4)
|
1,900,000
|
6.00
|
%
|
–
|
–
|
5.59
|
%
|
|||||||||||||
G. Lamonde Investissements Financiers Inc. (3)
|
24,743,000
|
78.19
|
%
|
–
|
–
|
72.85
|
%
|
|||||||||||||
EdgePoint Investment Group, Inc.
|
–
|
–
|
3,011,136
|
12.97
|
%
|
*
|
||||||||||||||
Soros Fund Management
|
–
|
–
|
2,306,000
|
9.93
|
%
|
*
|
||||||||||||||
Renaissance Technologies
|
–
|
–
|
1,543,200
|
6.64
|
%
|
*
|
* |
Less than 1%
|
(1)
|
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Options that are currently exercisable within 60 days of November 1, 2017 (including options that have an exercise price above the market price) are deemed to be outstanding and to be beneficially owned by the person holding such options for the purpose of computing the percentage ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
|
(2)
|
The number of shares held by Germain Lamonde includes 5,000,000 multiple voting shares held of record by 9356-9036 Quebec Inc., 1,900,000 multiple voting shares held of record by Fiducie Germain Lamonde and 24,743,000 multiple voting shares held of record by G. Lamonde Investissements Financiers Inc.
|
(3)
|
9356-8988 Quebec Inc., 9356-9010 Quebec Inc., 9356-9036 Quebec Inc. and G. Lamonde Investissements Financiers Inc. are companies controlled by Mr. Lamonde.
|
(4)
|
Fiducie Germain Lamonde is a family trust for the benefit of Mr. Lamonde and members of his family.
|
Years ended August 31,
|
||||||||||||||||||||||||
2017
|
2016
|
2015
|
||||||||||||||||||||||
Export Sales
|
$
|
220,715
|
91
|
%
|
$
|
214,566
|
92
|
%
|
$
|
202,367
|
91
|
%
|
||||||||||||
Domestic Sales
|
22,586
|
9
|
18,027
|
8
|
19,722
|
9
|
||||||||||||||||||
$
|
243,301
|
100
|
%
|
$
|
232,583
|
100
|
%
|
$
|
222,089
|
100
|
%
|
NASDAQ (US$)
|
TSX (CA$)
|
||||
High
|
Low
|
High
|
Low
|
||
September 1, 2012 to August 31, 2013
|
5.90
|
4.00
|
5.86
|
4.14
|
|
September 1, 2013 to August 31, 2014
|
5.70
|
4.13
|
5.88
|
4.51
|
|
September 1, 2014 to August 31, 2015
|
4.40
|
2.45
|
4.92
|
3.32
|
|
September 1, 2015 to August 31, 2016
|
4.32
|
2.57
|
5.44
|
3.61
|
|
September 1, 2016 to August 31, 2017
|
6.05
|
3.42
|
7.99
|
4.41
|
|
September 1, 2015 to November 30, 2015 (2016 1st Quarter)
|
3.43
|
2.77
|
4.55
|
3.61
|
|
December 1, 2015 to February 29, 2016 (2016 2nd Quarter)
|
3.42
|
2.57
|
4.51
|
3.70
|
|
March 1, 2016 to May 31, 2016 (2016 3rd Quarter)
|
4.32
|
2.85
|
5.44
|
3.85
|
|
June 1, 2016 to August 31, 2016 (2016 4th Quarter)
|
4.08
|
3.16
|
5.25
|
4.12
|
|
September 1, 2016 to November 30, 2016 (2017 1st Quarter)
|
4.45
|
3.42
|
6.00
|
4.41
|
|
December 1, 2016 to February 28, 2017 (2017 2nd Quarter)
|
5.90
|
4.10
|
7.66
|
5.51
|
|
March 1, 2017 to May 31, 2017 (2017 3rd Quarter)
|
6.05
|
4.55
|
7.99
|
6.08
|
|
June 1, 2017 to August 31, 2017 (2017 4th Quarter)
|
5.30
|
3.83
|
7.15
|
4.84
|
|
May 2017
|
4.93
|
4.60
|
6.65
|
6.25
|
|
June 2017
|
5.30
|
4.70
|
7.15
|
6.05
|
|
July 2017
|
4.50
|
4.10
|
5.77
|
5.13
|
|
August 2017
|
4.70
|
3.83
|
5.80
|
4.84
|
|
September 2017
|
4.35
|
3.75
|
5.32
|
4.79
|
|
October 2017
|
4.15
|
3.85
|
5.16
|
4.94
|
|
November 2017 (until November 13)
|
4.30
|
3.85
|
5.45
|
5.00
|
(a)
|
an individual citizen or resident of the United States;
|
(b)
|
a corporation created or organized under the laws of the United States or any state thereof and the District of Columbia;
|
(c)
|
an estate the income of which is subject to United States federal income taxation regardless of its source;
|
(d)
|
a trust if (1) a court within the United States is able to exercise primary supervision over its administration and one or more U.S. persons as described in Section 7701 (a) (30) of the Code have authority to control all substantial decisions of the trust or (2) the trust has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person; or
|
(e)
|
any other person whose worldwide income or gain is otherwise subject to U.S. federal income taxation on a net income basis.
|
·
|
the Code;
|
·
|
U.S. judicial decisions;
|
·
|
administrative pronouncements;
|
·
|
existing and proposed Treasury regulations; and
|
·
|
the Canada – U.S. Income Tax Treaty.
|
·
|
the holder's holding period for the subordinate voting shares, with a preferential rate available for subordinate voting shares held for more than one year; and
|
·
|
the holder's marginal tax rate for ordinary income.
|
·
|
such gain is effectively connected with the conduct by such Non-U.S. Holder of a trade or business in the United States; or
|
·
|
in the case of any gain realized by an individual Non-U.S. Holder, such Non-U.S. Holder is present in the United States for 183 days or more in the taxable year of such sale and certain other conditions are met.
|
·
|
at least 75% of our gross income for the taxable year is passive income; or
|
·
|
at least 50% of the average value of our assets is attributable to assets that produce or are held for the production of passive income.
|
·
|
dividends;
|
·
|
interest;
|
·
|
rents or royalties, other than certain rents or royalties derived from the active conduct of trade or business;
|
·
|
annuities; and
|
·
|
gains from assets that produce passive income.
|
·
|
any gain realized on the sale or other disposition of subordinate voting shares; and
|
·
|
any "excess distribution" by us to the U.S. Holder.
|
·
|
the gain or excess distribution would be allocated ratably over the U.S. Holder's holding period for the subordinate voting shares;
|
·
|
the amount allocated to the taxable year in which the gain or excess distribution was realized and to taxable years prior to the first year in which we were classified as a PFIC would be taxable as ordinary income; and
|
·
|
the amount allocated to each other prior year would be subject to tax as ordinary income at the highest tax rate in effect for that year, and the interest charge generally applicable to underpayments of tax would be imposed in respect of the tax attributable to each such year.
|
·
|
is resident in the United States and not resident in Canada;
|
·
|
holds the subordinate voting shares as capital property;
|
·
|
does not have a "permanent establishment" or "fixed base" in Canada, as defined in the Convention; and
|
·
|
deals at arm's length with us. Special rules, which are not discussed below, may apply to "financial institutions", as defined in the ITA, and to non-resident insurers carrying on an insurance business in Canada and elsewhere.
|
Years ending August 31,
|
||||||||
2018
|
2019
|
|||||||
Forward exchange contracts to sell US dollars in exchange for Canadian dollars
|
||||||||
Contractual amounts
|
$
|
18,300
|
$
|
10,900
|
||||
Weighted average contractual forward rates
|
1.3407
|
1.3426
|
Years ending August 31,
|
||||||||
2018
|
2019
|
|||||||
Forward exchange contracts to sell US dollars in exchange for Indian rupees
|
||||||||
Contractual amounts
|
$
|
3,400
|
$
|
1,600
|
||||
Weighted average contractual forward rates
|
69.49
|
67.26
|
Carrying/nominal
amount
(in thousands
of US dollars)
|
Carrying/nominal
amount
(in thousands
of euros)
|
|||||||
Financial assets
|
||||||||
Cash
|
$
|
20,120
|
€
|
6,235
|
||||
Accounts receivable
|
28,420
|
6,164
|
||||||
48,540
|
12,399
|
|||||||
Financial liabilities
|
||||||||
Accounts payable and accrued liabilities
|
12,447
|
2,725
|
||||||
Forward exchange contracts (nominal amount)
|
3,600
|
‒
|
||||||
16,047
|
2,725
|
|||||||
Net exposure
|
$
|
32,493
|
€
|
9,674
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the US dollar would decrease (increase) net earnings by $2.7 million, or $0.05 per diluted share, as at August 31, 2017.
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the euro would decrease (increase) net earnings by $1.0 million or $0.02 per diluted share, as at August 31, 2017.
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the US dollar would increase (decrease) other comprehensive income by $2.7 million as at August 31, 2017.
|
Current
|
$
|
35,100
|
||
Past due, 0 to 30 days
|
3,049
|
|||
Past due, 31 to 60 days
|
1,289
|
|||
Past due, more than 60 days, less allowance for doubtful accounts of $2,960
|
1,692
|
|||
Total trade accounts receivable
|
$
|
41,130
|
Balance – Beginning of year
|
$
|
3,752
|
||
Addition charged to earnings
|
654
|
|||
Write-off of uncollectible accounts
|
(1,446
|
)
|
||
Balance – End of year
|
$
|
2,960
|
0-12
months
|
13-24
months
|
|||||||
Accounts payable and accrued liabilities
|
$
|
36,776
|
$
|
–
|
||||
Contingent liability
|
1,092
|
–
|
||||||
Forward exchange contracts
|
||||||||
Outflow (nominal amount)
|
21,700
|
12,500
|
||||||
Inflow
|
(23,265
|
)
|
(13,357
|
)
|
||||
Total
|
$
|
36,303
|
$
|
(857
|
)
|
(a)
|
Disclosure Controls and Procedures
|
(b)
|
Management's Annual Report on Internal Control over Financial Reporting
|
(c)
|
Attestation Report of the Independent Auditor
|
(d)
|
Changes in Internal Control over Financial Reporting
|
·
|
Code of Ethics for our Principal Executive Officer and Senior Financial Officers;
|
·
|
Board of Directors Corporate Governance Guidelines;
|
·
|
Ethics and Business Conduct Policy;
|
·
|
Statement of Reporting Ethical Violations (Whistleblower).
|
Number
|
Exhibit
|
1.1
|
|
1.2
|
|
1.3
|
|
1.4
|
|
1.5
|
|
2.1
|
|
2.2
|
|
3.1
|
|
4.1
|
|
4.2
|
|
4.3
|
|
4.4
|
|
4.5
|
|
4.6
|
|
Number
|
Exhibit
|
4.7
|
|
4.8
|
|
4.9
|
|
4.10
|
|
4.11
|
|
4.12
|
|
4.13
|
|
4.14
|
|
4.15
|
|
4.16
|
|
4.17
|
|
4.18
|
|
4.19
|
|
4.20
|
|
Number
|
Exhibit
|
4.21
|
|
4.22
|
|
4.23
|
|
4.24
|
|
4.25
|
|
4.26
|
|
4.27
|
|
4.28
|
|
4.29
|
|
4.30
|
|
4.31
|
|
4.32
|
|
4.33
|
|
4.34
|
|
4.35
|
|
4.36
|
|
Number
|
Exhibit
|
4.37
|
|
4.38
|
|
4.39
|
|
4.40
|
|
4.41
|
|
4.42
|
|
4.43
|
|
4.44
|
|
4.45
|
|
4.46
|
|
4.47
|
|
4.48
|
|
4.49
|
|
4.50
|
|
4.51
|
|
Number
|
Exhibit
|
4.52
|
|
4.53
|
|
4.54
|
|
4.55
|
|
4.56
|
|
4.57
|
Long-Term Incentive Plan, dated May 25, 2000, amended in October 2004 and on January 12, 2005 and effective January 10, 2018 (incorporated by reference to Exhibit 4.57 of EXFO's Annual Report on Form 20-F dated November 24, 2017, File No. 000-30895).
|
4.58
|
Deferred Share Unit Plan, effective January 12, 2005, amended in January 2018 and effective January 10, 2018 (incorporated by reference to Exhibit 4.58 of EXFO's Annual Report on Form 20-F dated November 24, 2017, File No. 000-30895).
|
8.1
|
Subsidiaries of EXFO (list included in Item 4C of this Annual Report).
|
11.1
|
|
11.2
|
|
11.3
|
|
11.4
|
|
11.5
|
Audit Committee Charter (incorporated by reference to Exhibit 11.5 of EXFO's Annual Report on Form 20-F dated November 24, 2017, File No. 000-30895).
|
11.6
|
|
11.7
|
Corporate Governance Practices (incorporated by reference to Exhibit 11.7 of EXFO's Annual Report on Form 20-F dated November 24, 2017, File No. 000-30895).
|
11.8
|
|
11.9
|
|
11.10
|
|
11.11
|
|
11.12
|
|
Number
|
Exhibit
|
11.13
|
Board of Directors Corporate Governance Guidelines dated February 28, 2010 and amended on June 29, 2017 (incorporated by reference to Exhibit 11.13 of EXFO's Annual Report on Form 20-F dated November 24, 2017, File No. 000-30895).
|
11.14
|
Director Share Ownership Policy dated September 25, 2013 and amended on June 29, 2017 (incorporated by reference to Exhibit 11.14 of EXFO's Annual Report on Form 20-F dated November 24, 2017, File No. 000-30895).
|
11.15
|
Human Resources Committee Charter dated February 28, 2010 and amended on October 9, 2012, on October 8, 2014 and on October 12, 2017 (incorporated by reference to Exhibit 11.15 of EXFO's Annual Report on Form 20-F dated November 24, 2017, File No. 000-30895).
|
12.1
|
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
12.2
|
Certification of the Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
13.1
|
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
13.2
|
Certification of the Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
As at August 31,
|
||||||||
2017
|
2016
|
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash
|
$
|
38,435
|
$
|
43,208
|
||||
Short-term investments (note 6)
|
775
|
4,087
|
||||||
Accounts receivable (note 6)
|
||||||||
Trade
|
41,130
|
42,993
|
||||||
Other
|
3,907
|
2,474
|
||||||
Income taxes and tax credits recoverable (note 19)
|
4,955
|
4,208
|
||||||
Inventories (note 7)
|
33,832
|
33,004
|
||||||
Prepaid expenses
|
4,202
|
3,099
|
||||||
127,236
|
133,073
|
|||||||
Tax credits recoverable (note 19)
|
38,111
|
34,594
|
||||||
Property, plant and equipment (notes 8 and 21)
|
40,132
|
35,978
|
||||||
Intangible assets (notes 9 and 21)
|
11,183
|
3,391
|
||||||
Goodwill (notes 9 and 21)
|
35,077
|
21,928
|
||||||
Deferred income tax assets (note 19)
|
6,555
|
8,240
|
||||||
Other assets
|
947
|
589
|
||||||
$
|
259,241
|
$
|
237,793
|
|||||
Liabilities
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued liabilities (note 11)
|
$
|
36,776
|
$
|
37,174
|
||||
Provisions (note 11)
|
3,889
|
299
|
||||||
Income taxes payable
|
663
|
971
|
||||||
Deferred revenue
|
11,554
|
9,486
|
||||||
52,882
|
47,930
|
|||||||
Deferred revenue
|
6,257
|
5,530
|
||||||
Deferred income tax liabilities (note 19)
|
3,116
|
2,857
|
||||||
Other liabilities
|
196
|
75
|
||||||
62,451
|
56,392
|
|||||||
Commitments (notes 12 and 22)
|
||||||||
Shareholders' equity
|
||||||||
Share capital (note 13)
|
90,411
|
85,516
|
||||||
Contributed surplus
|
18,184
|
18,150
|
||||||
Retained earnings
|
127,160
|
126,309
|
||||||
Accumulated other comprehensive loss (note 14)
|
(38,965
|
)
|
(48,574
|
)
|
||||
196,790
|
181,401
|
|||||||
$
|
259,241
|
$
|
237,793
|
On behalf of the Board
/s/ Philippe Morin
PHILIPPE MORIN
Chief Executive Officer
|
/s/ Claude Séguin
CLAUDE SÉGUIN
Chairman, Audit Committee
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Sales (note 21)
|
$
|
243,301
|
$
|
232,583
|
$
|
222,089
|
||||||
Cost of sales (1) (note 17)
|
94,329
|
87,066
|
85,039
|
|||||||||
Selling and administrative (2) (note 17)
|
86,256
|
82,169
|
82,200
|
|||||||||
Net research and development (note 17)
|
47,168
|
42,687
|
44,003
|
|||||||||
Depreciation of property, plant and equipment (note 17)
|
3,902
|
3,814
|
4,835
|
|||||||||
Amortization of intangible assets (note 17)
|
3,289
|
1,172
|
2,883
|
|||||||||
Change in fair value of cash contingent consideration (note 3)
|
(383
|
)
|
–
|
–
|
||||||||
Interest and other (income) expense
|
303
|
(828
|
)
|
(155
|
)
|
|||||||
Foreign exchange (gain) loss
|
978
|
(161
|
)
|
(7,212
|
)
|
|||||||
Unusual charge
|
–
|
–
|
603
|
|||||||||
Earnings before income taxes
|
7,459
|
16,664
|
9,893
|
|||||||||
Income taxes (note 19)
|
6,608
|
7,764
|
5,036
|
|||||||||
Net earnings for the year
|
$
|
851
|
$
|
8,900
|
$
|
4,857
|
||||||
Basic net earnings per share
|
$
|
0.02
|
$
|
0.17
|
$
|
0.09
|
||||||
Diluted net earnings per share
|
$
|
0.02
|
$
|
0.16
|
$
|
0.08
|
||||||
Basic weighted average number of shares outstanding (000's)
|
54,423
|
53,863
|
56,804
|
|||||||||
Diluted weighted average number of shares outstanding (000's) (note 20)
|
55,555
|
54,669
|
57,457
|
(1)
|
The cost of sales is exclusive of depreciation and amortization, shown separately.
|
(2)
|
Selling and administrative is exclusive of a one-time charge relating to an unusual bad debt expense in fiscal 2015.
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Net earnings for the year
|
$
|
851
|
$
|
8,900
|
$
|
4,857
|
||||||
Other comprehensive income (loss), net of income taxes
|
||||||||||||
Items that will not be reclassified subsequently to net earnings
|
||||||||||||
Foreign currency translation adjustment
|
8,262
|
707
|
(39,175
|
)
|
||||||||
Items that may be reclassified subsequently to net earnings
|
||||||||||||
Unrealized gains/losses on forward exchange contracts
|
1,403
|
862
|
(5,583
|
)
|
||||||||
Reclassification of realized gains/losses on forward exchange contracts in net earnings
|
423
|
2,797
|
2,107
|
|||||||||
Deferred income tax effect of gains/losses on forward exchange contracts
|
(479
|
)
|
(935
|
)
|
905
|
|||||||
Other comprehensive income (loss)
|
9,609
|
3,431
|
(41,746
|
)
|
||||||||
Comprehensive income (loss) for the year
|
$
|
10,460
|
$
|
12,331
|
$
|
(36,889
|
)
|
Year ended August 31, 2015
|
||||||||||||||||||||
Share
capital |
Contributed
surplus |
Retained
earnings |
Accumulated
other comprehensive loss |
Total
shareholders' equity |
||||||||||||||||
Balance as at September 1, 2014
|
$
|
111,491
|
$
|
16,503
|
$
|
112,552
|
$
|
(10,259
|
)
|
$
|
230,287
|
|||||||||
Redemption of share capital (note 13)
|
(26,827
|
)
|
1,333
|
–
|
–
|
(25,494
|
)
|
|||||||||||||
Reclassification of stock-based compensation costs (note 13)
|
1,381
|
(1,381
|
)
|
–
|
–
|
–
|
||||||||||||||
Stock-based compensation costs
|
–
|
1,323
|
–
|
–
|
1,323
|
|||||||||||||||
Net earnings for the year
|
–
|
–
|
4,857
|
–
|
4,857
|
|||||||||||||||
Other comprehensive loss
|
||||||||||||||||||||
Foreign currency translation adjustment
|
–
|
–
|
–
|
(39,175
|
)
|
(39,175
|
)
|
|||||||||||||
Changes in unrealized losses on forward exchange contracts, net of deferred income taxes of $905
|
–
|
–
|
–
|
(2,571
|
)
|
(2,571
|
)
|
|||||||||||||
Total comprehensive loss for the year
|
(36,889
|
)
|
||||||||||||||||||
Balance as at August 31, 2015
|
$
|
86,045
|
$
|
17,778
|
$
|
117,409
|
$
|
(52,005
|
)
|
$
|
169,227
|
Year ended August 31, 2016
|
||||||||||||||||||||
Share
capital |
Contributed
surplus |
Retained
earnings |
Accumulated
other comprehensive loss |
Total
shareholders' equity |
||||||||||||||||
Balance as at September 1, 2015
|
$
|
86,045
|
$
|
17,778
|
$
|
117,409
|
$
|
(52,005
|
)
|
$
|
169,227
|
|||||||||
Redemption of share capital (note 13)
|
(1,768
|
)
|
217
|
–
|
–
|
(1,551
|
)
|
|||||||||||||
Reclassification of stock-based compensation costs (note 13)
|
1,239
|
(1,239
|
)
|
–
|
–
|
–
|
||||||||||||||
Stock-based compensation costs
|
–
|
1,394
|
–
|
–
|
1,394
|
|||||||||||||||
Net earnings for the year
|
–
|
–
|
8,900
|
–
|
8,900
|
|||||||||||||||
Other comprehensive income
|
||||||||||||||||||||
Foreign currency translation adjustment
|
–
|
–
|
–
|
707
|
707
|
|||||||||||||||
Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes of $935
|
–
|
–
|
–
|
2,724
|
2,724
|
|||||||||||||||
Total comprehensive income for the year
|
12,331
|
|||||||||||||||||||
Balance as at August 31, 2016
|
$
|
85,516
|
$
|
18,150
|
$
|
126,309
|
$
|
(48,574
|
)
|
$
|
181,401
|
Year ended August 31, 2017
|
||||||||||||||||||||
Share
capital |
Contributed
surplus |
Retained
earnings |
Accumulated
other comprehensive loss |
Total
shareholders' equity |
||||||||||||||||
Balance as at September 1, 2016
|
$
|
85,516
|
$
|
18,150
|
$
|
126,309
|
$
|
(48,574
|
)
|
$
|
181,401
|
|||||||||
Issuance of share capital (note 13)
|
3,490
|
–
|
–
|
–
|
3,490
|
|||||||||||||||
Reclassification of stock-based compensation costs (note 13)
|
1,405
|
(1,405
|
)
|
–
|
–
|
–
|
||||||||||||||
Stock-based compensation costs
|
–
|
1,439
|
–
|
–
|
1,439
|
|||||||||||||||
Net earnings for the year
|
–
|
–
|
851
|
–
|
851
|
|||||||||||||||
Other comprehensive income
|
||||||||||||||||||||
Foreign currency translation adjustment
|
–
|
–
|
–
|
8,262
|
8,262
|
|||||||||||||||
Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes of $479
|
–
|
–
|
–
|
1,347
|
1,347
|
|||||||||||||||
Total comprehensive income for the year
|
10,460
|
|||||||||||||||||||
Balance as at August 31, 2017
|
$
|
90,411
|
$
|
18,184
|
$
|
127,160
|
$
|
(38,965
|
)
|
$
|
196,790
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Cash flows from operating activities
|
||||||||||||
Net earnings for the year
|
$
|
851
|
$
|
8,900
|
$
|
4,857
|
||||||
Add (deduct) items not affecting cash
|
||||||||||||
Stock-based compensation costs
|
1,477
|
1,378
|
1,295
|
|||||||||
Depreciation and amortization
|
7,191
|
4,986
|
7,718
|
|||||||||
Change in fair value of cash contingent consideration
|
(383
|
)
|
–
|
–
|
||||||||
Unusual charge
|
–
|
–
|
603
|
|||||||||
Deferred revenue
|
1,723
|
4,238
|
396
|
|||||||||
Deferred income taxes
|
1,054
|
1,578
|
403
|
|||||||||
Changes in foreign exchange gain/loss
|
1,096
|
(332
|
)
|
(3,842
|
)
|
|||||||
13,009
|
20,748
|
11,430
|
||||||||||
Changes in non-cash operating items
|
||||||||||||
Accounts receivable
|
3,955
|
2,682
|
(10,828
|
)
|
||||||||
Income taxes and tax credits
|
(2,386
|
)
|
939
|
(2,062
|
)
|
|||||||
Inventories
|
911
|
(4,713
|
)
|
820
|
||||||||
Prepaid expenses
|
(918
|
)
|
(280
|
)
|
(982
|
)
|
||||||
Other assets
|
(121
|
)
|
170
|
61
|
||||||||
Accounts payable and accrued liabilities and provisions
|
(1,745
|
)
|
4,882
|
8,132
|
||||||||
Other liabilities
|
165
|
(65
|
)
|
(87
|
)
|
|||||||
12,870
|
24,363
|
6,484
|
||||||||||
Cash flows from investing activities
|
||||||||||||
Additions to short-term investments
|
(2,910
|
)
|
(3,546
|
)
|
(20,067
|
)
|
||||||
Proceeds from disposal and maturity of short-term investments
|
6,374
|
873
|
23,685
|
|||||||||
Purchases of capital assets (notes 8 and 9)
|
(7,175
|
)
|
(4,356
|
)
|
(5,933
|
)
|
||||||
Business combinations, net of cash acquired (note 3)
|
(12,792
|
)
|
–
|
–
|
||||||||
(16,503
|
)
|
(7,029
|
)
|
(2,315
|
)
|
|||||||
Cash flows from financing activities
|
||||||||||||
Repayment of long-term debt (note 3)
|
(1,480
|
)
|
‒
|
‒
|
||||||||
Redemption of share capital (note 13)
|
–
|
(1,551
|
)
|
(25,494
|
)
|
|||||||
(1,480
|
)
|
(1,551
|
)
|
(25,494
|
)
|
|||||||
Effect of foreign exchange rate changes on cash
|
340
|
1,561
|
(6,932
|
)
|
||||||||
Change in cash
|
(4,773
|
)
|
17,344
|
(28,257
|
)
|
|||||||
Cash – Beginning of year
|
43,208
|
25,864
|
54,121
|
|||||||||
Cash – End of year
|
$
|
38,435
|
$
|
43,208
|
$
|
25,864
|
||||||
Supplementary information
|
||||||||||||
Income taxes paid
|
$
|
2,866
|
$
|
2,015
|
$
|
1,491
|
1
|
Nature of Activities and Incorporation
|
2
|
Basis of Presentation
|
(a)
|
Foreign currency transactions
|
(b)
|
Foreign operations
|
Cash
|
Loans and receivables
|
Short-term investments
|
Available for sale
|
Accounts receivable
|
Loans and receivables
|
Other assets
|
Loans and receivables
|
Forward exchange contracts
|
Derivatives used for hedging
|
Accounts payable and accrued liabilities
|
Other financial liabilities
|
Contingent liability
|
Financial liabilities at fair value through profit or loss
|
Forward exchange contracts
|
Derivatives used for hedging
|
Level 1: |
Quoted prices (unadjusted) in active market for identical assets or liabilities;
|
Level 2: |
Inputs other than quoted prices included within Level 1 that are observable for the asset and liability, either directly or indirectly;
|
Level 3: |
Unobservable inputs for the asset or liability.
|
Term
|
|
Land improvements
|
15 years
|
Buildings
|
20 to 60 years
|
Equipment
|
3 to 15 years
|
Leasehold improvements
|
The lesser of useful life and remaining lease term
|
(a)
|
Determination of functional currency
|
(b)
|
Determination of cash generating units and allocation of goodwill
|
(a)
|
Inventories
|
(b)
|
Income taxes
|
(c)
|
Tax credits recoverable
|
(d)
|
Impairment of non-financial assets
|
(e)
|
Purchase price allocation in business combinations
|
3
|
Business Combinations
|
Assets acquired
|
||||
Core technology
|
$
|
4,130
|
||
Other assets
|
236
|
|||
4,366
|
||||
Liability assumed
|
||||
Deferred income taxes
|
279
|
|||
Net identifiable assets acquired
|
4,087
|
|||
Goodwill
|
4,403
|
|||
Fair value of the total consideration transferred
|
$
|
8,490
|
Assets acquired
|
||||
Accounts receivable
|
$
|
1,701
|
||
Core technology
|
3,802
|
|||
Customer relationships
|
1,607
|
|||
Other assets
|
37
|
|||
7,147
|
||||
Liabilities assumed
|
||||
Accounts payable and accrued liabilities
|
3,343
|
|||
Deferred revenue
|
211
|
|||
Long-term debt
|
1,480
|
|||
Net identifiable assets acquired
|
2,113
|
|||
Goodwill
|
7,067
|
|||
Fair value of the total consideration transferred, net of cash acquired
|
$
|
9,180
|
4
|
Restructuring Charges
|
5
|
Capital Disclosures
|
·
|
To maintain a flexible capital structure that optimizes the cost of capital at acceptable risk;
|
·
|
To sustain future development of the company, including research and development activities, market development and potential acquisitions of complementary businesses or products; and
|
·
|
To provide the company's shareholders with an appropriate return on their investment.
|
6
|
Financial Instruments
|
As at August 31, 2017
|
||||||||||||||||||||||||
Loans and
receivable |
Available
for sale |
Other
financial liabilities |
Financial
liabilities at fair value through profit or loss |
Derivatives
used for hedging |
Total
|
|||||||||||||||||||
Financial assets
|
||||||||||||||||||||||||
Cash
|
$
|
38,435
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
38,435
|
||||||||||||
Short-term investments
|
$
|
‒
|
$
|
775
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
775
|
||||||||||||
Accounts receivable
|
$
|
43,340
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
43,340
|
||||||||||||
Other assets
|
$
|
36
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
36
|
||||||||||||
Forward exchange contracts
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
2,258
|
$
|
2,258
|
||||||||||||
Financial liabilities
|
||||||||||||||||||||||||
Accounts payable and accrued liabilities
|
$
|
‒
|
$
|
‒
|
$
|
36,776
|
$
|
‒
|
$
|
‒
|
$
|
36,776
|
||||||||||||
Contingent liability
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
1,092
|
$
|
‒
|
$
|
1,092
|
As at August 31, 2016
|
||||||||||||||||||||
Loans and
receivable |
Available
for sale |
Other
financial liabilities |
Derivatives
used for hedging |
Total
|
||||||||||||||||
Financial assets
|
||||||||||||||||||||
Cash
|
$
|
43,208
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
43,208
|
||||||||||
Short-term investments
|
$
|
‒
|
$
|
4,087
|
$
|
‒
|
$
|
‒
|
$
|
4,087
|
||||||||||
Accounts receivable
|
$
|
45,467
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
45,467
|
||||||||||
Other assets
|
$
|
35
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
35
|
||||||||||
Forward exchange contracts
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
980
|
$
|
980
|
||||||||||
Financial liabilities
|
||||||||||||||||||||
Accounts payable and accrued liabilities
|
$
|
‒
|
$
|
‒
|
$
|
36,099
|
$
|
‒
|
$
|
36,099
|
||||||||||
Forward exchange contracts
|
$
|
‒
|
$
|
‒
|
$
|
‒
|
$
|
1,120
|
$
|
1,120
|
As at August 31, 2017
|
As at August 31, 2016
|
|||||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Level 1
|
Level 2
|
||||||||||||||||
Financial assets
|
||||||||||||||||||||
Short-term investments
|
$
|
775
|
$
|
‒
|
‒
|
$
|
4,087
|
$
|
‒
|
|||||||||||
Forward exchange contracts
|
$
|
‒
|
$
|
2,258
|
‒
|
$
|
‒
|
$
|
980
|
|||||||||||
Financial liabilities
|
||||||||||||||||||||
Forward exchange contracts
|
$
|
‒
|
$
|
‒
|
‒
|
$
|
‒
|
$
|
1,120
|
|||||||||||
Contingent liability
|
$
|
‒
|
$
|
‒
|
1,092
|
$
|
‒
|
$
|
‒
|
Expiry dates
|
Contractual
amounts |
Weighted average
contractual forward rates |
|||||||
As at August 31, 2016
|
|||||||||
September 2016 to August 2017
|
$
|
22,200
|
1.2784
|
||||||
September 2017 to August 2018
|
9,900
|
1.3367
|
|||||||
September 2018 to December 2018
|
1,900
|
1.3639
|
|||||||
Total
|
$
|
34,000
|
1.3002
|
||||||
As at August 31, 2017
|
|||||||||
September 2017 to August 2018
|
$
|
18,300
|
1.3407
|
||||||
September 2018 to August 2019
|
10,900
|
1.3426
|
|||||||
Total
|
$
|
29,200
|
1.3414
|
Expiry dates
|
Contractual
amounts |
Weighted average
contractual forward rates |
|||||||
As at August 31, 2016
|
|||||||||
September 2016 to August 2017
|
$
|
3,800
|
70.92
|
||||||
As at August 31, 2017
|
|||||||||
September 2017 to August 2018
|
$
|
3,400
|
69.49
|
||||||
September 2018 to February 2019
|
1,600
|
67.26
|
|||||||
Total
|
$
|
5,000
|
68.78
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Losses on forward exchange contracts
|
$
|
468
|
$
|
2,651
|
$
|
2,562
|
As at August 31,
|
||||||||||||||||
2017
|
2016
|
|||||||||||||||
Carrying/nominal
amount (in thousands
of US dollars)
|
Carrying/nominal
amount (in thousands
of euros)
|
Carrying/nominal
amount (in thousands
of US dollars)
|
Carrying/nominal
amount (in thousands
of euros)
|
|||||||||||||
Financial assets
|
||||||||||||||||
Cash
|
$
|
20,120
|
€
|
6,235
|
$
|
13,090
|
€
|
2,927
|
||||||||
Accounts receivable
|
28,420
|
6,164
|
30,141
|
5,963
|
||||||||||||
48,540
|
12,399
|
43,231
|
8,890
|
|||||||||||||
Financial liabilities
|
||||||||||||||||
Accounts payable and accrued liabilities
|
12,447
|
2,725
|
14,251
|
1,081
|
||||||||||||
Forward exchange contracts (nominal value)
|
3,600
|
‒
|
4,000
|
–
|
||||||||||||
16,047
|
2,725
|
18,251
|
1,081
|
|||||||||||||
Net exposure
|
$
|
32,493
|
€
|
9,674
|
$
|
24,980
|
€
|
7,809
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the US dollar would decrease (increase) net earnings by $2,342,000, or $0.04 per diluted share, and $2,726,000, or $0.05 per diluted share, as at August 31, 2016 and 2017 respectively.
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the euro would decrease (increase) net earnings by $830,000, or $0.02 per diluted share, and $1,025,000 or $0.02 per diluted share, as at August 31, 2016 and 2017 respectively.
|
·
|
An increase (decrease) of 10% in the period-end value of the Canadian dollar compared to the US dollar would increase (decrease) other comprehensive income by $2,176,000 and $2,744,000 as at August 31, 2016 and 2017 respectively.
|
As at August 31,
|
||||||||
2017
|
2016
|
|||||||
Term deposits denominated in Indian rupees, bearing interest at annual rates of 4.3% to 6.9% in 2017 and 6.0% to 7.3% in 2016, maturing on different dates between October 2017 and October 2018 in 2017 and November 2016 and October 2018 in 2016
|
$
|
775
|
$
|
1,419
|
||||
Term deposit denominated in Canadian dollars, bearing interest at an annual rate of 1.5%, matured in May 2017
|
‒
|
2,668
|
||||||
$
|
775
|
$
|
4,087
|
As at August 31,
|
||||||||
2017
|
2016
|
|||||||
Current
|
$
|
35,100
|
$
|
38,411
|
||||
Past due, 0 to 30 days
|
3,049
|
1,286
|
||||||
Past due, 31 to 60 days
|
1,289
|
868
|
||||||
Past due, more than 60 days, net of allowance for doubtful accounts of $3,752 and $2,960 as at August 31, 2016 and 2017, respectively
|
1,692
|
2,428
|
||||||
$
|
41,130
|
$
|
42,993
|
Years ended August 31,
|
||||||||
2017
|
2016
|
|||||||
Balance – Beginning of year
|
$
|
3,752
|
$
|
2,935
|
||||
Addition charged to earnings
|
654
|
817
|
||||||
Writeoff of uncollectible accounts
|
(1,446
|
)
|
‒
|
|||||
Balance – End of year
|
$
|
2,960
|
$
|
3,752
|
As at August 31, 2017
|
||||||||
0-12
months |
13-24
months |
|||||||
Accounts payable and accrued liabilities
|
$
|
36,776
|
$
|
‒
|
||||
Contingent liability
|
1,092
|
‒
|
||||||
Forward exchange contracts
|
||||||||
Outflow
|
21,700
|
12,500
|
||||||
Inflow
|
(23,265
|
)
|
(13,357
|
)
|
||||
Total
|
$
|
36,303
|
$
|
(857
|
)
|
As at August 31, 2016
|
||||||||||||
0-12
months |
13-24
months |
25-36
months |
||||||||||
Accounts payable and accrued liabilities
|
$
|
36,099
|
$
|
‒
|
$
|
‒
|
||||||
Forward exchange contracts
|
||||||||||||
Outflow
|
26,000
|
9,900
|
1,900
|
|||||||||
Inflow
|
(25,653
|
)
|
(10,089
|
)
|
(1,976
|
)
|
||||||
Total
|
$
|
36,446
|
$
|
(189
|
)
|
$
|
(76
|
)
|
7
|
Inventories
|
As at August 31,
|
||||||||
2017
|
2016
|
|||||||
Raw materials
|
$
|
18,899
|
$
|
18,692
|
||||
Work in progress
|
886
|
1,067
|
||||||
Finished goods
|
14,047
|
13,245
|
||||||
$
|
33,832
|
$
|
33,004
|
8
|
Property, Plant and Equipment
|
Land and land
improvements |
Buildings
|
Equipment
|
Leasehold
improvements |
Total
|
||||||||||||||||
Cost as at September 1, 2015
|
$
|
4,309
|
$
|
29,472
|
$
|
31,209
|
$
|
2,794
|
$
|
67,784
|
||||||||||
Additions
|
‒
|
201
|
3,626
|
226
|
4,053
|
|||||||||||||||
Disposals
|
‒
|
(11
|
)
|
(4,280
|
)
|
(121
|
)
|
(4,412
|
)
|
|||||||||||
Foreign currency translation adjustment
|
13
|
93
|
162
|
19
|
287
|
|||||||||||||||
Cost as at August 31, 2016
|
4,322
|
29,755
|
30,717
|
2,918
|
67,712
|
|||||||||||||||
Additions
|
‒
|
794
|
5,562
|
319
|
6,675
|
|||||||||||||||
Business combinations (note 3)
|
‒
|
‒
|
130
|
‒
|
130
|
|||||||||||||||
Disposals
|
‒
|
‒
|
(2,568
|
)
|
(339
|
)
|
(2,907
|
)
|
||||||||||||
Foreign currency translation adjustment
|
200
|
1,402
|
1,733
|
150
|
3,485
|
|||||||||||||||
Cost as at August 31, 2017
|
$
|
4,522
|
$
|
31,951
|
$
|
35,574
|
$
|
3,048
|
$
|
75,095
|
||||||||||
Accumulated depreciation as at September 1, 2015
|
$
|
1,142
|
$
|
5,943
|
$
|
24,213
|
$
|
791
|
$
|
32,089
|
||||||||||
Depreciation for the year
|
45
|
639
|
2,811
|
319
|
3,814
|
|||||||||||||||
Disposals
|
‒
|
(11
|
)
|
(4,258
|
)
|
(121
|
)
|
(4,390
|
)
|
|||||||||||
Foreign currency translation adjustment
|
5
|
31
|
136
|
49
|
221
|
|||||||||||||||
Accumulated depreciation as at August 31, 2016
|
1,192
|
6,602
|
22,902
|
1,038
|
31,734
|
|||||||||||||||
Depreciation for the year
|
45
|
403
|
3,162
|
292
|
3,902
|
|||||||||||||||
Disposals
|
‒
|
‒
|
(2,210
|
)
|
(339
|
)
|
(2,549
|
)
|
||||||||||||
Foreign currency translation adjustment
|
58
|
328
|
1,353
|
137
|
1,876
|
|||||||||||||||
Accumulated depreciation as at August 31, 2017
|
$
|
1,295
|
$
|
7,333
|
$
|
25,207
|
$
|
1,128
|
$
|
34,963
|
||||||||||
Net carrying value as at:
|
||||||||||||||||||||
August 31, 2016
|
$
|
3,130
|
$
|
23,153
|
$
|
7,815
|
$
|
1,880
|
$
|
35,978
|
||||||||||
August 31, 2017
|
$
|
3,227
|
$
|
24,618
|
$
|
10,367
|
$
|
1,920
|
$
|
40,132
|
9
|
Intangible Assets and Goodwill
|
Core
technology |
Customer
relationships |
Brand name
|
Software
|
Total
|
||||||||||||||||
Cost as at September 1, 2015
|
$
|
10,521
|
$
|
4,935
|
$
|
492
|
$
|
10,728
|
$
|
26,676
|
||||||||||
Additions
|
147
|
‒
|
‒
|
313
|
460
|
|||||||||||||||
Disposals
|
(6,414
|
)
|
(4,935
|
)
|
(492
|
)
|
(310
|
)
|
(12,151
|
)
|
||||||||||
Foreign currency translation adjustment
|
48
|
‒
|
‒
|
112
|
160
|
|||||||||||||||
Cost as at August 31, 2016
|
4,302
|
‒
|
‒
|
10,843
|
15,145
|
|||||||||||||||
Additions
|
‒
|
‒
|
‒
|
912
|
912
|
|||||||||||||||
Business combinations (note 3)
|
7,932
|
1,607
|
‒
|
‒
|
9,539
|
|||||||||||||||
Disposals
|
(76
|
)
|
‒
|
‒
|
(407
|
)
|
(483
|
)
|
||||||||||||
Foreign currency translation adjustment
|
735
|
82
|
‒
|
553
|
1,370
|
|||||||||||||||
Cost as at August 31, 2017
|
$
|
12,893
|
$
|
1,689
|
$
|
‒
|
$
|
11,901
|
$
|
26,483
|
||||||||||
Accumulated amortization as at September 1, 2015
|
$
|
7,912
|
$
|
4,935
|
$
|
492
|
$
|
9,241
|
$
|
22,580
|
||||||||||
Amortization for the year
|
700
|
‒
|
‒
|
472
|
1,172
|
|||||||||||||||
Disposals
|
(6,414
|
)
|
(4,935
|
)
|
(492
|
)
|
(297
|
)
|
(12,138
|
)
|
||||||||||
Foreign currency translation adjustment
|
109
|
‒
|
‒
|
31
|
140
|
|||||||||||||||
Accumulated amortization as at August 31, 2016
|
2,307
|
‒
|
‒
|
9,447
|
11,754
|
|||||||||||||||
Amortization for the year
|
2,617
|
167
|
‒
|
505
|
3,289
|
|||||||||||||||
Disposals
|
(54
|
)
|
‒
|
‒
|
(398
|
)
|
(452
|
)
|
||||||||||||
Foreign currency translation adjustment
|
260
|
2
|
‒
|
447
|
709
|
|||||||||||||||
Accumulated amortization as at August 31, 2017
|
$
|
5,130
|
$
|
169
|
$
|
‒
|
$
|
10,001
|
$
|
15,300
|
||||||||||
Net carrying value as at:
|
||||||||||||||||||||
August 31, 2016
|
$
|
1,995
|
$
|
‒
|
$
|
‒
|
$
|
1,396
|
$
|
3,391
|
||||||||||
August 31, 2017
|
$
|
7,763
|
$
|
1,520
|
$
|
‒
|
$
|
1,900
|
$
|
11,183
|
||||||||||
Remaining amortization period as at August 31, 2017
|
4 years
|
5 years
|
‒
|
5 years
|
Years ended August 31,
|
||||||||
2017
|
2016
|
|||||||
Balance – Beginning of year
|
$
|
21,928
|
$
|
21,860
|
||||
Business combinations (note 3)
|
11,470
|
‒
|
||||||
Foreign currency translation adjustment
|
1,679
|
68
|
||||||
Balance – End of year
|
$
|
35,077
|
$
|
21,928
|
As at August 31,
|
||||||||
2017
|
2016
|
|||||||
EXFO CGU
|
$
|
13,772
|
$
|
8,663
|
||||
Brix CGU
|
13,878
|
13,265
|
||||||
Ontology CGU (note 3)
|
7,427
|
‒
|
||||||
Total
|
$
|
35,077
|
$
|
21,928
|
10
|
Credit Facilities
|
11
|
Accounts Payable and Accrued Liabilities and Provisions
|
As at August 31,
|
||||||||
2017
|
2016
|
|||||||
Trade
|
$
|
19,002
|
$
|
16,940
|
||||
Salaries and social benefits
|
15,176
|
16,188
|
||||||
Forward exchange contracts (note 6)
|
‒
|
1,075
|
||||||
Other
|
2,598
|
2,971
|
||||||
$
|
36,776
|
$
|
37,174
|
As at August 31,
|
||||||||
2017
|
2016
|
|||||||
Warranty
|
$
|
320
|
$
|
299
|
||||
Contingent liability (note 3)
|
1,092
|
‒
|
||||||
Restructuring charges (note 4)
|
2,477
|
‒
|
||||||
$
|
3,889
|
$
|
299
|
12
|
Commitments
|
As at August 31,
|
||||||||
2017
|
2016
|
|||||||
No later than 1 year
|
$
|
2,176
|
$
|
2,213
|
||||
Later than 1 year and no later than 5 years
|
6,238
|
3,050
|
||||||
Later than 5 years
|
1,681
|
1,037
|
||||||
$
|
10,095
|
$
|
6,300
|
As at August 31,
|
||||||||
2017
|
2016
|
|||||||
No later than 1 year
|
$
|
1,264
|
$
|
1,124
|
||||
Later than 1 year and no later than 5 years
|
1,450
|
826
|
||||||
$
|
2,714
|
$
|
1,950
|
13
|
Share Capital
|
Authorized – unlimited as to number, without par value
|
|
Subordinate voting and participating, bearing a non-cumulative dividend to be determined by the Board of Directors, ranking pari passu with multiple voting shares
|
|
Multiple voting and participating, entitling to 10 votes each, bearing a non-cumulative dividend to be determined by the Board of Directors, convertible at the holder's option into subordinate voting shares on a one-for-one basis, ranking pari passu with subordinate voting shares
|
Multiple Voting Shares
|
Subordinate Voting Shares
|
|||||||||||||||||||
Number
|
Amount
|
Number
|
Amount
|
Total
amount
|
||||||||||||||||
Balance as at September 1, 2014
|
31,643,000
|
$
|
1
|
28,703,750
|
$
|
111,490
|
$
|
111,491
|
||||||||||||
Redemption of restricted share units (note 15)
|
‒
|
–
|
229,559
|
–
|
–
|
|||||||||||||||
Redemption of deferred share units (note 15)
|
‒
|
–
|
48,697
|
–
|
–
|
|||||||||||||||
Redemption of share capital
|
‒
|
–
|
(6,889,972
|
)
|
(26,827
|
)
|
(26,827
|
)
|
||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
–
|
–
|
–
|
1,381
|
1,381
|
|||||||||||||||
Balance as at August 31, 2015
|
31,643,000
|
1
|
22,092,034
|
86,044
|
86,045
|
|||||||||||||||
Redemption of restricted share units (note 15)
|
–
|
–
|
277,805
|
–
|
–
|
|||||||||||||||
Redemption of deferred share units (note 15)
|
–
|
–
|
653
|
–
|
–
|
|||||||||||||||
Redemption of share capital
|
–
|
–
|
(452,550
|
)
|
(1,768
|
)
|
(1,768
|
)
|
||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
–
|
–
|
–
|
1,239
|
1,239
|
|||||||||||||||
Balance as at August 31, 2016
|
31,643,000
|
1
|
21,917,942
|
85,515
|
85,516
|
|||||||||||||||
Issuance of share capital (note 3)
|
–
|
–
|
793,070
|
3,490
|
3,490
|
|||||||||||||||
Redemption of restricted share units (note 15)
|
–
|
–
|
327,859
|
–
|
–
|
|||||||||||||||
Redemption of deferred share units (note 15)
|
–
|
–
|
29,906
|
–
|
–
|
|||||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
–
|
–
|
–
|
1,405
|
1,405
|
|||||||||||||||
Balance as at August 31, 2017
|
31,643,000
|
$
|
1
|
23,068,777
|
$
|
90,410
|
$
|
90,411
|
a)
|
On January 7, 2015, the company announced that its Board of Directors had authorized a substantial issuer bid (the "Offer") to purchase for cancellation up to 7,142,857 subordinate voting shares for an aggregate purchase price not to exceed CA$30,000,000. On February 20, 2015, pursuant to the Offer, the company purchased for cancellation 6,521,739 subordinate voting shares for an aggregate purchase price of CA$30,000,000 (US$24,027,000), plus related fees of $223,000. The company used cash to fund the purchase of shares.
|
b)
|
On March 25, 2015, the company announced that its Board of Directors had approved the renewal of its share repurchase program, by way of a normal course issuer bid on the open market of up to 10% of the issued and outstanding subordinate voting shares, representing 1,397,598 subordinate voting shares at the prevailing market price. The normal course issuer bid started on March 27, 2015, and ended on March 26, 2016. All shares repurchased under the bid were cancelled.
|
c)
|
On March 29, 2016, the company announced that its Board of Directors had approved the renewal of its share repurchase program, by way of a normal course issuer bid on the open market of up to 6.6% of the issued and outstanding subordinate voting shares, representing 900,000 subordinate voting shares at the prevailing market price. The normal course issuer bid started on April 1, 2016, and ended on March 31, 2017. All share repurchased under that bid were cancelled.
|
14
|
Accumulated Other Comprehensive Loss
|
Foreign
currency translation adjustment |
Cash-flow
hedge |
Accumulated
other comprehensive loss |
||||||||||
Balance as at September 1, 2014
|
$
|
(10,668
|
)
|
$
|
409
|
$
|
(10,259
|
)
|
||||
Foreign currency translation adjustment
|
(39,175
|
)
|
–
|
(39,175
|
)
|
|||||||
Changes in unrealized losses on forward exchange contracts, net of deferred income taxes
|
–
|
(2,571
|
)
|
(2,571
|
)
|
|||||||
Balance as at August 31, 2015
|
(49,843
|
)
|
(2,162
|
)
|
(52,005
|
)
|
||||||
Foreign currency translation adjustment
|
707
|
‒
|
707
|
|||||||||
Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes
|
‒
|
2,724
|
2,724
|
|||||||||
Balance as at August 31, 2016
|
(49,136
|
)
|
562
|
(48,574
|
)
|
|||||||
Foreign currency translation adjustment
|
8,262
|
‒
|
8,262
|
|||||||||
Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes
|
‒
|
1,347
|
1,347
|
|||||||||
Balance as at August 31, 2017
|
$
|
(40,874
|
)
|
$
|
1,909
|
$
|
(38,965
|
)
|
15
|
Stock-Based Compensation Plans
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Stock-based compensation costs arising from
equity-settled awards |
$
|
1,439
|
$
|
1,394
|
$
|
1,323
|
||||||
Stock-based compensation costs arising from
cash-settled awards |
38
|
(16
|
)
|
(28
|
)
|
|||||||
$
|
1,477
|
$
|
1,378
|
$
|
1,295
|
Years ended August 31,
|
||||||||||||||||
2016
|
2015
|
|||||||||||||||
Number
|
Weighted
average exercise price |
Number
|
Weighted
average exercise price |
|||||||||||||
(CA$)
|
(CA$)
|
|||||||||||||||
Outstanding – Beginning of year
|
17,099
|
$
|
6
|
87,454
|
$
|
6
|
||||||||||
Forfeited
|
–
|
–
|
(2,000
|
)
|
6
|
|||||||||||
Expired
|
(17,099
|
)
|
6
|
(68,355
|
)
|
6
|
||||||||||
Outstanding – End of year
|
–
|
$
|
–
|
17,099
|
$
|
6
|
||||||||||
Exercisable – End of year
|
–
|
$
|
–
|
17,099
|
$
|
6
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Outstanding – Beginning of year
|
1,551,555
|
1,299,958
|
1,225,135
|
|||||||||
Granted
|
527,143
|
572,008
|
409,521
|
|||||||||
Redeemed
|
(327,859
|
)
|
(277,805
|
)
|
(229,559
|
)
|
||||||
Forfeited
|
(139,509
|
)
|
(42,606
|
)
|
(105,139
|
)
|
||||||
Outstanding – End of year
|
1,611,330
|
1,551,555
|
1,299,958
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Outstanding – Beginning of year
|
159,127
|
114,810
|
117,701
|
|||||||||
Granted
|
45,058
|
44,970
|
45,806
|
|||||||||
Redeemed
|
(29,906
|
)
|
(653
|
)
|
(48,697
|
)
|
||||||
Outstanding – End of year
|
174,279
|
159,127
|
114,810
|
Years ended August 31,
|
||||||||||||||||||||||||
2017
|
2016
|
2015
|
||||||||||||||||||||||
Number
|
Weighted
average exercise price |
Number
|
Weighted
average exercise price |
Number
|
Weighted
average exercise price |
|||||||||||||||||||
Outstanding – Beginning of year
|
33,500
|
$
|
1
|
42,324
|
$
|
1
|
39,874
|
$
|
2
|
|||||||||||||||
Granted
|
7,900
|
–
|
7,800
|
–
|
6,150
|
–
|
||||||||||||||||||
Exercised
|
(14,104
|
)
|
2
|
(12,927
|
)
|
5
|
(500
|
)
|
6
|
|||||||||||||||
Expired
|
–
|
–
|
(1,500
|
)
|
7
|
(2,000
|
)
|
5
|
||||||||||||||||
Forfeited
|
–
|
–
|
(2,197
|
)
|
–
|
(1,200
|
)
|
6
|
||||||||||||||||
Outstanding – End of year
|
27,296
|
$
|
1
|
33,500
|
$
|
1
|
42,324
|
$
|
1
|
|||||||||||||||
Exercisable – End of year
|
4,721
|
$
|
3
|
14,000
|
$
|
3
|
22,924
|
$
|
3
|
Stock appreciation
rights outstanding |
Stock appreciation
rights exercisable |
|||||||||||||
Exercise price
|
Number
|
Weighted average
remaining contractual life |
Number
|
|||||||||||
$
|
–
|
22,575
|
8 years
|
–
|
||||||||||
$
|
2.36
|
2,721
|
1 year
|
2,721
|
||||||||||
$
|
3.74
|
1,500
|
2 years
|
1,500
|
||||||||||
$
|
6.28
|
500
|
–
|
500
|
||||||||||
27,296
|
7 years
|
4,721
|
16
|
Related-Party Disclosures
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Salaries and short-term employee benefits
|
$
|
3,715
|
$
|
3,701
|
$
|
3,025
|
||||||
Stock-based compensation costs
|
775
|
826
|
617
|
|||||||||
$
|
4,490
|
$
|
4,527
|
$
|
3,642
|
17
|
Statements of Earnings
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Gross research and development expenses
|
$
|
53,124
|
$
|
47,875
|
$
|
50,148
|
||||||
Research and development tax credits and grants
|
(5,956
|
)
|
(5,188
|
)
|
(6,145
|
)
|
||||||
Net research and development expenses for the year
|
$
|
47,168
|
$
|
42,687
|
$
|
44,003
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Cost of sales
|
||||||||||||
Depreciation of property, plant and equipment
|
$
|
1,522
|
$
|
1,290
|
$
|
1,519
|
||||||
Amortization of intangible assets
|
2,652
|
702
|
1,540
|
|||||||||
4,174
|
1,992
|
3,059
|
||||||||||
Selling and administrative expenses
|
||||||||||||
Depreciation of property, plant and equipment
|
530
|
501
|
524
|
|||||||||
Amortization of intangible assets
|
251
|
75
|
790
|
|||||||||
781
|
576
|
1,314
|
||||||||||
Net research and development expenses
|
||||||||||||
Depreciation of property, plant and equipment
|
1,850
|
2,023
|
2,792
|
|||||||||
Amortization of intangible assets
|
386
|
395
|
553
|
|||||||||
2,236
|
2,418
|
3,345
|
||||||||||
$
|
7,191
|
$
|
4,986
|
$
|
7,718
|
|||||||
Depreciation of property, plant and equipment
|
$
|
3,902
|
$
|
3,814
|
$
|
4,835
|
||||||
Amortization of intangible assets
|
3,289
|
1,172
|
2,883
|
|||||||||
Total depreciation and amortization expenses for the year
|
$
|
7,191
|
$
|
4,986
|
$
|
7,718
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Salaries and benefits
|
$
|
115,832
|
$
|
112,569
|
$
|
114,868
|
||||||
Restructuring charges
|
3,509
|
‒
|
1,637
|
|||||||||
Stock-based compensation costs
|
1,414
|
1,378
|
1,295
|
|||||||||
Total employee compensation for the year
|
$
|
120,755
|
$
|
113,947
|
$
|
117,800
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Cost of sales
|
$
|
1,697
|
$
|
‒
|
$
|
290
|
||||||
Selling and administrative expenses
|
1,150
|
‒
|
586
|
|||||||||
Net research and development costs
|
2,232
|
‒
|
761
|
|||||||||
Total restructuring charges for the year
|
$
|
5,079
|
$
|
‒
|
$
|
1,637
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Cost of sales
|
$
|
121
|
$
|
107
|
$
|
159
|
||||||
Selling and administrative expenses
|
1,052
|
972
|
791
|
|||||||||
Net research and development expenses
|
304
|
299
|
345
|
|||||||||
Total stock-based compensation costs for the year
|
$
|
1,477
|
$
|
1,378
|
$
|
1,295
|
18
|
Other Disclosures
|
·
|
Canadian defined contribution pension plan
|
·
|
US defined contribution pension plan (401K plan)
|
19
|
Income Taxes
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Income tax provision at combined Canadian federal and provincial statutory tax rate (27%)
|
$
|
2,014
|
$
|
4,499
|
$
|
2,671
|
||||||
Increase (decrease) due to:
|
||||||||||||
Foreign income/loss taxed at different rates
|
(900
|
)
|
(1,025
|
)
|
482
|
|||||||
Non-deductible loss (non-taxable income)
|
(245
|
)
|
5
|
2,540
|
||||||||
Non-deductible expenses
|
981
|
411
|
664
|
|||||||||
Change in tax rates
|
(10
|
)
|
‒
|
‒
|
||||||||
Foreign exchange effect of translation of foreign subsidiaries in the functional currency
|
176
|
566
|
(3,641
|
)
|
||||||||
Utilization of previously unrecognized deferred income tax assets
|
(46
|
)
|
‒
|
‒
|
||||||||
Unrecognized deferred income tax assets on temporary deductible differences and unused tax losses
|
4,659
|
3,702
|
2,556
|
|||||||||
Other
|
(21
|
)
|
(394
|
)
|
(236
|
)
|
||||||
Income tax provision for the year
|
$
|
6,608
|
$
|
7,764
|
$
|
5,036
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
The income tax provision consists of the following:
|
||||||||||||
Current
|
||||||||||||
Current income taxes
|
$
|
5,554
|
$
|
6,186
|
$
|
4,633
|
||||||
Deferred
|
||||||||||||
Deferred income taxes relating to the origination and reversal of temporary differences
|
(3,605
|
)
|
(2,124
|
)
|
(2,153
|
)
|
||||||
Unrecognized deferred income tax assets on temporary deductible differences and unused tax losses
|
4,659
|
3,702
|
2,556
|
|||||||||
1,054
|
1,578
|
403
|
||||||||||
Income tax provision for the year
|
$
|
6,608
|
$
|
7,764
|
$
|
5,036
|
As at August 31,
|
||||||||
2017
|
2016
|
|||||||
Deferred income tax assets
|
||||||||
Deferred income tax assets recoverable within 12 months
|
$
|
3,361
|
$
|
4,224
|
||||
Deferred income tax assets recoverable after 12 months
|
3,194
|
4,016
|
||||||
6,555
|
8,240
|
|||||||
Deferred income tax liabilities
|
||||||||
Deferred income tax liabilities payable within 12 months
|
499
|
645
|
||||||
Deferred income tax liabilities payable after 12 months
|
2,617
|
2,212
|
||||||
3,116
|
2,857
|
|||||||
Deferred income tax assets net
|
$
|
3,439
|
$
|
5,383
|
Balance as at
September 1, 2015 |
Credited
(charged) to the statement of earnings |
Credited
(charged) to shareholders' equity |
Foreign
currency translation adjustment |
Balance as at
August 31, 2016 |
||||||||||||||||
Deferred income tax assets
|
||||||||||||||||||||
Long-lived assets
|
$
|
2,849
|
$
|
(595
|
)
|
$
|
‒
|
$
|
1
|
$
|
2,255
|
|||||||||
Provisions and accruals
|
5,024
|
177
|
(935
|
)
|
(20
|
)
|
4,246
|
|||||||||||||
Deferred revenue
|
1,308
|
1,015
|
‒
|
7
|
2,330
|
|||||||||||||||
Research and development expenses
|
2,240
|
112
|
‒
|
9
|
2,361
|
|||||||||||||||
Losses carried forward
|
6,551
|
(1,951
|
)
|
‒
|
(2
|
)
|
4,598
|
|||||||||||||
Deferred income tax liabilities
|
||||||||||||||||||||
Research and development tax credits
|
(10,037
|
)
|
(336
|
)
|
‒
|
(34
|
)
|
(10,407
|
)
|
|||||||||||
Total
|
$
|
7,935
|
$
|
(1,578
|
)
|
$
|
(935
|
)
|
$
|
(39
|
)
|
$
|
5,383
|
|||||||
Classified as follows:
|
||||||||||||||||||||
Deferred income tax assets
|
$
|
9,459
|
$
|
8,240
|
||||||||||||||||
Deferred income tax liabilities
|
(1,524
|
)
|
(2,857
|
)
|
||||||||||||||||
$
|
7,935
|
$
|
5,383
|
Balance
as at September 1, 2016 |
Credited
(charged) to the statement of earnings |
Credited
(charged) to shareholders' equity |
Business
combinations |
Foreign
currency translation adjustment |
Balance
as at August 31, 2017 |
|||||||||||||||||||
Deferred income tax assets
|
||||||||||||||||||||||||
Long-lived assets
|
$
|
2,255
|
$
|
(240
|
)
|
$
|
‒
|
$
|
(279
|
)
|
$
|
66
|
$
|
1,802
|
||||||||||
Provisions and accruals
|
4,246
|
(89
|
)
|
(479
|
)
|
‒
|
94
|
3,772
|
||||||||||||||||
Deferred revenue
|
2,330
|
486
|
‒
|
‒
|
74
|
2,890
|
||||||||||||||||||
Research and development expenses
|
2,361
|
248
|
‒
|
‒
|
122
|
2,731
|
||||||||||||||||||
Losses carried forward
|
4,598
|
(1,470
|
)
|
‒
|
1,059
|
54
|
4,241
|
|||||||||||||||||
Deferred income tax liabilities
|
||||||||||||||||||||||||
Long-lived assets
|
‒
|
111
|
‒
|
(1,059
|
)
|
(54
|
)
|
(1,002
|
)
|
|||||||||||||||
Research and development tax credits
|
(10,407
|
)
|
(100
|
)
|
‒
|
‒
|
(488
|
)
|
(10,995
|
)
|
||||||||||||||
Total
|
$
|
5,383
|
$
|
(1,054
|
)
|
$
|
(479
|
)
|
$
|
(279
|
)
|
$
|
(132
|
)
|
$
|
3,439
|
||||||||
Classified as follows:
|
||||||||||||||||||||||||
Deferred income tax assets
|
$
|
8,240
|
$
|
6,555
|
||||||||||||||||||||
Deferred income tax liabilities
|
(2,857
|
)
|
(3,116
|
)
|
||||||||||||||||||||
$
|
5,383
|
$
|
3,439
|
As at August 31,
|
||||||||
2017
|
2016
|
|||||||
Temporary deductible differences
|
$
|
2,271
|
$
|
1,676
|
||||
Losses carried forward
|
43,670
|
38,287
|
||||||
$
|
45,941
|
$
|
39,963
|
Year of expiry
|
Finland
|
United States
|
United Kingdom
|
|||||||||
2018
|
$
|
444
|
$
|
741
|
$
|
‒
|
||||||
2019
|
‒
|
3,470
|
‒
|
|||||||||
2020
|
7,848
|
7,991
|
‒
|
|||||||||
2021
|
6,799
|
2,211
|
‒
|
|||||||||
2022
|
11,788
|
7,435
|
‒
|
|||||||||
2023
|
7,637
|
1,972
|
‒
|
|||||||||
2024
|
5,896
|
1,351
|
‒
|
|||||||||
2025
|
7,350
|
1,351
|
‒
|
|||||||||
2026
|
251
|
1,351
|
‒
|
|||||||||
2027
|
2,035
|
1,351
|
‒
|
|||||||||
2028
|
‒
|
2,447
|
‒
|
|||||||||
2030
|
‒
|
2,713
|
‒
|
|||||||||
2031
|
‒
|
109
|
‒
|
|||||||||
2033
|
‒
|
4,681
|
‒
|
|||||||||
2034
|
‒
|
4,851
|
‒
|
|||||||||
2035
|
‒
|
2,616
|
‒
|
|||||||||
2036
|
‒
|
8,501
|
‒
|
|||||||||
2037
|
‒
|
8,988
|
‒
|
|||||||||
Indefinite
|
‒
|
‒
|
3,737
|
|||||||||
$
|
50,048
|
$
|
64,130
|
$
|
3,737
|
(1)
|
Undistributed profits of its foreign subsidiaries will not be distributed in the foreseeable future; and
|
(2)
|
Undistributed profits of its domestic subsidiaries will not be taxable when distributed.
|
20
|
Earnings per Share
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Basic weighted average number of shares outstanding (000's)
|
54,423
|
53,863
|
56,804
|
|||||||||
Plus dilutive effect of (000's):
|
||||||||||||
Restricted share units
|
979
|
675
|
549
|
|||||||||
Deferred share units
|
153
|
131
|
104
|
|||||||||
Diluted weighted average number of shares outstanding (000's)
|
55,555
|
54,669
|
57,457
|
|||||||||
Stock awards excluded from the calculation of the diluted weighted average number of shares outstanding because their exercise price was greater than the average market price of the common shares (000's)
|
‒
|
75
|
57
|
21
|
Segment Information
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
Products
|
$
|
213,653
|
$
|
205,371
|
$
|
193,427
|
||||||
Services
|
29,648
|
27,212
|
28,662
|
|||||||||
$
|
243,301
|
$
|
232,583
|
$
|
222,089
|
Years ended August 31,
|
||||||||||||
2017
|
2016
|
2015
|
||||||||||
United States
|
$
|
97,186
|
$
|
95,388
|
$
|
82,227
|
||||||
Canada
|
22,586
|
18,027
|
19,722
|
|||||||||
Other
|
14,951
|
14,129
|
17,547
|
|||||||||
Americas
|
134,723
|
127,544
|
119,496
|
|||||||||
Europe, Middle-East and Africa
|
62,101
|
57,172
|
57,274
|
|||||||||
China
|
22,312
|
25,281
|
21,526
|
|||||||||
Other
|
24,165
|
22,586
|
23,793
|
|||||||||
Asia-Pacific
|
46,477
|
47,867
|
45,319
|
|||||||||
$
|
243,301
|
$
|
232,583
|
$
|
222,089
|
As at August 31, 2017
|
As at August 31, 2016
|
|||||||||||||||||||||||
Property,
plant and equipment |
Intangible
assets |
Goodwill
|
Property,
plant and equipment |
Intangible
assets |
Goodwill
|
|||||||||||||||||||
Canada
|
$
|
29,417
|
$
|
4,643
|
$
|
3,890
|
$
|
27,048
|
$
|
1,330
|
$
|
–
|
||||||||||||
United States
|
2,031
|
1,072
|
14,696
|
1,174
|
1,637
|
13,265
|
||||||||||||||||||
Finland
|
441
|
316
|
9,064
|
572
|
354
|
8,663
|
||||||||||||||||||
United Kingdom
|
915
|
5,093
|
7,427
|
797
|
–
|
–
|
||||||||||||||||||
India
|
4,000
|
27
|
–
|
3,602
|
37
|
–
|
||||||||||||||||||
China
|
3,227
|
32
|
–
|
2,657
|
33
|
–
|
||||||||||||||||||
Other
|
101
|
–
|
–
|
128
|
–
|
–
|
||||||||||||||||||
$
|
40,132
|
$
|
11,183
|
$
|
35,077
|
$
|
35,978
|
$
|
3,391
|
$
|
21,928
|
22
|
Subsequent Events
|
1.
|
PURPOSE OF THE PLAN
|
1.1
|
The purpose of the long-term incentive plan (the "Plan") for Directors, executive officers, employees and other persons or companies providing ongoing management or consulting services (the "Consultants") to EXFO Inc. (the "Corporation") or to any of the Subsidiaries of the Corporation is to secure for the Corporation and its shareholders the benefit of an incentive to partake in share ownership by Directors, executive officers and employees of the Corporation and its Subsidiaries, as the case may be, and by certain Consultants who provide services on a continuous basis. For the purposes of the Plan, "Subsidiaries" shall mean (i) any legal entity of which the Corporation is the holder or the beneficiary, at the time of the granting of the Option or RSUs, directly or indirectly, otherwise than by way of security only, of securities to which are attached over 50% of the votes enabling it to elect the majority of the Directors of such entity as well as any subsidiary of such legal entity and (ii) any legal entity in which the Corporation or a subsidiary of the Corporation holds at least 50% of the voting rights or in which it has a majority interest and of which the Corporation or a subsidiary of the Corporation manages the operations.
|
2.
|
DEFINITIONS
|
3.
|
ADMINISTRATION
|
4.
|
SHARES SUBJECT TO THE PLAN
|
(a)
|
the number of Shares reserved for issuance pursuant to Options, RSUs and DSUs granted to insiders of the Corporation shall not exceed 10% of the total issued and outstanding Shares;
|
(b)
|
the number of Shares issued to insiders, within a one-year period, pursuant to the exercise, settlement or redemption of Options, RSUs and DSUs shall not exceed 10% of the total issued and outstanding Shares; and
|
(c)
|
the number of Shares issued to any one insider and such insider's associates, within a one-year period, pursuant to the exercise, settlement or redemption Options, RSUs and DSUs shall not exceed 5% of the total issued and outstanding Shares.
|
5.
|
OPTIONS
|
5.1
|
Grant of Options
|
5.2
|
Subscription Price
|
5.3
|
Option Period
|
5.3.1
|
Subject to the provisions of subsections 5.3.2 and 5.3.3, each Option shall be exercisable during a period established by the Board or the Committee (the "Option Period"); such period shall commence no earlier than the Grant Date and shall terminate no later than ten years after such date.
|
5.3.2
|
Notwithstanding the provisions of subsection 5.3.1, an Option shall not be exercisable by an Optionee from and after each and every one of the following dates (an "Early Expiry Date"), unless the Board or the Committee decides otherwise:
|
(a)
|
in the case where the Optionee is an officer or an employee, the date on which the Optionee resigns and voluntary leaves his employment with the Corporation or one of its Subsidiaries, as the case may be, or the date on which the employment of the Optionee with the Corporation or one of its Subsidiaries is terminated for a good and sufficient cause, as the case may be;
|
(b)
|
in the case where the Optionee is a Director of the Corporation or one of its Subsidiaries, as the case may be, but is not employed by either the Corporation or one of its subsidiaries, 30 days following the date on which such Optionee ceases to be a member of the Board of Directors for any reason other than death or Permanent Disability;
|
(c)
|
(i) in the case where the Optionee is an officer or employee, 6 months following the date on which the Optionee's employment with the Corporation or any of its Subsidiaries, as the case may be, is terminated by reason of death or Permanent Disability or (ii) in the case where the Optionee is a Director of the Corporation or any of its Subsidiaries, as the case may be, but is not employed by either the Corporation or any of its Subsidiaries, 6 months following the date on which such Optionee ceases to be a member of the Board of Directors by reason of death or Permanent Disability. Notwithstanding the foregoing, in case of death or Permanent Disability of the Optionee, the Option Period established by the Board or the Committee shall commence no later than the date of termination by reason of death or Permanent Disability of the Optionee and all Options held by such Optionee shall become exercisable upon such date;
|
(d)
|
in the case where the Optionee is an officer or employee, 30 days following the date on which the Optionee's employment with the Corporation or any of its Subsidiaries, as the case may be, is terminated for any cause or reason other than those mentioned in paragraphs 5.3.2(a) and 5.3.2(c), including, without limiting the scope of the foregoing, disability, illness, retirement or early retirement. Notwithstanding the foregoing, in case of retirement or early retirement of an officer or employee, the Board or the Committee may at its own discretion but subject to Section 3, extend the Early Expiry Date mentioned in this paragraph 5.3.2(d);
|
(e)
|
in the case where the Optionee is a Consultant, 30 days following the date on which his contract as a Consultant is terminated or, as the case may be, 30 days following the receipt by the Consultant of a notice from the Corporation indicating that the Options must be exercised within 30 days from the date of receipt of the notice.
|
5.3.3
|
The rules set forth in paragraph 5.3.2 shall not be interpreted in such a manner as to extend the Option Period beyond 10 years.
|
5.3.4
|
The Option Period shall automatically be extended if the date on which it is scheduled to terminate shall fall during a Blackout Period or within 10 business days after the last day of a Blackout Period. In such cases, the Option Period shall terminate 10 business days after the last day of a Blackout Period.
|
5.3.5
|
All rights conferred by an Option not exercised at the termination of the Option Period or from and after any Early Expiry Date shall be forfeited.
|
5.4
|
Exercise of Options
|
(a)
|
Subject to the provisions of section 5.3, an Option may be exercised in whole, at any time, or in part, from time to time, during the Option Period, but in all cases in accordance with the exercise frequency established by the Board or the Committee and applicable at the time of the grant.
|
(b)
|
An Option may be exercised by forwarding a duly executed Subscription Form as attached hereto as Schedule 1 (the "Subscription Form") to the Secretary of the Corporation. Such Subscription Form shall set forth the number of Shares so subscribed and the address to which the share certificate is to be delivered. The Subscription Form shall also be accompanied by a certified cheque made payable to the Corporation in the amount of the Subscription Price. The Corporation shall cause a certificate for the number of Shares specified in the Subscription Form to be issued in the name of the Optionee and delivered to the address specified in the Subscription Form no later than 10 business days following the receipt of such Subscription Form and cheque.
|
5.5
|
No Assignment
|
5.6
|
Not a Shareholder
|
6.
|
GRANT OF RSU AWARDS
|
6.1
|
Grant of Awards
|
6.2
|
Award Agreement
|
6.3
|
Vesting Date
|
6.4
|
Early Vesting
|
(a)
|
Unless otherwise determined by the Board at or after the time of grant, and subject to the minimum and maximum term referred to at section 6.3 hereof, except for events described in section 6.4(b) and (c) where minimum term is not applicable:
|
(i)
|
Where vesting of an Award is subject to the attainment of performance objectives, such Award, or part thereof, shall expire on the Vesting Date if such performance objectives have not been attained or shall be postpone at a further Vesting Date as determined by the Board from time to time, the whole in accordance with the terms and conditions of the applicable Award Agreement.
|
(ii)
|
Any Award, whether or not subject to the attainment of performance objectives, shall expire immediately upon the RSU Holder thereof ceasing to be an Eligible Participant as a result of being dismissed from his office or employment for cause.
|
(iii)
|
Any Award, whether or not subject to the attainment of performance objectives, shall vest before its Vesting Date or expire, as the case may be, in the following events and manner:
|
(1)
|
if an RSU Holder resigns and voluntary leaves his office or employment, the Award held by such RSU Holder shall expire immediately on the date he resigns and leaves his office or employment;
|
(2)
|
if an RSU Holder is dismissed without cause, the Award held by such RSU Holder shall vest immediately on the date of dismissal in accordance with section 6.4(b);
|
(3)
|
if an RSU Holder dies or his employment with the Corporation is terminated due to Permanent Disability, the Award held by such RSU Holder shall vest immediately on the date of the death of the RSU Holder or on the date of termination, as the case may be and notwithstanding anything to the contrary herein provided, the RSU Holder (or, if deceased, his legal representative) of such early vesting Award shall be entitled to receive, on the date of the death of the RSU Holder or the date of termination due to Permanent Disability (each for the purpose of this section 6.4(a)(iii)(3) an "Early Vesting Date"), all of the Shares of the Award Agreement on the terms set out in the Award Agreement and in accordance with the vesting as set forth in section 6.7 below; and
|
(4)
|
if an RSU Holder attains the retirement conditions established by the Corporation from time to time, the Award held by such RSU Holder shall vest immediately on the date of retirement in accordance with section 6.4(c).
|
(b)
|
In the case of the occurrence of an event contemplated in section 6.4(a)(iii)(2), and notwithstanding anything to the contrary herein provided, the RSU Holder of such early vesting Award shall be entitled to receive, on the date of dismissal without cause or the date of the Change of Control, as the case may be (each for the purpose of this section 6.4(b) an "Early Vesting Date"), the number of Shares equal to:
|
The number of RSU Shares
underlying the Award
|
X
|
Number of days elapsed between the Award Date and the Early Vesting Date
|
||
Number of days in the Vesting Period of such Award
|
(c)
|
In the case of the occurrence of an event contemplated in sections 6.4(a)(iii)(4), and notwithstanding anything to the contrary herein provided, the RSU Holder shall be entitled to the regular vesting as established by the Award Agreement upon the following conditions: (i) attainment of the retirement conditions established by the Corporation and (ii) continued compliance with the confidentiality, non-solicitation and non-competition obligations of the RSU Holder, on the terms set out in the Award Agreement and in accordance with the vesting as set forth in section 6.7 below.
|
6.5
|
Non-Assignable
|
6.6
|
No Implied Rights
|
6.7
|
Vesting of the Award
|
(a)
|
issue from treasury the number of RSU Shares represented by such vested Award (or the number of Shares determined in accordance with section 6.4(b), as the case may be) and direct its transfer agent to issue a certificate in the name of the RSU Holder of such vested Award (or, if deceased, his legal representative) which will be issued as fully paid and non-assessable Shares.
|
7.
|
CHANGE OF CONTROL
|
7.1
|
For the purposes of this section 7, "Change of Control" shall mean:
|
7.1.1
|
the acquisition by any person or entity, or any persons or entities acting jointly or in concert, whether directly or indirectly, of voting securities of the Corporation which together with all other voting securities of the Corporation held by such persons or entities, constitute, in the aggregate, either (a) fifty percent (50%) or more of the votes attached to all outstanding voting securities of the Corporation, or (b) forty percent (40%) or more of the votes attached to all outstanding voting securities of the Corporation and is followed within twenty-four (24) months by changes of the members of the Board resulting in a change of the majority of the Board;
|
7.1.2
|
an amalgamation, arrangement or other form of business combination of the Corporation with another entity which results in the holders of voting securities of that other entity holding, in the aggregate, either (a) fifty percent (50%) or more of the votes attached to all outstanding voting securities of the entity resulting from the business combination, or (b) forty percent (40%) or more of the votes attached to all outstanding voting securities of the entity resulting from the business combination and is followed within twenty-four (24) months by changes of the members of the Board resulting in a change of the majority of the Board;
|
7.1.3
|
any event or series of events (which event or series of events may include, without limitation, a proxy fight or proxy solicitation with respect to the election of Directors of the Corporation made in opposition to the nominees recommended by the Continuing Directors during any period of twenty-four (24) consecutive months) as a result of which a majority of the members of the Board consists of individuals other than Continuing Directors; or
|
7.1.4
|
the sale, lease or exchange of all or substantially all of the property of the Corporation to another person or entity, other than in the ordinary course of business of the Corporation or any of its Subsidiaries.
|
7.2
|
For the purposes of this section 7.2, "Continuing Directors" shall mean with respect to any period of twenty-four (24) consecutive months, (a) any members of the Board on the first (1st) day of such period, (b) any members of the Board elected after the first (1st) day of such period at any annual meeting of shareholders who were nominated by the Board or a committee thereof, if a majority of the members of the Board or such committee were Continuing Directors at the time of such nomination, and (c) any members of the Board elected to succeed Continuing Directors by the Board or a committee thereof, if a majority of the members of the Board or such committee were Continuing Directors at the time of such election.
|
7.3
|
Notwithstanding any provisions to the contrary contained in this Plan, the Board or the Committee shall have the power to accelerate the time at which an Option or RSU may first be exercised or the time during which an Option or RSU or any part thereof will become exercisable including, without limitation, prior to or in connection with a Change of Control.
|
8.
|
EFFECTS OF ALTERATION OF SHARE CAPITAL
|
9.
|
AMENDMENT AND TERMINATION
|
9.1
|
The Board bears full responsibility with regard to the Plan, which includes, but is not limited to, the power and authority to amend, suspend or terminate the Plan, in whole or in part, or amend the terms and conditions of outstanding Options or RSUs, provided that such amendment, suspension or termination shall:
|
9.1.1
|
be subject to obtaining approval of the shareholders of the Corporation, unless not required pursuant to section 9.2 or applicable securities law or stock exchange requirements;
|
9.1.2
|
be subject to obtaining any required approval of any securities regulatory authority or stock exchange; and
|
9.1.3
|
not adversely alter or impair any Option or RSU previously granted (provided that the Board may at its discretion accelerate the vesting of any Option or RSU regardless of any adverse or potentially adverse tax consequences resulting from such acceleration).
|
9.2
|
Subject to section 9.3, shareholder approval is not required with respect to the following actions, provided that they are made in accordance with applicable securities law and stock exchange requirements:
|
9.2.1
|
amendments of a general housekeeping or clerical nature that, among others, clarify, correct or rectify any ambiguity, defective provision, error or omission in the Plan;
|
9.2.2
|
amendments necessary to comply with applicable laws or the requirements of any securities regulatory authority or stock exchange;
|
9.2.3
|
changing the eligibility for, and limitations on, participation in the Plan;
|
9.2.4
|
modifying the terms and conditions, including restrictions, not inconsistent with the terms of the Plan, of any Option or RSU, which terms and conditions may differ among individual Option or RSU grants and Optionees and RSU Holders;
|
9.2.5
|
modifying the periods referred to in section 5.3 of the Plan during which vested Options may be exercised, provided that the Option Period is not extended beyond 10 years after the date of the granting of the Option;
|
9.2.6
|
amendments with respect to the vesting period or with respect to circumstances that would accelerate the vesting of Options or RSUs;
|
9.2.7
|
any amendment resulting from or due to the alteration of share capital as more fully set out in section 8 hereof;
|
9.2.8
|
amendments to the provisions relating to the administration of the Plan; and
|
9.2.9
|
suspending or terminating the Plan.
|
9.3
|
Notwithstanding section 9.2, shareholder approval is required for:
|
9.3.1
|
a reduction in the Subscription Price of Options held by an insider;
|
9.3.2
|
an extension of the Option Period of Options held by an insider;
|
9.3.3
|
any amendment to remove or to exceed the limit in sections 4(a) or 4(b);
|
9.3.4
|
an increase to the maximum number of Shares issuable under the Plan; and
|
9.3.5
|
any amendment to the provisions of this Section 9.
|
9.4
|
With regard to shareholder approval as required pursuant to sections 9.3.1, 9.3.2 and 9.3.3, the votes attached to Shares held directly or indirectly by insiders benefiting directly or indirectly from the amendment must be excluded.
|
9.5
|
With regard to shareholder approval as required pursuant to section 9.3.5, where the amendment will disproportionately benefit one or more insiders over other Optionees or RSU Holders, the votes attached to Shares held directly or indirectly by those insiders receiving the disproportionate benefit must be excluded.
|
10.
|
FINAL PROVISIONS
|
10.1
|
The Corporation's obligation to issue Options granted or Shares under the terms of the Plan is subject to all of the applicable laws, regulations or rules of any governmental regulatory agency or other competent authority in respect of the issuance or distribution of securities and to the rules of any stock exchange on which the Shares of the Corporation are listed. Each Optionee shall agree to comply with such laws, regulations and rules and to provide to the Corporation any information or undertaking required to comply with such laws, regulations and rules.
|
10.2
|
The participation in the Plan of a Director, an executive officer or an employee of the Corporation or any of its Subsidiaries, as well as any Consultant, shall be entirely optional and shall not be interpreted as conferring upon a Director, an executive officer or an employee of the Corporation or any of its Subsidiaries, as well as any Consultant, any right or privilege whatsoever, except for the rights and privileges set out expressly in the Plan. Neither the Plan nor any act that is done under the terms of the Plan shall be interpreted as restricting the right of the Corporation or any of its Subsidiaries to terminate the employment of an executive officer or employee at any time, as well as any contractual relationship with any Consultant. Any notice of dismissal given to an executive officer or employee, as well as to any Consultant, at the time his/her employment is terminated, or any payment in the place and stead of such notice, or any combination of the two, shall not have the effect of extending the duration of the employment or the contractual relationship for purposes of the Plan.
|
10.3
|
No Director, executive officer or employee of the Corporation or any of its Subsidiaries, as well as any Consultant, shall acquire the automatic right to be granted one or more Options or RSUs under the terms of the Plan by reason of any previous grant of Options or RSUs under the terms of the Plan.
|
10.4
|
The Plan does not provide for any guarantee in respect of any loss or profit that may result from fluctuations in the price of the Shares.
|
10.5
|
The Corporation and its Subsidiaries shall assume no responsibility as regards the tax consequences that participation in the Plan will have for a Director, an executive officer or an employee of the Corporation or any of its Subsidiaries, as well as any Consultant, and such persons are urged to consult their own tax advisors in such regard.
|
(a)
|
A plan participant may be required to pay to the Corporation or any subsidiary and the Corporation or any Subsidiary shall have the right and is hereby authorized to withhold from any Shares or other property deliverable under any Option or RSU or from any compensation or other amounts owing to a plan participant the amount (in cash or Shares) of any required tax withholding and payroll taxes in respect of an Option, its exercise, or any payment or transfer under an Option or in respect of a RSU and to take such other action as may be necessary in the opinion of the Corporation to satisfy all obligations for the payment of such taxes.
|
(b)
|
Without limiting the generality of clause (a) above a Plan participant may satisfy, in whole or in part, the foregoing withholding liability (but no more than the minimum required withholding liability) by delivery of Shares owned by the Plan participant with a fair market value equal to such withholding liability (provided that such Shares are not subject to any pledge or other security interest and have either been held by the Plan participant for 6 months, previously acquired by the Plan participant on the open market or meet such other requirements as the Committee may determine necessary in order to avoid an accounting earnings charge), or by having the Corporation withhold from the number of Shares otherwise issuable pursuant to the exercise or settlement of the Option or RSU award a number of Shares with a fair market value equal to such withholding liability.
|
10.6
|
The Plan and any Option or RSU granted under the terms of the Plan shall be governed and interpreted according to the laws of the province of Quebec and the laws of Canada applicable thereto.
|
10.7
|
The Plan is dated as of May 25, 2000 and amended as of January 9, 2004, January 12, 2005, as of January 6, 2016 and as of January 10, 2018.
|
1. |
on______________________(the "Award Date");
|
2. |
________________________(the "RSU Holder");
|
3. | was granted ____________________ | non-assignable Restricted Shares Units (RSU) (the "Award"); |
4. |
vesting of the Award shall:
|
5. |
the Award shall vest at 5:00 P.M., Eastern Time on the following date(s):
|
·
|
__________________ or, if such date falls into any black out period or any other restrictive period during which the RSU Holder is not entitled to trade EXFO's Subordinate Voting Shares, the RSUs shall: a) vest on the fifth trading day the RSU Holder is entitled to trade after such black out period or restrictive period or b) if the RSU Holder decides, prior to such vesting date, to pay his/her income tax without using any of the Shares' proceeds, then and only then, the vesting date shall remain [date];
|
6. |
The Corporation will issue from treasury, its Subordinate Voting Shares, the number of RSU represented by such vested Award mentioned above.
|
7. |
All on the terms and subject to the conditions set out in the Plan. By signing this agreement, the RSU Holder acknowledges that he or she has read and understands the Plan, and agrees to be bound thereby.
|
8. |
This Agreement and all related documents have been drawn up in the English language at the specific request of the parties hereto. La présente entente, ainsi que tout autre document y afférent, ont été rédigés en langue anglaise à la demande expresse des parties.
|
RSU Holder
|
EXFO Inc. | ||
Name of RSU Holder
|
|||
|
By:
|
||
Signature of RSU Holder
|
[Name], [Title]
|
1.
|
DEFINITIONS
|
(i)
|
the Participant has ceased to be a director of the Corporation by reason of his or her death or retirement or loss of office as a director; and
|
(ii)
|
person related to the Corporation for the purposes of the Income Tax Act (Canada).
|
2.
|
ADMINISTRATION
|
2.1
|
This DSUP shall be administered by the Board, which may delegate its duties and powers in whole or in part to any subcommittee thereof consisting solely of non-employee directors. The Board is authorized to interpret this DSUP, to establish, amend and rescind any rules and regulations relating to this DSUP, and to make any other determinations that it deems necessary or desirable for the administration of this DSUP. The Board may correct any defect or supply any omission or reconcile any inconsistency in this DSUP in the manner and to the extent the Board deems necessary or desirable. Any decision of the Board in the interpretation and administration of this DSUP, as described herein, shall lie within its sole and absolute discretion and shall be final, conclusive and binding on all parties concerned. Notwithstanding the foregoing, all actions of the Board shall be such that this DSUP continuously meets the conditions of paragraph 6801(d) of the Regulations under the Income Tax Act (Canada). Neither the Board or any member thereof, nor any officer or employee of the Corporation, shall be liable for any act, omission, interpretation, construction or determination made in good faith in connection with this DSUP, and the members of the Board and the officers and employees of the Corporation shall be entitled to indemnification by the Corporation in respect of any claim, loss, damage or expense (including legal fees and disbursements) arising therefrom to the fullest extent permitted by law. The expenses of administering this DSUP shall be borne by the Corporation.
|
3.
|
ELIGIBILITY
|
3.1
|
The Corporation is establishing a DSUP for Directors beginning from the date of the approval by the shareholders of the Corporation.
|
3.2 |
Each Participant is entitled to receive in the form of units a percentage of the annual board retainer fee payable annually to a Director and may, subject to the conditions set forth herein, elect to receive in the form of Units any percentage, up to 100%, of the annual board retainer fee (the "Portion").
|
4.
|
ELECTION TO PARTICIPATE
|
4.1
|
Each Participant who elects to participate in the DSUP will be required to file a notice of election, in the form of Schedule A hereto (the "Election Notice"), with the Corporation's Secretary before August 1st in each year and for each new Director such Election Notice must be delivered not later than 7 days after the date on which his or her term as a director commenced, indicating the percentage of the Portion payable
|
(a)
|
in the following calendar year for a continuing director and
|
(b)
|
in the current calendar year beginning on the first day of the financial quarter of the Corporation next following the date of receipt by the Corporation of the Election Notice for a new director in respect of which the Participant elects to receive Units.
|
4.2
|
The election of a Participant (who has not filed a Termination Notice in respect of such election) to participate in the DSUP shall be effective for the fiscal year or balance thereof in respect of which it is made and shall be deemed to apply to all fiscal years of the Corporation subsequent to the filing of the Election Notice until and unless a Termination Notice is filed per Section 4.3. If no Election Notice is made, and no prior election is deemed effective, the Participant shall be deemed to have elected to be paid 100% of the Portion in Units.
|
4.3
|
Each Participant is entitled, at any time, to terminate such Participant's future participation in the DSUP by filing with the Secretary of the Corporation a notice of termination in the form of Schedule B hereto (the "Termination Notice"). A Participant who has filed a Termination Notice may elect to participate again in the DSUP in respect of any period following the filing of such Termination Notice by filing an Election Notice in accordance with Section 4.1, and so on.
|
5.
|
GRANT OF UNITS
|
5.1
|
Participants will be credited for each fiscal year of the Corporation, a number of Units determined on the basis of the amount of Deferred Remuneration payable to such Director in respect of such fiscal year, divided by the Value of a Unit.
|
5.2
|
Participants to whose accounts Units stand credited will be credited with additional Units whenever cash dividends are paid on Shares.
|
5.3
|
In the event of a stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off or other distribution (other than normal cash dividends) of the Corporation's assets to shareholders, or any other change affecting the Shares, including the conversion thereof into shares of another entity upon an amalgamation or reorganization of the Corporation, such proportionate adjustments, if any, as the Board in its discretion may deem appropriate to reflect such change, will be made with respect to the number of Units outstanding under the DSUP.
|
6.
|
REDEMPTION OF UNITS
|
6.1
|
Subject to the limitations contained in sections 6.2 to 6.4, Units will be redeemable and the value thereof payable after the Termination Date of a Participant.
|
6.2
|
In the case where a Participant ceases to act as a Director, the Participant (or in the case of death, the beneficiary of the Units) may, after the Termination Date, subject to section 6.3, cause the Corporation to redeem the Units by filing a notice of redemption in the form of Schedule C hereto (the "Redemption Notice") with the Corporation's Secretary specifying the redemption date, which shall be at least five Business Days following the date on which the Redemption Notice is filed with the Corporation, but no later than December 15 of the first calendar year commencing after the year of the Termination Date (the "Redemption Date").
|
(a)
|
a number of Shares purchased on the open market by the Broker having a Value of the Units, net of any applicable withholdings, equal to the Value of a Unit on the Redemption Date multiplied by the number of Units credited to his or her notional account on the Payment Date, in accordance with the terms of Section 7 hereof,
|
(b)
|
a number of Shares issued by the Corporation equal to the number of Units credited to his or her notional account on the Payment Date,
|
(c)
|
any combination of clauses (a) and (b).
|
6.3
|
If the Participant or his/her beneficiary or legal representative, as the case may be, fails to file a Redemption Notice with the Corporation before the Deadline, the Participant or his/her beneficiary or legal representative, shall be deemed to have filed on the Deadline a Redemption Notice with the Corporation for such Participant's Units specifying December 15 of such year as the Redemption Date.
|
6.4
|
If a Participant dies after ceasing to act as a Director, but before filing a Redemption Notice with the Corporation, sections 6.2 and 6.3 shall apply with such modifications as the circumstances require.
|
6.5
|
A Redemption Notice shall apply to all Units held by the Participant or his/her beneficiary or legal representative, as the case may be, at the time it is filed.
|
6.6
|
Purchase of Shares pursuant to Section 6 hereof shall be made on the open market by a broker independent from the Corporation and who is a member of The Toronto Stock Exchange or NASDAQ Global Select Market or if the Shares are no longer listed or traded on The Toronto Stock Exchange or NASDAQ Global Select Market or both, then of such other stock exchange or quotation service as the Board may determine constitutes the principal market for the Shares (the "Broker"). Any such designation may be changed from time to time. Upon designation of a broker or at any time thereafter, the Corporation may elect to provide the Broker with a letter of agreement to be executed by the Broker and entered into with the Participant and to which the Corporation would also be a party, setting forth, inter alia, (i) the Broker's concurrence to being so designated, to acting for the Participant's account in accordance with customary usage of the trade with a view to obtaining the best share price for the Participant and to delivering to the Participant or his or her representative the share certificate for the Shares purchased upon payment by the Corporation of the purchase price and the related reasonable brokerage commissions, and (ii) the Corporation's agreement to notify the Broker of the number of Shares to be purchased and to pay the purchase price and the related reasonable brokerage commissions, provided however that no terms of such letter agreement shall have the effect of making the Broker or deeming the broker to be an affiliate of (or not independent from) the Corporation for purposes of any applicable corporate, securities or stock exchange requirement.
|
6.7
|
Prior to 11:00 a.m. (Montreal time) on the Payment Date, the Corporation shall notify the Broker as to the number of Shares to be purchased by the Broker on behalf of the Participant on the open market. As soon as practicable thereafter, the Broker shall purchase on the open market the number of Shares which the Corporation has requested the Broker to purchase and shall notify the Participant and the Corporation of (a) the aggregate purchase price ("Aggregate Purchase Price") of the Shares, (b) the purchase price per Share or, if the Shares were purchased at different prices, the average purchase price (computed on a weighted average basis) per Share, (c) the amount of any related reasonable brokerage commissions and (d) the settlement date for the purchase of the Shares. On the settlement date, upon payment of the Aggregate Purchase Price and related reasonable commissions by the Corporation, the Broker shall deliver to the Participant or to his or her representative the certificate representing the Shares. No settlement date shall be after the last business day in December of the first calendar year commencing after the Termination Date.
|
6.8
|
The Units, that may be delivered under this DSUP, have not been registered under the U.S. Securities Act of 1933, as amended, as of the effective date of this DSUP and the Corporation has no obligation to register such units.
|
7.
|
SHARES SUBJECT TO THIS DEFERRED SHARE UNIT PLAN
|
7.1
|
The total number of Shares that may be issued under this DSUP shall not exceed 11,792,893 Shares of the Corporation, including such Shares that may be issued under the Long Term Incentive Plan of the Corporation, subject to the adjustment under Section 8, and no Participant shall hold in total Options, RSUs and Units which may be exercised, settled or redeemed for more than 5% of the number of Shares issued and outstanding from time to time.
|
(i) |
the number of Shares reserved for issuance pursuant to Options, RSUs and Units granted to insiders of the Corporation shall not exceed 10% of the total issued and outstanding Shares;
|
(ii) |
the number of Shares issued to insiders, within a one-year period, pursuant to the exercise, settlement or redemption of Options, RSUs and Units shall not exceed 10% of the total issued and outstanding Shares; and
|
(iii) |
the number of Shares issued to any one insider and such insider's associates, within a one-year period, pursuant to the exercise, settlement or redemption of Options, RSUs and Units shall not exceed 5% of the total issued and outstanding Shares.
|
8.
|
ADJUSTMENTS AND REORGANIZATIONS
|
8.1
|
In the event of any change in the number of outstanding Shares of the Corporation by reason of any stock dividend, stock split, recapitalization, merger, consolidation, combination or exchange of Shares or other similar change, subject to the prior approval of the competent regulatory authorities, an equitable adjustment shall be made by the Board in the maximum number or kind of Shares issuable under this DSUP. Such adjustment will be definitive and mandatory for the purposes of this DSUP.
|
9.
|
AMENDMENT OR TERMINATION OF THE DSUP
|
9.1
|
The Board bears full responsibility with regard to the DSUP, which includes, but is not limited to, the power and authority to amend, suspend or terminate the DSUP, in whole or in part, or amend the terms and conditions of outstanding Units, provided that such amendment, suspension or termination shall:
|
9.1.1
|
be subject to obtaining approval of the shareholders of the Corporation, unless not required pursuant to section 9.2 or applicable securities law or stock exchange requirements;
|
9.1.2
|
be subject to obtaining any required approval of any securities regulatory authority or stock exchange; and
|
9.1.3
|
not adversely alter or impair any Unit previously granted (provided that the Board may at its discretion accelerate the redemption of any Unit regardless of any adverse or potentially adverse tax consequences resulting from such acceleration).
|
9.2
|
Subject to section 9.3, shareholder approval is not required with respect to the following actions, provided that they are made in accordance with applicable securities law and stock exchange requirements:
|
9.2.1
|
amendments of a general housekeeping or clerical nature that, among others, clarify, correct or rectify any ambiguity, defective provision, error or omission in the DSUP;
|
9.2.2
|
amendments necessary to comply with applicable laws or the requirements of any securities regulatory authority or stock exchange;
|
9.2.3
|
changing the eligibility for, and limitations on, participation in the DSUP;
|
9.2.4
|
modifying the terms and conditions, including restrictions, not inconsistent with the terms of the DSUP, of any Unit, which terms and conditions may differ among individual Unit grants and Participants;
|
9.2.5
|
amendments with respect to the term or with respect to circumstances that would accelerate the redemption of Units;
|
9.2.6
|
any amendment resulting from or due to the alteration of share capital as more fully set out in section 8 hereof;
|
9.2.7
|
amendments to the provisions relating to the administration of the DSUP; and
|
9.2.8
|
suspending or terminating the DSUP.
|
9.3
|
Notwithstanding section 9.2, shareholder approval is required for:
|
9.3.1
|
any amendment to remove or to exceed the limit in sections 7.1(i) and 7.1(ii);
|
9.3.2
|
an increase to the maximum number of Shares issuable under the DSUP; and
|
9.3.3
|
any amendment to the provisions of this Section 9.
|
9.4
|
With regard to shareholder approval as required pursuant to section 9.3, the votes attached to Shares held directly or indirectly by insiders benefiting directly or indirectly from the amendment must be excluded.
|
9.5
|
With regard to shareholder approval as required pursuant to section 9.3.5, where the amendment will disproportionately benefit one or more insiders over other Participants, the votes attached to shares held directly or indirectly by those insiders receiving the disproportionate benefit must be excluded.
|
10.
|
GENERAL
|
10.1
|
The DSUP will be administered by the Board or, if determined by the Board, by a committee of the Board, and all costs related to the implementation and administration of the DSUP will be paid by the Corporation.
|
10.2
|
A Participant may not sell, assign or otherwise dispose of Units or any rights in respect thereof, except by will or other testamentary document or according to the laws respecting the devolution and allotment of estates.
|
10.3
|
Unless otherwise determined by the Board, no funds will be set aside to guarantee the payment of the Units and future payment of Units will remain an unfunded liability recorded on the books of the Corporation.
|
10.4
|
The DSUP will be effective as of January 12, 2005, as amended as of January 10, 2018.
|
Note: All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Deferred Share Unit Plan.
|
£ |
I hereby elect to participate in the Corporation's Deferred Share Unit Plan and my elected percentage is %.
|
£ |
I hereby elect not to participate in the Corporation's Deferred Share Unit Plan.
|
Date
|
(Signature of Participant)
|
||
(Name of Participant in Block Letters)
|
Note: All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Deferred Share Unit Plan.
|
Date
|
(Signature of Participant)
|
||
(Name of Participant in Block Letters)
|
Note: All capitalized terms not otherwise defined herein shall have the meaning ascribed thereto in the Deferred Share Unit Plan.
|
Date
|
(Signature of Participant)
|
||
(Name of Participant in Block Letters)
|
I.
|
Purpose
|
II.
|
Composition
|
III.
|
Meetings
|
IV.
|
Authority and Responsibilities
|
1. |
Be directly responsible for recommending the nomination, compensation, retention and oversight of the external auditors (including resolution of disagreements between management and the external auditors regarding financial reporting) for the purpose of preparing its audit report or related work.
|
2. |
Have the sole authority to review in advance, and grant any appropriate pre‑approvals, of (a) all auditing services to be provided by the external auditors and (b) all non-audit services to be provided by the external auditors as permitted by Section 10A of the Securities Exchange Act and any other regulatory requirements, and in connection therewith to approve all fees and other terms of engagement. The Audit Committee shall also review and approve disclosures required by applicable regulatory requirements.
|
3.
|
Review on an annual basis the performance of the external auditors including the lead audit partner.
|
4.
|
Review the Corporation's financial statements, MD&A and annual and earnings (profit or loss) press releases before the Corporation publicly discloses this information.
|
5.
|
Ensure that the external auditors submit directly to the Audit Committee, on an annual basis, a formal written statement consistent with Independence Standards Board Standard No. 1.
|
6.
|
Actively discuss with the external auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the external auditors and satisfy itself as to the external auditors' independence.
|
7.
|
Take, or recommend that the full board take, appropriate action to oversee the independence of the external auditor.
|
8.
|
Confirm that the lead audit partner and the audit partner responsible for reviewing the audit, has not performed audit services for the Corporation for each of the five previous fiscal years, taking into account years prior to adoption of S/O Act.
|
9.
|
Review all reports required to be submitted by the external auditors to the Audit Committee under Section 10A of the Securities Exchange Act and any other regulatory requirements.
|
10.
|
Review, based upon the recommendation of the external auditors and management, the scope and plan of the work to be done by the external auditors.
|
11.
|
Review and discuss with management and the external auditors the Corporation's annual audited financial statements, including disclosures made in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the external auditors' audit of the annual financial statements prior to submission to stockholders, any government body, any stock exchange or the public.
|
12.
|
Discuss with the external auditors the matters required to be discussed by Statement on Auditing Standards No. 61, as amended, relating to the conduct of the audit.
|
13.
|
Recommend to the Board, if appropriate, that the Corporation's annual audited financial statements be included in the Corporation's annual report on Form 20-F or 40-F for filing with the Securities and Exchange Commission and with any other regulatory authorities.
|
14.
|
Review and discuss with management the Corporation's quarterly financial statements, including disclosures made in "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the external auditors' review of the quarterly financial statements, prior to submission to stockholders, any government body, any stock exchange or the public.
|
15.
|
Obtain and review an annual report from management relating to the accounting principles used in the preparation of the Corporation's financial statements, including those policies for which management is required to exercise discretion or judgments regarding the implementation thereof. If requested, discuss with management and the external auditors any issues regarding accounting principles used by the Corporation.
|
16.
|
Periodically review separately with each of management and the external auditors (a) any significant disagreement between management and the external auditors in connection with the preparation of the financial statements, (b) any difficulties encountered during the course of the audit, including any restrictions on the scope of work or access to required information and (c) management's response to each.
|
17.
|
Periodically discuss with the external auditors, without management being present, (a) their judgments about the quality and appropriateness of the Corporation's accounting principles and financial disclosure practices as applied in its financial reporting and (b) the completeness and accuracy of the Corporation's financial statements.
|
18.
|
Consider and approve, if appropriate, significant changes to the Corporation's accounting principles and financial disclosure practices as suggested by the external auditors or management. Review with the external auditors and management, at appropriate intervals, the extent to which any changes in accounting principles or financial disclosure practices, as approved by the Audit Committee, have been implemented.
|
19.
|
Review and discuss with management, the external auditors and the Corporation's in-house and independent counsel, as appropriate, any legal, regulatory or compliance matters that could have a significant impact on the Corporation's financial statements, including applicable changes in accounting standards or rules.
|
20.
|
Review and discuss with management the Corporation's earnings press releases, including the use of "Pro forma" or "Adjusted" non-GAAP information as well as financial information and earnings guidance provided to analysts and rating agencies. Such discussions maybe done generally (i.e., discussion of the types of information to be disclosed and the types of presentation to be made).
|
21.
|
Review and discuss with management all material off-balance sheet transactions, arrangements, obligations (including contingent obligations) and other relationships of the Corporation with unconsolidated entities or other persons, that may have a material current or future effect on financial condition, changes in financial condition, results of operations, liquidity, capital resources, capital reserves or significant components of revenues or expenses.
|
22.
|
Review and discuss with management the Company's major risk exposures and the steps management has taken to monitor, control and manage such exposures.
|
23.
|
In consultation with the external auditors, review the adequacy to the Corporation's internal controls and disclosure controls and procedures designed to insure compliance with laws and regulations, and discuss the responsibilities, budget and staffing needs for support of internal controls and disclosure controls and procedures.
|
24.
|
Establish procedures for (a) the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal accounting controls or auditing matters and (b) the confidential, anonymous submission by employees of the Corporation of concerns regarding the questionable accounting or auditing matters.
|
25.
|
Review, when required by regulation, (i) the internal control report prepared by management, including management's assessment of the effectiveness of the Corporation's internal controls for financial reporting and (ii) the external auditor's attestation, and report, on the assessment made by management.
|
26.
|
Review and approve all related-party transactions.
|
27.
|
Review and approve (a) any change or waiver in the Corporation's "Code of Ethics for our Principal Executive Officer and Senior Financial Officers" and (b) any disclosure regarding such change or waiver.
|
28.
|
Establish a policy addressing the Corporation's hiring of employees or former employees of the external auditors who were engaged on the Corporation's account that provides as a minimum that the positions of CEO, CFO, Chief Accounting Officer, Controller or any person serving in an equivalent position cannot be filled by a person employed by the external auditor and that participated in the audit of the Corporation during the preceding twelve month period.
|
29.
|
Review and reassess the adequacy of this Charter annually and recommend to the Board any changes deemed appropriate by the Audit Committee.
|
30.
|
Report regularly to the Board. Review with the full Board any issues that have arisen with respect to the quality or integrity of the Company's financial statements, the Company's compliance with legal or regulatory requirements, the performance and independence of the Company's external auditors.
|
31.
|
Perform any other activities consistent with this Charter, the Corporation's by‑laws and governing law, as the Audit Committee or the Board deems necessary or appropriate.
|
V.
|
Resources
|
CSA Guidelines
|
EXFO's Corporate Governance Practices
|
|||
1.
|
Board of Directors
|
|||
(a)
|
Disclose the identity of directors who are independent.
|
The following directors are independent:
Mr. Pierre-Paul Allard
Mr. François Côté Ms. Angela Logothetis Mr. Claude Séguin Mr. Randy E. Tornes |
||
(b)
|
Disclose the identity of directors who are not independent, and describe the basis for that determination.
|
Mr. Germain Lamonde – non-independent – is Executive Chairman of the Corporation and the majority shareholder of the Corporation as he has the ability to exercise a majority of the votes for the election of the Board of Directors.
Mr. Philippe Morin – non-independent – is currently a proposed nominee for Director and is CEO of the Corporation since April 1, 2017.
|
||
(c)
|
Disclose whether or not a majority of directors are independent. If a majority of directors are not independent, describe what the board of directors does to facilitate its exercise of independent judgment in carrying out its responsibilities.
|
The majority of directors are independent:
From September 1, 2016 to November 1, 2017, 5 out of 6.
|
||
(d)
|
If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.
|
No.
|
||
(e)
|
Disclose whether or not the independent directors hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. If the independent directors hold such meetings, disclose the number of meetings held since the beginning of the issuer's most recently completed financial year. If the independent directors do not hold such meetings, describe what the board does to facilitate open and candid discussion among its independent directors.
|
The independent Directors hold as many meetings as needed annually and any Director may request a meeting at any time. From September 1, 2016 and to November 1, 2017 five (5) meetings of independent Directors without Management occurred.
In June 2011, an Independent Members Committee Charter was adopted.
|
(f)
|
Disclose whether or not the chair of the board is an independent director. If the board has a chair or lead director who is an independent director, disclose the identity of the independent chair or lead director, and describe his or her role and responsibilities. If the board has neither a chair that is independent nor a lead director that is independent, describe what the board does to provide leadership for its independent directors.
|
The Chair of the Board of Directors (being the majority shareholder) is not an independent Director. Since 2002, the Corporation has named an independent director to act as "Lead Director". Mr. François Côté has been acting as the independent "Lead Director" of the Corporation since January 2016.
The Lead Director is an outside and unrelated Director appointed by the Board of Directors to ensure that the Board of Directors can perform its duties in an effective and efficient manner independent of Management. The appointment of a Lead Director is part of the Corporation's ongoing commitment to good corporate governance. The Lead Director will namely:
|
|||
●
|
provide independent leadership to the Board of Directors;
|
||||
●
|
select topics to be included in the Board of Directors meetings;
|
||||
●
|
facilitate the functioning of the Board of Directors independently of the Corporation's Management;
|
||||
●
|
maintain and enhance the quality of the Corporation's corporate governance practices;
|
||||
●
|
in the absence of the Executive Chair, act as chair of meetings of the Board of Directors;
|
||||
●
|
recommend, where necessary, the holding of special meetings of the Board of Directors;
|
||||
●
|
serve as Board of Directors ombudsman, so as to ensure that questions or comments of individual directors are heard and addressed;
|
||||
●
|
manage and investigate any report received through the Corporation website pursuant to the Corporation's Statement on reporting Ethical Violations, Ethics and Business Conduct Policy and Agent Code of Conduct; and
|
||||
●
|
work with the Board of Directors to facilitate the process for developing, monitoring and evaluating specific annual objectives for the Board of Directors each year.
|
||||
(g) |
Disclose the attendance record of each director for all board meetings held since the beginning of the issuer's most recently completed financial year.
|
The table below indicates the Directors' record of attendance at meetings of the Board of Directors and its committees during the financial year ended August 31, 2017: |
Director
|
Board
Meetings Attended |
Audit Committee
Meetings Attended
|
Human Resources
Committee Meetings Attended
|
Independent Directors Meetings Attended
|
Total Board
and Committee Meetings Attendance Rate
|
||
Lamonde, Germain
|
9 of 9
|
n/a
|
n/a
|
n/a
|
100%
|
||
Allard, Pierre-Paul
|
7 of 9
|
3 of 5
|
3 of 4
|
3 of 4
|
73%
|
||
Côté, François
|
8 of 9
|
5 of 5
|
4 of 4
|
4 of 4
|
95%
|
||
Edwards, Darryl
|
2 of 5
|
1 of 3
|
1 of 2
|
1 of 2
|
42%
|
||
Logothetis, Angela
|
3 of 4
|
2 of 2
|
2 of 2
|
2 of 2
|
90%
|
||
Séguin, Claude
|
9 of 9
|
5 of 5
|
4 of 4
|
4 of 4
|
100%
|
||
Tornes, Randy E.
|
9 of 9
|
5 of 5
|
4 of 4
|
4 of 4
|
100%
|
||
Attendance Rate:
|
87%
|
84%
|
90%
|
90%
|
87%
|
2.
|
Board Mandate – Disclose the text of the board's written mandate. If the board does not have a written mandate, describe how the board delineates its role and responsibilities.
|
|||
(a)
|
Assuring the integrity of the executive officers and creating a culture of integrity throughout the organization.
|
The Board of Directors is committed to maintaining the highest standards of integrity throughout the organization. Accordingly, the Board of Directors adopted an Ethics and Business Conduct Policy and a Statement on Reporting Ethical Violations (Whistleblower Policy) which are available on the Corporation's website (www.EXFO.com) to all employees and initially distributed to every new employee of the Corporation.
|
||
(b)
|
Adoption of a strategic planning process.
|
The Board of Directors provides guidance for the development of the strategic planning process and approves the process and the plan developed by Management annually. In addition, the Board of Directors carefully reviews the strategic plan and deals with strategic planning matters that arise during the year.
|
||
(c)
|
Identification of principal risks and implementing of risk management systems.
|
The Board of Directors works with Management to identify the Corporation's principal risks and manages these risks through regular appraisal of Management's practices on an ongoing basis.
|
||
(d)
|
Succession planning including appointing, training and monitoring senior management.
|
The Human Resources Committee is responsible for the elaboration and implementation of a succession planning process and its updates as required. The Human Resources Committee is responsible to monitor and review the performance of the Executive Chairman and of the Chief Executive Officer and that of all other senior officers.
|
||
(e)
|
Communications policy.
|
The Chief Financial Officer of the Corporation is responsible for communications between Management and the Corporation's current and potential shareholders and financial analysts. The Board of Directors adopted and implemented Disclosure Guidelines to ensure consistency in the manner that communications with shareholders and the public are managed. The Audit Committee reviews press releases containing the quarterly results of the Corporation prior to release. In addition, all material press releases of the Corporation are reviewed by the Executive Chairman, Chief Executive Officer, Chief Financial Officer, Investor Relations Manager, Director of Financial Reporting and Accounting and General Counsel. The Disclosure Guidelines have been established in accordance with the relevant disclosure requirements under applicable Canadian and United States securities laws.
|
||
(f)
|
Integrity of internal control and management information systems.
|
The Audit Committee has the responsibility to review the Corporation's systems of internal controls regarding finance, accounting, legal compliance and ethical behavior. The Audit Committee meets with the Corporation's external auditors on a quarterly basis. Accordingly, the Corporation fully complies with Sarbanes-Oxley Act requirements within the required period of time.
|
(g)
|
Approach to corporate governance including developing a set of corporate governance principles and guidelines that are specifically applicable to the issuer.
|
The Board of Directors assumes direct responsibility for the monitoring of the Board of Director's corporate governance practices, the functioning of the Board of Directors and the powers, mandates and performance of the committees. These responsibilities were previously assumed by the Human Resources Committee. Accordingly, the Board of Directors adopted the following policies to fully comply with these responsibilities, which are updated on a regular basis as required:
|
||||
Policy
|
Adopted
|
Amendments
|
||||
Audit Committee Charter*
|
March 2005
|
November 2011
(French version only)
October 2014
|
||||
Board of Directors Corporate Governance
Guidelines*
|
March 2005
|
June 2017
|
||||
Code of Ethics for our Principal Executive Officer
and Senior Financial Officers*
|
March 2005
|
|||||
Disclosure Guidelines
|
March 2005
|
May 2005
August 2008 March 2017 |
||||
Ethics and Business Conduct Policy*
|
March 2005
|
June 2013
|
||||
Human Resources Committee Charter*
|
September 2006
October 2012 January 2013 October 2014 October 2017 |
|||||
Securities and Trading Policy
|
March 2005
|
|||||
Statement on Reporting Ethical Violations
(Whistleblower Policy)*
|
March 2005
|
June 2013
|
||||
Policy Regarding Hiring Employees and Former
Employees of Independent Auditors*
|
October 2006
|
|||||
Best Practice Regarding the Granting Date of Stock
Incentive Compensation
|
April 2007
|
|||||
Guidelines Regarding the Filing and Disclosure of
Material Contracts
|
October 2008
|
|||||
Independent Committee Charter
|
June 2011
|
|||||
Majority Voting Policy*
|
October 2011
|
March 2016
|
||||
Policy Regarding Conflict Minerals*
|
January 2013
|
|||||
Agent Code of Conduct*
|
September 2013
|
|||||
Director Share Ownership Policy*
|
September 2013
|
June 2017
|
||||
* Available on the Corporation's website (www.EXFO.com).
|
The Board of Directors adopted in October 2011 a Majority Voting Policy for the election of Directors and updated it in accordance with the TSX Rules in March 2016. In October 2012 in order to expressly reflect the responsibility of the Human Resources Committee to conduct an annual assessment of the risks associated with the Corporation's executive compensation policies and procedures, the Board of Directors amended the Human Resources Committee Charter. The Board of Directors amended in January 2013 the Human Resources Committee Charter to include within the Human Resources Committee's mandate the responsibility to receive and discuss suggestions from shareholders for potential director's nominees. Also in January 2013, the Board of Directors adopted a Policy Regarding Conflict Minerals. In the course of formalizing its anti-corruption compliance program, the Board of Directors amended the Ethics and Business Conduct Policy and the Statement on Reporting Ethical Violations (Whistleblower Policy) in June 2013 and also adopted in September 2013 the Agent Code of Conduct. In September 2013, the Board of Directors integrated a governance best practice by adopting a Director Share Ownership Policy.
The Board of Directors amended in October 2014 the Human Resources Committee Charter in order to adapt it to the latest NASDAQ Rules on compensation committees along with an update on the nomination of Directors process and the Audit Committee Charter in order to harmonize its terminology with MI 52-110.
The Board of Directors amended in March 2017 the Disclosure Guidelines to add the Executive Chairman as a member of the Disclosure Committee. The Board of Directors amended in June 2017 the Director Share Ownership Policy and the Board of Directors Corporate Governance Guidelines in order to introduce mandatory obligations for the Directors to elect to receive at least seventy-five (75%) of their Annual Retainer in form of DSUs until their cumulative Annual Retainers equal or exceed three (3) times the sum of: i) the Annual Retainer for Directors; ii) the Annual Retainer for Audit Committee Members; and iii) the Annual Retainer for Human Resources Committee Members. The Board of Directors amended in October 2017 the Human Resources Committee Charter in order to specifically add the compensation review of the Executive Chairman.
|
|||
(h)
|
Expectations and responsibilities of Directors, including basic duties and responsibilities with respect to attendance at board meetings and advance review of meeting materials.
|
The Board of Directors is also responsible for the establishment and functioning of all of the Board of Directors' committees, their compensation and their good standing. At regularly scheduled meetings of the Board of Directors, the Directors receive, consider and discuss committee reports. The Directors also receive in advance of any meeting, all documentation required for the upcoming meetings and they are expected to review and consult this documentation.
|
3. | Position Descriptions | ||||
(a) |
Disclose whether or not the board has developed written position descriptions for the chair of the board and the chair of each board committee. If the board has not developed written position descriptions for the chair and/or the chair of each board committee, briefly describe how the board delineates the role and responsibilities of each such position.
|
There is no specific mandate for the Board of Directors, however the Board of Directors is, by law, responsible for managing the business and affairs of the Corporation. Any responsibility which is not delegated to senior Management or to a committee of the Board of Directors remains the responsibility of the Board of Directors. Accordingly, the chair of the Board of Directors, of the Audit Committee and of the Human Resources Committee will namely: | |||
● |
provide leadership to the Board of Directors or Committee;
|
||||
● |
ensure that the Board of Directors or Committee can perform its duties in an effective and efficient manner;
|
||||
● |
facilitate the functionary of the Board of Directors or Committee; and
|
||||
● | promote best practices and high standards of corporate governance. | ||||
(b)
|
Disclose whether or not the board and CEO have developed a written position description for the CEO. If the board and CEO have not developed such a position description, briefly describe how the board delineates the role and responsibilities of the CEO.
|
No written position description has been developed for the Executive Chairman and for the CEO. The Executive Chairman and the Chief Executive Officer, along with the rest of Management placed under his supervision, is responsible for meeting the corporate objectives as determined by the strategic objectives and budget as they are adopted each year by the Board of Directors.
|
|||
4.
|
Orientation and Continuing Education
|
||||
(a)
|
Briefly describe what measures the board takes to orient new directors regarding
|
||||
i.
|
the role of the board, its committees and its directors; and
|
The Human Resources Committee Charter foresees that the Human Resources Committee maintains an orientation program for new Directors.
|
|||
ii.
|
the nature and operation of the issuer's business.
|
Presentations and reports relating to the Corporation's business and affairs are provided to new Directors. In addition, new Board of Directors members meet with senior Management of the Corporation to review the business and affairs of the Corporation.
|
(b)
|
Briefly describe what measures, if any, the board takes to provide continuing education for its directors. If the board does not provide continuing education, describe how the board ensures that its directors maintain the skill and knowledge necessary to meet their obligations as directors.
|
The Human Resources Committee Charter foresees that the Human Resources Committee maintains a continuing education program for Directors. In March 2013, the independent Directors of the Corporation attended a presentation on the Corruption of Foreign Public Officials Act given by PricewaterhouseCoopers LLP. In March 2014, the independent Directors of the Corporation attended a presentation on directors' fiduciary duty by Fasken Martineau DuMoulin LLP. In March 2015, the Directors of the Corporation attended a presentation on directors' fiduciary duty in a controlled environment and on Corporate Governance by Norton Rose Fulbright LLP. In October 2015 the Directors of the Corporation attended a presentation on the Corporation's Service Assurance products by the Vice-President Transport and Service Assurance Division of the Corporation. In 2016, the Directors of the Corporation attended an online training on the Corporation's business and orientation. In 2017, the Directors of the Corporation attended a training on the Corporation's products and solutions and also attended a presentation on Fraud Risk given by PricewaterhouseCoopers LLP.
|
||
5.
|
Ethical Business Conduct
|
|||
(a)
|
Disclose whether or not the board has adopted a written code for the directors, officers and employees. If the board has adopted a written code:
|
The Corporation is committed to maintaining the highest standard of business conduct and ethics. Accordingly, the Board of Directors updated and established (i) a Board of Directors Corporate Governance Guidelines, (ii) a Code of Ethics for our Principal Executive Officer and senior Financial Officers, (iii) an Ethics and Business Conduct Policy and (iv) a Statement on Reporting Ethical Violations (Whistleblower Policy) which are available on the Corporation's website (www.EXFO.com).
|
||
i.
|
disclose how a person or company may obtain a copy of the code;
|
|||
ii.
|
describe how the board monitors compliance with its code, or if the board does not monitor compliance, explain whether and how the board satisfies itself regarding compliance with its code; and
|
The Board of Directors will determine, or designate appropriate persons to determine, appropriate actions to be taken in the event of a violation of the Code of Ethics for our Principal Executive Officer and senior Financial Officers. Someone that does not comply with this Code of Ethics will be subject to disciplinary measures, up to and including discharge from the Corporation. Furthermore, a compliance affirmation must be filled in a written form agreeing to abide by the policies of the Code of Ethics.
|
||
iii.
|
provide a cross-reference to any material change report filed since the beginning of the issuer's most recently completed financial year that pertains to any conduct of a director or executive officer that constitutes a departure from the code.
|
No material change report has been required or filed during our financial year ended August 31, 2017 with respect to any conduct constituting a departure from our Code of Ethics.
|
(b)
|
Describe any steps the board takes to ensure directors exercise independent judgement in considering transactions and agreements in respect of which a director or executive officer has a material interest.
|
Activities that could give rise to conflicts of interest are prohibited. Members of the Board of Directors should contact the Lead Director or in-house legal counsel regarding any issues relating to possible conflict of interest. If such event occurs, the implicated Board of Directors member will not participate in the meeting and discussion with respect to such possible conflict of interest and will not be entitled to vote on such matter. Senior executives should also contact the in-house legal counsel regarding any issues relating to possible conflict of interest.
|
|
(c)
|
Describe any other steps the board takes to encourage and promote a culture of ethical business conduct.
|
The Corporation has instituted and follows a "Whistleblower Policy" where each member of the Board of Directors as well as any senior officer, every employee of the Corporation and any person is invited and encouraged to report anything appearing or suspected of being non-ethical to our Lead Director, in confidence. The Lead Director has the power to hire professional assistance to conduct an internal investigation should he so fell it is required.
|
|
6.
|
Nomination of Directors
|
||
(a)
|
Describe the process by which the board identifies new candidates for board nomination.
|
The Board of Directors adopted and implemented a Human Resources Committee Charter which integrates the Compensation Committee Charter and the Nominating and Governance Committee Charter. The Human Resources Committee is responsible for nomination, assessment and compensation of directors and Officers.
More specifically, the Human Resources committee, which is comprised entirely of independent Directors, is responsible for participating in the recruitment and recommendation of new candidates for appointment or election to the Board. When considering a potential candidate, the Human Resources Committee considers the qualities and skills that the Board, as a whole, should have and assesses the competencies and skills of the current members of the Board. Based on the talent already represented on the Board, the Human Resources Committee then identifies the specific skills, personal qualities or experiences that a candidate should possess in light of the opportunities and risks facing the Corporation. Potential candidates are screened to ensure that they possess the requisite qualities, including integrity, business judgment and experience, business or professional expertise, independence from Management, international experience, financial literacy, excellent communications skills and the ability to work well with the Board and the Corporation. The Human Resources Committee considers the existing commitments of a potential candidate to ensure that such candidate will be able to fulfill his or her obligations as a Board member.
|
The Human Resources Committee maintains a list of potential director candidates for its future consideration and may engage outside advisors to assist in identifying potential candidates. The Human Resources Committee also considers recommendations for director nominees submitted by the Corporation's shareholders, officers, Directors and senior Management.
|
|||||
(b)
|
Disclose whether or not the board has a nominating committee composed entirely of independent directors. If the board does not have a nominating committee composed entirely of independent directors, describe what steps the board takes to encourage an objective nomination process.
|
The Human Resources Committee consists of five (5) members all of whom are independent Directors. The Chairman of the Human Resources Committee is Mr. François Côté.
The Human Resources Committee Charter foresees:
|
|||
●
|
recommending a process for assessing the performance of the Board of Directors as a whole, the Chair of the Board of Directors and the Committee chairs and the contribution of individual Directors, and seeing to its implementation;
|
||||
(c)
|
If the board has a nominating committee, describe the responsibilities, powers and operation of the nominating committee.
|
●
|
recommending the competencies, skills and personal qualities required on the Board of Directors in order to create added value, taking into account the opportunities and risks faced by the Corporation and subsequently identifying and recommending to the Board of Directors.
|
||
7.
|
Compensation
|
||||
(a)
|
Describe the process by which the board determines the compensation for the issuer's directors and officers.
|
The Human Resources Committee reviews periodically compensation policies in light of market conditions, industry practice and level of responsibilities. Only independent Directors are compensated for acting as a Director of the Corporation.
|
|||
(b)
|
Disclose whether or not the board has a compensation committee composed entirely of independent directors. If the board does not have a compensation committee composed entirely of independent directors, describe what steps the board takes to ensure an objective process for determining such compensation.
|
The Human Resources Committee consists of five (5) members all of who are independent Directors. The Chairman of the Human Resources Committee is Mr. François Côté.
|
|||
(c)
|
If the board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.
|
The Human Resources Committee Charter foresees that such committee shall:
|
|||
●
|
review and approve on an annual basis with respect to the annual compensation of all senior officers which namely includes the assessment of risks associated with the compensation of such senior officers;
|
●
|
review and approve, on behalf of the Board of Directors or in collaboration with the Board of Directors as applicable, on the basis of the attribution authorized by the Board of Directors, to whom options to purchase shares of the Corporation, RSUs or DSUs shall be offered as the case may be and if so, the terms of such options, RSUs or DSUs in accordance with the terms of the Corporation's LTIP or the Deferred Share Unit Plan provided that no options, RSUs or DSUs shall be granted to members of this committee without the approval of the Board of Directors;
|
|||
●
|
recommend to the Board of Directors from time to time the remuneration to be paid by the Corporation to Directors;
|
|||
●
|
make recommendations to the Board of Directors with respect to the Corporation's incentive compensation plans and equity-based plans.
|
|||
8.
|
Other Board Committees – If the board has standing committees other than the audit, compensation and nominating committees identify the committees and describe their function.
|
The Board of Directors has no other standing committee.
|
||
9.
|
Assessments – Disclose whether or not the board, its committees and individual directors are regularly assessed with respect to their effectiveness and contribution. If assessments are regularly conducted, describe the process used for the assessments. If assessments are not regularly conducted, describe how the board satisfies itself that the board, its committees, and its individual directors are performing effectively.
|
The Board of Directors assumes direct responsibility for the monitoring of the Board of Directors' corporate governance practices, the functioning of the Board of Directors and the powers, mandates and performance of the Human Resources Committee. The Human Resources Committee, composed solely of independent Directors, initiates a self-evaluation of the Board of Directors' performance on an annual basis. Questionnaires are distributed to each independent director for the purpose of evaluation the Board of Directors' responsibilities and functions and the performance of the Board of Directors' Committees. The results of the questionnaires are compiled on a confidential basis to encourage full and frank commentary and are discussed at the next regular meeting of the Human Resources Committee or independent Board of Directors members meeting.
|
||
10.
|
Director Term Limits and Other Mechanisms of Board Renewal – Disclose whether or not the issuer has adopted term limits for the directors on its board or other mechanisms of board renewal and, if so, include a description of those director term limits or other mechanisms of board renewal. If the issuer has not adopted director term limits or other mechanisms of board renewal, disclose why it has not done so.
|
The Corporation does not have a policy that limits the term of the directors on its board. The Board has determined that the term limit of the director's mandate or the mandatory retirement age is not essential in part, because Board renewal has not been a challenge for the Corporation in recent years. Specifically, the average tenure of the current independent directors is low, at approximately four (4) years and a half (fifty-four (54) months). Historically, the average tenure of the independent directors that served on the Board of Directors since 2000 is eight (8) years and ten (10) months. In addition, the Corporation seeks to avoid losing the services of a qualified director with experience and in-depth knowledge of the Corporation through the imposition of an arbitrary term limit but is of the opinion however that a balance between long‐term directors and new directors who bring a different experience and new ideas is essential.
|
The Human Resources Committee initiates a self-evaluation of the Board of Director's performance on an annual basis. This evaluation is an alternative mechanism for renewing the terms of the Directors serving on its Board of Directors. The annual review process of the overall efficiency of the Board of Directors and Committees as a whole and of Committee members and Directors on an individual basis, remains the best way of ensuring that the skills required are well represented within the Board of Directors.
|
||||
11.
|
Policies Regarding the Representation of Women on the Board
|
|||
(a)
|
Disclose whether the issuer has adopted a written policy relating to the identification and nomination of women directors. If the issuer has not adopted such a policy, disclose why it has not done so.
|
The Corporation does not have any written policy regarding the identification and nomination of women directors as it did not deem it necessary and its focus is on the recruitment of candidates with the specific skills, personal qualities and experiences to add the highest value to the Board, rather than on the gender or other personal characteristics of particular candidates.
|
||
(b)
|
If an issuer has adopted a policy referred to in (a), disclose the following in respect of the policy:
|
The Corporation does not have a written policy.
|
||
i.
|
a short summary of its objectives and key provisions,
|
|||
ii.
|
the measures taken to ensure that the policy has been effectively implemented,
|
|||
iii.
|
annual and cumulative progress by the issuer in achieving the objectives of the policy, and
|
|||
iv.
|
whether and, if so, how the board or its nominating committee measures the effectiveness of the policy.
|
|||
12.
|
Consideration of the Representation of Women in the Director Identification and Selection Process – Disclose whether and, if so, how the board or nominating committee considers the level of representation of women on the board in identifying and nominating candidates for election or re-election to the board. If the issuer does not consider the level of representation of women on the board in identifying and nominating candidates for election or re-election to the board, disclose the issuer's reasons for not doing so.
|
The Human Resources Committee does not specifically consider the level of representation of women on the Board in identifying and nominating candidates for election or re-election to the Board. In the context of such process, it considers the then current Board composition and anticipated competencies required so as to add the highest value to the Board. See Heading 6 "Nomination of Directors" on page 8 of this Circular for a description of the process adhered to by the Corporation to select director candidates.
|
13.
|
Consideration Given to the Representation of Women in Executive Officer Appointments – Disclose whether and, if so, how the issuer considers the level of representation of women in executive officer positions when making executive officer appointments. If the issuer does not consider the level of representation of women in executive officer positions when making executive officer appointments, disclose the issuer's reasons for not doing so.
|
The Corporation is focused on finding executive talent to grow and expand its business. As such, it focuses on recruiting and retaining executive talent needed to develop and implement the Corporation's strategy, objectives and goals without regard for the gender or other personal characteristics of particular candidates for executive officer positions.
|
||
14.
|
Issuer's Targets Regarding the Representation of Women on the Board and in Executive Officer Positions
|
|||
(a)
|
For purposes of this Item, a "target" means a number or percentage, or a range of numbers or percentages, adopted by the issuer of women on the issuer's board or in executive officer positions of the issuer by a specific date.
|
|||
(b)
|
Disclose whether the issuer has adopted a target regarding women on the issuer's board. If the issuer has not adopted a target, disclose why it has not done so.
|
The Corporation does not have a target of women on the Board of Directors because it does not believe that any candidate for membership to the Board of Directors should be chosen nor excluded solely or largely because of gender or other personal characteristics. In selecting director nominee, the Corporation considers the skills, expertise and background that would complement the existing Board.
|
||
(c)
|
Disclose whether the issuer has adopted a target regarding women in executive officer positions of the issuer. If the issuer has not adopted a target, disclose why it has not done so.
|
The Corporation has not adopted a target regarding women in executive officer positions of the Corporation. The Corporation considers candidates based on their qualifications, personal qualities, business background and experience, and does not feel that targets necessarily result in the identification or selection of the best candidates.
|
||
(d)
|
If the issuer has adopted a target referred to in either (b) or (c), disclose:
|
|||
i.
|
the target, and
|
|||
ii.
|
the annual and cumulative progress of the issuer in achieving the target.
|
15.
|
Number of Women on the Board and in Executive Officer Positions
|
||
(a)
|
Disclose the number and proportion (in percentage terms) of directors on the issuer's board who are women.
|
Currently, one of the Corporation's Board members is a woman (17%).
|
|
(b)
|
Disclose the number and proportion (in percentage terms) of executive officers of the issuer, including all major subsidiaries of the issuer, who are women.
|
Even though the Corporation did have women as executive officers in the past, currently, none of the Corporation's executive officers are women (0%). However, starting November 13, 2017, one woman will be an executive officer of the Corporation (11%).
|
I.
|
Board Issues
|
1.
|
Size of Board. The Board's maximum size is twelve (12) members.
|
2.
|
Majority of Independent Directors. The Board will have a majority of directors who meet the criteria for independence required by NASDAQ. The Board must determine, based on all of the relevant facts and circumstances, whether each director satisfies the criteria for independence and must disclose each of these determinations. The Board may adopt and disclose categorical standards to assist it in making such determinations and may make a general disclosure if each director meets these standards. Any determination of independence for a director who does not meet these standards, however, must be specifically explained.
|
3.
|
Board Membership Criteria. The Board seeks members from diverse professional and personal backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity. This assessment will include an individual's qualification as independent, as well as consideration of diversity, age, skills and experience in the context of the needs of the Board.
|
4.
|
New Directors. The Human Resources Committee has, as one of its responsibilities, the recommendation of director candidates to the full Board. Nominees for directorship will be selected by the Human Resources Committee in accordance with the policies and principles in its charter. The Human Resources Committee will maintain an orientation program for new directors.
|
5.
|
Retirement.
|
(a)
|
Term Limits. The Board does not favor term limits for directors, but believes that it is important to monitor overall Board performance. Therefore, the Human Resources Committee shall review each director's continuation on the Board every three years. This will allow each director the opportunity to conveniently confirm his or her desire to continue as a member of the Board.
|
(b)
|
Retirement Policy. No person shall be nominated by the Board to serve as a director after he or she has passed his or her 75th birthday, unless the Human Resources Committee has voted, on an annual basis, to waive, or continue to waive, the mandatory retirement age of such person as a director.
|
(c)
|
Resignation Policy - Non-independent Directors. Non-independent directors shall offer to resign from the Board upon their resignation, removal or retirement as an officer of the Company.
|
(d)
|
Directors Changing Their Present Job Responsibilities. The Board expects directors to offer to resign from the Board upon a major change in their business position including, without limitation, retirement from the position on which their original nomination was based. There should, however, be an opportunity for the Board through the Human Resources Committee to review the continued appropriateness of Board membership under the circumstances. It is not the sense of the Board that in every instance the directors who retire or change from the position they held when they came on the Board should necessarily leave the Board.
|
II. |
Conduct:
|
1.
|
Directors' Duties. The basic responsibility of the directors is to exercise their business judgment to act in what they reasonably believe to be in the best interests of the Company and its shareholders. In discharging that obligation, directors should be entitled to rely on the honesty and integrity of the Company's officers, employees, outside advisors and independent auditors.
|
2.
|
Board Meetings.
|
(a)
|
Selection of Agenda Items and Executive Sessions. The Chairman of the Board or the Chief Executive Officer or the Lead Director should establish the agenda for Board meetings. Each Board member is free to suggest the inclusion of items on the agenda. Each Board member is free to raise at any Board meeting subjects that are not on the agenda for that meeting. The Board will meet at least two (2) times per year in executive session without any members of the Company's management, whether or not they are directors, who may otherwise be present. The Lead Director will be presiding at all executive sessions.
|
(b)
|
Distribution of Materials. The Company shall distribute, sufficiently in advance of meetings to permit meaningful review, written materials, which shall in all events include recent financial information, for use at Board meetings.
|
(c)
|
Attendance of Non-Directors. The Board believes that attendance of key executive officers augments the meeting process.
|
(d)
|
Number of Meetings. The Board shall hold a minimum of five (5) meetings per year.
|
3.
|
Conflicts of Interest. Directors shall avoid any action, position or interest that conflicts with an interest of the Company, or gives the appearance of a conflict. The Company annually solicits information from directors in order to monitor potential conflicts of interest and directors are expected to be mindful of their fiduciary obligations to the Company.
|
4.
|
Share Ownership by Directors. The Board believes that the number of shares of the Company's stock owned by each director is a personal decision, and encourages stock ownership in accordance with the Company's Director Share Ownership Policy.
|
5.
|
Director Compensation. The form and amount of director compensation will be determined by the Human Resources Committee in accordance with the policies and principles set forth in its charter. The Human Resources Committee will review every three (3) years the director compensation with the Company's Vice-President of Human Resources and outside consultant.
|
6.
|
Continuing Director Education. The Human Resources Committee will maintain orientation programs for new directors and continuing education programs for all directors.
|
7.
|
Assessing Board Performance. The Board will conduct an annual self-evaluation to determine whether it and its committees are functioning effectively. The Human Resources Committee will receive comments from all directors as to the Board's performance and report annually to the Board with an assessment of the Board's performance, to be discussed with the full Board following the end of each fiscal year.
|
8.
|
Access to Officers and Employees. Board members have complete and open access to the Company's Chief Executive Officer, Chief Financial Officer, Vice-President Human Capital, Legal Counsel and any other Officer of the Corporation. Board members who wish to have access to other members of management should coordinate such access through one of the foregoing.
|
9.
|
Interaction with Third Parties. The Board believes that management should speak for the Company and that the Chairman should speak for the Board.
|
10.
|
Board Authority. The Board on behalf of each committee has the power to hire independent legal, financial or other advisors as they may deem necessary, without consulting or obtaining the approval of any officer of the Company in advance. Information learned during the course of service on the Board is to be held confidential and used solely in furtherance of the Company's business.
|
11.
|
Confidentiality. The Board believes maintaining confidentiality of information and deliberations is an imperative.
|
III. |
Committee Issues
|
1.
|
Board Committees. The Board will have at all times an Audit Committee, a Human Resources Committee which will also act as the Compensation Committee. Each of these Committees shall consist solely of independent directors. Committee members will be appointed by the Board upon recommendation of the Human Resources Committee with consideration of the desires of individual directors.
|
2.
|
Rotation of Committee Assignments and Chairs. Committee assignments and the designation of committee chairs should be based on the director's knowledge, interests and areas of expertise. The Board does not favor mandatory rotation of committee assignments or chairs. The Board believes experience and continuity are more important than rotation. Committee members and chairs may be rotated in response to changes in membership of the Board and in all cases should be rotated only if rotation is likely to increase committee performance.
|
3.
|
Committee Charters. Each committee shall have its own charter. The charters will set forth the purposes, goals and responsibilities of the committees as well as qualifications for committee membership, procedures for committee member appointment and removal, committee structure and operations and committee reporting to the Board. The charters will also provide that each committee will annually evaluate its own performance.
|
4.
|
Frequency and Length of Committee Meetings. The chair of each committee, in consultation with the committee members, will determine the frequency and length of the committee meetings consistent with any requirements set forth in the committee's charter.
|
IV. |
Chief Executive Officer Evaluation and Management Succession
|
I.
|
Purpose
|
·
|
Nomination of directors;
|
·
|
Annual base salary;
|
·
|
Annual incentive opportunity;
|
·
|
Stock option, RSU's or DSU's or other equity participation plans;
|
·
|
Short term and long-term incentive compensation programs for all employees, including the performance goals for eligibility to participate in such programs and the apportionment of compensation among salary and short-term and long-term incentive compensation;
|
·
|
The terms of employment agreements, severance arrangements, and change in control agreements, in each case as, when and if appropriate;
|
·
|
Any special or supplemental benefits; and
|
·
|
Any other payments that are deemed compensation under applicable SEC rule.
|
II.
|
Organization
|
·
|
The Board shall elect annually from among its members a committee to be known as the Human Resources Committee which shall consist of a minimum of three (3) independent directors, each of whom shall satisfy the applicable independence requirements of the NASDAQ and any other regulatory requirements. At least one member of the Committee shall have experience in matters relating to executive compensation either as a professional or as a business executive.
|
·
|
Each member of the Committee shall hold such office until the next annual meeting of shareholders after his or her election as a member of the Committee. However, any member of the Committee may be removed or replaced at any time by the Board and shall cease to be a director.
|
·
|
The Committee shall appoint one of its members to act as Chairman of the Committee. The Chairman will appoint a secretary who will keep minutes of all meetings (the "Secretary"). The Secretary need not be a member of the Committee or a director and can be changed by simple notice from the Chairman.
|
·
|
The time at which and the place where the meetings of the Committee shall be held, the calling of meetings and the procedure in all respects of such meetings shall be determined by the Committee, unless otherwise provided for in the by-laws of the Corporation or otherwise determined by resolution of the Board.
|
·
|
The members of the Committee shall be entitled to receive such remuneration for acting as members of the Committee as the Board may from time to time determine.
|
·
|
It is understood that in order to properly carry out its responsibilities, the Board of Directors on behalf of the Committee may retain outside consultants at the expense of the Corporation if appropriate, so long as it notifies the Corporate Secretary of the Corporation in each instance.
|
·
|
The Committee may form and delegate authority to subcommittees when appropriate.
|
III.
|
Meetings
|
·
|
When the Committee meets to vote or deliberate on Chief Executive Officer's ("CEO") compensation, CEO is not to be present.
|
·
|
When the Committee meets to vote or deliberate on Executive Chairman's compensation, Executive Chairman is not to be present nor invited.
|
·
|
The Committee will meet as many times as is necessary to carry out its responsibilities but in no event, will the Committee meet less than twice a year.
|
·
|
No business may be transacted by the Committee except at a meeting of its members at which a quorum of the Committee is present (in person or by means of telephone conference) or by a resolution in writing signed by all of the members of the Committee. A majority of the members of the Committee shall constitute a quorum.
|
IV.
|
Authority and Responsibilities
|
·
|
Review and approve on an annual basis corporate goals and objectives relevant to CEO's compensation, evaluate the CEO's performance in light of those goals and objectives and set the CEO's compensation level based on this evaluation.1 In determining the long-term incentive component of CEO compensation, the Committee will also consider, among such other factors as it may deem relevant, the Corporation's performance, shareholder returns, the value of similar incentive awards to chief executive officers at comparable companies, the awards given to the CEO in past years and consider any risks related to the compensation of the CEO and of the Executive Chairman.
|
·
|
Review and approve on an annual basis corporate goals and objectives relevant to Executive Chairman's compensation, evaluate the Executive Chairman's performance in light of those goals and objectives and set the Executive Chairman's compensation level based on this evaluation. In determining the compensation of the Executive Chairman, the Committee will also consider, among such other factors as it may deem relevant, the Corporation's performance, shareholder returns, the value of similar incentive awards to Executive Chairman at comparable companies, the awards given to the Executive Chairman in past years and consider any risks related to the compensation of the Executive Chairman.
|
·
|
Review and approve on an annual basis with respect to the annual compensation of all senior officers2, after reviewing the recommendations of the CEO's review of the salary structure, the short-term and long-term incentive compensation programs for all employees, including the performance goals for eligibility to participate in such programs and the apportionment of compensation among salary and short-term and long-term incentive compensation.
|
·
|
Review and approve on an annual basis, the policy addressing the Corporation's hiring of employees or former employees of the independent auditors who were engaged on the Corporation's account that provides as a minimum that the positions of CEO, CFO, Chief Accounting Officer, Controller or any person serving in an equivalent position cannot be filled by a person employed by the independent auditor and that participated in the audit of the Corporation during the preceding twelve-month period.
|
·
|
Review and approve, on behalf of the Board of Directors (the "Board") or in collaboration with the Board, as applicable, on the basis of the attribution authorized by the Board, to whom options to purchase shares of the Corporation, RSU's or DSU's shall be offered as the case may be and if so, the terms of such options, RSU's or DSU's in accordance with the terms of the Corporation's Long Term Incentive Plan or the Deferred Share Unit Plan provided that no options, RSU's or DSU's shall be granted to members of this Committee without the approval of the Board.
|
·
|
Annually review and report to the Board on organizational structure and to ensure that senior management has developed a succession plan for the CEO and the CEO's direct reports and to review such report with senior management.
|
·
|
Recommend to the Board from time to time the remuneration to be paid by the Corporation to directors.
|
·
|
Make recommendations to the Board with respect to the Corporation's incentive compensation plans and equity-based plans.
|
·
|
Prepare the report required by the Securities and Exchange Commission to be included in the Corporation's annual proxy statement.
|
·
|
Conduct annually a risk assessment associated to the compensation policies and practices for executives.
|
·
|
Make recommendations to the Board with respect to membership on committees of the Board.
|
·
|
Identify individuals qualified to become members of the Board, the Committee may conduct background checks respecting such individuals as it wishes to recommend to the Board as a director nominee and recommend that the Board select the director nominees for the next annual meeting of shareholders.3
|
·
|
When considering a potential candidate, the Committee considers the qualities and skills that the Board, as a whole, should have and assesses the competencies and skills of the current members of the Board. Based on the talent already represented on the Board, the Committee identifies the specific skills, personal qualities or experiences that a candidate should possess in light of the opportunities and risks facing the Corporation.
|
·
|
Screen potential candidates to ensure that they possess the requisite qualities, including integrity, business judgment and experience, business or professional expertise, independence from management, international experience, financial literacy, excellent communications skills and the ability to work well with the Board and the Corporation. The Committee considers the existing commitments of a potential candidate to ensure such candidate will be able to fulfill his or her obligations as a Board member.
|
·
|
Receive and discuss suggestions from shareholders for potential director nominees.
|
·
|
Make recommendations to the Board with respect to potential successors to the Chief Executive Officer.
|
·
|
Maintain a list of potential director candidates for its future consideration and may engage outside advisors to assist in identifying potential candidates.
|
·
|
Prepare an annual written peer review to assess individual directors on the Board and attributes that contribute to an effective Board. This consists of both an evaluation of each director's peers and a self-evaluation which is based on a questionnaire approved by the Board. The written peer evaluation process is complemented meetings between the chair and the members.
|
·
|
Receive comments from all directors as to the Board's performance and report annually to the Board with an assessment of the Board's performance.
|
·
|
Prepare and recommend to the Board a set of corporate governance guidelines applicable to the Corporation. Review and reassess the adequacy of such guidelines annually and recommend to the Board any changes deemed appropriate by the Committee.
|
·
|
Maintain an orientation program for new directors and continuing education programs for directors.
|
·
|
Review and reassess the adequacy of this charter annually and recommend to the Board any changes deemed appropriate by the Committee.
|
·
|
Review its own performance annually.
|
·
|
Report regularly to the Board.
|
·
|
Perform any other activities consistent with this Charter, the Corporation's by-laws and governing law, as the Committee or the Board deems necessary or appropriate.
|
V.
|
Resources
|
·
|
The Board of Directors on behalf of the Committee shall have the sole authority to retain or terminate consultants to assist the Committee in the evaluation of director, CEO or senior executive, including the Executive Chairman, compensation and to be used to identify director candidates and the authority to retain other professionals to assist it with any background checks.
|
·
|
The Board of Directors on behalf of the Committee shall have the sole authority to determine the terms of engagement and the extent of funding necessary for payment of compensation to any consultant retained to advise the Committee and the extent of funding necessary for payment of compensation to any search firm and the authority to determine the extent of funding necessary for payment of compensation to any other professionals retained to advise the Committee. To do so, the Committee must take into account the provision of other services by the consultant's company, the amount of fees received from the consultant's company as a percentage of the total revenue of the consultant's company, the policies and procedures followed by the consultant's company, any business or personal relationship that the consultant may have with a member of the Committee or an Executive officer of the Committee and any stock of the Corporation the consultant may have.
|
1.
|
I have reviewed this Annual Report on Form 20-F of EXFO Inc. ("EXFO");
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of EXFO as of, and for, the periods presented in this report;
|
4.
|
EXFO's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for EXFO and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to EXFO, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of EXFO's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in EXFO's internal control over financial reporting that occurred during the period covered by the Annual Report that has materially affected, or is reasonably likely to materially affect, EXFO's internal control over financial reporting; and
|
5.
|
EXFO's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to EXFO's auditors and the audit committee of EXFO's board of directors:
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect EXFO's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in EXFO's internal control over financial reporting.
|
1.
|
The Annual Report on Form 20-F for the year ended August 31, 2017 of EXFO fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in this Annual Report fairly presents, in all material respects, the financial condition and results of operations of EXFO.
|
1.
|
I have reviewed this Annual Report on Form 20-F of EXFO Inc. ("EXFO");
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of EXFO as of, and for, the periods presented in this report;
|
4.
|
EXFO's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for EXFO and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to EXFO, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of EXFO's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in EXFO's internal control over financial reporting that occurred during the period covered by the Annual Report that has materially affected, or is reasonably likely to materially affect, EXFO's internal control over financial reporting; and
|
5.
|
EXFO's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to EXFO's auditors and the audit committee of EXFO's board of directors:
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect EXFO's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in EXFO's internal control over financial reporting.
|
1.
|
The Annual Report on Form 20-F for the year ended August 31, 2017 of EXFO fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
2.
|
The information contained in this Annual Report fairly presents, in all material respects, the financial condition and results of operations of EXFO.
|
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