CAPITAL STOCK:

We are authorized to issue an unlimited number of SVS, which entitle the holder to one vote per share, and an unlimited number of multiple voting shares (MVS), which entitle the holder to 25 votes per share. The SVS and MVS vote together as a single class on all matters submitted to a vote of shareholders, including the election of directors, except as otherwise required by law. The holders of the SVS and MVS are entitled to share ratably, as a single class, in any dividends declared subject to any preferential rights of any outstanding preferred shares in respect of the payment of dividends. Each MVS is convertible at any time at the option of the holder thereof and automatically, under certain circumstances, into one SVS. We are also authorized to issue an unlimited number of preferred shares, issuable in series. No preferred shares have been issued to date.

(a) Capital transactions:



Number of shares (in millions)	SVS			MVS
Issued and outstanding at December 31, 2016	121.9			18.9
Issued from treasury⁽ⁱ⁾	2.8			—
Cancelled under NCIB	(1.9	)		—
Other⁽ⁱⁱ⁾	0.35			(0.35	)
Issued and outstanding at December 31, 2017	123.2			18.6
Issued from treasury⁽ⁱ⁾	1.3			—
Cancelled under NCIB	(6.8	)		—
Issued and outstanding at December 31, 2018	117.7			18.6
Issued from treasury⁽ⁱ⁾	0.8		—	—
Cancelled under NCIB	(8.3	)	—	—
Issued and outstanding at December 31, 2019	110.2			18.6

(i)

During 2019, we issued nil (2018 — 0.1 million; 2017 — 1.7 million) SVS from treasury upon the exercise of stock options for aggregate cash proceeds of nil (2018 — $0.4; 2017 — $13.6). We issued 0.8 million (2018 — 1.2 million; 2017 — 1.1 million) SVS from treasury with ascribed values of $10.4 (2018 — $14.3; 2017 — $9.8) upon the vesting of certain RSUs and PSUs. We also settled RSUs and PSUs with SVS purchased in the open market. Settlement of these awards is described below.


(ii)	During 2017, Onex Corporation converted 346,175 MVS into SVS. Onex Corporation did not convert any MVS in 2018 or 2019.

We have repurchased SVS in the open market and otherwise for cancellation in recent years pursuant to NCIBs, which allow us to repurchase a limited number of SVS during a specified period. However, our Credit Facility prohibits share repurchases for cancellation if our leverage ratio (as defined in such facility) exceeds a specified amount. This prohibition (Repurchase Restriction) was in effect at December 31, 2019. The maximum number of SVS we are permitted to repurchase for cancellation under each NCIB (when permitted) is reduced by the number of SVS purchased by a broker in the open market during the term of such NCIB to satisfy obligations under our SBC plans. The Repurchase Restriction is not applicable to open market purchases for this purpose.

In December 2018, we launched an NCIB (2018 NCIB) which was completed in December 2019. The 2018 NCIB allowed us to repurchase, at our discretion, up to approximately 9.5 million SVS in the open market, or as otherwise permitted. In November 2017, we launched an NCIB (2017 NCIB) which was completed in November 2018. The 2017 NCIB allowed us to repurchase, at our discretion, up to approximately 10.5 million SVS in the open market, or as otherwise permitted.

Information regarding share repurchase activities under our NCIBs for the years indicated is set forth below:



	Year ended December 31
	2017		2018		2019

Aggregate cost ⁽¹⁾ of SVS repurchased for cancellation	$	19.9	$	75.5	$	67.3
Number of SVS repurchased for cancellation (in millions)	1.9		6.8		8.3
Weighted average price per share for repurchases	$	10.58	$	11.10	$	8.15
Aggregate cost ⁽¹⁾of SVS repurchased for delivery under SBC plans	$	16.7	$	22.4	$	9.2
Number of SVS repurchased for delivery under SBC plans (in millions)	1.4		2.1		1.2

⁽¹⁾Includes transaction fees.



December 31
2017	2018	2019



Number of SVS held by trustee for delivery under SBC plans ⁽¹⁾ (in millions)	0.8		1.9		1.7
Value of SVS held by trustee for delivery under SBC plans ⁽¹⁾	$	8.7	$	20.2	$	14.8

⁽¹⁾ For accounting purposes, we classify these shares as treasury stock until they are delivered pursuant to the plans.

(b) Employee SBC:

Long-Term Incentive Plan (LTIP):

Under the LTIP, we may grant stock options, stock appreciation rights, RSUs and PSUs to eligible employees, consultants and directors. We may, at the time of grant, authorize the grantees to settle these awards either in cash or in SVS. Absent such permitted election, such grants under the LTIP will be settled in SVS (on a one-for-one basis), which we may purchase in the open market, or issue from treasury (up to a maximum aggregate of 29.0 million SVS). As of December 31, 2019, 10.3 million SVS remain reserved for issuance from treasury, covering potential issuances of SVS for outstanding awards and for potential future grants of SBC under the LTIP.

Celestica Share Unit Plan (CSUP):

Under the CSUP, we may grant RSUs and PSUs to eligible employees. We have the option to settle RSUs and PSUs issued thereunder in SVS (on a one-for-one basis) purchased in the open market, or in cash.

For RSUs and DSUs issued to eligible directors under our Directors’ Share Compensation Plan (DSC Plan), see paragraph (c) below.

Information regarding employee SBC expense for the years indicated is set forth below:



	Year ended December 31
	2017		2018		2019
Employee SBC expense in cost of sales	$	14.6	$	14.7	$	14.6
Employee SBC expense in SG&A	15.5		18.7		19.5
Total	$	30.1	$	33.4	$	34.1

Employee SBC expense varies from period-to-period. The portion of such expense that relates to performance-based compensation generally varies depending on our level of achievement of pre-determined performance goals and financial targets.

(i) Stock options:

We are permitted to grant stock options under our LTIP, although no stock options have been granted in 2017, 2018 or 2019. When granted, stock options are granted at prices equal to the closing market price on the day prior to the grant date and are exercisable during a period not to exceed 10 years from the grant date.

Stock option transactions were as follows for the years indicated:



	Number of Options		Weighted Average Exercise Price
	(in millions)
Outstanding at January 1, 2017	2.1		$	8.46
Exercised	(1.7	)	$	7.87
Outstanding at December 31, 2017	0.4		$	12.14
Exercised	(0.1	)	$	6.20
Outstanding at December 31, 2018	0.3		$	11.93
Exercised	—		$	—
Outstanding at December 31, 2019	0.3		$	12.50

The following stock options* were outstanding as at December 31, 2019:



Range of Exercise Prices	Outstanding Options	Weighted Average Exercise Price	Weighted Average Remaining Life of Outstanding Options	Exercisable Options	Weighted Average Exercise Price
	(in millions)		(years)	(in millions)
$6.35 - $13.46	0.3	$12.50	5.2	0.3	$12.50

* The exercise prices used in the above tables were determined by converting the grant date fair value into U.S. dollars at the year-end exchange rate.

We amortize the estimated grant date fair value of stock options to expense over the vesting period (generally four years). The grant date fair value of outstanding stock options was determined using the Black-Scholes option pricing model and the following assumptions in the year of the grant: risk-free interest rate (based on U.S. government bond yields), expected volatility of the market price of our shares (based on historical volatility of our share price), and the expected option life (in years) (based on historical option holder behavior).

(ii) RSUs and PSUs:

We grant RSUs and PSUs to employees pursuant to our LTIP and CSUP. Each vested unit generally entitles the holder to receive one SVS. Under the CSUP, we have the option to satisfy the delivery of shares upon vesting of the awards by purchasing SVS in the open market or by settling such awards in cash. Under the LTIP, we may (at the time of grant) authorize the grantees to settle awards in either cash or SVS (absent such permitted election, grants will be settled in SVSs, which we may purchase in the open market or issue from treasury, subject to certain limits). We have generally settled these awards with SVS purchased in the open market by a broker, or issued from treasury. Unless a grantee has been authorized, and elects, to settle these awards in cash, Celestica intends to, settle all RSUs and PSUs with shares purchased in the open market. As a result, we have accounted for these awards as equity-settled awards. We amortize the grant date fair value of RSUs and PSUs to expense over the vesting period.

The grant date fair value of RSUs is based on the market value of our SVS at the time of grant.

With respect to PSUs, employees are granted a target number of PSUs (set forth for the years indicated in the table below). The number of PSUs that will actually vest will vary from 0% to 200% of the target amount granted based on the level of achievement of the relevant performance conditions. PSUs (representing in each case 100% of target) were primarily granted in the first quarter of each of 2017, 2018 and 2019. The PSUs granted in 2018 and 2019 vest based on the level of achievement of a pre-determined non-market performance measurement in the final year of the three-year performance period, subject to modification by a separate pre-determined non-market financial target and our relative TSR performance over the three-year vesting period. See note 2(l) for a description of TSR. We estimated the grant date fair value of the TSR modifier using a Monte Carlo simulation model and a premium of 102% (2018 — 106%). The grant date fair value of the non TSR-based performance measurement and modifier was based on the market value of our SVS at the time of grant and is subject to adjustment in subsequent years to reflect a change in the estimated level of achievement related to the applicable performance condition. 60% of the PSUs granted in 2017 vested based on the achievement of a market performance condition tied to TSR, and the balance vested based on a pre-determined non-market performance measurement in the final year of the three-year performance period. We estimated the grant date fair value of the 2017 TSR-based PSUs using a Monte Carlo simulation model (premium of 143%). The grant date fair value of the 2017 non-TSR-based PSUs was based on the market value of our SVS at the time of grant and was subject to adjustment in subsequent years to reflect a change in the estimated level of achievement related to the applicable performance condition. Vested awards were settled with SVS purchased in the open market by a broker or issued from treasury.

Information regarding RSU and PSU grants to employees and directors (see below), as applicable, for the years indicated is set forth below:



	Year ended December 31
	2017		2018		2019
RSUs Granted:
Number of awards (in millions)	1.9		2.6		3.0
Weighted average grant date fair value per unit	$	13.05	$	10.48	$	7.88

PSUs Granted:
Number of awards (in millions, representing 100% of target)	0.9		1.6		2.1
Weighted average grant date fair value per unit	$	17.18	$	11.11	$	8.14

	December 31
	2017		2018		2019
Number of outstanding RSUs (in millions)	3.2		3.8		4.6
Number of outstanding PSUs (in millions, representing 100% of target granted)	2.5		3.2		3.8

We grant DSUs to certain members of our Board of Directors under our DSC Plan. Commencing in 2019, we also grant RSUs (under specified circumstances) to directors as compensation under the DSC Plan. DSUs granted prior to January 1, 2007 may be settled with SVS issued from treasury or purchased in the open market, or with cash (at the discretion of the Company). DSUs granted after January 1, 2007 to directors as compensation may only be settled with SVS purchased in the open market, or with cash (at the discretion of the Company). RSUs granted to directors vest ratably over a three-year period. Such RSUs are governed by the terms of our LTIP. Each vested RSU entitles the holder thereof to one SVS; however, if permitted by the Company under the terms of the grant, a director may elect to receive a payment of cash in lieu of SVS. Unvested RSUs will vest immediately on the date the director Retires. See note 2(l) for details. During 2017, two of our directors resigned from the Board and in connection therewith, we settled their outstanding DSUs in 2017 in accordance with the provisions of the DSC Plan. Specifically, we paid $1.7 in cash to Joseph M. Natale to settle his outstanding DSUs, and we settled the outstanding DSUs of Thomas S. Gross with 14,098 SVS that we purchased in the open market. As Celestica is permitted to, and currently intends to, settle all other DSUs with shares purchased in the open market, we have accounted for these awards as equity-settled awards.

On January 29, 2020, William A. Etherington, our former Chair of the Board, retired from Celestica’s Board of Directors and Michael M. Wilson (a director since 2011) was immediately appointed as Chair of the Board. In accordance with the DSC Plan, the DSUs held by Mr. Etherington will be redeemed and payable on or prior to the 90^th day following the date on which he is no longer a director or employee of any corporation that does not deal at arm’s length with the Company. As of January 29, 2020, Mr. Etherington held 0.47 million DSUs.

Information regarding director SBC expense for the years indicated is set forth below:



	Year ended December 31
	2017		2018		2019
Director SBC expense in SG&A	$	2.2	$	2.0	$	2.4

	December 31
	2017		2018		2019
Number of DSUs outstanding (in millions)	1.5		1.6		1.8
Number of RSUs issued to directors outstanding (in millions)	—		—		0.02