ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) |
(IRS Employer Identification No.) | |
nada |
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(Address of Principal Executive Offices) |
(Zip Code) |
Title of Each Class |
Trading Symbol(s) |
Name of Each Exchange on which Registered | ||
, without par value, of Canadian Pacific Railway Limited |
Toronto Stock Exchange | |||
Consolidated Debenture Stock of Canadian Pacific Railway Company |
BC87 |
London Stock Exchange |
☒ |
Accelerated filer | ☐ | ||||
Non-accelerated filer |
☐ (Do not check if a smaller reporting company) |
Smaller reporting company | ||||
Emerging growth company |
CANADIAN PACIFIC RAILWAY LIMITED FORM 10-K/A TABLE OF CONTENTS |
PART III |
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Item 10 |
1 | |||||
Item 11 |
8 | |||||
Item 12 |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 55 | ||||
Item 13 |
Certain Relationships and Related Transactions, and Director Independence | 57 | ||||
Item 14 |
58 |
PART IV |
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Item 15 |
Exhibits, Financial Statement Schedule | 59 | ||||
Item 16 |
Form 10-K Summary | 59 | ||||
Signatures | 60 |
|
All of the individuals nominated for election to the Board are current directors and were elected at the last annual and special meeting of shareholders on April 21, 2021. The nominated directors are qualified and experienced, possessing a broad range of skills that facilitate strong oversight of CP’s management and strategy and have agreed to serve on our Board. Share Ownership All directors are CP shareholders and must meet our director share ownership requirements within five years of joining the Board. Share ownership listed here is as of February 28, 2022 and includes shares directors beneficially own or control, or hold directly or indirectly. Share ownership includes holdings under the Directors’ Deferred Share Unit (DDSU) plan. See page 55 for full details on share ownership by our directors. |
|
|
The 2022 nominee directors attended all of their Board and Committee meetings in 2021. |
All of the nominee directors have senior executive leadership experience. |
Isabelle Courville Chair | ||
Independent Age: Director since: May 1, 2013 Residence: 2021 voting results: 99.52% for |
DIRECTOR SKILLS AND QUALIFICATIONS Brings experience in the following areas: senior executive leadership, accounting & financial literacy, accounting & financial expertise, environment, health & safety, executive compensation/human resources, transportation industry knowledge, governance, government/regulatory affairs and legal, risk management, sales & marketing, and strategic oversight. |
• | Chair of Human Resources Committee |
• | Member of Governance and Ethics Committee |
• | Chair Research, Innovation and Sustainable Development Committee |
• | Member of Accounts and Audit Committee and the Nominations Committee |
OVERALL 2021 ATTENDANCE |
100% |
|||||
Meeting Attendance (1) |
||||||
Board | 14 of 14 | 100% | ||||
Audit and Finance | 5 of 5 | 100% | ||||
Governance | 3 of 3 | 100% | ||||
Compensation | 3 of 3 | 100% | ||||
Risk and Sustainability | 3 of 3 | 100% |
• | President of Hydro-Québec Distribution and Hydro-Québec TransÉnergie (2007 to 2013) |
• | 20 years of experience in the Canadian telecommunications industry, including President of Bell Canada’s Enterprise Group (2003 to 2006) and President and Chief Executive Officer of Bell Nordiq Group (2002 to 2003) |
• | Laurentian Bank of Canada (2007 to 2019) (Chair of the Board and member of Human Resources and Corporate Governance Committee) |
• | Gecina S.A. (2016 to April 2017) (member of Audit Committee) |
• | TVA Group (2013 to 2016) (member of Human Resources Committee) |
• | Institute for Governance of Private and Public Organizations (IGOPP) (2016 to present) (member of Human Resources Committee) |
• | Institute of Corporate Directors (ICD) (2013 to 2017) |
• | Bachelor’s degree in Engineering Physics, École Polytechnique de Montréal |
• | Bachelor’s degree in Civil Law, McGill University |
• | Doctorate Honoris Causa, Université de Montréal |
• | Fellow of the Institute of Corporate Directors |
(1) |
Ms. Courville is an ex-officio member of all standing committees and may attend committee meetings at her discretion. |
The Hon. John Baird, P.C. | ||
Independent Age: Director since: May 14, 2015 Residence: 2021 voting results: 99.40% for |
DIRECTOR SKILLS AND QUALIFICATIONS Brings experience in the following areas: senior executive leadership, accounting & financial literacy, environment, health & safety, transportation industry knowledge, governance, government/regulatory affairs and legal, risk management, and strategic oversight. |
• | Chair of Governance and Nomination Committee |
• | Member of Environmental and Sustainability Committee |
• | Chair of the Board |
OVERALL 2021 ATTENDANCE |
100% |
|||||
Meeting Attendance |
||||||
Board | 14 of 14 | 100% | ||||
Governance | 3 of 3 | 100% | ||||
Risk and Sustainability | 3 of 3 | 100% |
• | Senior Advisor at the law firm of Bennett Jones LLP and Eurasia Group (a geopolitical risk consultancy) (2015 to present) |
• | Member of the International Advisory Board, Barrick Gold Corporation (2015 to present) |
• | FWD Group Ltd./FWD Ltd. (2015 to present) (member of Audit Committee and Risk Management and Actuarial Committee) |
• | PineBridge Investments (2015 to present) |
• | Served as Canadian Foreign Minister, Minister of Transport and Infrastructure, Minister of the Environment, and President of the Treasury Board during his three terms as a Member of the Canadian Parliament (2006 to 2015) |
• | Appointed to the Privy Council in 2006 |
• | Former Minister of Community and Social Services and Minister of Energy in Ontario provincial legislature |
• | Senior Advisor to Community Living Ontario, an organization that supports individuals with developmental disabilities |
• | Advisory Board member to Prince’s Charities Canada, the charitable office of His Royal Highness, The Prince of Wales |
• | Honours Bachelor of Arts (Political Studies), Queen’s University |
Keith E. Creel | ||
Not Independent Age: Director since: May 14, 2015 Residence: 2021 voting results: 99.78% for |
DIRECTOR SKILLS AND QUALIFICATIONS President and Chief Executive Officer of CP since January 31, 2017. Brings experience in the following areas: senior executive leadership, accounting & financial literacy, environment, health & safety, executive compensation/human resources, transportation industry knowledge, governance, government/regulatory affairs and legal, risk management, sales & marketing and strategic oversight. |
OVERALL 2021 ATTENDANCE |
100% |
|||||
Meeting Attendance |
||||||
Board | 14 of 14 | 100% |
• | President and Chief Executive Officer of CP (2017 to present) |
• | President and Chief Operating Officer of CP (February 2013 to January 2017) |
• | Executive Vice-President and Chief Operating Officer of Canadian National Railway Company (CN) (2010 to 2013) |
• | Other positions at CN included Executive Vice-President, Operations, Senior Vice-President Eastern Region, Senior Vice-President Western Region, and Vice-President of CN’s Prairie division (2002 to 2010) |
• | Superintendent and general manager at Grand Trunk Western Railroad (1999 to 2002) |
• | Trainmaster and director of corridor operations at Illinois Central Railway prior to its merger with CN in 1999 |
• | Began his railroad career in 1992 as an intermodal ramp manager at Burlington Northern Railway in Birmingham, Alabama |
• | Named “2021 CEO of the Year and Strategist of the Year” by The Globe and Mail’s Report on Business magazine |
• | Named “Railroader of the Year” for 2022 & 2021 by Railway Age magazine |
• | Named “Railroad Innovator” for 2014 by Progressive Railroading in recognition of his leadership at CP |
• | Member of the Board of TTX Company (a private company) (2014 to present) |
• | Representative on American Association of Railroads |
• | Commissioned officer in the U.S. Army and served in the Persian Gulf War in Saudi Arabia |
• | Bachelor of Science in Marketing, Jacksonville State University |
• | Advanced Management Program, Harvard Business School |
Gillian (Jill) H. Denham | ||
Independent Age: Director since: September 6, 2016 Residence: 2021 voting results: 95.62% for |
DIRECTOR SKILLS AND QUALIFICATIONS Brings experience in the following areas: senior executive leadership, accounting & financial literacy, executive compensation/human resources, investment management, governance, government/regulatory affairs and legal, risk management, sales & marketing and strategic oversight. |
• | Chair of the Board |
• | Chair of Compensation Committee |
• | Member of the Audit Committee and the Nominating and Governance Committee |
• | Lead Director |
OVERALL 2021 ATTENDANCE |
100% |
|||||
Meeting Attendance |
||||||
Board | 14 of 14 | 100% | ||||
Audit and Finance | 6 of 6 | 100% | ||||
Compensation (1) |
1 of 1 | 100% | ||||
Risk and Sustainability (1) |
2 of 2 | 100% |
• | Vice-Chair, Retail Markets for Canadian Imperial Bank of Commerce (CIBC) (2001 to 2005) |
• | Previously held senior positions at CIBC Wood Gundy and CIBC, including: Managing Director, Head of Commercial Banking and E-Commerce |
• | President of Merchant Banking/Private Equity and Managing Director, Head responsible for CIBC’s European Operations |
• | National Bank of Canada (2010 to 2020) |
• | IHS Markit Ltd. (2014 to 2016) |
• | Penn West Petroleum Ltd. (2012 to 2016) |
• | Calloway Real Estate Investment Trust (2011 to 2012) |
• | Centre for Addiction and Mental Health (CAMH) (2015 to 2019) |
• | Ontario Teachers’ Pension Plan (2007 to 2010) |
• | Honours Business Administration (HBA) degree, Ivey Business School, Western University |
• | MBA, Harvard Business School |
Edward R. Hamberger | ||
Independent Age: Director since: July 15, 2019 Residence: . 2021 voting results: 99.84% for |
DIRECTOR SKILLS AND QUALIFICATIONS Brings experience in the following areas: senior executive leadership, accounting & financial literacy, environment, health & safety, executive compensation/human resources transportation industry knowledge, governance, government/regulatory affairs and legal, risk management and strategic oversight. |
OVERALL 2021 ATTENDANCE |
100% |
|||||
Meeting Attendance |
||||||
Board | 14 of 14 | 100% | ||||
Audit and Finance | 6 of 6 | 100% | ||||
Risk and Sustainability | 3 of 3 | 100% |
• | President and Chief Executive Officer, Association of American Railroads (1998 to 2019) |
• | Served as Assistant Secretary for governmental affairs at the U.S. Department of Transportation (1987 to 1989) |
• | Transportation Institute, University of Denver (2002 to present) |
• | Business Advisory Committee, Kellogg School of Management, Northwestern University (2000 to 2019) |
• | TTCI (Chair of the Board) (1998 to 2019) |
• | Railinc Corporation (1998 to 2019) |
• | Mineta Transportation Institute, San Jose State University (2005 to 2019) |
• | Baker Donelson, Management Committee (1989 to 1998) |
• | Juris Doctor, Georgetown University |
• | Master of Science, Foreign Service, Georgetown University |
• | Bachelor of Science, Foreign Service, Georgetown University |
(1) |
Ms. Denham moved from the Risk and Sustainability Committee to the Management Resources and Compensation Committee on September 29, 2021. |
Matthew H. Paull | ||
Independent Age: Director since: January 26, 2016 Residence: 2021 voting results: 99.43% for |
DIRECTOR SKILLS AND QUALIFICATIONS Brings experience in the following areas: senior executive leadership, accounting & financial literacy, accounting & financial expertise, executive compensation/human resources, investment management, governance, government/regulatory affairs and legal, risk management and strategic oversight. |
• | Chair of Audit and Finance Committee |
• | Member of Corporate Governance and Nominating Committee and Executive Committee |
OVERALL 2021 ATTENDANCE |
100% |
|||||
Meeting Attendance |
||||||
Board |
14 of 14 | 100% | ||||
Compensation (Chair) |
3 of 3 | 100% | ||||
Risk and Sustainability |
3 of 3 | 100% |
• | Senior Executive Vice-President and Chief Financial Officer of McDonald’s Corporation (2001 until his retirement in 2008) |
• | Before joining McDonald’s in 1993, was a partner at Ernst & Young where he managed a variety of financial practices during his 18-year career and consulted with many leading multinational corporations |
• | Chipotle Mexican Grill Inc. (2016 to 2020) (member of Compensation Committee) |
• | Best Buy Co. (2003 to 2013) (Lead independent director and chair of Finance Committee) |
• | WMS Industries Inc. (2012 to 2013) |
• | KapStone Paper and Packaging Corporation (2010 to 2018) |
• | Pershing Square Capital Management, L.P. (2008 to present) (member of Advisory Board) |
• | Master’s degree in Accounting, University of Illinois |
• | Bachelor’s degree, University of Illinois |
Jane L. Peverett | ||
Independent Age: Director since: December 13, 2016 Residence: 2021 voting results: 98.78% for |
DIRECTOR SKILLS AND QUALIFICATIONS Brings experience in the following areas: senior executive leadership, accounting & financial literacy, accounting & financial expertise, environment, health & safety, executive compensation/human resources, governance, government/regulatory affairs and legal, risk management and strategic oversight. |
• | Chair of the Corporate Governance Committee |
• | Member of Audit Committee |
• | Chair of Audit Committee |
• | Member of Governance, Organization and Executive Compensation Committee |
• | Member of People, Culture and Governance Committee and the Health, Safety and Environment Committee |
OVERALL 2021 ATTENDANCE |
100% |
|||||
Meeting Attendance |
||||||
Board |
14 of 14 | 100% | ||||
Audit and Finance (Chair) |
6 of 6 | 100% | ||||
Governance |
3 of 3 | 100% |
• | President & Chief Executive Officer of BC Transmission Corporation (electrical transmission) (2005 to 2009) |
• | Vice-President, Corporate Services and Chief Financial Officer of BC Transmission Corporation (2003 to 2005) |
• | President of Union Gas Limited (a natural gas storage, transmission and distribution company) (2002 to 2003) |
• | Other positions at Union Gas Limited: President & Chief Executive Officer (2001 to 2002); Senior Vice-President Sales & Marketing (2000 to 2001) and Chief Financial Officer (1999 to 2000) |
• | Encana Corp. (2003 to 2017) |
• | Postmedia Network Canada Corp. (2013 to 2016) |
• | Hydro One Limited (2015 to 2018) |
• | CSA Group (2019 to present) (Chair of the Board) |
• | British Columbia Institute of Corporate Directors Advisory Board |
• | Bachelor of Commerce degree, McMaster University |
• | Master of Business Administration degree, Queen’s University |
• | Certified Management Accountant |
• | A Fellow of the Society of Management Accountants |
• | Holds the ICD.D designation from the Institute of Corporate Directors |
Andrea Robertson | ||
Independent Age: Director since: July 15, 2019 Residence: 2021 voting results: 99.79% for |
DIRECTOR SKILLS AND QUALIFICATIONS Brings experience in the following areas: senior executive leadership, accounting & financial literacy, environment, health & safety, executive compensation/human resources, transportation industry knowledge, governance, government/regulatory affairs and legal, risk management, and strategic oversight. |
OVERALL 2021 ATTENDANCE |
100% |
|||||
Meeting Attendance |
||||||
Board |
14 of 14 | 100% | ||||
Governance (1) |
2 of 2 | 100% | ||||
Compensation |
3 of 3 | 100% |
• | President & Chief Executive Officer, Shock Trauma Air Rescue Service (STARS) (2012 to present) |
• | President & Chief Operating Officer, STARS (2011 to 2012) |
• | The Calgary Airport Authority (2017 to present) |
• | University of Alberta, Faculty of Medicine & Dentistry (2021 to present) |
• | Bow Valley College (2015 to 2018) |
• | United Way (2007 to 2013) |
• | Executive Leadership, Harvard University |
• | ICD.D Rotman School of Business |
• | Masters in Health-Care Administration, Central Michigan University |
• | Baccalaureate of Nursing, University of Calgary |
• | Executive Fellowship, Wharton University |
Gordon T. Trafton | ||
Independent Age: Director since: January 1, 2017 Residence: 2021 voting results: 99.82% for |
DIRECTOR SKILLS AND QUALIFICATIONS Brings experience in the following areas: senior executive leadership, accounting & financial literacy, environment, health & safety, executive compensation/human resources, transportation industry knowledge, governance, government/regulatory affairs and legal, risk management, sales & marketing and strategic oversight. |
OVERALL 2021 ATTENDANCE |
100% |
|||||
Meeting Attendance |
||||||
Board |
14 of 14 | 100% | ||||
Governance |
3 of 3 | 100% | ||||
Risk and Sustainability (Chair) |
3 of 3 | 100% |
• | Consultant, Brigadier Consulting (2014 to 2015) |
• | Consultant, CP (2013) |
• | Special Advisor to the Canadian National Railway (CN) leadership team (2009 to his retirement in 2010) |
• | Senior Vice-President Strategic Acquisitions and Integration, CN (2009 to 2010) |
• | Senior Vice-President, Southern Region, CN (2003 to 2009) |
• | Vice-President, Operations Integration, CN (2001 to 2003) |
• | Vice-President, Transportation and IT Services, Illinois Central Railroad (1999 to 2001) |
• | Held a number of leadership positions with Illinois Central Railroad and Burlington Northern Railroad |
• | Leeds School of Business Advisory Board, University of Colorado Boulder (2012 to present) |
• | Sacred Cow Consulting, Inc., Advisory Board (2020 to present) |
• | Bachelor of Science, Transportation Management from the Leeds School of Business, University of Colorado Boulder |
(1) |
Ms. Robertson moved from the Corporate Governance, Nominating and Social Responsibility Committee to the KCS Acquisition and Integration Committee on September 29, 2021. |
Notes: Other than as disclosed below, none of the nominated directors is, or has been in the last 10 years: (a) a director, chief executive officer or chief financial officer of a company that: • was subject to a cease trade or similar order or an order that denied the issuer access to any exemptions under securities legislation for over 30 consecutive days, that was issued while the proposed director was acting in that capacity, or • was subject to a cease trade or similar order or an order that denied the issuer access to an exemption under securities legislation for over 30 consecutive days, that was issued after the proposed director 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 that capacity (b) a director or executive officer of a company that, while that proposed director was acting in that capacity, or within a year of that person 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) 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 their assets, or (d) subject to 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 commission. Ms. Denham served as a director of Penn West Petroleum Ltd. (now Obsidian Energy Ltd.) from June 2012 to June 2016, which was subject to cease trade orders on its securities following the July 2014 announcement of the review of its accounting practices and restatement of certain of its financial statements. Those cease trade orders ended on September 23, 2014. Ms. Peverett was a director of Postmedia Network Canada Corp. (Postmedia) from April 2013 to January 2016. On October 5, 2016, Postmedia completed a recapitalization transaction under a court-approved plan of arrangement under the CBCA. Approximately US$268.6 million of debt was exchanged for shares that represented approximately 98% of the outstanding shares of Postmedia at that time. Postmedia repaid, extended and amended the terms of its outstanding debt obligations. |
Code of business ethics and business ethics reporting policy Our code of business ethics (the Code) sets out our expectations for conduct. It covers confidentiality, protecting our assets, avoiding conflicts of interest, fair dealing with third parties, compliance with applicable laws, rules and regulations, as well as reporting any illegal or unethical behaviour, among other things. The Code applies to everyone at CP and our subsidiaries: directors, officers, employees (unionized and non-unionized) and contractors who do work for us.Directors, officers and non-union employees must sign an acknowledgment every year that they have read, understood and agree to comply with the Code. Unionized employees are provided with a copy of the Code every three years. Unionized employees were mailed a copy of the Code in late 2019 and will receive the Code again in late 2022. Directors must also confirm annually that they have complied with the Code. The Code is part of the terms and conditions of employment for non-union employees, and contractors must agree to follow principles of standards of business conduct consistent with those set out in our Code as part of the terms of engagement. |
Monitoring compliance and updating the Code The Governance Committee is responsible for monitoring compliance with the Code, reviewing it periodically and recommending changes as appropriate, and promptly disclosing any aspects of the Code that have been waived. The Audit and Finance Committee ensures compliance with the Code. For 2020/21, we modernized our code of ethics training process to enhance employee understanding of the Code. |
2021 NAMED EXECUTIVE OFFICERS |
Keith E. Creel President and Chief Executive Officer |
Nadeem S. Velani Executive Vice-President and Chief Financial Officer |
John K. Brooks Executive Vice-President and Chief Marketing Officer |
Mark A. Redd Executive Vice-President Operations |
Jeffrey J. Ellis Chief Legal Officer and Corporate Secretary |
9 |
||||
10 | ||||
13 | ||||
Compensation Programs | 18 | |||
19 | ||||
31 | ||||
39 |
40 | ||
40 | ||
Incentive Plan Awards | 43 | |
Retirement Plans | 47 | |
Termination and Change in Control | 50 | |
CEO Pay Ratio | 51 |
• | competitive market pay practices to attract and retain talent |
• | a compensation mix that is incentive-driven with a large proportion of total direct compensation that is variable or “at-risk” to support our pay for performance culture |
• | compensation components paying out over multiple performance periods to link to our short and long-term business strategy |
• | aligning management’s interests with those of our shareholders through equity-based compensation and share ownership guidelines |
2021 total target direct compensation mix for our NEOs are shown in the graph. For 2021, 90 percent of our CEO’s total target direct compensation and an average of 80 percent for our other NEOs was at risk. |
Class I railroads |
Capital Intensive Companies in Canada | |||
BNSF Railway Company |
Barrick Gold Corporation |
Kinross Gold Corporation | ||
Canadian National Railway Company | BCE Inc. | Rogers Communications Inc. | ||
CSX Corporation | Cenovus Energy Inc. | Suncor Energy Inc. | ||
Kansas City Southern | Enbridge Inc. | TC Energy Corporation | ||
Norfolk Southern Corporation | Fortis Inc. | TELUS Corporation | ||
Union Pacific Corporation | Imperial Oil Limited |
Executive Level |
Ownership requirement (as a multiple of base salary) |
Our NEOs are compliant with ownership guidelines: • Mr. Creel, Mr. Velani, Mr. Redd and Mr. Ellis have achieved their ownership requirements. • Mr. Brooks is expected to meet his ownership requirement within the specified period. | ||||
CEO |
6x |
|||||
Executive Vice-President |
4x |
|||||
Senior Vice-President |
2x |
|||||
Vice-President |
1.5 to 2x |
|||||
Senior management |
1x |
Executive |
Requirement (as a multiple of salary) |
Minimum ownership value ($) (1) |
Shares ($) |
Deferred share units ($) |
Total ownership value ($) (2) |
Total ownership (as a multiple of salary) |
||||||||||||||||||
Keith Creel |
6x | 9,142,560 | 8,357,306 | 14,497,050 | 22,854,356 | 15.00x | ||||||||||||||||||
Nadeem Velani |
4x | 3,330,624 | 255,757 | 3,239,889 | 3,495,646 | 4.20x | ||||||||||||||||||
John Brooks |
4x | 3,098,312 | 1,063,168 | 1,495,529 | 2,558,697 | 3.30x | ||||||||||||||||||
Mark Redd |
4x | 2,996,728 | 1,979,420 | 1,466,240 | 3,445,660 | 4.60x | ||||||||||||||||||
Jeffrey Ellis |
2x | 1,210,000 | 516,323 | 1,466,295 | 1,982,618 | 3.28x |
(1) |
Minimum ownership values for Mr. Creel, Mr. Brooks and Mr. Redd have been converted to Canadian dollars using an exchange rate of 1.2698. |
(2) |
Total ownership values for Mr. Creel, Mr. Brooks and Mr. Redd are based on US$70.28, the closing price of our shares on the NYSE on February 28, 2022 and have been converted to Canadian dollars using an exchange rate of $1.2698. Values for Mr. Velani and Mr. Ellis are based on $89.25, the closing price of our shares on the TSX on February 28, 2022. |
(1) |
Ms. Denham joined the Compensation Committee on September 29, 2021. |
(2) |
Mr. Monser ceased to be a member of the Compensation Committee on September 29, 2021. |
• | direct responsibility for executive compensation matters |
• | membership on human resources committees |
• | compensation plan design, administration, compensation decision-making, risk management and understanding the Board’s role in the oversight of these practices |
• | understanding the principles and practices related to leadership development, talent management, succession planning and employment contracts |
• | engagement with investors on compensation issues |
• | financial literacy, oversight of financial analysis related to compensation plan design and practices |
• | pension benefit oversight, investment management |
• | recruitment of senior executives |
Compensation Committee advisor FW Cook |
Management Compensation advisor Willis Towers Watson | |
• Compensation Committee retains FW Cook to act as an independent compensation advisor, attending committee meetings (unless otherwise requested by the Committee Chair) • the Compensation Committee approves all compensation-related fees and work performed by FW Cook |
• management engages Willis Towers Watson to provide market survey data, analysis and advice to management related to compensation matters |
2021 |
2020 |
|||||||||||||||
Committee advisor |
Management advisor |
Committee advisor |
Management advisor |
|||||||||||||
Fees |
FW Cook (1) |
Willis Towers Watson |
FW Cook (1) |
Willis Towers Watson |
||||||||||||
Executive compensation-related fees |
$ |
226,608 |
|
$ |
88,394 |
|
$ |
188,473 |
|
$ |
67,743 |
| ||||
Other fees |
$ |
0 |
|
$ |
1,525,184 |
|
$ |
0 |
|
$ |
2,882,009 |
| ||||
Total fees |
$ |
226,608 |
|
$ |
1,613,578 |
|
$ |
188,473 |
|
$ |
2,949,752 |
|
(1) |
FW Cook fees have been converted to Canadian dollars using the average exchange rate for 2021 of $1.2535 |
• | the targets for the short-term incentive plan (STIP) and PSU plan, anticipated payout levels and the risks associated with achieving targeted performance |
• | the design of the long-term incentive awards, which reward sustainable financial and operating performance |
• | the compensation program, policies and practices to ensure alignment with our enterprise risk management practices |
1. Plan Design |
• we use a mix of fixed and variable (at-risk) compensation and a significant proportion is at-risk pay• short and long-term incentive plans have specific performance measures that are closely aligned with the achievement of our business strategy and performance required to achieve results in accordance with guidance provided to the market • STIP payout is capped and not guaranteed, and the Compensation Committee has discretion to adjust the amount of the awards • the payout for the STIP is designed to reflect the stretch targets for the achievement of exceptional performance • the long-term incentive plan has overlapping vesting periods to address longer term risks and maintain executives’ exposure to the risks of their decision-making through unvested share-based awards | |
2. Policies |
• we promote an ethical culture and everyone is subject to a code of business ethics, and any violations of our code of business ethics can be reported under our business ethics reporting policy • we have share ownership requirements for executives and senior management so they have a stake in our future success • we have a disclosure and insider trading/reporting policy to protect our interests and ensure high business standards and appropriate conduct • our disclosure and insider trading policy contains within it, an anti-hedging policy which prohibits directors, executive officers and employees from buying financial instruments that are designed to hedge or offset a decrease in the market value of equity awards or shares or share based awards • our anti-pledging policy prohibits directors and senior officers from holding our shares in a margin account or otherwise pledging the securities as collateral for a loan • we also have a policy that prohibits employees from forward selling shares that may be delivered on the future exercise of stock options, or otherwise monetizing their option awards, other than through exercising the options and subsequently selling the shares through a public venue or the Company’s cashless exercise option • our clawback policy allows the Board to recoup short and long-term incentive compensation paid to a current or former senior executive if the incentive compensation was calculated on the basis of financial results that were subsequently restated or corrected in whole or in part and/or, the senior executive engaged in gross negligence, fraud or intentional misconduct that caused or contributed to the need for restatement or correction, as admitted by the senior executive or as reasonably determined by the Board, which has sole discretion to determine whether it is in our best interests to pursue reimbursement of all or part of the incentive compensation in these circumstances and the Board’s actions would be separate from actions that may be taken by law enforcement agencies, regulators or other authorities • DSUs held by the President and CEO, executives, and senior management are not settled for cash until at least six months after leaving the Company • our whistleblower policy applies to all employees and prohibits retaliation against anyone who makes a complaint acting in good faith |
3. Mitigation Measures |
• senior executives have a significant portion of their compensation deferred • we must achieve a specific threshold of operating income, otherwise no short-term incentive awards are granted • financial performance is verified by our external auditor (completion of annual financial statement audit) before the Board makes any decisions about short-term incentives • the Compensation Committee adopts principles for adjusting payout under the STIP, and provides them to the Board as part of their review of the Compensation Committee’s recommendations and performance overall • the Compensation Committee takes the business landscape and any external factors into account when exercising discretion and determining incentive awards • we regularly benchmark executive compensation against our compensation comparator group • safety is part of individual performance under the STIP for the President and CEO and executives in operations roles in addition to being a specific STIP measure which applies to all employees • all long-term incentive eligible employees are subject to two-year non-compete and non-solicit covenants should they leave CP• different performance scenarios are stress-tested and back-tested to understand possible outcomes • we review and consider risks associated with retention-related compensation |
• | the incentive compensation received was calculated based on financial results that were subsequently restated or corrected, in whole or in part; and/or |
• | the senior executive engaged in gross negligence, fraud or intentional misconduct that caused or contributed to the need for the restatement or correction, as admitted by the senior executive or as reasonably determined by the Board. |
Element |
Purpose |
Risk mitigating features |
Link to business and | |||
Salary Fixed cash (see page 19) |
• competitive level of fixed pay to reflect scope of responsibilities and market data • reviewed annually |
• benchmarked against our comparator group to ensure market competitiveness |
• attract and retain talent • no automatic or guaranteed increases to promote a performance culture | |||
Short-term incentive Variable cash bonus (see page 19) |
• performance-based incentive to reward achievement of annual corporate and individual objectives to attract and retain highly qualified leaders • established target awards based on level of employee |
• year-end performance is measured against predetermined, approved targets• actual payouts are based on the achievement of predetermined corporate and individual objectives • payouts range from 0% to a maximum of 200% of target awards |
• motivate high corporate and individual performance • performance metrics are aligned to the strategic plan and approved annually • align personal objectives with area of responsibility and role in achieving financial, safety and operating results | |||
Deferred compensation Deferred share units (see page 49) |
• encourages share ownership while aligning management interests with growth in shareholder value • executives and senior management can elect to receive their short-term incentive and their annual PSU grant in DSUs if they have not yet met their share ownership requirement • company provides a 25% match of the deferral amount in DSUs |
• deferral limited to the amount required to meet the executive’s share ownership guidelines • helps retain key executive talent • matching DSUs vest after three years |
• sustained alignment of executive and shareholder interests because the value of DSUs is tied directly to our share price • cannot be redeemed for cash until a minimum of six months after the executive leaves CP | |||
Long-term incentive Performance share units (see page 26) |
• equity-based incentive to align with shareholder interests and focuses on three-year performance • accounts for 60% of an executive’s long-term incentive award • vest after three years |
• use predefined market and financial metrics • the number of units that vest is based on a performance modifier that is capped • no guarantee of a minimum payout |
• focuses the leadership team on achieving challenging medium-term performance goals • payout based on share price and company performance • attract and retain highly qualified leaders | |||
Long-term incentive Stock options (see page 27) |
• equity-based incentive to align with long term performance and growth in share price • accounts for 40% of an executive’s long-term incentive award • vests over four years, term is seven years |
• focuses on appreciation in our share price, aligning with shareholder interests • only granted to senior management and executives |
• focuses the leadership team on creating sustainable long-term value | |||
Pension Defined contribution and defined benefit pension plans (see page 47) |
• pension benefit based on pay, age and service and is competitive with the market • supplemental plan for senior management and executives |
• balances risk management of pay packages that have a high percentage of variable pay |
• attract and retain highly qualified leaders | |||
Perquisites Flexible spending account (see page 42) |
• market competitive benefit to support health and well-being |
• capped perquisites for the CEO and executives |
• attract and retain highly qualified leaders |
Executive |
2021 (in USD) |
percent change from 2020 |
2020 (in USD) | |||
Keith Creel |
1,193,513 | 0.0% | 1,193,513 | |||
Nadeem Velani |
640,000 | 6.3% | 602,000 | |||
John Brooks |
580,000 | 5.2% | 551,250 | |||
Mark Redd (1) |
525,000 | 17.6% | 446,250 | |||
Jeffrey Ellis (1) |
446,869 | 12.8% | 396,160 |
(1) |
Increases for Mr. Redd and Mr. Ellis were approved to progressively align their tenure, scope of responsibility and performance with the competitive market |
Purpose |
• performance-based incentive to achieve predefined annual corporate and individual performance goals that are tied directly to our strategy and operational objectives | |
Term |
• measure performance over a one-year period | |
Payout |
• corporate performance is assessed against financial, safety and operational measures • individual performance is assessed based on individual performance objectives • awards are pro-rated for eligibility in calendar performance year and can range from 0 to 200 percent of base salary• cash awards are paid out in February following the performance year | |
Restrictions |
• must meet minimum level of corporate and individual performance • must achieve corporate operating income hurdle for any payout on individual or corporate performance to occur • performance modifier for each metric is capped at 2x target for exceptional performance • actual award is capped as a maximum of 200 percent of target award to limit payout and excessive risk-taking |
Our STIP target is based on a percentage of base salary and reviewed annually for market competitiveness. Our 2021 market review resultedin STIP adjustments for Mr. Velani, Mr. Brooks, Mr. Redd and Mr. Ellis to maintain their target total direct compensation positioning relative to the competitive market. |
STIP target as a percent of base salary | |||||||||
Executive |
Minimum |
Target |
Maximum | |||||||
Keith Creel | 0% | 125% | 250% | |||||||
Nadeem Velani | 0% | 100% | 200% | |||||||
John Brooks | 0% | 100% | 200% | |||||||
Mark Redd | 0% | 90% | 180% | |||||||
Jeffrey Ellis | 0% | 80% | 160% |
(1) |
Mr. Brooks and Mr. Redd elected to defer a portion of their 2021 STIP award to DSUs. |
Executive |
2021 individual performance factor |
The individual performance factor for the CEO cannot exceed the STIP corporate performance factor. This ensures the payout factor for the CEO aligns with CP’s overall performance. | ||||||
Keith Creel |
125% |
|||||||
Nadeem Velani |
175% |
|||||||
John Brooks |
175% |
|||||||
Mark Redd |
175% |
|||||||
Jeffrey Ellis |
175% |
|||||||
The Compensation Committee sets the individual performance factor for the CEO. The CEO reviews the performance of his direct reports against their objectives, and recommends their individual performance factors to the Compensation Committee. |
Performance measure (Weighting) |
Why the measure is important |
Threshold (50%) |
Target (100%) |
Maximum (200%) |
2021 Reported Result |
2021 STIP Result |
Score |
|||||||||||||||||||
Financial measures |
||||||||||||||||||||||||||
STIP Operating ratio (35%) Operating expenses divided by total revenues based on an assumed fuel price and foreign exchange rate |
Continues our focus on driving down costs while focusing on growth strategy |
57.1% | 56.8% | 56.4% | 57.6% (1) |
56.3% (2) |
200% | |||||||||||||||||||
STIP Operating income (35%) ($ millions) Total revenues less total operating expenses based on an assumed foreign exchange rate |
Highlights the importance of revenue growth to our corporate strategy |
3,426 |
3,517 |
3,616 |
3,389 (1) |
3,461 (2) |
69% |
|||||||||||||||||||
Safety measures |
||||||||||||||||||||||||||
FRA Train Accident Frequency (10%) Number of FRA-reportable train accidents which meet FRA reporting thresholds per million train miles |
CP has long been an industry leader in rail safety and we are more focused on it than ever, committed to protecting our people, our communities, our environment and our customers’ goods |
1.10 | 1.01 | 0.96 | 1.10 | 1.10 | 50% | |||||||||||||||||||
FRA Personal Injury Frequency (10%) Number of FRA reportable injuries per 200,000 employee hours |
As safety is our top priority, we introduced FRA Personal Injury as an additional safety metric under our STIP beginning 2020 |
1.15 | 1.10 | 1.05 | 0.92 | 0.92 | 200% | |||||||||||||||||||
Operating measure |
||||||||||||||||||||||||||
Trip Plan Compliance (10%) Calculated as the number of shipments completed on time (less than 12 hours late vs. baseline plan), divided by the total number of shipments completed |
Trip plan compliance is a detailed schedule of performance and the core of CP’s product offering. It balances between customer needs and what we are capable of delivering It is critical to the service we provide customers and to our growth strategy |
75% | 80% | 85% | 76% | 76% | 60% | |||||||||||||||||||
Corporate performance factor |
|
125 |
% |
(1) |
Adjusted diluted EPS, Adjusted operating income and Adjusted operating ratio are non-GAAP measures. Non-GAAP measures are defined and reconciled on pages 94-104 of CP’s 2021 Form 10-K. |
(2) |
The Compensation Committee may adjust the results for unusual or non-recurring items that are outside our normal business and do not accurately reflect our ongoing operating results or business trends and affect the comparability of our financial performance year over year. Results used under the STIP could therefore differ from our reported GAAP results. Significant items that were adjusted so that they do not impact, either favourably or unfavourably, the assumptions made when the STIP targets were planned include: foreign exchange rates, fuel price and land sales, all of which were adjusted to reflect the original assumptions made in our 2021 budget. Consequently, operating ratio and operating income were adjusted downwards and upwards, respectively compared to our reported results, increasing the bonus payment. |
(1) |
Although the recommendation to exercise discretion with respect to payout and vesting performance factors were made following the conclusion of the performance period ending December 31, 2020, the July 2018 special retention grants did not vest until July 20, 2021 and were settled based on the average closing price per share on the applicable stock exchange during the immediately preceding 30 days prior to July 20, 2021. |
Performance share units (60%) |
Stock options (40%) | |||||
Purpose |
• notional share units to align compensation with medium-term financial and market objectives |
• equity-based compensation to align executives with long-term performance of our shares and business | ||||
Term |
• three years |
• seven years | ||||
Vesting |
• the number of units that vest is based on performance over a three-year period • cliff vest at the end of three years to the extent performance vesting conditions are met and Board approval |
• vest 25% every year beginning on the first anniversary of the grant date | ||||
Payout |
• paid out in cash based on units earned and the average closing share price for the 30 trading days prior to the end of the performance period on the TSX or NYSE • may be paid out in shares at the discretion of the CEO • accumulates quarterly dividends • no guarantee of a minimum payout • if performance is exceptional on all measures the Board may approve a payout of up to 249% |
• right to buy CP shares at a specified price after vesting • does not attract dividends • only have value if our share price increases above the exercise price | ||||
Restrictions |
• must achieve threshold performance level on a measure otherwise the payout factor for that measure is zero and a portion of the award is forfeited |
• no exercises can be made during a blackout period • financial assistance is not provided to facilitate the purchase of shares under the stock option plan | ||||
Assignment |
• not permitted other than by operation of law |
• options will continue to vest and expire on the scheduled expiry date if the holder’s employment ends due to permanent disability. If an option holder dies, the options will expire 12 months following the date of death and may be exercised by the holder’s estate. • can only be assigned to the holder’s family trust, holding corporation or retirement trust, or a legal representative of a holder’s estate or a person who acquires the holder’s rights by bequest or inheritance | ||||
Termination Provisions |
||||||
Resignation |
• all units cancelled |
• 30 days to exercise any vested options; unvested options are cancelled | ||||
Retirement (1) |
• units continue to vest providing the unit holder meets the retirement age and service requirements and has a minimum participation period of six months during a performance period |
• options continue to vest and expire on the earlier of five years from retirement or the original expiry date | ||||
Termination without Cause |
• pro-rated to termination date as long as unit holder has a minimum of six months of service in the performance period |
• six months to exercise vested options; unvested options continue to vest for six months following termination date | ||||
Termination with Cause |
• all units cancelled |
• all options cancelled | ||||
Change of Control |
• pro-rated to change of control date• if unit holder is terminated without cause—pro-rated to termination date |
• all options vest immediately (2) |
(1) |
Retirement notice of six months is required starting in 2021 to allow for business continuity and knowledge transfer. |
(2) |
Stock options have a double trigger clause requiring a change of control and the option holder to be terminated without cause. |
Executive |
2021 long-term incentive award (grant value) ($) (1) |
Allocation |
||||||||||||||||||
Performance share units |
Stock options |
|||||||||||||||||||
($) |
(#) |
($) |
(#) |
|||||||||||||||||
Keith Creel (2), (3) |
22,049,529 | 7,138,547 | 84,695 | 14,910,982 | 754,530 | |||||||||||||||
Nadeem Velani |
2,682,113 | 1,684,658 | 19,605 | 997,455 | 57,790 | |||||||||||||||
John Brooks (2) |
2,420,435 | 1,500,279 | 17,800 | 920,156 | 49,835 | |||||||||||||||
Mark Redd (2), (4) |
2,008,552 | 1,245,063 | 14,772 | 763,489 | 41,350 | |||||||||||||||
Jeffrey Ellis |
1,383,789 | 869,182 | 10,115 | 514,607 | 29,815 |
(1) |
See the Summary compensation table on page 40 for details on how we calculate the grant date fair values of the PSUs and stock options. Both were calculated in accordance with FASB ASC Topic 718. |
(2) |
The grant value of the awards based on the NYSE trading price has been converted to Canadian dollars using a 2021 average exchange rate of $1.2535. |
(3) |
Mr. Creel’s 2021 stock option value reflects the annual grant of 237,145 stock options on January 29, 2021 and the special upfront grant of 517,385 stock options received on March 27, 2021, in conjunction with amendments to his executive employment agreement on March 21, 2021. |
(4) |
Mr. Redd elected to defer a proportion of his 2021 PSU award to DSUs. |
2021 PSU performance measures |
Why the measure is important |
Threshold (50%) |
Target (100%) |
Stretch (200%) |
Exceptional (270%) |
Weighting | ||||||
PSU three-year average return on invested capital (ROIC) (1) Net operating profit after tax divided by average invested capital |
Focuses executives on the effective use of capital as we grow Ensures shareholders’ capital is employed in a value-accretive manner |
15.5% | 16.3% | 16.7% | 17.1% | 70% | ||||||
Total shareholder return (TSR) Measured over three years. The percentile ranking of CP’s TSX Compound Annual Growth Rate (CAGR) relative to the companies that make up the S&P/TSX 60 |
Compares our TSR on the TSX to the broader S&P/TSX 60 to reflect our progress relative to the Canadian market Aligns long-term incentive compensation with long-term shareholder interests |
25 th percentile |
50 th percentile |
75 th percentile |
n/a | 15% | ||||||
Total shareholder return (TSR) Measured over three years. The ordinal ranking of CP’s NYSE CAGR relative to the Class I railroads |
Compares our TSR on the NYSE to the publicly traded Class I railroads to ensure we are competitive against our primary competitors. Aligns long-term incentive compensation with long-term shareholder interests |
4 th |
3 rd |
1 st |
n/a | 15% |
(1) |
Adjusted ROIC is a non-GAAP measure. Non-GAAP measures are defined and reconciled on pages 94-104 of CP’s 2021 Form 10-K. |
Executive |
Grant value ($) (1) |
Number of PSUs |
Grant price |
|||||||||
Keith Creel |
|
7,138,547 |
|
|
84,695 |
|
|
US$67.24 (NYSE) |
| |||
Nadeem Velani |
|
1,684,658 |
|
|
19,605 |
|
|
$85.93 (TSX) |
| |||
John Brooks |
|
1,500,279 |
|
|
17,800 |
|
|
US$67.24 (NYSE) |
| |||
Mark Redd (2) |
|
1,245,063 |
|
|
14,772 |
|
|
US$67.24 (NYSE) |
| |||
Jeffrey Ellis |
|
869,182 |
|
|
10,115 |
|
|
$85.93 (TSX) |
|
(1) |
See the Summary compensation table on page 40 for details on how we calculate the grant date fair values of the PSUs. The grant values of the PSU awards based on the NYSE trading price have been converted to Canadian dollars using a 2021 average exchange rate of $1.2535. |
(2) |
Mr. Redd elected to defer a proportion of his 2021 PSU award to DSUs. |
(1) |
Free cash, Adjusted net debt to Adjusted EBITDA, and Adjusted ROIC are non-GAAP measures. Non-GAAP measures are defined and reconciled on pages 94-104 of CP’s Annual Report on Form 10-K for the year ended December 31, 2021. |
a. | the number of SARs to be granted shall, in the sole discretion of the Administrator, be: |
i. | one SAR for every two optioned shares, or |
ii. | one SAR for each optioned share; |
b. | the reference price for a SAR will be same as the exercise price of the related option |
c. | SARs may be exercise from time to time by an optionholder as follows: |
i. | on and after the second anniversary of the grant date, as to 50% of the SARs or any part thereof; |
ii. | on and after the third anniversary of the grant date, as to the remaining 50% of the SARs or any part thereof; |
d. | exercise of SARs will result in a reduction in the number of option shares on the basis of one optioned share for each exercised SAR; and |
e. | exercise of an option will result in a reduction in the number of SARs on the basis of: |
i. | one SAR for each optioned share purchased in excess of 50% of the number of optioned shares, where one SAR was granted for every two optioned shares; and |
ii. | one SAR for each optioned share purchased, where one SAR was granted for each optioned share. |
f. | The expiry date of a SAR will be ten years after the grant date. |
Executive |
Grant Date |
Grant value ($) (1) |
# of options |
Grant price |
||||||||||||
Keith Creel (2) |
|
29-Jan-21 |
|
|
4,378,658 |
|
|
237,145 |
|
|
US$67.24 (NYSE) |
| ||||
|
27-Mar-21 |
|
|
10,532,324 |
|
|
517,385 |
|
|
US$71.64 (NYSE) |
| |||||
Nadeem Velani |
|
29-Jan-21 |
|
|
997,455 |
|
|
57,790 |
|
|
$85.93 (TSX) |
| ||||
John Brooks |
|
29-Jan-21 |
|
|
920,156 |
|
|
49,835 |
|
|
US$67.24 (NYSE) |
| ||||
Mark Redd |
|
29-Jan-21 |
|
|
763,489 |
|
|
41,350 |
|
|
US$67.24 (NYSE) |
| ||||
Jeffrey Ellis |
|
29-Jan-21 |
|
|
514,607 |
|
|
29,815 |
|
|
$85.93 (TSX) |
|
(1) |
See the Summary compensation table on page 40 for details on how we calculate the grant date fair values of the stock options. The grant value of the stock option awards based on the NYSE trading price have been converted to Canadian dollars using a 2021 average exchange rate of $1.2535. |
(2) |
As discussed in the 2021 Long-term incentive awards on page 25, Mr. Creel received the regular annual stock option grant and a second, special upfront grant in relation to the announcement of the merger with KCS on March 21, 2021. |
As a percent of the number of shares outstanding | ||
Maximum number of shares that, together with any other share compensation arrangement, may be reserved for issuance to insiders as options |
10% | |
Maximum number of shares that may be issued under the option plan and any other share compensation arrangements to insiders in a one-year period |
10% | |
Maximum number of shares that may be issued under the option plan and any other share compensation arrangements to any insider in a one-year period |
5% | |
As a percent of the number of shares outstanding at the time the shares were reserved | ||
Maximum number of shares that may be reserved for issuance to any person as options |
5% |
as at December 31 |
2019 |
2020 |
2021 |
|||||||||
Number of options granted |
|
1,123,650 |
|
|
1,086,200 |
|
|
1,346,358 |
| |||
Weighted number of shares outstanding |
|
693,859,695 |
|
|
677,193,050 |
|
|
679,709,375 |
| |||
Burn rate |
|
0.16% |
|
|
0.16% |
|
|
0.20% |
|
Number of options/shares |
Percent of outstanding shares |
|||||||
Options outstanding (as at December 31, 2021) |
|
7,392,188 |
|
|
0.80% |
| ||
Options available to grant (as at December 31, 2021) |
|
3,312,565 |
|
|
0.36% |
| ||
Shares issued on exercise of options in 2021 |
|
711,922 |
|
|
0.08% |
| ||
Options granted in 2021 |
|
1,346,358 |
|
|
0.14% |
|
• | changes to clarify information or to correct an error or omission |
• | changes of an administrative or a housekeeping nature |
• | changes to eligibility to participate in the stock option plan |
• | terms, conditions and mechanics of granting stock option awards |
• | changes to vesting, exercise, early expiry or cancellation |
• | amendments that are designed to comply with the law or regulatory requirements |
• | an increase to the maximum number of shares that may be issued under the plan |
• | a decrease in the exercise price |
• | a grant of options in exchange for, or related to, options being cancelled or surrendered |
• | on February 28, 2012, the stock option plan was amended so that a change of control would not trigger accelerated vesting of options held by a participant, unless the person is terminated without cause or constructively dismissed; and |
• | on November 19, 2015, the stock option plan was amended to provide net stock settlement |
(1) |
The grant value for Mr. Creel, Mr. Brooks and Mr. Redd was converted to Canadian dollars using an exchange rate of $1.3269 for 2019. |
(2) |
Reflects the 30-day average closing share price prior to December 31, 2021 on the TSX ($92.51) and NYSE (US$72.56) when both markets were open. |
(3) |
The PSU payout value for Mr. Creel, Mr. Brooks and Mr. Redd was converted using a 2021 year-end exchange rate of $1.2678. |
(4) |
Mr. Redd’s 2019 PSU award reflects his annual grant on February 14, 2019 as well as an additional grant on September 3, 2019 in relation to his appointment to Executive Vice President, Operations. Both 2019 PSU awards had the same performance period, performance measures and payout factor of 200%. |
PSU performance measures |
Threshold (50%) |
Target (100%) |
Maximum (200%) |
PSU result |
Weighting |
PSU performance factor | ||||||||||||||||
3-Year Average Adjusted Return on Invested Capital(1) |
|
15.3% |
|
|
16.0% |
|
|
16.4% |
|
|
16.5% |
|
|
70% |
|
200% | ||||||
TSR to S&P/TSX 60 Index (2) |
|
25 th percentile |
|
50 th |
75 th |
88 th |
|
15% |
|
200% | ||||||||||||
TSR to Class I railroads (2) |
|
4 th |
|
|
3 rd |
|
|
1 st |
|
|
1 st |
|
|
15% |
|
200% | ||||||
PSU performance factor |
200% |
(1) |
Adjusted Return on Invested Capital is a non-GAAP measure. Non-GAAP measures are defined and reconciled on pages 94-104 of CP’s 2021 Form 10-K. Results for Adjusted Return on Invested Capital for PSU purposes have been adjusted in 2021 to remove the impacts of the KCS acquisition in order to more accurately reflect the operating performance of our core business from 2019-2021. |
(2) |
TSR performance was rated against companies in the respective indices at the beginning and end of performance periods in accordance with the terms of the PSU plan and the 2019 award agreement. |
|
Mr. Creel has been President and Chief Executive Officer (CEO) since his appointment on January 31, 2017. He joined CP in February 2013 as President and Chief Operating Officer (COO). Prior to joining CP, Mr. Creel had a very successful operating career that began in 1992 at Burlington Northern as a management trainee in operations, which later led to his appointment to EVP and COO at CN in 2010. Mr. Creel obtained a Bachelor of Science in marketing from Jacksonville State University and completed the Advanced Management Program at the Harvard Business School. He served as a commissioned officer in the U.S. Army and is a Persian Gulf War veteran. At CP, our purpose is to deliver transportation solutions that connect North America to the world. By doing this safely and efficiently, we create long-term, sustainable value for our employees, shareholders | |
and the broader economy. From our multi-year strategic business plans to our daily operations and sales and marketing playbooks, everything we do is driven by, and tested against, our purpose and our values of accountability, diversity and pride. |
(1) |
Adjusted diluted EPS and Adjusted operating ratio are non-GAAP measures. Non-GAAP measures are defined and reconciled on pages 94-104 of CP’s 2021 Form 10-K. |
|
Compensation (in CAD $‘000) |
2021 |
||||
Fixed |
||||||
Salary |
|
1,496 |
| |||
At-risk |
||||||
Short-term incentive |
|
2,338 |
| |||
Long-term incentive |
||||||
- PSUs |
|
7,139 |
| |||
- Stock options - annual |
|
4,379 |
| |||
- Stock options - upfront |
|
10,532 |
| |||
Total direct compensation |
|
25,884 |
|
|
|
Summary compensation table. Realized and realizable. • the value of vested 2019 PSUs paid in February 2022 was calculated using the 30-day average trading price of our shares prior to December 31, 2021 of US$72.56 on the NYSE with a performance multiplier of 2.0 and includes reinvested dividends up to the payment date• the value of unvested 2020 and 2021 PSUs are based on the closing price of our shares on December 31, 2021 of US$71.94 on the NYSE with a performance multiplier of 1.0 and includes reinvested dividends • the value of unvested/unexercised stock options is based on the closing price of our shares on December 31, 2021 of US$71.94 on the NYSE • the values for salary earned and actual cash bonus are as disclosed in the summary compensation table on page 40 • the value of any realized and realizable PSUs and stock options have been converted into Canadian dollars using the 2021 year-end exchange rate of $1.2678 |
|
Compensation awarded ($) |
Realized and realizable value of compensation as at |
Value of $100 |
|||||||||||||||||
December 31, 2021 |
Keith Creel |
Shareholder |
||||||||||||||||||
(in CAD $‘000) |
($) |
Period |
($) |
($) |
||||||||||||||||
2019 |
14,029,129 | 35,835,646 | Jan 1, 2019 to Dec 31, 2021 | 255 | 193 | |||||||||||||||
2020 |
16,026,481 | 20,745,748 | Jan 1, 2020 to Dec 31, 2021 | 129 | 140 | |||||||||||||||
2021 (1) |
25,883,203 | 13,215,773 | Jan 1, 2021 to Dec 31, 2021 | 51 | 104 |
(1) |
Compensation awarded in 2021 is higher than 2019 and 2020 as a result of the special upfront grant of stock options in March 2021 and is expected to normalize in 2022. |
|
Mr. Velani has been Executive Vice-President and Chief Financial Officer since October 17, 2017. Mr. Velani joined CP in March 2013 after spending approximately 15 years with CN where he held a variety of leadership positions in financial planning, sales and marketing, investor relations and the Office of the President and CEO. Mr. Velani is a key member of the CP senior management team responsible for the long-term strategic direction of the Company. Responsibilities include financial planning, investor relations, reporting and accounting systems, as well as pension, tax, treasury and internal audit functions. Mr. Velani obtained a Bachelor of Economics from Western University and an MBA in Finance/International Business from McGill. |
(1) |
Adjusted diluted EPS and Adjusted operating ratio are non-GAAP measures. Non-GAAP measures are defined and reconciled on pages 94-104 of CP’s 2021 Form 10-K. |
|
Compensation (in CAD $‘000) |
2021 |
||||
Fixed |
||||||
Salary |
|
807 |
| |||
At-risk |
||||||
Short-term incentive |
|
1,103 |
| |||
Long-term incentive |
||||||
- PSUs |
|
1,685 |
| |||
- Stock options |
|
997 |
| |||
Total direct compensation |
|
4,592 |
| |||
|
Mr. Brooks has been Executive Vice-President and Chief Marketing Officer (CMO) since February 14, 2019. Mr. Brooks started his railroading career with Union Pacific and later helped start I&M Rail Link, LLC, which was purchased by the Dakota, Minnesota and Eastern Railroad (DM&E) in 2002. When CP acquired the DM&E in 2007, Mr. Brooks was Vice-President of Marketing. With more than 27 years in the railroading business, Mr. Brooks has held senior responsibilities in all lines of business, including coal, chemicals, merchandise products, grain and intermodal. Mr. Brooks is responsible for strengthening relationships with existing customers, generating new opportunities for growth, enhancing the value of the Company’s service offerings and developing strategies to optimize CP’s business. |
|
Compensation (in CAD $‘000) |
2021 |
||||
Fixed |
||||||
Salary |
|
723 |
| |||
At-risk |
||||||
Short-term incentive |
|
1,000 |
| |||
Long-term incentive |
||||||
- PSUs |
|
1,500 |
| |||
- DSUs |
|
66 |
| |||
- Stock options |
|
920 |
| |||
Total direct compensation |
|
4,209 |
|
|
Mr. Redd has been Executive Vice-President Operations since September 1, 2019, bringing to his role considerable leadership experience in rail operations and safety excellence. He joined CP in October 2013 as General Manager Operations U.S. West and has held various leadership positions. In February 2017, he became Senior Vice-President Operations Western Region. Mr. Redd was proudly named CP’s 2016 Railroader of the Year. He leads the 24/7 operations of our network, which includes responsibility for network transportation, operations, mechanical, engineering, procurement, operations technology and labour relations. Mr. Redd began his railroading career at Midsouth Rail in Jackson, Mississippi, and then moved to KCS as a locomotive engineer and then appointed Vice-President Transportation. He is also a former Chairman of the operating board for the Port Terminal Railroad Association in Houston, Texas. Mr. Redd holds a Bachelor and Master of Science in Management from University of Phoenix and Executive MBA from the University of Missouri – Kansas City. |
|
Compensation (in CAD $‘000) |
2021 |
||||
Fixed |
||||||
Salary |
|
646 |
| |||
At-risk |
||||||
Short-term incentive |
|
814 |
| |||
Long-term incentive |
||||||
- PSUs |
|
1,426 |
| |||
- DSUs |
|
19 |
| |||
- Stock options |
|
1,011 |
| |||
Total direct compensation |
|
3,916 |
|
|
Mr. Ellis has been Chief Legal Officer and Corporate Secretary since November 23, 2015. He is accountable for the overall strategic leadership, and performance of the legal, corporate secretarial, government relations and public affairs functions at CP. Prior to joining CP in 2015, Mr. Ellis was the U.S. General Counsel at BMO Financial Group. Before joining BMO in 2006, Mr. Ellis was in private practice in Ontario. He holds a BA and MA from the University of Toronto, JD and LLM degrees from Osgoode Hall Law School as well as an MBA from Western University. Mr. Ellis is a member of the bars of New York, Illinois, Ontario and Alberta. |
|
Compensation (in CAD $‘000) |
2021 |
||||
Fixed |
||||||
Salary |
|
554 |
| |||
At-risk |
||||||
Short-term incentive |
|
616 |
| |||
Long-term incentive |
||||||
- PSUs |
|
869 |
| |||
- DSUs |
|
78 |
| |||
- Stock options |
|
515 |
| |||
Total direct compensation |
|
2,632 |
|
at December 31 |
2017 |
2018 |
2019 |
2020 |
2021 |
|||||||||||||||
CP TSR (C$) |
|
121 |
|
|
129 |
|
|
178 |
|
|
240 |
|
|
249 |
| |||||
CP TSR (US$) |
|
129 |
|
|
127 |
|
|
184 |
|
|
253 |
|
|
265 |
| |||||
S&P/TSX Composite Index (C$) |
|
109 |
|
|
99 |
|
|
122 |
|
|
129 |
|
|
161 |
| |||||
S&P 500 Index (US$) |
|
122 |
|
|
116 |
|
|
153 |
|
|
181 |
|
|
233 |
| |||||
TDC ($ thousands) |
|
27,471 |
|
|
22,210 |
|
|
27,352 |
|
|
31,855 |
|
|
41,754 |
|
• | Total direct compensation |
• | We used the following to calculate total direct compensation in the table above: |
• | 2021 and 2020: Keith Creel, Nadeem Velani, John Brooks, Mark Redd and Jeffrey Ellis |
• | 2019: Keith Creel, Nadeem Velani, John Brooks, Laird Pitz and Mark Redd |
• | 2018: Keith Creel, Nadeem Velani, Robert Johnson, Laird Pitz and John Brooks |
• | 2017: Keith Creel, Nadeem Velani, Robert Johnson, Laird Pitz and Jeffrey Ellis |
• | Mr. Creel, Mr. Brooks, Mr. Pitz, Mr. Redd and Mr. Johnson were paid in U.S. dollars and their amounts have been converted using the following average exchange rates: $1.2535 for 2021, $1.3415 for 2020, $1.3269 for 2019, $1.2957 for 2018 and $1.2986 for 2017. |
Executive and principal position |
Year |
Salary ($) (1) |
Share-based awards ($) (2) |
Option-based awards ($) (3) |
Non-equity incentive plan compensation - annual incentive plan ($) (4) |
Pension Values ($) (5) |
All other compensation ($) (6) |
Total Compensation ($) |
||||||||||||||||||||||||
Keith E. Creel |
2021 | 1,496,068 | 7,138,547 | 14,910,982 | 2,337,606 | 608,541 | 237,237 | 26,728,981 | ||||||||||||||||||||||||
President and Chief |
2020 | 1,601,097 | 6,826,446 | 4,156,579 | 3,442,359 | 546,767 | 242,948 | 16,816,196 | ||||||||||||||||||||||||
Executive Officer |
2019 | 1,537,866 | 5,870,208 | 3,642,061 | 2,978,994 | 566,343 | 554,930 | 15,150,402 | ||||||||||||||||||||||||
Nadeem S. Velani |
2021 | 806,821 | 1,684,658 | 997,455 | 1,102,552 | 248,433 | 53,715 | 4,893,634 | ||||||||||||||||||||||||
Executive Vice-President |
2020 | 790,366 | 1,818,076 | 1,157,441 | 1,263,452 | 226,331 | 66,336 | 5,322,002 | ||||||||||||||||||||||||
and Chief Financial Officer |
2019 | 751,099 | 1,623,980 | 978,943 | 1,095,729 | 214,043 | 59,250 | 4,723,044 | ||||||||||||||||||||||||
John K. Brooks |
2021 | 722,525 | 1,566,074 | 920,156 | 999,666 | 534,527 | 90,248 | 4,833,196 | ||||||||||||||||||||||||
Executive Vice-President |
2020 | 735,100 | 1,548,288 | 942,743 | 1,149,741 | 557,101 | 83,767 | 5,016,740 | ||||||||||||||||||||||||
and Chief Marketing Officer |
2019 | 670,235 | 1,240,804 | 697,030 | 829,259 | 627,542 | 66,651 | 4,131,521 | ||||||||||||||||||||||||
Mark A. Redd |
2021 | 645,748 | 1,444,831 | 1,010,560 | 814,384 | 104,262 | 89,381 | 4,109,166 | ||||||||||||||||||||||||
Executive Vice-President |
2020 | 595,081 | 1,155,272 | 693,849 | 827,327 | 93,038 | 79,781 | 3,444,348 | ||||||||||||||||||||||||
Operations |
2019 | 491,307 | 642,177 | 355,053 | 592,539 | 96,231 | 214,626 | 2,391,933 | ||||||||||||||||||||||||
Jeffrey J. Ellis |
2021 | 554,274 | 947,383 | 514,607 | 616,166 | 143,932 | 51,938 | 2,828,300 | ||||||||||||||||||||||||
Chief Legal Officer |
2020 | 520,967 | 954,825 | 520,534 | 638,004 | 125,011 | 44,457 | 2,803,798 | ||||||||||||||||||||||||
and Corporate Secretary |
2019 | 463,071 | 695,339 | 438,493 | 520,787 | 112,898 | 54,844 | 2,285,432 |
(1) |
Salary. |
(2) |
Share-based awards. 10-K filed with the SEC and securities regulatory authorities in Canada on February 23, 2022 for more details. |
To calculate the number of PSUs our NEOs receive, we use the Willis Towers Watson binomial lattice model and the 30-day average closing share price on the TSX or the NYSE prior to the grant date. |
Willis Towers Watson Expected Life Binomial Valuation | ||
Assumptions |
TSX / NYSE | |
Term |
3 years | |
Vesting Schedule |
3 year cliff | |
Payout Range % (threshold-target-max) |
50 - 100 - 270 | |
Risk of Forfeiture |
5% | |
PSU Value (as a % of grant price) |
84% |
Using this valuation model, the grant date expected fair value on January 29, 2021 was $72.18 on the TSX and US$56.48 on the NYSE, based on the above assumptions. |
Mr. Brooks, Mr. Redd and Mr. Ellis’ amounts include the value of DSUs granted on January 29, 2021. See the About deferred compensation section on page 49 for more details. |
Mr. Redd’s amount also includes the incremental fair value of $180,830 (US$144,260) to reflect the discretion approved by Board for his July 20, 2018 special PSUs granted when he was not an NEO. See Compensation committee discretion on page 23 for more details. The incremental fair value is calculated in accordance with FASB ASC Topic 718: Compensation—Stock Compensation and reflects the fair value of incremental PSUs allowed to vest due to exercise of positive discretion. |
(3) |
Option-based awards. 10-K filed with the SEC and securities regulatory authorities in Canada on February 23, 2022 for more details. |
To calculate the number of options, we use Willis Towers Watson’s expected life binomial methodology and the 30-day average closing share price on the TSX or the NYSE prior to the grant date. |
The grant price on January 29, 2021 is $85.93 on the TSX and US$67.24 on the NYSE. Using the binomial valuation model, the grant date expected fair value on January 29, 2021 was $16.33 on the TSX and US$13.45 on the NYSE. The assumptions are below: |
|
Willis Towers Watson Expected Life Binomial Valuation |
|||||||
Assumptions |
NYSE |
TSX |
||||||
Option Term |
7 years | 7 years | ||||||
Vesting Schedule |
4 year pro-rated |
4 year pro-rated |
||||||
Expected Life |
4.75 years | 4.75 years | ||||||
Dividend Yield (1-year historical) |
1.02% | 1.01% | ||||||
Volatility (3-year daily) |
23.5% | 22.3% | ||||||
Risk-free Rate (yield curve) |
1.75 - 2.00% | 1.5 - 1.7% | ||||||
Risk of Forfeiture |
5% | 5% | ||||||
Stock Option Value (as a % of grant price) |
20% |
19% |
Mr. Creel’s amount includes a special upfront grant on March 27, 2021 in relation to amendments to his executive employment agreement made on March 21, 2021 to retain him until at least year 2026. The grant date fair value of this grant is US$16.24 on the NYSE and is calculated in accordance with FASB ASC Topic 718: Compensation - Stock Compensation. See 2021 stock option awards on page 28 for more details. |
Mr. Redd’s amount also includes the incremental fair value of $247,071 (US$197,105) to reflect the discretion approved by Board for his July 20, 2018 PSOs granted when he was not an NEO. See Compensation committee discretion on page 23 for more details. The incremental fair value is calculated in accordance with FASB ASC Topic 718: Compensation - Stock Compensation and reflects the fair value of incremental options allowed to vest due to exercise of positive discretion as calculated using the Black-Scholes option-pricing model at the modification date. |
(4) |
Non-equity annual incentive |
(5) |
Pension. |
(6) |
All other compensation. |
Perquisites |
Other compensation |
|||||||||||||||||||||||||||||||||||
Executive |
Personal use of company aircraft ($) (a) |
Auto benefits ($) (b) |
Housing allowance ($) (c) |
Financial and tax planning ($) (d) |
Additional medical ($) (e) |
Club benefits ($) (f) |
401K match ($) (g) |
Employer share purchase plan match ($) (h) |
Total ($) |
|||||||||||||||||||||||||||
Keith Creel |
115,501 | 28,092 | 4,514 | 22,444 | 655 | 29,642 | 6,769 | 29,620 | 237,237 | |||||||||||||||||||||||||||
Nadeem Velani |
- | 25,045 | - | - | 1,495 | 11,200 | - | 15,975 | 53,715 | |||||||||||||||||||||||||||
John Brooks |
- | 38,396 | - | 12,410 | 1,860 | 14,039 | 9,237 | 14,306 | 90,248 | |||||||||||||||||||||||||||
Mark Redd |
- | 39,241 | - | 12,410 | - | 14,039 | 10,905 | 12,786 | 89,381 | |||||||||||||||||||||||||||
Jeffrey Ellis |
- | 27,321 | 947 | - | 1,495 | 11,200 | - | 10,975 | 51,938 |
(a) |
Calculated by multiplying the variable cost per air hour by the number of hours used for travel and includes costs for fuel, maintenance, landing fees and other miscellaneous costs. As Mr. Creel is required to travel frequently for business, CP prefers he uses our corporate aircraft within North America to ensure his safety, security and ability to immediately travel across CP’s network. As an executive of a Calgary-based company, enabling the CEO to visit his family in the United States is an important retention tool. Non-corporate use of the corporate aircraft has been limited to family visits. |
(b) |
Reflects the cost of a company-leased vehicle and reimbursement of related operating costs. A taxable reimbursement of auto benefits is provided for executives with vehicles that meets a CFCR (Combined Fuel Consumption Ratio from the Canadian federal government) of 11.8L per 100KM or less. |
(c) |
Reflects total costs pro-rated for the days Mr. Creel is in Calgary to provide reasonable accommodation. For Mr. Ellis, the value reflects a housing subsidy that was included in his relocation package, which ended in June 2021. |
(d) |
Reflects the cost of executive financial counselling provided for Mr. Creel, Mr. Brooks and Mr. Redd. Mr. Velani and Mr. Ellis did not use the company provided service. |
(e) |
Under the U.S. medical benefits plan, available to all U.S. employees, the majority of the cost of a medical examination is covered by the plan. Only incremental costs for the executive medical are paid for by CP. In Canada, executive medicals are not covered under the group benefit plan. |
(f) |
Included in the perquisites program available to all senior executives is a value of $11,200 in their respective home currency. Value of CEO’s club membership of $29,642 reflects the Canadian dollar conversion of US$23,647. |
(g) |
Reflects matching company contributions to the 401k plan for Mr. Creel, Mr. Brooks and Mr. Redd. |
(h) |
Company contributions to the employee share purchase plan (ESPP). Our NEOs participate in the ESPP on the same terms and using the same formulas as other participants. See page 47 to read more about the ESPP. |
• | reasonable living accommodation in Calgary |
• | use of the corporate aircraft for business commuting and family visits within North America |
• | non-disclosure, non-solicitation and confidentiality covenants |
• | severance provisions as described on page 50 |
• | reimbursement for club memberships of up to US$25,000 annually |
• | reimbursement for financial services of up to US$20,000 annually |
|
|
Option-based awards (1) |
|
Share-based awards (2) |
||||||||||||||||||||||||||||||||
Executive |
Grant date |
Number of securities underlying unexercised options (#) |
Option exercise price ($) |
Option expiration date |
Value of unexercised in-the-money options ($) (1) |
Grant type |
Number of shares or units of shares that have not vested (#) |
Market or payout value of share-based awards that have not vested ($) |
Market or payout value of vested share-based awards not paid out or distributed ($) |
|||||||||||||||||||||||||||
Keith Creel (3) |
31-Jan-14 |
199,500 | 33.77 | 31-Jan-24 |
11,413,395 | |||||||||||||||||||||||||||||||
24-Jul-14 |
239,700 | 42.06 | 24-Jul-24 |
11,726,124 | ||||||||||||||||||||||||||||||||
22-Jan-16 |
276,250 | 23.36 | 22-Jan-26 |
17,014,161 | ||||||||||||||||||||||||||||||||
20-Jan-17 |
42,355 | 30.20 | 20-Jan-24 |
2,241,341 | ||||||||||||||||||||||||||||||||
1-Feb-17 |
93,810 | 30.23 | 1-Feb-24 |
4,960,667 | ||||||||||||||||||||||||||||||||
1-Feb-17 |
886,125 | 30.23 | 1-Feb-24 |
46,858,235 | ||||||||||||||||||||||||||||||||
22-Jan-18 |
215,740 | 37.17 | 22-Jan-25 |
9,510,123 | ||||||||||||||||||||||||||||||||
25-Jan-19 |
271,010 | 41.06 | 25-Jan-26 |
10,609,950 | ||||||||||||||||||||||||||||||||
31-Jan-20 |
287,160 | 53.16 | 31-Jan-27 |
6,837,074 | ||||||||||||||||||||||||||||||||
29-Jan-21 |
237,145 | 67.24 | 29-Jan-28 |
1,413,066 | ||||||||||||||||||||||||||||||||
27-Mar-21 |
517,385 | 71.64 | 27-Mar-28 |
196,782 | ||||||||||||||||||||||||||||||||
6-Feb-13 |
DSU | 14,785,061 | ||||||||||||||||||||||||||||||||||
14-Feb-19 |
PSU | 20,708,836 | ||||||||||||||||||||||||||||||||||
31-Jan-20 |
PSU | 97,200 | 8,865,218 | |||||||||||||||||||||||||||||||||
29-Jan-21 |
PSU | 85,217 | 7,772,251 | |||||||||||||||||||||||||||||||||
Total |
3,266,180 |
122,780,918 |
182,417 |
16,637,469 |
35,493,897 |
|
|
Option-based awards (1) |
|
Share-based awards (2) |
||||||||||||||||||||||||||||||||
Executive |
Grant date |
Number of securities underlying unexercised options (#) |
Option exercise price ($) |
Option expiration date |
Value of unexercised in-the-money options ($) (1) |
Grant type |
Number of shares or units of shares that have not vested (#) |
Market or payout value of share-based awards that have not vested ($) |
Market or payout value of vested share-based awards not paid out or distributed ($) |
|||||||||||||||||||||||||||
Nadeem Velani |
23-Jan-15 |
1,000 | 43.76 | 23-Jan-25 |
47,220 | |||||||||||||||||||||||||||||||
22-Jan-16 |
14,635 | 33.15 | 22-Jan-26 |
846,342 | ||||||||||||||||||||||||||||||||
22-Jan-18 |
66,300 | 46.33 | 22-Jan-25 |
2,960,295 | ||||||||||||||||||||||||||||||||
25-Jan-19 |
81,565 | 54.30 | 25-Jan-26 |
2,991,804 | ||||||||||||||||||||||||||||||||
31-Jan-20 |
87,275 | 70.31 | 31-Jan-27 |
1,803,974 | ||||||||||||||||||||||||||||||||
29-Jan-21 |
57,790 | 85.93 | 29-Jan-28 |
291,840 | ||||||||||||||||||||||||||||||||
26-Feb-14 |
DSU | 313,080 | ||||||||||||||||||||||||||||||||||
19-Feb-15 |
DSU | 158,400 | ||||||||||||||||||||||||||||||||||
24-Feb-17 |
DSU | 287,385 | ||||||||||||||||||||||||||||||||||
22-Feb-19 |
DSU | 1,375 | 125,078 | 500,311 | ||||||||||||||||||||||||||||||||
31-Jan-20 |
DSU | 21,010 | 1,911,551 | |||||||||||||||||||||||||||||||||
14-Feb-19 |
PSU | 5,503,966 | ||||||||||||||||||||||||||||||||||
31-Jan-20 |
PSU | 5,250 | 477,667 | |||||||||||||||||||||||||||||||||
29-Jan-21 |
PSU | 19,727 | 1,794,722 | |||||||||||||||||||||||||||||||||
Total |
|
|
|
308,565 |
|
|
|
|
|
|
8,941,475 |
|
|
|
47,362 |
4,309,018 |
6,763,142 |
|||||||||||||||||||
John Brooks |
23-Jan-15 |
12,530 | 35.18 | 23-Jan-25 |
583,952 | |||||||||||||||||||||||||||||||
22-Jan-16 |
21,700 | 23.36 | 22-Jan-26 |
1,336,497 | ||||||||||||||||||||||||||||||||
20-Jan-17 |
13,050 | 30.20 | 20-Jan-24 |
690,580 | ||||||||||||||||||||||||||||||||
22-Jan-18 |
20,975 | 37.17 | 22-Jan-25 |
924,607 | ||||||||||||||||||||||||||||||||
25-Jan-19 |
37,420 | 41.06 | 25-Jan-26 |
1,464,980 | ||||||||||||||||||||||||||||||||
14-Feb-19 |
14,845 | 40.40 | 14-Feb-26 |
593,598 | ||||||||||||||||||||||||||||||||
31-Jan-20 |
65,130 | 53.16 | 31-Jan-27 |
1,550,699 | ||||||||||||||||||||||||||||||||
29-Jan-21 |
49,835 | 67.24 | 29-Jan-28 |
296,950 | ||||||||||||||||||||||||||||||||
6-Sep-12 |
DSU | 468,351 | ||||||||||||||||||||||||||||||||||
22-Feb-19 |
DSU | 843 | 76,849 | 307,397 | ||||||||||||||||||||||||||||||||
29-Jan-21 |
DSU | 785 | 71,635 | 286,541 | ||||||||||||||||||||||||||||||||
14-Feb-19 |
PSU | 4,221,951 | ||||||||||||||||||||||||||||||||||
31-Jan-20 |
PSU | 22,046 | 2,010,697 | |||||||||||||||||||||||||||||||||
29-Jan-21 |
PSU | 17,910 | 1,633,462 | |||||||||||||||||||||||||||||||||
Total |
|
|
|
235,485 |
|
|
|
|
|
|
7,441,863 |
|
|
|
41,584 |
3,792,643 |
5,284,240 |
|
|
Option-based awards (1) |
|
Share-based awards (2) |
||||||||||||||||||||||||||||||||
Executive |
Grant date |
Number of securities underlying unexercised options (#) |
Option exercise price ($) |
Option expiration date |
Value of unexercised in-the-money options ($) (1) |
Grant type |
Number of shares or units of shares that have not vested (#) |
Market or payout value of share-based awards that have not vested ($) |
Market or payout value of vested share-based awards not paid out or distributed ($) |
|||||||||||||||||||||||||||
Mark Redd (4) |
1-Apr-14 |
6,900 | 33.23 | 1-Apr-24 |
398,475 | |||||||||||||||||||||||||||||||
23-Jan-15 |
6,280 | 35.18 | 23-Jan-25 |
292,675 | ||||||||||||||||||||||||||||||||
20-Jan-17 |
4,665 | 30.20 | 20-Jan-24 |
246,862 | ||||||||||||||||||||||||||||||||
22-Jan-18 |
20,075 | 37.17 | 22-Jan-25 |
884,934 | ||||||||||||||||||||||||||||||||
20-Jul-18 |
19,800 | 38.99 | 20-Jul-25 |
827,125 | ||||||||||||||||||||||||||||||||
25-Jan-19 |
19,980 | 41.06 | 25-Jan-26 |
782,210 | ||||||||||||||||||||||||||||||||
3-Sep-19 |
6,485 | 46.95 | 3-Sep-26 |
205,460 | ||||||||||||||||||||||||||||||||
31-Jan-20 |
47,935 | 53.16 | 31-Jan-27 |
1,141,298 | ||||||||||||||||||||||||||||||||
29-Jan-21 |
41,350 | 67.24 | 29-Jan-28 |
246,391 | ||||||||||||||||||||||||||||||||
19-Feb-15 |
DSU | 203,119 | ||||||||||||||||||||||||||||||||||
22-Feb-19 |
DSU | 715 | 65,189 | 260,758 | ||||||||||||||||||||||||||||||||
31-Jan-20 |
DSU | 4,279 | 390,298 | 81,188 | ||||||||||||||||||||||||||||||||
29-Jan-21 |
DSU | 1,712 | 156,160 | 82,475 | ||||||||||||||||||||||||||||||||
14-Feb-19 |
PSU | 1,527,089 | ||||||||||||||||||||||||||||||||||
3-Sep-19 |
PSU | 519,437 | ||||||||||||||||||||||||||||||||||
31-Jan-20 |
PSU | 12,170 | 1,110,005 | |||||||||||||||||||||||||||||||||
29-Jan-21 |
PSU | 13,377 | 1,220,049 | |||||||||||||||||||||||||||||||||
Total |
173,470 |
5,025,430 |
32,253 |
2,941,701 |
2,674,066 |
|||||||||||||||||||||||||||||||
Jeffrey Ellis |
22-Jan-16 |
6,485 | 33.15 | 22-Jan-26 |
375,028 | |||||||||||||||||||||||||||||||
20-Jan-17 |
17,150 | 40.30 | 20-Jan-24 |
869,162 | ||||||||||||||||||||||||||||||||
22-Jan-18 |
21,255 | 46.33 | 22-Jan-25 |
949,036 | ||||||||||||||||||||||||||||||||
25-Jan-19 |
36,535 | 54.30 | 25-Jan-26 |
1,340,104 | ||||||||||||||||||||||||||||||||
31-Jan-20 |
39,250 | 70.31 | 31-Jan-27 |
811,298 | ||||||||||||||||||||||||||||||||
29-Jan-21 |
29,815 | 85.93 | 29-Jan-28 |
150,566 | ||||||||||||||||||||||||||||||||
22-Jan-16 |
DSU | 174,058 | ||||||||||||||||||||||||||||||||||
31-Jan-20 |
DSU | 1,980 | 180,198 | 720,794 | ||||||||||||||||||||||||||||||||
29-Jan-21 |
DSU | 916 | 83,310 | 333,241 | ||||||||||||||||||||||||||||||||
14-Feb-19 |
PSU | 2,465,754 | ||||||||||||||||||||||||||||||||||
31-Jan-20 |
PSU | 11,811 | 1,074,521 | |||||||||||||||||||||||||||||||||
29-Jan-21 |
PSU | 10,178 | 925,968 | |||||||||||||||||||||||||||||||||
Total |
150,490 |
4,495,194 |
24,885 |
2,263,997 |
3,693,847 |
(1) |
Option-based awards. |
Value of unexercised in-the-money in-the-money year-end is based on $90.98, the closing share price on the TSX on December 31, 2021. For NEOs with U.S. dollar stock option grants, the value of unexercised in-the-money year-end is based on US$71.94, the closing share price on the NYSE on December 31, 2021. |
(2) |
Share-based awards. year-end exchange rate of $1.2678. |
Vested and unvested DSU awards are deferred and cannot be redeemed until the NEO leaves the Company. |
(3) |
Mr. Creel was awarded an upfront PSO grant on February 1, 2017 when he became CEO on January 31, 2017. These PSOs vested on February 1, 2022 based on our five-year total shareholder return (TSR) relative to two equally weighted measures: the S&P/TSX Capped Industrial Index and the S&P 1500 Road and Rail Index. The threshold for vesting is for CP’s TSR being at or above the 60 th percentile relative to each index at the end of the performance period on January 31, 2022. CP’s TSR performance relative to the S&P/TSX Capped Industrial and S&P 1500 Road and Rail indices both exceeded the 60th percentile, vesting 100 percent of the grant. |
On March 27, 2021, Mr. Creel was awarded a special stock option grant in conjunction with amendments to his executive employment agreement made on March 21, 2021. See 2021 Stock option awards on page 28 for more details. |
(4) |
As disclosed in CP’s 2021 proxy, prior to becoming an NEO, Mr. Redd was one of a number of key senior leaders who received a retention grant on July 20, 2018, consisting of PSOs and PSUs. The vesting of the grant was based on the achievement of revenue and diluted earnings per share (EPS) targets on December 31, 2020. To provide an equitable outcome for all award participants, the Board approved the application of positive discretion for the PSOs to vest at 75 percent (without discretion would vest at 50 percent) and the PSUs paid out at 125 percent (without discretion would payout at 100 percent) based upon the EPS target having been exceeded. The share price hurdle for the PSUs was exceeded, enabling the PSUs to payout at the approved 125 percent. As a result, Mr. Redd’s 19,800 PSOs vested and became exercisable on July 20, 2021. Mr. Redd’s 8,677 PSUs (including re-invested dividends) with 125 percent discretion applied based on the 30-day closing share price prior to the vest date on the NYSE and the 2021 average exchange rate of 1.2535 resulted in a Canadian dollar equivalent payout of $1,043,687. This value exceeds the estimated payout of $951,781 disclosed in the 2021 proxy as the market value of CP shares have appreciated since the time of the estimate. |
Executive |
Option-based awards - value vested during the year ($) (1) |
Share-based awards - value vested during the year ($) (2) |
Non-equity incentive plan compensation - value earned during the year ($) |
|||||||||
Keith Creel |
9,131,870 | 20,708,836 | 2,337,606 | |||||||||
Nadeem Velani |
1,993,507 | 5,503,966 | 1,102,552 | |||||||||
John Brooks |
1,158,116 | 4,221,951 | 999,666 | |||||||||
Mark Redd |
1,714,153 | 3,102,120 | 814,384 | |||||||||
Jeffrey Ellis |
988,176 | 2,465,754 | 616,166 |
(1) |
Option-based awards—value vested during the year. |
(2) |
Share-based awards—value vested during the year. year-end exchange rate of $1.2678. See Payout of 2019 PSU award on page 30 for more details. In addition to the 2019 PSUs, Mr. Redd’s value reflects his 2018 special retention PSUs which vested on July 20, 2021 at 125 percent. See Outstanding share-based awards and option-based awards on page 43 for more details. |
Executive |
Number of options exercised and sold |
Option exercise price ($) |
Value realized ($) (1) |
|||||||||
Nadeem Velani |
18,220 | 40.30 | 786,826 | |||||||||
6,695 | 43.76 | 266,930 | ||||||||||
Jeffrey Ellis |
7,750 | 40.30 | 445,541 | |||||||||
4,000 | 33.15 | 248,228 |
(1) |
Based on the market price of shares less the option exercise price on the date of exercise. |
Plan Category |
Number of securities to be issued upon exercise of outstanding options, warrants and rights |
Weighted-average exercise price of outstanding options, warrants and rights ($) |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in the first column) |
|||||||||
Equity compensation plans approved by security holders |
7,392,188 | 53.36 | 5,012,565 | |||||||||
Equity compensation plans not approved by security holders |
- | - | - | |||||||||
Total |
7,392,188 |
53.36 |
5,012,565 |
Executive |
Accumulated value at start of year ($) |
Compensatory ($) |
Accumulated value at year end ($) |
|||||||||
Keith Creel |
2,801,563 | 587,106 | 3,661,737 | |||||||||
Nadeem Velani |
|
1,108,415 |
|
|
248,433 |
|
|
1,632,195 |
| |||
Jeffrey Ellis |
|
633,286 |
|
|
143,932 |
|
|
910,273 |
|
• | a qualified defined benefit pension plan (closed plan) which provides annual benefit accruals funded by employer contributions determined from Internal Revenue Service (IRS) rules; |
• | a non-qualified defined benefit pension plan (closed plan) for certain employees whose compensation exceeds the U.S. Internal Revenue Code limit (US$230,000 for 2021); |
• | a voluntary qualified 401(k) plan with employer match; |
• | a qualified defined contribution plan which provides automatic employer contributions; and |
• | a non-qualified defined contribution plan for certain employees whose compensation exceeds the U.S. Internal Revenue Code limit (US$290,000 for 2021). |
Years of credited service |
Annual benefits payable |
Opening present value of defined benefit obligation ($) |
Compensatory change ($) |
Non-compensatory change ($) |
Closing present value of defined benefit obligation ($) |
|||||||||||||||||||||||||||
Executive |
At December 31, 2021 |
At age 65 |
At year end ($) |
At age 65 ($) |
||||||||||||||||||||||||||||
John Brooks |
13.17 | 27.25 | 194,504 | 402,448 | 3,048,768 | 534,527 | (420,711 | ) | 3,162,584 |
Executive |
Accumulated value at start of year ($) |
Compensatory ($) |
Accumulated value at year end ($) |
|||||||||
Keith Creel |
1,227,046 | 21,435 | 1,303,392 | |||||||||
Mark Redd |
|
415,177 |
|
|
104,262 |
|
|
557,017 |
|
Executive |
Unvested DSUs (#) |
Vested DSUs (#) |
Total Units (#) |
Value as at December 31, 2021 ($) (1) |
||||||||||||
Keith Creel |
0 | 162,107 | 162,107 | 14,785,061 | ||||||||||||
Nadeem Velani |
22,385 | 13,840 | 36,225 | 3,295,805 | ||||||||||||
John Brooks |
1,628 | 11,647 | 13,275 | 1,210,773 | ||||||||||||
Mark Redd |
6,706 | 6,881 | 13,587 | 1,239,187 | ||||||||||||
Jeffrey Ellis |
2,896 | 13,498 | 16,394 | 1,491,601 |
(1) |
We valued the outstanding DSUs using $90.98, our closing share price on the TSX on December 31, 2021 for Mr. Velani and Mr. Ellis, and US$71.94, our closing share price on the NYSE and converted to Canadian dollars using a year-end exchange rate of $1.2678 for Mr. Creel, Mr. Brooks and Mr. Redd. |
Resignation |
Retirement |
Termination with cause |
Termination without cause |
Change in control | ||||||
Severance |
None | None | None | Mr. Creel: 24 months of base salary Mr. Ellis: 12 months of salary Other NEOs: pursuant to applicable law |
None | |||||
Short-term incentive |
Forfeited | Award for current year is pro-rated to retirement date |
Forfeited | Equal to the target award for severance period for Mr. Creel Other NEOs: award for current year is pro-rated to termination date as per plan |
None | |||||
DSUs |
Unvested DSUs are forfeited | Unvested DSUs are forfeited | Unvested DSUs are forfeited | Unvested DSUs are forfeited | Unvested units vest early if the holder is terminated following change in control | |||||
Performance share units |
Forfeited | Award continues to vest based on performance factors and executive is entitled to receive the full value as long as they have worked for six months of the performance period, otherwise the award is forfeited |
Forfeited | Pro-rated based on active service within the performance period and based on actual performance at the end of the performance period |
Only vest if the executive is terminated following a change in control PSUs vest at target, pro-rated based on active service within the performance period | |||||
Stock options |
Vested options are exercisable for 30 days or until the expiry date, whichever comes first Unvested options are forfeited Performance stock options are forfeited |
Options continue to vest Award expires five years after the retirement date or the normal expiry date, whichever is earlier Performance stock options are forfeited |
Forfeited | Vested options are exercisable for six months following termination as well as any options that vest during the six-month periodPerformance stock options are forfeited |
Options only vest early if the option holder is terminated following the change in control Performance stock options are forfeited | |||||
Pension |
No additional value |
No additional value | No additional value |
No additional value |
No additional value | |||||
ESPP shares |
Unvested shares are forfeited |
Unvested shares vest | Unvested shares are forfeited | Unvested shares vest | Unvested shares vest | |||||
Benefits |
End on last day worked | Post-retirement life insurance of $50,000 and a health spending account based on years of service (same for all employees) |
End on termination date | End on last day worked | None | |||||
Perquisites |
Any unused flex perquisite dollars are forfeited |
Any unused flex perquisite dollars are forfeited | Any unused flex perquisite dollars are forfeited | Any unused flex perquisite dollars are forfeited | Any unused flex perquisite dollars are forfeited |
Name |
Severance period (# of months) |
Base pay ($) |
Short-term incentive ($) |
Additional retirement benefits ($) |
Other benefits (1) |
Value of vesting of options and equity-based awards (2) ($) |
Payable on termination without cause ($) |
|||||||||||||||||||||
Keith Creel |
|
24 |
|
|
3,026,270 |
|
|
3,782,838 |
|
|
— |
|
36,474 | 15,642,663 | 22,488,245 | |||||||||||||
Jeffrey Ellis |
|
12 |
|
|
560,150 |
|
|
448,120 |
|
|
— |
|
24,630 | 1,837,786 | 2,870,686 | |||||||||||||
Total |
3,586,420 |
4,230,958 |
|
— |
|
61,104 |
17,480,449 |
25,358,931 |
(1) |
Reflects the value of accelerated vesting of shares purchased under the ESPP for Mr. Creel and Mr. Ellis. Also includes the cost of group benefits for Mr. Ellis for the severance period as per his employment agreement. |
(2) |
Reflects the value of stock options and equity-based awards vesting within six months following termination in accordance with our stock option plan, and the pro-rated value as of the termination date of PSU awards. Mr. Creel’s calculation is based on US$71.94, our closing share price on the NYSE on December 31, 2021, converted to Canadian dollars using a year-end exchange rate of $1.2678. Mr. Ellis’ calculation is based on $90.98, our closing share price on the TSX on December 31, 2021. |
For December 31 |
2021 (1) |
2020 |
2019 | |||||||
CEO pay ratio |
|
223:1 |
|
|
145:1 |
|
130:1 | |||
Without 2021 one-time stock option grant |
|
135:1 |
|
(1) |
The year-over-year increase in the CEO pay ratio is, in large part, attributable to the special upfront stock option grant awarded to Mr. Creel on March 27 and does not take into account the corresponding reduction to Mr. Creel’s future annual long-term incentive plan compensation. Without including this one-time upfront stock option grant in the CEO pay ratio calculation, the 2021 pay ratio would be 135:1, which is aligned with the pay ratios of the prior two years. This supplemental ratio is not intended to replace the above ratio calculated in accordance with SEC rules, but is provided to normalize for Mr. Creel’s one-time special compensation award, which we do not believe is helpful in evaluating compensation for comparative purposes. |
As further disclosed in the 2021 long-term incentive awards on page 25, the upfront stock option will reduce the value of Mr. Creel’s annual long-term incentive plan by US$2.1 million in each year of 2022, 2023, 2024 and 2025 (an aggregate of US$8.4 million) pursuant to the amendments to his executive employment agreement. |
Our director compensation program shares the same objective as our executive compensation program: to attract and retain qualified directors and to align the interests of directors and shareholders. Flat fee retainer We pay directors a flat fee retainer, which reflects the director’s ongoing oversight and responsibilities throughout the year and attendance at Board and committee meetings. Directors receive 100 percent of their annual retainer in Director Deferred Share Units (DDSUs) until they have met their share ownership requirements. After that they must receive at least 50 percent of their retainer in DDSUs, and can receive the balance in cash. Directors must make their election before the beginning of each calendar year. Directors must meet their share ownership requirements within five years of joining the Board, and must hold their DDSUs for one year after they retire from the Board. The table below shows the flat fee retainers for 2021. In 2021, Canadian directors’ fees were converted to Canadian dollars and the number of DDSUs received was based on the trading price of our shares on the TSX. U.S. directors were paid in U.S. dollars and the number of DDSUs they received was based on the trading price of our shares on the NYSE. |
|
Aligning director and shareholder interests Directors receive their annual retainer in deferred share units so they have an ongoing stake in our future success, aligning their interests with those of our shareholders. About DDSUs DDSUs are granted to directors under the director deferred share unit plan. Only non-employee directors participate in the plan.A DDSU is a bookkeeping entry that has the same value as one CP common share. DDSUs earn additional units as dividend equivalents at the same rate as dividends paid on our shares. DDSUs vest immediately. The DDSU Plan was amended in April 2020 to allow for directors to elect to receive DDSUs in cash after leaving the Board instead of waiting for a six- or 12-month month period. These changes to the DDSU plans are subject to tax rules in the country of the director’s residence and in the case of U.S. directors, this election is only possible on DDSUs awarded after April 2020. Additional non-material changes to the DDSU Plan were made in October 2021. | ||||||||
2021 Annual Director Compensation |
Annual Retainer |
|||||||||
Compensation – All Directors |
|
US$200,000 |
|
|||||||
Additional retainer – All Committee Chairs |
|
US$30,000 |
|
|||||||
Additional retainer – Board Chair |
|
US$195,000 |
|
|||||||
We reimburse directors for travel and out-of-pocket |
|
2022 Annual Director Compensation |
Annual Retainer |
|||
Compensation – All Directors |
|
US$280,000 |
| |
Additional retainer – Risk Chair, Governance Committee Chair |
|
US$30,000 |
| |
Additional retainer – Audit Committee Chair, Compensation Committee Chair |
|
US$40,000 |
| |
Additional retainer – Board Chair |
|
US$195,000 |
|
(1) |
Board Chair compensation for 2021 is an aggregate total of the Director retainer fee of US$200,000 plus the Chair of the Board retainer fee of US$195,000 totaling US$395,000. |
Name |
Share-based awards (1),(3) ($) |
All other compensation (2),(3) ($) |
Total ($) |
|||||||||
John Baird |
251,940 | 1,000 | 252,940 | |||||||||
Isabelle Courville |
497,582 | 1,000 | 498,582 | |||||||||
Jill Denham |
251,940 | 1,000 | 252,940 | |||||||||
Edward Hamberger |
250,700 | 1,253 | 251,953 | |||||||||
Rebecca MacDonald |
289,731 | 1,000 | 290,731 | |||||||||
Edward Monser |
250,700 | 1,253 | 251,953 | |||||||||
Matthew Paull |
288,305 | 1,253 | 289,558 | |||||||||
Jane Peverett |
289,731 | 1,000 | 290,731 | |||||||||
Andrea Robertson |
251,940 | 1,000 | 252,940 | |||||||||
Gordon Trafton |
288,305 | 1,253 | 289,558 |
(1) |
The value of the share-based awards has been calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 (FASB ASC 718) using the grant date fair value, which is prescribed by the DDSU Plan. |
(2) |
Each director was provided with a $1,000 donation, in local currency, to the charity of their choice in December 2021 in gratitude for their year of service. This amount appears under All other compensation. |
(3) |
All directors were paid in U.S. dollars and the value of their share-based awards, and cash and other payments, as applicable, have been converted to Canadian dollars using the 2021 average exchange rate of $1.2535. |
Share-based awards |
||||||||||||
Name |
Number of shares or units of shares that have not vested (#) |
Market or payout value of share-based awards that have not vested ($) |
Market or payout value of vested share-based awards not paid out or distributed ($) (1) |
|||||||||
John Baird |
|
- |
|
|
- |
|
|
3,051,014 |
| |||
Isabelle Courville |
|
- |
|
|
- |
|
|
5,149,923 |
| |||
Jill Denham |
|
- |
|
|
- |
|
|
2,224,461 |
| |||
Edward Hamberger |
|
- |
|
|
- |
|
|
781,631 |
| |||
Rebecca MacDonald |
|
- |
|
|
- |
|
|
6,116,040 |
| |||
Edward Monser |
|
- |
|
|
- |
|
|
1,032,355 |
| |||
Matthew Paull |
|
- |
|
|
- |
|
|
3,341,679 |
| |||
Jane Peverett |
|
- |
|
|
- |
|
|
2,338,823 |
| |||
Andrea Robertson |
|
- |
|
|
- |
|
|
777,515 |
| |||
Gordon Trafton |
|
- |
|
|
- |
|
|
2,325,620 |
|
(1) |
Calculated based on the closing price of our shares on December 31, 2021 on the TSX ($90.98), in the case of directors resident in Canada, and on the NYSE (US$71.94) which was converted to Canadian dollars using the year-end exchange rate of $1.2678, in the case of the directors resident in the U.S. |
Name of beneficial owner1 |
Common shares beneficially owned |
Percent of common shares outstanding |
||||||
John Baird (a) |
0 | - | ||||||
Isabelle Courville (a) |
4,500 | * | ||||||
Jill Denham (a) |
0 | - | ||||||
Edward Hamberger (a) |
0 | - | ||||||
Matthew Paull (a) |
15,190 | * | ||||||
Jane Peverett (a) |
0 | - | ||||||
Andrea Robertson (a) |
0 | - | ||||||
Gordon Trafton (a) |
0 | - | ||||||
Keith Creel(a) (b)(c) |
2,582,769 | * | ||||||
Nadeem Velani (b)(d) |
204,170 | * | ||||||
John Brooks (b)(e) |
164,475 | * | ||||||
Mark Redd (b)(f) |
132,579 | * | ||||||
Jeffrey Ellis (b)(g) |
105,259 | * | ||||||
James Clements (b)(h) |
146,251 | * | ||||||
Mike Foran (b)(i) |
78,447 | * | ||||||
Pam Arpin (b)(j) |
20,849 | * | ||||||
Laird Pitz (b)(k) |
30,329 | * | ||||||
Chad Rolstad (b)(l) |
35,479 | * | ||||||
TCI Fund Management Limited (m) |
55,860,385 | 6.01 | % | |||||
All current executive officers and directors as a group |
3,520,297 | * |
* | Represents less than one percent of the outstanding common shares. |
(a) |
See Directors’ Profiles in “Item 10. Directors, Executive Officers and Corporate Governance” above for disclosure with respect to DDSUs. The address of each director is c/o Canadian Pacific, 7550 Ogden Dale Road S.E., Calgary, Alberta, T2C 4X9. |
(b) |
See “Compensation Details - Deferred Compensation Plans” in Item 11. Executive Compensation, for disclosure with respect to NEO DSUs. The address of each executive officer is c/o Canadian Pacific, 7550 Ogden Dale Road S.E., Calgary, Alberta, T2C 4X9. |
(c) |
The common shares owned by Mr. Creel comprise (i) 2,488,960 shares issuable upon the exercise of stock options that have vested or will vest within the next 60 days and (ii) 93,809 shares held by Mr. Creel directly. |
(d) |
The common shares owned by Mr. Velani comprise (i) 201,200 shares issuable upon the exercise of stock options that have vested or will vest within the next 60 days and (ii) 2,970 shares held by Mr. Velani directly. |
(e) |
The common shares owned by Mr. Brooks comprise (i) 152,485 shares issuable upon the exercise of stock options that have vested or will vest within the next 60 days and (ii) 11,990 shares held by Mr. Brooks directly. |
(f) |
The common shares owned by Mr. Redd comprise (i) 110,260 shares issuable upon the exercise of stock options that have vested or will vest within the next 60 days and (ii) 22,319 shares held by Mr. Redd directly. |
(g) |
The common shares owned by Mr. Ellis comprise (i) 99,380 shares issuable upon the exercise of stock options that have vested or will vest within the next 60 days and (ii) 5,879 shares held by Mr. Ellis directly. |
(h) |
The common shares owned by Mr. Clements comprise (i) 133,726 shares issuable upon the exercise of stock options that have vested or will vest within the next 60 days and (ii) 12,525 shares held by Mr. Clements directly. |
(i) |
The common shares owned by Mr. Foran comprise (i) 68,335 shares issuable upon the exercise of stock options that have vested or will vest within the next 60 days and (ii) 10,112 shares held by Mr. Foran directly. |
(j) |
The common shares owned by Ms. Arpin comprise (i) 16,040 shares issuable upon the exercise of stock options that have vested or will vest within the next 60 days and (ii) 4,809 shares held by Ms. Arpin directly. |
(k) |
The common shares owned by Mr. Pitz comprise (i) 29,845 shares issuable upon the exercise of stock options that have vested or will vest within the next 60 days and (ii) 484 shares held by Mr. Pitz directly. |
(l) |
The common shares owned by Mr. Rolstad comprise (i) 32,955 shares issuable upon the exercise of stock options that have vested or will vest within the next 60 days and (ii) 2,524 shares held by Mr. Rolstad directly. |
(m) |
Based upon statements in the Schedule 13G/A filed by TCI Fund Management Limited (“TCI Fund”) and Christopher Hohn on February 14, 2022, TCI Fund and Christopher Hohn have (i) shared voting power over 55,860,385 shares of CP’s common shares; and (ii) shared dispositive power of 55,860,385 common shares. The Children’s Investment Master Fund (“TCIF”) is the investment manager of TCI Fund and CIFF Capital UK LP (“CIFF”). Mr. Hohn, as managing director of TCIF, may be deemed to beneficially own the shares held by the TCI Fund and CIFF. The address of each of TCI Fund and Mr. Hohn is 7 Clifford Street, London W1S 2FT, United Kingdom. |
For the year ended December 31 |
2021 |
2020 |
||||||
Audit fees for audit of our annual financial statements, reviews of quarterly reports and services relating to statutory and regulatory filings or engagements (including attestation services and audit or interim review of financial statements of certain subsidiaries and certain pension and benefits plans, and advice on accounting and/or disclosure matters) |
$ | 3,834,200 | $ | 3,842,100 | ||||
Audit-related fees for services related to the audit but not included in the audit fees above, including securities filings |
$ | 545,700 | $ | 269,500 | ||||
Tax fees for services relating to tax compliance, tax planning and tax advice |
$ | 224,700 | $ | 5,800 | ||||
All other fees |
$ | — | $ | — | ||||
Total |
$ | 4,604,600 | $ | 4,117,400 |
• | The Audit and Finance Committee pre-approves the terms of the annual engagement of the external auditor. |
• | The Audit and Finance Committee is responsible for pre-approving annual audit and non-audit services, as well as pre-approving the external auditor’s compensation for audit and non-audit services. |
• | The Vice-President, Financial Planning and Accounting submits reports at least quarterly to the Audit and Finance Committee listing the services that were performed or planned to be performed by the external auditor. |
• | Any additional services to be provided by the external auditor that were not included in the list of pre-approved services or exceed the budgeted amount by more than 10 percent must each be pre-approved by the Audit and Finance Committee or the committee chair. The committee chair must report any additional pre-approvals at the next committee meeting. |
• | The Audit and Finance Committee reviews the policy as necessary to make sure it continues to reflect our needs. |
• | Our chief internal auditor monitors compliance with the policy. |
Exhibit |
Description | |
31.1* | CEO Rule 13a-14(a) Certifications relating to this Amendment No. 1 on Form 10-K/A | |
31.2* | CFO Rule 13a-14(a) Certifications relating to this Amendment No. 1 on Form 10-K/A | |
104* | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* | Filed with this Amendment No. 1 on Form 10-K/A |
CANADIAN PACIFIC RAILWAY LIMITED | ||
(Registrant) | ||
By: | /s/ KEITH CREEL | |
Keith Creel | ||
President and Chief Executive Officer |
Signature |
Title | |
* Keith Creel |
President, Chief Executive Officer and Director (Principal Executive Officer) | |
/s/ NADEEM VELANI Nadeem Velani |
Executive Vice-President and Chief Financial Officer (Principal Financial Officer) | |
* Isabelle Courville |
Chair of the Board of Directors | |
* John R. Baird |
Director | |
* Gillian H. Denham |
Director | |
* Edward R. Hamberger |
Director | |
* Rebecca MacDonald |
Director | |
* Edward Monser |
Director | |
* Matthew H. Paull |
Director | |
* Jane L. Peverett |
Director | |
* Andrea Robertson |
Director | |
* Gordon T. Trafton |
Director |
*By: | /s/ NADEEM VELANI | |
Nadeem Velani | ||
Attorney-in-Fact |