SIRIUS XM CANADA HOLDINGS INC.

Transcription

1 SIRIUS XM CANADA HOLDINGS INC. NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD JANUARY 15, 2016 AND MANAGEMENT INFORMATION CIRCULAR Our annual and special meeting of Shareholders will be held at 10:00 a.m. (Toronto time) on January 15, 2016 at TMX Broadcast Centre Exchange Tower, Ground Floor 130 King Street West Toronto, Ontario, M5X 1J2 As a Shareholder of Class A Subordinate Voting Shares or Class B Voting Shares of Sirius XM Canada Holdings Inc., you have the right to vote your Shares, either by proxy or in person at the meeting. If you are a registered Shareholder and have any questions or require further information in regards to voting your Shares, please contact the Company s transfer agent, CST Trust Company at or by at inquiries@canstockta.com. If you are a non-registered Shareholder please contact your broker or agent. December 9, 2015

2 SIRIUS XM CANADA HOLDINGS INC. NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JANUARY 15, 2016 NOTICE IS HEREBY GIVEN THAT the annual and special meeting (the Meeting ) of the holders (the Shareholders ) of Class A Subordinate Voting Shares (the Class A Subordinate Voting Shares ), Class B Voting Shares (the Class B Voting Shares and together with the Class A Subordinate Voting Shares, the Shares ) and Class C Non-Voting Shares (the Class C Non-Voting Shares ) of Sirius XM Canada Holdings Inc. (the Company ) will be held at the TMX Broadcast Centre, Exchange Tower, Ground Floor, 130 King Street West, Toronto, Ontario, M5X 1J2 on Friday, January 15, 2016 at 10:00 a.m. (Toronto time) for the following purposes: 1. to receive the audited consolidated financial statements of the Company for the fiscal year ended August 31, 2015, together with the auditor s report thereon; 2. to elect the directors of the Company; 3. to re-appoint the auditor of the Company and authorize the directors to fix its remuneration; 4. to approve the Option Plan Resolution, an ordinary resolution set out in Schedule A to the Company s management information circular dated December 9, 2015 (the Circular ), approving all unallocated options under the Company s stock option plan; and 5. to transact such further or other business as may properly come before the Meeting, or any adjournments or postponements thereof. Accompanying this Notice of Meeting is a copy of the Circular, the Company s 2015 Annual Report (containing a letter to Shareholders, the audited consolidated financial statements of the Company for the fiscal year ended August 31, 2015 and Management s Discussion and Analysis thereon), a form of proxy (if you are a registered Shareholder) or a voting instruction form (if you are a non-registered Shareholder), and a supplemental mail list return box for Shareholders to request they be included in the Company s supplementary mailing list for receipt of the Company s annual and interim financial statements for the 2016 fiscal year. These materials, as well as the Company s Annual Information Form dated November 30 can be found on the Company s profile on the System for Electronic Document Analysis and Retrieval ( SEDAR ) at and also on the Company s website at Shareholders are reminded to review the Circular before voting. The Company s board of directors (the Board ) has fixed the close of business on November 25, 2015 as the record date for determining Shareholders entitled to receive notice of, and to vote at, the Meeting and any adjournments or postponements thereof. No Shareholders becoming Shareholders of record after that time will be entitled to vote at the Meeting, or any adjournments or postponements thereof. Whether or not you expect to attend the Meeting, please exercise your right to vote. Shareholders who have voted by proxy may still attend the Meeting. Registered Shareholders are requested to complete, date, sign and return (in the pre-paid return envelope provided for that purpose) the form of proxy printed on YELLOW paper. You may also vote your Shares by proxy by appointing another person to attend the Meeting and vote your Shares for you. To be valid, the form of proxy must be signed and received by the proxy department of the Company s transfer agent, CST Trust Company, by mail at P.O. Box 721, Agincourt, Ontario, M1S 0A1, by facsimile at (416) or toll-free in North America at , or by to proxy@canstockta.com, not later than 5:00 p.m. (Toronto time) on January 13, 2016 or if the Meeting is adjourned or postponed, prior to 5:00 p.m. (Toronto time) on the second business day before any adjournments or postponements of the Meeting. Failure to properly complete or deposit a proxy may result in its invalidation. Most Shareholders do not hold their Shares in their own names. Such Shares may be beneficially owned by you but registered either: (a) in the name of an intermediary such as a bank, trust company, securities dealer or broker, or the trustee or administrator of a self-administered RRSP, RRIF, RESP, TFSA or similar plan, or (b) in the

3 name of a clearing agency (such as CDS Clearing and Depository Services Inc.) or its nominee, of which the intermediary is a participant. If your Shares are shown in an account statement provided to you by your intermediary, in almost all cases, your Shares will not be registered in your name in the records of the Company. Only proxies deposited by registered Shareholders can be recognized and acted upon at the Meeting. As a result, if you hold your Shares through a broker or other intermediary, we urge you to complete only the voting instruction form or provide your voting instructions to your broker or other intermediary by other acceptable methods. Please read the instructions regarding how to vote at, or attend, the Meeting under General Proxy Matters Non- Registered Shareholders in the Circular. DATED at Toronto, Ontario this 9 th day of December, By order of the board of directors, Anthony Viner Anthony Viner Chairman

4 TABLE OF CONTENTS INFORMATION CONTAINED IN THIS CIRCULAR... 1 NOTICE TO SHAREHOLDERS NOT RESIDENT IN CANADA... 1 GENERAL PROXY MATTERS... 1 PARTICULARS OF MATTERS TO BE ACTED UPON AT THE MEETING... 4 INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATERIAL TRANSACTIONS... 8 DIRECTORS AND OFFICERS INSURANCE... 9 INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS EXECUTIVE COMPENSATION SUMMARY COMPENSATION DISCUSSION & ANALYSIS DIRECTORS COMPENSATION STATEMENT OF CORPORATE GOVERNANCE PRACTICES SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS VOTING SHARES AND PRINCIPAL SHAREHOLDERS LEGAL PROCEEDINGS OTHER BUSINESS ADDITIONAL INFORMATION APPROVAL OF THIS CIRCULAR SCHEDULE A... S-1 APPENDIX I TO SCHEDULE A... S-2

5 INFORMATION CONTAINED IN THIS CIRCULAR This management information circular (the Circular ) is furnished by management of Sirius XM Canada Holdings Inc. (the Company ) in connection with the solicitation of proxies for use at the annual and special meeting of Shareholders (the Meeting ) to be held on January 15, 2016 at 10:00 a.m. (Toronto time) at the TMX Broadcast Centre, Exchange Tower, Ground Floor, 130 King Street West, Toronto, Ontario, M5X 1J2 or any postponements(s) or adjournment(s) thereof, for the purposes set forth in the notice of meeting (the Notice of Meeting ). Information in this Circular is given as at November 25, 2015, unless otherwise indicated. All amounts in this Circular are expressed in Canadian dollars ( $ ). This Circular does not constitute an offer to buy, or a solicitation of an offer to sell, any securities, or the solicitation of a proxy, by any person in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such an offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such an offer or solicitation. No person has been authorized to give any information or to make any representation in connection with any matters to be considered at the Meeting other than those contained in this Circular and, if given or made, any such information or representation must not be relied upon as having been authorized. NOTICE TO SHAREHOLDERS NOT RESIDENT IN CANADA The Company is established under the laws of the province of Ontario. This solicitation of proxies involves securities of a Canadian issuer and is being effected in accordance with applicable corporate and securities laws in Canada. The proxy rules under the United States Securities Exchange Act of 1934, as amended, are not applicable to the Company or this solicitation. Accordingly, this solicitation is not being effected in accordance with such U.S. laws. Shareholders should be aware that the requirements applicable to the Company under Canadian laws may differ from requirements under corporate and securities laws relating to corporations in other jurisdictions. The enforcement by investors of civil liabilities under U.S. federal securities laws or the securities laws of other jurisdictions outside Canada may be affected adversely by the fact that the Company is formed under the laws of the province of Ontario, that a majority of the Company s officers and directors are residents of Canada and that all or substantially all of their and the Company s respective assets are located in Canada. You may not be able to sue the Company or its officers or directors in a Canadian court for violations of U.S. or other foreign securities laws. It may be difficult to compel the Company to subject itself to a judgment of a court outside Canada. NO SECURITIES REGULATORY AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED IN THIS DOCUMENT, ANY REPRESENTATION TO THE CONTRARY IS AN OFFENCE. GENERAL PROXY MATTERS As a Shareholder, it is very important that you read this information carefully and then vote your Shares, either by proxy or voting instruction form or by attending the Meeting. Date, Time and Place of Meeting The Meeting is scheduled to be held on Friday, January 15, 2016 at 10:00 a.m. (Toronto time) at the TMX Broadcast Centre, Exchange Tower, Ground Floor, 130 King Street West, Toronto, Ontario, M5X 1J2, for the purposes set forth in the Notice of Meeting. The Company reserves the right to adjourn or postpone the Meeting if considered appropriate by the Board. 1

6 Record Date The Board has established the record date (the Record Date ) for the Meeting as the close of business on November 25, Only Shareholders of record at the close of business on the Record Date will be entitled to notice of the Meeting, or any adjournments or postponements thereof, and to vote at the Meeting. No Shareholders having become Shareholders of record after that time will be entitled to vote at the Meeting, or any adjournments or postponements thereof. Quorum A quorum of Shareholders is present at a meeting of Shareholders if the holders of not less than five percent of the Shares entitled to vote at the Meeting are present in person or represented by proxy, and at least two persons entitled to vote at the Meeting are actually present at the Meeting. Solicitation of Proxies The information contained in this Circular is furnished in connection with the solicitation of proxies by and on behalf of the management of the Company to be used at the Meeting and for the purposes set forth in the Notice of Meeting. It is expected that the solicitation will be primarily by mail, but proxies may also be solicited personally by telephone or other electronic means by management of the Company, including directors and officers. The costs of the solicitation will be borne by the Company. Registered Shareholders You are a registered Shareholder if your name appears on your share certificate. If you are a Registered Shareholder, the applicable proxy form(s), printed on YELLOW paper, are included in this package. You can vote in person at the Meeting or by proxy. Voting by proxy means that you are giving the person or people named on your form of proxy (your proxyholder) the authority to vote your Shares for you at the Meeting, or any adjournments or postponements thereof. How to Vote in Person If you intend to be present and vote in person at the Meeting, you do not need to complete or return your form of proxy. Voting in person at the Meeting will automatically cancel any proxy you completed earlier. At the Meeting, you should see a representative of CST Trust Company. How to Vote by Proxy Complete and return the enclosed form of proxy in the pre-paid return envelope provided. The proxy must be executed by the Shareholder or the attorney of such Shareholder, duly authorized in writing. If you vote by proxy, the directors and officers who are named on the form of proxy will vote your Shares for you, unless you appoint someone else to be your proxyholder. If you appoint someone else, he or she must be present at the Meeting to vote your Shares. This person does not have to be a Shareholder. Write the name of the person you are appointing in the space provided. Complete your voting instructions and date and sign the form. Make sure that the person you appoint is aware that he or she has been appointed and attends the Meeting. At the Meeting, he or she should see a representative of CST Trust Company. If you are voting your Shares by proxy, the Company s transfer agent, CST Trust Company, must receive your signed proxy by mail at P.O. Box 721, Agincourt, Ontario, M1S 0A1, by facsimile at (416) or tollfree in North America at , or by to proxy@canstockta.com, not later than 5:00 p.m. (Toronto time) on January 13, 2016, or, if the Meeting is adjourned or postponed, prior to 5:00 p.m. (Toronto time) on the second business day preceding the day of the Meeting, or any adjournments or postponements thereof. Failure to properly complete or deposit a proxy may result in its invalidation. The Shares represented by any proxy received by management will be voted for or against or withheld from voting, as the case may be, by the persons named in the enclosed form of proxy in accordance with the direction of the Shareholder appointing them. In the absence of any direction to the contrary, it is intended that the Shares 2

7 represented by proxies received by management will be voted on any ballot FOR : (1) the election of the directors referred to in this Circular; (2) the re-appointment of the auditor of the Company with remuneration to be fixed by the directors; and (3) the approval of the Option Plan Resolution. How to Change your Vote A registered Shareholder executing the enclosed form of proxy may revoke it at any time before it has been exercised by: (i) (ii) (iii) completing a form of proxy that is dated later than the form of proxy you are revoking and mailing it to CST Trust Company so that it is received before 5:00 p.m. (Toronto time) on January 13, 2016; sending a revocation notice in writing to the corporate secretary of the Company so that it is received at any time up to and including the last business day preceding the day of the Meeting, of any postponement or adjournment thereof. The notice can be from the Shareholder or the authorized attorney of such Shareholder; or attending the Meeting and providing a revocation notice to the chair of the meeting before any vote in respect of which the proxy has been given has been taken. Non-Registered Shareholders You are a non-registered Shareholder (or beneficial Shareholder) if your bank, trust corporation, securities broker or other financial institution (your nominee) holds your Shares for you. In that case, you will likely not receive a form of proxy. If you are a Non-Registered Shareholder, and the Company or its agent has sent this package directly to you, your name and address and information about your holdings of securities have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding Shares on your behalf. By choosing to send this package to you directly, the Company (and not the intermediary holding Shares on your behalf) has assumed responsibility for (i) delivering this package to you, and (ii) executing your proper voting instructions. Please return your voting instructions as specified in the request for voting instructions delivered to you. If you are not sure whether you are a registered Shareholder or a non-registered Shareholder, please contact the Company s transfer agent, CST Trust Company at or by at inquiries@canstockta.com. How to Vote by Voting Instruction Form Non-Registered Shareholders who receive a voting instruction form should carefully follow the instructions provided to ensure their vote is counted. Subject to the terms of your voting instruction form, if you do not specify how you want your Shares voted, they will be voted FOR : (1) the election of the directors referred to in this Circular; (2) the re-appointment of the auditor of the Company with remuneration to be fixed by the directors; and (3) the approval of the Option Plan Resolution. How to Vote in Person If you are a Non-Registered Shareholder (or beneficial Shareholder) and wish to vote in person at the Meeting, please write your name in the space provided on the voting instructions provided to you or contact your broker or agent well in advance of the Meeting to determine how you can do so. At the Meeting, you should see a representative of CST Trust Company. 3

8 How to Change your Vote A Non-Registered Shareholder may change or revoke a voting instruction at any time by following the instructions on the voting instruction form in sufficient time prior to the Meeting. Exercise of Discretion by Proxyholders The enclosed form of proxy and any voting instructions submitted confer discretionary authority upon the persons named therein with respect to matters not specifically mentioned in the Notice of Meeting but which may properly come before the Meeting, or any adjournments or postponements thereof, and with respect to amendments to or variations of matters identified in the Notice of Meeting. As of the date hereof, management of the Company knows of no such amendments, variations or other matters to come before the Meeting, other than the matters referred to in the Notice of Meeting and routine matters incidental to the conduct of the Meeting. If any further or other business is properly brought before the Meeting, it is intended that the persons appointed as proxyholders will vote on such other business in such manner as such persons then consider to be proper. PARTICULARS OF MATTERS TO BE ACTED UPON AT THE MEETING (As Itemized In The Notice Of Meeting) Presentation of Financial Statements The audited consolidated financial statements of the Company for the fiscal year ended August 31, 2015, together with the report of the auditor thereon, will be presented to Shareholders at the Meeting for their consideration, but no vote thereon is required. These audited consolidated financial statements are available on SEDAR at and also on the Company s website at Election of Directors Under the terms of the governance agreements (collectively the Governance Agreements each a Governance Agreement ) made as of June 21, 2011 by and among the Company, Sirius XM Canada Inc., successor to Canadian Satellite Radio Inc. and Sirius Canada Inc. ( Sirius ), and each of Obelysk Media Inc. (formerly CSRI Inc., Obelysk ), Sirius XM Radio Inc. ( Sirius XM ), Canadian Broadcasting Corporation ( CBC ) and Slaight Communications Inc. ( Slaight ), the Board is fixed at nine directors, including two directors nominated for election by each of Obelysk and Sirius XM, and one director nominated for election by each of CBC and Slaight. Three additional directors who are independent within the meaning of applicable securities laws in Canada are also nominated for election. The nomination of independent directors for election is the responsibility of the Company s Corporate Governance Committee. Should a vacancy among any of the independent directors occur during the year for any reason, the two remaining independent directors are responsible for nominating an independent director to fill the vacancy until the next annual meeting of shareholders. If the two remaining independent directors are unable to unanimously nominate an independent director to fill the vacancy, then the three Canadian Shareholders (as defined in each of the Governance Agreements) with the greatest voting interest and whose voting interest is not less than 10% will, by majority vote, nominate an independent director to fill the vacancy. Under its governance agreement, Obelysk currently has the right to nominate up to two directors to the Board. At the time of filing this Circular, Obelysk had elected to put forward only one director nominee. Obelysk continues to have the right to nominate an additional nominee to fill the vacancy on the Board and has expressed intention to do so at or following the Meeting. In the event that Obelysk identifies its second nominee prior to the Meeting, that individual will be put forward for consideration to be elected as a director at the Meeting. In the event that Obelysk identifies its second nominee after the Meeting, that individual will be appointed by the Board after the Meeting in accordance with the Company s articles. It is intended that on any resolution or ballot that may be called for relating to the election of the directors at the Meeting, the Shares represented by proxies in favour of management nominees will be voted in favour of the election of Dara Altman, Timothy Casgrain, David Coriat, Philip Evershed, David Frear, Guy Johnson, Christine Magee and Anthony Viner as directors of the Company, unless a Shareholder has specified in his or her proxy that his or her Shares are to be withheld from voting. Management does not contemplate that any of the proposed nominees will be unable to serve as a director, but if that should occur for any reason prior to the Meeting, the 4

9 person named in the enclosed form of proxy reserves the right to vote for another nominee in their discretion. The Company has been informed by each nominee that he or she is willing to stand for election and to serve as a director. The Company has adopted a majority voting policy (the Majority Voting Policy ), which requires that in an uncontested election of directors, if any nominee receives a greater number of votes withheld than votes for, the nominee will tender a resignation to the Board forthwith following the Meeting. The Corporate Governance Committee will then consider the offer of resignation in a timely manner and shall make a recommendation to the Board no later than within 90 days of the Meeting. The Board will make a final decision on the resignation having considered the factors looked at by the Corporate Governance Committee. A director who tenders his or her resignation will not participate in the Board s consideration of whether to accept the tendered resignation. The Board will promptly disclose its decision in a press release, and should the Board decline to accept the resignation, the press release will include the reasons for its decision. A copy of the Majority Voting Policy is available on the Company s website. The current term of office of the directors of the Company will expire immediately prior to the election of the directors at the Meeting. It is proposed that each of the persons whose name appears below be elected as a director of the Company to serve until the next annual meeting of Shareholders or until his or her successor is elected or appointed. If Anthony Viner is re-elected as a director, the Board intends to re-appoint him as Chairman of the Company after the conclusion of the Meeting. The following table sets forth, among other things, the names of the nominees, their respective principal occupation and the year each became a director of the Company. Nominees Position Presently Held Principal Occupation During Past Five Years Director Since Class A Subordinate Voting Shares Beneficially Owned or Controlled (1) OBELYSK S NOMINEE Philip Evershed Ontario, Canada Director CEO of Oxford Park Capital and Principal at Oxford Park Group, former Managing Director and Head of Investment Banking at Canaccord Genuity Corp ,286 (5) SIRIUS XM S NOMINEES Dara Altman New York, USA Director Executive Vice President and Chief Administrative Officer of Sirius XM Radio Inc (3) David Frear Connecticut, USA Director Senior Executive Vice President and Chief Financial Officer of Sirius XM Radio Inc (3) CBC S NOMINEE Timothy Casgrain Ontario, Canada Director Consultant to Skyservice Investments Inc. and former Chairman of CBC-Radio Canada 2013 SLAIGHT S NOMINEE David Coriat Ontario, Canada Director Executive Vice President and Chief Financial Officer of Slaight Communications Inc (4) 5

10 INDEPENDENT NOMINEES (2) Guy Johnson British Columbia, Canada Director Entrepreneur, former Chairman of Sirius Canada Inc. and former Executive Vice President of Sirius XM Radio Inc Christine Magee Ontario, Canada Director Co-Founder and Executive Co-Chair of Sleep Country Canada 2014 Anthony Viner, Ontario, Canada Notes: Director and Chairman Chairman of the Company and former President of Rogers Media Inc ,000 (1) Individual director nominees have furnished information as to Class A Subordinate Voting Shares, assuming conversion of all Class B Voting Shares into Class A Subordinate Voting Shares, beneficially owned by them, directly or indirectly, or over which they exercise control or direction. (2) Guy Johnson, Christine Magee and Anthony Viner are independent. Pursuant to National Instrument , an independent director is one who has no direct or indirect material relationship with the Company which could, in the view of the Board, reasonably interfere with a director s independent judgment. The remaining nominees are not independent on the basis that each has been nominated by a significant Shareholder of the Company. (3) Dara Altman and David Frear are executive officers of Sirius XM, a significant Shareholder of the Company. Please refer to Voting Shares and Principal Shareholders Ownership of Shares of the Company. (4) David Coriat is an executive officer of Slaight Communications Inc., a significant Shareholder of the Company. Please refer to Voting Shares and Principal Shareholders Ownership of Shares of the Company. (5) Includes 237,700 Class A Subordinate Voting Shares held in trust. Committee Membership Assuming each of the director nominees set out is elected to the Board and subject to Board approval, it is currently expected that the committees of the Board will be composed of the following directors: Audit Committee Corporate Governance Committee Compensation Committee Christine Magee (Chair) Guy Johnson Anthony Viner Christine Magee (Chair) Guy Johnson Anthony Viner Guy Johnson (Chair) Christine Magee Anthony Viner Other Public Directorships Timothy Casgrain is a director of Anaconda Mining, Inc. Christine Magee is a director and Executive Co-Chair of Sleep Country Canada Holdings Inc. Corporate Cease Trade Orders and Bankruptcies None of the Company s proposed directors: (a) is, as at the date of this Circular, or has been, within 10 years before the date of this Circular, a director, CEO or CFO of any company (including the Company) that, (i) (ii) was subject to an order that was issued while the proposed director was acting in the capacity as director, CEO or CFO; or was subject to an order that was issued after the proposed director ceased to be a director, CEO or CFO and which resulted from an event that occurred while that person was acting in the capacity as a director, CEO or CFO; 6

11 (b) (c) is, as at the date of this Circular, or has been within 10 years before the date of this Circular, a director or executive officer of any company (including the Company) that, while that person 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; or has, within the 10 years before the date of this Circular, 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 the assets of the director or executive officer. For the purposes of the paragraphs above, order means: (i) a cease trade order; (ii) an order similar to a cease trade order; or (iii) an order that denied the relevant company access to any exemption under securities legislation that was in effect for a period of more than 30 consecutive days. Penalties or Sanctions None of the Company s proposed directors has: (a) (b) been 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 regulatory authority; or been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director. Unless a proxy specifies that the Shares it represents should be withheld from voting in respect of the election of directors or voted in accordance with the specification in the proxy, the persons named in the form of proxy intend to vote FOR the election of each of the nominees listed in this Circular. Appointment of Auditor The Board proposes to nominate PricewaterhouseCoopers LLP, Chartered Accountants, the present auditor of the Company, as the auditor of the Company to hold office until the close of the next annual meeting of Shareholders, and to authorize the directors to fix the remuneration of the auditor. Unless a proxy specifies that the Shares it represents should be withheld from voting in respect of the appointment of auditor or voted in accordance with the specification in the proxy, the persons named in the form of proxy intend to vote FOR the appointment of PricewaterhouseCoopers LLP, Chartered Accountants as auditor of the Company. Approval of Unallocated Options Under the Stock Option Plan The Stock Option Plan is described under the heading Securities Authorized for Issuance Under Equity Compensation Plans Summary of Amended and Restated Stock Option Plan. Pursuant to the Stock Option Plan, options to purchase Shares may be granted by the Board to directors, senior officers, employees and consultants of the Company and its affiliates and their respective Permitted Assigns, which, in the case of a director, includes the entity that nominated them to the Board. The Stock Option Plan is an evergreen plan that provides that the maximum aggregate number of Class A Subordinate Voting Shares which may be issuable at any time under all security based compensation arrangements of the Company (including any restricted stock unit plan in place from time to time) is 10% (on a non-diluted basis) of the Class A Subordinate Voting Shares outstanding from time to time (assuming the conversion of all Class B Voting Shares and Class C Non-Voting Shares into Class A Subordinate Voting Shares). As a result, any increase in the issued and outstanding Shares will result in an increase in the number of Class A Subordinate Voting Shares 7

12 available for issue upon exercise of options granted pursuant to the Stock Option Plan, and any exercise or cancellation of options will make new grants available under the Stock Option Plan, effectively resulting in a reloading of the number of options available for grant pursuant to the Stock Option Plan. In accordance with the requirements of the Toronto Stock Exchange (the TSX ), every three years after institution, all unallocated options, rights or other entitlements with respect to treasury issuances under a security based compensation arrangement which does not have a fixed maximum aggregate of securities issuable must be approved by: (i) the Board; and (ii) a majority of the issuer s security holders. The Board approved all unallocated options, rights or other entitlements available under the Stock Option Plan on October 29, The Stock Option Plan and unallocated options were last approved by shareholders at the annual and special meeting on January 15, As the three year term prescribed by the TSX will expire, an ordinary resolution (the Option Plan Resolution ) will be placed before shareholders to approve the unallocated options. If at the Meeting, the shareholders of the Company do not approve all unallocated options, rights or other entitlements with respect to treasury issuances available under the Stock Option Plan, all currently outstanding options will be unaffected, however all options which have not been allocated as of January 15, 2016 and any outstanding options that are thereafter cancelled or expire will not be available for re-grant until such time as shareholder approval is obtained. At the Meeting, shareholders will be asked to consider and, if deemed advisable, to approve, with or without variation, the Option Plan Resolution to approve the unallocated options, rights or other entitlements with respect to treasury issuances under the Stock Option Plan and the grant of options until January 15, 2019, which is the date that is three years from the date of the Meeting. A copy of the Option Plan Resolution is attached as Schedule A and a copy of the Stock Option Plan is provided as Appendix I to Schedule A. To be effective, the Option Plan Resolution must be approved by more than 50% of the votes cast in person or by proxy at the Meeting. Unless a proxy specifies that the Shares it represents should be voted against the approval of the Option Plan Resolution or voted in accordance with the specification in the proxy, the persons named in the form of proxy intend to vote FOR the approval of the Option Plan Resolution. Sirius XM INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATERIAL TRANSACTIONS The Company, its operating subsidiary, and/or a predecessor to the Company s operating subsidiary, are parties to a number of operational and governance-related agreements with Sirius XM, or its predecessors, one of the Company s significant Shareholders, including: (i) a Governance Agreement; (ii) the Amended and Restated Licence and Services Agreement, effective as of August 24, 2005, by and among Sirius Satellite Radio Inc., a predecessor of Sirius XM, and Sirius, a predecessor of the Company s operating subsidiary, as last amended January 13, 2014; (iii) (iv) (v) the XM System Licence Agreement, effective as of November 17, 2005, by and among XM Satellite Radio Inc., a predecessor of Sirius XM, the Company and Canadian Satellite Radio Inc., a predecessor of the Company s operating subsidiary, as last amended January 13, During fiscal 2015 the Company provided notice of renewal to Sirius XM, as provided for in the XM System License Agreement and on November 17, 2015 the XM System License Agreement was extended for a further 5 years; the Programming Agreement, effective as of November 17, 2005, by and among XM Satellite Radio Inc., the Company and Canadian Satellite Radio Inc.; the Technical Services Agreement, effective as of November 17, 2005, by and among XM Satellite Radio Inc., the Company and Canadian Satellite Radio Inc.; and 8

13 (vi) the Trademark Licence Agreement, effective as of November 17, 2005, by and among XM Satellite Radio Inc., the Company and Canadian Satellite Radio Inc. In addition to being one of our significant Shareholders, Sirius XM has the right to appoint two directors to the Board pursuant to a Governance Agreement. Sirius XM s nominees are Dara Altman, Executive Vice President and Chief Administrative Officer of Sirius XM, and David Frear, Senior Executive Vice President and Chief Financial Officer of Sirius XM. The incurred costs during fiscal year 2015 related to these Sirius XM agreements listed above, as reported in the audited consolidated financial statements of the Company were approximately $53.9 million. As of August 31, 2015, an amount of approximately $16.1 million due to Sirius XM was included in amounts due to related parties. This amount also includes non-interest bearing promissory notes issued pursuant to the June 21, 2011 combination transaction between the Company and Sirius of approximately $0.4 million. CBC Pursuant to a licence agreement, effective August 24, 2005, as amended on June 21, 2011, the Company has a limited non-exclusive, non-transferable licence to transmit six CBC channels (CBC Radio One, CBC Radio 3, CBC Music Sonica, Première, FrancoCountry and Chansons). In addition to being one of our significant Shareholders, CBC has the right to appoint a single director to the Board pursuant to a Governance Agreement. CBC s nominee is Timothy Casgrain, former chairman of CBC. The incurred costs during fiscal year 2015 related to these CBC agreements listed above, as reported in the audited consolidated financial statements of the Company, were approximately $2.3 million. As of August 31, 2015, an amount of approximately $0.6 million due to CBC was included in amounts due to related parties. This amount also includes non-interest bearing promissory notes issued pursuant to the June 21, 2011 combination transaction between the Company and Sirius of approximately $0.4 million. Obelysk Obelysk which is controlled by John Bitove, is a party to a Governance Agreement. In addition to being one of our significant Shareholders, Obelysk has the right pursuant to a Governance Agreement to appoint up to two directors to the Board. At the time of filing this Circular, Obelysk had elected to put forward only one director nominee, Philip Evershed. Slaight In addition to Slaight being one of our significant Shareholders, Slaight has the right to appoint a single director to the Board pursuant to a Governance Agreement. Slaight s nominee is David Coriat, Executive Vice- President, Chief Financial Officer and Director of Slaight. As of August 31, 2015, an amount of approximately $0.4 million due to Slaight was included in amounts due to related parties. This balance relates to non-interest bearing promissory notes issued pursuant to the June 21, 2011 combination transaction between the Company and Sirius. DIRECTORS AND OFFICERS INSURANCE The Company indemnifies its directors and officers against certain losses arising from claims against them for their acts, errors or omissions in their capacity as directors or officers and the Company maintains liability insurance for its directors and officers. The policy provides insurance for directors and officers of the Company in respect of certain losses arising from claims against them for their acts, errors or omissions in their capacity as directors or officers. The Company is also insured against any loss arising out of any payment that it may be required or permitted by law to make to directors or officers in respect of such claims. The policy does not distinguish between the liability insurance for its directors and officers, the coverage being the same for both groups. The policy limit for such insurance coverage, which is currently set to expire on September 1, 2016, is $15 million with no deductible for non-indemnifiable claims and a deductible of $100,000 for securities claims, and $50 to 9

14 $100,000 for all other claims per occurrence. The premium paid by the Company for the 12 month period ended August 31, 2015 was $57,675. INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS As of the date hereof and during the most recently completed financial year, no director or executive officer of the Company, nor any associate thereof, is or was indebted to the Company or subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company. Summary Compensation Table EXECUTIVE COMPENSATION SUMMARY The following table provides a summary of the compensation paid or awarded during fiscal years ended August 31, 2015, August 31, 2014 and August 31, 2013, respectively, to the CEO and the CFO of the Company and the three most highly compensated individuals who currently serve as executive officers of the Company, excluding the CEO and the CFO, and whose total annualized compensation for the most recently completed fiscal year exceeded $150,000 (collectively, the NEOs ). In this section of the Circular, fiscal year 2015 (or fiscal year ended August 31, 2015), fiscal year 2014 (or fiscal year ended August 31, 2014), and fiscal year 2013 (or fiscal year ended August 31, 2013) refer to the 12 month periods ended August 31, 2015, August 31, 2014 and August 31, 2013, respectively. During the fiscal year the Company announced the departure of its Chief Financial Officer, Michael Washinushi, effective September 4, Mr. Washinushi remained associated with the Company in an advisory capacity to help facilitate a smooth transition. Subsequent to the fiscal year, on October 27, 2015, the Company announced the appointment of Jason Redman as Chief Financial Officer of the Company, and Mr. Redman joined the Company on November 30, Mr. Redman was Sirius s Chief Financial Officer prior to the combination transaction between the Company and Sirius and brings more than 20 years of experience in operational and financial management. Prior to his appointment, Mr. Redman served as President, Drainage Solutions at Armtec LP A Brookfield Company, one of Canada s largest infrastructure companies. Prior to joining Armtec, Mr. Redman held a number of other senior executive leadership positions, including Chief Operating Officer/Chief Financial Officer for Dealfind/Teambuy, Chief Financial Officer for Sirius (prior to the merger), and Chief Financial Officer for ONEnergy Inc. The amounts in the Option Based Awards column represent the grant date fair value of options granted during fiscal year 2015, fiscal year 2014 and fiscal year The dollar value of options granted in fiscal year 2015 is based on the grant date fair value of $1.99 per option. The dollar value of options granted in fiscal year 2014 is based on the grant date fair value of $3.27 per option. The dollar value of options granted in fiscal year 2013 is based on the grant date fair value of $2.21 per option. The fair value of the options was estimated on the date of the grant using the Black Scholes option pricing model. The following assumptions were used for the options: weighted average risk-free interest rate of 1.9% (2014: 1.5%; 2013: 1.4%); weighted average expected life of four and a half years (2014: four and a half years; 2013: four and a half years); weighted average expected dividend yield of 7% (2014: 5.0%; 2013: 7.0%); and weighted average expected volatility of 42.8% (2014: 48.4%; 2013: 57.6%). The Company utilizes the Black-Scholes valuation methodology because it is a long-standing and common methodology used by Canadian reporting issuers. 10

15 Name and Principal Position Year Salary Share Based Award Option Based Award (1) Non-Equity Incentive Plan Compensation Pension Value All Other Compensation (2) Total Compensation Annual Incentive Plans Longterm Incentive Plans Mark Redmond, President and CEO $546,042 $533,750 $525,000 $589,499 $640,502 (3) $625,036 $406,272 $403,332 (3) $250,993 $239,166 (4) $283,357 $480,680 $84,500 (5) N/A N/A N/A $1,865,479 $1,860,941 $1,881,709 Michael Washinushi, CFO, Treasurer and Secretary (7) $340,733 $333,467 $325,320 $242,591 $263,125 (3) $240,047 $176,203 $172,561 (3) $100,441 (4) $171,397 $239,153 $33,800 (5) N/A N/A N/A $793,327 $940,549 $904,961 Paul Cunningham, Senior Vice President, Sales & Marketing $251,913 $247,114 $241,880 $132,842 $140,789 (3) $163,030 $44,775 $51,503 $68,433 $87,561 (4) $94,694 $122,230 $16,900 (5) N/A N/A N/A $533,991 $534,100 $595,573 Ian Gordon Senior Vice President, Conversion & Communications $217,707 $209,296 $103,863 $46,765 $207,233 (3) $46,598 $75,251 (4) $64,815 $6,891 (5) N/A N/A - - $450,477 $527,941 John Lewis, Senior Vice President, Programming & Operations Notes: $223,493 $219,039 $214,400 $128,153 $132,860 (3) $146,037 $44,775 $47,415 $60,927 $78,279 (4) $67,832 $110,701 $16,900 (5) (1) The fair value of the options was estimated on the date of the grant using the Black Scholes option pricing model. N/A N/A N/A $41,040 (6) $40,862 $40,651 $532,640 $508,008 $572,716 (2) Other than as set out below none of the NEOs is entitled to perquisites or other benefits, which in the aggregate are worth over $50,000 or 10% of the NEO s base salary. (3) Inclusive of discretionary equity grant for 2014 in connection with the bonuses payable during (4) Amount of fiscal year 2015 annual incentive plan bonus earned during the year and paid in fiscal year Michael Washinushi ceased to be eligible for the annual incentive plan bonus payable after his resignation effective September 4, (5) Amount of special bonus earned during the year and paid partly in fiscal year 2015 and in fiscal year Michael Washinushi ceased to be eligible for any special bonus payable after his resignation effective September 4, (6) Combination of Deferred Profit Sharing Plan contribution, housing allowance and flexible benefits. (7) Resigned effective September 4, Incentive Plan Awards Outstanding Share Based and Option Based Awards The following table provides information with respect to outstanding stock options held by the Company s NEOs. The information provided below is as of August 31,

16 Option Based Awards Share Based Awards Name Number of Securities Underlying Unexercised Options (#) Option Exercise Price Option Expiration Date Value of Unexercised In-The- Money Options (1) Number of Shares or Units of Shares That Have Not Vested (#) Market or Payout Value of Share- Based Awards That Have Not Vested (2) Market or Payout Value of Vested Share-Based Awards That Have Not Paid Out or Distributed 200,000 $ $390,000 43,910 (3) $217,355 62,500 $ $88,750 87,400 (4) $432,630 85,275 $ $16,202 52,200 (5) $258,390 63,000 $ ,508 (6) $160,915 Mark Redmond 204,157 $ ,460 (7) $353, ,000 $ $234,000 16,810 (3) $83,210 33,750 $ $47,925 33,620 (4) $166,419 34,125 $ $6,484 20,200 (5) $99,990 Michael Washinushi (8)(9) 24,750 88,544 $8.49 $ ,095 (6) 27,690 (7) $74,720 $137,066 45,000 $ $87,750 11,350 (3) $56,183 26,250 $ $37,275 22,900 (4) $113,355 31,000 $ $5,890 11,200 (5) $55,440 Paul Cunningham 15,750 22,500 $8.49 $ ,529 (6) 15,900 (7) $37,269 $78,705 14,250 $ ,600 (5) $52,470 23,500 $ ,838 (6) $14,048 Ian Gordon 15,480 (7) $76,626 John Lewis Notes: 40,000 8,750 13,800 14,500 22,500 $3.00 $3.53 $4.76 $8.49 $ $78,000 $12,425 $ ,300 (3) 20,380 (4) 10,600 (5) 7,062 (6) 15,540 (7) $50,985 $100,881 $52,470 $34,957 $76,923 (1) Value of unexercised In-the Money options is based on the difference in share price on August 31, 2015 and the exercise price. (2) Value of unvested RSUs and PSUs is based on the share price on August 31, (3) Number of outstanding RSUs granted as at November 16, (4) Number of outstanding PSUs granted as at November 16, (5) Number of outstanding PSUs granted as at November 18, (6) Number of outstanding RSUs granted as at November 03, (7) Number of outstanding PSUs granted as at November 03, (8) Resigned effective September 4, (9) Due to his resignation, all of Mr. Washinushi s options, RSUs and PSUs that had not vested prior to September 4, 2015 have been forfeited. Pursuant to his agreement with the Company, all Mr. Washinushi s vested stock options are scheduled to expire March 31, Value Vested or Earned During the Year The following table provides information on the vesting and payouts of awards under the Company s incentive plans during the fiscal year ended August 31,

17 Name Options Vested During the Year and Strike Price Option Based Awards - Value Vested During the Year Share-Based Awards Vested During the Year Share-Based Awards - Value Vested During the Year Non-Equity Incentive Plan Compensation - Value Earned During the Year Mark Redmond 28,425 ($4.76) 15,750 ($8.49) 31,250 ($3.53) 100,000 ($3.00) Michael 11,375 ($4.76) Washinushi (7) 6,188 ($8.49) 16,875 ($3.53) 40,000 ($3.00) Paul Cunningham 7,750 ($4.76) 3,938 ($8.49) 8,750 ($3.53) 20,000 ($3.00) $16,771 (1) (2) $47,813 (3) $306,000 (4) $6,711 (1) (2) $25,819 (3) $122,400 (4) $4,573 (1) (2) $13,388 (3) $61,200 (4) $323,666 (6) $33,800 (8) $104,461 (6) Ian Gordon 3,563 ($8.49) (2) 11,780 $91,295 (5) $82,142 (6) John Lewis 6,900 ($4.76) Notes: 3,625 ($8.49) 8,750 ($3.53) 20,000 ($3.00) $4,071 (1) (2) $13,388 (3) $61,200 (4) $95,179 (6) (1) Options vested on November 15, 2014, on which date the market price of the Class A Subordinate Voting Shares was $5.35. (2) Options vested on November 17, 2014, on which date the market price of the Class A Subordinate Voting Shares was $5.35. (3) Options vested on November 21, 2014, on which date the market price of the Class A Subordinate Voting Shares was $5.06. (4) Options vested on January 1, 2015, on which date the market price of the Class A Subordinate Voting Shares was $6.06. (5) RSU vested on September 1, 2014, on which date the market price of the Class A Subordinate Voting Shares was $7.75. (6) Includes amount of fiscal year 2015 annual incentive plan bonus earned during the year and paid in fiscal year 2016 and amount of special bonus earned during the year and paid partly in fiscal year 2015 and in fiscal year (7) Resigned effective September 4, Due to his resignation all of Mr. Washinushi s options, RSUs and PSUs that had not vested prior to September 4, 2015 have been forfeited. Pursuant to his agreement with the Company all Mr. Washinushi s vested stock options are scheduled to expire March 31, (8) Mr. Washinushi was eligible to receive a special bonus that was earned during the year and partly paid in fiscal 2015 but any amounts that were payable in fiscal year 2016 were forfeited upon his resignation. Please also refer to Securities Authorized for Issuance Under Equity Compensation Plans. COMPENSATION DISCUSSION & ANALYSIS This Compensation Discussion and Analysis describes and explains the Company s compensation philosophy and objectives, as well as the significant elements of compensation of the Company s executive officers during the fiscal year ended August 31, Compensation Policy The Compensation Committee of the Company has been delegated the responsibility of annually setting and approving the compensation policy of executive officers and other key employees of the Company (the Compensation Policy ). The Compensation Policy has the objective of providing a competitive compensation package designed to recognize and reward individual and corporate performance and create economic value for Shareholders over the long-term. To encourage the creation of economic value for Shareholders, the Compensation Policy emphasizes short-term and long-term incentive awards, thus favouring the alignment of management s interests with those of Shareholders. During fiscal 2015, the Compensation Committee retained the services of 13

18 Meridian Compensation Partners as the Compensation Committee s independent consultant, see Compensation Discussion & Analysis Compensation Consultants. It is the Compensation Committee s objective to have a significant portion of the executive officers compensation contingent upon the Company s performance, as well as upon his or her own individual contributions to the achievement of business objectives. The compensation package is comprised of three elements: (i) base salary, which is designed primarily to be competitive with salary levels in the industry, as well as reflect individual performance through merit increases; (ii) annual cash bonuses tied to the Company s achievement of financial and business performance goals, contribution of executive officers in strategic corporate projects, and contribution in the growth of business; and (iii) long-term equity based incentive awards which provide enhanced executive compensation opportunities in return for performance intended to increase Shareholder value. The factors which the Compensation Committee considered in establishing the individual components of each executive officer s compensation package for fiscal year 2015 are summarized below. The Compensation Committee may, in its discretion, apply entirely different factors, particularly different measures of financial performance, in setting executive officer compensation. Each element of the compensation package is an integral part and decisions regarding each element are made in light of the overall compensation package. In order to evaluate the competitiveness and appropriateness of the Company s total compensation for executive officers, the Compensation Committee reviews data on the base salary, short-term incentive awards, longterm incentive awards and nominal profit sharing allocation compensation for various executive positions. To achieve the best overall comparison of the competitiveness of the Company s executive level compensation, the Company includes a sample of companies and subsidiaries within the general industry and core area comprised of a blend in revenue size from approximately $100 million to $500 million. Subject to adjustment upward or downward based upon various evaluations, the Compensation Committee generally targets base compensation and equity based incentive awards that are competitive with the benchmark sample group of companies. The Compensation Committee believes that competitive compensation levels and targets are necessary and appropriate in the highly competitive market for quality executive talent and during the Company s current phase in its evolution and business cycles. The most recent benchmark analysis was completed in October 2015 and the benchmark sample group consisted of the following companies, as they were known at that time: (i) Axia Netmedia Corp., (ii) BCE Inc., (iii) Cineplex Inc., (iv) Cogeco Cable Inc., (v) Corus Entertainment Inc., (vi) DHX Media Ltd., (vii) IMAX Corp., (viii) Manitoba Telecom Services Inc., (ix) Rogers Communications Inc., (x) Shaw Communications Inc., (xi) TELUS Corp., (xii) TeraGo Inc., (xiii) TVA Group Inc., and (xiv) Videotron Ltd. The Compensation Policy is designed to maintain the salary structure of executive offers and key employees at a competitive level and to preserve the flexibility to raise the overall compensation of executives and key employees to reward performance that exceeds expectations through higher stock options and RSU grants. Input from Management The Compensation Committee has engaged in active discussions with, and considered recommendations from, the CEO concerning: (i) appropriate base salary levels and internal equity among executives, (ii) who should participate in the incentive programs and at what levels, (iii) which performance metrics should be used in connection with different operational groups, (iv) the determination of performance targets, as well as individual goals and initiatives for the coming year, where applicable, and (v) whether and to what extent criteria for the previous year have been achieved. With respect to equity-based grants, the Compensation Committee has considered recommendations from the CEO as to appropriate grant levels for executive officers. Base Salary Base salaries for executive officers (including the CEO) and key employees are generally competitive relative to the remuneration practices of comparable companies in the sample group as discussed above. Salary levels are reviewed and considered annually as part of the Company s performance review process. Merit based increases to salaries are based on the assessment made by the Compensation Committee of the individual s performance, skill set and competitive market factors. The Compensation Committee reviews and approves the annual base salary of the CEO. 14

19 Short-Term Incentive Awards Determining annual bonuses is an objectives based process that links employee performance to the broader business plans of the Company. Individual incentive targets are confirmed to employees, including executive officers, in the offer of employment. Any change to an individual s incentive target is communicated in writing. Individual performance expectations and metrics are defined annually by the manager of the employee. Corporate performance targets are set annually, and are subject to change from year to year, upon recommendation by the Company s management and approval by the Compensation Committee and the Board. For Fiscal 2015 the performance metrics, and respective weightings approved by the Board were net subscribers (10%), revenue (20%), free cash flow (15%) and adjusted EBITDA (55%). Adjusted EBITDA is a non-gaap financial measure and a definition of adjusted EBITDA can be found on page 35 of the Management s Discussion and Analysis for fiscal year 2015 dated October 29, 2015 and filed on SEDAR. Page 19 of the Management s Discussion and Analysis for fiscal year 2015 includes a reconciliation of adjusted EBITDA to operating income (loss). Bonuses are calculated as a function of the employee s individual performance, corporate performance and his or her target bonus. The calculation is as follows: Individual performance (%) Corporate performance (%) Base salary Target bonus (%) = Actual bonus At the conclusion of the fiscal year, the employee s manager evaluates the employee s performance against the goals set earlier in the year. Executive management provides a detailed summary of corporate performance to the Board for review and approval. Once the Board has approved the corporate performance and reviewed the executive and staff incentive payments, the amounts are paid via payroll. The bonus criteria for the CEO are established by the Compensation Committee and the bonus criteria for the other executive officers are established by the CEO and reviewed by the Compensation Committee. The bonus amounts for executive officers are reviewed and approved annually by the Compensation Committee. The Company awards annual cash bonuses to executive officers based upon those executive measures that support organizational financial success in the best interests of the Shareholders and are measured primarily on the basis of financial results. Executive officers are rewarded for attaining strategic, financial and operational goals viewed as critical to the continued growth and profitability of the Company. The annual cash bonus for executive officers varies between 0% and 160% of their base salary, depending on the specific terms of their employment agreements entered into with the Company. The Company achieved favourable financial results for the 2015 fiscal year, including implementing strategic initiatives so that the business is well positioned in the current economic circumstances, as such, the Compensation Committee decided to grant cash bonuses in line with the performance metrics referenced above for fiscal year The CEO recommended, and the Compensation Committee approved, that the executive officers be awarded cash bonuses based upon individual performance in the context of the overall financial performance of the Company during the fiscal year Long-Term Incentive Awards Long-term incentive awards in fiscal year 2015 consist principally of stock options and RSUs. The aim of these long-term incentives is to align management interest with Shareholder value growth and to award compensation that is competitive with companies in the general industry. These grants are made on a discretionary basis and based on performance measured against set business and financial objectives for the year, such as paying subscribers and sustained profitability. The decision to grant long-term incentive awards also takes into account market practices, the competitive environment, retention and business performance. Stock options granted to the executive officers (excluding the CEO and CFO) in fiscal year 2015 were proposed to the Compensation Committee by the Company s CEO, and such proposals reflected the market value of a position and the skills and experience of the executive officers as well as the Company s performance. The proposals were reviewed and approved by the Compensation Committee. The stock option grants for the CEO and 15

20 CFO in fiscal year 2015 were subject to the discretion of the Compensation Committee and stock options were granted to such executive officers as determined by the Compensation Committee after reviewing the proposals submitted by the CEO. The Compensation Committee granted stock options to the executive officers as a result of the contribution of such officers related to long-term profitability which has strengthened the Company s strategic position in the market. Subsequent to fiscal 2015, on November 3, 2015 employees including the NEOs were entitled to settlement of RSUs and PSUs that had vested according to time and performance criteria. This was the first year that performance stock units that had been granted three years in advance and which were subject to performance metrics vested and were settled. The PSUs vest according to achievement of certain performance targets from 0 if actuals were below 90% of budget to 2x for overachievement by 115%. The performance target is based on three years of cumulative adjusted EBITDA budget. The Board determined that the rolling performance of the Company s 3 year cumulative annual actuals as compared to budget was 102.6% which resulted in settlement of PSUs at a PSU multiplier of 1.15x. The Board elected to settle the PSUs and RSUs in shares and certain NEOs were provided a net settlement of shares by way of settlement in shares and cash in order to satisfy tax obligations triggered at time of vesting. For individual option grants to NEOs during fiscal year 2015, see Executive Compensation Summary Summary Compensation Table. Stock options are granted in accordance with applicable TSX rules, at a fixed exercise price per Class A Subordinate Voting Share which is not lower than the weighted average price of the Class A Subordinate Voting Shares on the TSX during the five trading days prior to the date of grant of options. It is the Company s policy that options should not be granted during blackout periods. The terms of the Amended and Restated Stock Option Plan (the Stock Option Plan ) are intended to encourage long-term retention of executive officers and motivate their continued performance. They will be able to get maximum return from grants of options only if they continue their employment with the Company for the complete duration of the vesting period of the options for a minimum period of three to five years, and if the stock price increases in value. The more the value of the stock is increased, the more Shareholder value increases and the greater the return the executive officer gets as a result. Similarly, RSUs are also available for grant and, if granted, will include vesting requirements to encourage retention, motivate performance of executive officers, increase Shareholder value and align the interest of executive officers with that of the Shareholders. The Compensation Committee recommends for approval by the Board a schedule that sets out the number of stock options and/or RSUs to be granted to each executive officer in the context of the long-term incentive plan for the fiscal year. In setting the schedule, the Compensation Committee receives recommendations from management and takes previous option grants and RSU grants into consideration. In addition to the components of compensation that the Company currently pays to its executive officers, they are also entitled to certain personal benefits. Executive officers are provided coverage under the Company s health insurance, and other benefits similar to all eligible employees. Compensation Risk The Board has delegated to the Compensation Committee the responsibility for establishing a compensation framework that results in the creation of long-term shareholder value. While there was no formal review by the Board or the Compensation Committee of the implications of risks associated with the Company s compensation framework during fiscal year 2015, the current structure of the Company s executive compensation arrangements are designed to encourage executive officers to not expose the Company to inappropriate or excessive risks. The following elements of the Company s executive compensation arrangements correlate to the long-term performance of the Company: (i) (ii) (iii) compensation with a balanced mix of salary, annual bonus and options and/or RSUs; performance metrics aligned with the Company s long-term business strategy; the use of a sliding scale to grant annual bonuses (as opposed to an all-or-nothing policy); 16