The 2006 Elite Canadian Directors Continue to Drive Governance Improvement

1Authors:Professor Tim Rowley with David Comrie

In 2004, CC(BE)2 discovered a cluster of 16 directors each of whom sat on 5 or more S&P/TSX Composite Index boards…we called them the “Elite 16”

Directors Number of Boards Companies

MacNeill, Brian F. 7 DFS, PCA, SCC, T, TD, WFT, WTO

Cockwell, Jack L. 6 ACM.NV.A, BPO, FL, FPS, NRD, NBD

Mazankowski, Rt. Hon. D.F. 6 ACO.NV.X, GWO, IGM, POW.SV, PWF

McKenna, Hon. F.J. 6 BMO, CGS, FNX, NRD, SC, ZEN

O’Brien, David P. 6 ECA, FHR, N, MOL.A, RY, TA

2

O’Brien, David P. 6 ECA, FHR, N, MOL.A, RY, TA

Baillie, A. Charles 5 BLD, CNR, WN, IQW, T

Bérard, André 5 BCE, BBD.SV.B, NRD, SAP, VAS

Cleghorn, John E. 5 CP, FTT, MOL.A, NT, SNC

Fortier, L. Yves 5 AL, HBC, NT, NCX, RY

Godsoe, Peter C. 5 ABX, FHR, OCX.SV, RCI.NV.B, SBY

Hushovd, Oyvind 5 CCO, GBU, IMN, LIM, WTO

Lanthier, J. Spencer 5 EME, ITP, PS.NV.B, X, ZL

Newall, J.M. Edward 5 AL, CP, MFI, NCX, RY

Osborne, Ronald W. 5 FSH.SV, SHC, ST.SV.A, SLF, TS.NV.B

Prichard, J. Robert S. 5 BMO, FSH.SV, WN, OCX.SV, TS.NV.B

Tapp, Lawrence G. 5 ATA, CCL.NV.B, HKY, TLM, WCS.A

These 16 directors had a huge influence on Canadian Markets

0.95% of

Directors

31% of

Companies

50% of Composite

Market Cap

3

16 Elite Directors…

sit on 68 Index boards…

31%

50.69%

comprising $437B market capitalization

All except Tapp and Mazankowski were interconnected.

CockwellBérard

McKenna

Lanthier

OsborneMazankowski

Prichard

4

TappMacNeill

Prichard

Godsoe

Baillie

Hushovd

O’Brien

Cleghorn

Fortier

Newall

In 2006 only 5 sit on 5 or more boards on the S&P/TSX Composite.

Directors Number of Boards

MacNeill, Brian F. 7

Cockwell, Jack L. 6

Mazankowski, Rt. Hon. D.F. 6

McKenna, Hon. F.J. 6Directors Number of Boards

2006

2004

Directors on 5 or more boards

5

O’Brien, David P. 6

Baillie, A. Charles 5

Bérard, André 5

Cleghorn, John E. 5

Fortier, L. Yves 5

Godsoe, Peter C. 5

Hushovd, Oyvind 5

Lanthier, J. Spencer 5

Newall, J.M. Edward 5

Osborne, Ronald W. 5

Prichard, J. Robert S. 5

Tapp, Lawrence G. 5

Directors Number of Boards

Mazankowski, Rt. Hon. D.F. 6

Desmarais, André 5

Lanthier, J. Spencer 5

Osborne, Ronald W. 5

Prichard, J. Robert S. 5

So the CC(BE)2 re-defined the Elite as the 22 non-management directors who sit on 4 or more boards.

Director Number of Boards

Mazankowski, Rt. Hon. D.F. 6

Lanthier, J. Spencer 5

Osborne, Ronald W. 5

Prichard, J. Robert S. 5

Director Number of Boards

Giffin, Hon. Gordon D. 4

Godsoe, Peter C. 4

Graham, Anthony R. 4

Griffiths, Anthony F. 4

6

Beatty, David R. 4

Bolton, Hugh J. 4

Chevrier, Robert 4

Desautels, L. Denis 4

Ducros, Pierre Y. 4

Gauthier, Hon. Paule 4

Gibara, Germaine 4

Hushovd, Oyvind 4

MacNeill, Brian F. 4

McCoy, Richard H. 4

McLennan, John T. 4

O’Brien, David P. 4

Phillips, Roger 4

Willson, John M. 4

As before the 2006 Elite continue to have huge influence over the S&P/TSX Composite Index.

comprising a

1% of

Directors

25% of

Companies

63% of

Market Cap

7

25%

63%

22 Elite Directors…

sit on 69 companies…

comprising a $900B market capitalization

The average governance scores*, of these 22 directors are well above the rest of the composite.

93

91.2

5

89.7

5

89.2

5

88.2

5

84.7

5

83.7

5

83.7

5

78.7

5

78.7

5

78

78

77.5

76

75.4

71.7

5

71.2

70.2

5

70

67.5

61.830

405060708090100

Average score of

companies w/o

elite directors:

71.57

8

78.7

5

78.7

5

77.5

75.4

71.7

5

71.2

70.2

5

70

67.5

61.8

48.5

010203040

Beatty, David R.

Giffin, Hon. Gordon D.

Gauthier, Hon. Paule

O'Brien, David P.

Phillips, Roger

Ducros, Pierre Y.

MacNeill, Brian F.

Willson, John M.

Gibara, Germaine

Hushovd, Oyvind

Griffiths, Anthony F.

McCoy, Richard H.

Bolton, Hugh J.

Chevrier, Robert

Prichard, J. Robert S.

McLennan, John T.

Lanthier, J. Spencer

Desautels, L. Denis

Godsoe, Peter C.

Graham, Anthony R.

Osborne, Ronald Walter

Mazankowski, Rt. Hon. Donald F.

* based on the Clarkson Centre’s “Board Shareholder Confidence Index”

As before, these 22 directors form a network through which information and practices can be dispersed.

Beatty

Desautels

Hushovd

Prichard

GodsoeGraham

Mazankowski

DucrosMacNeill

9

Chevrier

Willson

Griffiths

McLennan

McCoy

Gauthier

Gibara

OsborneLanthier

Phillips

O’Brien

Giffin

Bolton

The New Elite continue to promote best practices examples on matters relating to independence.

70%

80%

90%

100%

Elite

10

77% 9

0%

75%

60%

84%

61%

0%

10%

20%

30%

40%

50%

60%

Board

Independence

Audit Committee

Independence

Compensation

Committee

Independence

The Rest

…and in board and director evaluations.

60%

70%

80%

90%

100%

Elite

11

75%67%

55% 53%

0%

10%

20%

30%

40%

50%

60%

Board Evaluations Director Evaluations

Elite

The Rest

Elite directors sit on 15 company boards that received a share structure deduction*

Company Name Director Name(s)

ACE Aviation Holdings Inc. Richard H. McCoy, John T. McLennan

Alliance Atlantis Communications Inc. Anthony F. Griffiths

ATCO Ltd. Rt. Hon. Donald F. Mazankowski

Bombardier Inc. L. Denis Desautels

Cogeco Cable Inc. Germaine Gibara

Four Seasons Hotels Inc. Ronald Walter Osborne, Prichard, J. Robert S. Prichard

12

* A deduction occurs when a company has a dual class share structure where equity does not equal voting power. This area can result in the largest deduction of any category in the Board Shareholder Confidence Index.

Four Seasons Hotels Inc. Ronald Walter Osborne, Prichard, J. Robert S. Prichard

The Jean Coutu Group (PJC) Inc. L. Denis Desautels

ONEX Corp. Peter C. Godsoe

Power Corporation of Canada Anthony R. Graham, Rt. Hon. Donald F. Mazankowski

Rogers Communications Inc. Peter C. Godsoe

Shaw Communications Inc. Rt. Hon. Donald F. Mazankowski

St. Lawrence Cement Group Inc. Germaine Gibara, Ronald Walter Osborne

Teck Cominco Ltd. Hugh J. Bolton

Torstar Corporation J. Spencer Lanthier, Ronald Walter Osborne, J. Robert S. Prichard

Transcontinental Inc. Robert Chevrier

= 1 of 5 lowest

scoring directors

= 1 of 5 highest

scoring directors

= Share Structure deduction

Dual class share companies did not score as highly overall as companies with a single class share structure*

13

* Scores EXCLUDE the deductions for dual class structures

Annual Averages

72747678 Companies w/

Elite Directors

Rest of

Composite

CONCLUSIONS:1. Elite directors do spread best practices effectively

14

64.2 65.5 63.9

69.371.6

64.7

69.171.2

76.6 76.3

565860626466687072

2002 2003 2004 2005 2006

70%

80%

90%

100%

Co

mp

anie

s w

/ B

est P

ractices -

Board

s w

ith E

lite

dir

ecto

r(s) only

One Class

Dual Class

CONCLUSIONS:1. Elite directors do spread best practices effectively2. Elite directors are less effective in dual class environments

15

83.3%

70.4%

53.7%

46.7%

53.3%

33.3%

0%

10%

20%

30%

40%

50%

60%

Comp. Committee Director Eval. CEO/Chair Split

Co

mp

anie

s w

/ B

est P

ractices -

Board

s w

ith E

lite

dir

ecto

r(s) only

CONCLUSIONS:1. Elite directors do spread best practices effectively2. Elite directors are less effective in dual class environments

16

For further information please contact: Rowley@Rotman.Utoronto.Ca OR David.Comrie@Rotman.Utoronto.Ca