Form 6-K DESCARTES SYSTEMS GROUP For: May 11

May 11, 2022 1:42 PM EDT

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 6-K
 
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934
 
 
For the month of May 2022
 
Commission File Number:  000-29970
 
 
THE DESCARTES SYSTEMS GROUP INC.
(Translation of registrant’s name into English)
 
120 Randall Drive
Waterloo, Ontario
Canada N2V 1C6
(Address of principal executive office)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F [ ] Form 40-F [x]

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
 

The attached 2022 Notice of Annual General Meeting is furnished herewith as Exhibit 99.1.
The attached 2022 Annual General Meeting Circular is furnished herewith as Exhibit 99.2.



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

THE DESCARTES SYSTEMS GROUP INC.
 
(Registrant)
 
 
By:
/s/ Michael Verhoeve                    
Name:
Michael Verhoeve
Title:
Legal Counsel

Date:  May 11, 2022
 
 
 
 

EXHIBITS


Exhibit 99.2










The Descartes Systems Group Inc.


Annual Meeting of Shareholders

to be held on

Thursday, June 16th, 2022











TABLE OF CONTENTS
SOLICITATION OF PROXIES
 
1
DELIVERY OF MEETING MATERIALS
 
1
APPOINTMENT OF PROXIES
 
2
ATTENDING THE MEETING
 
3
Registered Shareholders
 
3
Non-Registered Shareholders
 
3
Attending as a Guest
 
3
PARTICIPATING AT THE MEETING
 
4
Registered Shareholders and Duly Appointed Proxyholders
 
4
Non-Registered Shareholders
 
5
VOTING AT THE MEETING
 
5
REVOCATION OF PROXIES
 
6
VOTING OF PROXIES
 
6
VOTING OF SHARES
 
6
PRINCIPAL HOLDERS OF VOTING SHARES
 
7
CURRENCY
 
7
MATTERS TO BE ACTED UPON AT THE MEETING
 
7
1.
Presentation of Financial Statements
 
7
2.
Election of Directors

8

Director Nominees
 
8

Skill Set and Experience of Proposed Director Nominees
 
13

Board Independence
 
14

Independent Chair of the Board
 
14

Meetings of Independent Directors
 
14

Director Service on Other Boards
 
14

Director Meetings and Attendance
 
15

Director Tenure, Age and Board Renewal
 
15

Nomination of Directors
 
16

Orientation of New Directors
 
17

Continuing Education
 
17

Majority Voting Policy
 
20

Advance Notice Provisions
 
20
3.
Appointment of Auditors

20

Audit Fees
 
21

1

4.
Approval of Amendments to the Performance and Restricted Share Unit Plan

21

Housekeeping Amendments
 
22

Blackout-related Amendments
 
22

Corporate Transactions
 
22

Amendment Provisions
 
23
5.
Advisory Vote on Executive Compensation (Say-On-Pay Vote)

25
6.
Other Matters

25
STATEMENT OF CORPORATE GOVERNANCE PRACTICES
 
26
Mandate of the Board of Directors
 
27
Risk Oversight
 
27
ESG Oversight
 
28
Role of Board in Corporate Strategy
 
28
Committee Charters and Position Descriptions
 
29
Audit Committee
 
29
Compensation Committee
 
31
Corporate Governance Committee
 
31
Nominating Committee
 
32
Board of Directors, Committee and Individual Director Assessments
 
33
Policy on Diversity
 
33
Ethical Business Conduct
 
35
Succession Planning
 
36
Shareholder Engagement
 
37
Environmental, Social and Governance Framework
 
37
Organizational Governance
 
38
Environmental Impact
 
38
Human Rights and Labour Practices
 
39
Business Conduct and Fair Dealing
 
40
STATEMENT OF COMPENSATION GOVERNANCE
 
41
Compensation Committee
 
41
Compensation Committee Report
 
43
Compensation Discussion and Analysis
 
43
Overview of Compensation Program
 
43
Executive Officer Compensation Philosophy
 
43
Compensation Objectives
 
44
Compensation Oversight Process
 
55
Use of Compensation Consultants
 
55
Role of Executive Officers in the Compensation Process
 
56

2

Compensation-related Risk Mitigation
 
56
Incentive Compensation Clawback Policy
 
57
Management Equity Ownership Policy
 
58
Total Value of Equity Holdings of NEOs
 
59
Hedging and Pledging Restrictions
 
59
Summary Compensation Table
 
65
Outstanding NEO Option-based Awards and Share-based Awards
 
66
NEO Incentive Plan Awards – Value Vested or Earned During Fiscal 2022
 
68
NEO Option Exercises During Fiscal 2022
 
68
CEO Five-Year Look Back Compensation
 
68
NEO Termination and Change of Control Benefits
 
69
Quantitative Estimates of Payments to NEOs upon Termination or Change of Control
 
71
Director Compensation
 
72
Compensation Policies
 
73
Fiscal 2022 Compensation for Directors
 
74
Outstanding Director Option-Based Awards and Share-based Awards
 
74
Director Incentive Plan Awards – Value Vested or Earned During Fiscal 2022
 
74
Director Equity Ownership Policy
 
75
SECURITY-BASED COMPENSATION PLANS
 
76
Common Shares Authorized for Issuance Under Equity Compensation Plans
 
76
1998 Stock Option Plan
 
76
PRSU Plan
 
79
Directors’ DSU Plan
 
83
Cash-settled RSU Plan
 
83
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
 
83
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
83
GENERAL
 
84
SHAREHOLDER PROPOSALS
 
84
APPROVAL BY THE BOARD OF DIRECTORS
 
84
SCHEDULE “A”  MANDATE FOR THE BOARD OF DIRECTORS
 
A-1
SCHEDULE “B”  RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - ADJUSTED EBITDA
 
B-1
SCHEDULE “C”  VIRTUAL MEETING USER GUIDE
 
C-1
SCHEDULE “D”  PERFORMANCE AND RESTRICTED SHARE UNIT PLAN
 
D-1



3

THE DESCARTES SYSTEMS GROUP INC.


Management Information Circular

for the

Annual Meeting of Shareholders

Thursday, June 16th, 2022

SOLICITATION OF PROXIES
This management information circular (this “Circular”) is furnished in connection with the solicitation by and on behalf of management (the “Management”) of The Descartes Systems Group Inc. (the “Corporation”) of proxies to be used at the Corporation’s annual meeting (the “Meeting”) of holders of common shares of the Corporation (the “Common Shares”) to be held on Thursday, June 16th, 2022 at 10:00 a.m. (Eastern time) or at any adjournment(s) thereof. It is expected that the solicitation will be primarily by mail, but proxies may also be solicited personally, by advertisement, by telephone by employees of the Corporation without special compensation, or by the Corporation’s transfer agent, Computershare Investor Services Inc., at a nominal cost. The cost of solicitation will be borne by the Corporation.
DELIVERY OF MEETING MATERIALS
As permitted by the Canadian Securities Administrators and pursuant to an exemption from the management proxy solicitation requirement received from the Director appointed under the Canada Business Corporations Act (the “CBCA”), the Corporation is using “notice and access” to deliver proxy-related materials such as this Circular and the Corporation’s annual financial statements for the year ended January 31st, 2022 and associated management’s discussion and analysis (collectively, the “Meeting Materials”) to both registered and non-registered shareholders. Rather than receiving a paper copy of the Meeting Materials in the mail, shareholders will have access to them online. Shareholders will receive a notice package (the “Notice Package”) containing the information prescribed by applicable Canadian securities laws (including a description of the matters to be addressed at the Meeting and of the notice and access procedures for accessing the Meeting Materials, as well as a form of proxy (for registered shareholders) or a voting instruction form (for non-registered shareholders). Where a shareholder has previously consented to electronic delivery, the Notice Package will be sent to the shareholder electronically, and otherwise will be mailed to the shareholder. Shareholders are reminded to review the Circular prior to voting.

Electronic copies of the Meeting Materials are available online at www.envisionreports.com/TSCQ2022 and on SEDAR at www.sedar.com. All references to websites are for your information only. The information contained on or linked through any website is not part of, and is not incorporated by reference in, this Circular.
Shareholders may obtain paper copies of the Meeting Materials free of charge by following the instructions provided in the Notice Package. Shareholders may request paper copies of the Meeting Materials for up to one year from the date of that this Circular was filed on SEDAR. In order to receive paper copies of the Meeting Materials in advance of the deadline for submission of voting instructions and the date of the Meeting, your request must be received by Computershare by June 14th, 2022. Please note that if you request a paper copy of the Meeting Materials, you will not receive a new form of
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proxy or voting instruction form, and you should therefore retain the forms included in the Notice Package in order to vote.
APPOINTMENT OF PROXIES
The persons specified in the enclosed form of proxy are officers of the Corporation. A shareholder has the right to appoint as a proxyholder a person or company (who need not be a shareholder of the Corporation) other than the persons designated by Management of the Corporation in the enclosed form of proxy (the “Management Appointees”) to attend and act on the shareholder’s behalf at the Meeting or at any adjournment(s) thereof. Such right may be exercised by inserting the name of the person or company in the blank space provided in the enclosed form of proxy or by completing another form of proxy.

A proxy can be submitted by a registered shareholder to Computershare Trust Company of Canada / Computershare Investor Services Inc. (“Computershare”) either in person, or by mail or courier, to 100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1, or via the internet at www.investorvote.com. The proxy must be deposited with Computershare by no later than 10:00 a.m. Eastern time on June 14th, 2022, or if the meeting is adjourned or postponed, not less than 48 hours, excluding Saturdays, Sundays and statutory holidays, before the commencement of such adjourned or postponed meeting. If a shareholder who has submitted a proxy attends the meeting via the webcast and has accepted the terms and conditions when entering the meeting online, any votes cast by such shareholder on a ballot will be counted and the submitted proxy will be disregarded.

Registered Shareholders
A person or company whose name appears on the books and records of the Corporation as a holder of Common Shares is a registered shareholder.

A registered shareholder may vote Common Shares owned by it at the Meeting in one of two ways – either in by themselves by participating in the Meeting as set out below or by proxy.

A registered shareholder who does not wish to attend the Meeting or does not wish to vote should properly complete and deliver the enclosed form of proxy, and the Common Shares represented by the shareholder’s proxy will be voted or withheld from voting in accordance with the instructions indicated on the form of proxy, on any ballot that may be called at the Meeting or any adjournment(s) thereof.

Non-Registered Shareholders
A non-registered shareholder is a beneficial owner of Common Shares whose shares are registered in the name of an intermediary (such as a bank, trust company, securities dealer or broker, or a clearing agency in which an intermediary participates).

Non-registered shareholders will typically be given the ability to provide voting instructions in one of the following two ways.

Usually, a non-registered shareholder will be given a voting instruction form which must be completed and signed by the non-registered shareholder in accordance with the instructions provided by the intermediary. In this case, a non-registered shareholder cannot use the mechanisms described above for registered shareholders and must follow the instructions provided by the intermediary (which in some cases may allow the completion of the voting instruction form by telephone or the internet).

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Occasionally, however, a non-registered shareholder may be given a proxy that has already been signed by the intermediary. This form of proxy is restricted to the number of Common Shares beneficially owned by the non-registered shareholder but is otherwise not completed. This form of proxy does not need to be signed by the non-registered shareholder. In this case, the non-registered shareholder can complete the proxy and return by mail or facsimile only, as described above for registered shareholders.
ATTENDING THE MEETING
The Meeting will only be hosted online by way of a live webcast. Shareholders will not be able to attend the Meeting in person. A summary of the information shareholders will need to attend the online Meeting is provided below.

Registered Shareholders

Registered shareholders can attend the Meeting online by going to https://meetnow.global/MK5FRJQ and clicking on “Shareholder” and entering the applicable control number.

Registered shareholders who wish to appoint a third-party proxyholder other than the Management Appointees to represent them at the online meeting must submit their proxy form prior to registering their proxyholder. Registering the proxyholder, other than the Management Appointees, is an additional step once a shareholder has submitted their proxy. Failure to register a duly appointed proxyholder will result in the proxyholder not receiving a Username to participate in the meeting. To register a proxyholder, shareholders MUST visit https://www.computershare.com/descartes by June 14th, 2022 at 10:00 a.m. Eastern time and provide Computershare with their proxyholder’s contact information, so that Computershare may provide the proxyholder with a Username via email.

Non-Registered Shareholders

Any non-registered shareholder receiving either a form of proxy or a voting instruction form who wishes to attend at the Meeting should, in the case of a form of proxy, insert the non-registered shareholder’s name in the blank space provided or, in the case of a voting instruction form, follow the corresponding instructions provided by the intermediary. In either case, the non-registered shareholder should carefully follow the instructions provided by the intermediary.

Non-Registered shareholders who wish to appoint a third-party proxyholder other than the Management Appointees to represent them at the online meeting must submit their proxy or voting instruction form (as applicable) prior to registering their proxyholder. Registering the proxyholder is an additional step once a shareholder has submitted their proxy/voting instruction form. Failure to register a duly appointed proxyholder will result in the proxyholder not receiving a Username to participate in the meeting. To register a proxyholder, shareholders MUST visit https://www.computershare.com/descartes by June 14th, 2022 at 10:00 a.m. Eastern time and provide Computershare with their proxyholder’s contact information, so that Computershare may provide the proxyholder with an Invite Code via email.

Attending as a Guest

Non-registered shareholders who have not appointed themselves as proxyholders may attend the Meeting by clicking “I am a guest” and completing the online registration process but will be unable to participate in the Meeting.
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PARTICIPATING AT THE MEETING
The Meeting will begin at 10:00 a.m. Eastern Time on June 16th, 2022. It is important that you are connected to the internet at all times during the meeting in order to vote when balloting commences. It is each shareholder’s responsibility to ensure connectivity for the duration of the Meeting. In order to participate online, registered shareholders must have a valid 15-digit control number and duly appointed proxyholders must have received an email from Computershare containing a Username, as explained below.

If you have any difficulties accessing the Meeting, please contact our webcast provider at: +1-888-724-2416 / International +1 781-575-2748.

For more information, please see Computershare’s Virtual AGM User Guide, attached hereto as Schedule “C”.

It is recommended that shareholders and proxyholders submit their questions or comments as soon as possible during the Meeting so they can be addressed at the right time. Submission may be made in writing by using the relevant dialog box in the function “Q&A” during the Meeting. Written submissions received through the dialog box function will be read or summarized by a representative of the Corporation, after which the Chair of the Meeting or members of management present at the Meeting will respond. Submissions relating to a formal matter to be voted on at the Meeting will be addressed before a vote is held on such matter, if applicable. General questions will be addressed by the Chair of the Meeting and other members of management following the end of the Meeting during the question period.
So that as many submissions as possible are addressed, shareholders and proxyholders are asked to be brief and concise and to cover only one topic per submission. If several submissions relate to the same or very similar topic, the Corporation will group the submissions and state that it has received similar submissions. All shareholder submissions are welcome. However, the Corporation does not intend to address submissions that are: irrelevant to the Corporation’s business or to the business of the Meeting; related to non-public information; are repetitive or have already been addressed; are in furtherance of a shareholder’s personal or business interests; or are out of order or not otherwise appropriate as determined by the Chair or Secretary of the Meeting in their reasonable judgment.

For any submissions made but not addressed during the question period following the end of the Meeting, a member of the Corporation’s management will attempt to contact such shareholder to respond to the submission to the extent the shareholder has provided an email address within their submission. Shareholders may also contact the Corporation’s Corporate Secretary at [email protected]

In the event of technical malfunction or other significant problem that disrupts the Meeting, the Chair of the Meeting may adjourn, recess, or expedite the Meeting, or take such other action as the Chair determines is appropriate considering the circumstances.

Registered Shareholders and Duly Appointed Proxyholders

Registered shareholders that have a 15-digit control number, along with duly appointed proxyholders who were assigned an invite code by Computershare (see details above under the heading “Appointment of Proxies”), will be able to vote and submit questions during the meeting. To do so, please go to https://meetnow.global/MK5FRJQ prior to the start of the meeting to login. Registered shareholders and their duly appointed proxyholders can participate in the Meeting by clicking “Shareholder” and entering a control number or an invite code before the start of the Meeting.

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o
Registered shareholders – The 15-digit control number is located on the form of proxy or in the email notification you received.

o
Duly appointed proxyholders – Computershare will provide the proxyholder with an invite code after the proxy cut-off has passed.
Non-Registered Shareholders

Non-registered shareholders (other than United States non-registered shareholders – see below) who have duly appointed themselves as proxyholders will follow the proxyholder process described above.

To attend and vote at the virtual Meeting, United States resident non-registered shareholders must first obtain a valid legal proxy from their broker, bank or other agent and then register in advance to attend the Meeting. United States resident non-registered shareholders should follow the instructions from their broker or bank included with these proxy materials or contact their broker or bank to request a legal proxy form. After first obtaining a valid legal proxy from their broker, bank or other agent, to then register to attend the Meeting, United States resident non-registered shareholders must submit a copy of their legal proxy to Computershare. Requests for registration should be directed to:

Computershare
100 University Avenue
8th Floor
Toronto, Ontario, Canada
M5J 2Y1

OR


Requests for registration must be labeled as “Legal Proxy” and be received no later than June 14th, 2022 by 10:00 am. United States resident non-registered shareholders will receive a confirmation of their registration and an invite code by email after Computershare receives their registration materials. Such United States resident non-registered shareholders may then attend the Meeting and vote their shares at https://meetnow.global/MK5FRJQ during the meeting. Please note that you are required to register your appointment at www.computershare.com/descartes.

Non-registered shareholders who have not appointed themselves as proxyholders to participate and vote in the meeting will only be able to attend as a guest which allows them to listen to the meeting however will not be able to vote or submit questions. Please see the information under the heading “Appointment of Proxy – Non-Registered Shareholders” above for an explanation of why certain shareholders may not receive a form of proxy.
VOTING AT THE MEETING
A Registered Shareholder (or a Non-Registered Shareholder) who has appointed themselves or appointed a third-party proxyholder to represent them at the meeting, will appear on a list of proxyholders prepared by Computershare, who is appointed to review and tabulate proxies for this meeting. To be able to vote their shares at the meeting, each Registered Shareholder or proxyholder will be required to enter their control number or Invite Code provided by Computershare at https://meetnow.global/MK5FRJQ prior to the start of the meeting.
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In order to vote, Non-Registered Shareholders who appoint themselves as a proxyholder MUST register with Computershare at https://meetnow.global/MK5FRJQ AFTER submitting their voting instruction form in order to receive an Invite Code (please see the information under the headings “Appointment of Proxies” above for details).
REVOCATION OF PROXIES
Registered Shareholders
A registered shareholder who has given a proxy may revoke it by depositing an instrument in writing signed by the shareholder or by the shareholder’s attorney, who is authorized in writing, or by transmitting, by telephonic or electronic means, a revocation signed by electronic signature by the shareholder or by the shareholder’s attorney, who is authorized in writing, to the attention of the Corporate Secretary of the Corporation at 120 Randall Drive, Waterloo, Ontario, Canada, N2V 1C6, or facsimile number (519) 747-0082, at any time up to and including 10:00 a.m. (Eastern time) on June 14th, 2022, or in the case of any adjournment of the Meeting, at 10:00 a.m. (Eastern time) on the last business day preceding the date of the adjournment, or with the Chair of the Meeting on the day of, and prior to the start of, the Meeting or any adjournment thereof. A shareholder may also revoke a proxy in any other manner permitted by law.

Non-Registered Shareholders
A non-registered shareholder may revoke previously given voting instructions by contacting his or her Intermediary and complying with any applicable requirements imposed by such Intermediary. An Intermediary may not be able to revoke voting instructions if it receives insufficient notice of revocation.
VOTING OF PROXIES
On any ballot that may be called for, Common Shares represented by properly executed proxies in favour of the persons specified in the enclosed form of proxy will be voted for, against or withheld from voting, as applicable, in accordance with the instructions given thereon. If the shareholder specifies a choice with respect to any matter to be acted upon, the Common Shares will be voted or withheld from voting accordingly. If no choice is specified in the proxy with respect to a particular matter identified in the accompanying notice of meeting (the “Notice of Meeting”), the Common Shares represented by proxies given in favour of the persons designated by Management will be voted FOR such matter.

The enclosed form of proxy confers discretionary authority upon the persons specified in the proxy to decide how to vote on any amendment(s) or variation(s) to matters identified in the accompanying Notice of Meeting and on any other matters which may properly come before the Meeting or any adjournment(s) thereof. As of the date of this Circular, Management is not aware of any such amendment, variation or other matters. However, if any amendments or variations to matters identified in the accompanying Notice of Meeting, or any other matters that are not now known to Management, should properly come before the Meeting or any adjournment thereof, the Common Shares represented by proxies given in favour of the persons designated by Management in the enclosed form of proxy will be voted or withheld from voting by those persons pursuant to such discretionary authority.
VOTING OF SHARES
The board of directors (the “Board”) has fixed April 21st, 2022 as the record date for the Meeting. Shareholders of record at the close of business on April 21st, 2022 are entitled to vote the Common Shares registered in their name at that date on each matter to be acted upon at the Meeting. As at April 21st, 2022, the Corporation had 84,781,562 Common Shares issued and outstanding, each entitling the holder to one vote, without cumulation, on each matter to be voted on at the Meeting. As of the date of
6


this Circular, being April 29th, 2022, the number of Common Shares issued and outstanding is 84,781,562.

Under normal conditions, confidentiality of voting is maintained by virtue of the fact that proxies and votes are tabulated by the Corporation’s transfer agent. However, such confidentiality may be lost as to any proxy or ballot if a question arises as to its validity or revocation or any other like matter. Loss of confidentiality may also occur if the Board decides that disclosure is in the interest of the Corporation or its shareholders.
A quorum for the transaction of business at the Meeting shall be persons not being less than two in number and holding or representing by proxy not less than 25% of the issued and outstanding Common Shares entitled to vote at the Meeting. A quorum is required only at the opening of the Meeting.
The Corporation has been granted an exemption from the rules of the NASDAQ Stock Market (“NASDAQ”) that require a quorum at any meeting of the holders of Common Shares of no less than 33 1/3% of the outstanding Common Shares. This exemption was granted because this requirement is not consistent with generally accepted business practices in Canada. In particular, Section 139(1) of the CBCA provides that a corporation’s by-laws may set the quorum requirements for a meeting of shareholders.
PRINCIPAL HOLDERS OF VOTING SHARES
To the knowledge of the directors and executive officers of the Corporation, as at April 29th, 2022, the only persons or companies who beneficially owned or controlled or directed, directly or indirectly, more than 10% of the votes attached to the outstanding Common Shares were as follows:
Name
Number of
Common Shares
Percentage of
Class
T. Rowe Price Associates, Inc.(1)
10,594,762
12.5%

(1) The number of Common Shares reported as being under the control or direction of T. Rowe Price Associates, Inc. is based on the Form 62-103F3 as filed with the Canadian Securities Administrators through SEDAR on April 7, 2022.
CURRENCY
In this Circular, unless otherwise specified or the context otherwise requires, all references to “$” and “US$” are to U.S. dollars and all references to “Cdn.$” are to Canadian dollars. All currency amounts, except where otherwise indicated, have been converted into U.S. dollars at the indicative foreign exchange rate on January 31, 2022, the last business day of fiscal 2022. At that date, the exchange rate, as reported by the Bank of Canada, was US$1.00 = Cdn.$1.2719.
MATTERS TO BE ACTED UPON AT THE MEETING
1.
Presentation of Financial Statements
The audited consolidated financial statements of the Corporation for the fiscal year ended January 31st, 2022 and the reports of the auditors thereon accompany this Circular or have been mailed to shareholders separately and will be submitted to the Meeting. No vote will be taken on the financial statements at the Meeting.
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2.
Election of Directors
The number of directors to be elected at the Meeting is ten. Under the Corporation’s by-laws, directors of the Corporation are elected annually. Each director will hold office until the next annual meeting or until the successor of such director is duly elected or appointed, unless such office is earlier vacated in accordance with the by-laws.

The nominees proposed for election as directors, who were recommended to the Board by the Nominating Committee, are listed under the heading “Director Nominees” in the table below.

Except where authority to vote in respect of the election of directors is withheld, the persons designated by Management in the enclosed form of proxy intend to vote FOR the nominees listed in the table below under the heading “Director Nominees”. Management does not contemplate that any of the nominees will be unable to serve as a director, but if that should occur for any reason prior to the Meeting, the persons named in the enclosed form of proxy reserve the right to vote for another nominee in their discretion.

The following sets forth information as of the date of this Circular regarding each of the ten people proposed to be nominated for election as a director at the Meeting, including the number of Common Shares (and share-based units) beneficially owned, or controlled or directed, directly or indirectly, by such person or the person’s associates or affiliates as at the date of this Circular. In the table, certain information, not being within the knowledge of the Corporation, has been furnished by the respective proposed nominees individually.
Director Nominees
Nominee
Director Since
Equity Holdings
Deepak Chopra, B. Comm (Hons), FCPA, FCGA
Toronto, Ontario
Age – 58
Member – Audit Committee
Member – Nominating Committee
 
2021 AGM Votes in Favour: 98.83%
2020
DSUs                                            6,907
 
Mr. Chopra most recently served as President and Chief Executive Officer of Canada Post Corporation from February 2011 to March 2018. Mr. Chopra has more than 30 years of global experience in the financial services, technology, transportation, logistics & supply-chain industries. Prior to that, for more than 20 years, he worked for Pitney Bowes Inc., a NYSE-traded technology company known for postage meters, mail automation and location intelligence services. He served as President of Pitney Bowes Canada and Latin America from 2006 to 2010. He held a number of increasingly senior executive roles internationally, including President of its new Asia Pacific and Middle East region from 2001 to 2006 and Chief Financial Officer for Europe, Africa & Middle East (EAME) region from 1998-2001. He has previously served on the boards of Canada Post Corporation, Purolator Inc., SCI Group, the Canada Post Community Foundation, Conference Board of Canada and the Toronto Region Board of Trade. He currently sits on the board of Celestica, Inc. (TSX:CLS), The North West Company (TSX:NWC) and Sun Life Financial (TSX:SLF). Mr. Chopra is a Fellow of the Institute of Chartered Professional Accountants of Canada and has a Bachelor’s degree in Commerce (Honours) and a Master’s degree in Business Management.

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Nominee
Director Since
Equity Holdings
Deborah Close, B.A., ICD.D
Calgary, Alberta, Canada
Age – 68
Chair – Compensation Committee
Member – Nominating Committee

2021 AGM Votes in Favour: 99.42%
2015
DSUs                                        35,190
 
Ms. Close is a corporate director. Ms. Close held the position of President of the Production Services division of Tervita Corporation from 2010 until 2016. Tervita Production Services, now High Artic Energy Services (TSX:HWO), delivers engineering and field-based services to the oil and gas industry. From 2002 to 2010, Ms. Close was the Executive Vice President of DO2 Technologies (now Enverus), a software company providing electronic invoicing to the oil and gas industry. During Ms. Close’s tenure, DO2 grew from a start-up to the leading provider of e-invoicing to oil and gas companies and their suppliers. Prior to DO2, Ms. Close served in a number of Regional Vice President roles in Halliburton Corporation’s software division, Landmark Graphics.  She held executive roles in several of Landmark’s largest regions, including VP of Strategic Accounts, Regional VP of North America and Regional VP of Europe and the former Soviet Union. During Ms. Close’s 12 years at Halliburton, she worked in Canada, the US and Europe. Ms. Close also currently serves on the board of directors of Inter Pipeline Ltd, a privately held company but a reporting issuer for certain debt securities. Ms. Close holds a Bachelor of Arts from the University of Calgary and the ICD.D designation from the Institute of Corporate Directors and Rotman School of Management.


 
Nominee
Director Since
Equity Holdings
Eric A. Demirian, BBM, C.P.A, C.G.A, C.A.
Toronto, Ontario, Canada
Age – 63
Chair of the Board
Member – Audit Committee
Member – Governance Committee

2021 AGM Votes in Favour: 99.48%
2011
Common Shares                                        10,000
DSUs                                                                             61,572
 
Mr. Demirian is a Chartered Professional Accountant, Certified General Accountant and a Chartered Accountant. Since 2003, Mr. Demirian has served as president of Parklea Capital, Inc. (“Parklea”), a boutique financial and strategy advisory firm providing services to small- and mid-market public and private companies, and President of Demicap Inc., a private investment firm. Prior to Mr. Demirian’s position at Parklea, he held the position of Executive Vice President of Group Telecom, Inc. from 2000 to 2003. From 1983 to 2000, Mr. Demirian was with PricewaterhouseCoopers LLP (“PwC”) where he was a partner and head of the Information and Communications Practice. Mr. Demirian serves on the boards of Enghouse Systems Ltd. (TSX:ENGH) and Imax Corporation (NYSE:IMAX). Mr. Demirian is a former director and chair of the audit committees of a number of public companies. Mr. Demirian holds a Bachelor of Business Management degree from Ryerson University. Mr. Demirian has served as non-executive Chair of the Board of the Corporation since May 2014 and was previously Chair of the Corporation’s audit committee.

9


Nominee
Director Since
Equity Holdings
Sandra Hanington, B.A.Sc., MBA, ICD.D
Toronto, Ontario
Age - 60
New Nominee
 
Ms. Hanington is the former President & Chief Executive Officer of the Royal Canadian Mint, a $1.4 billion global manufacturing and marketing business, where she led a multi-year strategic and operational turnaround. Prior to that, Ms. Hanington had deep experience in the financial services sector and served in a number of progressively senior roles in Canada and the U.S., culminating as Executive Vice-President and member of the Management Committee of BMO Financial Group. Ms. Hanington currently serves as a director for Extendicare Inc. (TSX: EXE) which provides care to seniors across Canada in long term care homes, retirement homes or through quality home care; as a director for Aimia Inc. (TSX:AIM), an investment holding company; and is a member of the Governing Council of the University of Toronto. Ms. Hanington previously served on the boards of Canada Mortgage and Housing Corporation and Symcor, Inc. Ms. Hanington is co-founder and has served as a director of Jack.org, a Canadian youth mental health charity since 2010 and is the recipient of the Meritorious Service Cross from the office of the Governor General for her work with the organization. Ms. Hanington was named by the Women’s Executive Network (WXN) as one of Canada’s Top 100 Most Powerful Women three times in a row, from 2007 to 2009 and was inducted into the WXN Hall of Fame in 2010. Ms. Hanington is a licensed professional engineer with a B.A.Sc. from University of Waterloo, an MBA from the Rotman School of Management, University of Toronto, and holds the ICD.D designation.


 

Nominee
Director Since
Equity Holdings
Kelley Irwin, B.A.Math, C.Dir
Pickering, Ontario
Age - 59
New Nominee
 
Ms. Irwin is a Chief Information Officer (CIO) and a C.Dir certified Chartered Director and currently serves as the CIO for the Electrical Safety Authority for the Province of Ontario.  Ms. Irwin is a seasoned executive with experience leading global technology teams.  Ms. Irwin started her career at Sun Life Financial and has held executive roles at Sun Life Financial, TD Bank, Economical Insurance, and its subsidiary, Sonnet Insurance, and the Electrical Safety Authority.  Ms. Irwin is a cyber advocate and is active in public forums on cyber-security. Ms. Irwin currently serves as a Director on the Board of Directors of Pro-Demnity, a professional liability insurer to architectural practices in the Province of Ontario. Ms. Irwin holds a BA in Math from the University of Western Ontario, a Computer Sciences Diploma from Fanshawe College, a Cyber-Security Certificate from the University of Washington and has completed executive education at the Harvard Kennedy School.

10



Nominee
Director Since
Equity Holdings
Dennis Maple, B.Sc.
Malvern, Pennsylvania, U.S.A.
Age – 62
Chair – Nominating Committee
Member – Compensation Committee

2021 AGM Votes in Favour: 97.55%
2017
DSUs                                        22,569
 
Mr. Maple is currently President and CEO of Goddard Systems, Inc., which oversees the operation of more than 500 premium early childhood education schools across the United States. Between January 2014 and August 2019, Mr. Maple was the President of First Student, Inc., a subsidiary of United Kingdom based publicly-traded First Group plc. First Group plc is the leading transport operator in the United Kingdom and North America, providing solutions encompassing student bus transportation and public rail. Mr. Maple’s portfolio at First Student included 57,000 employees focused on providing more than 5.5 million passenger journeys daily across the US and Canada. Prior to serving as President of First Group, from 2006 to January 2014, Mr. Maple was President of Aramark Education where he had responsibility for more than 15,000 employees serving more than 4,500 US schools with food preparation, facilities management and related services. Prior to his role as President of Aramark Education, from 2003 to 2006, Mr. Maple held senior executive management positions at Aramark. Prior to serving in an executive role at Aramark, from 1994 to 2003, Mr. Maple served as an Area Vice President at Coors Brewing and in several other management roles. Prior to 1994, Mr. Maple held roles at Kraft-General Foods, PepsiCola and The Quaker Oats Company. Mr. Maple has a Bachelor of Science, Business Administration, Accounting from the University of Tennessee. Mr. Maple has served on numerous charitable and community-based boards and has been an active participant in organizations supporting primary and secondary schools and communities across North America.


 
Nominee
Director Since
Equity Holdings
Chris Muntwyler
Baech, Switzerland
Age – 69
Member – Governance Committee
Member – Compensation Committee

2021 AGM Votes in Favour: 99.87%
2020
DSUs                                          6,861
 
 
Mr. Muntwyler has significant international experience in the transportation, logistics and technology sectors. Having previously held various senior executive positions at SwissAir and the positions of Chief Executive of DHL Express (UK) Limited and Managing Director (Switzerland, Germany and Central Europe) at DHL Express, he is now a management consultant through his business, Conlogic AG, specializing in strategic development, leadership guidance and customer orientation and process automation. Mr. Muntwyler spent 10 years in the DHL Express organization following a 27-year career with SwissAir. Mr. Muntwyler currently serves as a non-executive director on the board of Austrian Post (Vienna:POST). Mr. Muntwyler previously served as a non-executive director on the board of National Express Group PLC in the United Kingdom (LSE:NEX) from 2011 to 2020 and as a director of Panalpina World Transport (Holding) Ltd. from 2010 to 2018. During the period of 2007 and 2008, Mr. Muntywler served as a member of the President’s Committee on the United Kingdom’s Confederation of British Industry. During his professional career, Mr. Muntwyler has lived and worked in Switzerland, Sweden, the United States, Germany and the United Kingdom.

11


 
Nominee
Director Since
Equity Holdings
Jane O’Hagan, B.A. (Hons.), ICD.D
Calgary, Alberta, Canada
Age – 58
Chair – Governance Committee
Member – Compensation Committee

2021 AGM Votes in Favour: 99.86%
2014
DSUs                                        52,481
 
Ms. O’Hagan is a corporate director with over 20 years experience in the transportation and logistics sectors. From 2010 until 2014, Ms. O’Hagan was the Executive Vice President and Chief Marketing Officer of Canadian Pacific Railway Limited. Ms. O’Hagan also held various roles at CP including Senior Vice President, Strategy and Yield, Vice President, Strategy and External Affairs and Assistant Vice President, Strategy and Research. Ms. O’Hagan also serves as a director of USD Partners GP LCC, the general partner of USD Partners LP (NYSE:USDP), an acquirer, developer and operator of energy-related rail terminals and other complementary mid-stream assets, where Ms. O’Hagan serves as the Chair of USD Partners GP LLC board’s conflicts committee and as a member of the audit committee. From 2018 until its acquisition in 2021, Ms. O’Hagan was a member of the board of Pinnacle Renewable Holdings (TSX:PL), a supplier of industrial wood pellets based in Richmond, BC where she also served as a member of the audit and risk committees. Ms. O’Hagan has a Bachelor of Arts (Hons.) and a Bachelor of Administrative and Commercial Studies from the University of Western Ontario (London, Ontario, Canada) and has completed graduate studies in Program and Policy Studies from the University of Western Ontario. In December 2012, Ms. O’Hagan was named one of Canada’s Top 100 Most Powerful Women by the Women’s Executive Network. Ms. O’Hagan is also a holder of the ICD.D designation from the Institute of Corporate Directors, which she achieved in June 2016 and earned the CERT Certificate in Cyber Risk Oversight issued by Carnegie Mellon University and the National Association of Corporate Directors in February 2018. 


 
Nominee
Director Since
Equity Holdings
Edward J. Ryan, B.A.
Fort Washington, Pennsylvania, U.S.A.
Age – 53
Chief Executive Officer

2021 AGM Votes in Favour: 99.81%
2014
RSUs                                                     228,963
PSUs                                                                       438,331
Stock Options                                         191,328
 
       
Mr. Ryan is Descartes’ Chief Executive Officer, having been appointed to that position in November 2013. Since 2000, Mr. Ryan has occupied various senior management positions within Descartes, with particular focus on the Corporation’s network and recurring business. Prior to his appointment as Chief Executive Officer, Mr. Ryan served as the Corporation’s Chief Commercial Officer (2011-2013), Executive Vice President, Global Field Operations (2007-2011), General Manager, Global Logistics Network (2004-2007) and Vice President, Sales (2000-2004). Mr. Ryan first joined Descartes in February 2000 in connection with the Corporation’s acquisition of E-Transport Incorporated. Mr. Ryan has a Bachelor of Arts from Franklin and Marshall College in Lancaster, Pennsylvania, U.S.A.

12


 
Nominee
Director Since
Equity Holdings
John J. Walker, B.Sc., C.P.A., C.G.M.A
Wyckoff, New Jersey, U.S.A.
Age – 69
Chair – Audit Committee
Member – Governance Committee

2021 AGM Votes in Favour: 99.69%
2011
Common Shares                                          4,500
DSUs                                                                                 67,694
 
Mr. Walker is a corporate director and a Certified Public Accountant and a Chartered Global Management Accountant with 37 years overall financial and executive management experience, including twenty-one years of experience as a Chief Financial Officer with both public and private companies. Mr. Walker served as Chief Financial Officer, and Senior Vice President of Bowne & Company, a New York Stock Exchange-listed provider of services to help companies produce and manage their shareholder, investor and marketing & business communications, from 2006 until its acquisition by R.R. Donnelley & Sons in 2010. Prior to Bowne & Company, from 1988 to 2006, Mr. Walker was an executive with Loews Cineplex Entertainment Corporation a motion picture theatre exhibition chain, including sixteen years as Chief Financial Officer. Prior thereto, Mr. Walker served for six years as Controller and Principal Accounting Officer of Corporate Property Investors, then one of the largest real estate investment trusts in the United States. Mr. Walker also served for six years as Treasurer and Assistant Corporate Controller of Princess Hotels International a company involved in the ownership and operation of luxury resort hotels, real estate and timesharing developments. Since October 2021 to the present, Mr. Walker is a member of the Board of Schultze Special Purpose Acquisition Corp. II (Nasdaq: SAMAU, SAMA, SAMAW) where he is Chair of the Audit Committee and also serves on the Nominating and Compensation Committees. Mr. Walker started his career in the New York office of then-Price Waterhouse. Mr. Walker is a member of the American Institute of Certified Public Accountants and the New York State Society of CPAs.



Skill Set and Experience of Proposed Director Nominees
The Corporate Governance Committee uses the following categories of skills and experience to assess the overall strength and diversity of the group of proposed non-executive director nominees to the Board.

 
Senior Executive Leadership
Other Public Company Board Experience
Risk and Compliance Management
Financing
Financial Expert
(for Audit Committee Purposes)
Strategic Planning
M&A
Human Resources / Compensation
Corporate Governance
International Business Operations and Sales and Marketing
Technology / IT Industry
Transportation and Logistics Industry
Deepak Chopra
Deborah Close
 
   
 
 
 
Eric A. Demirian
 
Sandra Hanington
   
 
   
Kelley Irwin
 
   
   
 
Dennis Maple
 
 
 
 
Chris Muntwyler
   
Jane O’Hagan
   
 
John J. Walker
 
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Board Independence
National Policy 58-201 – Corporate Governance Guidelines recommends that boards of directors of reporting issuers be composed of a majority of independent directors. The Board is currently composed of a majority of independent directors with seven of the eight current directors being independent. Of the ten nominees standing for election at the Meeting, all are independent with the exception of Mr. Ryan, the CEO of the Corporation.
Independent Chair of the Board
Mr. Demirian, an independent director, is the Chair of the Board, and is responsible for, among other things, providing leadership to ensure that the Board functions independently of Management and non-independent directors and calling, where necessary, the holding of special meetings of the Board, non-Management directors or independent directors.
Meetings of Independent Directors
The independent directors meet without management at every board meeting, including special meetings. The various committees of the Board also hold in-camera sessions of the independent directors at the conclusion of every committee meeting, during which management is not present. The Board met eleven (11) times during fiscal 2022, and at each meeting held an in-camera session without members of management present and has met two further times between February 1, 2022 and April 29, 2022, again holding an in-camera session at each such meeting without management present.
Director Service on Other Boards
Currently, the following proposed director nominees serve on the following boards of other public companies:

Director
Public Company Board Membership
Deepak Chopra
Celestica (TSX:CLS)
The North West Company (TSX:NWC)
SunLife Financial (TSX:SLF)
 
Deb Close
Inter Pipeline Ltd. (listed debt securities)
Eric A. Demirian
Enghouse Systems Ltd. (TSX:ENGH)
Imax Corporation (NYSE:IMAX)
 
Sandra Hanington
Extendicare Inc. (TSX:EXE)
Aimia Inc. (TSX:AIM)
 
Chris Muntwyler
Austrian Post (Vienna:POST)
Jane O’Hagan
USD Partners LP (NYSE:USDP)
John Walker
SCHULTZE Special Purpose Acquisition Corp II (Nasdaq: SAMUA, SAMA,  SAMAW)
14

Director Meetings and Attendance
The Board is committed to scheduling regular meetings of the Board and its committees and encouraging attendance by applicable directors and committee members to ensure the Board Mandate is fulfilled. The Board and its committees held the following number of meetings since January 31, 2021:

 
Year ended January 31, 2022
February 1, 2022 – April 29, 2022
Total
Board
11
2
13
Audit Committee
7
2
9
Compensation Committee
5
2
7
Corporate Governance Committee
5
2
7
Nominating Committee
7
2
9

The attendance of each of the current directors at such meetings was as follows:

Director
Board Meetings Attended
Audit Committee Meetings Attended
Compensation Committee Meetings Attended
Corporate Governance Committee Meetings Attended
Nominating Committee Meetings Attended
Deepak Chopra1
13 of 13
6 of 6
   
7 of 7
Deborah Close2
13 of 13
3 of 3
7 of 7
 
7 of 7
Eric A. Demirian
13 of 13
 9 of 9
 
7 of 7
 
Dennis Maple
13 of 13
 
7 of 7
 
9 of 9
Chris Muntwyler3
13 of 13
 
5 of 5
5 of 5
 
Jane O’Hagan4
13 of 13
 
7 of 7
7 of 7
2 of 2
Edward J. Ryan
13 of 13
       
John J. Walker5
13 of 13
9 of 9
 
7 of 7
2 of 2
1 Deepak Chopra joined the Audit Committee and Nominating Committee of the Board as of June 3, 2021 and his attendance reflects meetings held after that date.
2 Deborah Close moved from the Audit Committee to the Nominating Committee of the Board as of June 3, 2021 and her attendance reflects meetings held both prior to and after that date, as applicable.
3 Chris Muntwyler joined the Compensation Committee and Corporate Governance Committee of the Board as of June 3, 2021 and his attendance reflects meetings held after that date.
4 Jane O’Hagan moved off of the Nominating Committee as of June 3, 2021 and her attendance reflects meetings held prior to that date.
5 John Walker moved off of the Nominating Committee as of June 3, 2021 and his attendance reflects meetings held prior to that date.
Director Tenure, Age and Board Renewal
The Corporation does not have director term limits or a formal retirement policy. In considering its approach to these topics, the Board of Directors believes term limits and retirement policies may indiscriminately eliminate both high and low performing directors as well as directors with unique and critical skill sets based solely on tenure or age. Instead, the Board:


1.
Has a process of rigorous annual director peer evaluations that allow the Chair of the Board (or in the case of the evaluation of the Chair of the Board, the Chair of the Corporate Governance Committee) to have a clear understanding of relative director contribution, skillset and expertise, so that an appropriate level of director turnover can be achieved by having one or more directors not stand for re-election at appropriate times;

2.
Maintains a director skill set and experience matrix to ensure that, in choosing director candidates, it is focused appropriately on skills and experience critical to the Board’s responsibilities, including assessing and providing input on the Corporation’s strategic and operating activities; and
15



3.
Provides clear disclosure in the Corporation’s management information circular of director tenure and age and an explanation of how the Corporation’s approach ensures diversity of skills, experience, background and gender and an appropriate level of turnover.
The Board strives to maintain a balance of experience and familiarity with the business and operations of the Corporation with fresh perspectives, as reflected by the following chart which summarizes the tenure composition of the current Board, including Ed Ryan as CEO and a member of the Board.
 
 
The average tenure of the current directors of the Corporation is 6.75 years and the average age is 62.5 years. If each of the proposed nominees are elected the average tenure of the directors following the Meeting will be 5.4 years and the average age will be 61.5 years.

More than 50% of the Board has “turned-over” over the past eight years and during that period five individuals have joined the Board and four individuals have retired from the Board. If each of the proposed nominees are elected, that will result in seven new board members having joined the Board in the past eight years and five new board members having joined the Board in the past five years.
Nomination of Directors
The Nominating Committee is responsible for identifying and recruiting new candidates for nomination to the Board. The Nominating Committee, on at least an annual basis, reviews the competencies and skills that the Board as a whole should possess as well as the current strengths, skills and experience represented by each current director in light of the objectives, priorities, strategic direction and areas of focus of the Corporation. The Nominating Committee assesses potential candidates for nomination to the Board based on a particular candidate’s skills, experience, background and ability to commit and fulfill their duties as a director. The Nominating Committee also considers the Corporation’s policy with respect to diversity and the Corporation’s current needs after taking into consideration the current composition of the Board.
During fiscal 2022, the Nominating Committee undertook a process to assess the overall composition of the Board and to identify areas of competency, experience and background that may be beneficial to the Board on a go-forward basis. As a result of that process, the Board instructed the Nominating Committee to commence a search to identify potential new candidates for future consideration as additions to the Board. That search has culminated with the addition of two new proposed nominees to the Board, as set out in this Circular.
16


Orientation of New Directors
Responsibility for orientation of new directors is assigned by the Board to the Corporate Governance Committee. In this regard, the Corporate Governance Committee’s duties include ensuring the adequacy of the orientation and education program for new members of the Board. The Corporate Governance Committee reviews this program on an annual basis.
When a new director joins the Board, the new director’s orientation program considers the new director’s background and skills as well as the new director’s contemplated committee involvement. The orientation program is designed to introduce the new director to the business and to the Corporation’s expectations of directors. New directors have the opportunity to meet with the Chair of the Board, the CEO, the President and Chief Operating Officer (the “President and COO”), the Chief Financial Officer (the “CFO”) and the Corporation’s General Counsel, in addition to other senior members of Management. The Corporation’s General Counsel also reviews with each new member: (i) certain information regarding the Corporation, including the role of the Board and its committees and the Corporation’s corporate history; (ii) certain key documents of the Corporation, including the Corporation’s Code of Business Conduct and Ethics (the “Code of Conduct”), the Corporation’s Corporate Governance Framework, the Corporation’s policy with respect to diversity, Insider Trading Policy, Disclosure Policy, Risk Management Policy, Board Mandate, committee charters and position descriptions; and (iii) the legal obligations of a director of the Corporation. The Corporation’s General Counsel includes the Chair of the Board in this orientation process to assist independent directors with enquiries and information relating to such independent director’s role on the Board.
Continuing Education
The Corporate Governance Committee is responsible for arranging continuing education for directors in order to ensure that directors acquire and maintain skills and knowledge relevant to the performance of their duties as directors. In addition to external continuing education sessions attended by Board members, director education sessions, which are presented by Management or external consultants, are generally scheduled to coincide with the Corporation’s regular quarterly Board meetings to extend the Board’s knowledge of the Corporation and its operations and topics that the Corporate Governance Committee identifies as relevant to those operations. Sessions conducted for the Board in fiscal 2022 included the following:
Date
Topic
Description
Director Attendance
March 2, 2021
ESG and Emerging Themes in Corporate Governance
 
The Board received a presentation from the Corporation’s external legal counsel on the topic of key developments in the area of ESG and corporate governance including diversity and information security risk.
All directors
 
March 2, 2021
Data Privacy
The Board received a presentation from the Corporation’s EVP Product Management and its Senior Legal Counsel on the overall data privacy landscape faced by the Corporation in its operations and the approach taken by the Corporation to compliance with its data privacy obligations
All directors
June 1, 2021
Capital Markets Overview
The Board received a presentation from a prominent North American investment banking firm providing an overview of current trends and developments in capital markets, including trends with tech companies, SPACs, broader M&A activity and ESG themes.
All directors
 

17


Date
Topic
Description
Director Attendance
Sept 7, 2021
Current Trends in Transportation and Logistics
The Board received a presentation from an economist/author/consultant in the field of transportation and logistics covering emerging trends in the field of transportation and logistics particularly as concerning global supply chains.
 
All directors
 
Nov 30, 2021
Review of Overall Cyber-Security Landscape
The Board received a presentation from the Corporation’s SVP Information Security providing an overview of global developments in the area of cyber-security noting common attack vectors, common vulnerabilities and trends in ransomware.  The presentation including an overview of common defensive strategies and approaches to managing your “attack surface”.
All directors
 

In addition, each of the committees of the Board may schedule education sessions with third party consultants that have been retained by such committees in connection with the fulfillment of the mandate of the committee. Each member of the Board is also eligible for reimbursement of up to $3,000 per fiscal year (Chair of the Board, $5,000) of fees paid by that individual director for enrolment in continuing education courses or programs conducted by third parties or institutions relevant to their role as a director of the Corporation. The Board encourages individual directors to enroll in such programs and advise the Corporate Secretary of the programs they have participated in. The following is a summary of the continuing education undertaken by each of the current non-executive directors during fiscal 2022, each of whom is proposed for re-election at the Meeting, but excluding the two new nominees to the Board:
Director
Continuing Education
Deepak Chopra
Attended various ongoing education courses and presentations provided by outside consulting firms as part of board education sessions at public company boards in the areas of geo-political risks and implications on supply chains, , corporate governance, Environmental, social and governance (“ESG”) matters including Bank of Canada and OSFI’s emerging view of climate change scenarios, accounting and auditing standards including introduction of IFRS 17, structural changes in air-cargo industry, cyber-security including emerging draft disclosure requirements, executive compensation and on the role of board in a crisis such as pandemic management or war. Self-study through business and director journals on emerging trends for boards and directors.
Deborah Close
Attended numerous seminars conducted by the Institute of Corporate Directors, National Association of Corporate Directors and various consulting firms on topics related to the impacts of employees working remotely, the board’s role in social impact initiatives, developments and trends in executive compensation, strategy development related to diversity and inclusion, and ESG considerations impacting corporate governance. Undertook self-study through various publications covering trends pertaining to the role of the board and corporate governance.
Eric A. Demirian
Attended various ongoing continuing education courses provided by outside accounting and consulting firms, including as participant at Audit Committees and Boards of other public companies, in the areas of corporate governance, accounting and financial reporting, cyber-security, human resources and legal matters. In addition, undertook self-study of accounting, and corporate governance topics by reading trade journals and other publications.


18

Director
Continuing Education
Dennis Maple
In his current role as Chairman and CEO Goddard Systems Inc., Mr. Maple routinely designs and leads ongoing operational reviews, assigns and directs presentations from both internal personnel and external consultants. He also assigns, selects and directs advisors in the areas of leadership and team development, succession planning, managing and developing high performers, integration of performance management plans, and he is leading the corporation's evaluation of compensation programs. Additionally, in his current role, Mr. Maple is leading a major corporate IT platform transformation. Mr. Maple is also leading the development of the strategy for a new supply chain management initiative, development of a new corporate franchise development strategy, corporate growth strategy, and the revamping of several major functions including, marketing, communications, HR, and legal / risk. Finally, Mr. Maple is engaged in self-study in a number of areas related to management and corporate governance, including in the areas of “tone from the top” and corporate ethics.
Chris Muntwyler
In his role as CEO of the consulting company Conlogic AG, Mr. Muntwyler  leads and consults in the areas of process and strategy designs in transportation and supply chain management and information technology. As a current board member at Austrian Post he is actively involved in the strategic development of this transportation and supply chain organization in several countries in Europe. He is also actively involved in the remuneration policies and cyber-security strategy of that organization.  He regularly attends further education programs in cyber-security, ESG development, corporate governance and risk management.
Jane O’Hagan
Attended seminars and on-line education in corporate governance matters related to emerging trends, impacts and lessons learned from the pandemic for Canadian and US issuers. Joined the Governance Professionals of Canada and attended virtual and on demand sessions in board oversight and strategy, board effectiveness. committee and director peer assessment and board education. Participated in virtual sessions on cyber-security and privacy governance focusing on risk, threat management and regulatory standards. Attended webinars in ESG to better understand the link between financial and ethical values into strategy, reporting, metrics and disclosure. Undertook a benchmarking review of shareholder engagement best practices among top North American issuers and reviewed board effectiveness and peer review programs to address policy and disclosure. Completed on-line seminars in Compensation best practices, trends in executive compensation and trends in diversity to help develop practices to improve inclusion and understand proxy advisor standards.
John J. Walker
Completed 46 hours of continuing professional education credits conducted by PWC, Deloitte, EY and KPMG, in the following areas of study: corporate governance and risk management, accounting & financial reporting; ESG emerging trends, SPAC reporting, human capital management, tax, SEC updates and hot topics, internal controls, OECD BEPS 2.0, pandemic response and crisis management, IT data security and data privacy, risk oversight, supply chain and global resilience, and internal audit. In addition, undertook self-study in enterprise-wide risk management and cyber-security risk management, fraud risk, audit committee best practices and hot topics, crisis management, succession planning and talent development and internal audit best practices.
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Majority Voting Policy
The Board has adopted a policy (the “Majority Voting Policy”) whereby, in an uncontested election of directors, any nominee who does not receive a greater number of Common Shares voted in favour of his or her election than Common Shares withheld from voting, must promptly tender his or her resignation to the Chair of the Board, to take effect on acceptance by the Board. The Corporate Governance Committee, or such other committee of the Board as is applicable, will promptly consider such tendered resignation and make a recommendation to the Board to accept such resignation unless there are exceptional circumstances that would support rejection of the resignation. The Board will have 90 days following the date of the applicable annual meeting of shareholders to act on the committee’s recommendation. Following the Board’s decision on the resignation, the Board shall promptly disclose, via press release, its decision whether to accept the director’s resignation offer including the reasons for the Board rejecting the resignation offer, if applicable. The director will not participate in any committee (subject to the terms of the Majority Voting Policy) or Board deliberations on the resignation offer.
Advance Notice Provisions
The Corporation’s by-laws provide for advance notice of nominations of directors (“Advance Notice Provisions”) in circumstances where nominations of persons for election to the Board are made by shareholders other than pursuant to a requisition of a meeting or a shareholder proposal, in each case made pursuant to the provisions of the CBCA. The Advance Notice Provisions fix deadlines by which a shareholder must notify the Corporation of nominations of persons for election to the Board as follows: such notice must be provided to the Corporate Secretary of the Corporation (i) in the case of an annual meeting (including an annual and special meeting) of shareholders, not less than 30 nor more than 65 days prior to the date of the meeting; provided, however, that in the event that the meeting is to be held on a date that is less than 60 days after the date (the “Notice Date”) on which the first public announcement of the date of the meeting was made, notice by the nominating shareholder may be given not later than the close of business (Eastern time) on the tenth day following the Notice Date; and (ii) in the case of a special meeting (which is not also an annual meeting) of shareholders called for the purpose of electing directors (whether or not called for other purposes), not later than the close of business (Eastern time) on the fifteenth day following the day on which the first public announcement of the date of the meeting was made. The Advance Notice Provisions also stipulate that certain information about any proposed nominee and the nominating shareholder be included in such a notice for it to be valid. The purpose of the Advance Notice Provisions is to ensure that all shareholders, including those participating in a meeting by proxy rather than in person, receive adequate prior notice of director nominations, as well as sufficient information concerning the nominees, and can thereby exercise their voting rights in an informed manner. In addition, the Advance Notice Provisions should assist in facilitating an orderly and efficient meeting process. A copy of the Corporation’s by-laws is available on the Corporation’s website at www.descartes.com and on SEDAR at www.sedar.com.
3.
Appointment of Auditors
At the Meeting, the holders of Common Shares will be requested to vote on the re-appointment of KPMG LLP, Chartered Professional Accountants, Licensed Public Accountants, as auditors of the Corporation to hold office until the next annual meeting of shareholders or until a successor is appointed. KPMG LLP have been the auditors of the Corporation since April 16, 2015.
Except where authority to vote in respect of the appointment of auditors is withheld, the persons designated by Management in the enclosed form of proxy intend to vote FOR the re-appointment of KPMG LLP, Chartered Professional Accountants, Licensed Public Accountants, as auditors of the Corporation to hold office until the next annual meeting of shareholders or until a successor is appointed. A simple majority of the applicable votes cast at the Meeting, whether in person or by proxy, will constitute approval of the resolution to re-appoint KPMG LLP, Chartered
20


Professional Accountants, Licensed Public Accountants, as auditors of the Corporation to hold office until the next annual meeting of shareholders or until a successor is appointed.
Audit Fees
For the fiscal year ended January 31, 2022 (“fiscal 2022”) and the fiscal year ended January 31, 2021 (“fiscal 2021”), the Corporation incurred the approximate fees set out below for the services of KPMG LLP. Fees billed in Canadian dollars are presented in U.S. dollars using the Bank of Canada indicative foreign exchange rate on the last business day of the applicable fiscal period.
The following table sets forth the fees we have incurred in using the services of KPMG LLP in respect of the applicable fiscal years:
Fiscal Year Ended
Audit Fees
Audit-Related Fees
Tax Fees
All Other Fees
Total
January 31, 2022
$681,657
$2,430
Nil
Nil
$684,087
January 31, 2021
$651,748
$2,430
Nil
Nil
$654,178

Audit Fees” consist of fees and related disbursements for professional services rendered for the audit of the Corporation’s annual consolidated financial statements, reviews of the Corporation’s interim consolidated financial statements, services provided in connection with regulatory filings and statutory audits of certain of the Corporation’s foreign subsidiaries.
            Audit-Related Fees” consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of the Corporation’s financial statements and are not reported as Audit Fees.
4.
Approval of Amendments to the Performance and Restricted Share Unit Plan
On April 30, 2012, the Board adopted the Corporation’s Performance and Restricted Share Unit Plan (as subsequently amended and restated, the “PRSU Plan”). For a description of the PRSU Plan, as it is formulated on the date hereof, please see the section entitled “Security-based Compensation Plans – PRSU Plan”. As the PRSU Plan provides that no new awards may be made thereunder after April 30th, 2022 (the “Plan Expiry Date”), being the tenth anniversary of the PRSU Plan’s effective date, on April 26th, 2022, the Board approved certain amendments to the PRSU Plan (the “Plan Amendments”), including removal of the Plan Expiry Date, subject to shareholder approval and acceptance by the Toronto Stock Exchange (the “TSX”). A copy of the PRSU Plan, reflecting the Plan Amendments, is attached hereto as Schedule “D”.

In accordance with the policies of the TSX, the Corporation is required to submit the Plan Amendments for approval by the Corporation’s shareholders at the Meeting. If the Plan Amendments are approved, the maximum number of Common Shares currently available for issuance under the PRSU Plan will not change and will remain at 2,587,500 Common Shares, representing 3.05% of the issued and outstanding Common Shares as at April 29th, 2022, and will continue to be available for issuance under the PRSU Plan.
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Housekeeping Amendments
The Plan Amendments include certain amendments of a housekeeping nature, including to: (i) replace certain references to Affiliates to be references to Subsidiaries and add a definition of such term; (ii) add language to confirm that non-employee directors are not eligible to participate in the PRSU Plan; (iii) update the definitions of Just Cause and Termination Date and make certain other changes to reflect consideration of developments in employment law since the last time the PRSU Plan was amended; and (iv) make clarifications to reflect the intent of certain provisions and otherwise correct certain clerical matters in the PRSU Plan.
Blackout-related Amendments
The Plan Amendments also propose, consistent with market practice for such matters, to introduce a definition for “Blackout Period” and add a provision extending the period for redemption of Restricted Share Units (“RSUs”) and/or Performance Share Units (“PSUs”) (RSUs and PSUs are collectively referred to as “Share Units”) that would otherwise be redeemed or expire during a Blackout Period such that the redemption will occur following completion of the Blackout Period.

Corporate Transactions
The Plan Amendments would also update the concept of Corporate Transaction (as such term is defined under the PRSU Plan) to clarify the situations it is intended to cover and not cover and increase the condition for ownership by joint actors from 20% to being 40%, as follows:

Corporate Transaction” means, whether completed in one or a series of transactions, any (i) Change inof Control, (ii) capital reorganization, (iii) amalgamation, (iv) offer for Common Shares, where the Common Shares subject to the offer, together with the offeror’s Common Shares and Common Shares of any person or Corporation acting jointly or in concert with the offeror, constitute in the aggregate 20% or more of the Common Shares; (v) acquisition by a person of Common Shares such that the Common Shares acquired, together with the person’s Common Shares and Common Shares of any person or corporation acting jointly or in concert with such person, constitute in the aggregate 2040% or more of the Common Shares outstanding immediately after such acquisition, unless another person has previously acquired and continues to hold Common Shares that represent a greater percentage than the first-mentioned person;, (vi) sale of all or substantially all of the assets of the Corporation or any Subsidiary; (viiv) arrangement, plan of arrangement or other scheme or reorganization, or (viii(vi) liquidation of all or substantially all of the consolidated assets of the Corporation or wind-up of the Corporation’s business or significant reorganization of its affairs or the commencement of proceedings for such a liquidation, winding-up or reorganization (except where such reorganization is part of a bona fide reorganization of the Corporation in circumstances where the business of the Corporation is continued and the shareholdings remain substantially the same following the reorganization), or (vii) extraordinary distributions to shareholders, including extraordinary cash dividends, dividends in kind and return of the Corporation of all or substantially all of the consolidated assets of the Corporation; provided that a Corporate Transaction shall exclude: (i) any transaction to which the parties are limited to the Corporation and/or any one or more Subsidiaries of the Corporation prior to the time of the transaction, (ii) the completion of a treasury offering of securities of the Corporation or a Subsidiary of the Corporation, or (iii) the dividend or other distribution by the Corporation or one of its Subsidiaries of shares in the capital; of the Corporation.
The application of the term Corporate Transaction, would also be updated to provide that to trigger a Corporate Transaction of the Corporation where the surviving, successor or acquiring entity does not assume the outstanding Share Units or substitute similar share units for the outstanding Share Units, that a further condition be added to such trigger such that it will require that the surviving, successor or acquiring entity be listed on a “Recognized Stock Exchange” with a “Market Capitalization”
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in excess of the Corporation’s “Market Capitalization”. See Schedule “D” for the meaning of such defined terms.
Amendment Provisions
As noted above, the Plan Amendments would remove the Plan Expiry Date, which provision was included in the amendment section of the PRSU Plan.

The Plan Amendments would also propose, consistent with TSX requirements, to further update the amendment section of the PRSU Plan to clarify when shareholder approval is required or not required for amendments, what level of such shareholder approval is required, and the process for amending outstanding Share Units, as follows:

No new awards may be made under the Plan after the 10th anniversary of the Effective Date. The Board may amend, suspend or terminate the Plan, or any portion thereof or, subject to the consent of the holder as required under the final paragraph of this Section 6.2, any outstanding Share Units granted thereunder, at any time, and in whole or in part, subject to those provisions of applicable law (including, without limitation, the rules, regulations and policies of the Toronto Stock Exchange), if any, that require the approval of shareholders or any governmental or regulatory body. The, provided that, the Board may make any amendments to the Plannot, without seeking shareholderthe approval except the following amendments for which Shareholder approval will be requiredof the holders of a majority of the Common Shares present and voting in person or by proxy at a meeting of Shareholders, make:


(a)
amendments to the number of Common Shares issuable under the Plan, including an increase to a fixed maximum number of Common Shares or a change from a fixed maximum number of Common Shares to a fixed maximum percentage;


(b)
any amendment expanding the categories of Eligible Person which would have the potential of broadening or increasing insider participation, including, without limitation, any amendment to the categories of Eligible Person which would introduce or re-introduce a member of the Board who is not also an employee or officer of a Participating Companypermitting the introduction of non-employee members of the Board;


(c)
any amendment extending the term of a Share Unit or any rights pursuant thereto held by an insider beyond its original expiry date;


(d)
the addition of any other provision which results in participants receiving Common Shares while no cash consideration is received by the Company;


(e)
any amendment that would increase or remove the insider participation limits set out in Section 1.4(d);


(f)
(e) any amendment which would permit awards granted under the Plan to be transferable or assignable other than for normal estate settlement purposes;


(g)
(f) any amendments to the foregoing subsections listed in this section 6.2.

Without limiting the generality of the foregoing pre-amble, but subject to the foregoing listed subsections, the Board may, without shareholder approval, make:

(h)            amendments that are of a “housekeeping” nature; and
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(i)
(g) amendments required to be approved by shareholdersto the terms and conditions of this Plan necessary to ensure that this Plan complies with the provisions of applicable law (including, without limitation, the rules, regulations and policies of the Toronto Stock Exchange);


(j)
amendments to the provisions of this Plan respecting administration of this Plan and eligibility for participation under this Plan;


(k)
amendments to the provisions of this Plan respecting the terms and conditions on which Share Units may be granted to Eligible Persons pursuant to this Plan; and


(l)
any other amendments not requiring shareholder approval under the provisions of applicable law (including, without limitation, the rules, regulations and policies of the Toronto Stock Exchange and Nasdaq Stock Marketstock market).

If this Plan is terminated, the provisions of this Plan and any administrative guidelines, and other rules adopted by the Board and in force at the time of this Plan, will continue in effect as long as a Share Unit or any rights pursuant thereto remain outstanding.  However, notwithstanding the termination of the Plan, the Board may make any amendments to the Plan or the Share Units it would be entitled to make if the Plan were still in effect.

TheSubject to the foregoing, the Board may amend or modify any outstanding Share Unit in any manner to the extent that the Board would have had the authority to initially grant the award as so modified or amended, provided that, where such amendment or modification is adverse to the holder, the consent of the holder is required to effect such amendment or modification.

The TSX has conditionally approved the Plan Amendments, subject to approval of the Plan Amendments by a majority of votes cast at the Meeting. As a result, at the Meeting, shareholders will be asked to consider and, if thought advisable, to pass the ordinary resolution that follows below (the “Plan Amendments Resolution”), approving the Plan Amendments. The Board believes that approval of the PRSU Plan Amendments Resolution is in the best interests of the Corporation and unanimously recommends that shareholders vote FOR the approval of the Plan Amendments Resolution. If the Plan Amendments Resolution is not passed at the Meeting, the PRSU Plan will not be amended and no new awards may be made thereunder.

WHEREAS:


1.
The Board approved on April 26th, 2022 certain amendments to the Performance and Restricted Share Unit Plan (the “PRSU Plan”) as described in the management information circular of the Corporation for its annual meeting of shareholders to be held on June 16th, 2022, in order to (collectively, the “Amendments”):


a.
make certain housekeeping amendments;


b.
extend the redemption period for holders of awards under the PSRU Plan otherwise prevented from redeeming awards due to blackout periods;


c.
update the concept of Corporate Transaction (as such term is defined under the PRSU Plan) and narrow the circumstances where Corporate Transactions trigger consequences under the PRSU Plan; and


d.
adopt new amendment provisions, including to remove the provision that no new awards may be made under the PRSU Plan after April 30th, 2022
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NOW THEREFORE BE IT RESOLVED THAT:


1.
The PRSU Plan be amended by the Amendments and approved, substantially in the form appended to the management information circular of the Corporation for its annual meeting of shareholders to be held in 2022; and


2.
Any director or officer of the Corporation be and is hereby authorized to do such things and to sign, execute and deliver all documents and instruments that such director and officer may, in his or her discretion, determine to be necessary in order to give full effect to the intent and purpose of this resolution.

In the absence of a contrary instruction, the persons designated by Management in the enclosed form of proxy intend to vote FOR the Plan Amendments Resolution.
5.
Advisory Vote on Executive Compensation (Say-On-Pay Vote)
The Board has determined to provide the Corporation’s shareholders with an advisory vote on the Corporation’s approach to executive compensation. While this “Say-on-Pay” vote is non-binding, it gives shareholders an opportunity to provide important input to the Board. Shareholders will be asked at the Meeting to consider, and, if deemed advisable, adopt the following resolution (the “Say-On-Pay Resolution”):

“BE IT RESOLVED, on an advisory basis and not to diminish the role and responsibilities of the Board, that the shareholders accept the approach to executive compensation disclosed in the Corporation’s Management Information Circular dated April 29, 2022.”

Approval of the Say-On-Pay Resolution will require an affirmative vote of a majority of the votes cast by holders of Common Shares present or represented by proxy at the Meeting.
In the absence of a contrary instruction, the persons designated by Management in the enclosed form of proxy intend to vote FOR the Say-On-Pay Resolution.

As this is an advisory vote, the results will not be binding upon the Board. However, the Board of Directors will take the results of the vote into account, as it deems appropriate, when considering future compensation policies, procedures and decisions and in determining whether to increase its current engagement practices with shareholders on compensation and related matters. The Corporation will disclose the results of the shareholder advisory vote as part of its report of voting results for the Meeting.
At the previous year’s annual meeting of shareholders held on June 3rd, 2021, 95.75% of the votes cast by shareholders were cast in favour of the “Say-on-Pay” resolution.
6.
Other Matters
The Corporation knows of no other matters to be submitted to the shareholders at the Meeting. If any other matters properly come before the Meeting, it is the intention of the persons designated by Management in the enclosed form of proxy to vote the Common Shares they represent in accordance with their judgment on such matters.

STATEMENT OF CORPORATE GOVERNANCE PRACTICES
The Board and Management consider good corporate governance to be central to the effective operation of the Corporation. Both Management and the Board, with the assistance of the Corporate
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Governance Committee, have devoted significant attention and resources to ensuring that the Corporation’s system of corporate governance meets or exceeds applicable legal and stock exchange requirements, and reflects consideration of best practices in corporate governance and their application to the Corporation’s circumstances.

The Corporation is subject to the requirements of the Canadian Securities Administrators National Instrument 58-101 – Disclosure of Corporate Governance Practices; National Policy 58-201 – Corporate Governance Guidelines; and National Instrument 52-110 – Audit Committees (the “Audit Committee National Instrument”).

The Corporation is also subject to certain requirements of the U.S. Sarbanes-Oxley Act and requirements of the TSX and NASDAQ and comparable requirements under Canadian provincial securities legislation, including those relating to the certification of financial and other information by the Corporation’s CEO and CFO; oversight of the Corporation’s external auditors; enhanced independence criteria for audit committee members; the pre-approval of permissible non-audit services to be performed by the Corporation’s external auditors; and the establishment of procedures for the anonymous submission of employee complaints regarding the Corporation’s accounting practices (commonly known as whistle-blower procedures).

The Board and Management believe that the Corporation has a sound governance structure in place for both Management and the Board, and a comprehensive system of internal controls designed to ensure reliability of financial records. These structures and systems are reviewed and assessed on a regular basis considering developments in both Canada and the United States relating to corporate governance, accountability and disclosure.
Mandate of the Board of Directors
The Board is responsible for the overall stewardship of the Corporation. The Board discharges this responsibility directly and through delegation of specific responsibilities to committees of the Board,
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the Chair of the Board, and the executive officers of the Corporation, all as more particularly described in the Board Mandate attached to this Circular as Schedule “A”.
Risk Oversight
The Board Mandate, among other things, describes the Board’s responsibility for oversight of risks impacting the Corporation. The Board Mandate provides that the Board will provide regular oversight of the Corporation’s risk management practices, either directly or through its committees, and, with the assistance of its committees, oversee Management’s assessment, management and monitoring of key risks affecting the Corporation and the Corporation’s risk management/monitoring systems. The Board Mandate also provides that the Board will, with the assistance of the Audit Committee, review the controls relating to financial information and the integrity of the Corporation’s financial information and systems, the effectiveness of internal controls and Management’s reports on those controls.

Consistent with the Board Mandate, the Corporation has adopted a risk management policy that is reviewed and updated as necessary on an annual basis (the “Risk Management Policy”) that establishes principles to guide Management’s implementation and operation of the Corporation’s risk management program, which are based on the International Standards Organization’s ISO 31000:2009, Risk management – Principles and guidelines. The Risk Management Policy also establishes a framework for risk management (the “Risk Management Framework”) that includes risk identification, risk assessment/measurement, risk response and control activities, risk reporting and communication, risk monitoring and risk reduction/mitigation.

Each fiscal quarter, Management reports directly to the Board and Audit Committee on existing and emerging risks impacting the Corporation’s business risk profile, including human-resource based risk, regulatory changes, litigation, changes in customer relationships, information technology risks, cyber-security risks, product development, credit and liquidity risks, market risks and other business risks, including those more particularly identified in the “Certain Factors That May Affect Future Results” section of the Corporation’s periodic financial reports. Management also reports to the Audit Committee on an ongoing basis on Management’s risk management activities consistent with the Risk Management Framework. In addition, on an ongoing basis the Board and Management consider short- and long-term risks in developing the Corporation’s strategic plans. If new or emerging risks are identified, the Board considers what, if any, amendments to the Corporation’s existing policies and procedures are appropriate to establish compensating controls to manage or mitigate the risk. On an ongoing basis, the Corporate Governance Committee and Audit Committee review the Corporation’s Risk Management Policy and Risk Management Framework to assist the Board in evaluating the framework’s effectiveness.

Although the Board as a whole has responsibility for risk oversight, the Board exercises its oversight of the Corporation’s risk management policies and practices primarily through its committees, which in turn report back to the Board on risk oversight.

The Audit Committee is responsible for overseeing risks related to our accounting, financial statements, financial reporting process and internal controls related to financial reporting. The Board has also assigned to the Audit Committee primary responsibility for overall enterprise risk management and oversight of the Corporation’s risk management policies, except in those areas where other committees have express responsibility for specific categories of risk, for example, the Compensation Committee in the area of compensation-related risk. As discussed above, the Audit Committee is also responsible for receiving reports from Management on an ongoing basis related to the risk management activities undertaken pursuant to the Risk Management Framework.

Within its oversight overall enterprise risk management, the Audit Committee is also responsible for oversight of the Corporation’s approach to cyber-security risk management. On a quarterly basis, the Audit Committee receives an update from Management on the Corporation’s ongoing approach to cyber-
27


security risk management and on a periodic basis the Audit Committee receives reports from third party consultants related to reviews of the Corporation’s level of maturity in its cyber-security risk management practices. As part of its annual review of the Corporation’s commercial insurance program, the Audit Committee also reviews the level of cyber-security specific insurance maintained by the Corporation.

The Board delegates to the Compensation Committee the responsibility to provide risk oversight of the Corporation’s compensation policies and practices, and to identify and mitigate compensation policies and practices that could encourage inappropriate or excessive risks by members of senior Management. See “Compensation – Compensation Discussion and Analysis – Compensation-related Risks”.

The Corporate Governance Committee is responsible for monitoring risk and potential risks associated with the effectiveness of the Corporation’s corporate governance framework and for monitoring risks in the areas of environmental and social governance.

The Nominating Committee is delegated responsibility to monitor risks related to overall Board composition and director succession.

The Board reviews the composition of its committees at least annually, typically following the annual meeting of the Corporation’s shareholders, to ensure that the committees are appropriately composed to discharge each committee’s respective responsibilities. In assigning committee responsibilities among its members, the Board considers factors including the applicable restrictions and requirements of committee composition established by law and regulation; the qualifications and knowledge of the individual members eligible to serve on committees; and the relative distribution of committee responsibilities to each individual member.
ESG Oversight
Although the Board has, through its oversight of the overall governance framework under which the Corporation has operated, exercised oversight over many of the areas that now fall within the broad concepts of environmental, social and governance (“ESG”) initiatives, the Board has recently updated its Board Mandate to expressly recognize the role of the Board in reviewing the Corporation’s approach to ESG on a regular basis.  In addition, specific responsibility for oversight of the Corporation’s ESG initiatives has been delegated by the Board to its Corporate Governance Committee and, similarly, the committee charter for the Corporate Governance Committee has been updated to expressly identify the Committee’s role in this area.
For further discussion of the Corporation’s approach to ESG, please see the section below under the heading “Environmental and Social Governance Framework”.
Role of Board in Corporate Strategy
The Board engages in a detailed review and discussion of the Corporation’s short- and long-term strategy on at least an annual basis. The primary areas of focus in such reviews include consideration of forecasted areas of growth, planned investments, corporate development initiatives, capitalization requirements of the Corporation and overall organizational development. In addition to the formally scheduled strategy review sessions, the Board also regularly engages in considering various elements of the Corporation’s strategy as part of each quarterly review of the financial results of the Corporation.
Committee Charters and Position Descriptions
The Board delegates certain responsibilities to the following four committees of the Board: (i) the Audit Committee; (ii) the Compensation Committee; (iii) the Corporate Governance Committee; and (iv)
28


the Nominating Committee. As of April 29, 2022, the following directors serve on the following committees in the following roles:
Current Board Committee Composition

Director
Audit
Compensation
Corporate Governance
Nominating
Deepak Chopra
Member
   
Member
Deborah Close
 
Chair
 
Member
Eric A. Demirian
Member
 
Member
 
Dennis Maple
 
Member
 
Chair
Chris Muntwyler
 
Member
Member
 
Jane O’Hagan
 
Member
Chair
 
John J. Walker
Chair
 
Member
 

In addition to the above, in fiscal 2022, the Chair of the Board also attended all Committee meetings in an ex-officio capacity.

The Board does not currently plan any changes to the above committee composition following the election of each of the proposed nominees to the Board of Directors.

The Board has adopted a written charter for each of these committees. Each committee charter includes a description of the role of the chair of that committee. A description of each committee charter, the committee membership and each committee’s activities in fiscal 2022 is included below in this “Statement of Corporate Governance Practices” section. The committee charters are also available at https://www.descartes.com/who-we-are/investor-relations/corporate-governance or upon request from the Corporate Secretary of the Corporation.

From time to time, the Board may appoint ad hoc committees to assist it in specific matters. Where such ad hoc committees are established, the Board delegates a specific mandate to such ad hoc committee.

The Board has adopted a written position description for the roles of the Chair of the Board and the CEO. The Chair of the Board’s role is described as facilitating the operations and deliberations of the Board and the satisfaction of the Board’s functions and responsibilities under the Board Mandate. The Chair of the Board’s functions and responsibilities include facilitating the functioning of the Board independently of Management, providing independent leadership to the Board, Board management and reviewing Management’s strategic initiatives. The CEO’s role includes having general supervision over the business and affairs of the Corporation, including strategic planning, operational planning and shareholder communication, and leading the implementation of the resolutions and policies of the Board. The position descriptions of the Chair of the Board and the CEO are available at https://www.descartes.com/who-we-are/investor-relations/corporate-governance or upon request from the Corporate Secretary of the Corporation.
Audit Committee
The Audit Committee currently comprises John Walker (Chair), Deepak Chopra and Eric Demirian. Each member of the Audit Committee is independent and financially literate for purposes of the National Instrument 52-110 – Audit Committees, as well as pursuant to the Listing Standards of NASDAQ and U.S. federal securities laws. Item 7.2 of the Corporation’s Annual Information Form dated April 14, 2022, a copy of which is filed on www.sedar.com, contains further disclosure with respect to the Corporation’s Audit Committee. The Board has also determined that John Walker, Deepak Chopra and Eric Demirian are each an “audit committee financial expert” for the purposes of applicable U.S. securities laws and regulations.

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The responsibilities, power and operation of the Audit Committee are set out in its written charter, a copy of which is annexed to the Corporation’s Annual Information Form as filed on www.sedar.com. The Committee reviews its charter for updates on a regular basis.  The Committee’s primary functions are to oversee the accounting and financial reporting practices of the Corporation and the audits of the Corporation’s financial statements. This includes: assisting the Board in fulfilling its responsibilities in reviewing financial disclosures and internal controls over financial reporting; monitoring the system of internal control and risk management; monitoring the adequacy of the Corporation’s computerized information system controls and overall enterprise risk management program including cyber-security risk, monitoring the Corporation’s compliance with applicable laws and regulations; selecting the auditors for shareholder approval; reviewing the qualifications, independence and performance of the auditors; overseeing the internal audit function of the Corporation and approving an annual internal audit plan; reviewing and approving any related-party transactions between the Corporation and any of its directors or executive officers; reviewing and approving the Audit Committee charter; and reviewing the qualifications, independence and performance of the Corporation’s financial management.

In fiscal 2022, the Audit Committee’s activities included the following:
Audit Committee Meetings

The Audit Committee conducted seven committee meetings during the year with all members of the committee present at each of the meetings;

The Corporation’s independent auditors – KPMG – attend each quarterly meeting of the Committee at which the financial results are reviewed, to report on the results of their quarterly reviews of the interim financial statements and the annual audit of the financial statements and annual audit of internal controls over financial reporting;

At each quarterly meeting of the Audit Committee, an in-camera meeting with the independent auditor is conducted without Management present, as well as an in-camera meeting with the head of internal audit without Management present, and an in-camera meeting with the CFO without the other members of Management present; and

At each meeting of the Audit Committee including both the regular quarterly meetings and any of the other ad-hoc meetings held, an in-camera meeting of the members of the Audit committee and other Board members in attendance is conducted without Management present.

Fiscal 2022 Audited Consolidated Financial Statements

Reviewed and discussed with Management and the independent auditor the audited annual consolidated financial statements prepared by Management, and the notes disclosures and management’s discussion and analysis thereon; and

Reviewed and discussed with Management and the independent auditor the results of the audit of the internal control over financial reporting.

Independent Auditor

Reviewed the qualifications, performance and independence of the independent auditor and approved the compensation of the independent auditor;

Reviewed the qualifications and experience of the proposed new lead engagement partner of the independent auditor as required under the partner rotation practices of the independent auditor;

Approved audit and permitted non-audit services to be performed by the independent auditor;

Delegated authority to the Chair of the Audit Committee to approve requests received during the year for audit and permitted non-audit services to be provided by the independent auditor and reviewed and ratified the decisions of the Chair at the next meeting; and

Reviewed the overall scope and plan of the annual audit with the independent auditor and Management.

Financial Reporting
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Reviewed with Management and the independent auditor prior to publication, and recommended for approval by the Board, the interim quarterly financial statements and the annual consolidated financial statements prepared by Management and the notes and management’s discussion and analysis thereon, and the related earnings press release for each quarter;

Compliance

Reviewed the Corporation’s design plans and testing of internal controls over financial reporting in accordance with the COSO 2013 framework;

Reviewed Management’s reports on the effectiveness of internal control over financial reporting and disclosure controls and procedures; and

Reviewed the results of the Audit Committee whistle-blower hotline program.

Risk Oversight

Reviewed results of annual risk assessment survey;

Reviewed the annual fraud risk assessment prepared by management and the controls and procedures designed to monitor and manage fraud risk;

Received regular updates from management and external consultants on approach to cyber-security risk management and mitigation; and

Reviewed the Corporation’s commercial insurance coverage program.

Planning

Reviewed the performance of the CFO, the head of internal audit and senior finance and tax staff; and

Reviewed Management’s annual proposed budget for the Corporation and related planning initiatives.

Internal Audit

Received and reviewed quarterly reports from the internal audit function reporting directly to the Chair of the Audit Committee; and

Reviewed and approved the annual work plan for internal audit.

Equity and Debt Financing

Reviewed certain amendments to the Corporation’s credit facility that were put in place in December 2021 to address certain changes related to the administration of the credit facility.
Compensation Committee
The Compensation Committee currently comprises of Deborah Close (Chair), Chris Muntwyler, Dennis Maple and Jane O’Hagan. Each of the members of the Compensation Committee is an independent director. The responsibilities, powers and operation of the Compensation Committee are set out in its written charter and are described in the section “Compensation – Compensation Committee” included later in this Circular.
Corporate Governance Committee
The Corporate Governance Committee is currently comprised of Jane O’Hagan (Chair), Chris Muntwyler, Eric Demirian and John Walker. Each of the members of the Corporate Governance Committee is an independent director. The responsibilities, powers and operation of the Corporate Governance Committee are set out in its written charter. As described in its charter, the Corporate Governance Committee is responsible for, among other things, assisting the Board in fulfilling its corporate governance oversight responsibilities. In fiscal 2022, the Corporate Governance Committee’s activities included the following:
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Reviewed and recommended for Board approval the Corporation’s corporate governance framework;

Periodically reviewed the Corporation’s corporate governance activities and reported to the Board on these activities at quarterly Board meetings;

Reviewed development of and progress towards ongoing ESG initiatives, and the Corporation’s disclosure relating to those initiatives;

Reviewed and recommended for Board approval the statement of corporate governance practices included in this Circular;

Reviewed the Corporation’s governing documents including the Corporation’s Board Mandate and each of its committee charters;

Reviewed the Code of Conduct and recommended for Board re-approval;

Reviewed the Corporation’s disclosure policy;

Reviewed the Corporation’s director orientation program;

Oversaw the ongoing director education program and the selection of topics for director education sessions;

Reviewed the Corporation’s directors’ and officers’ liability insurance program and recommended to Management that certain enhancements to the program be made;

Conducted an assessment of the performance of the Board, the individual directors and each Board committee against their respective mandates;

Evaluated each director against independence criteria applicable to the Corporation; and

Reviewed, together with the Compensation Committee, the CEO’s recommendations for Management succession and development plans.
Nominating Committee
The Nominating Committee currently comprises Dennis Maple (Chair), Deepak Chopra and Deb Close. Each of the members of the Nominating Committee is independent. The responsibilities, powers and operation of the Nominating Committee are set out in its written charter. The Nominating Committee’s primary function is to assist the Board in identifying and nominating suitable candidates to serve on the Board and to succeed the Chair of the Board. To identify new candidates to serve on the Board, the Nominating Committee:

Considers the criteria established by the Board for the selection of new directors, which includes professional experience, personal characteristics and Board diversity, including gender diversity;

Maintains a list of desired competencies, expertise, skills, background and personal qualities for potential candidates for the Board;

Identifies and recommends to the Board individuals qualified and suitable to become Board members, taking into consideration any perceived gaps in the current Board or committee composition; and

Considers the experience and expertise of the independent members of the Board with a view to identification of a suitable potential successor for the Chair of the Board role.

In fiscal 2022, the Nominating Committee’s activities included the following:

Considered the overall size of the Board;

Reviewed the composition of the Board’s committees and recommended to the Board the proposed composition of the Board’s committees having regard to succession planning within those committees in light of changes in Board composition; and

Commenced a process to identify the key skills, expertise and background for potential new additions to the Board to ensure the Board remains well positioned for future refreshment and then began to identify potential candidates who could address those areas of interest.
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Board of Directors, Committee and Individual Director Assessments
The Corporate Governance Committee, in consultation with the Chair of the Board, is responsible for assessing the effectiveness of the Board as a whole and the committees of the Board. Each director is required to complete, on an annual basis, a confidential written evaluation with respect to the performance of the Board; the performance of its committees; and the contributions of the other directors to the Board and its committees. The results of the evaluations are summarized by the Chair of the Corporate Governance Committee and presented to the full Board. In addition, the Chair of the Board reviews with each director that director’s aggregate peer evaluation results. In the case of the peer evaluation results for the Chair of the Board, those results are reviewed with the Chair of the Board by the Chair of the Corporate Governance Committee.
Policy on Diversity
The Corporation has a written Diversity Policy which states that the Corporation recognizes and values the benefits of having diversity within its Board of Directors and in its senior management as a means to provide the necessary range of perspectives, experience and expertise required for the Corporation to achieve its objectives and deliver for its stakeholders. Recognizing the international nature of the Corporation’s operations and the global composition of its workforce, “diversity” under this Diversity Policy expressly includes factors such as gender, age, persons with disabilities, race, nationality, culture, language and other ethnic distinctions, education and regional and industry experience.
Gender diversity is one factor that is considered in identifying and selecting board members and in considering the hiring, promotion and appointment of its senior management. The Corporation regularly considers the level of representation of women on the Board and in senior management positions. The Corporation does not have specific targets respecting the representation of women on the Board and in senior management positions, instead focusing on choosing the most appropriate candidate for the position. However, in assessing the appropriateness of candidates for board and senior management appointments, the Corporation considers the desirability of an appropriate level of representation of women on its board and in senior management positions. Specifically in the context of identification of potential candidates for roles on the Board, the Nominating Committee ensures that the list of potential candidates that it initially considers as part of its process includes female candidates and to the extent that the Nominating Committee uses the assistance of a third-party search firm to establish an initial list of potential candidates, that search firm is instructed to ensure that female candidates are included in the list.  The Nominating Committee also attempts to ensure that its list of potential candidates for any new board position includes individuals who are members of a visible minority.
On an annual basis, the Nominating Committee (i) assesses the effectiveness of the Board nomination processes at achieving the Corporation’s diversity objectives; and (ii) considers if it is advisable to recommend to the Board for adoption, measurable objectives for achieving diversity on the Board. Further to the foregoing, among other things, the Nominating Committee considers (i) the number of women considered or brought forward for a position on the Board; (ii) the skills, knowledge, experience and other characteristics of female candidates to ensure that such candidates have been fairly considered relative to other candidates; and (iii) the number of women on the Board and the proportion (in percentage terms) of persons on the Board.
Having regard to the current nominees proposed for election to the Board, the Nominating Committee is satisfied that the Board would represent a well-balanced combination of diversity across multiple factors, including gender, age, race, nationality, education and regional and industry experience.
Of the current Board of eight directors, four (50% of the Board) self-identify as being in diverse categories with two (25%) being women and two (25%) identifying as members of a visible minority. In looking at the independent directors only, these percentages increase to 29% representation by women and 29% representation by individuals identifying as members of a visible minority.
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Current Board Composition Across Different Diversity Considerations

If the proposed nominees are each elected at the Meeting, the Board would then consist of ten directors, with six (60% of the Board) self-identifying as being in diverse categories with four (40%) being women and two (20%) identifying as members of a visible minority.
Proposed Board Composition Across Different Diversity Considerations

The following table reports self-identified diversity statistics for the Board of Directors of the Corporation in accordance with NASDAQ Rule 5606.



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As noted above, gender diversity is one factor that the Corporation considers in the hiring, promotion and appointment of individuals for senior management roles. The Corporation does not have specific targets for the number of women in senior management positions, again, choosing to focus on hiring the most appropriate candidate for the position but having regard to an overall interest in increasing the level of representation of women within senior management roles at the Corporation. Management reports to the Board on a quarterly basis with respect to the composition of its workforce including specific disclosure of the number of women within the overall employee base as well as in senior management positions within the Corporation. The Board, in its quarterly one-on-one meetings with the CEO, regularly reinforces its interest in continuing to attract and promote women into senior management positions within the Corporation.
Upon adoption of the Corporation’s first formal diversity policy in December 2014, there were three women who were part of the senior management team of the Corporation, being at the level of Vice-President or above, but there were no women in executive officer positions of the Corporation. Currently, there are fifteen women who are part of the senior management team of the Corporation, representing 15% of the total group of 96 positions that the Corporation currently identifies as being senior management but there are not currently any women in any of the nine roles that are currently identified as executive officer positions of the Corporation.
In reference to the disclosure requirements under the Canada Business Corporations Act, the Corporation has not adopted a written policy that specifically relates to the identification and nomination of women, aboriginal peoples in Canada, persons with disabilities and members of visible minorities (the “Designated Groups”) for election as directors or for the appointment of members of senior management. As discussed above, the current Diversity Policy of the Corporation includes consideration of broader categories of diversity beyond those of the Designated Groups (but which encompass the Designated Groups) and which the Board considers to be better aligned to achieve the range of perspectives, experience and expertise required by the Corporation. As noted above, two of the eight Directors on the Board are women, and two other Directors identify as members of a visible minority. Currently, fourteen percent of the people in senior management positions at the Corporation are women.  The Corporation has not requested that individuals within its senior management positions provide self-identification information by which the Corporation can identify if such individuals may constitute a member of a Designated Group and does not have data available to report the level of representation in its senior management positions across those Designated Groups beyond gender.
Please refer to the earlier discussion under the heading of “Director Tenure and Age” for our approach to director renewal and term limits.
Ethical Business Conduct
The Board has adopted the Code of Conduct applicable to the Corporation’s directors and employees. A copy of the Code of Conduct is available on the Corporation’s website at https://www.descartes.com/who-we-are/investor-relations/corporate-governance and has been filed on and is accessible through SEDAR at www.sedar.com. The Code of Conduct sets out in detail the core values and principles by which the Corporation is governed and addresses topics such as: honest and ethical conduct; conflicts of interest; compliance with applicable laws and the Corporation’s policies and procedures; public disclosure and books and records; use of corporate assets and opportunities; confidentiality of corporate information; reporting responsibilities and procedures; health and safety; and non-retaliation.

The Corporation’s General Counsel is responsible for communicating the Code of Conduct to directors, officers, and employees and assisting the Corporate Governance Committee in administering the Code of Conduct. The Corporate Governance Committee monitors overall compliance with the Code of Conduct. The Corporation’s General Counsel and Corporate Governance Committee each report to the Board at regular quarterly meetings of the Board on any issues or concerns that have been raised,
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provided that any issues or concerns specifically related to accounting, internal financial controls and/or auditing are reviewed and forwarded to the Audit Committee.

In addition, the Board has adopted and communicated policies and procedures for the submission by employees, directors or officers of concerns regarding accounting matters or violations of the Code of Conduct or applicable laws; and the receipt, retention and treatment of such concerns. The Board and the Audit Committee have established a confidential, anonymous hotline to encourage employees, officers and directors to raise concerns regarding matters covered by the Code of Conduct (including accounting, internal controls or auditing matters) on a confidential basis free from discrimination, retaliation or harassment. Employees have also been advised that concerns relating to compliance with the Code of Conduct may also be raised to an independent director by way of the Chair of the Board. Frequent reminders are sent to employees about the availability of the hotline.

As noted above under the description of the duties of the Corporation’s Audit Committee, the Audit Committee has responsibility for oversight and review of any related-party transaction between the Corporation or any of the subsidiary companies under the direct or indirect control of the Corporation and any Director or any executive officer of the Corporation. Under the terms of the Audit Committee Charter this includes any transaction or series of transactions in the same fiscal year involving a payment or any other consideration payable to or receivable by any Director or executive officer of the Corporation outside of approved compensation arrangements or customary expense reimbursement. There were no such related-party transactions in fiscal 2022 or agreements in respect of which a Director or executive officer declared a material interest in fiscal 2022.
Succession Planning
Oversight of the Corporation’s succession planning is primarily the responsibility of the Compensation Committee, with the Nominating Committee having responsibility for succession planning related to the role of the Chair of the Board. Each of these two committees is comprised entirely of independent directors. In addition, other committees of the Board may be consulted in the succession planning process depending upon the specific role under consideration.

The Corporation’s process for succession planning for the roles held by Management, including the CEO, involves the identification and consideration of potential internal and external candidates based on various factors, including the following: executive experience; market and industry expertise; geographic location; familiarity with the Corporation’s business and customers; and past successes in achieving particular corporate goals. Interim internal successors for those roles are also identified for the purposes of the Corporation’s Emergency Succession Plan, and these may differ from those identified as potential longer-term succession candidates.

The Compensation Committee reviews the Corporation’s Emergency Succession Plan on at least an annual basis. The Compensation Committee also reviews the CEO’s recommendations for the ongoing longer-term succession plans for other members of Management.

In succession planning for the role of the CEO, the Compensation Committee, with the assistance of the Corporation’s senior human resources management, has developed a skills matrix that identifies the key skills and experience that would be important in any successor to the CEO role. The Compensation Committee utilizes that matrix in considering whether there are individuals within the existing senior management team who have the skills and experience to be a potential successor to the CEO role and what additional skills or experience might need to be further developed or expanded by any of those individuals.

Succession planning for the CEO role and other key senior management roles is regularly discussed between the Compensation Committee and the CEO at quarterly in-camera meetings without
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other members of Management present. The recommendations and views of the Compensation Committee and, in the case of the Chair of the Board, the Nominating Committee in respect of succession planning are presented to the Board on an annual basis for consideration at a session without Management present.
Shareholder Engagement
The Board has a formal shareholder engagement policy that encourages regular and constructive engagement directly with shareholders by both Management and the Board. Members of the Board actively contact a target list of the largest shareholders of the Corporation on at least a bi-annual basis to solicit feedback from those shareholders on the performance of the CEO; the performance of the Board; the performance of the Corporation generally; and overall governance and compensation matters. These meetings are generally held with the Chair of the Board and the Chair of either the Compensation Committee or the Corporate Governance Committee. This policy of engagement has also included regular meetings with the Canadian Coalition for Good Governance to review governance and compensation matters relative to the Corporation.

In addition to engagement with shareholders by the Board, Management also regularly engages with shareholders of the Corporation and attempts to meet with, or offer meetings to, each of the Corporation’s largest shareholders on at least an annual basis.  On a quarterly basis, Management holds a conference call available to all shareholders to review the financial and operating results of the most recently completed quarter and several of our Management regularly attend and speak at various investor conferences and broker-sponsored meetings with groups of investors and potential investors.

On an annual basis, our shareholders are invited to consider and approve an advisory resolution on our approach to executive compensation.

To facilitate communication and engagement with our shareholders, the following means of communication are available:

By email to:  [email protected]

By email directly to the Chair of the Board:  [email protected]

By phone: 519-746-6114 x.202358

By mail:  Investor Relations, Descartes, 120 Randall Drive, Waterloo, ON, Canada N2V 1C6
Environmental, Social and Governance Framework
The Corporation recognizes the role that it can play in helping advance environmental, social and governance initiatives (“ESG Initiatives”) that are important to our stakeholders, including our shareholders, customers, suppliers and employees. The Corporate Governance Committee exercises oversight over the Corporation’s ESG Initiatives and consider progress towards these initiatives on a quarterly basis. In order to demonstrate its commitment to these principles, the Corporation has adopted an Environmental, Health, Safety and Sustainability Statement to provide guidance to the Corporation’s employees, customers and business partners of its expectations in this regard. A current copy of that statement is as follows.

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The Descartes Systems Group Inc.
Environmental, Health, Safety and Sustainability Statement

The Descartes Systems Group Inc. (the “Company”)’s approach to environmental, health, safety and sustainability matters is founded on the following principles: respect for human rights (in accordance with the Company’s Human Rights Statement), the protection of the health and wellbeing of the Company’s employees and the protection of the environment at each of the Company’s global offices and in the manner in which the Company operates its business.

The Company believes that each employee, regardless of his/her/their role in the organization, is accountable for these matters.  Accordingly, each employee is expected to and empowered to take responsibility for conducting himself/herself/themself in a manner that is consistent with the principles of this statement.

Specifically, the Company is committed to:


Complying with all social, occupational health and safety and environmental legislation applicable to the Company’s services and operations;

Encouraging each employee to take personal responsibility for the environmental, health, safety and sustainability matters within his/her/their department;

Identifying and eliminating hazards, if practical, and mitigating risks related to environmental, health, safety and sustainability matters;

Involving and consulting employees in addressing environmental, health, safety and sustainability risks through committees and representatives;

Promoting the minimization of the use of energy and the elimination, reduction, reuse and recycling of waste materials as part of Company-wide initiatives to improve the life cycle environmental effects of the Company’s services and operations;

Fostering awareness of sustainability principles amongst the Company’s employees;

Promoting the principles of this statement to the Company’s suppliers and partnering with suppliers and organizations that are ethically, socially and environmentally responsible;

Engaging with the communities in which the Company operates to meet community needs and to make a positive impact;

Continuously seeking ways to improve the Company’s performance in accordance with this statement; and

Providing the necessary training and resources to employees to fully implement this statement.
Organizational Governance
Within the area of Organizational Governance, we have adopted a number of policies and procedures to reinforce the principle that the Corporation, and its employees and directors, should at all times act in an ethical, respectful and responsible manner. These include our Code of Business Conduct, Business Partner Code of Conduct, Diversity Policy, Global Anti-Corruption Policy, Disclosure Policy, Whistle-blower Policy, Anti-Harassment Policy and a variety of other policies that set the tone for the type of workplace we intend to operate and the manner in which we expect all employees and directors to conduct themselves.
Environmental Impact
The Corporation is proud of the positive environmental impacts that can be achieved through the use of many of its solutions and services. For readers who are interested in the positive environmental
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impacts that some of the products and solutions of the Corporation can have for its customers, the Corporation has published an Environmental Impact guide which is available on its website at www.descartes.com that outlines many of the positive benefits from some of the Corporation’s solutions in reductions in paper, reductions in fuel consumption, reductions in numbers of vehicles on the road and to generally improve efficiencies in various transportation and logistics processes.

In addition to the benefits the Corporation’s solutions deliver to its customers in helping them achieve their own environmental impact goals, the Corporation has also taken a number of actions of its own to positively impact its own environmental footprint including:

(a)
reducing paper usage by adopting paperless processes where possible;

(b)
adopting electronic signing processes for documents to reduce paper copies and mail/courier usage and by default requiring two-sided printing of paper documents where a paper copy is required;

(c)
adoption of several communication tools to enable remote collaboration between employees and with customers and to reduce travel where possible;

(d)
reducing the number and sizes of corporate offices wherever possible to reduce heating, cooling and electrical consumption;

(e)
adoption of recycling programs in those jurisdictions where it is supported; and

(f)
use of water dispenser systems rather than bottled water whenever possible.

As directly relevant to this Information Circular, the Corporation has adopted notice-and-access to distribute the Meeting Materials, thereby reducing the number of pages of paper required for printing and a significant volume of mail weight that would otherwise need to be handled by postal delivery.
Human Rights and Labour Practices
The Corporation has adopted a number of policies that are focused on respecting the rights of all employees and providing a safe and healthy working environment. These include compliance with requisite occupational health and safety requirements of the jurisdictions in which we operate. Our Code of Business Conduct and our Anti-Harassment Policy are two key components of our approach in this area. In addition, we expect each of our suppliers to respect basic human rights in their own operations and we enshrine that principle in our Business Partner Code of Conduct which defines the standards by which we expect our suppliers to conduct their own businesses.

The Corporation is committed to the protection of personal information and to the principle of only using such information for the purpose for which it was provided and has implemented a variety of measures to protect the security and confidentiality of the data it processes.

The Corporation has also adopted a policy on director and executive officer diversity to recognize the value of diversity within members of the Board and Management.   We refer to the discussion earlier under the heading “Policy on Diversity”.

Recognizing that the Corporation’s commitments to these principles are reflected in a variety of different policies, the Corporation has adopted an over-arching Human Rights Statement which can be found below.

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The Descartes Systems Group Inc.
Human Rights Statement

The Descartes Systems Group Inc. and its various affiliates (collectively, the “Company”) is committed to providing a global work environment that is free from harassment or discrimination based on the grounds enumerated in federal, national, state, provincial or other Human Rights legislation.  More fundamentally, in addition to compliance with applicable laws and regulations, the Company is steadfast in conducting its business in a manner that is consistent with internationally recognized norms, tenets and principles such as the United Nations Universal Declaration of Human Rights.

These core values are specifically reflected in the manner by which the Company conducts itself in its dealings with its prospective and current employees, its customers and its other stakeholders as further outlined in the following practices, policies and initiatives:


Providing a safe space for employees that is free of harassment, bullying and violence as expressed in the Company’s Workplace Violence and Harassment Policy and Program;

Promoting ethical conduct and behaviour by our employees and suppliers through adherence to the Company’s Code of Business Conduct and Ethics;

Protecting the privacy of our employees, customers and suppliers and others in accordance with the Company’s various privacy policies and programs including but not limited to the General Privacy Policy, Commercial Relationship Privacy Policy and Recruitment Privacy Policy;

Forgoing the use of forced or child labour in compliance with applicable laws and international norms;

Ensuring that employees and prospective employees are treated fairly and equally in the recruitment and hiring process;

Fostering a diverse and inclusive work environment and providing opportunities for underrepresented employee groups and communities to participate and thrive;

Recognizing the right of our employees to join associations of their own choosing or to refrain from joining, and the right to collective bargaining; and

Maintaining safe, healthy and respectful working conditions in accordance with the Company’s Environmental, Health, Safety and Sustainability Statement.
Business Conduct and Fair Dealing
The Corporation is committed to conducting its business in an ethical and honest manner. This principle is a core component of the approach taken in the design of the Corporation’s Code of Business Conduct, our Business Partner Code of Conduct and our Global Anti-Corruption Policy. Our Code of Business Conduct is an internally facing policy, designed to set out our expectations of our employees in how they conduct themselves in their business dealings on behalf of the Corporation and in the performance of their duties. This includes guidance in the areas of ethical conduct in dealing with customers, suppliers and co-workers; avoiding conflicts of interest; compliance with applicable laws; and reporting of any violations of the code itself. Our Business Partner Code of Conduct sets out our expectations of how our suppliers will conduct themselves in their business operations, including our expectations of their compliance with applicable laws, providing a safe work environment, following sound labour practices, compliance with the Foreign Corrupt Practices Act and responsible sourcing.

For readers that want to learn more about the Corporation’s activities and progress specifically in the areas of ESG, the Corporation has recently published its first Corporate ESG Report which is available on the Corporation’s website at www.descartes.com.
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STATEMENT OF COMPENSATION GOVERNANCE
Compensation Committee
The Compensation Committee of the Board (the “Compensation Committee”) currently comprises Deborah Close (Chair), Dennis Maple, Chris Muntwyler and Jane O’Hagan. Each member of the Compensation Committee is an independent director and none of the members of the Compensation Committee have been or are an officer or employee of the Corporation or any of its subsidiaries.

In addition to each Compensation Committee member’s general business background, senior management experience and involvement with other companies (see biographical information under “Matters to be Acted Upon at the Meeting – 2. Election of Directors”), three of the four current members has been involved in the committee for more than three years. The following further, direct experience of the members of the Compensation Committee in the design, implementation or oversight of compensation programs is also relevant to their responsibilities in executive compensation, and the members of the Compensation Committee draw upon this experience, as well as the skills gained with this experience, to enable them to make decisions on the suitability of the Corporation’s compensation policies and practices:
Deborah Close, B.A., ICD.D – Ms. Close joined the Compensation Committee during 2016 and was appointed Chair of the Committee in 2017. Ms. Close previously held the position of President of the Production Services division of Tervita Corporation from 2010 until 2016. In her role as President, Ms. Close was involved in the design and structure of the compensation program for all division employees, including performance-based goal-setting, performance management, talent management, succession planning, and cross-divisional performance and compensation calibration. In addition to that role at Tervita Corporation, during her time as Executive Vice President at DO2 Technologies (now Enverus), Ms. Close directed the design and administration of compensation programs, and performance and talent management programs for all customer-facing functions, including sales, marketing, consulting and customer support. As a former Regional Vice President of Halliburton Corporation’s software division, Landmark Graphics, Ms. Close was involved in compensation program design and implementation, including leading a team to develop sales compensation programs for the corporation. Ms. Close also currently serves on the compensation committee of a privately-held company, Ember Resources Inc.

Dennis Maple, B.Sc. – Mr. Maple is currently President and CEO of Goddard Systems, Inc., which oversees the operation of more than 500 premium early childhood education schools across the United States. Between January 2014 and August 2019, Mr. Maple was the President of First Student, Inc., which employed 57,000 employees in various capacities, and was actively involved in setting, implementing and overseeing executive management compensation programs with the company. Mr. Maple has been involved in the design, structure and evaluation of numerous performance-based compensation structures and for assessing performance of senior management against specific goals and criteria. In addition, over his thirty-plus years of senior management level experience, Mr. Maple himself has been subject to a variety of short-term and long-term compensation and incentive structures tied to specific goals and performance criteria.

Chris Muntwyler - Mr. Muntwyler has significant international experience in the transportation, logistics and technology sectors. Having previously held various senior executive positions at SwissAir and the positions of Chief Executive of DHL Express (UK) Limited and Managing Director (Switzerland, Germany and Central Europe) at DHL Express, he is now a management consultant through his business, Conlogic AG, specializing in strategic development, leadership guidance and customer orientation and process automation. Mr. Muntwyler spent 10 years in the DHL Express organization following a 27-year career with SwissAir. Over the course of Mr. Muntwyler’s career in various operational and executive level roles, Mr. Muntwyler has been closely involved in setting
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and managing executive compensation programs and defining operational goals and objectives related to compensation plans.

Jane O’Hagan, B.A.(Hons.), ICD.D – Ms. O’Hagan previously served as the Executive Vice-President, Marketing and Sales and Chief Marketing officer of CP Rail. The Compensation Committee benefits from Ms. O’Hagan’s experience in being part of the management team at large companies, specifically in the review of executive compensation policies, programs and levels, and in setting appropriate performance measures and targets for incentive compensation plans. Ms. O’Hagan has experience working with external compensation consultants to assess compensation-related risk, human resources practices and benefits and in measuring the competitiveness of compensation policies and practices. She has directly participated in developing leadership succession, talent management and development plans and for implementing performance-based goals for executive and enterprise-wide personnel. She also has extensive experience in corporate restructuring and organizational change initiatives.

The responsibilities, powers and operation of the Compensation Committee are set out in its written charter, available on the Corporation’s website at www.descartes.com. As of the date of this Circular, the Compensation Committee is generally responsible for, among other things, the following:

reviewing and making recommendations to the Board with respect to the appointment, compensation and other terms of employment of the CEO;

reviewing and making recommendations to the Board based on the recommendations of the CEO with respect to the appointment, compensation and other terms of employment of the CFO, the President and COO and all other officers appointed by the Board, which includes each of the NEOs (as defined herein);

reviewing and approving the quarterly accrual of any variable compensation in the quarterly financial results of the Corporation and confirming same to the Audit Committee for the purposes of its review of the financial results;

reviewing and making recommendations to the Board with respect to the Corporation’s compensation principles, policies and plans for Management, including the establishment of performance measures and evaluation processes;

reviewing and making recommendations to the Board with respect to the compensation arrangements for members of the Board;

reviewing, administering and interpreting equity-based compensation plans and making recommendations to the Board with respect to the grant of compensation thereunder;

administering and interpreting the Corporation’s equity ownership and retention policies applicable to members of the Board and senior Management;

reviewing the CEO’s recommendations respecting any major changes to the structure, organization and responsibilities of the CEO or senior Management;

reviewing the CEO’s recommendations respecting succession planning and executive development for the CEO, CFO, President and COO and senior Management;

providing risk oversight of the Corporation’s compensation policies and practices and identifying and mitigating compensation policies and practices that could encourage inappropriate or excessive risk taking by members of senior Management; and

reviewing and approving certain compensation disclosures prior to their public release.
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Compensation Committee Report
The Compensation Committee has reviewed and discussed with Management the following Compensation Discussion and Analysis. Based on this review and discussion, the Compensation Committee has recommended to the Board that the following Compensation Discussion and Analysis be included in this Circular.
Compensation Discussion and Analysis
This Compensation Discussion and Analysis provides you with a detailed description of our executive compensation objectives, philosophy and programs, the compensation decisions we have made under those programs, and the rationale and details supporting specific compensation decisions relating to our fiscal 2022 period ended January 31, 2022.
Overview of Compensation Program
The CEO, CFO and the Corporation’s three other most highly compensated executives (collectively, the “Named Executive Officers” or “NEOs”), who are the subject of this Compensation Discussion and Analysis, are as set forth in the following table:

Name
Position
Edward J. Ryan
CEO
Allan Brett
CFO
J. Scott Pagan
President & COO
Andrew Roszko
Executive Vice President, Commercial Operations
Kenneth Wood
Executive Vice President, Product Management

The Compensation Committee’s oversight is designed to ensure that total compensation paid to the NEOs is fair and reasonable and consistent with our compensation philosophy.
Executive Officer Compensation Philosophy
The Compensation Committee believes that compensation plays an important role in achieving the Corporation’s short- and long-term business objectives that ultimately drive business success in alignment with long-term shareholder goals. The Corporation’s compensation philosophy is based on three fundamental principles:

Strong link to business strategy — the performance required to successfully execute our business strategy and achieve the Corporation’s short- and long-term goals should be reflected in our overall compensation program;

Performance-based — compensation should be linked to the operating and financial performance of the Corporation to a significant degree; and

Market-relevant — compensation should be market competitive in terms of value and structure in order to retain key employees who are performing according to their objectives and to attract new talented employees.
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What We Do
What We Don’t Do
Link executive pay to company performance through our annual and long-term incentive plans
No single-trigger change-in-control provisions
Balance among short- and long-term incentives, cash and equity and fixed and variable pay
No golden-parachute type arrangements
Compare executive compensation and company performance to relevant peer group companies
No hedging or pledging by executives or directors of equity holdings
Require executives to meet minimum stock ownership requirements
No re-pricings of underwater stock options
Maintain a compensation claw-back policy to recapture unearned incentive pay
No tax gross-ups
Provide only limited perquisites
No aspect of our pay policies or practices pose material adverse risk to the Company

Compensation Objectives
The objectives of our executive compensation program are to:


1.
Attract and retain highly-qualified executive officers;

2.
Align the interests of executive officers with our shareholders’ interests and with the execution of our business strategy;

3.
Evaluate executive performance based on key financial measurements which we believe closely measure the performance of our business; and

4.
Tie compensation directly to those measurements based on achieving and overachieving predetermined objectives.


1.
Market Competitive Compensation for Attracting and Retaining Highly Qualified Executive Officers

We seek to attract and retain high performing executives by offering competitive compensation; and an appropriate mix and level of short- and long-term financial incentives. We benchmark compensation to a comparator group of peer companies to assess the competitiveness of our compensation programs. The comparator group is reviewed annually by the Compensation Committee with assistance from its independent compensation consultant. The comparator group used by the Compensation Committee to assess compensation levels at the beginning of fiscal 2022 and for the purposes of setting performance criteria for performance-based awards comprised 16 publicly traded peers in the technology industry, consisting of two Canadian peers, 13 US peers and one Australian peer (the “Comparator Group”).  The Corporation was positioned as follows against the Comparator Group in terms of revenues and market capitalization based on data as of the end of calendar year 2020, being immediately prior to the commencement of the Corporation’s fiscal 2022 period:

 
Revenue (in millions)
Market Capitalization (in millions)
25th Percentile
$ 290
$ 1,251
Median
$ 437
$ 2,339
75th Percentile
$ 597
$ 4,776
Descartes
$ 335
$ 4,848
Percentile Rank
P38
P75


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Historically, the comparator group used by the Compensation Committee had included a larger number of Canadian peers but, as the Corporation has grown in terms of revenue and market capitalization, it has been increasingly difficult to find appropriate technology company peers of the Corporation that are based in Canada and, accordingly, over the past several years, the Compensation Committee has found that identifying an appropriate comparator group for the Corporation has resulted in a larger number of US-based and other international peers being added to the group. The Compensation Committee has determined that this is appropriate given a number of factors, including the dual-listing of the Corporation’s shares in Canada and the US; the distribution of the Corporation’s shares across shareholders in both Canada and the US; the nature of the Corporation’s operations with a significant portion of its revenues coming from and operations being located in the US; the location of the most directly comparable industry peers to the Corporation; and the composition of both its Board of Directors and Management, being a mix of Canadian and US residents.

The Comparator Group used in developing the Corporation’s director and officer compensation program for fiscal 2022 was as follows:

Canadian Peers
US Peers
Enghouse Systems Ltd.
Aspen Technology, Inc.
Bottomline Technologies Inc.
Kinaxis Inc
Commvault Systems, Inc.
Cornerstone OnDemand, Inc.
 
Ebix, Inc.
Guidewire Software, Inc.
 
Manhattan Associates, Inc.
 
Australian Peer
Progress Software Corp
OneSpan, Inc.
WiseTech Global Limited
QAD Inc.
Qualys, Inc.
 
SPS Commerce Inc.
Upland Software, Inc.
     

Compensation for each of the CEO, President & COO and CFO is designed to be competitive with the target total direct compensation for similar roles and/or seniority positioning in the Comparator Group and for the other NEOs, to be competitive to available market benchmarking data for the particular role and consistent with the internal pay practices for other executive officers of the Corporation who are not NEOs. Although we review each element of compensation for market competitiveness, and weigh each particular element based on the individual NEO’s role within the Corporation, we are primarily focused on remaining competitive in the market with respect to total direct compensation.

In determining the overall compensation program of our CEO for fiscal 2022, the Compensation Committee, with assistance from its compensation consultant, compared the material elements of our CEO compensation program to those of the Comparator Group. The review included base salary, actual and target bonus, actual and target total cash, expected value of long-term incentives and actual and target total direct compensation. The purpose of this process was to:

Understand the competitiveness of current pay levels for the Chief Executive Officer position relative to the Comparator Group;

Identify and understand any significant differences that may exist between current compensation levels for the Corporation’s CEO and market compensation levels; and

Serve as a basis for determining salary adjustments and short- and long-term incentive awards for Compensation Committee consideration.

At the beginning of fiscal 2022, the Compensation Committee also conducted an annual benchmarking compensation study with its compensation consultant for the positions of: (i) President and Chief Operating Officer; and (ii) Chief Financial Officer.
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Based on the results of the compensation study, the Compensation Committee recommended certain increases to the overall compensation program for each of the NEOs to be effective during fiscal 2022, which consisted of a combination of increases in base salary, on-target short-term incentives and on-target long-term incentives in each case as set out below.


2.
Aligning the Interests of the NEOs with the Interests of Descartes’ Shareholders and the Execution of our Business Strategy

We believe that transparent, objective and easily verified corporate goals, combined with individual performance goals, play an important role in creating and maintaining an effective compensation strategy for our NEOs. We use a combination of fixed and variable compensation to motivate our executives to achieve our corporate goals because we believe that achieving these goals contributes to increases in shareholder value.

For fiscal 2022, the three basic components of our executive officer compensation program were: (i) base salary and benefits; (ii) short-term incentives; and (iii) long-term incentives. In establishing the appropriate pay mix among these components, we consider what compensation is “at-risk” based on performance. The greater the NEO’s ability to drive the business results, the higher the “at risk” portion of his or her compensation. We consider all compensation other than base salary and benefits to be “at risk”.

In establishing the appropriate pay mix to align the interests of the NEO with the interests of the Corporation’s shareholders and execution of our business strategy, we consider the following in respect of the three components of total compensation:


i.
Base Salary and Benefits

Base salaries for our NEOs are reviewed annually. The base salary review for each NEO considers factors such as current competitive market conditions and particular skills, scope of the role, experience in the role, leadership ability and management effectiveness, internal equity, responsibility and proven or expected performance of the particular individual. The following chart outlines the base salaries that were in place for the NEOs during fiscal 2022 and shows the changes in base salary levels compared to fiscal 2021. Recognizing that base salaries for the NEOs had not been increased in the two preceding fiscal years, other than a small adjustment for Mr. Wood, the Compensation Committee, having regard to the findings of the compensation benchmarking study discussed above, recommended an increase to the base salary of the CEO and approved the recommendation of the CEO for certain increases to the base salaries of the other NEOs effective during fiscal 2022.

Name
Fiscal 2021 Base Salary
($)
Fiscal 2022 Base Salary
($)
Percentage Change
Edward J. Ryan
$440,000
$500,000
14%
Allan Brett
$300,000
$350,000
17%
J. Scott Pagan
$300,000
$350,000
17%
Andrew Roszko
$250,000
$300,000
20%
Kenneth Wood
$220,000
$250,000
14%

We also provide various benefits to all of our employees, which include but are not limited to, medical and health insurance; dental insurance; life insurance; and tax-based retirement savings plan matching contributions. NEOs are also eligible to participate in an executive health care benefits program that is not otherwise available to all of our employees.
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Under this program, each NEO is eligible to be reimbursed for a limited value of additional health care expenses in excess of the dollar limitations available to all of our employees.

NEOs in Canada are eligible to participate in the Corporation’s deferred profit-sharing plan (“DPSP”) under which the Corporation will contribute to the NEO’s DPSP account 50% of the NEO’s contributions to the Corporation’s group registered retirement savings plan, subject to a maximum contribution by the Corporation of 3% of the NEO’s annual base salary. NEOs in the United States are eligible to participate in the Corporation’s 401(k) plan under which the Corporation will contribute to the NEO’s 401(k) account 3% of the NEO’s base salary contributions to the 401(k) plan, subject to a maximum annual contribution by the Corporation of $2,000 per NEO. This is provided in lieu of a pension or retirement benefit.


ii.
Short-Term Incentives

For each NEO, the at-target and maximum eligibility for short-term incentives is established for each fiscal year. The following table shows the percentage of salary payable for fiscal 2022 for on-target short-term incentives (“On-Target Short-Term Incentive Eligibility”):

Name
Base Salary
($)
On-Target STI Eligibility
(% of Base Salary)
On-Target STI Eligibility
($)
Maximum STI Eligibility (% of Base Salary)
Maximum STI Eligibility
($)
Actual STI Awarded in Fiscal 2022
Edward J. Ryan
$500,000
100%
$500,000
150%
$750,000
$750,000
Allan Brett
$350,000
70%
$245,000
105%
$367,500
$367,500
J. Scott Pagan
$350,000
85%
$297,500
127.5%
$446,250
$446,250
Andrew Roszko
$300,000
100%
$300,000
150%
$450,000
$450,000
Kenneth Wood
$250,000
30%
$75,000
45%
$112,500
$112,500

For the NEOs, where short-term incentives have been awarded, the amount has historically been paid, at the option of the NEO, in cash and/or in cash settled restricted share units (“CRSUs”) vesting and paid over a period of no more than three years from the grant.

The amount of the short-term incentive actually payable to each NEO is based on meeting pre-established, Board-approved, Corporation-wide quantitative and qualitative corporate objectives related to creating shareholder value and executing business strategy on budget. For fiscal 2022, the quantitative objectives measured and monitored by the Compensation Committee in assessing performance (the “Quantitative Measures”) were:


Adjusted EBITDA;

Revenue; and

Cash generated from operations as a percentage of Adjusted EBITDA.

The Compensation Committee considered these Quantitative Measures to be the most appropriate to ensure the Corporation remained focused on its path of consistent, profitable growth.

Adjusted EBITDA Criteria

Adjusted EBITDA, which is a non-GAAP measure, was the exclusive measure of corporate performance for purposes of determining eligibility for short-term incentive awards for fiscal 2022. To achieve On-Target Short-Term Incentive Eligibility, the Compensation Committee requires that the Corporation has achieved its annual target for Adjusted EBITDA, which for fiscal 2022 was as set out in the table below. To the extent the
47


Corporation over-achieves the annual target, the Compensation Committee may award Short-Term Incentives up to the Maximum STI Eligibility set out above. The Compensation Committee will not award short-term incentives unless the annual target for Adjusted EBITDA has been achieved.

FY22 Adjusted EBITDA* Target
(in millions of USD)
FY22 Adjusted EBITDA* Target Growth
(as a % increase from FY21 Actual)
FY22 Adjusted EBITDA Actual
(in millions of USD)
FY22 Adjusted EBITDA* Actual Growth
(as a % increase from FY21 Actual)
$156.2
10%
$185.7
31%
* A non-GAAP ratio.  A description and definition of Adjusted EBITDA used by the Corporation, as well as a reconciliation of Adjusted EBITDA to net income for fiscal 2022, is included in Schedule “B” to this Circular.

In considering whether the Adjusted EBITDA target has been achieved, the Compensation Committee considers any impact on the target based on fluctuations in foreign currency exchange compared to the foreign currency exchange rates used at the time of setting the targets. If the Adjusted EBITDA target has been achieved, the Compensation Committee then considers whether there are reasons that an amount other than the On-Target Short-Term Incentive Eligibility should be awarded.

Recognizing that any short-term incentive amount awarded would reduce Adjusted EBITDA, if the Adjusted EBITDA target would not otherwise be achieved if the On-Target Short-Term Incentive Eligibility were awarded, then the Compensation Committee would intend to reduce the short-term incentive compensation that may be awarded to the NEOs on a pro-rata basis to the extent such reduction would then result in the Corporation achieving its Adjusted EBITDA target.

Other Quantitative Measures

The Committee retains discretion to reduce the short-term incentive awards even when the annual target for Adjusted EBITDA is achieved if the Corporation has not achieved its objectives for the other Quantitative Measures (revenue and cash generated from operations as a percentage of Adjusted EBITDA) or has otherwise failed to perform against the Other Factors monitored by the Compensation Committee, as discussed below.

Revenue

The following table details the Corporation’s fiscal 2022 target and actual results for revenue in fiscal 2022.

FY22 Revenue Target
(in millions of USD)
FY22 Revenue Target Growth
(as a % increase from FY20 Actual)
FY22 Revenue Actual
(in millions of USD)
FY22 Revenue Actual Growth
(as a % increase from FY20 Actual)
$380.0
9%
$424.7
22%

Cash Flow from Operations as a Percentage of Adjusted EBITDA

For fiscal 2022, the target for cash flow from operations was set at a target range of 80-85% of Adjusted EBITDA.

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Actual Cash Flow from Operations
(in millions of USD)
Target Cash Flow from Operations (% of Adjusted EBITDA)
Actual Cash Flow From Operations (% of Adjusted EBITDA)*
$176.1
80-85%
95%
* A non-GAAP ratio.  A description and definition of Adjusted EBITDA used by the Corporation, as well as a reconciliation of Adjusted EBITDA to net income for fiscal 2022, is included in Schedule “B” to this Circular.

Other Factors

In determining whether an amount less than the On-Target Short-Term Incentive Eligibility should be awarded when the annual minimum target for Adjusted EBITDA has otherwise been achieved, the Compensation Committee will give consideration to the following “Other Factors”: (i) the performance of the Corporation relative to the above mentioned Quantitative Measures other than Adjusted EBITDA; (ii) the progress of the Corporation’s corporate development activities; (iii) the performance of the Corporation against various return metrics on invested capital that are monitored on a quarterly basis; (iv) the Corporation’s performance in comparison to its annual budget; (v) the performance of the Corporation’s Common Shares in the public market over the year; and (vi) the progress of the Corporation towards the achievement of its ESG Initiatives. In addition, the Compensation Committee considers the individual performance of each NEO which, in the case of the CEO, is evaluated by the Compensation Committee and, in the case of the other NEOs, is evaluated by the Compensation Committee based on the recommendation of the CEO, as further discussed below under “Evaluating Individual Executive Performance”.

In determining whether an amount more than the On-Target Short-Term Incentive Eligibility should be awarded, up to the Maximum Short-Term Incentive Eligibility, the Compensation Committee considers whether there has been significant over-performance by the Corporation against its Adjusted EBITDA target, provided that any additional amount awarded above the On-Target Short-Term Incentive must continue to result in the Corporation achieving, or exceeding, its Adjusted EBITDA target. The Compensation Committee establishes “high-end” targets for both Adjusted EBITDA and Revenue which are used in assessing over-performance and considering if the Maximum Short-Term Incentive Eligibility should be awarded. For fiscal 2022, these “high-end” targets were based on 15% growth in Adjusted EBITDA and 12% growth in Revenue. Prior to making any award above the On-Target Short-Term Incentive Eligibility, the Compensation Committee will also consider the Other Factors discussed above.

Upon the completion of fiscal 2022, the Compensation Committee considered the appropriate level of short-term incentives to award to the NEOs. Considering the Corporation’s overall performance in fiscal 2022 and, in particular, its over-performance against its Adjusted EBITDA target, each NEO was awarded a short-term incentive in respect of fiscal 2022 at the Maximum Short-Term Incentive Eligibility amount for fiscal 2022, to be satisfied in cash.


iii.
Long-Term Incentives

The fiscal 2022 compensation program for our NEOs, included long-term incentive compensation in the form of equity-based awards consisting of a mix of:


PSU grants which vest at the end of a three-year performance period;

RSU grants which vest over a period of three fiscal years; and

stock options that vest over a period of three fiscal years.
49



The PSUs are subject to performance conditions and vest on an interpolation basis from 0% to 200% based on the total shareholder return performance of the Corporation relative to the Comparator Group over a three-year period in accordance with the following criteria:

RELATIVE PERFORMANCE
ADJUSTMENT FACTOR
Less than the 30th percentile
0
30th percentile
.50
50th percentile
1.00
75th percentile
1.50
90th percentile
2.00

The following table shows the on-target long-term incentive compensation established for fiscal 2022 (“On-Target Long-Term Incentive Eligibility”):

Name
On-Target Total LTI
Value of PSUs at time of grant (and percentage of total LTI)
Value of RSUs at time of grant (and percentage of total LTI)
Value of stock options at the time of grant (and percentage of total LTI)
Edward J. Ryan
$4,000,000
$2,000,000 (50%)
$1,400,000 (35%)
$600,000 (15%)
Allan Brett
$1,487,500
$743,750 (50%)
$520,625 (35%)
$223,125 (15%)
J. Scott Pagan
$1,837,500
$918,750 (50%)
$643,125 (35%)
$275,625 (15%)
Andrew Roszko
$800,000
$400,000 (50%)
$200,000 (25%)
$200,000 (25%)
Kenneth Wood
$400,000
$200,000 (50%)
$100,000 (25%)
$100,000 (25%)

The Board and Compensation Committee review and approve all grants of PSUs, RSUs and stock options. In making these determinations, the Board and Compensation Committee consider the recommendations of the CEO (except for grants to the CEO). The Board and Compensation Committee also consider previous grants of stock options and Share Units that have been made to an individual in deciding whether to make new grants of stock options and Share Units.

When deciding whether to grant stock options, our Board, subject to the recommendation of our Compensation Committee, makes the following determinations:

Which NEOs and others are eligible for a grant of options;

The number of options to be granted under the plan in general and to each recipient;

The exercise price for each stock option granted (which may not be less than fair market value of a Common Share at the date of the grant);

The date on which each option is granted (which may not be earlier than the date the grant is approved by the Board);

The vesting period;

The expiration date; and

Other material terms and conditions of each stock option grant.

As the long-term incentives granted to our NEOs are Common Share-based, and the price of our Common Shares has increased over each of the past five fiscal years, the value to be realized by each NEO from such incentives has increased over this same period.

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3.
Evaluating Individual Executive Performance

We believe that regular and comprehensive evaluation of our NEOs contributes to effective compensation programs and the achievement of the Corporation’s business goals. Our Board, Compensation Committee and CEO have instituted a set of procedures to evaluate the performance of each of our NEOs to help determine the amount of base salary and short- and long-term incentives to award to each NEO.

CEO – The Board and Compensation Committee assess the performance of the CEO on an ongoing basis, with a formal review conducted annually. The formal review includes interviews with the CEO and comments solicited from members of the Board, Management and the Corporation’s major shareholders. The Compensation Committee, if appropriate, approves adjustments to the CEO’s compensation under authority delegated to it by the Board. However, decisions about share-based compensation are ultimately determined by the Board on receiving the recommendation of the Compensation Committee. The Compensation Committee communicates its assessment and any compensation decisions directly to the CEO.

NEOs other than the CEO – The performance of each NEO other than the CEO is evaluated by the CEO and assessed by the Compensation Committee on the basis of the CEO’s evaluation. Recommendations for adjustments to compensation for these NEOs are made by the CEO to our Compensation Committee for consideration. The Compensation Committee follows its review and assessment process described in this Circular and, if appropriate, approves compensation adjustments for the NEOs under authority delegated to it by the Board. However, decisions about share-based compensation are ultimately determined by the Board on receiving the recommendation of the Compensation Committee.

In evaluating NEO performance for a fiscal year, the Compensation Committee and Board consider several factors including the following:

a)
Contribution to the achievement of the Corporation’s longer-term financial and corporate development plan;

b)
Contribution to the achievement of annual corporate financial targets;

c)
Contribution to the achievement of the Corporation’s corporate development goals in acquiring businesses and integrating acquired businesses;

d)
Contribution to advancing the Corporation’s ESG Initiatives;

e)
Customer service, satisfaction and retention;

f)
Infrastructure development;

g)
Investor communication;

h)
Organizational development;

i)
Succession planning and initiatives;

j)
Strategic planning; and

k)
Other corporate and individual qualitative factors.

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4.
Evaluating Overall Corporate Performance


a.
Longer-term Financial and Corporate Development Plan

The Corporation’s long-term financial plan is focused on consistent, sustainable growth in Adjusted EBITDA, accomplished through a combination of the performance of existing operations and acquiring and integrating new operations. The Corporation typically targets ongoing growth in Adjusted EBITDA of 10-15% per year.

The Corporation’s Adjusted EBITDA in fiscal 2022 grew by 31% over fiscal 2021, which was significantly above the high end of the Corporation’s ongoing financial plan.

The Corporation also acquired three businesses in fiscal 2022 (QuestaWeb, Portrix and GreenMile) consistent with its corporate development goals.


b.
Annual Corporate Financial Targets

The Corporation’s annual corporate financial targets are considered and established in two levels for each of annual revenues and annual Adjusted EBITDA: (i) a minimum level; and (ii) a high-end target level.

This budget and the financial targets are established with various assumptions, including foreign exchange rate assumptions relating to foreign operations.

The Corporation exceeded its established target for Adjusted EBITDA and revenues in fiscal 2022. The Corporation targeted growing its Adjusted EBITDA 10-15%, and it actually grew 31% from fiscal 2021. The Corporation targeted growing its revenues by 9-12%, and they actually grew 22% from fiscal 2021.

The following table details the Corporation’s fiscal 2022 minimum and high-end target plans for both revenues and Adjusted EBITDA and the Corporation’s actual reported revenues and approximate unaudited Adjusted EBITDA results in the period. The targets have not been adjusted for movements in foreign exchange rates from the beginning of the fiscal year to the end of the fiscal year.

Revenue Minimum Target
(millions)
Revenue High-End Target
(millions)
Revenue Actual
(millions)
Adjusted EBITDA Minimum Target
(millions)
Adjusted EBITDA High-End Target
(millions)
Adjusted EBITDA Actual
(millions)
$380.0
$390.5
$424.7
$156.2
$163.3
$185.7

Overall, the Corporation’s revenues and Adjusted EBITDA grew 22% and 31%, respectively, from fiscal 2021.

In addition, the Compensation Committee noted the Corporation’s strong cash generated from operations in fiscal 2022 in evaluating the Corporation’s and executive officer’s performance. The Corporation has targeted cash from operations of between 80% and 85% of Adjusted EBITDA in a fiscal period. In fiscal 2022, the Corporation generated $176.1 million in cash from operations, representing 95% of Adjusted EBITDA for the year.

On an ongoing basis, the Compensation Committee and Board also monitored the Corporation’s return on invested capital, both on individual acquisitions and in the aggregate, using various return metrics. The Compensation Committee noted that the
52


metrics were in-line with the aggregate returns anticipated to be generated by the Corporation’s acquisition portfolio.


c.
Common Share Price

The Compensation Committee also considers any change in the trading price of the Corporation’s Common Shares during the fiscal year in evaluating awards of short-term compensation. Over fiscal 2022, the price of the Corporation’s Common Shares increased as follows:

Market
January 31, 2021 (closing price)
January 31, 2022 (closing price)
% Increase
TSX
Cdn. $77.98
Cdn. $92.48
18.6%
NASDAQ
$61.06
$72.77
19.2%

The Compensation Committee also considered each NEO’s contribution to sustained historical superior performance by the Corporation.

Performance Graph

The following graph compares the cumulative total shareholder return on the Common Shares to the cumulative total return of the S&P/TSX Composite Index, the NASDAQ Composite Index and the “Software & Services” industry subgroup of the S&P/TSX Composite Index for the Corporation’s last five years commencing February 1, 2017.


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Jan 31, 2017
Jan 31, 2018
Jan 31, 2019
Jan 31, 2020
Jan 31, 2021
Jan 31, 2022
Actual Data
           
Descartes (DSG) (Cdn.$)
28.41
34.80
40.84
59.33
77.98
92.48
S&P/TSX Composite Index
15385.96
15951.67
15540.60
17318.49
17337.02
21098.30
NASDAQ Composite Index
5614.79
7411.48
7281.74
9150.94
13070.69
14239.88
Software & Services Industry Subgroup
4294.00
5199.02
6119.32
10075.20
16553.19
15669.94
CEO Compensation1
2026483
2331340
2651788
3314980
4687068
5926482
Nominal Data
           
Descartes (DSG) (Cdn.$)
100
122
144
209
274
326
S&P/TSX Composite Index
100
104
101
113
113
137
NASDAQ Composite Index
100
132
130
163
233
254
Software & Services Industry Subgroup
100
121
143
235
385
365
CEO Compensation1
100
115
131
164
231
292
1. CEO Compensation set out in the table above is based on total compensation from the Summary Compensation Table.

As reflected in the graph above, over that five-year period, the performance of the Corporation’s Common Shares has exceeded that of the S&P/TSX Composite Index and the NASDAQ Composite Index but has performed slightly below the S&P/TSX Composite Index “Software & Services” industry subgroup index. During this five-year period, the price of the Corporation’s Common Shares on the TSX has shown an increase of 326%. During that same period, the aggregate total compensation awarded to the Chief Executive Officer (as calculated as set out in the Summary Compensation Table below) has shown an increase of 292%. As the Corporation’s revenues and share price have increased over the past five years, with a corresponding increase in the Corporation’s market capitalization, the composition of the Corporation’s compensation peer group has similarly changed over that period to include larger companies in terms of revenue and market capitalization. This, in turn, has led to an increase in the median compensation levels observed within the compensation peer group over that period and a resulting increase in the overall total compensation awarded to the Chief Executive Officer to maintain competitiveness with the trends in median compensation levels within the selected peer group.  As reflected in the graph below, increases in the CEO compensation over this period has closely aligned to the appreciation in the Corporation’s Common Shares over that same period.


d.
Shareholder Engagement

The Board has a formal shareholder engagement policy that encourages regular and constructive engagement directly with shareholders by both Management and the Board. Members of the Board actively contact a target list of the largest shareholders of the Corporation on at least a bi-annual basis to solicit feedback from those shareholders on the performance of the CEO; performance of the Board; performance of the Corporation generally; and overall governance and compensation matters. These meetings are generally held with the Chair of the Board and the Chair of either the Compensation Committee or the Corporate Governance Committee. This policy of engagement has also included regular meetings with the Canadian Coalition for Good Governance to review governance and compensation matters relative to the Corporation and responding to other governance related inquiries from other investment industry focused governance bodies from time to time. In addition to engagement with shareholders by the Board, Management also regularly engages with shareholders of the Corporation and attempts to meet with, or offer meetings to, each of the Corporation’s largest shareholders on at least an annual basis.

During fiscal 2022, the Board conducted a pro-active outreach program with each of the Corporation’s ten largest shareholders inviting discussion on the corporation’s governance
54


and compensation practices. Several shareholders had indicated previously that a bi-annual outreach was sufficient unless the circumstances of the Corporation warranted otherwise.

Management has also continued its outreach program with the Corporation’s largest shareholders, offering one-on-one meetings following the release of each quarter’s financial results. Feedback from these meetings is discussed on a quarterly basis with the Board.

The Corporation has adopted an annual “say on pay” resolution at its annual shareholder meeting to give shareholders the opportunity to vote on the executive compensation arrangements of the Corporation. At the most recent shareholder meeting of June 3rd, 2021, the “say on pay” resolution received a vote of 95.75% in favour. This significant level of support from shareholders, combined with the direct feedback received from shareholders through the engagement process discussed above, has given the Compensation Committee increased confidence that its overall approach to compensation structure is well received by shareholders.
Compensation Oversight Process
The Compensation Committee has responsibility for overseeing executive compensation and director compensation and makes compensation recommendations to the Board for final approval. The Compensation Committee met five times during fiscal 2022 and, as of the date of this Circular, had met twice more during fiscal 2023. Management assists the Chair of the Compensation Committee in the coordination and preparation of the meeting agenda and materials for meetings as requested by the Chair. Following the approval of the Chair of the Compensation Committee, meeting materials are delivered for review to the other Compensation Committee members and invitees, if any, typically in advance of each meeting.
Use of Compensation Consultants
The Compensation Committee seeks the advice of outside, independent compensation consultants to provide assistance and guidance on compensation issues. Consultants are screened and chosen by the Compensation Committee and report to the Compensation Committee. The consultants provide the Compensation Committee with relevant information pertaining to market compensation levels, alternative compensation plan designs, market trends and best practices. The consultants assist the Compensation Committee with respect to determining the appropriate benchmarks for the Chief Executive Officer and each of the other executive officers of the Corporation (which includes the NEOs).

Commencing from the latter half of fiscal 2018, the Compensation Committee has engaged the services of Mercer (Canada) Limited (“Mercer”) to act as compensation consultant to the committee. Mercer has confirmed to the Compensation Committee that it will not accept any engagement from the Corporation or any members of Management of the Corporation except with the prior written approval of the Compensation Committee. During the same period, the Corporation’s human resources department has subscribed to a global compensation and benefits database service operated by Mercer. This database subscription service is unrelated to the compensation consulting services provided by Mercer to the Compensation Committee and not included in the summary of fees set out below.

During fiscal 2022 and fiscal 2021 Mercer provided services to the Compensation Committee in the following: (i) assisting the Compensation Committee in considering the comparator group used to assess the Corporation’s director and executive officer compensation arrangements; (ii) conducting a compensation-related risk review; (iii) conducting a competitive benchmarking analysis of the Corporation’s director and CEO compensation arrangements; and (iv) recommending the overall short-term and long-term incentive mix for CEO compensation.

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Mercer’s fees incurred in fiscal 2022 and fiscal 2021 regarding services provided were as follows(1):

Fiscal year ended
Executive Compensation-Related Fees
All Other Fees
January 31, 2022
$77,285
$0
January 31, 2021
$86,341
$0

(1) Amounts included in this table have been converted to US dollars at the indicative foreign exchange rate on the last business day of the applicable year as reported by the Bank of Canada, which was 1 US dollar = 1.2719 Canadian dollars at January 31, 2022 and 1 US dollar = 1.2780 Canadian dollars at January 29, 2021.

The Compensation Committee’s written charter provides that, with respect to any external compensation consultant or advisor retained by the Compensation Committee or the Board for determining executive or director compensation, the Compensation Committee must pre-approve any other services that Management has requested be provided to the Corporation or Management by such external compensation consultant or advisor or its affiliates.
Role of Executive Officers in the Compensation Process
The Compensation Committee makes recommendations to the Board: (i) with respect to the CEO’s compensation following an annual review of the performance of the CEO, an annual review of compensation benchmarking data provided by its compensation consultant and following discussion with the CEO; and (ii) with respect to all other executive officers of the Corporation, including the NEOs, the Compensation Committee makes recommendations to the Board following an annual review of the overall performance of the Corporation, consideration of any compensation benchmarking data that may have been requested by the Committee from its compensation consultant and based on the Compensation Committee’s consideration of the recommendations of the CEO. At a meeting of the Compensation Committee at which Management, including the CEO, is not present, the Compensation Committee determines the compensation of the CEO and of the executive officers of the Corporation, including the NEOs, that will be recommended by the Committee to the Board. The Compensation Committee then makes its recommendations to the Board, which approves the compensation of the CEO and of the executive officers of the Corporation, including the NEOs.
Compensation-related Risk Mitigation
The Board provides regular oversight of the Corporation’s risk management practices, and delegates to the Compensation Committee the responsibility to provide risk oversight of the Corporation’s compensation policies and practices, and to identify and mitigate compensation policies and practices that could encourage members of Management to take inappropriate or excessive risks.

In respect of fiscal 2022, the Compensation Committee retained Mercer to assist it in reviewing the risks associated with the Corporation’s executive compensation policies and practices. The Compensation Committee reviewed Mercer’s risk report and presented it to the Board in March 2022. The Compensation Committee and Board concluded that there were no identified risks arising from the Corporation’s compensation policies or practices that are likely to have a material adverse effect on the Corporation.

The Compensation Committee and Board have concluded that the Corporation has policies and practices to ensure that Management does not have incentives to take inappropriate or excessive risks including the following:


An appropriate balance of fixed and variable compensation, and an appropriate weighting of share-based compensation and short- and long-term compensation;

An appropriate equity ownership policy for Management;
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Quantitative and qualitative Corporation-wide metrics used to form a balanced scorecard to determine the amount of awards to NEOs under the Corporation’s short-term incentive plans;

Board and Compensation Committee discretion to adjust the amount, if any, of awards under the Corporation’s short-term incentive programs, to take into account the quality of the results and the level of risk required to achieve results, with awards historically being made only out of the Corporation’s operating profits;

A clawback policy under which incentive compensation may be clawed back if there is misconduct of an executive resulting in a restatement of financial results;

A mix of equity compensation vehicles in the long-term incentive program, which measure both relative and absolute performance;

Periodic share-based compensation awards with overlapping vesting periods to provide ongoing retention incentives to Management and long-term share-based exposure to the risks Management undertakes;

Annual incentive awards that have historically been a reasonable percentage of revenues and Adjusted EBITDA to ensure an appropriate sharing of value created between management and shareholders;

Annual incentive awards that are not determined until the completion of the audit of the Corporation’s consolidated annual financial statements by the independent auditor;

An insider trading policy that prohibits hedging and restricts pledging of the Common Shares and Common Share-based incentives;

An organizational culture of prudent risk-taking, which is maintained by a practice of promoting from within the organization;

A strong shareholder outreach program designed, in part, to ensure that the Corporation’s compensation programs are aligned with shareholder interests and expectations;

A comprehensive Code of Conduct and Whistleblower Policy that encourages reporting of imprudent corporate behavior;

A Compensation Committee comprised entirely of independent directors that retains an independent compensation consultant to assist in its review of compensation, compensation governance and incentive programs;

The Compensation Committee is expressly required by its charter to provide risk oversight of Descartes’ compensation policies and practices and to identify and mitigate compensation policies and practices that could encourage excessive or inappropriate risk taking;

A Chair of the Board, Eric Demirian, who attends all meetings of the Compensation Committee as an ‘ex-officio’ member of the Committee and who is also a member of the Audit Committee, which allows him to inform the Compensation Committee with respect to the Corporation’s enterprise risks and financial results when making decisions in respect of compensation; and

Compensation Committee members, Deborah Close, Dennis Maple, Chris Muntwyler and Jane O’Hagan, who are also members of either the Corporate Governance Committee or the Nominating Committee, which ensures that compensation governance and compensation related risk are considered from a broader corporate governance perspective.
Incentive Compensation Clawback Policy
In April 2015, the Board adopted an Incentive Compensation Clawback Policy (the “Clawback Policy”). The Clawback Policy authorizes the independent directors of the Corporation (the “Independent Committee”) to recover short- and long-term incentive compensation of an executive officer, including any gains realized upon exercise or settlement of any share-based awards, in the following circumstances:


1.
the Corporation is required to prepare an accounting restatement due to non-compliance with any financial reporting requirement under applicable securities laws (the “Restatement”);
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2.
the executive officer engaged in gross negligence, intentional misconduct or fraud that either caused or significantly contributed to the non-compliance resulting in the Restatement; and

3.
the executive officer was over-compensated as a result of the Restatement.
 
If the Independent Committee concludes that such circumstances exist, it may in its sole discretion, to the extent that it considers such action to be in the best interests of the Corporation, direct the Corporation to take any combination of the following actions as it considers necessary or advisable for the Corporation to recover the amount of the excess incentive compensation and all costs incurred in recovering the incentive compensation: (a) require the executive officer to reimburse the Corporation; (b) withhold any amounts owing or that may become owing, or cancel any share-based awards outstanding (whether vested or unvested) or due to be granted or awarded, to the executive officer; and (c) such other action as the Independent Committee considers appropriate.
Management Equity Ownership Policy
The Corporation has an equity ownership policy applicable to Management (the “Management Equity Ownership Policy”).

The objective of the Management Equity Ownership Policy is to ensure that the CEO and other senior executives acquire and hold a meaningful equity ownership interest in the Corporation within a reasonable period following the individual’s appointment to the office. Under the policy, within five years of becoming subject to the policy, the NEOs are required to attain and maintain the following equity ownership levels:

Position
Equity Ownership Level as a Multiple of Annual Base Salary
CEO
6X
President & COO
4X
Chief Financial Officer
4X
Other NEOs
1X

For purposes of the Management Equity Ownership Policy, “Market Value” for determining compliance means the volume-weighted average trading price of a Common Share on the TSX for the five trading days preceding the measurement date. In determining compliance with the Management Equity Ownership Policy:

Common Shares are included and valued at the greater of cost and Market Value;

CRSUs and RSUs are included and valued at the greater of Market Value at the date of grant or Market Value at the date of measurement;

Vested PSUs are included and valued at the greater of Market Value at the date of grant or Market Value at the date of measurement. Any PSUs that are subject to a vesting condition or future performance condition are not included in this calculation until fully vested or earned; and

Options are given no value under the terms of the policy.

During a period when an NEO has not met the applicable equity ownership levels, the NEO must retain 25% of the Common Shares received on the exercise of a stock option or the redemption of an RSU or PSU and, to the extent made available to the NEO, elect to convert to RSUs 25% of any cash proceeds received by the NEO pursuant to the Corporation’s incentive compensation plans.

The following table identifies the equity ownership levels of each of the NEOs as at April 29th, 2022 with reference to the minimum equity ownership levels required by the Management Equity Ownership Policy. Market Values included in the table are calculated by multiplying the number of securities by the volume-weighted average trading price of a Common Share on the TSX for the five
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trading days preceding April 29th, 2022, being Cdn. $80.14, converted to US dollars at the rate of 1 US dollar = 1.2829 Canadian dollars, being the indicative foreign exchange rate reported by the Bank of Canada on April 28th, 2022. The table identifies the Market Value of Common Share-based holdings included for the purposes of calculation pursuant to the Management Equity Ownership Policy (which does not include any value for stock options, whether vested or unvested). Minimum equity ownership levels are determined by multiplying the level set out in the Management Equity Ownership Policy for the applicable position by the individual’s current annual base salary converted to US dollars at the rate of 1 US dollar = 1.2829 Canadian dollars, being the indicative foreign exchange rate reported by the Bank of Canada on April 28th, 2022:


Name
Multiple of Base Salary
Minimum Equity Ownership Level Required
($)
Market Value of Common Shares Held
($)
Market Value of Share Units Held (RSUs and vested PSUs)
($)
Market Value of cash-settled Share Units Held (cRSUs)
($)
Value of Holdings per Equity Ownership Policies
($)
Minimum Equity Ownership Level Achieved?
Edward J. Ryan
6X
3,000,000
 -
 34,797,464
 -
 34,834,774
Yes
Allan Brett
4X
1,400,000
 2,186,375
 10,958,297
 -
 13,218,807
Yes
J. Scott Pagan
4X
1,400,000
 10,283,207
 23,016,902
 -
 33,317,175
Yes
Andrew Roszko
1X
300,000
 218,637
 624,803
 34,607
 883,610
Yes
Kenneth Wood
1X
250,000
 348,820
 283,604
 57,033
 692,139
Yes
Total Value of Equity Holdings of NEOs
The following table shows the total value of all equity holdings of each of the NEOs as at April 29th, 2022, determined in accordance with the Market Value determination set out above plus the “in the money value” of unexercised but vested options, which are otherwise not included in the calculation under the Corporation’s Equity Ownership Policies and excluding the value of unvested RSUs, which are otherwise included in the calculation under the Corporation’s Equity Ownership Policies.

Name
Market Value of Common Shares Held
($)
Market Value of vested RSUs
($)
Market Value of vested PSUs
($)
Market Value of cash-settled Share Units Held (cRSUs)
($)
Value of unexercised in-the-money options1
Total
Edward J. Ryan
 -
 10,973,727
 20,517,127
 -
 2,558,077
 34,048,931
Allan Brett
 2,186,375
 3,364,581
 6,378,467
 -
 2,072,348
 14,001,771
J. Scott Pagan
 10,283,207
 7,493,143
 13,987,550
 -
 3,201,505
 34,965,405
Andrew Roszko
 218,637
 127,309
 -
 34,607
 1,861,434
 2,241,987
Kenneth Wood
 348,820
 60,406
 -
 57,033
 962,805
 1,429,064
(1) The value of unexercised in-the-money options has been calculated using the difference between the closing price of the Corporation’s Common Shares on the TSX on April 28, 2022 (Cdn.$81.09) and the Canadian dollar option exercise price. The value has been reported in US dollars using an exchange rate of 1 US dollar = 1.2829 Canadian dollars, being the indicative foreign exchange rate reported by the Bank of Canada on April 28, 2022.
Hedging and Pledging Restrictions
The Corporation’s compensation program is designed to align a significant portion of NEO compensation to longer-term shareholder interests. Under the terms of the Corporation’s Insider Trading Policy, all employees and Directors, including the NEOs, are prohibited from purchasing financial instruments, including, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that directly hedge or offset a decrease in market value of securities or Common Share-based compensation held, directly or indirectly, by the individual. In addition, any Director or NEO that seeks to specifically pledge securities held, directly or indirectly, by the Director or NEO must first consult with the Corporation’s insider trading policy administrator to determine whether the proposed pledge would
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reasonably be expected to cause the Director or NEO to no longer have a meaningful aggregate equity ownership interest in the Corporation.

Fiscal 2022 Compensation Structures of the NEOs

CEO - Edward J. Ryan

Mr. Ryan was appointed Chief Executive Officer on November 26, 2013 and had served in senior executive roles at the Corporation for more than 10 years prior to this appointment.

On an annual basis, the Compensation Committee reviews Mr. Ryan’s compensation as the Chief Executive Officer of the Corporation. As part of this review the Compensation Committee considers the total target direct compensation of the chief executive officer role in the Comparator Group and the mix of the overall compensation components, including the allocation among base salary, short-term incentives and long-term incentives, as well as the split between guaranteed components and “at-risk” components. The Compensation Committee also considers the level of equity ownership that it wants Mr. Ryan to accumulate over the long-term incentive period.

For fiscal 2022, the Compensation Committee considered various factors in determining that Mr. Ryan’s total target direct compensation should be positioned at the median of the Comparator Group, including the following factors:

Mr. Ryan has significant tenure with the Corporation in a senior executive role;

During Mr. Ryan’s tenure in a senior executive role, and since his appointment to the role of Chief Executive Officer, the Corporation has achieved superior financial performance and executed on its long-term and corporate development strategy;

During the past years of Mr. Ryan’s tenure, the performance of the Common Shares  exceeded that of the S&P/TSX Composite Index and the NASDAQ Composite Index and tracked slightly under the S&P/TSX Composite Index “Software &Services” industry subgroup index;

Mr. Ryan developed a strong relationship with many of the significant shareholders of the Corporation and the Board of Directors receives positive feedback regarding Mr. Ryan and his performance through its shareholder engagement process; and

Mr. Ryan played an integral role in the steady increase in the Corporation’s revenues and the completion of various acquisitions and financing transactions.

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The following chart illustrates the pay mix for, and components of, Mr. Ryan’s overall compensation structure as was set for fiscal 2022, assuming on-target performance:


In determining the appropriate compensation levels and pay mix for Mr. Ryan for fiscal 2022, the Compensation Committee continued to weight total compensation more heavily towards “at-risk” and long-term incentives, consistent with the Corporation’s past practice, market practice and the Comparator Group. Following a review of the compensation benchmarking study for the CEO position conducted by the Compensation Committee’s compensation consultant and in consideration of the performance achieved by the Corporation through fiscal 2021, the Compensation Committee determined that an increase in Mr. Ryan’s aggregate compensation was appropriate for fiscal 2022.

Accordingly, Mr. Ryan’s base salary was set at $500,000 (an increase of 14% from $440,000 in fiscal 2021), his eligibility for on-target short-term incentives was set at 100% of base salary, with a maximum of 150% of base salary (the same percentages as in fiscal 2021), and his total on-target long-term incentive eligibility was set at $4,000,000 for fiscal 2022 (an increase from $3,135,000 in fiscal 2021). The long-term incentive component continued to be awarded 50% in the form of PSUs, 35% in the form of RSUs and 15% in the form of stock options. For further details, see the discussion under the heading “Long Term Incentives” above.

Upon the completion of fiscal 2022, the Compensation Committee considered the appropriate level of short-term incentives to award Mr. Ryan in respect of fiscal 2022. As previously discussed above, considering the Corporation’s overall performance in fiscal 2022 and its over-performance against its Adjusted EBITDA targets, as well as the performance of the Corporation in a number of other areas (as discussed above under the headings “Longer-term Financial and Corporate Development Plan”, “Annual Corporate Financial Targets” and “Common Share Price”) and Mr. Ryan’s contribution to such performance, Mr. Ryan was awarded a short-term incentive in respect of fiscal 2022 in the amount of $750,000, being his maximum short-term incentive eligibility at 150% of his on-target short-term incentive for fiscal 2022, to be paid in cash.

Chief Financial Officer – Allan Brett

Mr. Brett joined the Corporation as Chief Financial Officer on May 29, 2014. Mr. Brett previously served as Chief Financial Officer of Aastra Technologies Limited from 1996 through to its sale to Mitel Networks Corporation in 2014.

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The Compensation Committee received certain recommendations from the Chief Executive Officer with respect to the setting of Mr. Brett’s compensation package for fiscal 2022. In considering these recommendations, the Compensation Committee considered compensation benchmarking data prepared by the Corporation’s compensation consultant in past fiscal periods assessing the compensation arrangements of the chief financial officer position within the Comparator Group.

The Compensation Committee considered various factors in determining that Mr. Brett’s total target direct compensation should be positioned at a level that approaches the median for the chief financial officer position in the Comparator Group, including the following factors:

Mr. Brett has significant experience in the role of a Chief Financial Officer to a publicly traded company with international operations;

Mr. Brett has demonstrated his abilities and knowledge in several areas that have added value to the Corporation since his appointment, including in the areas of capital market transactions, merger and acquisition integration, taxation, business planning and overall financial management and financial reporting; and

Mr. Brett has played a key role in capital market transactions, including putting in place a restated credit facility that assists the Corporation in executing against its business plan and executing on a public offering of Commons Shares of the Corporation.

The following chart illustrates the pay mix for, and components of, Mr. Brett’s overall compensation structure as was set for fiscal 2022, assuming on-target performance:

In determining the appropriate compensation levels and pay mix for Mr. Brett for fiscal 2022, the Compensation Committee determined that the total compensation should be more heavily weighted towards “at-risk” and long-term incentives, consistent with the compensation of the Chief Executive Officer. Considering the performance of the Corporation in fiscal 2021 and based on the recommendation of the CEO which was then approved by the Compensation Committee, the compensation arrangements for Mr. Brett for fiscal 2022 included base salary in the amount of $350,000 (a 17% increase from $300,000 in fiscal 2021), on-target eligibility for short-term incentives set at $245,000, being 70% of base salary, with a maximum eligibility of 105% of base salary (a slight increase from 67% and 100%, respectively, in fiscal 2021) and eligibility for long-term incentives set at $1,487,500 for fiscal 2022 (an increase from $1,250,000 in fiscal 2021). Consistent with the arrangements with the CEO and the President and COO, and consistent with past practice, it was determined that the long-
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term incentives for Mr. Brett continue to be granted 50% in the form of PSUs, 35% in the form of RSUs and 15% in the form of stock options.

Upon the completion of fiscal 2022, the Compensation Committee considered the appropriate level of short-term incentives to award Mr. Brett in respect of fiscal 2022. As previously discussed above, considering the Corporation’s overall performance in fiscal 2022 and its over-performance against its Adjusted EBITDA targets, as well as the performance of the Corporation in a number of other areas (as discussed above under the headings “Longer-term Financial and Corporate Development Plan”, “Annual Corporate Financial Targets” and “Common Share Price”) and Mr. Brett’s contribution to such performance, Mr. Brett was awarded a short-term incentive in respect of fiscal 2022 in the amount of $367,500, being his maximum short-term incentive eligibility at 150% of his on-target short-term incentive for fiscal 2022, to be paid in cash.

President & COO – J. Scott Pagan

Mr. Pagan was appointed President and COO on November 26, 2013 and had served in a senior executive role in the Corporation for more than 10 years prior to this appointment.

The Compensation Committee received certain recommendations from the Chief Executive Officer with respect to the setting of Mr. Pagan’s compensation package for fiscal 2022. In considering these recommendations, the Compensation Committee reviewed a benchmarking report prepared by the Corporation’s compensation consultant assessing the compensation arrangements of the second-highest paid officer position within the Comparator Group. The Compensation Committee considered various factors in determining that Mr. Pagan’s total target direct compensation should be positioned within a competitive range of the median of the Comparator Group for the second-highest paid officer, including the following factors:

The scope of Mr. Pagan’s role is broader than comparable roles at peer companies;

Mr. Pagan had served in a senior executive role for more than 10 years;

During such time, the Corporation has achieved superior financial performance and executed on its long-term and corporate development strategy;

During the past five years of Mr. Pagan’s tenure, the performance of the Common Shares exceeded that of the S&P/TSX Composite Index and the NASDAQ Composite Index and tracked slightly under the S&P/TSX Composite Index “Software &Services” industry subgroup index; and

Mr. Pagan played an integral role in the steady improvement in the Corporation’s operating performance and the completion of various acquisitions and financing transactions.

The following chart illustrates the pay mix for, and components of, Mr. Pagan’s overall compensation structure as was set for fiscal 2022, assuming on-target performance:

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In determining the appropriate compensation levels and pay mix for Mr. Pagan for fiscal 2022, the Compensation Committee determined that the total compensation should be more heavily weighted towards “at-risk” and long-term incentives, consistent with the compensation of the Chief Executive Officer. Considering the performance of the Corporation in fiscal 2021 and based on the recommendation of the CEO which was then approved by the Compensation Committee, the compensation arrangements for Mr. Pagan for fiscal 2022 included base salary in the amount of $350,000 (a 17% increase from $300,000 in fiscal 2021), on-target eligibility for short-term incentives set at $297,500, being 85% of base salary, with a maximum eligibility of 127.5% of base salary (a slight increase from 84% and 105%, respectively, in fiscal 2021) and eligibility for long-term incentives set at $1,837,500 for fiscal 2022 (an increase from $1,590,000 in fiscal 2021). Consistent with the arrangements with the CEO and the President and COO, and consistent with past practice, it was determined that the long-term incentives for Mr. Pagan continue to be granted 50% in the form of PSUs, 35% in the form of RSUs and 15% in the form of stock options.

 Upon the completion of fiscal 2022, the Compensation Committee considered the appropriate level of short-term incentives to award Mr. Pagan in respect of fiscal 2022. As previously discussed above, considering the Corporation’s overall performance in fiscal 2022 and its over-performance against its Adjusted EBITDA targets, as well as the performance of the Corporation in a number of other areas (as discussed above under the headings “Longer-term Financial and Corporate Development Plan”, “Annual Corporate Financial Targets” and “Common Share Price”) and Mr. Pagan’s contribution to such performance, Mr. Pagan was awarded a short-term incentive in respect of fiscal 2022 in the amount of $446,250, being his maximum short-term incentive eligibility at 150% of his on-target short-term incentive for fiscal 2022, to be paid in cash.

Executive Vice President, Commercial Operations – Andrew Roszko

Mr. Roszko was promoted to the role of Executive Vice President, Global Sales effective as of February 1st, 2019 and was subsequently promoted to the role of Executive Vice President, Commercial Operations in June 2021 with the assumption of increased responsibility for management of the marketing and emerging markets functions within the Corporation.

The Compensation Committee received certain recommendations from the Chief Executive Officer with respect to the setting of Mr. Roszko’s compensation package for fiscal 2022. In considering these recommendations, the Compensation Committee reviewed previous benchmarking reports
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prepared by the Corporation’s compensation consultant assessing the compensation arrangements of roles similar to that of Mr. Roszko within the Comparator Group.

In determining the appropriate compensation levels and pay mix for Mr. Roszko for fiscal 2022, the Compensation Committee considered  the role Mr. Roszko plays in managing the Corporation’s global sales organization and his responsibility for achieving overall sales revenue targets, and as a result, a larger percentage of Mr. Roszko’s total on-target compensation package is tied to a short-term incentive component when compared to other NEOs, however the same criteria for assessing short-term incentive eligibility as discussed above under the heading “Short Term Incentives” are used in determining Mr. Roszko’s annual eligibility for this short-term incentive component. Considering the performance of the Corporation in fiscal 2022 and based on the recommendation of the CEO which was then approved by the Compensation Committee, the compensation arrangements for Mr. Roszko for fiscal 2022 included base salary in the amount of $300,000 (a 20% increase from $250,000 in fiscal 2021), on-target eligibility for short-term incentives set at $300,000, being 100% of base salary, with a maximum eligibility of 150% of base salary (an increase from 90% and 110%, respectively, in fiscal 2021) and eligibility for long-term incentives set at $800,000 for fiscal 2022 (an increase from $600,000 in fiscal 2021). The long-term incentive component for Mr. Roszko in respect of fiscal 2022 was awarded 50% in the form of PSUs vesting following a three-year performance period, 25% in the form of RSUs vesting equally over three years and 25% in the form of stock options vesting over three years.

Upon the completion of fiscal 2022, the Compensation Committee considered the appropriate level of short-term incentives to award Mr. Roszko in respect of fiscal 2022. As previously discussed above, considering the Corporation’s overall performance in fiscal 2022 and its over-performance against its Adjusted EBITDA targets and, in the case of Mr. Roszko specifically, the performance of the Corporation against its aggregate revenue targets and Mr. Roszko’s contribution to such performance, Mr. Roszko was awarded a short-term incentive in respect of fiscal 2022 in the amount of $450,000, being his maximum short-term incentive eligibility at 150% of his on-target short-term incentive for fiscal 2022, to be paid in cash.

Executive Vice President, Product Management – Kenneth Wood

The Compensation Committee received certain recommendations from the Chief Executive Officer with respect to Mr. Wood’s compensation package for fiscal 2022. In considering these recommendations, the Compensation Committee considered a benchmarking report prepared by its compensation consultant in fiscal 2020 assessing the compensation arrangements of the five highest paid officers within the Comparator Group and any direct comparable for the role of the most senior product management/product development officer. Considering the performance of the Corporation in fiscal 2022 and based on the recommendation of the CEO which was then approved by the Compensation Committee, the compensation arrangements for Mr. Wood for fiscal 2022 included base salary in the amount of $250,000 (a 14% increase from $220,000 in fiscal 2021), on-target eligibility for short-term incentives set at $75,000, being 30% of base salary, with a maximum eligibility of 45% of base salary (an increase from 25% and 40%, respectively, in fiscal 2021) and eligibility for long-term incentives set at $400,000 for fiscal 2022 (the same level as in fiscal 2021).  The long-term incentive component for Mr. Wood in respect of fiscal 2022 was awarded 50% in the form of PSUs vesting following a three-year performance period, 25% in the form of RSUs vesting equally over three years and 25% in the form of stock options vesting over three years.

Upon the completion of fiscal 2022, the Compensation Committee considered the appropriate level of short-term incentives to award Mr. Wood in respect of fiscal 2022. As previously discussed above, considering the Corporation’s overall performance in fiscal 2022 and its over-performance against its Adjusted EBITDA targets and Mr. Wood’s contribution to such performance, Mr. Wood was awarded a short-term incentive in respect of fiscal 2022 in the amount of $112,500, being his maximum short-term incentive eligibility at 150% of his on-target short-term incentive for fiscal 2022, to be paid in cash.
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Summary Compensation Table
The following table sets forth information regarding compensation earned by the NEOs for the fiscal years as specified:

Name and Principal
Position
Fiscal
Year
Ended
Jan. 31
 
Salary1
Share-
based
Awards2
Option-
based
Awards3
Annual
Non-Equity
Incentive Plan
compensation4
All Other
Compensation5
Total
Compensation
 
 
($)
($)
($)
($)
($)
($)
Edward J. Ryan
Chief Executive Officer
2022
2021
2020
485,000
440,000
440,000
4,097,288
3,305,797
2,125,494
592,194
499,271
307,486
750,000
440,000
440,000
2,000
2,000
2,000
5,926,482
4,687,068
3,314,980
               
Allan Brett
Chief Financial Officer
2022
2021
2020
333,333
300,000
300,000
1,523,671
1,333,664
939,999
220,218
200,307
135,987
367,500
200,000
200,000
9,931
9,474
8,993
2,454,653
2,043,445
1,584,979
               
J. Scott Pagan
President & COO
2022
2021
2020
333,333
300,000
300,000
1,882,214
1,706,026
1,253,399
272,041
255,549
181,319
446,250
252,000
252,000
9,931
9,474
8,993
2,943,769
2,523,049
1,995,711
               
Andrew Roszko
Executive Vice President, Global Sales
 
2022
2021
2020
283,333
250,000
250,000
739,461
440,650
40,310
197,392
211,949
984,8867
450,000
225,000
225,000
7,189
1,677,375
1,127,599
1,500,1966
Kenneth Wood
Executive Vice President, Product Management
 
2022
2021
2020
 
242,500
220,000
215,000
 
369,762
245,086
65,450
 
98,705
139,440
122,435
 
112,500
55,000
55,000
 
2,000
2,000
2,000
 
825,467
661,526
459,885
 
(1) Amounts in this column reflect actual amounts paid during the specified period and may not reflect the base salary set for the specified period under the Corporation’s compensation plans depending upon the timing of any adjustments to base salary during the fiscal year.
(2) Dollar amounts in this column reflect the grant date fair value of CRSUs, PSUs and RSUs issued in the applicable year which are recorded by the Corporation for expense purposes in its functional currency of Canadian dollars and converted to US dollars at the exchange rate in effect at the end of the specified period and which may vary from the exchange rate applied at the time of calculating the US dollar equivalent fair value as of the grant date. Stated amounts do not include any amounts of annual short-term incentive plan compensation that the NEO elected to receive in the form of CRSUs. The grant date fair value of a CRSU was determined by multiplying the number of CRSUs granted by the weighted-average closing price of the Common Shares in the period of five trading days preceding the date of the grant. This approach is used as it is the model used to value CRSUs for the purposes of the Corporation’s consolidated financial statements. The grant date fair value of a PSU is determined using a Monte Carlo simulation approach. This approach is used as it is the model used to value PSUs for the purposes of the Corporation’s consolidated financial statements. The grant date fair value of an RSU is based on the closing price of the Common Shares on the trading day preceding the date of the grant. This approach is used as it is the model used to value RSUs for the purposes of the Corporation’s consolidated financial statements. Amounts in this column do not reflect any actual financial benefit an NEO may receive upon any eventual vesting and redemption of PSUs, RSUs or CRSUs. Please see the section entitled “Security-Based Compensation Plans”.
(3) Dollar amounts in this column reflect the grant date fair value of stock options issued in the applicable year which are recorded by the Corporation for expense purposes in its functional currency of Canadian dollars and converted to US dollars at the exchange rate in effect at the end of the specified period and which may vary from the exchange rate applied at the time of calculating the US dollar equivalent fair value as of the grant date. Amounts in this column do not reflect whether the NEO has actually realized a financial benefit from the exercise of the awards. The grant date fair value of a stock option is determined using the Black-Scholes-Merton model. This model is used as it is the model used to value stock options for the purposes of the Corporation’s consolidated financial statements. Please see the section entitled “Security-Based Compensation Plans – Common Shares Authorized for Issuance Under Equity Compensation Plans”.
(4) Annual non-equity incentive plan compensation reflects the entitlement of an NEO pursuant to the Corporation’s short-term incentives, described earlier in this Circular. An NEO may elect to take such entitlements in the form of cash or CRSUs. Where the NEO elected to receive an award in the form of CRSUs, the award is made using the weighted average closing price of the Common Shares on the TSX in the period of five trading days preceding the date of the grant and paid out over a period of ten quarters.
(5) “All Other Compensation” includes contributions made by the Corporation to, in the case of Messrs. Brett, Pagan and Roszko, the NEO’s DPSP Plan or, in the case of Messrs. Ryan and Wood, the NEOs’ 401(k) plan. “All Other Compensation” does not include benefits received by the NEOs which are available generally to all our salaried employees. “All Other Compensation” also does not include the value of perquisites for each NEO where the aggregate value of those is less than
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10% of the NEO’s total salary for the financial year and less than Cdn.$50,000. Mr. Ryan, as a salaried officer of the Corporation, does not receive compensation for serving as a Director of the Corporation.
(6) The Option-Based Awards granted to Mr. Roszko in fiscal 2020 included a one-time award of 100,000 options vesting over a period of five (5) years and having a Black-Scholes value of $899,267 as of the date of grant in connection with Mr. Roszko’s promotion to the role of Executive Vice-President, Global Sales. Mr. Roszko’s annual compensation package for fiscal 2020 included a further grant of options having a Black-Scholes value of $85,000 as of the date of grant as a portion of his annual long-term incentive.

Using the data and valuation methodology from the above summary compensation table, the Corporation has calculated the following:

Total Compensation of NEOs in Fiscal 2022 as a percentage of the Corporation’s total revenue in Fiscal 2022
3.26%

Outstanding NEO Option-based Awards and Share-based Awards
The following table details the outstanding option-based awards and share-based awards for each NEO as at January 31, 2022.

 
Option-based Awards1
Share-based Awards1
Name
Grant Date
Number of securities underlying unexercised options
Option Exercise Price2
Option Expiration Date
Value of unexercised in-the-money options3
Number of shares or units of shares that have not vested4,5
Market or payout value of share-based awards that have not vested5,6
Market or payout value of vested share-based awards not paid out or distributed7
 
(#)
($)
($)
(#)
($)
($)
 
Edward J. Ryan
April 13, 2018
34,135
28.65
April 13, 2025
1,503,990
       
 
April 13, 2019
34,193
39.63
April 13, 2026
1,131,254
       
 
April 12, 2020
33,851
40.55
April 12, 2027
1,088,534
       
 
Dec 7, 2020
11,392
57.92
Dec 7, 2027
168,475
       
 
April 14, 2021
35,596
64.37
April 14, 2028
296,937
       
           
 120,189
 8,746,154
 33,338,193
 
                   
Allan Brett
April 15, 2016
12,205
19.49
April 15, 2023
649,545
       
 
April 13, 2017
12,505
23.51
April 13, 2024
615,271
       
 
April 13, 2018
12,526
28.65
April 13, 2025
551,896
       
 
April 13, 2019
15,122
39.63
April 13, 2026
500,302
       
 
April 12, 2020
14,971
40.55
April 12, 2027
481,417
       
 
Dec 7, 2020
3,625
57.92
Dec 7, 2027
53,610
       
 
April 14, 2021
13,237
64.37
April 14, 2028
110,421
       
           
 48,393
 3,521,559
 9,870,086
 
                   
J. Scott Pagan
April 15, 2016
21,090
19.49
April 15, 2023
1,122,401
       
 
April 13, 2017
20,597
23.51
April 13, 2024
1,013,413
       
 
April 13, 2018
18,790
28.65
April 13, 2025
827,889
       
 
April 13, 2019
20,163
39.63
April 13, 2026
667,080
       
 
April 12, 2020
19,961
40.55
April 12, 2027
641,878
       

67

 
Dec 7, 2020
4,039
57.92
Dec 7, 2027
59,732
       
 
April 14, 2021
16,352
64.37
April 14, 2028
136,406
       
           
 61,991
 4,511,085
 23,050,043
 
                   
Andrew Roszko
April 13, 2018
2,763
28.65
April 13, 2025
121,738
       
 
April 13, 2019
6,758
39.63
April 13, 2026
223,584
       
 
April 13, 2019
100,000
39.63
April 13, 2026
3,308,436
       
 
April 12, 2020
9,426
40.55
April 12, 2027
303,108
       
 
Dec 7, 2020
8,199
57.92
Dec 7, 2027
121,254
       
 
April 14, 2021
11,865
64.37
April 14, 2028
98,976
       
           
 14,030
 1,020,963
 201,864
 
                   
Kenneth Wood
April 13, 2017
4,825
23.51
April 13, 2024
237,400
       
 
April 13, 2018
9,499
28.65
April 13, 2025
418,527
       
 
April 13, 2019
13,615
39.63
April 13, 2026
450,444
       
 
April 12, 2020
13,479
40.55
April 12, 2027
433,439
       
 
Dec 7, 2020
3,677
57.92
Dec 7, 2027
54,379
       
 
April 14, 2021
5,933
64.37
April 14, 2028
49,492
       
           
 7,599
 552,979
 158,420
 
(1) See the discussion of Executive Compensation for each of the NEOs commencing on page 49 above for details of the specific option- and share-based awards received in respect of fiscal 2022.
(2) Options granted April 15, 2016, April 13, 2017, April 13, 2018, April 13, 2019, April 12, 2020, December 7, 2020 and April 14, 2021 were granted with Canadian dollar exercise prices of Cdn.$24.79, Cdn.$29.90, Cdn.$36.44, Cdn.$50.40, Cdn.$51.58, Cdn.$73.67 and Cdn. $81.87, respectively. The exercise prices noted in this table have been converted to US dollars using an exchange rate of 1 US dollar = 1.2719 Canadian dollars, being the indicative foreign exchange rate reported by the Bank of Canada on January 31, 2022, the last business day of fiscal 2022. The April 15, 2016 options granted to Mr. Ryan, Mr. Brett, Mr. Pagan, Mr. Roszko and Mr. Wood vest annually over a period of three years from January 31, 2017. The April 13, 2017 options granted to Mr. Ryan, Mr. Brett, Mr. Pagan, Mr. Roszko and Mr. Wood vest annually over a period of three years from January 31, 2018. The April 13, 2018 options granted to Mr. Ryan, Mr. Brett, Mr. Pagan, Mr. Roszko and Mr. Wood vest annually over a period of three years from January 31, 2019. The April 13, 2019 options granted to Mr. Ryan, Mr. Brett, Mr. Pagan, Mr. Roszko and Mr. Wood vest annually over a period of three years from January 31, 2020 except for the 100,000 options granted to Mr. Roszko which vest annually over a period of five years from January 31, 2020. The April 12, 2020 options granted to Mr. Ryan, Mr. Brett, Mr. Pagan, Mr. Roszko and Mr. Wood vest annually over a period of three years from January 31, 2021. The December 7, 2020 options granted to Mr. Ryan, Mr. Brett, Mr. Pagan, Mr. Roszko and Mr. Wood vest annually over a period of two years from January 31, 2022. The April 14, 2021 options granted to Mr. Ryan, Mr. Brett, Mr. Pagan, Mr. Roszko and Mr. Wood vest annually over a period of three years from January 31, 2022.
(3) The value of unexercised in-the-money options has been calculated using the difference between the closing price of the Corporation’s Common Shares on the TSX at the end of fiscal 2022 (Cdn.$92.48) and the Canadian dollar option exercise price (see footnote (2) above). The value has been reported in US dollars using an exchange rate of 1 US dollar = 1.2719 Canadian dollars, being the indicative foreign exchange rate reported by the Bank of Canada on January 31, 2022, the last business day of fiscal 2022. No adjustment has been made for options that have not yet vested and are therefore not yet exercisable.
(4) The number of PSUs included assumes a 1.0 adjustment factor. See also footnote (5).
(5) PSU awards under the PRSU Plan are subject to performance vesting criteria. The number of PSUs that vest on a vesting date is subject to an adjustment factor which ranges from 0.0 to 2.0 for outstanding grants. Please see the section entitled “Security-Based Compensation Plans – PRSU Plan”. The market value of PSUs included assumes a 1.0 adjustment factor.
(6) Unvested share-based awards are in the form of CRSUs, RSUs and PSUs. The market value of CRSUs, RSUs and PSUs that have not vested was determined using the closing price of the Common Shares on NASDAQ on January 31, 2022 ($72.77) being the last trading day of fiscal 2022.
(7) Vested share-based awards are in the form of RSUs and PSUs. The market value of RSUs and PSUs that have vested but have not been distributed was determined using the closing price of the Common Shares on NASDAQ on January 31, 2022 ($72.77), being the last trading day of fiscal 2022.
NEO Incentive Plan Awards – Value Vested or Earned During Fiscal 2022
Name
Option-based awards – Value vested during the year1
Share-based awards – Value vested during the year2
Non-equity incentive plan compensation – Value earned during the year3
($)
($)
($)
Edward J. Ryan
 923,131
 5,447,635
 750,000
Allan Brett
 390,823
 2,060,919
 367,500
J. Scott Pagan
 511,675
 2,941,145
 446,250
Andrew Roszko
 961,327
 198,299
 450,000
Kenneth Wood
338,347
172,029
112,500
(1) The total value of stock options that vested in fiscal 2022. The value is equal to the difference between the closing price of the Corporation’s Common Shares on the TSX on the vesting date and the Canadian dollar option exercise price. The value has been reported in US dollars using an exchange rate of 1 US dollar = 1.2719 Canadian dollars, being the indicative foreign exchange rate reported by the Bank of Canada on January 31, 2022, the last business day of fiscal 2022.
(2) The total value of RSUs, PSUs and CRSUs vested during fiscal 2022. The value of RSUs and PSUs that have vested was determined using the closing price of the Common Shares on NASDAQ on January 31, 2022 ($72.77), the last business day of fiscal 2022.  PSUs that vested in fiscal 2022 are based on PSUs awarded in fiscal 2019 subject to three year performance vesting criteria and, based on the three year total shareholder return applicable to those PSU awards for the
68


three-year period ended January 31, 2021, the final vested number of units resulting from such awards reflected a 1.82x performance factor adjustment.
(3) Annual non-equity incentive plan compensation reflects the entitlement of an NEO pursuant to the Corporation’s short-term incentives, described earlier in this Circular. These amounts are also included in the Summary Compensation Table above.
NEO Option Exercises During Fiscal 2022
Name
Shares acquired on exercise during the year
Aggregate Value Realized1
Unexercised options at the end of the year2

(#)

($)

(#)
Edward J. Ryan
Nil
Nil
 149,167
Allan Brett
Nil
Nil
 84,191
J. Scott Pagan
Nil
Nil
 120,992
Andrew Roszko
Nil
Nil
 139,011
Kenneth Wood
Nil
Nil
51,028
(1) The aggregate value realized is the difference between the fair market value of the common shares on the exercise date and the exercise price of the option.
(2) See Summary Compensation Table above for value of unexercised option holdings.
CEO Five-Year Look Back Compensation
The following chart represents a five-year look back comparison of the on-target compensation awarded to the CEO in a fiscal year compared to the amounts “realizable” from those compensation awards.

The “Total Target Compensation” reflects the total on-target compensation set for the CEO by the Compensation Committee for the fiscal year as indicated, consisting of base salary, on-target STI eligibility and on-target LTI award values at time of grant.

The “Total Realizable Compensation” reflects the actual salary and STI amounts received by the CEO in respect of the fiscal year indicated plus the value of any vested RSUs, vested PSUs or vested stock options awarded as part of the LTI for the fiscal year indicated. RSUs and PSUs have been valued based on the fair market value of a Common Share on the date of vesting. Stock options have been valued based on the “in-the-money” value of the stock option on the date of vesting, being the difference between the fair market value of a Common Share and the exercise price of the stock option. In each case, the values have been calculated using the Canadian dollar closing price of Common Shares on the date of vesting, converted to USD at the applicable exchange rate as of that calculation date. These calculations are based on values determined as of vesting dates and are not reflective of actual amounts that may be received by the CEO depending on the timing of the redemption of any vested stock options or vested share units resulting from any of the RSU or PSU awards included in the 5 year period covered below. For details of any actual amounts received from exercises of vested stock options, please refer to the separate discussion of NEO option exercises above.

As a significant portion of the CEO's target compensation is in the form of LTI that is equity-based and vests over time, more recent periods will reflect that the LTI corresponding to that period has largely not vested yet.  The appreciation in the price of Common Shares during the 5-year period has had a corresponding appreciation impact on the realizable value of the LTI compensation awarded in past years that is now being calculated in this chart as those past LTI awards vest. In addition, the Corporation's success in achieving the applicable performance criteria for incremental adjustment to the PSU awards during this 5-year period (as discussed above and in previous years in the discussion of Long-Term Incentives) has also resulted in a corresponding increase in the realizable value of the PSU component of the LTI compensation.
69


The chart below similarly reflects that a significant portion of the compensation awarded in fiscal 2021 and 2022 is in the form of LTI that has not been earned yet and has not yet vested and therefore is not reflected in the “Total Realizable Compensation” for those fiscal years as of the date of this Circular based on the calculation method outlined above.
NEO Termination and Change of Control Benefits
The employment contracts we have with our NEOs may require us to make certain types of payments and provide certain types of benefits to the NEOs upon the occurrence of:
The termination without cause of the NEO;
A material adverse change to the NEO’s terms of employment; and/or
A change of control of the Corporation.

The Corporation considers it to be in its best interests to establish severance benefits for its NEOs to provide certainty to both the Corporation in respect of its obligations in the event of termination of employment as well as to the NEOs as an incentive to encourage their retention and continued focus on the Corporation’s operations in circumstances such as an unsolicited change of control transaction. The Corporation believes that the severance benefits established for its NEOs are competitive and in-line with market practice. The period over which severance benefits are calculated is based on the position held by the NEO and the NEO’s length of service with the Corporation.

a.            Termination Without Cause

If the NEO is terminated without cause, we may be obligated to make severance payments as described below. We may also be required to continue the NEO’s employment benefits during any applicable severance period.

Edward J. Ryan / J. Scott Pagan


We are required to pay the NEO his base salary and on-target short-term compensation for up to two years.

70


Allan Brett


We are required to pay the NEO his base salary for up to one year and an amount equal to his annual average short-term compensation received over the two preceding years.

Andrew Roszko


We are required to pay the NEO his base salary for up to one year and an amount equal to his on-target short-term compensation for the then current year.

Kenneth Wood


We are required to pay the NEO his base salary for up to 12 months, subject to a 50% reduction of the unpaid balance of such severance amount from the date the departed NEO finds alternate employment to the end of the 12-month period.

The PRSU Plan provides that if the employment of an NEO is terminated by the Corporation without cause, a prorated portion of the NEO’s unvested Share Units will automatically vest, based on the number of months from the first day of the grant to the termination date divided by the number of months in the grant and, in the case of PSUs, using an adjustment factor of 1.0. The PRSU Plan provides that if the employment of an NEO is terminated by the Corporation without cause within 12 months of a Change of Control (as defined below), then there will be immediate accelerated vesting of all of the NEO’s Share Units using an adjustment factor of 1.0. Potential payouts relating to such grants are reflected in the table in the section “Quantitative Estimates of Payments upon Termination or Change of Control”.

b.            Material Adverse Change to the NEO’s Terms of Employment

If there is an adverse change in the relationship between the Corporation and the NEO without the NEO’s written consent, we may be obligated to provide the payments or benefits to the NEO outlined above in the section “Termination Without Cause”. Some examples of such an adverse change in the relationship between the NEO and the Corporation are as follows:

A Change in Control as described in the section below which results in a material change of the NEO’s position, duties, responsibilities, title or office which were in effect immediately prior to such a change in control;

A material reduction by the Corporation of the NEO’s salary, benefits or any other form of remuneration payable by the Corporation; or

A material breach of the employment agreement between the Corporation and the NEO that is committed by the Corporation.

c.            Change of Control

The only situation in which a change in control, by itself and absent any termination of employment, results in any unvested compensation of an NEO being accelerated is the limited circumstances where there is:

A Corporate Transaction; and

The surviving, successor or acquiring entity does not assume the outstanding Share Units;
in which case, under the PRSU Plan all outstanding and then unvested Share Units will vest immediately prior to the Corporate Transaction at not less than 100% and not more than 200% as determined by the Compensation Committee.


A “Change of Control” includes:
71



o
A transaction in which any person or group acquires ownership of more than 50% of the Corporation’s Common Shares, on a fully-diluted basis;

o
During any two-year period, directors, including any additional director whose election was approved by a vote of at least a majority of the directors then in office or who were appointed by the directors then in office, cease to constitute a majority of the Board;

o
A transaction which results in more than 50% of the Corporation’s Common Shares, on a fully-diluted basis, being held by any person or group other than the Corporation’s shareholders immediately preceding the transaction; or

o
There is a transaction to sell all or substantially all of the assets of the Corporation;


A “Corporate Transaction” is defined as any of the following:

o
A capital reorganization, amalgamation, arrangement, plan of arrangement or other scheme or reorganization;

o
An offer for Common Shares, where the Common Shares subject to the offer, together with the offeror’s Common Shares and Common Shares of any person or company acting jointly or in concert with the offeror, constitute in the aggregate 20% or more of the Common Shares;

o
An acquisition by a person of Common Shares such that the Common Shares acquired, together with the person’s Shares and Shares of any person or company acting jointly or in concert with such person, constitute in the aggregate 20% or more of the Common Shares outstanding immediately after such acquisition, unless another person has previously acquired and continues to hold Common Shares that represent a greater percentage than the first-mentioned person;

o
A sale of all or substantially all of the assets of the Corporation or any subsidiary; or

o
An extraordinary distribution to shareholders, including extraordinary cash dividends, dividends in kind and return of capital.

Quantitative Estimates of Payments to NEOs upon Termination or Change of Control

Further information regarding payments to our NEOs in the event of a termination without “cause” and/or upon a Change of Control may be found in the table below. This table sets forth the estimated amount of payments each NEO would be entitled to receive upon the occurrence of the indicated event, assuming that the event occurred on January 31, 2022. Amounts potentially payable under plans which are generally available to all salaried employees, such as life and disability insurance, are excluded from the table. The values related to vesting of stock options and awards are based upon the fair market value of our Common Shares of Cdn.$92.48 per Common Share as reported on the TSX on January 31, 2022, the last trading day of fiscal 2022, converted to US dollars at the rate of 1 US dollar = 1.2719 Canadian dollars, being the indicative foreign exchange rate reported by the Bank of Canada on January 31, 2022, the last business day of fiscal 2022. Stock option amounts deduct the applicable exercise price of the stock options. CRSU values are calculated using the fair market value of our Common Shares of $72.77 per Common Share as reported on NASDAQ on January 31, 2021, being the last trading day of fiscal 2022. Payments that would be incurred in Canadian dollars are also converted to US dollars at the rate of 1 US dollar = 1.2719 Canadian dollars. Severance amounts included in the table below assume that an NEO does not obtain alternate employment during any severance period. Severance amounts do not include amounts payable by the Corporation on account of, or in lieu of, employment benefits. The “Without Cause” summary information includes any deemed termination by the Corporation due to an adverse change in relationship between the Corporation and the NEO.

Name
Event
Salary
($)
Short-term
($)
Stock
Options ($)
Share Units
($)
Total
($)
Edward J. Ryan
Termination Without Cause
1,000,000
1,000,000
 4,530,369
 6,530,369
Termination Without Cause Within 12 Months of Change of Control
1,000,000
1,000,000
645,021
 8,746,154
 11,391,175
Solely Upon Change of Control

72

Allan Brett
Termination Without Cause
350,000
283,750
 1,894,688
 2,528,438
Termination Without Cause Within 12 Months of Change of Control
350,000
283,750
260,908
 3,521,559
4,416,217
Solely Upon Change of Control
J. Scott Pagan
Termination Without Cause
700,000
595,000
 2,467,437
 3,762,437
Termination Without Cause Within 12 Months of Change of Control
700,000
595,000
334,731
 4,511,085
6,140,816
Solely Upon Change of Control
Andrew Roszko
Termination Without Cause
300,000
300,000
345,124
 945,124
Termination Without Cause Within 12 Months of Change of Control
300,000
300,000
 967,404
 1,567,404
Solely Upon Change of Control
Kenneth Wood
Termination Without Cause
250,000
 162,544
 412,544
Termination Without Cause Within 12 Months of Change of Control
250,000
 464,9218
 714,928
Solely Upon Change of Control
 Director Compensation
The Compensation Committee also exercises oversight over the compensation paid to non-executive directors of the Corporation and recommends the annual compensation program for directors to the Board of Directors for approval. In setting the director compensation structure for fiscal 2022, the Compensation Committee sought the advice of its outside, independent compensation consultant, Mercer, to provide assistance and guidance on director compensation issues. Mercer provided to the Compensation Committee relevant information pertaining to market compensation levels within the Corporation’s Comparator Group, alternative compensation plan designs, overall market trends and best practices relating to director compensation. In making director compensation recommendations to the Board for approval, the Compensation Committee considers a number of factors, including: the director compensation benchmarking report from Mercer and the relative positioning of the board compensation within the Comparator Group; feedback from shareholders in the shareholder engagement process undertaken by the Board; the results of the previous year’s “say on pay” shareholder vote; the overall performance of the Corporation over the past fiscal year in terms of both financial performance against its budget and its share price performance relative to the Comparator Group; overall industry trends in director compensation; and the general macro-economic environment facing the Corporation.

At the end of fiscal 2021, the Compensation Committee undertook a benchmarking exercise with the assistance of its compensation consultant to assess current Director compensation compared to the Corporation’s Comparator Group.  As had been discussed in the Corporation’s Management Information Circular for its meeting of shareholders held in 2021, no changes had been made to the Director compensation structures in fiscal 2021 in light of the events of the Covid-19 pandemic and the uncertainty it had created for the Corporation. The result of the benchmarking study conducted at the beginning of fiscal 2022 against the Comparator Group identified that the compensation being awarded to the Directors was falling behind the targeted median director compensation levels within the Comparator Group.  The Compensation Committee had noted the same observation in fiscal 2021 but, as discussed, had determined to hold Director compensation levels at the same levels in fiscal 2021.    For fiscal 2022, the Compensation Committee recommended to the Board of Directors that certain increases be made in the Director compensation program to maintain a level of competitiveness with the director compensation levels observed in the Comparator Group. The Board of Directors approved increases to the director compensation structure for fiscal 2022 as set out in the chart below.
73


Compensation Policies
Directors who are officers or employees of the Corporation receive no compensation for serving as directors. Non-employee directors of the Corporation were compensated in fiscal 2022 based on the annual retainers for Board and committee work outlined in the table below.

Retainer
Fiscal 2021 Amounts
Fiscal 2022 Amounts
Annual Base Retainer – Non-Executive Chair
$95,000
$135,000
Annual Base Retainer – All Other Non-Executive Directors
$50,000
$60,000
Audit Committee Retainer
$20,000 – Chair
$10,000 – Member
$28,000 – Chair
$14,000 – Member
Compensation Committee Retainer
$10,000 – Chair
$5,000 – Member
$14,000 – Chair
$7,000 – Member
Corporate Governance Committee Retainer
$10,000 – Chair
$3,750 – Member
$14,000 – Chair
$5,250 – Member
Nominations Committee Retainer
$5,000 – Chair
$2,500 – Member
$7,000 – Chair
$3,500 – Member
Annual Equity Grant – Non-Executive Chair
$150,000
$200,000
Annual Equity Grant – All Other Non-Executive Directors
$115,000
$175,000

Outside directors who are not ordinarily resident in the Province of Ontario and travel to attend a meeting of the Board in person were compensated an additional $1,500 per meeting.

All annual retainers are paid in cash and/or DSUs. Each DSU granted has a value equal to the weighted-average closing price of the Common Shares in the period of five trading days preceding the date of grant. A director may elect, prior to the commencement of a fiscal year, to receive a portion of his or her cash compensation for that fiscal year in the form of DSUs. Directors are required to receive a minimum of 50% of their retainer compensation in the form of DSUs if they have not yet achieved the minimum equity ownership threshold specified by the Director Equity Ownership Policy described below.

Directors are not permitted to purchase financial instruments, including, for greater certainty, prepaid variable forward contracts, equity swaps, collars, or units of exchange funds that directly hedge or offset a decrease in market value of securities held, directly or indirectly, by the director.

Directors are entitled to reimbursement for expenses incurred by them in their capacity as directors. During fiscal 2022, each non-employee member of the Board was also eligible for reimbursement of up to $3,000 per fiscal year (Non-Executive Chair of the Board, $5,000) of fees paid by that individual director for enrolment in continuing education courses or programs conducted by third parties or institutions relevant to their role as a director of the Corporation.
Fiscal 2022 Compensation for Directors
The following table sets forth summary information concerning the annual compensation earned by each of the current non-executive directors of the Corporation for fiscal 2022.

Name
Fees Earned1 ($)
Share-based Awards2 ($)
Total3 ($)
Deepak Chopra
68,231
175,000
243,231
Deborah Close
75,039
175,000
250,039
Eric A. Demirian - Chair
121,630
200,000
321,630
Dennis Maple
69,321
175,000
244,321
Chris Muntwyler
64,759
175,000
239,759
Jane O’Hagan
76,503
175,000
251,503
John J. Walker
87,583
175,000
262,583

74


(1) Of the fees disclosed, each of the following directors elected to receive the following amounts in the form of DSUs under the DSU Plan (number of DSUs expressed in parentheses): (i) Deepak Chopra - $68,231 (934); (ii) Dennis Maple - $69,321 (955); (iii) Chris Muntwyler - $64,759 (888); (iv) Jane O’Hagan – $76,503 (1,056); and (v) John J. Walker – $87,583 (1,207). DSUs are valued by multiplying the number of DSUs granted and the weighted-average closing price of the Common Shares on the NASDAQ in the period of five trading days preceding the date of the grant.
(2) Amounts set forth in this column reflect awards of DSUs under the DSU Plan (other than DSUs that directors elected to receive in lieu of fees). DSUs are valued by multiplying the number of DSUs granted and the weighted-average closing price of the Common Shares on NASDAQ in the five trading days preceding the date of the grant.
(3) Table does not include any amounts paid as reimbursement of expenses.
Outstanding Director Option-Based Awards and Share-based Awards
The following table details the outstanding share-based awards for each of the Corporation’s non-employee directors as at January 31, 2022. The Corporation’s non-employee directors did not hold any outstanding option-based awards as of the date of this Circular.

 
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 distributed1
(#)
($)
($)
Deepak Chopra
 482,174
Deborah Close
 2,560,776
Eric A. Demirian
 4,493,693
Dennis Maple
 1,622,844
Chris Muntwyler
 480,209
Jane O’Hagan
 3,797,648
John J. Walker
 4,901,496
(1) All share-based awards that have vested are in the form of DSUs. DSUs vest on grant, however, are not paid to the director until the director ceases to serve on the Board. The market value of DSUs was determined using the closing price of the Common Shares on NASDAQ on January 31, 2022 ($72.77), the last business day of fiscal 2022.
Director Incentive Plan Awards Value Vested or Earned During Fiscal 2022
Name
Option-based awards – Value vested during the year ($)
Share-based awards – Value vested during the year1 ($)
Deepak Chopra
 243,231
Deborah Close
 175,000
Eric A. Demirian
 200,000
Dennis Maple
 244,321
Chris Muntwyler
 239,759
Jane O’Hagan
 251,503
John J. Walker
 262,583
(1) Amounts shown are inclusive of annual share-based awards plus any fees earned which are taken in the form of DSUs.  DSUs vest on grant, however, are not paid to the director until the director ceases to serve on the Board of Directors.
Director Equity Ownership Policy
The Corporation has an equity ownership policy applicable to directors (the “Director Equity Ownership Policy”).

The objective of the Director Equity Ownership Policy is to ensure that non-Management members of the Board acquire and hold a meaningful ownership interest in the Corporation within a reasonable period following the individual’s election or appointment to the Board. Under the policy, within five years of becoming subject to the policy, each non-Management director is required to attain and maintain the following equity ownership level. During a period when a non-Management director has not met the applicable equity ownership levels, the non-Management director must elect to receive at least 50% of the base annual retainer received by the director for serving on the Board in the form of DSUs.
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Position
Equity Ownership Level as a Multiple of Annual Base Retainer
Non-Management Director
3X

For purposes of the Director Equity Ownership Policy, “Market Value” for determining compliance means the volume-weighted average trading price of a Common Share on the TSX for the five trading days preceding the measurement date. In determining compliance with the Director Equity Ownership Policy, Common Shares are included and valued at the greater of cost and Market Value; and DSUs are included and valued at the greater of Market Value at the date of grant or Market Value at the date of measurement.

The following table identifies the equity ownership levels of each of the current Directors, other than Mr. Ryan, Chief Executive Officer, as at April 29th, 2022 with reference to the minimum equity ownership levels required by the Director Equity Ownership Policy. Where Market Values have been included in the table they are calculated by multiplying the number of securities by the volume-weighted average trading price of a Common Share on the TSX for the five trading days preceding April 29th, 2022, being Cdn.$80.14 converted to US dollars at the rate of 1 US dollar = 1.2509, being the indicative foreign exchange rate reported by the Bank of Canada on April 28th, 2022. Minimum equity ownership levels are determined by multiplying the level set out in the Director Equity Ownership Policy by the current annual base retainer (which, as of the date of this Circular, is $135,000 for Mr. Demirian in his role as Chair and $60,000 for other directors):

Name
Minimum Equity
Ownership Level
($)
Value of Holdings per Equity
Ownership Policies(1)
($)
Minimum Equity Ownership
Level Achieved?
Deepak Chopra
 180,000
 441,332
Yes
Deborah Close
 180,000
 2,198,244
Yes
Eric A. Demirian
405,000
 4,482,193
Yes
Dennis Maple
180,000
 1,419,507
Yes
Chris Muntwyler
180,000
 437,854
Yes
Jane O'Hagan
180,000
 3,289,009