Cogeco 2011 Annual Report Download - page 72

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Consolidated financial statements COGECO CABLE INC. 2011 71
Incentive share unit plan
Effective October 29, 2009, the Corporation established a senior executive and designated employee Incentive Share Unit Plan (“ISU Plan”).
According to the plan, senior executives and designated employees periodically receive a given number of Incentive Share Units (“ISUs”) which
entitle the participant to receive subordinate voting shares of the Corporation after three years less one day from the date of grant. During fiscal
year 2011, the Corporation granted 61,724 (63,666 in 2010) ISUs of which 10,000 (9,981 in 2010) ISUs were granted to COGECO Inc.’s
employees. The Corporation establishes the value of the compensation related to the ISUs granted based on the fair value of the Corporation’s
subordinate voting shares at the date of grant and a compensation expense is recognized over the vesting period, which is three years less one
day. A Trust was created for the purpose of purchasing these shares on the stock market in order to protect against stock price fluctuation. The
Corporation instructed the trustee to purchase 59,503 (62,436 in 2010) subordinate voting shares of the Corporation on the stock market.
These shares were purchased for cash consideration aggregating $2,368,000 ($2,008,000 in 2010) and are held in trust for the participants
until they are fully vested. The Trust, considered as a variable interest entity, is consolidated in the Corporation’s financial statements with the
value of the acquired shares presented as subordinate voting shares held in trust under the ISU Plan in reduction of capital stock. A
compensation expense of $1,305,000 ($577,000 in 2010) was recorded for the year ended August 31, 2011. Under the ISU Plan, the following
ISUs were granted by the Corporation and are outstanding at August 31:
2011 2010
Outstanding, beginning of year 57,409 –
Granted 61,724 63,666
Distributed (13,184) (5,027)
Forfeited (885) (1,230)
Outstanding, end of year 105,064 57,409
Deferred share unit plan
The Corporation established a Deferred Share Unit Plan (“DSU Plan”) to assist in the attraction and retention of qualified individuals to serve on
the Board of Directors (“Board”) of the Corporation. Each existing or new member of the Board may elect to be paid a percentage of the annual
retainer in the form of deferred share units (“DSUs”) with the balance, if any, being paid in cash. The number of DSUs that a member is entitled
to receive is based on the average closing price of the subordinate shares on the Toronto Stock Exchange for the twenty consecutive trading
days immediately preceding the date preceding by one day the date of grant. Dividend equivalents are awarded with respect to DSUs in a
member’s account on the same basis as if the member was a shareholder of record of subordinate shares on the relevant record date, and the
dividend equivalents are credited to the individual’s account as additional DSUs. DSUs are redeemable upon an individual ceasing to be a
member of the Board or in the event of the death of the member. During the year, 4,521 (4,422 in 2010) DSUs were issued to the participants
in connection with the DSU Plan. A compensation expense of $337,000 ($252,000 in 2010) was recorded for the year ended August 31, 2011
related to this plan. Under the DSU plan, the following DSUs were issued by the Corporation and are outstanding at August 31:
2011 2010
Outstanding, beginning of year 10,855 10,000
Issued 4,521 4,422
Dividend equivalents 232 169
Redeemed – (3,736)
Outstanding, end of year 15,608 10,855
14. Accumulated other comprehensive income
2011 2010
Translation of a
net investment in
self-sustaining
foreign
subsidiaries
Cash flow
hedges Total
Translation of a
net investment in
self-sustaining
foreign
subsidiaries
Cash flo
w
hedges Total
(in thousands of dollars) $ $ $ $$$
Balance, beginning of year 15,439 2,920 18,359 23,610 (4,029) 19,581
Other comprehensive income (loss) 3,345 (928) 2,417 (8,171) 6,949 (1,222)
Balance, end of year 18,784 1,992 20,776 15,439 2,920 18,359