Cogeco 2015 Annual Report Download - page 100

Consolidated financial statements COGECO CABLE INC. 2015 99
22. RELATED PARTY TRANSACTIONS
A) PARENT COMPANY
Cogeco Cable is a subsidiary of COGECO , which holds 31.9% of the Corporation's equity shares, representing 82.4% of the Corporation's
voting shares. On September 1, 1992, Cogeco Cable executed a Management Agreement with COGECO under which the parent company
agreed to provide executive, administrative, financial and strategic planning services and other services (the "Services") to the Corporation
and its subsidiaries (the "Management Agreement").
Under the Management Agreement, the Corporation pays monthly fees equal to 2% of its total revenue to COGECO for the Services subject
to a maximum amount which was set at $9.9 million in fiscal 2015 and fully paid in the first quarter. For fiscal 2014, management fees were
set at a maximum of $9.7 million and were fully paid within the first half of the fiscal year. The management fees were subject to annual
upward adjustment based on increases in the Consumer Price Index in Canada. This limit can be increased under certain circumstances
upon request to that effect by COGECO. In addition, the Corporation reimburses COGECO's out-of-pocket expenses incurred with respect
to services provided to the Corporation under the Management Agreement.
On July 14, 2015, the Management Agreement was amended and restated (the "Amended and Restated Agreement") in order to align the
annual fees with the costs, time and resources committed by COGECO to provide the Services under the Management Agreement. At the
end of June 2015, the independent Directors of the Board of COGECO resolved that the management fees should be increased, for the
fiscal year beginning on September 1, 2015, to an annual fee, payable monthly, equal to 0.85% of the consolidated revenue of the Corporation,
with no maximum level or inflation-based adjustment. Accordingly, COGECO submitted to the Corporation a request for an adjustment of
the fees and amendments to the Management Agreement.
The matter was then considered by the Corporation’s Board at its July 2015 meeting, and the increased level of management fees and the
Amended and Restated Agreement were ratified and approved by the independent Directors of the Board. In the Amended and Restated
Agreement, provision is made for future adjustment upon the request of either COGECO or the Corporation should the level of management
fees no longer align with the costs, time and resources committed by COGECO.
In fiscal 2016, under the Amended and Restated Agreement, management fees will no longer be subject to a maximum amount and will be
paid on a monthly basis. Accordingly, management fees will be recognized and paid throughout the year resulting in more comparable
operating margins from quarter to quarter.
No direct remuneration is payable to COGECO's executive officers by the Corporation. However, the Corporation granted 61,300 stock
options (84,250 in 2014), did not grant any ISUs (12,550 in 2014) and granted 11,050 PSUs to these executive officers as executive officers
of Cogeco Cable during fiscal 2015. During fiscal 2015, the Corporation charged COGECO Inc. amounts of $502,000 ($293,000 in 2014),
$303,000 ($681,000 in 2014) and $188,000 with regards to the Corporation's stock options, ISUs and PSUs granted to these executive
officers.
There were no other material related party transactions during the periods covered.
B) COMPENSATION OF KEY MANAGEMENT PERSONNEL
Key management personnel are comprised of the members of the Board and of the Management Committee of the Corporation. The
compensation paid or payable to key management personnel for employee services is as follows:
Years ended August 31, 2015 2014
(In thousands of Canadian dollars) $$
Salaries and other short-term employee benefits 3,950 3,718
Post-employment benefits 612 980
Share-based payments 2,473 2,042
7,035 6,740