Cogeco 2015 Annual Report Download - page 91

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90 COGECO CABLE INC. 2015 Consolidated financial statements
Under the ISU Plan, the following ISUs were granted by the Corporation and are outstanding at August 31:
Years ended August 31, 2015 2014
Outstanding, beginning of the year 247,279 209,608
Granted (1) 56,656 137,071
Distributed (81,217) (84,700)
Cancelled (4,939) (14,700)
Outstanding, end of the year 217,779 247,279
(1) For the year ended August 31, 2015, the Corporation did not grant (12,550 in 2014) ISUs to COGECO's executive officers as executive officers of the
Corporation.
A compensation expense of $4,163,000 ($4,022,000 in 2014) was recorded for the year ended August 31, 2015 related to this plan.
PSU plan
In October 2014, the Corporation introduced a PSU Plan for executive officers. The objectives of the PSU Plan are to retain executive
officers, to align their interests with those of the shareholders and to sustain positive corporate performance, as measured by the Economic
Value Creation formula, a performance measure used by management. The number of Performance Share Units ("PSUs") is based on the
dollar value of the award and the average closing stock price of the Corporation for the previous twelve month period ending August 31.
The PSUs vest over a three-year less one day period, based on the level of increase in the Economic Value of the Corporation or the relevant
subsidiary or controlled entity for the preceding three-year period ending August 31, meaning that no vesting will occur if there is no increase
in the Economic Value. The participants are entitled to receive dividend equivalents in the form of additional PSUs but only with respect to
vested PSUs. PSUs are redeemable in case of death, permanent disability, normal retirement or termination of employment not for cause,
in which cases, the holder of PSUs is entitled to payment of the PSUs in proportion that the time of employment between the date of the
grant and the date of termination bears to the three-year vesting period. A trust was created for the purpose of purchasing these shares on
the stock market in order to protect against stock price fluctuation and the Corporation instructed the trustee to purchase subordinate voting
shares of the Corporation on the stock market. These shares are purchased and are held in trust for the participants until they are fully
vested. The trust, considered as a special purpose 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 PSU Plan in reduction of share capital.
Under the PSU Plan, the following PSUs were granted by the Corporation and are outstanding at August 31, 2015:
Year ended August 31, 2015
Outstanding, beginning of the year —
Granted (1) 56,000
Distributed (617)
Cancelled (6,574)
Dividend equivalents 1,053
Outstanding, end of the year 49,862
(1) For the year ended August 31, 2015, the Corporation granted 11,050 PSUs to COGECO's executive officers as executive officers of the Corporation.
A compensation expense of $646,000 was recorded for the year ended August 31, 2015 related to this plan.
DSU plan
The Corporation also offers a DSU Plan for members of the Board to assist in the attraction and retention of qualified individuals to serve
on the 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 TSX 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.