BCI Responsible Investing Newsletter

RIN_Sep2014

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FROM THE CEO/CIO Wanting the companies bcIMC invests in to align executive compensation with performance that enhances long-term value is a priority. We believe that this alignment ultimately translates into better returns for our clients, allowing us to fulfil our mandate of growing and protecting the value of their funds. It is up to the company's board of directors to align the interests of management and directors with those of investors through executive compensation packages that are directly linked to the company's long-term performance. As executive compensation is one of the more complex topics that a board will encounter, bcIMC looks for a compensation committee that is independent of management, with experienced members who are knowledgeable and understand the link between pay and performance. This committee must set the overall philosophy and approve components of executive compensation packages, which should be appropriately structured to motivate, recruit, and retain executives who are capable of growing shareholder value. bcIMC believes using independent expertise and advice reflects good corporate governance practices. Recognizing the connection to long-term value, bcIMC – on behalf of our clients – has long focused on executive compensation. In the aftermath of the global financial crisis, broader industry interest intensified on the topic of say on pay under the belief that misaligned executive compensation schemes were a primary contributor to a number of the perverse incentives that had been created. Say-on- pay advisory votes – increasingly common today – enable shareholders to communicate directly with board directors on the topic. Many of bcIMC's clients – pension plans and others – have long-term financial obligations. As their investment manager, it is our responsibility to ensure that we invest their funds in well governed and managed companies. Returns are important: $75 of every $100 a pension plan member receives in retirement benefits, on average, is funded by our investment activities. bcIMC has worked for over a decade to advance the principle of clear, transparent, and reasonable executive compensation that encourages and rewards long-term value creation. We believe our efforts have improved executive compensation practices, especially in Canada. This has been and will continue to be a priority for bcIMC. Gordon J. Fyfe, Chief Executive Officer / Chief Investment Officer bcIMC RESPONSIBLE INVESTING NEWSLETTER 2

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