5 5 5 Elements of Incentive Compensation Annual Cash Bonus Annual cash bonuses are a short-term variab le element of compensation that reward each officer for both corporate and individual performance and are intended to fit into the Corporation’s overall comp ensation objectives by di rectly linking individual compensation to the performance of both the Corporation and the individual. The process by which the CESGC determines the amount of cash bonuses is described further below under “Corporate Goals and Performance Measures". Share-Based Compensation Share-based compensation is a long-term, at-r isk, variable element of compensation that directly and indirectly aligns the interests of officers with shareholders and encourages retention. The components of the share-based compensation consist of time-based RSUs and performance-based RSUs. Restricted Share Units The Corporation awards both time-based RSUs and performance-based RSUs as they have different vesting schedules which en sure strong alignment with shareholder interests. Time-based RSUs, if awarded, vest in equal thirds over a three-year period commencing on the first anniversary of the grant date. Performance-based RSUs, if awarded, vest on the third anniversary of the grant date subject to the achievement of pre-determin ed performance-vesting criteria on such vesting date. The performance-vesting criter ia are described further below. The CESGC determines whether such criteria have been satisfied as of the vesting date. For performance-based RSUs awarded in 2021, the CESGC will determine the vesting of such performance-based RSUs in late 2024. The CESGC believes the different components of share-based compensation, together with the different vesting schedules, directly tie an officer’s compensation to shareholder returns and the performance of both the Corporation and the individual over the near, medium and long-term. Performance-Based RSU Multiplier If the CESGC determines that the performance- vesting criteria have only been partially met, it is possible that zero vesting may occur. As disclosed in the Corporation’s management information circular dated Ma rch 19, 2021, the Corporation adopted a formulaic approach to the vesting of perfor mance-based RSUs. Previo usly, it was in the CESGC’s discretion to adjust the vesting of performance-based RSUs downwards in the event of underperformance. The CESGC determined that, effective with the 2021 compensation year, it would be appropriate to provide for both a downwards adjustment and an upwards adjustment based on an objective metric. The CESGC determined that the three-year Relative TSR Performance Metric, which was already being used to determine vesting of the performance-based RSUs, was appropriate to inform potential adjustments. The CESGC determined that, absent extraordinary circumstances, vesting