SNC-LAVALIN GROUP INC. MANAGEMENT PROXY CIRCULAR and Notice of Annual Meeting of Shareholders March 26, 2012
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SNC-LAVALIN GROUP INC. MANAGEMENT PROXY CIRCULAR and Notice of Annual Meeting of Shareholders March 26, 2012 SNC-LAVALIN GROUP INC. NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To the shareholders of SNC-Lavalin Group Inc. (the “Corporation”): NOTICE IS HEREBY GIVEN THAT the annual meeting of the shareholders (the “Meeting”) of the Corporation will be held in the East Ballroom on the 4th floor of the Toronto Board of Trade, located at First Canadian Place, 77 Adelaide Street West, Toronto (Ontario), Canada M5H 1P9, on Thursday, May 3, 2012, commencing at 11:00 a.m., Eastern Daylight Time, for the following purposes: 1. to receive and consider the report of the directors of the Corporation (the “Directors”) to the shareholders, the consolidated financial statements of the Corporation for the year ended December 31, 2011 and the auditor’s report thereon; 2. to elect the Directors for the ensuing year; 3. to appoint the auditor for the ensuing year; 4. to consider and, if deemed appropriate, to adopt a resolution (the full text of which is reproduced in Schedule “C” to the accompanying Management Proxy Circular) providing for a non-binding advisory vote on the Corporation’s approach to executive compensation (Say on Pay vote); and 5. to transact such other business as may properly be brought before the Meeting or any adjournment thereof. Registration of shareholders will begin at 10:30 a.m. We would appreciate your early arrival and registration so that the Meeting may start promptly at 11:00 a.m. Montreal, Quebec, March 26, 2012. BY ORDER OF THE BOARD OF DIRECTORS ARDEN R. FURLOTTE (signed) Vice-President and Corporate Secretary SHAREHOLDERS MAY EXERCISE THEIR RIGHTS BY ATTENDING THE MEETING OR BY COMPLETING A FORM OF PROXY. SHOULD YOU BE UNABLE TO ATTEND THE MEETING IN PERSON, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED FORM OF PROXY AND RETURN IT IN THE ENVELOPE PROVIDED FOR THAT PURPOSE. PROXIES MUST BE RECEIVED BY THE TRANSFER AGENT AND REGISTRAR OF THE CORPORATION (COMPUTERSHARE INVESTOR SERVICES INC., 100 UNIVERSITY AVENUE, 9th FLOOR, NORTH TOWER, TORONTO, ONTARIO, CANADA M5J 2Y1) NO LATER THAN 5:00 P.M. (EASTERN DAYLIGHT TIME) ON TUESDAY MAY 1, 2012. YOUR SHARES WILL BE VOTED IN ACCORDANCE WITH YOUR INSTRUCTIONS AS INDICATED ON THE FORM OF PROXY, OR FAILING INSTRUCTIONS, IN THE MANNER SET FORTH IN THE ACCOMPANYING MANAGEMENT PROXY CIRCULAR. TABLE OF 2 NOTICE OF ANNUAL MEETING OF SHAREHOLDERS CONTENTS 4 Glossary of Terms 5 Section 1 - Voting Information 9 Section 2 - 2012 Annual Meeting of Shareholders 12 Section 3 - Board of Directors 38 Section 4 - Directors’ CD&A and Compensation Disclosure 46 Section 5 - Directors’ Selection, Assessment, Orientation and Ongoing Education 53 Section 6 - Executive Compensation - Letter to Shareholders and HR Committee Report 59 Section 7 - Executive CD&A 82 Section 8 - Executive Compensation Disclosure 96 Section 9 - General and Additional Information SCHEDULE A.1 Mandate of the Board of Directors SCHEDULE A.2 Forward Agenda of the Board of Directors SCHEDULE B Position Descriptions SCHEDULE C Say on Pay Resolution SCHEDULE D Ongoing Director Education SCHEDULE E Site Visits SCHEDULE F Summary of 2004 Stock Option Plan SCHEDULE G Summary of 2007 Stock Option Plan SCHEDULE H Summary of 2009 Stock Option Plan SCHEDULE I Summary of 2011 Stock Option Plan SCHEDULE J Board Committees’ Reports 3 GLOSSARY OF TERMS AIF Annual information Form BIAC Bid and Investment Approval Committee Board or Board of Directors SNC-Lavalin Group Inc.’s board of directors CCGG Canadian Coalition for Good Governance CD&A Compensation Discussion and Analysis CEO Chief Executive Officer CFO Chief Financial Officer Chair / Chairman Chairman / Chairperson of the Board and Board Committees Code of Ethics Code of Ethics and Business Conduct Common Shares SNC-Lavalin Group Inc.’s common shares Comparator Group group of companies comparable to SNC-Lavalin Group Inc. Computershare Computershare Investor Services Inc. Corporation SNC-Lavalin Group Inc. CSA Canadian Securities Administrators Directors members of the Board of Directors of SNC-Lavalin Group Inc. D-DSUs Directors Deferred Share Units D-DSUP Directors Deferred Share Unit Plan E-DSUs Executive Deferred Share Units E-DSUP Executive Deferred Share Unit Plan EMRIP Executive Management Retirement Income Plan EPS earnings per share ESOP Employee Share Ownership Plan Executive Employment Agreement Pierre Duhaime’s executive employment agreement Evergreen List a running list of potential Board candidates kept by the Board Expanded BIAC Expanded Bid and Investment Approval Committee Forward Agenda 1 year rolling plan used by the Board and Board Committees as a checklist of items to review throughout the year Harvest Harvest Retirement Savings Program Harvest Plus Harvest Plus Retirement Savings Program HR Committee Human Resources Committee of the Board HS&E Committee Health, Safety and Environment Committee of the Board In Camera Session meeting held without management being present Management Committee committee composed of members of management, typically Vice-Presidents and Senior Vice-Presidents as well as members of the Office of the President MD&A Management Discussion and Analysis Meeting SNC-Lavalin Group Inc.’s annual shareholders meeting to be held on May 3, 2012 MIP Management Incentive Program MSOP Management Share Ownership Program NEOs named executive officers Office of the President senior management committee composed of all Executive Vice-Presidents and President and CEO Performance Peer Group SNC-Lavalin Group Inc.’s performance peer group composed of engineering and construction companies PSUs Performance Share Units PSUP Performance Share Unit Plan REC Risk Evaluation Committee Record Date close of business on March 5, 2012 RSUs Restricted Share Units RSUP Restricted Share Unit Plan Say on Pay non-binding advisory vote on the Corporation’s approach to executive compensation Skills Matrix table of industry specific experience, business expertise and individual qualifications of Directors Stock Option Plan any of SNC-Lavalin Group Inc.’s 4 Stock Option Plans established in 2004, 2007, 2009 and 2011 respectively TSX Toronto Stock Exchange TSXV TSX Venture Exchange 4 SNC-LAVALIN GROUP INC. MANAGEMENT PROXY CIRCULAR Section 1 VOTING INFORMATION This Management Proxy Circular is issued in connection with the solicitation of proxies, by and on behalf of the management of the Corporation, for use at the Meeting to be held on Thursday, May 3, 2012, at the place, commencing at the time and for the purposes set forth in the foregoing notice of said Meeting and at any and all adjournments thereof. The solicitation is made by mail. The cost of solicitation is borne by the Corporation. 1.1 General The following questions and answers provide guidance on how to vote your shares. 1.1.1 Who can vote? Each holder of Common Shares is entitled to one vote at the Meeting or any adjournment thereof for each Common Share registered in the holder’s name as at the close of business on the Record Date, March 5, 2012. As of March 26, 2012, the Corporation had 151,143,903 Common Shares outstanding. To the knowledge of the Directors and officers of the Corporation based on the most recent publicly available information, the only investor who, as at March 26, 2012, owns or exercises control or direction over shares carrying more than 10% of the voting rights attached to all shares of the Corporation is Jarislowsky, Fraser Limited (“JFL”), a fund manager. According to the most recent publicly available information concerning the shareholdings of JFL in the Common Shares of the Corporation, JFL held 21,699,311 Common Shares, representing 14.37% of the outstanding Common Shares of the Corporation. 1.1.2 What will I be voting on? Shareholders will be voting to (i) elect Directors; (ii) appoint Deloitte & Touche LLP, Chartered Accountants, as auditor of the Corporation; and (iii) adopt a resolution (the full text of which is reproduced in Schedule C) providing for a Say on Pay vote. The Board of Directors and management of the Corporation recommend that shareholders vote FOR items (i), (ii) and (iii). 1.1.3 How will these matters be decided at the Meeting? A simple majority of the votes cast, in person or by proxy, will constitute approval of these matters. 1.1.4 How do I vote? If you are eligible to vote and your Common Shares are registered in your name, you can vote your Common Shares in person at the Meeting or by proxy, as explained below. If your Common Shares are held in the name of a nominee (for example, a broker), see the instructions below under “Non-Registered Shareholder Voting”. 1.1.5 Who can I call with questions? If you have questions about the information contained in this Management Proxy Circular or require assistance in completing your form of proxy, please contact Computershare, the Corporation’s proxy solicitation agent and transfer agent, by mail at Computershare Investor Services Inc., 100 University Ave, 9th Floor, North Tower, Toronto, Ontario M5J 2Y1, by telephone at 1-800-564- 6253, by fax at 1-866-249-7775 or on the Internet at www.computershare.com. 5 1.2 Registered Shareholder Voting 1.2.1 Voting by proxy You are a registered shareholder if your name appears on a share certificate. If this is the case, you may appoint someone else to vote for you as your proxy holder by using the enclosed form of proxy. The persons named in the enclosed form of proxy are Directors or officers of the Corporation. A shareholder has the right to appoint as proxy holder a person other than those whose names are printed as proxy holders in the accompanying form of proxy, by striking out said printed names and inserting the name of his/her chosen proxy holder in the blank space provided for that purpose in the form of proxy.