Human Resources and Compensation Committee

Purpose

The purpose of the Human Resources and Compensation Committee (the "Committee") is to assist the Board of Directors (the “Board”) of The Churchill Corporation (the “Corporation”) in fulfilling its obligations relating to human resource and compensation matters and to establish a plan of continuity and development of senior management.

Composition and Operations

1. The Committee shall be composed entirely of independent Directors within the meaning of National Policy 58-201 Corporate Governance Practices.
2. The Committee shall meet at least twice each year and as required to fulfill its responsibilities.
3. The Committee shall be composed and operate in accordance with the Standing Committees of the Board General Terms of Reference.

Duties and Responsibilities

Subject to the powers and duties of the Board, the Committee has the responsibility:

1. With respect to policy, to:

1. Review and recommend the compensation philosophy, guidelines and general plans for the Corporation’s employees, executives and Directors;
2. Review, on an annual basis, the proposed changes to the base salary schedule for employees and executives of the Corporation in consultation with the President and Chief Executive Officer (the “CEO”) and recommend to the Board an overall level of funding;
3. Regularly review the bonus plans for employees and executives of the Corporation, including:
   

   Designation of the employees who will participate; and Determination of the bonus pools The CEO’s proposed distribution program to individual participants

4. Review and monitor the effectiveness of the Employee Share Purchase Plan (“ESPP”) including:
   

   Receiving reports from Management regarding participation in the ESPP and retention of shares; reporting at least annually to the Board in regards to this information; and If appropriate, recommending to the Board, changes in the objectives, policies or size of the ESPP.

5. Review and monitor the effectiveness of the Executive Share Unit Plan (the “ESU Plan”) including:
   

   Recommending for the Board’s approval: The roster of participants Their level of participation The performance of participants; and Assessing the effectiveness of the plan in achieving its objectives such as attraction and retention of key employees and alignment with corporate objectives.

6. In consultation with the CEO, develop, review and recommend to the Board other forms of short and long term compensation or incentive programs such as stock options, share awards or similar plans for employees and executives of the Corporation.
7. Regularly review the form and level of compensation for Directors, Committee Members, Committee Chairmen and the Chairman of the Board. Where appropriate, recommend changes in compensation to the Board; and
8. Review and recommend to the Board for approval, the "Human Resources and Compensation Committee Report” or any other compensation related disclosure prior to their publication in public disclosure documents.

2. With respect to the CEO, to:

1. Review on an annual basis the performance and compensation of the CEO following the Performance Evaluation Process of the President and Chief Executive Officer as outlined in these terms of reference;
2. Review periodically the Position Profile of the CEO to ensure it is up to date and represents the current needs of the Corporation.
3. Review periodically the corporate goals and objectives for which the CEO is responsible and that are relevant to his compensation;
4. Establish appropriate objectives and determine the basis for payment of the CEO’s annual bonus; and
5. In the event of an impending vacancy in the position of the CEO, lead the selection process, and make recommendations to the Board as to proposed candidates.

3. With respect to the Executive Team, to:

1. In consultation with the CEO, review the appointments and approve the compensation, including base salaries, benefit plans, bonus, stock and/or option or similar plans, for the executive team, including the CEO. Benefit plans to include car allowances, life insurance, retirement plans, health plans, etc. as applicable;
2. Ensure that a succession plan for the CEO and other key officers is in place by following the Succession Planning Process outlined in these terms of reference. Review with the CEO existing management resources and plans, including recruitment and training programs, to ensure that qualified personnel will be available for succession to executive positions in the Corporation and key officer positions in its major subsidiaries, and report regularly on this matter to the Board;
3. Review and endorse or recommend to the Board, major changes in the organizational structure of management as proposed by the CEO;
4. Review and approve any material severance or similar termination payments proposed to be made to any executive officer of the Corporation;
5. Review with the CEO any significant outside commitments he or she is considering before the commitment is made. This includes commitments to act as a director or trustee of for-profit and not-for-profit organizations; and
6. In consultation with the CEO, monitor participation levels and performance related to the ESU Plan including, within the first 90 days of a calendar year:

1. Reviewing and approving the roster of participants;
2. Determining the participation level for the Base Award for each participant for the coming year
3. Determining the number of shares for which the participant is eligible;
4. Determining the participant’s Additional Award for the prior year based on whether or not the prior year’s target was achieved in whole or in part;
5. Determining a current year target for the Additional Award; and
6. Communicate in writing, through the CEO, the above share awards and targets to the participants.

Authority

The Committee may engage and compensate any outside director that it determines necessary to permit it to carry out its duties.

THE PERFORMANCE EVALUATION OF THE PRESIDENT AND
CHIEF EXECUTIVE OFFICER

Objectives

The following four documents constitute the benchmarks against which the review and evaluation takes place:

1. A written statement of goals or primary objectives for the year under review. These goals have been agreed to by the President and Chief Executive Officer (the “CEO”) and the Board of Directors (the “Board”) during the first quarter of the year under review.
2. The performance of The Churchill Corporation against objectives set out in the Strategic Plan.
3. Financial achievements of the Corporation for the year under review versus annual operating and capital budgets.
4. Board approved Terms of Reference for the CEO.

The CEO’s Self-Appraisal

1. The CEO writes his own self-appraisal judging his performance, for the year under review against the benchmarks outlined above.
2. The Human Resources and Compensation Committee (the “Committee”) is best equipped to undertake their assessment of the CEO if they know how the CEO has evaluated his performance against the agreed upon objectives of the year and what the CEO sees as the goals and priorities for the coming year.
3. The CEO’s self-appraisal is discussed with the Committee in advance of their evaluation of the CEO.

Director Involvement

1. Members of the Committee develop their assessment of the CEO's performance. These individual assessments are then consolidated by the Committee Chair and the Chairman of the Board into a statement from the Board to the CEO.
2. The Chairman of the Board and the Committee Chair discuss the summary statement in general terms with the full Board (excluding the CEO and any Management Directors) to seek Board approval before meeting with the CEO.
3. The Chairman of the Board and the Committee Chair discuss the statement with the CEO.
4. In the event the Board Chair and the Human Resources and Compensation Committee Chair are the same individual, the Chair of the Governance and Nominating Committee will serve as the second "Chair" as provided above.

CEO Feedback

The CEO may provide a written response to the review to the Board through the Chairman of the Board.

Timing and Responsibilities Regarding CEO Performance Appraisal

Activity		Who		When
(a) The CEO develops a set of goals and objectives, for the year ahead, that are approved by the Human Resources and Compensation Committee (HR&CC) and the Board.		- CEO - HR&CC - Board		January – February for the fiscal year just beginning
(b) The CEO writes a self-appraisal for the year under review and submits it to the HR&CC.		- CEO - HR&CC		November
(c) The CEO discusses his self-appraisal with the Board Chair and the HR&CC.		- CEO - HR&CC - Board Chair		November
(d) HR&CC members discuss their assessments of the CEO.		- HR&CC - HR&CC Chair		November
(e) The HR&CC Chair presents inputs to the Board. Assessment is then finalized as directed by the Board.		- HR&CC Chair - Board		December
(f) The CEO’s review is conducted by the HR&CC Chair and the Board Chair.		- Board Chair - HR&CC Chair - CEO		December
(g) The CEO may present a written response to the Board through the Board Chair.		- CEO		December

Note: Steps (b), (c) and (d) would normally occur around one meeting of the HR&CC. Step (e) would normally occur as part of the December Board meeting.

THE SUCCESSION PLANNING PROCESS

Introduction

1) The Board considers succession planning to be an ongoing process providing longevity of the Corporation through the continual development, encouragement and assessment of leadership talent at all levels of the organization.

2) The succession planning process is designed to assure the Board that at all times the Corporation's key Executive and Management positions can be filled by competent people. The process is designed to ensure there are a range of options available to the Board and a broad diverse base of skills at the top and middle levels of the organization from which the Corporation can choose its future leaders.


Purpose

1. Primary

a) Identify internal succession candidates for all Executive and Senior Management positions;

b) Design/implement development plans, where required, to assist key candidates in obtaining the required experience and qualifications; and

c) Ensure that there is an emergency succession plan in the case of an accident or health problem involving the CEO or any other key officers.

2. Secondary

a) Identify "rising stars" early in their career; and
b) Design/implement plans to develop their potential.

Duties and Responsibilities

The duties and responsibilities in the succession planning process are shared among the CEO, the Human Resources and Compensation Committee, and the Board.

1. The Board is responsible for:

a) Approving the succession plan for the CEO;
b) In the case of other senior managers, ensuring plans are in place for management succession and development;
The Churchill Corporation Compensation Committee
Terms of Reference
c) Ensuring that criteria and processes for recognition, promotion, development and appointment of senior management are consistent with the future leadership requirements of the Corporation; and
d) Ensuring it receives appropriate briefings and acquires sufficient knowledge on potential successors.

2. The Human Resources and Compensation Committee (the "Committee"):

a) Reviews the CEO's management succession plan;
b) Receives periodic updates as well as an annual report on the plan and forwards it to the Board with appropriate comment;
c) Reviews and discusses with the CEO, the processes and outcomes associated with the recognition, promotion, appointment and development of the executive and senior level management team; and
d) Ensures that the succession plan includes a process that would respond to an emergency situation, which would require an immediate replacement of the incumbent CEO.

3. The CEO is responsible for:

a) Ensuring plans are in place for management succession and development;
b) Ensuring that criteria and process for recognition, promotion, development and appointment of senior management are consistent with the future leadership requirements of the Corporation;
c) Reviewing with the Committee the processes and outcomes associated with the recognition, promotion, appointment and development of the executive and senior level management team;
d) Ensuring that the Succession Plan includes a process that would respond to an emergency situation requiring an immediate replacement of the incumbent CEO; and
e) Providing periodic updates as well as an annual report on the plan to the Committee so that the Board is informed regarding available candidates for future management positions.