2018 Developments

In early 2018, IFC expanded its clawback and readjustment of compensation policy for LTIP participants, to align more closely with the Financial Stability Board’s principles for sound compensation practices and emerging best practices. In the event of misconduct, IFC can adjust an LTIP participant’s compensation, recoup all variable compensation, including cash bonuses and equity compensation, that have already been paid or vested, as well as cancel unvested long-term incentive awards. The misconduct look-back period is indefinite while the compensation that can be clawed back is limited to that received in the 24 months preceding the date on which the Board of Directors determined misconduct occurred, except in cases where the misconduct contributed to a financial restatement, in which case the clawback period is indefinite. See our Management Proxy Circular for further details.

The Board of Directors and the management of Intact Financial Corporation welcome interaction with shareholders and believe that it is important to have direct regular and constructive engagement with them in order to allow and encourage open dialogue and the exchange of ideas. In addition to shareholder engagement events hosted by management throughout the year, the Company adopted a shareholder engagement plan in 2018 that provides opportunities for shareholders to meet directly with the Chair of the Board of Directors as well as other directors as may be identified by the Chair of the Board of Directors. In this regard, the Company’s largest shareholders will be invited annually by the Chair of the Board of Directors to address selected matters of interest. Other key shareholders will be invited every two years. The Board of Directors can also be reached directly through the Office of the Corporate Secretary. See our Management Proxy Circular for further details.

The Board of Directors is responsible for integrating environmental, social and governance (ESG) factors of material value or risk into the long-term strategic objectives of the Company as well as monitoring the Company’s corporate social responsibility initiatives and the integration of ESG principles throughout the Company, including diversity.

The Board of Directors is also responsible for laying a strong foundation of accountability for Management in the execution and achievement of corporate priorities and long-term strategies. Integrating ESG matters into corporate governance practices can be viewed as part of the fiduciary duty of the Board of Directors. This includes ensuring that all material risk factors, including ESG matters, are managed and that there is ongoing organizational understanding and ownership of their business impact.

The Board of Directors understands the link between ESG matters and long-term company value. They are discussed at Board of Directors meetings and, moreover, in the context of board succession, the Board of Directors will look for the right mix of knowledge and experience to enable constructive contribution to ESG discussions and oversight.