Intact Financial Corporation And its Canadian P&C Insurance Companies (jointly called the “Company”)

I. Purpose

The Human Resources and Compensation Committee (the “Committee”) is a committee of the Board of Directors of the Company (the “Board”). It assists the Board in fulfilling its governance supervisory responsibilities for strategic oversight of the Company and its subsidiaries (the “Group”)’s human capital, including organization effectiveness, succession planning and compensation, and the alignment of compensation with the Group’s philosophy and programs consistent with the overall business objectives of the Group. Compensation includes base salaries, benefits, pension plans and incentive programs of the employees, management and executives.

II. Membership

1. Number

The Board will appoint no fewer than three of its members to the Committee, on the recommendation of the Governance and Sustainability Committee.

2. Composition and Qualifications

The Committee consists of directors who are “independent” as that term is defined from time to time in the relevant legislation, and who are non-executives of the Group. In addition, no more than one-third of the members of the Committee shall be sitting chief executive officer(s) of another company.

All Committee members must have or be willing and able to acquire within a reasonable period of time following their appointment, an understanding of compensation programs and have management experience.

In addition, the composition of the Committee, and qualifications of its members, will comply with such additional requirements as may be imposed by applicable legislation and best practices as determined by the Board.

3. Chair

The Board will appoint the Chair of the Committee annually, to be selected from the members of the Committee. If, in any year, the Board does not make such an appointment, the incumbent Chair will continue in office until a successor is appointed. In the event the Chair is not able or willing to act as Chair of the Committee for any reason, the Board may appoint another Chair on an interim or permanent basis. The Chair is bound to act in accordance with this mandate.

4. Tenure

Each member of the Committee will be appointed annually by the Board and will hold office at the will of the Board or until their successor is appointed.

5. Removal and Vacancies

Any member of the Committee may be removed and replaced at any time by the Board and will also automatically cease to be a member of the Committee as soon as such member ceases to be a director. The Board may fill vacancies by appointing members of the Board to the Committee. If and whenever a vacancy exists, the remaining members may exercise all the powers of the Committee as long as a quorum remains in office.

III. Process and Operations

1. Meetings

The Committee meets at least four times per year and otherwise as needed.

The following individuals may call a meeting of the Committee at any time:
• Chair of the Committee
• The chair of the governance, conduct and remuneration committee of the Company’s subsidiaries in the United Kingdom

2. Private Meetings of the Committee and Private Meetings with Members of Management

Following each meeting, the Committee meets privately without the presence of Management.

Following each regular meeting, the Committee meets in private with any members of management required in respect of this mandate. The Committee may also meet with members of management following any non-regular meeting. The Committee may also meet with any other employees of the Company, as it deems appropriate.

3. Quorum

A quorum at any meeting shall be a simple majority of the members of the Committee.

4. Report to the Board

Following each meeting, the Committee reports to the Board on matters reviewed by the Committee.

IV. Duties and Responsibilities of the Committee

1. Human Resources Policies and Practices

The role of the Committee is to oversee management in defining policies and programs that: (i) support the Group’s overall strategy and objectives, (ii) attract and retain talent, (iii) link total compensation to financial performance and the attainment of strategic objectives and (iv) provide total competitive opportunities at a reasonable cost while enhancing the ability to fulfill the Group’s objectives.

This includes overseeing the human resources policies and programs to foster the proper culture within the organization and to meet goals with respect to diversity and fairness.

2. CEO Appointment, Assessment and Compensation

The Committee makes recommendations to the Board, for its approval, of the Group Chief Executive Officer (“CEO”) mandate as well as the appointment, assessment, compensation and termination (if applicable) of the CEO.

The Committee periodically reviews the job description of the CEO and at least once a year reviews the CEO’s objectives and the CEO’s assessment and provides its comments to the Board. 

The Committee reviews the annual base salary levels, annual incentive opportunity levels, function pre-requisites, employment agreements (if and when appropriate), benefits and any supplemental benefits of the CEO including pension benefits and other supplementary compensation plans.

It also evaluates the CEO’s compensation and payouts against (1) pre-established, measurable performance goals and objectives; and (2) an appropriate comparator group.

The Committee ensures that the CEO demonstrates suitability in line with the high ethical values of the Group.

3. Senior Executives’ Appointment, Assessment, Succession and Talent Development and Executives Compensatio

The Committee makes recommendations to the Board, for its approval, of the appointment of the Group’s operating committee members and head of oversight functions (the “Senior Executives”) and reviews the assessment of the Senior Executives at least once a year and reviews and approves their succession plan, including the planning process for identifying such succession and the executive profile required to fill such functions in the Group.

The Committee receives the recommendation from the other Committees of the Board regarding the assessment of the oversight functions.

The Committee reviews, at least annually, the individual compensation of the Senior Executives, and approves it in relation to pre-established objectives of the Group and personal objectives of the Senior Executives for the year. More specifically the Committee approves: (i) the annual base salary levels, (ii) annual incentive opportunity levels, (iii) employment agreements as well as (iv) the benefits and any supplemental benefits including pension benefits and other supplementary
compensation plans.

The Committee will also make recommendations to the CEO, where advisable, on the compensation of the other executives of the Group. It also evaluates the Senior Executives’ compensation and payouts against (1) pre-established, measurable performance goals and objectives; and (2) an appropriate comparator group.

The Committee periodically reviews the Group’s policies and programs related to succession planning, talent development and management and periodically reviews the Total Compensation Policy of the Group.

In exercising these functions the Committee ensures that the Senior Executives demonstrate suitability in line with the high ethical values of the Group.

The Committee shall periodically review reports from the Group Chief Risk Officer on how the Company’s compensation approach and programs align with the Group’s strategic goals, are adequate from a sound risk management perspective and comply with the Financial Stability Board (FSB) Principles for Sound Compensation Practices.

4. Pension Plans and Incentive Plans

The Committee reviews the pension plans and the incentive plans of the Company and recommends them to the Board for approval.

The Committee approves nonmaterial amendments to such plans.

The Committee also recommends fundamental changes to such plans to the Board for approval.

Fundamental changes include termination of a plan, replacement of an existing plan or parts thereof by a new plan or new parts, adoption of new plans, liquidation of a plan (in the case of pension plans) and making substantial changes to a plan.

The Committee receives regular reports and recommendations from management and the pension committee that are responsible for day-to-day operations and administration of pension plans, regarding the design and alignment of such plans.

The Committee receives the financial statements of the pension plans and recommends to the Board for approval the actuarial valuations of the Company’s pension funds.

5. Review of Organizational Structures and Recommendations to the Board

The Committee reviews and assesses management’s proposals for major reorganizations of the Group that affect the management structure and composition, and makes recommendations to management and to the Board in this regard.

6. Annual Report on Executive Compensation

The Committee reviews and recommends to the Board the annual report on executive compensation that must be published or sent to the shareholders from time to time (Annual meeting documentation, prospectus, etc.)

V. Access to Independent Consultants

The Committee may retain and terminate independent consultants, at the Company’s expense, as it deems necessary or advisable to carry out its duties.

In case of differences of opinion between the members of the Committee or with management in relation to the hiring of such consultants, the Board may decide on the issue or delegate the review of such issue to the Governance and Sustainability Committee and receive its recommendation.

VI. Delegation

The Committee may designate a sub-committee or individual(s) to review any matter the Committee can delegate by law.

VII. Self-Assessment

On an annual basis, the Committee evaluates and reviews the assessment reports on the adequacy of the Committee, its Chair and each of its members.

VIII. Committee Mandate

On an annual basis, and as may otherwise be required, the Committee reviews this mandate and recommends any changes to the Board.

Approved by the Board of Directors of Intact Financial Corporation and its Canadian P&C Subsidiaries on August 1, 2023.