================================================================================
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
[X] Filed by the registrant [ ] Filed by a party other than registrant
Check the appropriate box:
[ ] Preliminary proxy statement.
[ ] Confidential, for use of the Commission only (as permitted by
rule 14a-6(e)(2)).
[X] Definitive proxy statement.
[ ] Definitive additional materials.
[ ] Soliciting Material under Rule 14a-12.
COTT CORPORATION
--------------------------------------------------
(Name of registration as specified in its charter)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i) (1) and 0-11.
1. Title of each class of securities to which transaction applies.
2. Aggregate number of securities to which transaction applies:
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4. Proposed maximum aggregate value of transaction:
5. Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
1. Amount Previously Paid:
2. Form, Schedule or Registration Statement No.:
3. Filing Party:
4. Date Filed:
================================================================================
(COTT LOGO)
COTT CORPORATION
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREOWNERS
The Annual and Special Meeting of shareowners of Cott Corporation will be held
on: Thursday, April 20, 2006
at: 8:30 a.m. (local time in Toronto, Canada)
at the: Glenn Gould Studio, Canadian Broadcasting Centre
250 Front Street West, Toronto, Ontario, Canada
to: - receive the financial statements for the year ended December 31,
2005 and the auditors' report on those statements,
- elect directors,
- appoint auditors,
- consider and, if thought fit, pass a resolution in the form set
forth in Appendix A to the accompanying proxy circular approving
Cott's performance share unit plan,
- consider and, if thought fit, pass a resolution in the form set
forth in Appendix B to the accompanying proxy circular approving
Cott's share appreciation rights plan, and
- transact any other business that properly may be brought before the
meeting and any adjournment of the meeting.
By order of the Board of Directors
-s- Mark R. Halperin
Mark R. Halperin
Senior Vice President,
General Counsel & Secretary
Toronto, Ontario
March 20, 2006
(COTT LOGO) John K. Sheppard
President and
Chief Executive Officer
Cott Corporation
207 Queen's Quay West
Suite 340
Toronto, Ontario M5J 1A7
March 20, 2006
Dear Shareowners:
We would like to invite you to attend our annual and special meeting, which
will be held at the Glenn Gould Studio, Canadian Broadcasting Centre, 250 Front
Street West in Toronto, Ontario, Canada at 8:30 a.m. (local time in Toronto,
Canada) on Thursday, April 20, 2006. This meeting gives you the opportunity to
learn more about us, receive our financial results and hear about our plans for
the future. It also provides you with an opportunity to meet our directors and
senior management.
The notice of meeting and circular that accompany this letter describe the
business to be conducted at the meeting.
Even if you cannot attend the meeting, it is important that your shares be
represented and voted by using the enclosed form of proxy. We encourage you to
read the circular and vote as soon as possible. We look forward to your
participation.
Sincerely,
-s- John K. Sheppard
JOHN K. SHEPPARD,
President and Chief Executive Officer
(COTT LOGO)
COTT CORPORATION
ANNUAL AND SPECIAL MEETING OF SHAREOWNERS
THIS BOOKLET EXPLAINS:
- details of the matters to be voted upon at the
meeting, and
- how to exercise your vote even if you cannot attend
the meeting.
THIS BOOKLET CONTAINS:
- the notice of the meeting,
- the proxy circular for the meeting, and
- a proxy form that you may use to vote your shares
without attending the meeting.
REGISTERED SHAREOWNERS
A form of proxy is enclosed with this booklet. This form may be used to vote
your shares if you are unable to attend the meeting in person. Instructions on
how to vote using this form are found starting on page 1 of the circular.
NON-REGISTERED BENEFICIAL SHAREOWNERS
If your shares are held on your behalf or for your account by a broker,
securities dealer, bank, trust company or other intermediary, you will not be
able to vote unless you carefully follow the instructions provided by your
intermediary.
THE ACCOMPANYING CIRCULAR AND FORM OF PROXY ARE FURNISHED IN CONNECTION WITH THE
SOLICITATION OF PROXIES BY OR ON BEHALF OF MANAGEMENT FOR USE AT THE ANNUAL AND
SPECIAL MEETING OF THE SHAREOWNERS TO BE HELD ON APRIL 20, 2006 AND ANY
CONTINUATION OF THE MEETING AFTER AN ADJOURNMENT OF THAT MEETING.
AVAILABILITY OF FINANCIAL INFORMATION
Note: If you are a shareowner and wish to receive (or continue to receive) our
quarterly interim financial statements (and the related management discussion
and analysis) by mail, you must complete and return the enclosed request form.
If you do not do so, quarterly financial statements will not be sent to you.
Financial results are announced by media release, and financial statements are
available on our website at www.cott.com, on the SEDAR website maintained by the
Canadian securities regulators at www.sedar.com and on the EDGAR website
maintained by the United States Securities and Exchange Commission at
www.sec.gov.
PROXY CIRCULAR
TABLE OF CONTENTS
PAGE
----
VOTING AT THE MEETING....................................... 1
Who Can Vote.............................................. 1
Voting By Registered Shareowners.......................... 1
Voting By Non-Registered Beneficial Shareowners........... 3
Confidentiality of Vote................................... 3
Quorum.................................................... 3
How Will Resolutions be Passed?........................... 3
Please Complete Your Proxy................................ 3
PROCEDURE FOR CONSIDERING SHAREOWNERS PROPOSALS............. 3
PRINCIPAL SHAREOWNERS....................................... 4
FINANCIAL STATEMENTS........................................ 5
ELECTION OF DIRECTORS....................................... 5
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT.............. 7
Security Ownership........................................ 7
Section 16(a) Beneficial Ownership Reporting Compliance... 8
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.............. 8
EXECUTIVE COMPENSATION...................................... 9
Summary Compensation Table................................ 9
Stock Option Grants....................................... 11
Options Exercised......................................... 12
Executive Officers........................................ 12
EMPLOYMENT AGREEMENTS....................................... 12
REPORT ON EXECUTIVE COMPENSATION............................ 13
Human Resources and Compensation Committee................ 13
Compensation Principles................................... 14
Compensation Elements and Determination Process........... 14
Long-Term Incentives...................................... 15
Option Plan............................................. 15
Executive Investment Share Purchase Plan................ 16
Proposed New Plans...................................... 17
Compensation of the Chief Executive Officer............... 18
SHAREOWNER RETURN PERFORMANCE GRAPH......................... 19
COMPENSATION OF DIRECTORS................................... 20
EQUITY COMPENSATION PLAN INFORMATION........................ 21
DIRECTORS AND OFFICERS INSURANCE............................ 21
CORPORATE GOVERNANCE........................................ 21
Board and Management Roles................................ 21
Allocation of Responsibility between the Board and
Management.............................................. 22
Board's Expectations of Management........................ 22
Shareowner Communications................................. 22
Composition of the Board.................................. 22
Independence of the Board................................. 23
Board Committees.......................................... 23
AUDITORS.................................................... 25
Appointment of Auditors................................... 25
Principal Accountant's Fees............................... 25
Audit Fees................................................ 25
Audit-Related Fees........................................ 26
Tax Fees.................................................. 26
Pre-Approval Policies and Procedures...................... 26
Audit Committee Report.................................... 26
ADDITIONAL INFORMATION...................................... 27
Information about Cott.................................... 27
Householding.............................................. 27
Approval.................................................. 27
APPENDIX A -- ADOPTION OF PERFORMANCE SHARE UNIT PLAN....... A-1
APPENDIX B -- ADOPTION OF SHARE APPRECIATION RIGHTS PLAN.... B-1
APPENDIX C -- PERFORMANCE SHARE UNIT PLAN................... C-1
APPENDIX D -- SHARE APPRECIATION RIGHTS PLAN................ D-1
APPENDIX E -- MANDATE OF THE BOARD OF DIRECTORS............. E-1
APPENDIX F -- AUDIT COMMITTEE CHARTER....................... F-1
i
(COTT LOGO)
COTT CORPORATION
PROXY CIRCULAR
THIS PROXY CIRCULAR IS FURNISHED IN CONNECTION WITH THE SOLICITATION OF
PROXIES BY OR ON BEHALF OF MANAGEMENT FOR USE AT THE ANNUAL AND SPECIAL MEETING
OF SHAREOWNERS THAT IS TO BE HELD AT THE TIME AND PLACE, AND FOR THE PURPOSES,
DESCRIBED IN THE ACCOMPANYING NOTICE OF THE MEETING. This proxy circular and the
accompanying proxy are being mailed to our shareowners on or about March 20,
2006.
All dollar amounts are in United States dollars unless otherwise stated.
All information contained in this document is as of February 28, 2006 unless
otherwise indicated.
VOTING AT THE MEETING
WHO CAN VOTE
March 10, 2006 is the record date to determine shareowners who are entitled
to receive notice of the meeting. Shareowners at the close of business on that
date will be entitled to vote at the meeting.
As at February 28, 2006, 71,711,630 common shares were outstanding. Each
common share entitles the holder to one vote on all matters to be presented at
the meeting.
VOTING BY REGISTERED SHAREOWNERS
The following instructions are for registered shareowners only. IF YOU ARE
A NON-REGISTERED BENEFICIAL SHAREOWNER, PLEASE FOLLOW YOUR INTERMEDIARY'S
INSTRUCTIONS ON HOW TO VOTE YOUR SHARES.
VOTING IN PERSON
Registered shareowners who attend the meeting may vote the shares
registered in their name on resolutions put before the meeting. If you are a
registered holder who will attend and vote in person at the meeting, you do not
need to complete or return the form of proxy. Please register your attendance
with the scrutineer, Computershare Trust Company of Canada, upon your arrival at
the meeting.
VOTING BY PROXY
If you are a registered shareowner but do not plan to attend the meeting in
person, you may vote by using a form of proxy to appoint someone to come to the
meeting as your proxyholder. You either can tell that person how you want your
shares to be voted or let that person choose how to vote your shares.
WHAT IS A PROXY?
A proxy is a document that authorizes another person to attend the meeting
and cast votes on behalf of a registered shareowner at the meeting. If you are a
registered shareowner, you can use the accompanying proxy form. You may also use
any other legal form of proxy.
HOW DO YOU APPOINT A PROXYHOLDER?
Your proxyholder is the person you appoint to cast your votes for you at
the meeting. The persons named in the enclosed form of proxy are directors or
officers of Cott. You may choose those individuals or any other person to be
your proxyholder. Your proxyholder does not have to be a shareowner of Cott. If
you want to authorize a director or officer of Cott who is named on the enclosed
proxy form as your proxyholder, please leave the line near the top of the proxy
form blank, as their names are pre-printed on the form. IF YOU WANT TO AUTHORIZE
ANOTHER PERSON AS YOUR PROXYHOLDER, fill in that person's name in the blank
space located near the top of the enclosed proxy form.
Your proxy authorizes the proxyholder to vote and otherwise act for you at
the meeting, including any continuation of the meeting that may occur if the
meeting is adjourned.
1
HOW WILL A PROXYHOLDER VOTE?
If you mark on the proxy how you want to vote on a particular issue (by
checking FOR, AGAINST or WITHHOLD), your proxyholder must cast your votes as
instructed. By checking "WITHHOLD" on the proxy form, you will be abstaining
from voting.
IF YOU DO NOT MARK ON THE PROXY HOW YOU WANT TO VOTE ON A PARTICULAR
MATTER, YOUR PROXYHOLDER IS ENTITLED TO VOTE YOUR SHARES AS HE OR SHE SEES FIT.
IF YOUR PROXY DOES NOT SPECIFY HOW TO VOTE ON ANY PARTICULAR MATTER, AND IF YOU
HAVE AUTHORIZED A DIRECTOR OR OFFICER OF COTT TO ACT AS YOUR PROXYHOLDER, YOUR
SHARES WILL BE VOTED AT THE MEETING:
- FOR ELECTION OF THE NOMINEES NAMED IN THIS PROXY CIRCULAR AS DIRECTORS,
- FOR THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS AUDITORS,
- FOR THE APPROVAL OF THE PERFORMANCE SHARE UNIT PLAN DESCRIBED UNDER
"REPORT ON EXECUTIVE COMPENSATION -- LONG-TERM INCENTIVES -- PERFORMANCE
SHARE UNIT PLAN" BEGINNING ON PAGE 17 OF THIS PROXY CIRCULAR, IN
ACCORDANCE WITH THE RESOLUTION ATTACHED AS APPENDIX A ON PAGE A-1, AND
- FOR THE APPROVAL OF THE SHARE APPRECIATION RIGHTS PLAN DESCRIBED UNDER
"REPORT ON EXECUTIVE COMPENSATION -- LONG-TERM INCENTIVES -- SHARE
APPRECIATION RIGHTS PLAN" ON PAGE 18 OF THIS PROXY CIRCULAR, IN
ACCORDANCE WITH THE RESOLUTION ATTACHED AS APPENDIX B ON PAGE B-1.
For more information on these matters, please see "Election of Directors"
beginning on page 5, "Auditors -- Appointment of Auditors" on page 25, "Report
on Executive Compensation -- Long-Term Incentives -- Proposed New
Plans -- Performance Share Unit Plan" beginning on page 17 and "Report on
Executive Compensation -- Long-Term Incentives -- Proposed New Plans -- Share
Appreciation Rights Plan" on page 18.
If any amendments are proposed to these matters, or if any other matters
properly arise at the meeting, your proxyholder can generally vote your shares
as he or she sees fit. The notice of the meeting sets out all the matters to be
presented at the meeting that are known to management as of March 16, 2006.
HOW DO YOU DEPOSIT A PROXY?
To be valid, the proxy must be filled out, correctly signed (exactly as
your name appears on the proxy form) and returned to the Toronto office of our
transfer agent, Computershare Trust Company of Canada, by delivering it to:
100 University Avenue
9th Floor
Toronto, Ontario
M5J 2Y1
Attention: Secretary of Cott Corporation
Fax: (416) 263-9524 or 1-866-249-7775 (toll-free in Canada and the U.S.)
by 4:30 p.m. (local time in Toronto, Canada) on April 19, 2006 (or the last
business day before any reconvened meeting if the meeting is adjourned) or by
presenting it to the Chairman of the meeting before commencement of the meeting
(or before the reconvened meeting if the meeting is adjourned).
HOW DO YOU REVOKE YOUR PROXY?
If you want to revoke your proxy after you have delivered it, another
properly executed form of proxy bearing a later date should be delivered by you
as set out above under "How do You Deposit a Proxy?" or you can clearly indicate
in writing that you want to revoke your proxy and deliver this written document
to our principal executive office at:
207 Queen's Quay West
Suite 340
Toronto, Ontario
Canada
M5J 1A7
Attention: Secretary
Fax: (416) 203-6207
2
This revocation must be received by us before the meeting (or before the
date of the reconvened meeting if the meeting is adjourned) or be given to the
Chairman of the meeting before commencement of the meeting (or before the
reconvened meeting if the meeting is adjourned), or in any other way permitted
by law.
If you revoke your proxy and do not replace it with another form of proxy
that is properly deposited, you may still vote shares registered in your name in
person at the meeting.
VOTING BY NON-REGISTERED BENEFICIAL SHAREOWNERS
You may be a non-registered beneficial shareowner (as opposed to a
registered shareowner) if your shares are held on your behalf or for your
account by an intermediary, such as a broker, a securities dealer, a bank or a
trust company. Intermediaries generally are required to forward meeting
materials to the persons for whom they hold shares. If you are a non-registered
beneficial shareowner, it is your intermediary that legally will be entitled to
vote your shares at the meeting. To vote your shares, you must carefully follow
the instructions that your intermediary provides you. Instead of completing the
form of proxy that we have provided, you likely will be asked to complete and
deliver a different form to your intermediary, which would instruct the
intermediary how to vote your shares at the meeting on your behalf.
As a non-registered beneficial shareowner, while you are invited to attend
the meeting, you will not be entitled to vote at the meeting unless you make the
necessary arrangements with your intermediary to do so.
CONFIDENTIALITY OF VOTE
Computershare Trust Company of Canada counts and tabulates proxies in a
manner that preserves the confidentiality of your votes. Proxies will not be
submitted to management unless:
- there is a proxy contest,
- the proxy contains comments clearly intended for management, or
- it is necessary to determine a proxy's validity or to enable management
and/or the board of directors to meet their legal obligations to
shareowners or to discharge their legal duties to Cott.
QUORUM
The annual and special meeting requires a quorum, which for this meeting
means:
- at least two persons personally present, each being a shareowner
entitled to vote at the meeting or a duly appointed proxy for an absent
shareowner so entitled, and
- persons owning or representing not less than a majority of the total
number of our shares entitled to vote.
HOW WILL RESOLUTIONS BE PASSED?
All matters that are scheduled to be voted upon at the meeting are ordinary
resolutions. Ordinary resolutions are passed by a simple majority: if more than
half of the votes that are cast are in favour, the resolution passes. (Special
resolutions require approval of at least two-thirds of the votes cast. NO
SPECIAL RESOLUTIONS ARE CONTEMPLATED AT THE MEETING.) Directors who receive the
highest vote totals will be elected as directors. Cumulative voting in the
election of directors is not permitted. All other matters must be approved by a
majority of the votes cast by shareowners that are present or represented and
entitled to vote at the meeting. Abstentions and broker non-votes are counted as
present and entitled to vote for purposes of establishing a quorum, but they are
not counted as votes cast for or against a proposal.
PLEASE COMPLETE YOUR PROXY
Our management, with the support of the board of directors, requests that
you fill out your proxy to ensure your votes are cast at the meeting. THIS
SOLICITATION OF YOUR PROXY (YOUR VOTE) IS MADE ON BEHALF OF MANAGEMENT. We will
pay the cost of proxy solicitation, which primarily will be by mail. Proxies
also may be solicited by telephone, in writing or in person by our employees or
our transfer agent. We may also use the services of an outside solicitation
agent if we deem it advisable and we do not anticipate paying more than C$50,000
for such services.
PROCEDURE FOR CONSIDERING SHAREOWNERS PROPOSALS
If you want to propose any matter for a vote by shareowners at our 2007
annual meeting, you must send your proposal to our Secretary. In order for your
proposal to be considered for inclusion in our 2007 proxy circular and proxy, it
must be received by our Secretary by no later than December 20, 2006 at Cott
Corporation, 207 Queen's Quay West, Suite 340, Toronto, Ontario, Canada M5J 1A7.
3
PRINCIPAL SHAREOWNERS
We are not aware of any person who, as of February 28, 2006, beneficially
owned or exercised control or direction over more than 5% of our common shares
except as set forth below:
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NATURE OF OWNERSHIP NUMBER OF PERCENTAGE
NAME AND ADDRESS OR CONTROL SHARES OF CLASS
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AIM Funds Management Inc.(1) Beneficial ownership 13,308,200 18.6%
5140 Yonge Street, Suite 900
Toronto, Ontario
Canada M2N 6X7
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T. Rowe Price Associates, Inc.(2) Beneficial ownership 5,840,151 8.1%
100 E. Pratt Street
Baltimore, Maryland 21202
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Guardian Capital LP(3) Beneficial ownership 5,646,860 7.9%
Commerce Court West, Suite 3100
P.O. Box 201
Toronto, Ontario
Canada M5L 1E8
--------------------------------------------------------------------------------------------------
Franklin Resources, Inc.(4) Beneficial ownership 4,908,883 6.8%
One Franklin Parkway
San Mateo, California 94403-1906
--------------------------------------------------------------------------------------------------
PRIMECAP Management Company(5) Beneficial ownership 3,990,690 5.6%
225 South Lake Ave., #400
Pasadena, California 91101
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(1) AIM Funds Management Inc. ("AIM") reported in an Alternative Monthly Early
Warning Report pursuant to section 4.5 of National Instrument 62-103 -- The
Early Warning System and Related Take-Over Bid and Insider Reporting Issues
that, as of January 2006, AIM beneficially owns, and has control or
direction over these shares. All of such shares are held by AIM on behalf
of client accounts and AIM disclaims any ownership in the shares. AMVESCAP
PLC ("AMVESCAP") reported in a Schedule 13G filed on February 6, 2006 with
the Securities Exchange Commission that, as of December 31, 2005, AIM Funds
Management Inc. is an investment advisory subsidiary of AMVESCAP. The
address of AIM Funds Management Inc. is 5140 Yonge Street, Suite 900,
Toronto, Ontario Canada M2N 6X7.
(2) Based on information provided on an amended Schedule 13G filed February 13,
2006 with the Securities and Exchange Commission. These securities are
owned by various individual and institutional investors which T. Rowe Price
Associates, Inc. ("Price Associates") serves as investment adviser with
power to direct investments and/or sole power to vote the securities. For
purposes of the reporting requirements of the Securities Exchange Act of
1934, Price Associates is deemed to be a beneficial owner of such
securities; however, Price Associates expressly disclaims that it is, in
fact, the beneficial owner of such securities. The address of T. Rowe Price
Associates, Inc. is 100 E. Pratt Street, Baltimore, Maryland 21202.
(3) Guardian Capital LP reported in a Schedule 13G filed on February 14, 2006,
that as of December 31, 2005, it beneficially owns, holds sole voting power
in and holds sole dispositive power over these shares. The address of
Guardian Capital LP is Commerce Court West, Suite 3100, P.O. Box 201,
Toronto, Ontario, Canada M5L 1E8.
(4) Franklin Resources, Inc. ("FRI") reported in a Schedule 13G filed on
February 7, 2006 with the Securities and Exchange Commission that, as of
December 31, 2005, these shares are beneficially owned by one or more
investment companies or other managed accounts that are advised by direct
and indirect investment advisory subsidiaries of FRI. FRI reported that
advisory contracts grant to the applicable investment advisory subsidiaries
all investment and/or voting power over the securities owned by their
investment advisory clients. Accordingly, these subsidiaries may be deemed
to be the beneficial owner of these shares. FRI also reported that Charles
B. Johnson and Rupert H. Johnson Jr. (the "FRI Principal Shareholders")
each own in excess of 10% of the outstanding common stock of FRI and are
the principal shareholders of FRI, and therefore may be deemed to be the
beneficial owners of securities held by persons and entities advised by FRI
subsidiaries. FRI reported that Franklin Templeton Investments Corp., an
investment advisory subsidiary, holds sole voting power as to 4,324,787
shares and sole dispositive power with respect to 4,470,883 shares. FRI,
the FRI Principal Shareholders and the investment advisory subsidiaries
disclaim any economic interest or beneficial ownership in the shares and
are of the view that they are not acting as a "group" for purposes of
Section 13(d) under the Securities Exchange Act of 1934. The address of
Franklin Templeton Investments Corp. is 1 Adelaide Street East, Suite 2101,
Toronto, Ontario, Canada M5C 3B8. The address of each of the FRI Principal
Shareholders is One Franklin Parkway, San Mateo, CA 94403-1906.
(5) PRIMECAP Management Company reported in a Schedule 13G filed on February
14, 2006 with the Securities and Exchange Commission that, as of December
31, 2005, these shares are beneficially owned and that it holds sole voting
power as to 1,951,990 shares and sole dispositive power as to 3,990,690
shares. The address of PRIMECAP Management Company is 225 South Lake
Avenue, #400, Pasadena, California 91101.
4
FINANCIAL STATEMENTS
At the meeting, we will submit Cott's annual consolidated financial
statements for the year ended December 31, 2005, and the related report of the
auditors, to you. No vote will be taken regarding the financial statements.
ELECTION OF DIRECTORS
The Corporate Governance Committee of the board reviews annually the
qualification of persons proposed for election to the board and submits its
recommendations to the board for consideration. In the opinion of the Corporate
Governance Committee and the board, each of the eleven nominees for election as
a director is well qualified to act as a director of Cott and, together, the
nominees bring the mix of independence, expertise and experience necessary for
the board and its committees to function effectively. Our approach to corporate
governance and the roles of the board and its committees are described under
"Corporate Governance".
In 2005, the board of directors held eight meetings. Each of our current
directors attended in person or by telephone all of the applicable meetings of
the board of directors and committees on which they served, except for (i) Mr.
Adair who attended seven of eight meetings of the board; (ii) Ms. Magee who
attended seven of eight meetings of the board and nine of 10 meetings of the
Human Resources and Compensation Committee; and (iii) Mr. Watt who attended five
of eight meetings of the board.
Set out below is certain information concerning our nominees for election
as directors of Cott.
COMMITTEE
NOMINEE MEMBERSHIP
--------------------------------------------------------------------------------------
COLIN J. ADAIR, 63, of Westmount, Quebec, Canada, has Corporate Governance
served on the board since 1986. Mr. Adair is first vice Committee
president/investment advisor at CIBC World Markets Inc.
(investment bank). Prior to January 2002, Mr Adair was a
director with Merrill Lynch Canada, Inc.
--------------------------------------------------------------------------------------
W. JOHN BENNETT, 60, of Westmount, Quebec, Canada, has Audit Committee
served on the board since 1998. Mr. Bennett has been
chairman and a trustee of Benvest New Look Income Fund
(merchant bank) since May 2005 Prior to that Mr. Bennett
was chairman and chief executive officer of Benvest Capital
Inc. (merchant bank).
--------------------------------------------------------------------------------------
SERGE GOUIN, 62, of Outremont, Quebec, Canada, has served Corporate Governance
on the board since 1986 and is the lead independent Committee
director. Mr. Gouin is chairman of Quebecor Media Inc.
(broadcasting and publishing conglomerate). From March 2004 Human Resources and
to May 2005 Mr. Gouin was president and chief executive Compensation Committee
officer of Quebecor Media Inc. In the past five years, Mr.
Gouin was also vice chairman, Salomon Smith Barney Canada,
Inc. (financial services company) until 2003 and advisory
director of Citigroup Global Markets Canada Inc. (financial
services company) from 2003 to 2004. Mr. Gouin is also a
director of Cossette Communication Group Inc. (advertising
agency), Onex Corporation (conglomerate), TVA Group Inc.
(broadcast communications company), Quebecor Media Inc.,
Sun Media Corporation (newspaper publishing company) and
Videotron Limited (cable television company).
--------------------------------------------------------------------------------------
STEPHEN H. HALPERIN, 56, of Toronto, Ontario, Canada, has --
served on the board since 1992. In the past five years, Mr.
Halperin has been a partner at Goodmans LLP (law firm) and
a member of that firm's executive committee. Mr. Halperin
is a trustee of KCP Income Fund (private label and custom
household chemical and personal products manufacturing).
Mr. Halperin was a director of AT & T Canada Inc. (now
known as Allstream Inc.) when it filed for bankruptcy
protection in Canada and the United States in late 2002.
That company emerged from bankruptcy protection in early
2003, at which point Mr. Halperin ceased to be one of its
directors. Mr. Halperin is the brother of Mark Halperin,
Cott's Senior Vice-President, General Counsel and
Secretary.
--------------------------------------------------------------------------------------
5
COMMITTEE
NOMINEE MEMBERSHIP
--------------------------------------------------------------------------------------
BETTY JANE HESS, 57, of Hingham, Massachusetts, U.S.A., has Human Resources and
served on the board since July 2004. Prior to her Compensation Committee
retirement in mid-2004, Ms. Hess was (and had been for the
prior five years) Senior Vice President, Office of the
President, of Arrow Electronics, Inc. (electronics
distributor). Ms. Hess is a director of The Service Master
Company (residential and commercial outsourcing services).
--------------------------------------------------------------------------------------
PHILIP B. LIVINGSTON, 48, of Basking Ridge, New Jersey, Audit Committee
U.S.A., has served on the board since 2003. Mr. Livingston
was appointed the Chief Financial Officer of Duff & Phelps Corporate Governance
LLC (provider of independent financial advisory and Committee
valuation services) in March 2006. Prior to that he had
been the vice chairman of Approva Corporation (provider of
enterprise controls management software) since 2005. Prior
thereto and from 2003 he had been chief financial officer
and a member of the board of World Wrestling Entertainment,
Inc. (media and entertainment company). Prior to 2003, he
served as president and chief executive officer of
Financial Executives International, a membership
organization for chief financial officers, controllers and
treasurers, a position that he held from 1999 to 2003. Mr.
Livingston is also a director of MSC Software Corporation
(provider of virtual product development tools).
--------------------------------------------------------------------------------------
CHRISTINE A. MAGEE, 46, of Oakville, Ontario, Canada, has Human Resources and
served on the board since 2002. Ms. Magee is president of Compensation Committee
Sleep Country Canada Inc. (mattress retailer), a position
that she held for over the past five years. Ms. Magee is
also a trustee of Sleep Country Canada Income Fund.
--------------------------------------------------------------------------------------
ANDREW PROZES, 60, of Greenwich, Connecticut, U.S.A., has Audit Committee
served on the board since January 2005. Mr. Prozes is, and
has been for the past five years, global chief executive
officer of LexisNexis Group (provider of legal, news and
business information). Mr. Prozes serves on the board of
directors of Reed Elsevier plc and Reed Elsevier NV
(publisher and information provider).
--------------------------------------------------------------------------------------
JOHN K. SHEPPARD(1), 48, of Tampa, Florida, U.S.A., has --
served on the board since 2003. Mr. Sheppard is our
president and chief executive officer. Prior to September
2004, Mr. Sheppard was our president and chief operating
officer and prior to July 2003 was our executive vice
president and president of our US operations. Prior to
January 2002, Mr. Sheppard was president and chief
executive officer of Service Central Technologies, Inc. (a
supply chain software developer).
--------------------------------------------------------------------------------------
DONALD G. WATT, 70, of King Township, Ontario, Canada, has --
served on the board since 1992. Mr. Watt is the chairman
and chief executive officer of DW + Partners Inc. (design
merchant bank). In the past five years, Mr. Watt held the
position of chairman of Watt International Inc. (marketing
and design company). Mr. Watt is a director of Aastra
Telecom, Inc. (telecommunications manufacturer), Forzani
Group, Inc. (sporting goods retailer) and Pethealth Inc.
(provider of pet insurance).
--------------------------------------------------------------------------------------
FRANK E. WEISE III(2), 61, of Vero Beach, Florida, U.S.A., --
has served on the board since June 1998 and has been
chairman of the board since January 2002. Mr. Weise served
as president of Cott from June 1998 to July 2003, and chief
executive officer of Cott from June 1998 to August 2004.
Mr. Weise is an operating partner and managing director of
J.W. Childs Associates, L.P. (a private equity investment
firm).
--------------------------------------------------------------------------------------
(1) Under an agreement entered into on March 11, 2004, we have agreed to submit
the name of John Sheppard for election to the board of directors at each
annual meeting during the term of that agreement.
(2) Under an agreement entered into on April 28, 2004, we have agreed to submit
the name of Frank Weise for election to the board of directors at each
annual meeting and to recommend his continued appointment as chairman of
our board, as described under "Compensation of Directors".
6
It is intended that each director will hold office until the close of
business of the 2007 annual meeting or until they cease to hold office.
Unless otherwise instructed, the persons named in the accompanying form of
proxy intend to vote FOR the election to the board of directors of the eleven
nominees who are identified above. Management does not contemplate that any of
the nominees will be unable to serve as a director. If, for any reason at the
time of the meeting, any of the nominees is unable to serve, and unless
otherwise instructed, the persons named in the accompanying form of proxy will
vote at their discretion for a substitute nominee or nominees.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
SECURITY OWNERSHIP
The following table and the notes that follow show the number of our common
shares beneficially owned as of February 28, 2006 by each of our directors and
the individuals named in the Summary Compensation Table (other than Raymond P.
Silcock), as well as by the directors and executive officers as a group. Mr.
Silcock's holdings are not included as the information is not available to us.
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
COMMON SHARES
BENEFICIALLY OWNED, COMMON SHARES
NAME CONTROLLED OR DIRECTED(1) PERCENTAGE OF CLASS
------------------------------------------------------------------------------------------------------------
Colin J. Adair 39,827(2) 0.06%
------------------------------------------------------------------------------------------------------------
W. John Bennett 38,094(3) 0.05%
------------------------------------------------------------------------------------------------------------
Serge Gouin 248,069(4) 0.35%
------------------------------------------------------------------------------------------------------------
Stephen H. Halperin(5) 42,500(6) 0.06%
------------------------------------------------------------------------------------------------------------
Betty Jane Hess 31,305(7) 0.04%
------------------------------------------------------------------------------------------------------------
Philip B. Livingston 35,363(8) 0.05%
------------------------------------------------------------------------------------------------------------
Christine A. Magee 30,074(9) 0.04%
------------------------------------------------------------------------------------------------------------
Andrew Prozes 28,000(10) 0.04%
------------------------------------------------------------------------------------------------------------
John K. Sheppard 593,268(11) 0.82%
------------------------------------------------------------------------------------------------------------
Donald G. Watt 7,561(12) 0.01%
------------------------------------------------------------------------------------------------------------
Frank E. Weise III 686,004(13) 0.95%
------------------------------------------------------------------------------------------------------------
Mark Benadiba 132,570(14) 0.18%
------------------------------------------------------------------------------------------------------------
Clyde Preslar 35,311 0.05%
------------------------------------------------------------------------------------------------------------
Tina Dell'Aquila 49,135(15) 0.07%
------------------------------------------------------------------------------------------------------------
Mark Halperin 161,766(16) 0.22%
------------------------------------------------------------------------------------------------------------
Colin Walker 131,240(17) 0.18%
------------------------------------------------------------------------------------------------------------
Directors and executive officers as a group
(consisting of 24 persons, including those named
above) 2,609,349(18) 3.62%
------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------
(1) Each director and officer has provided the information on shares
beneficially owned, controlled or directed.
(2) Includes 35,000 common shares subject to stock options that vest on or
before April 29, 2006.
(3) Includes 25,000 common shares subject to stock options that vest on or
before April 29, 2006.
(4) Includes 60,000 common shares subject to stock options that vest on or
before April 29, 2006.
(5) Mr. Halperin is also one of three trustees of the Nancy Pencer Spouse
Trust, which has indirect control over 27,808 common shares through
holdings of various private corporations. Mr. Halperin disclaims any
beneficial ownership of such shares.
(6) Includes 10,000 common shares subject to stock options that vest on or
before April 29, 2006.
(7) Includes 25,000 common shares subject to stock options that vest on or
before April 29, 2006.
(8) Includes 25,000 common shares subject to stock options that vest on or
before April 29, 2006.
7
(9) Includes 25,000 common shares subject to stock options that vest on or
before April 29, 2006.
(10) Includes 25,000 common shares subject to stock options that vest on our
before April 29, 2006.
(11) Includes 525,000 common shares subject to stock options that vest on or
before April 29, 2006.
(12) Includes 5,000 common shares subject to stock options that vest on or
before April 29, 2006.
(13) Includes 600,000 common shares subject to stock options that vest on or
before April 29, 2006.
(14) Includes 108,000 common shares subject to stock options that vest on or
before April 29, 2006.
(15) Includes 38,250 common shares subject to stock options that vest on or
before April 29, 2006.
(16) Includes 122,000 common shares subject to stock options that vest on or
before April 29, 2006.
(17) Includes 92,000 common shares subject to stock options that vest on or
before April 29, 2006.
(18) Includes 1,957,550 common shares subject to stock options that vest on or
before April 29, 2006.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our directors and executive officers and beneficial owners of more than 10%
of our common shares, as well as certain affiliates of those persons, must file
reports with the Securities and Exchange Commission showing the number of common
shares they beneficially own and any changes in their beneficial ownership.
Based on our review of these reports, and written representations, if any,
of our directors and executive officers, we believe that all required reports
were filed in 2005 in a timely manner except (i) one acquisition of shares for
the benefit of Andrew Murfin on April 25, 2005 pursuant to our Executive
Investment Share Purchase Plan was inadvertently not reported until January 11,
2006, (ii) two sales of shares by Ivano Grimaldi on February 21, 2005 and
February 25, 2005 were inadvertently not reported until March 10, 2005, and
(iii) three acquisitions of shares pursuant to the Share Plan for Non-Employee
Directors for the benefit of Colin Adair, John W. Bennett, Serge Gouin, Betty
Jane Hess and Christine Magee (all Non-Employee Directors) on May 10, 2005,
August 3, 2005 and November 3, 2005 were inadvertently not reported until
February 16, 2006.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The board has determined that eight of the nominees for director, Colin J.
Adair, W. John Bennett, Serge Gouin, Betty Jane Hess, Philip B. Livingston,
Christine A. Magee, Andrew Prozes and Donald G. Watt, are independent within the
meaning of the rules of the New York Stock Exchange and National Instrument
58-101 Disclosure of Corporate Governance Practice ("NI 58-101") of the Canadian
Securities Administrators. A director is "independent" in accordance with the
rules of the New York Stock Exchange and NI 58-101 if the board affirmatively
determines that such director has no material relationship with us (either
directly or as a partner, shareowner or officer of an organization that has a
relationship with us).
Mr. Adair has business relationships with certain members of management
through his position as an investment advisor at CIBC World Markets Inc. The
board has determined that Mr. Adair is an independent director on the basis that
such relationships are not sufficiently significant to Mr. Adair's role with
CIBC World Markets Inc. (and account for well below 2% of the gross revenues
test in the rules of the New York Stock Exchange) to affect his ability to act
with a view to our best interests and were not material to us, Mr. Adair or CIBC
World Markets Inc.
Both Mr. Watt and a company controlled by him have business relationships
with Wal-Mart Stores Inc., our largest customer. The board has determined that
such relationships are not sufficiently significant to Wal-Mart to affect Mr.
Watt's ability to act with a view to our best interests and were not material to
us.
Our board has determined that neither Mr. Weise nor Mr. Sheppard are
independent directors, as each is an employee and officer or past employee or
officer and that Mr. Halperin is a non-management but not an independent
director as he is the brother of Mark R. Halperin, our senior vice-president,
general counsel and secretary, in each case as "independent" is determined under
both the rules of the New York Stock Exchange or NI 58-101. Mr. Halperin is also
a partner of Goodmans LLP, a law firm that provides counsel to us on a regular
basis.
8
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table provides a summary of compensation earned during each
of the last three fiscal years by our chief executive officer, our chief
financial officers and our three other most highly compensated executive
officers (collectively, the "named executive officers").
COMPENSATION -- SUMMARY TABLE
------------------------------------------------------------------------------
------------------------------------------------------------------------------
ANNUAL COMPENSATION
--------------------------------------
OTHER ANNUAL
NAME AND PRINCIPAL POSITION YEAR(1) SALARY($) BONUS(2)($) COMPENSATION(3)
------------------------------------------------------------------------------
John K. Sheppard(5) 2005 550,000 -- 33,631
President and 2004 466,667 348,000 29,389
Chief Executive Officer 2003 388,437 475,000 --
----------------------------------------------------------------------
Mark Benadiba(6) 2005 427,318 -- 23,093
Executive Vice President 2004 376,836 93,774 15,343
Canada and International 2003 336,716 374,609 --
----------------------------------------------------------------------
Clyde Preslar(7) 2005 113,808 -- 8,861
Executive Vice President and
Chief Financial Officer
----------------------------------------------------------------------
Raymond P. Silcock(8) 2005 105,769 -- 8,704
Former Executive Vice 2004 300,000 217,500 24,712
President and Former Chief 2003 288,750 453,698 --
Financial Officer
----------------------------------------------------------------------
Tina Dell'Aquila(6), (9) 2005 275,542 -- 13,642
Interim Chief Financial 2004 184,715 86,972 12,348
Officer, Vice President, 2003 158,664 112,255 --
Controller and Assistant
Secretary
----------------------------------------------------------------------
Mark R. Halperin(6) 2005 304,119 -- 15,709
Senior Vice President, 2004 283,323 145,126 14,943
General Counsel & Secretary 2003 261,277 242,698 --
----------------------------------------------------------------------
Colin D. Walker(6) 2005 304,119 -- 31,357
Senior Vice President, 2004 283,323 145,126 14,943
Corporate Resources 2003 261,277 241,764 --
----------------------------------------------------------------------
----------------------------------------------------------------------
------------------------------ -----------------------------------------------------------
------------------------------ -----------------------------------------------------------
LONG-TERM COMPENSATION AWARDS
-----------------------------------------
RESTRICTED
SECURITIES SHARES
UNDER OPTIONS OR RESTRICTED LTIP ALL OTHER
NAME AND PRINCIPAL POSITION GRANTED(4)(#) SHARE UNITS PAYOUTS COMPENSATION($)
-----------------------------------------------------------
John K. Sheppard(5) 200,000 -- -- 11,554(10)
President and 400,000 -- -- 11,390(11)
Chief Executive Officer 100,000 -- -- 427,138(12)
-------------------------- ----------------------------------------------------------------------
Mark Benadiba(6) 80,000 -- -- 828,308(13)
Executive Vice President 50,000 -- -- 1,593(14)
Canada and International 50,000 -- -- 308,414(15)
-------------------------- ----------------------------------------------------------------------
Clyde Preslar(7) 100,000 -- -- 405,166(16)
Executive Vice President and
Chief Financial Officer
-------------------------- ----------------------------------------------------------------------
Raymond P. Silcock(8) -- -- -- 1,444,494(17)
Former Executive Vice 55,000 -- -- 16,801(18)
President and Former Chief 55,000 -- -- 324,748(19)
Financial Officer
-------------------------- ----------------------------------------------------------------------
Tina Dell'Aquila(6), (9) 20,000 -- -- 12,963(20)
Interim Chief Financial 15,000 -- -- 10,482(21)
Officer, Vice President, 15,000 -- -- 132,490(22)
Controller and Assistant
Secretary
-------------------------- ----------------------------------------------------------------------
Mark R. Halperin(6) 40,000 -- -- 14,798(23)
Senior Vice President, 40,000 -- -- 13,422(24)
General Counsel & Secretary 40,000 -- -- 210,175(25)
-------------------------- ----------------------------------------------------------------------
Colin D. Walker(6) 65,000 -- -- 14,798(26)
Senior Vice President, 40,000 -- -- 13,611(27)
Corporate Resources 30,000 -- -- 211,110(28)
-------------------------- ----------------------------------------------------------------------
-------------------------- ----------------------------------------------------------------------
(1) In this proxy circular, references to the year 2005 are to the fiscal year
that ended December 31, 2005; to the year 2004 are to the fiscal year that
ended January 1, 2005; and to the year 2003 are to the fiscal year that
ended January 3, 2004.
(2) The bonuses earned in 2004 were paid in 2005. See "Compensation
Principles".
(3) Includes car allowance, premiums for health, dental and disability
insurance paid on behalf of the named executive officers.
(4) Granted pursuant to the 1986 Common Share Option Plan, as amended (the
"Option Plan"). All outstanding unvested options immediately vest upon a
change of control as defined in the Option Plan.
(5) Mr. Sheppard was appointed Chief Executive Officer on September 1, 2004.
(6) Amounts converted to US$ at the rate of $1.21, $1.30 and $1.40 for 2005,
2004 and 2003, respectively.
(7) Mr. Preslar joined Cott as Executive Vice President and Chief Financial
officer on August 29, 2005. Amounts are in respect of the period from
August 29, 2005 to December 31, 2005.
(8) Mr. Silcock resigned as Executive Vice President and Chief Financial
Officer effective April 29, 2005. Amounts are in respect of the period from
January 2, 2005 to April 29, 2005.
(9) Ms. Dell'Aquila served as Interim Chief Financial officer from the date of
Mr. Silcock's departure until Mr. Preslar joined as Chief Financial
Officer.
(10) Includes $1,094 in income imputed for term life insurance premiums and
$10,500 paid to a defined contribution retirement plan.
(11) Includes $1,140 in income imputed for term life insurance premiums and
$10,250 paid to a defined contribution retirement plan.
(12) Includes $398,525 paid to a trustee to purchase our common shares on behalf
of Mr. Sheppard, which vest over a three-year period (30%, 30% and 40% per
year) pursuant to the "2003 Executive Incentive Share Compensation Plan",
$1,140 in income imputed for term life insurance premiums and $10,000 paid
to a defined contribution retirement plan.
9
(13) Includes $1,898 in income imputed for term life insurance premiums and a
signing bonus of $826,410 paid to Mr. Benadiba as an inducement to enter
into a new employment agreement and in full and final satisfaction of
payments, benefits, rights and entitlements due or payable to him pursuant
to his prior employment agreement.
(14) Includes $1,593 in income imputed for term life insurance premiums.
(15) Includes $293,694 paid to a trustee to purchase our common shares on behalf
of Mr. Benadiba, which vest over a three year period (30%, 30%and 40% per
year) pursuant to the "2003 Executive Incentive Share Compensation Plan"
and $1,730 in income imputed for term life insurance premiums.
(16) Includes $1,896 in income imputed for term life insurance premiums,
$118,269 for relocation expenses and a signing bonus of $285,000.
(17) Includes $324 in income imputed for term life insurance premiums, $10,500
paid to a defined contribution retirement plan and a payment of $1,433,670
payable in connection with his resignation.
(18) Includes $6,551 in income imputed for term life insurance premiums and
$10,250 paid to a defined contribution retirement plan.
(19) Includes $296,302 paid to a trustee to purchase our common shares on behalf
of Mr. Silcock, which vest over a three-year period (30%, 30% and 40% per
year) pursuant to the "2003 Executive Incentive Share Compensation Plan",
$990 in income imputed for term life insurance premiums and $10,000 paid to
a defined contribution retirement plan.
(20) Includes $1,898 in imputed income for term life insurance premiums, $6,818
paid to a defined contribution retirement plan and $4,147 paid to a share
purchase plan.
(21) Includes $1,330 in income imputed for term life insurance premiums, $5,541
paid to a defined contribution retirement plan and $3,610 paid to a share
purchase plan.
(22) Includes $112,255 paid to a trustee to purchase our common shares on behalf
of Ms Dell'Aquila, which vest over a three-year period (30%, 30% and 40%)
per year pursuant to "2002 Executive Incentive Share Compensation Plan",
$1,600 in income imputed for term life insurance premiums, $4,556 paid to a
defined contribution retirement plan and $3,037 paid to a share purchase
plan.
(23) Includes $1,898 in income imputed for term life insurance premiums, $6,818
paid to a defined contribution retirement plan and $6,082 paid to a share
purchase plan.
(24) Includes $1,404 in income imputed for term life insurance premiums, $6,352
paid to a defined contribution retirement plan and $5,667 paid to a share
purchase plan.
(25) Includes $185,427 paid to a trustee to purchase our common shares on behalf
of Mr. Halperin, which vest over a three-year period (30%, 30% and 40% per
year) pursuant to the "2003 Executive Incentive Share Compensation Plan",
$1,169 in income imputed for term life insurance premiums, $5,530 paid to a
defined contribution retirement plan and $5,226 paid to a share purchase
plan.
(26) Includes $1,898 in income imputed for term life insurance premiums, $6,818
paid to a defined contribution retirement plan and $6,082 paid to a share
purchase plan.
(27) Includes $1,593 in income imputed for term life insurance premiums, $6,352
paid to a defined contribution retirement plan and $5,667 paid to a share
purchase plan.
(28) Includes $186,361 paid to a trustee to purchase our common shares on behalf
of Mr. Walker, which vest over a three-year period (30%, 30% and 40% per
year) pursuant to the "2003 Executive Incentive Share Compensation Plan",
$1,169 in income imputed for term life insurance premiums, $5,530 paid to a
defined contribution retirement plan and $5,226 paid to a share purchase
plan.
10
STOCK OPTION GRANTS
During the fiscal year ended December 31, 2005, options to purchase a total
of 1,309,250 common shares were granted to employees and a director. The
following table provides a summary of grants in 2005 of options to purchase
common shares under the Restated 1986 Common Share Option Plan, as amended, to
each of the named executive officers. The amounts in the columns headed "5%" and
"10%" represent hypothetical gains that could be achieved if the options were to
be exercised at the end of the option term. The gains are based on assumed rates
of stock appreciation of 5% and 10% compounded annually from the dates on which
the respective options were granted to their respective expiration dates. The
dollar amounts in the table below are in Canadian dollars because the exercise
price of the options is in Canadian dollars.
OPTIONS GRANTED IN 2005
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
MARKET VALUE OF
% OF TOTAL SECURITIES
OPTIONS UNDERLYING
SECURITIES GRANTED IN EXERCISE OR OPTIONS ON THE
UNDER OPTIONS FISCAL BASE PRICE DATE OF GRANT EXPIRATION
GRANTED(1)(#) YEAR (C$/SECURITY) (C$/SECURITY) DATE
-------------------------------------------------------------------------------------------------------------------
John K. Sheppard 200,000 15% 28.98 28.98 July 20, 2012
-------------------------------------------------------------------------------------------------------------------
Mark Benadiba 50,000 28.98 28.98 July 20, 2012
30,000 6% 19.35 19.35 October 22, 2012
-------------------------------------------------------------------------------------------------------------------
Clyde Preslar 100,000 8% 29.79 29.79 August 29, 2012
-------------------------------------------------------------------------------------------------------------------
Raymond P. Silcock(3) -- -- -- -- --
-------------------------------------------------------------------------------------------------------------------
Tina Dell'Aquila 20,000 2% 28.98 28.98 July 20, 2012
-------------------------------------------------------------------------------------------------------------------
Mark R. Halperin 40,000 3% 28.98 28.98 July 20, 2012
-------------------------------------------------------------------------------------------------------------------
Colin D. Walker 40,000 28.98 28.98 July 20, 2012
25,000 5% 19.35 19.35 October 22, 2012
-------------------------------------------------------------------------------------------------------------------
TOTAL 505,000 39%
-------------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------
------------------------------- ----------------------
------------------------------- ----------------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
OPTION TERM(C$)
5%(2) 10%(2)
-------------------------------
John K. Sheppard 2,359,554 5,498,764
-------------------------------
Mark Benadiba 589,889 1,374,691
236,322 550,730
-------------------------------
Clyde Preslar 471,911 1,099,753
-------------------------------
Raymond P. Silcock(3) -- --
-------------------------------
Tina Dell'Aquila 235,955 549,876
-------------------------------
Mark R. Halperin 471,911 1,099,753
-------------------------------
Colin D. Walker 471,911 1,099,753
196,935 458,942
-------------------------------
TOTAL
-------------------------------
-------------------------------
(1) Subject to the terms of the Option Plan, these options, unless otherwise
expressly indicated, have a seven year term and are exercisable (on a
cumulative basis) as to 30% of the optioned shares on or after the first
anniversary of the date of the grant, 30% of the optioned shares on or
after the second anniversary of the date of the grant and 40% of the
optioned shares on or after the third anniversary of the date of the grant.
(2) The 5% and 10% values for Mr. Sheppard converted to US$ as of July 19, 2005
at the rate of $1.2191 would be $1,935,489 and $4,510,511, respectively.
The 5% and 10% values for Mr. Benadiba converted to US$ as of July 19, 2005
and October 19, 2005 at the rate of $1.2191 and $1.1745, respectively,
would be $483,872 and $1,127,628 and $201,211 and $468,906, respectively.
The 5% and 10% values for Mr. Preslar converted to US$ as of August 26,
2005 at the rate of $1.1986 would be $1,011,807 and $2,357,941,
respectively. The 5% and 10% values for Ms. Dell'Aquila converted to US$ as
of July 19, 2005 at the rate of $1.2191 would be $193,549 and $451,051,
respectively. The 5% and 10% values for Mr. Halperin converted to US$ as of
July 19, 2005 at the rate of $1.2191 would be $387,098 and $902,102,
respectively. The 5% and 10% values for Mr. Walker converted to US$ as of
July 19, 2005 and October 21, 2005 at the rate of $1.2191 and $1.1745,
respectively, would be $387,098 and $902,102 and $169,675 and $390,755,
respectively.
(3) Mr. Silcock's options were exercised or terminated following his
resignation.
11
OPTIONS EXERCISED
The following table provides a summary of the exercise of options by each
of those named executive officers during the year ended December 31, 2005 and
the number and value of unexercised options on an aggregated basis as at such
date.
AGGREGATE OPTION EXERCISES
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
VALUE OF
UNEXERCISED
UNEXERCISED IN-THE-MONEY
SECURITIES OPTIONS AT OPTIONS AT
ACQUIRED AGGREGATE DECEMBER 31, 2005 DECEMBER 31, 2005
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED(C$)(1) UNEXERCISABLE(#) UNEXERCISABLE(2)(C$)
-----------------------------------------------------------------------------------------------------------------
John K. Sheppard -- -- 405,000/ 520,000 --
-----------------------------------------------------------------------------------------------------------------
Mark Benadiba -- -- 69,000/ 159,000 --
-----------------------------------------------------------------------------------------------------------------
Clyde Preslar -- -- 0/ 100,000 --
-----------------------------------------------------------------------------------------------------------------
Raymond P. Silcock 60,000 555,000 -- --
-----------------------------------------------------------------------------------------------------------------
Tina Dell'Aquila -- -- 33,750/ 36,500 --
-----------------------------------------------------------------------------------------------------------------
Mark R. Halperin -- -- 110,000/ 84,000 --
-----------------------------------------------------------------------------------------------------------------
Colin D. Walker 60,000 672,000 80,000/ 105,000 --
-----------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------
(1) The aggregate value realized for securities acquired on exercise by Messrs.
Silcock and Walker, converted to US$ at the closing rate on the day of
exercise, was $441,892 and $543,426, respectively.
EXECUTIVE OFFICERS
For information with respect to identification of executive officers, see
"Executive Officers of Cott" in Part I of our 2006 Annual Report on Form 10-K
filed pursuant to the Securities Exchange Act of 1934 and with all applicable
Canadian securities authorities.
EMPLOYMENT AGREEMENTS
John K. Sheppard, Mark Benadiba, Clyde Preslar, Tina Dell'Aquila, Mark R.
Halperin and Colin D. Walker have individual contracts of employment for an
unspecified term, which provide for annual base salaries at rates not less than
the amounts reported in the Summary Compensation Table for 2005. Each of these
agreements provides for:
- the payment of bonuses consistent with market and industry standards
from time to time and which are based upon the achievement of agreed
upon criteria established from time to time by the Human Resources and
Compensation Committee, and
- customary allowances and perquisites.
Each of the named executive officers participates in both short-term and
long-term incentive programs that we provide. The level of participation is
determined by our Human Resources and Compensation Committee and varies by named
executive officer.
If we terminate Mr. Sheppard's employment for any reason other than for
just cause, disability or death or if Mr. Sheppard terminates his employment for
good reason (which includes a reduction in salary or benefits, a relocation of
his principal place of business in certain instances, or a material diminution
in his duties), he will receive a severance payment equal to the aggregate of:
- 24 months of base salary and bonus (based on the average of the bonus
paid or payable to Mr. Sheppard in respect of the most recent two
completed fiscal years),
- a pro-rated bonus for the year in which the termination occurs, and
- the amount contributed to the executive investment share purchase plan
on his behalf for the year immediately preceding the termination, and
12
- subject to the terms of our benefit plans in existence from time to time
we will continue all group insurance benefits for a period of up to 24
months following the termination date (unless he finds alternate
employment that provides comparable benefits). In addition, if Mr.
Sheppard's employment is terminated for any reason (other than just
cause or his voluntary resignation other than for good reason prior to
his 55th birthday), beginning on the later of the date of the
termination or Mr. Sheppard's 55th birthday, Mr. Sheppard and his spouse
(as long as either of them live) and his daughter (until her 21st
birthday) will be entitled to health insurance benefits (medical,
dental, and vision care, including prescriptions) to the level provided
for in Mr. Sheppard's employment agreement.
If, following a change of control, Mr. Sheppard's employment is (i)
terminated by us other than for just cause, or is deemed terminated, or (ii) Mr.
Sheppard terminates his employment for good reason, he shall be entitled to
receive a payment equal to:
- 36 months of his base salary,
- 36 months of bonuses, based on the average of the bonuses paid to him
over the prior two years, and
- 36 months of past contributions to the executive investment share
purchase plan made on Mr. Sheppard's behalf.
In addition, Mr. Sheppard shall be entitled to a continuation of his
benefits, as discussed above. All unvested options and other amounts, benefits
or entitlements under Mr. Sheppard's employment agreement vest immediately upon
a change of control.
A "change of control" means any person or group of persons acquiring more
than 50% of our outstanding voting shares, a sale by us of all or substantially
all of our undertakings and assets or the voluntary liquidation, dissolution or
winding-up of Cott.
If we terminate Mr. Benadiba's employment without just cause he is entitled
to receive the aggregate of:
- two times his annual base salary and annual automobile allowance plus
two times the cash value of his target annual incentive bonus, and
- the continuation of all benefits and perquisites for a period of 24
months (or reimbursement of all reasonable expenses to replace such
benefits and perquisites if we cannot replace them).
If we terminate Mr. Preslar's employment for any reason other than just
cause (including termination without just cause following a change of control),
he will receive a severance payment equal to 24 months' base salary and target
annual incentive bonus.
If we terminate Mr. Halperin's, Mr. Walker's or Ms. Dell'Aquila's
employment for any reason other than just cause, each will receive a severance
payment equal to 24 months', 24 months' and 18 months', respectively, of base
salary, target annual incentive bonus, car allowance and benefits, excluding
short- and long-term disability and out of country benefits.
Messrs. Sheppard, Benadiba, Preslar, Halperin and Walker have each agreed
to a restrictive covenant which generally limits their ability to compete with
us (i) in the case of Messrs. Sheppard and Benadiba in any countries in which we
conduct business, (ii) in the case of Mr. Preslar, in Canada, the United States,
Mexico and the United Kingdom, and (iii) in the case of Messrs. Walker and
Halperin, in Canada, the United States and the United Kingdom, in each case
during the term of their employment and for a period of 24 months following the
termination of their employment regardless of the cause of the termination.
REPORT ON EXECUTIVE COMPENSATION
HUMAN RESOURCES AND COMPENSATION COMMITTEE
The Human Resources and Compensation Committee is responsible for
reviewing, developing and recommending to the board the appropriate management
compensation policies, programs and levels. The committee develops performance
objectives in conjunction with the chief executive officer and assesses the
performance of the chief executive officer and reviews the performance of the
other senior executive officers at least annually in relation to these
objectives.
13
The committee is ultimately responsible for determining the level and
nature of Cott's executive compensation. The committee has access, at Cott's
expense, to independent, outside compensation consultants for both advice and
competitive data for the purpose of making such determinations. The committee
believes that the compensation policies and programs as outlined below ensure
that levels of executive compensation truly reflect Cott's performance, thereby
serving the best interests of Cott's shareowners.
COMPENSATION PRINCIPLES
Cott is committed to the philosophy of partnership and to sharing the
benefits of success with those who help Cott grow. Cott's strength and ability
to sustain growth is based on an organization that perceives people as its
single most important asset. The committee's goal is to provide sufficient
compensation opportunities for executives in order to attract, retain and
motivate the best possible management team to lead Cott in the achievement of
both its short and long-term performance goals. The committee believes that
compensation significantly based on performance is important to link management
and shareowner objectives. With these goals in mind, Cott has adopted an annual
bonus plan, an employee share option plan, an employee share purchase savings
plan and an executive investment share purchase plan and, if approved at the
meeting, the performance share unit plan and stock appreciation rights plan to:
- increase the risk/reward ratio of Cott's executive compensation program,
- focus management on long-term strategic issues, and
- align management's interests with those of Cott's shareowners in the
sustained growth of shareowner value.
COMPENSATION ELEMENTS AND DETERMINATION PROCESS
Compensation for executive officers, including the chief executive officer,
consists of a base salary, opportunities for bonus cash compensation, and
long-term compensation in the form of stock options, the participation in the
share purchase savings plan and the executive investment share purchase plan
and, if approved at the meeting, the performance share unit plan and stock
appreciation rights plan. As set out under "Employment Agreements" each of the
named executive officers has a written agreement. The committee's role is to
determine what adjustments to base salary, the amount of bonus, performance
targets for performance-based compensation, and the appropriate level and
targets for other compensation, if any, would be appropriate for the executives.
The committee negotiated and approved the arrangement with Mr. Sheppard in
connection with his appointment as Chief Executive Officer effective in
September 2004. Management negotiates and recommends to the committee, and, if
considered appropriate, the committee approves, arrangements with each of Cott's
other named executive officers.
In reviewing and determining executive compensation, the committee examines
each component individually as well as total compensation as a whole. The
committee determines each executive officer's compensation with reference to
relevant industry norms, experience, past performance, level of responsibility
and personal requirements and expectations. The committee reviews salary levels
periodically and may make adjustments, if warranted, after an evaluation of
executive and company performance, salary increase trends in our geographic
marketplaces, current salary competitive positioning, and any increase in
responsibilities assumed by the executive. The committee has, from time to time,
considered the advice of independent consultants with respect to compensation
matters. In appropriate circumstances, the committee may augment cash
compensation with the payment of bonuses to more closely align an individual's
overall compensation with his or her performance, or the profitability of the
business unit for which the individual is accountable. The committee may
determine bonuses and levels of other compensation using overall corporate or
business segment performance targets. The committee sets performance objectives
and target levels on an annual basis, and assesses executives against these
targets in determining their overall compensation.
In supporting the philosophy of linking executives and officers and
shareowners, the committee has established certain required minimum holding
levels of Cott's common shares for executives and officers. These levels are to
be met, or were to have been met, by the later of December 31, 2005 and three
years after the executive became a member of management. An individual will be
considered to have achieved his or her minimum holding level if, prior to
December 31, 2005, he or she had satisfied the minimum holding level and has not
ceased to satisfy the threshold as a result of the disposal of common shares.
Shares held for the benefit of the executive officer through Cott's incentive
programs are included in the number of common shares held by the individual. All
of the named officers currently
14
comply with these requirements or it is anticipated that they will comply within
the timeline provided. The minimum holding levels that the committee requires
are:
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
POSITION SALARY MULTIPLE
-------------------------------------------------------------------------------
Chief Executive Officer 5X
-------------------------------------------------------------------------------
Executive Vice Presidents, Senior Vice Presidents 3X
-------------------------------------------------------------------------------
Other officers and vice presidents of Cott and its
subsidiaries 1 1/2X - 2X
-------------------------------------------------------------------------------
-------------------------------------------------------------------------------
LONG-TERM INCENTIVES
The committee considers long-term incentives to be an essential component
of executive compensation so that a proper balance exists between short and
long-term considerations and enhancing shareowner value. There are several
components to Cott's long-term incentive program. The committee considers the
level of each executive's participation in the program by assessing his or her
current level of participation and, in light of that participation, the extent
to which further participation will assist in achieving the goals of the
program.
OPTION PLAN
The board of directors and the committee believe that the grant of equity
incentives is one component of an overall compensation plan and is standard and
expected in Cott's industry. The directors and the committee believe that awards
under the plan play an important part in enabling Cott to attract, retain and
motivate employees in the extremely competitive industry in which Cott operates.
To that end, Cott maintains a stock option plan that is administered by the
committee.
ADMINISTRATION
The committee administers the Option Plan and has the power and authority
to construe and interpret the Option Plan and any awards made under the
Option Plan. The committee determines who is eligible to participate in the
Option Plan, the number of common shares for which options are granted, the
date of grant of options and the vesting period for each option. The board
of directors may amend the Option Plan at any time provided that shareowner
and regulatory or stock exchange approval of the amendments, if required,
is received prior to the issuance of options under the amended Option Plan.
OPTION AWARDS
The grant of options and the issuance of shares under the Option Plan are
subject to the following limitations:
- the number of common shares subject to outstanding options may not
exceed 15% of the common shares outstanding on the date of grant of
the option,
- the aggregate number of common shares which may be issued to any one
person pursuant to options granted under the Option Plan and any
other share compensation arrangement shall not exceed 5% of the
aggregate number of common shares outstanding on the date of grant,
- the aggregate number of common shares which may be issued to
directors who are not also officers or employees shall not exceed
0.5% of the aggregate number of common shares outstanding on the date
of the grant, and
- the aggregate number of common shares which may be issued, within a
one year period, pursuant to options granted under the Option Plan
and any other share compensation arrangement (i) to insiders, shall
not exceed 10% of the aggregate number of common shares outstanding
on the date of grant, and (ii) to any one insider, together with such
insider's associates, shall not exceed 5% of the aggregate number of
common shares outstanding on the date of grant, excluding, in each
case, common shares issued pursuant to share compensation
arrangements over the preceding one year period.
Options to acquire common shares are granted at the closing price on the
Toronto Stock Exchange on the last trading day preceding the date of grant
(other than options granted to U.S. participants who own more than 10% of
our total combined voting power, which are granted at 110% of the Toronto
Stock Exchange closing price).
15
Options are nontransferable and have a term of not more than ten years. If
a participant ceases to be a director, officer, employee or service
provider, all vested unexercised options awarded to such participant will
expire on the earliest of:
- the expiry date of such options,
- 60 days following the date the participant ceases to be a director,
officer, employee or service provider (the "termination date"), or in
the event of the death of a participant, 365 days following the date
of the death of such participant, and
- three years from the date of total and permanent disability or the
retirement of a participant.
All unvested options held by a participant will be forfeited on the date
the participant ceases to be a director, officer, employee or service
provider for reasons other than death, and all unvested options will fully
vest upon the death of a participant. In addition, all unvested options
held by participants will fully vest in the case of:
- a consolidation, merger or amalgamation of Cott with any other
corporation following which Cott's voting shareowners hold less than
50% of the voting shares of the surviving entity,
- a sale of all (or substantially all) of Cott's undertakings and
assets, or
- a proposal made in connection with Cott's liquidation, dissolution,
or winding-up.
If the number of outstanding shares is materially affected as a result of
Cott's merger with another entity, or as a result of a rights offering or a
reclassification, consolidation or subdivision of shares, participants will
be entitled to receive the same consideration paid to the holders of shares
in connection with the amalgamation, merger, rights offering,
reclassification, consolidation or subdivision, as if they had exercised
their options immediately prior to such event. Also, participants will have
the right to exercise all vested and unvested options held by them if a
take-over bid is made with a per-share offer price greater than (or equal
to) their option exercise price, provided the take-over bid permits
tendering by notice of guaranteed delivery. Any such exercise will be
conditioned upon completion of the take-over bid.
At February 28, 2006, there were approximately 155 holders of options under
the Option Plan and approximately 3,494 people (being all of Cott's directors,
officers and employees) were eligible to participate in the Option Plan. The
market value of common shares underlying options outstanding as of February 28,
2006 was $56,482,334.
EXECUTIVE INVESTMENT SHARE PURCHASE PLAN
Cott has adopted an Executive Investment Share Purchase Plan for the
purpose of retaining and rewarding those of Cott's officers and senior
management employees as are designated by the committee each year and who exceed
certain pre-determined annual performance objectives. This plan replaced the
former Executive Incentive Share Compensation Plan. Under this plan, Cott
contributes an amount in cash, determined by the committee, to an independent
trust. The trust uses the contributed funds to purchase Cott's common shares on
the open market on behalf of participants in the plan who exceed the annual
performance objectives determined by the committee. Once purchased, the trustee
will allocate, when directed by the committee, the number of common shares
acquired on behalf of each participant based upon the amount contributed to the
trust on behalf of each participant for that particular year. Generally, common
shares in the trust will vest over a period of three years in favour of those
participants for whom the amount was originally contributed (30% on each of the
first and second anniversaries of the first day of the fiscal year after the
grant for each of the two years immediately following the year in which common
shares were purchased and 40% on the third anniversary of the first day of the
fiscal year after the grant for the third year following the year in which the
shares were purchased).
The maximum number of common shares that can be purchased under the plan in
any year is, for the first fiscal year in which the plan was in effect, not more
than 0.5% of the total number of common shares outstanding on the first day of
that fiscal year and, for each subsequent fiscal year, the maximum number of
common shares for the preceding year plus 0.5% of the total number of common
shares outstanding on the first day of the fiscal year.
No shares are issued from treasury but are instead purchased on the open
market so that the plan is not dilutive to shareowners.
Cott did not make any contributions to the plan in respect of 2005.
16
PROPOSED NEW PLANS
Cott believes in aligning employee actions with shareowner interests. Our
intent is to move away from the granting of stock options as a long-term
incentive and focus more on performance-based awards through Performance Share
Units and Share Appreciation Rights. The proposed long-term incentive plans are
designed to attract, maintain and motivate key employees while promoting the
long-term financial success of Cott.
PERFORMANCE SHARE UNIT PLAN
As a means of providing an incentive for employees of Cott and its
subsidiaries to attain pre-determined corporate performance objectives over a
three-year performance cycle, the committee has recommended the adoption of the
performance share unit plan (the "PSU Plan"). The PSU Plan requires shareowner
approval as a result of New York Stock Exchange regulations. The purpose of the
PSU Plan is to promote Cott's long-term financial success and increase its value
by encouraging the long-term commitment of key employees and motivating their
performance by means of long-term performance-related incentives.
The value of an employee's award under the PSU Plan is based on two
factors: (i) Cott's performance over the three-year performance cycle; and (ii)
the market price of Cott's common shares at the time of vesting. At the start of
each performance cycle, the committee will establish three tiers of performance
goals for Cott to achieve over the three-year period: a minimum threshold level,
a target level and an outstanding performance level. The criteria used to set
these performance goals may include Cott's earnings before interest, taxes,
depreciation and amortization; net earnings; share price performance; return on
equity; return on invested capital; or any other financial criteria and
objectives determined by the committee. The committee will also determine the
employees who may participate in the PSU Plan for each performance cycle.
A target number of performance share units ("PSUs") for each participant is
established by the committee at the beginning of each three-year performance
cycle. Each PSU represents the right, on vesting, to receive one Cott common
share. The number of PSUs earned at the end of a performance cycle can range
from 0% to 150% of the targeted amount, depending on whether Cott achieves the
pre-determined threshold, target or outstanding performance goals in that
performance cycle. If performance over the three-year performance cycle falls
below the threshold level, no PSUs will vest. Cott performance between the
threshold and outstanding levels will be weighted so that the final award will
vary with the achieved performance. Additionally, since the value of each PSU is
tied to Cott's share price, the value received at the end of the performance
cycle will fluctuate with the value of the shares.
Subject to the provisions of the PSU Plan, performance share units will
vest upon the completion of the three-year performance cycle. If the employment
of a participant comes to an end (other than in the case of a termination
without cause) prior to the final vesting of the PSUs granted to such
participant, other than due to the death, normal retirement or permanent
disability of the participant, the participant will forfeit his or her rights to
those PSUs. If a participant is terminated without cause, the committee will
have discretion to determine what will happen to the PSUs.
Throughout the performance cycle, there are no dividends paid to
participants on the performance share units, and holders do not have the right
to vote the common shares represented by their PSUs. Following the vesting of a
participant's PSUs, Cott will contribute cash to an independent trust to be used
for the purpose of purchasing an equivalent number of Cott common shares on the
New York Stock Exchange at the prevailing market price. The common shares
purchased by the trustee will then be registered in the name of the participant
and delivered to the participant upon his or her request.
No shares are issued from treasury and the PSU Plan is not dilutive to
Cott's shareowners.
In the event of (i) a consolidation, merger or amalgamation of Cott with
any other corporation following which Cott's voting shareowners hold less than
50% of the voting shares of the surviving entity; (ii) a sale of all (or
substantially all) of Cott's undertakings and assets; or (iii) a proposal being
made in connection with Cott's liquidation, dissolution, or winding-up, the
committee may recommend to Cott's board whether to accelerate the vesting
(without regard to attainment of any performance goals) of PSUs of any
participant whose employment is terminated without cause in connection with the
change of control. In any such event, the board may elect in its discretion to
accelerate the vesting of some, all or none of any participant's PSUs.
The amounts to be awarded to participants pursuant to the PSU Plan in 2006
and future periods is not determinable. Cott's board of directors and the Human
Resources and Compensation Committee believe that the PSU
17
Plan is an important mechanism for providing certain officers and senior
management with an incentive for exceeding performance targets.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND THAT YOU VOTE FOR THE
RESOLUTION ADOPTING THE PERFORMANCE SHARE UNIT PLAN. A MAJORITY OF THE VOTES
CAST MUST BE IN FAVOUR OF THE RESOLUTION ADOPTING THE PSU PLAN, WHICH IS SET OUT
AT APPENDIX A ON PAGE A-1, IN ORDER FOR IT TO BE APPROVED. UNLESS A PROXY
SPECIFIES THAT THE SHARES IT REPRESENTS SHOULD ABSTAIN FROM VOTING OR VOTE
AGAINST THE RESOLUTION SET OUT IN APPENDIX A, THE PERSONS NAMED IN THE ENCLOSED
PROXY INTEND TO VOTE IN FAVOUR OF THE RESOLUTION. THE FULL TEXT OF THE
PERFORMANCE SHARE UNIT PLAN IS ATTACHED AT APPENDIX C AT PAGE C-1 OF THIS PROXY
CIRCULAR. THE FOREGOING DISCUSSION ABOVE IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE PSU PLAN.
SHARE APPRECIATION RIGHTS PLAN
The committee has recommended the adoption of the Share Appreciation Rights
Plan (the "SAR Plan") as a means of providing additional incentive to employees
and directors of Cott and its subsidiaries to promote the growth and success of
Cott's business and of aiding Cott and its subsidiaries in attracting and
rewarding personnel. The SAR Plan requires shareowner approval as a result of
New York Stock Exchange regulations. Under the SAR Plan, share appreciation
rights ("SARs") may be granted to employees and directors of Cott or its
subsidiaries by the committee on the recommendation of management.
SARs will typically vest on the third anniversary of the grant date. On
vesting, each SAR will represent the right to be paid the difference, if any,
between the price of Cott's common shares on the date of grant and their price
on the SAR's vesting date. Payments in respect of vested in-the-money SARs will
be made in the form of Cott common shares purchased on the open market by an
independent trust with cash contributed by Cott. If Cott's share price on the
date of vesting is lower than on the date of grant, no payment will be made in
respect of those vested SARs. Prior to vesting, there are no dividends paid on
the share appreciation rights, and holders do not have the right to vote the
common shares represented by their SARs.
No shares are issued from treasury and the SAR Plan is not dilutive to
Cott's shareowners.
If the employment of a participant comes to an end (other than in the case
of a termination without cause) prior to the final vesting of the SARs granted
to such participant, other than due to the death, normal retirement or permanent
disability of the participant, his or her unvested SARs will be forfeited. All
unvested SARs will vest in full in the event of (i) a consolidation, merger or
amalgamation of Cott with any other corporation following which Cott's voting
shareowners hold less than 50% of the voting shares of the surviving entity;
(ii) a sale of all (or substantially all) of Cott's undertakings and assets; or
(iii) a proposal being made in connection with Cott's liquidation, dissolution,
or winding-up. If a participant is terminated without cause, the committee will
have discretion to determine what will happen to the SARs.
The number of SARs to be awarded to participants pursuant to the SAR Plan
in 2006 and future periods is not determinable. Cott intends that key employees
and directors participate in the SAR Plan each year, in accordance with the
terms described above. Cott's board of directors and the committee believe that
the SAR Plan is an important mechanism for further aligning the interests of
Cott and its key employees and directors in the long-term growth of the company
and to aid Cott and its subsidiaries in attracting and retaining personnel.
THE BOARD OF DIRECTORS AND MANAGEMENT RECOMMEND THAT YOU VOTE FOR THE
RESOLUTION ADOPTING THE SHARE APPRECIATION RIGHTS PLAN. A MAJORITY OF THE VOTES
CAST MUST BE IN FAVOUR OF THE RESOLUTION ADOPTING THE SAR PLAN, WHICH IS SET OUT
AT APPENDIX B ON PAGE B-1, IN ORDER FOR IT TO BE APPROVED. UNLESS A PROXY
SPECIFIES THAT THE SHARES IT REPRESENTS SHOULD ABSTAIN FROM VOTING OR VOTE
AGAINST THE RESOLUTION SET OUT IN APPENDIX B, THE PERSONS NAMED IN THE ENCLOSED
PROXY INTEND TO VOTE IN FAVOUR OF THE RESOLUTION. THE FULL TEXT OF THE SHARE
APPRECIATION RIGHTS PLAN IS ATTACHED AT APPENDIX D AT PAGE D-1 OF THIS PROXY
CIRCULAR. THE FOREGOING DISCUSSION ABOVE IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO THE SAR PLAN.
COMPENSATION OF THE CHIEF EXECUTIVE OFFICER
Mr. Sheppard's base salary as chief executive officer in 2005 was $550,000.
No cash bonus was paid to Mr. Sheppard in respect of 2005. The committee has
targeted Mr. Sheppard's total compensation, including base salary, bonuses and
stock options at a level it believes reflective of the company's compensation
philosophy.
18
The committee annually reviews with the chief executive officer his
objectives for the upcoming year. In reviewing such objectives, the committee
determines the structure of the chief executive officer's bonus plan. As part of
its determination of bonus targets, the committee considers Cott's strategic
plan as well as the chief executive officer's personal objectives. The committee
sets targets for the chief executive officer to achieve within the framework of
Cott's bonus plan. Both a target for achievement as well as a "stretch" target
are set. For fiscal 2005, the committee considered what objectives would best
drive Cott's results and shareowner value and in its view earnings per share was
the most effective means of achieving those goals. Accordingly, the committee
determined that the objectives for Mr. Sheppard as chief executive officer would
be based on Cott's earnings per share.
Submitted by the Human Resources and Compensation Committee.
BETTY JANE HESS, CHAIR
SERGE GOUIN
CHRISTINE A. MAGEE
SHAREOWNER RETURN PERFORMANCE GRAPH
The following graph shows changes over our past five fiscal years in the
value of C$100, assuming reinvestment of dividends, invested in: (i) our common
shares; (ii) the Toronto Stock Exchange's S&P/TSX Composite Index; and (iii) a
peer group of publicly traded companies in the bottling industry comprised of
Coca-Cola Enterprises Inc., Coca-Cola Bottling Co. Consolidated, National
Beverage Corp., Pepsi Bottling Group Inc. and PepsiAmericas Inc. The closing
price of Cott's common shares as of December 30, 2005 on the Toronto Stock
Exchange was C$17.23 and on the New York Stock Exchange was $14.70.
(PERFORMANCE GRAPH)
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DATE DEC 00 DEC 01 DEC 02 JAN 04 DEC 04 DEC 05
--------------------------------------------------------------------------------------------------------------------------
Cott Common Shares 100 219.13 241.22 316.78 258.09 149.83
--------------------------------------------------------------------------------------------------------------------------
S&P/TSX Composite Index 100 87.43 76.55 97.01 111.06 137.85
--------------------------------------------------------------------------------------------------------------------------
Peer Group 100 105.93 115.97 118.17 126.13 127.23
--------------------------------------------------------------------------------------------------------------------------
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19
COMPENSATION OF DIRECTORS
The lead independent director receives an annual retainer of C$140,000.
Pursuant to a letter agreement between us and Mr. Weise, Mr. Weise receives an
annual fee of $250,000 to serve as the chairman of our board. Under the letter
agreement, we have agreed to submit Mr. Weise for election to the board at each
annual meeting of our shareowners and to recommend to the board and any
appropriate committee that he continue as chairman provided that (i) Mr. Weise
is not disqualified by applicable law from acting as a director, (ii) he is not
in breach of the letter agreement, (iii) he was elected to the board by the
shareowners at the most recent meeting held for this purpose, and (iv) we have
not otherwise determined that it is not in our best interest to make such
submissions or recommendations. The letter agreement will terminate on the
earlier of (i) the date on which our shareowners do not elect Mr. Weise as a
director; (ii) our directors (or any applicable committee) fail to appoint Mr.
Weise as chairman of our board; and (iii) upon receipt of 120 days' notice by
either us or Mr. Weise that such party intends to terminate the letter
agreement. Mr. Sheppard is a management director and as such does not receive
directors' fees.
U.S. resident directors receive their applicable retainers in the U.S.
dollar amounts found in the table below, while Canadian resident directors
receive their applicable fees and retainers in the Canadian dollar amounts set
forth below.
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
C$ US$(1)
------------------------------------------------------------------------------------
Director retainer 60,000 48,000
------------------------------------------------------------------------------------
Committee chair retainer (other than audit committee)(2) 10,000 8,000
------------------------------------------------------------------------------------
Audit committee chair retainer 15,000 12,000
------------------------------------------------------------------------------------
Committee membership retainer 10,000 8,000
------------------------------------------------------------------------------------
------------------------------------------------------------------------------------
(1) Converted to US$ at a rate of C$1.25.
(2) In addition to receiving a retainer for acting as a chair of a committee,
the chair of a committee will also receive the committee membership
retainer.
Directors are reimbursed for certain business expenses, including their
travel expenses in connection with board and committee meeting attendance.
Directors are required to own personally at least C$50,000 worth of our common
shares, which must be acquired within three years of joining the board or by
December 2006, whichever is later. The shares may be acquired through our Share
Plan for Non-Employee Directors and, if approved, the Share Appreciation Rights
Plan.
Our Share Plan for Non-Employee Directors allows directors who are neither
our employees nor our full-time officers to elect to receive their fees in the
form of our common shares. Fees that would otherwise be payable to directors who
elect to participate in the plan are paid to a third party trustee who uses the
funds to purchase shares on the open market. The trustee allocates the number of
shares attributable to each participant based on the amount of fees contributed
in respect of that participant. A participant may only receive the shares
purchased under the plan (or direct the trustee to sell the shares purchased on
his or her behalf and receive the proceeds from the sale of such shares) upon
ceasing to be a director. No shares are issued from treasury in connection with
this plan and it is not dilutive to shareowners.
20
EQUITY COMPENSATION PLAN INFORMATION
Set out below is information, as of December 31, 2005, about the only
equity compensation plan under which we may issue our common shares from
treasury.
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
NUMBER OF COMMON
SHARES REMAINING
AVAILABLE FOR FUTURE
NUMBER OF COMMON ISSUANCE UNDER EQUITY
SHARES TO BE ISSUED WEIGHTED-AVERAGE COMPENSATION PLANS
UPON EXERCISE OF EXERCISE PRICE OF (EXCLUDING SECURITIES
OUTSTANDING OPTIONS OUTSTANDING OPTIONS REFLECTED IN COLUMN (A))
PLAN CATEGORY (A) (B) (C)
---------------------------------------------------------------------------------------------------------
Cott Corporation 1986
Common Share Option Plan,
as amended(1) 4,604,655 C$30.69 1,094,396
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(1) As this plan was adopted prior to our initial public offering it was not
approved by shareowners. Subsequent amendments to the plan that required
shareowner approval have been approved by shareowners. The material terms
of the Option Plan are summarized in "Report on Executive
Compensation -- Long-Term Incentives -- Option Plan".
DIRECTORS AND OFFICERS INSURANCE
We provide insurance for the benefit of our directors and officers against
certain liabilities that may be incurred by them in their capacity as directors
and officers, as specified in the policy. The current annual policy limit is
$35,000,000. We are reimbursed for amounts paid to indemnify directors and
officers, subject to a deductible of $1,500,000 for securities and certain other
claims and a deductible of $500,000 for all other claims. The deductible is our
responsibility. There is no applicable deductible if we are unable to indemnify.
The annual premium, which is currently $901,870, including sales taxes, is paid
by us.
Under the terms of our by-laws and agreements with certain directors, we
indemnify our directors and officers against certain liabilities incurred by
them in their capacity as directors and officers to the extent permitted by law.
CORPORATE GOVERNANCE
BOARD AND MANAGEMENT ROLES
The board of directors has explicitly assumed responsibility for the
stewardship of Cott, including:
- the adoption of a strategic planning process,
- the identification of the principal risks for Cott and the
implementation of appropriate risk management systems,
- succession planning and monitoring of senior management,
- ensuring that we have in place a communications policy to enable us to
communicate effectively and in a timely manner with our shareowners,
other stakeholders and the public generally, and
- the integrity of our internal control and management information
systems.
All decisions materially affecting Cott, our business and operations,
including long-term strategic and operational planning, must be approved by the
board prior to implementation. Each year management prepares a statement of
objectives, plans and performance standards. This statement is submitted to the
board of directors for its review and approval prior to implementation.
To assist in discharging its responsibilities effectively, the board has
established three committees: the Audit Committee, the Corporate Governance
Committee and the Human Resources and Compensation Committee. The roles of the
committees as part of our governance process are outlined below, and their
charters may be viewed on our website at www.cott.com. Each committee has the
authority to retain special legal, accounting or other advisors.
21
ALLOCATION OF RESPONSIBILITY BETWEEN THE BOARD AND MANAGEMENT
The board has adopted a written mandate, the text of which is set out in
Appendix E. The business and affairs of Cott are managed by or under the
supervision of the board in accordance with all applicable laws and regulatory
requirements. The board is responsible for providing direction and oversight,
approving our strategic direction and overseeing the performance of our business
and management. Management is responsible for presenting strategic plans to the
board for review and approval and for implementing our strategic direction. The
board has approved a job description for the chief executive officer, which
specifically outlines the responsibilities of this position. One of these
responsibilities is to prepare on behalf of management a written statement of
management's objectives, plans and standards of performance. This report is
reviewed and approved annually by both the Human Resources and Compensation
Committee and the entire board. Additionally, we have established a lead
independent director role and position descriptions for the chairman of the
board and for each committee chair.
BOARD'S EXPECTATIONS OF MANAGEMENT
The board expects management to pursue the following objectives:
- produce timely, complete and accurate information on our operations and
business and on any other specific matter that may, in management's
opinion, have material consequences for us and our shareowners and other
stakeholders,
- act on a timely basis and make appropriate decisions with regard to our
operations, in accordance with all the relevant requirements and
obligations and in compliance with our policies, with a view to
increasing shareowner value,
- apply a rigorous budget process and closely monitor our financial
performance in terms of the annual budget approved by the board,
- develop and implement a strategic plan in light of trends in the market,
and
- promote high ethical standards and practices in conducting our business.
SHAREOWNER COMMUNICATIONS
We seek to maintain a transparent and accessible exchange of information
with all of our shareowners and other stakeholders with regard to our business
and performance, subject to the requirements of all applicable laws and any
other limitations of a legal or contractual nature. In addition to our timely
and continuous disclosure obligations under applicable law, we regularly
distribute information to our shareowners and the investment community through
conferences, webcasts made available to the public and press releases.
Shareowners are invited to communicate with any of our directors, including the
lead independent director, by sending a letter to the attention of the director,
c/o the Secretary of Cott, 207 Queen's Quay West, Suite 340, Toronto, Ontario
M5J 1A7. The letter should indicate that you are a Cott shareowner. Unless the
letter is primarily commercial in nature or if it relates to an improper or
irrelevant topic, the Secretary or his designee will:
- forward it to the director or directors to whom it is addressed (or, if
it is not directed toward a specific director, to our lead independent
director), or
- attempt to have management respond directly, for example where a
shareowner requests information about Cott or a share-related matter.
All communications not forwarded to the directors will be summarized for
the directors and made available to the directors upon their request.
At each board meeting, a member of management presents a summary of all
communications received since the last meeting that were not forwarded and makes
those communications available to the directors upon request.
COMPOSITION OF THE BOARD
Our articles permit a minimum of three and a maximum of 15 directors. There
are eleven nominees for election to the board, a number that the board considers
to be adequate given our size and the nature of our shareowner constituency.
Board members are encouraged to attend each annual meeting of shareowners.
Last year all of the directors attended the annual meeting.
22
INDEPENDENCE OF THE BOARD
Mr. Weise is the chairman of our board. Mr. Gouin, an independent director,
serves as our lead independent director and presides at meetings of
non-management and independent directors.
At all meetings of the board and committees of the board, any outside board
member may request that all members of management, including management
directors, be excused so that any matter may be discussed without any
representative of management being present. The non-management directors meet
independently of management as part of each regularly scheduled quarterly
meeting of the board and independent directors meet alone at least annually. The
directors met independently of management at seven meetings, and independently
of non-independent directors at one meeting, in 2005. In addition, directors who
have a material interest in a transaction or agreement are required to disclose
the interest to the board, to refrain from voting on the matter and do not
participate in discussions relating to the transaction or agreement.
Each of the Human Resources and Compensation Committee, the Corporate
Governance Committee and the Audit Committee is comprised of entirely
independent directors. The board oversees the establishment and function of all
committees, the appointment of committee members and their conduct. The board
has considered the independence of each of its members for purposes of the rules
of the New York Stock Exchange and, where applicable, NI 58-101. See "Certain
Relationships and Related Transactions".
BOARD COMMITTEES
HUMAN RESOURCES AND COMPENSATION COMMITTEE
Members -- Betty Jane Hess (Chair), Serge Gouin, Christine A. Magee
The board has determined that each member of the committee is independent
within the meaning of the rules of the New York Stock Exchange and NI 58-101.
See "Certain Relationships and Related Transactions". The committee's mandate
includes:
- reviewing, approving and, where appropriate, recommending to the board
compensation plans and levels for our senior officers and directors,
including our chief executive officer,
- reviewing and approving incentive compensation to be allocated to our
employees, including senior officers, and
- reviewing and recommending to the board the remuneration to be paid to
members of the board.
The committee also is responsible for reviewing and reporting annually to
the board of directors on our organizational structure and ensuring that an
appropriate succession plan for the chief executive officer and our senior
officers has been developed. The committee met 10 times in 2005.
In determining the amount of compensation for directors, management reviews
industry publications and trends and meets with an outside consultant to
determine the appropriate level of compensation. Management then reports its
findings and recommendations to the committee, which assesses the information to
form a recommendation to the board of directors.
In 2005, Mercer Human Resource Consulting was retained by Cott to provide
advice with respect to particular projects, including assisting with the
development of the PSU Plan and the SAR Plan as well as advising on compensation
generally for certain executive officers. In addition, Hay Group provided advice
with respect to various human resource matters, including advising on proposed
changes to directors' fees.
CORPORATE GOVERNANCE COMMITTEE
Members -- Serge Gouin (Chair), Colin Adair, Philip B. Livingston
The board has determined that each member of this committee is independent
within the meaning of the rules of the New York Stock Exchange and NI 58-101.
The Corporate Governance Committee is responsible for developing and monitoring
our approach to corporate governance issues in general. Specifically, the
Corporate Governance Committee is responsible for:
- reviewing and recommending changes to the mandates of the board
committees,
- ensuring compliance with the guidelines, rules and requirements that are
applicable to us,
23
- identifying and recommending the nomination of new members to the board
and its committees and identifying and proposing to the board nominees
for each annual meeting of shareowners (and as such functions as a
nominating committee),
- ensuring that management develops, implements and maintains (i)
appropriate orientation and education programs for directors and (ii) a
continuing education policy designed to foster a more extensive
knowledge of the business on the part of the board,
- monitoring and assessing the individual and collective effectiveness of
the board and its committees,
- monitoring the quality of relationship between management and the board
and recommending any areas for improvement,
- reviewing and assessing annually our Corporate Governance Guidelines,
and
- reviewing and, as appropriate, modifying the Code of Business Conduct
and Ethics, and pre-approving any request for a waiver of such Code.
In selecting candidates for the board, the Corporate Governance Committee
applies a number of criteria, including:
- each director should be an individual of the highest character and
integrity,
- each director should have sufficient experience to enable the director
to make a meaningful contribution to the board and to Cott,
- each director should have sufficient time available to devote to our
affairs in order to carry out his or her responsibilities as a director,
- each person who is nominated as an independent director should meet all
of the criteria established for independence under applicable securities
or stock exchange laws, rules or regulations,
- whether the residency of the nominee will impact residency and
qualification requirements under applicable legislation relating to the
composition of the board and its committees, and
- whether the person is being nominated, or is precluded from being
nominated, to fulfill any contractual obligation we may have.
The committee considers suggestions as to nominees for directors from any
source, including any shareowner. Shareowners wishing to suggest a candidate for
a director should write to our Secretary at our executive office and include:
- a statement that the writer is a shareowner and is proposing a candidate
for consideration by the Corporate Governance Committee,
- the name and contact information for the candidate,
- a statement of the candidate's business and educational experience,
- information regarding each of the factors listed above, other than those
in respect of board size and composition, to enable the committee to
evaluate the candidate,
- a statement detailing the relationship between the candidate and us or
any of our customers, suppliers or competitors,
- detailed information about any relationship or understanding between the
writer and the proposed candidate, and
- a statement that the candidate is willing to be considered as a
candidate and willing to serve as a director if nominated and elected.
The committee conducts assessments of the board and its committees at least
annually. Directors are required to complete an evaluation of the performance of
the board, its committees and directors, which are then reviewed by the
committee and results and recommendations resulting therefrom reported to the
full board.
New directors are provided with material respecting Cott and attend
information sessions and plant tours with management in order to familiarize
themselves with the business. They also meet with company representatives to
review the mandates and roles of the board and its committees as well as
applicable corporate policies. Directors
24
regularly meet with management to discuss corporate developments and participate
in plant tours from time to time. In addition, directors are provided with
materials concerning matters to be discussed at upcoming meetings prior to the
meeting.
The Corporate Governance Committee may from time to time engage outside
advisors to assist in identifying and evaluating potential nominees to the
board.
The Corporate Governance Committee met four times in 2005.
AUDIT COMMITTEE
Members -- W. John Bennett, Philip B. Livingston (Chair), Andrew Prozes
The Audit Committee reports directly to the board. Each member has been
determined by the board to be independent within the meaning of the rules of the
New York Stock Exchange and Rule 10A-3 of the U.S. Exchange Act.
The committee, on behalf of the board, oversees the integrity of our annual
and interim consolidated financial statements, compliance with applicable legal
and regulatory requirements, significant financial reporting issues, the
internal audit function, the annual independent audit of our financial
statements, the independent auditors' qualifications and independence, the
performance of our internal auditors and independent auditors and is responsible
for satisfying itself that we have implemented appropriate systems of internal
controls. The committee reviews the terms of engagement and proposed overall
scope of the annual audit with management and the independent auditor. See
"Auditors -- Audit Committee Report".
The committee operates pursuant to a written charter that was approved and
adopted by the board on March 7, 2001 and updated in March, 2004 and February,
2005, the text of which is set out in Appendix F. As required by the New York
Stock Exchange rules, the board has determined that each member of the committee
is financially literate and that Mr. Livingston qualifies as an "audit committee
financial expert" within the meaning of the rules of the U.S. Securities and
Exchange Commission. The committee met eight times in 2005.
AUDITORS
APPOINTMENT OF AUDITORS
At the meeting you will be asked to approve the appointment of
PricewaterhouseCoopers LLP, as our auditors for the next year. A majority of the
votes cast must be in favour of this resolution in order for it to be approved.
PRINCIPAL ACCOUNTANT'S FEES
The aggregate fees billed by PricewaterhouseCoopers LLP for professional
services performed by PricewaterhouseCoopers LLP for us for fiscal 2005 and 2004
were as follows:
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
FISCAL YEAR
-----------------------------
2005 2004
------------------------------------------------------------------------------------------
Audit Fees (including out-of-pocket expenses) $2,025,570 $1,835,178
------------------------------------------------------------------------------------------
Audit-Related Fees 121,557 119,000
------------------------------------------------------------------------------------------
Tax Fees 156,166 81,382
------------------------------------------------------------------------------------------
All Other Fees -- --
------------------------------------------------------------------------------------------
Total 2,303,293 $2,035,560
------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------
AUDIT FEES
Audit fees are those for services related to the audit of our annual
financial statements for the 2005 and 2004 fiscal years and for the review of
the financial statements included in our Quarterly Reports on Form 10-Q for
those years. For fiscal 2004, audit fees included $0.6 million in fees for audit
services related to our compliance with section 404 of the Sarbanes-Oxley Act
regarding our internal control over financial reporting.
25
AUDIT-RELATED FEES
Audit-related fees for the 2005 and 2004 fiscal years consisted primarily
of consultation on various matters and translation of financial documents and
financial assistance reports related to an acquisition.
TAX FEES
Tax fees in fiscal 2005 and 2004 consisted of tax compliance services and
advice.
PRE-APPROVAL POLICIES AND PROCEDURES
In engaging our independent auditor, the Audit Committee considers the
following guidelines:
- For audit services, the independent auditor is to provide the committee
with an engagement letter during the last quarter of each fiscal year
outlining the scope of the audit services proposed to be performed in
the next fiscal year. If agreed to by the committee, this engagement
letter will be formally accepted by the committee. The independent
auditor is to submit an audit services fee proposal for approval by the
committee.
- For non-audit services, management and the independent auditor will
periodically submit to the committee for approval in advance a
description of particular non-audit services. Management and the
independent auditor will each confirm to the committee that each
proposed non-audit service is permissible under applicable legal
requirements. The committee must approve permissible non-audit services
in order for us to engage the independent auditor for such services. The
committee will be informed routinely as to the non-audit services
actually provided by the independent auditor pursuant to this process.
- If management proposes that the committee engage the independent auditor
to provide a non-audit service that is not contemplated or approved by
the committee pursuant to the process outlined above, management will
submit the request to the committee. Our management and the independent
auditor will each confirm to the committee that such non-audit service
is permissible under all applicable legal requirements. Management will
also provide an estimate of the cost of such non-audit service. The
committee must approve the engagement for the non-audit service and the
fees for such service prior to our engagement of the independent auditor
for the purposes of providing such non-audit service.
Any amendment or modification to an approved permissible non-audit service
must be approved by the committee or the chair of the committee prior to the
engagement of the auditors to perform the service.
All of our audit related fees and tax fees in 2005 were pre-approved by the
Audit Committee in 2005. The Audit Committee has determined that the provision
of the non-audit services for which these fees were rendered is compatible with
maintaining the independent auditor's independence.
One or more representatives of PricewaterhouseCoopers LLP will be present
at the meeting, will have an opportunity to make a statement as he or she may
desire and will be available to respond to appropriate questions.
AUDIT COMMITTEE REPORT
The Audit Committee has reviewed and discussed with management Cott's
audited financial statements and Management's Report on Internal Control over
Financial Reporting.
The committee reviewed with the independent auditor their judgment as to
the quality, not just the acceptability, of Cott's accounting principles and
such other matters as the committee and the auditors are required to discuss
under generally accepted auditing standards, in particular those matters
required to be discussed by Statement of Auditing Standards No. 61,
"Communications with Audit Committees", as amended by Statement of Auditing
Standards No. 90, "Audit Committee Communications". The committee also reviewed
with management and PricewaterhouseCoopers LLP the critical accounting policies
underlying Cott's financial statements and how these policies were applied to
the financial statements.
The audit committee received the written disclosures and the letter from
the auditor required by the Independence Standards Board Standard No. 1. The
committee discussed with the auditors the auditor's independence from Cott and
management, including the matters that are required to be disclosed in writing
by the Independence Standards Board and considered the compatibility of
non-audit services with the auditors' independence.
26
Based on the foregoing reviews and discussions, the committee recommended
to the board of directors that the audited financial statements and Management's
Report on Internal Control over Financial Reporting be included in Cott's annual
report on Form 10-K for the year ended December 31, 2005 for filing with the
U.S. Securities and Exchange Commission.
PHILIP LIVINGSTON, CHAIRMAN
W. JOHN BENNETT
ANDREW PROZES
ADDITIONAL INFORMATION
INFORMATION ABOUT COTT
Upon request to the Secretary you may obtain a copy of our annual report on
Form 10-K for the fiscal year ended December 31, 2005, our 2005 audited
financial statements, and additional copies of this document. Copies of these
documents may also be obtained on our website at www.cott.com, on the SEDAR
website maintained by the Canadian securities regulators at www.sedar.com and on
the EDGAR website maintained by the United States Securities and Exchange
Commission at www.sec.gov.
In addition, we have made available on our website our Code of Business
Conduct and Ethics and our Corporate Governance Guidelines, as well as the
charters of each of our Human Resources and Compensation Committee, Corporate
Governance Committee and Audit Committee. Copies of any of these documents are
available in print to any shareowner upon request to the Secretary.
HOUSEHOLDING
Some banks, brokers and other nominee record holders may be participating
in the practice of "householding" proxy circulars and annual reports. This means
that only one copy of our proxy circular or annual report may have been sent to
multiple shareowners in your household. We will promptly deliver a separate copy
of either document to you if you request one by writing or calling as follows:
Cott Corporation, 207 Queen's Quay West, Suite 340, Toronto, Ontario, Canada M5J
1A7, Attention: Secretary; telephone number (416) 203-3898. If you want to
receive separate copies of the annual report and proxy circular in the future,
or if you are receiving multiple copies and would like to receive only one copy
for your household, you should contact your bank, broker or other nominee record
holder, or you may contact us at the above address and phone number.
APPROVAL
The board of directors of Cott has approved the contents and sending of
this proxy circular.
-s- Mark R. Halperin
(Signed) MARK R. HALPERIN
Senior Vice President,
General Counsel & Secretary
March 20, 2006
27
APPENDIX A
ADOPTION OF PERFORMANCE SHARE UNIT PLAN
BE IT RESOLVED AS AN ORDINARY RESOLUTION OF THE SHAREOWNERS THAT:
1. the Performance Share Unit Plan described in the proxy circular for Cott's
Corporation's annual and special meeting of shareowners to be held on April
20, 2006 under the heading "Long-Term Incentives -- Proposed New
Plans -- Performance Share Unit Plan", be and the same is hereby authorized
and approved; and
2. any officer or director of Cott Corporation be and is hereby authorized and
directed, for and on behalf of Cott Corporation, to execute and deliver all
such documents and to do all such acts and things as he or she may
determine necessary or desirable in order to carry out the foregoing
provisions of this resolution, the execution of any such document or the
doing of any such acts and things being conclusive evidence of such
determination.
A-1
APPENDIX B
ADOPTION OF SHARE APPRECIATION RIGHTS PLAN
BE IT RESOLVED AS AN ORDINARY RESOLUTION OF THE SHAREOWNERS THAT:
1. the Share Appreciation Rights Plan described in the proxy circular for
Cott's Corporation's annual and special meeting of shareowners to be held
on April 20, 2006 under the heading "Long-Term Incentives -- Proposed New
Plans -- Share Appreciation Rights Plan", be and the same is hereby
authorized and approved; and
2. any officer or director of Cott Corporation be and is hereby authorized and
directed, for and on behalf of Cott Corporation, to execute and deliver all
such documents and to do all such acts and things as he or she may
determine necessary or desirable in order to carry out the foregoing
provisions of this resolution, the execution of any such document or the
doing of any such acts and things being conclusive evidence of such
determination.
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APPENDIX C
COTT CORPORATION
PERFORMANCE SHARE UNIT PLAN
ARTICLE I
PURPOSE AND ESTABLISHMENT OF PLAN
1.1 PURPOSE.
The Company hereby establishes a Plan for the purposes of fostering and
promoting the long-term financial success of the Company and its Subsidiaries
and materially increasing the value of the Company and/or its Subsidiaries by
(i) encouraging the long-term commitment of key Employees, (ii) motivating
performance of key Employees by means of long-term performance related
incentives, (iii) attracting and retaining outstanding key Employees by
providing incentive compensation opportunities, and (iv) enabling participation
by key Employees in the long-term growth and financial success of the Company.
1.2 EFFECTIVE DATE.
The Plan shall become effective upon its approval by a majority of the
Company's shareholders at the Company's next annual meeting held after the
approval of the Plan by the Board.
ARTICLE II
DEFINITIONS
In this Plan, the following terms shall have the following meanings:
(a) "AWARD" means any award of the right to earn Performance Share Units
granted pursuant to the Plan;
(b) "AWARD AGREEMENT" means a written agreement between a Participant and
the Company which sets forth the terms of the grant of an Award;
(c) "AWARD AMOUNT" means the value (stated in terms of Canadian dollars)
of the Award granted under the Plan to a Participant in respect of a
Performance Cycle, assuming the target Performance Goals are attained
for such Performance Cycle;
(d) "BOARD" means the Board of Directors of the Company;
(e) "CAUSE" means any action by the Participant or inaction by the
Participant that constitutes: (i) a breach of a written employment
agreement by that Participant; or (ii) misconduct, dishonesty,
disloyalty, disobedience or action that might reasonably injure the
Company or any of its Subsidiaries or their respective business
interests or reputation;
(f) "CHANGE OF CONTROL" means: (i) a consolidation, merger or amalgamation
of the Company with or into any other corporation whereby the voting
shareholders of the Company immediately prior to such event receive
less than 50% of the voting shares of the consolidated, merged or
amalgamated corporation; (ii) a sale by the Company of all or
substantially all of the Company's undertakings and assets; or (iii) a
proposal by or with respect to the Company being made in connection
with a liquidation, dissolution or winding-up of the Company;
(g) "COMMITTEE" means the Human Resources and Compensation Committee of
the Board;
(h) "COMMON SHARES" means the common shares in the capital of the Company;
(i) "COMPANY" means Cott Corporation, a corporation amalgamated under the
laws of Canada;
(j) "EMPLOYEE" means a full-time, part-time or contract employee of an
Employer;
(k) "EMPLOYER" means, in respect of a Participant, the Company or the
Subsidiary of the Company employing such Participant;
(l) "FAIR MARKET VALUE" means, with respect to a Common Share on any
determination date, the closing price of the Common Shares on the
Toronto Stock Exchange on the last trading day on which Common Shares
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traded prior to such date; provided that if no Common Shares traded in
the five trading days prior to the determination date, the Committee
shall determine Fair Market Value on a reasonable basis using a method
that complies with section 409A of the United States Internal Revenue
Code of 1986, as amended, and guidance issued thereunder;
(m) "FISCAL YEAR" means the 12-month period beginning the first Sunday
following the immediately preceding Saturday closest to December 31st
and ending on the Fiscal Year End;
(n) "FISCAL YEAR END" means, with respect to each Fiscal Year, the
Saturday closest to December 31st of such Fiscal Year;
(o) "NORMAL RETIREMENT" means retirement from office or employment with an
Employer (at the election of the Employee and as agreed to by the
Employer);
(p) "PARTICIPANT" means any Employee(s) approved by the Committee to
participate in the Plan;
(q) "PERFORMANCE CYCLE" means a period of time determined at the date of
grant by the Committee, in its discretion, (not to be longer than
three Fiscal Years, the first year of which shall be the Fiscal Year
in which the award is granted and the last day of which shall be the
last day of a Fiscal Year) over which performance is measured for the
purpose of determining a Participant's eligibility to earn, and the
payment value of, any Performance Share Units;
(r) "PERFORMANCE GOALS" shall mean the criteria and objectives determined
by the Committee in its discretion pursuant to the Plan, which shall
be satisfied or met during the applicable Performance Cycle as a
condition precedent to a Participant earning Performance Share Units
under an Award. Such criteria and objectives may include earnings
before interest, taxes, depreciation and amortization; operating
income; net operating income after tax; pre-tax or after-tax income;
cash flow; net earnings; earnings per share; share price performance;
return on assets; return on equity; return on invested capital;
tangible net asset growth; any combination of the foregoing; or any
other financial criteria and objectives determined by the Committee in
its discretion;
(s) "PERFORMANCE SHARE UNIT" means a notional unit representing a
contingent right to receive Common Shares following the Vesting Date
based upon the achievement of certain Performance Goals during a
specified Performance Cycle;
(t) "PERMANENT DISABILITY" means the complete and permanent incapacity of
a Participant, as determined by a licensed medical practitioner
approved by the Committee, due to a medically determinable physical or
mental impairment which prevents such Participant from performing
substantially all of the essential duties of his or her office or
employment;
(u) "PLAN" means the Cott Corporation Performance Share Unit Plan, as
amended from time to time;
(v) "PSU FUND" means the trust fund or funds established under the PSU
Trust Agreement, which for purposes of the Plan constitutes an
"employee benefit plan" for purposes of the Tax Act;
(w) "PSU TRUST AGREEMENT" means the agreement or agreements by and among
the Company, the Trustee, and the Agent (as defined therein) to carry
out the purposes of the Plan in respect of Common Shares purchased on
account of vested Performance Share Units and any income attributable
thereto in accordance with the terms of the Plan;
(x) "SUBSIDIARY" has the meaning assigned thereto in the Securities Act
(Ontario) and "SUBSIDIARIES" shall have a corresponding meaning;
(y) "SUPERIOR GOALS" has the meaning attributed to it in Section 4.2;
(z) "TARGET GOALS" has the meaning attributed to it in Section 4.2;
(aa) "TARGET PSU NUMBER" has the meaning attributed to it in Section
4.3(b);
(bb) "TAX ACT" means the Income Tax Act (Canada) and all regulations
thereunder, as amended or restated from time to time. Any reference in
the Agreement to a provision of the Tax Act includes any successor
provision thereto;
(cc) "TERMINATED PARTICIPANT" means a Participant who has incurred a
Termination Date and shall include, where context requires, the
personal representative(s) of a Participant;
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(dd) "TERMINATION DATE" means the Participant's last day of active service
with his or her Employer (determined without regard to any notice of
termination owing pursuant to statute, regulation, agreement or common
law);
(ee) "THRESHOLD GOALS" has the meaning attributed to it in Section 4.2;
(ff) "TRUSTEE" means MRS Trust or its successor trustee under the PSU Trust
Agreement;
(gg) "UK TAX LIABILITY" has the meaning attributed to it in Section 8.7(b);
and
(hh) "VESTING DATE" means, with respect to any Performance Share Units
earned in a Performance Cycle, the last day of the Performance Cycle,
except as otherwise provided in Section 5.3.
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Committee. The Committee shall have
the power and authority to:
(a) adopt rules and regulations for implementing the Plan;
(b) other than with respect to the Chief Executive Officer of the Company,
determine the eligibility of persons to participate in the Plan, when
Awards shall be granted to eligible persons and the amounts, terms and
conditions of such Awards, including the Award Amount (subject to the
maximum Award Amount set forth in Section 4.1(b));
(c) interpret and construe the provisions of the Plan, and any such
interpretation and construction of the Plan by the Committee shall be
final in all respects and, in particular, shall not be subject to any
appeals whatsoever;
(d) subject to statutory and regulatory requirements, make exceptions to
the Plan in circumstances which it determines to be exceptional;
(e) delegate such administrative duties and powers as it may see fit with
respect to this Plan (excluding, for greater certainty, the power to
grant Awards) to any officers of an Employer (and any such duties
performed or powers exercised by any such officers shall be deemed to
have been performed or exercised, as the case may be, by the
Committee), such delegation to be evidenced by a written resolution
adopted by the Committee; and
(f) take such other steps as it determines to be necessary or desirable to
give effect to the Plan.
Any decision, approval or determination made by a person or group of persons
delegated the ability to make such decision, approval or determination pursuant
to Section 3.1(e) above shall be deemed to be a decision, approval or
determination, as the case may be, of the Committee; provided, that two officers
of the Company, one of whom must be the Chief Executive Officer, the Chief
Financial Officer, the Senior Vice President, Corporate Resources, or the
Secretary, are hereby authorized to sign and execute all instruments and
documents and do all things necessary or desirable for carrying out the
provisions of the Plan.
ARTICLE IV
OPERATION OF PLAN
4.1 ELIGIBILITY AND PARTICIPATION.
(a) All Employees are eligible for consideration to participate in the
Plan. Participants in the Plan shall be selected from time to time by
the Committee, in its discretion, from among those Employees who, in
the opinion of the Committee, are key Employees in a position to
contribute materially to the continued growth, development and
long-term financial success of the Company and/or its Subsidiaries.
Except with respect to Awards granted to the Chief Executive Officer
of the Company, the Committee, in its discretion, shall determine the
amounts, terms and conditions of each Award granted hereunder,
including the Award Amount (subject to the maximum Award Amount set
forth in Section 4.1(b) below). Any grant of an Award to the Chief
Executive Officer of the Company and the amounts, terms and conditions
of such Award, including the Award Amount (subject to the maximum
Award Amount set forth below), shall require the prior approval of
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the independent (as understood within the rules of the New York Stock
Exchange and applicable Canadian securities laws) members of the
Board, upon the recommendation of the Committee.
(b) The maximum Award Amount that may be granted to an individual
Participant in a Fiscal Year shall not exceed 50% of the aggregate
Award Amounts granted to all Participants under this Plan in such
Fiscal Year.
(c) Subject to the foregoing, Awards may be granted by the Committee at
any time and from time to time to new Participants, or to
already-participating Participants, or to a greater or lesser number
of Participants, and may include or exclude previous Participants, as
the Committee shall determine in its discretion. The grant of an Award
shall be evidenced by an Award Agreement setting forth such terms,
provisions, limitations and performance criteria (including
Performance Goals for the applicable Performance Cycle) as are
approved by the Committee, but not inconsistent with the Plan. The
Award Agreement shall also include the number of Performance Share
Units eligible to be earned by a Participant if the Threshold Goals,
Target Goals or Superior Goals are attained, as determined pursuant to
Section 4.3(b).
(d) Except as required by this Plan, Awards and the Award Agreements
evidencing the same need not contain similar provisions. The
Committee's determinations under the Plan (including determinations of
which Employees are to receive Awards, the form, amount and timing of
such Awards, the terms and provisions of such Awards and the Award
Agreements evidencing same) need not be uniform and may be made by the
Committee selectively among Participants who receive, or are eligible
to receive, Awards under the Plan.
4.2 PERFORMANCE GOALS.
At the beginning of each Performance Cycle (and not later than (a) in the
case of a Performance Cycle of 12 months or more, the 89th day after the
beginning of the Performance Cycle, and (b) in the case of a Performance Cycle
of less than 12 months, the date by which 25% of the Performance Cycle has
elapsed), the Committee shall, in its discretion, (i) establish for each
Performance Cycle the specific Performance Goals as the Committee believes are
relevant to the Company's overall business objectives; (ii) determine the
threshold Performance Goals (the "THRESHOLD GOALS"), target Performance Goals
(the "TARGET GOALS") and superior Performance Goals (the "SUPERIOR GOALS") to be
attained in order to earn Performance Share Units for such Performance Cycle;
and (iii) instruct senior Human Resources management to notify each Participant
in writing of the established Threshold Goals, Target Goals and Superior Goals
for such Performance Cycle.
4.3 ATTAINMENT OF PERFORMANCE GOALS.
(a) Upon completion of the Performance Cycle, the Committee shall certify
the level of the Performance Goals attained and the number of
Performance Share Units earned by Participants as a result thereof.
The basis for earning Performance Share Units for a given Performance
Cycle shall be as set forth in Section 4.3(b). Each Participant's
Performance Share Units will be subject to vesting as described in
Section 5.1.
(b) Attainment of the Target Goals for a Performance Cycle shall result in
a Participant earning a number of Performance Share Units equal to the
number obtained by dividing such Participant's Award Amount in respect
of such Performance Cycle by the Fair Market Value on the date of
grant of such Participant's Award (such number, the "TARGET PSU
NUMBER"). Failure to attain the Threshold Goals for a Performance
Cycle shall result in the failure to earn any of the Performance Share
Units eligible to be earned under the Award granted for such
Performance Cycle, and such Award shall terminate in full and all
contingent rights thereunder shall cease. Attainment between the
Threshold Goals and Target Goals for a Performance Cycle shall result
in the earning by the Participant of a portion of such Participant's
Target PSU Number of Performance Share Units, determined by
application of a pre-determined mathematical formula which shall be
determined by the Committee in its discretion and set out in the Award
Agreement governing such Award.
(c) In addition to the above targets, if performance in a Performance
Cycle exceeds the Target Goals, a Participant will earn additional
Performance Share Units over and above such Participant's Target PSU
Number of Performance Share Units for such Performance Cycle, as
determined by application of a pre-determined mathematical formula
which shall be determined by the Committee in its discretion and set
out in the Award Agreement governing such Award.
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ARTICLE V
VESTING
5.1 VESTING GENERALLY.
If a Participant earns Performance Share Units for a Performance Cycle,
such Performance Share Units shall vest in full on the applicable Vesting Date;
provided, that except as provided in Section 5.2, no Performance Share Units
shall vest unless the Participant is an Employee as of the applicable Vesting
Date and has been continuously employed by an Employer since the date of grant
of the Award. Any Performance Share Units that do not vest in accordance with
the provisions of this Plan shall be forfeited, and all contingent rights of a
Participant thereunder shall cease.
5.2 TERMINATION OF EMPLOYMENT.
(a) In the event a Participant's employment with an Employer is terminated
for Cause (as determined by the Committee in its discretion) or by the
Participant voluntarily (other than upon Normal Retirement), all of
the Participant's unvested Performance Share Units will be forfeited
immediately.
(b) Except as provided in Section 5.3, in the event a Participant's
employment is terminated without Cause, all of the Participant's
unvested Performance Share Units shall be forfeited immediately,
unless the Committee in its discretion waives the employment
requirement under Section 5.1, in which case the Committee shall
determine, in its discretion, the number of Performance Share Units to
be deemed earned by such Participant on each subsequent applicable
Vesting Date, such number not to exceed the pro rata number of
Performance Share Units that he or she would have earned on that
Vesting Date had he or she been continuously employed through such
date, as calculated by reference to the portion of the applicable
Performance Cycle during which the Participant was actually employed.
(c) In the event of a Participant's death while in the employ of an
Employer, or if a Participant's employment with an Employer is
terminated due to Permanent Disability or Normal Retirement, the
employment requirements of Section 5.1 shall not apply, in which case
the number of Performance Share Units to be deemed earned by such
Participant on each subsequent applicable Vesting Date shall equal the
pro rata number of Performance Share Units that he or she would have
earned on that Vesting Date had he or she been continuously employed
through such date, as calculated by reference to the portion of the
applicable Performance Cycle during which the Participant was actually
employed.
5.3 CHANGE OF CONTROL.
In the event of a Change of Control, the Committee may, in its discretion,
recommend to the Board whether to accelerate the vesting (without regard to
attainment of any Performance Goals) of all or a portion of the unvested
Performance Share Units of any Participant whose employment is involuntarily
terminated without Cause in connection with such Change of Control. The Board
may elect, in its sole and absolute discretion, to accelerate the vesting of
none, some or all of such Participants' unvested Performance Share Units, and
any such election shall be final in all respects and, in particular, shall not
be subject to any appeals whatsoever. The Vesting Date with respect to any such
unvested Performance Share Units shall be the date of such termination of
employment.
ARTICLE VI
PAYMENT OF PERFORMANCE SHARE UNITS
6.1 PAYMENT IN RESPECT OF PERFORMANCE SHARE UNITS.
(a) All Performance Share Units earned by a Participant that vest in
accordance with the terms of the Plan shall entitle such Participant
to receive an equivalent number of Common Shares.
(b) With respect to each Participant whose Performance Share Units have
vested hereunder, as soon as practicable following the determination
of the number of Performance Share Units earned by and vested in a
Participant, but in no event later than 50 days following the Vesting
Date, the Company shall cause such Participant's Employer to
contribute to the Trustee an amount sufficient to permit the Trustee
to purchase that number of Common Shares equal to the number of vested
Performance Share Units. As soon as practicable following the receipt
of funds from the applicable Employer under this Section 6.1(b) and
prior to the time specified in Section 6.1(c) below, the Trustee shall
use such funds to purchase Common Shares on the New
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York Stock Exchange at the prevailing market price for Common Shares
as of the time and date of such purchases.
(c) Within 60 days of the Vesting Date, but in no event later than March
15 of the calendar year following the calendar year in which the
Vesting Date occurs, the Common Shares purchased by the Trustee
hereunder shall be registered in the name of the Trustee for the
benefit of the respective Participant as beneficial owner, or, in the
event of death, a designated beneficiary, and transferred to the
Participant's account under the PSU Fund, net of all applicable
statutory withholdings.
(d) The Trustee, in its capacity as trustee of the PSU Fund, shall make
provision for the reporting and withholding of any Canadian, U.S., UK
or Mexican federal or national, provincial, state or local taxes that
may be required to be withheld prior to such transfer and shall
complete applicable tax withholding and reporting and remit the
amounts withheld to the relevant Employer to pay to the appropriate
taxing authorities. Until distributed to the Participant, the Trustee,
in its capacity as trustee of the PSU Fund, shall hold all such Common
Shares in accordance with the terms of the PSU Trust Agreement.
6.2 WITHDRAWAL OF VESTED INTEREST.
A Participant may request, at any time and from time to time, by a written
notice to the Company in the form approved by the Committee, and subject to
Section 6.4, the delivery to him or her of the share certificates representing
all or a portion of the Common Shares held in the Participant's account under
the PSU Fund, net of any applicable statutory withholdings. The Common Shares
constituting such payment shall be delivered by the Trustee within 30 days
following the delivery of the written notice.
6.3 PAYOUT OF VESTED INTEREST AT TERMINATION.
A Terminated Participant must deliver written direction, in the manner
prescribed by the Committee, to the Committee within ninety (90) days following
his or her Termination Date to request delivery to him or her of share
certificates evidencing all Common Shares to which he or she is entitled
hereunder. If a Terminated Participant fails to deliver such written direction
to the Committee within said ninety (90)-day period, the Committee, subject to
Section 6.4, shall instruct the Trustee to deliver to the Terminated Participant
the share certificates evidencing all of the Common Shares credited to the
Terminated Participant's account as of the Termination Date.
6.4 RESTRICTIONS ON VESTED SHARES.
Except as set forth in the Company's policies respecting the trading of the
Common Shares by Employees or as restricted by applicable law, Common Shares
that have been distributed to a Participant hereunder are not subject to any
restrictions concerning their sale or use.
6.5 NO PARTIAL SHARES.
Only certificates representing whole Common Shares shall be transferred to
a Participant's account under Section 6.1(c) or delivered under Sections 6.2 and
6.3. If a Participant is entitled to a fraction of a Common Share under Section
6.1, such entitlement shall be satisfied by payment within the time specified in
Section 6.1(c) of the cash equivalent of such fraction, determined by reference
to the Fair Market Value of such Common Share on the Vesting Date.
ARTICLE VII
DIVIDENDS AND OTHER RIGHTS
7.1 CASH EARNINGS.
Cash dividends or earnings, if any, received by the Trustee in respect of
Common Shares held in the PSU Fund shall be held by the Trustee for the benefit
of the Participant for whom such Common Shares are beneficially held. Until
distributed to the Participant, the Trustee shall hold such cash amounts in
accordance with the terms of the PSU Trust Agreement.
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7.2 STOCK DIVIDENDS.
Stock dividends, if any, received by the Trustee in respect of Common
Shares held in the PSU Fund shall be held by the Trustee for the benefit of the
Participant for whom such Common Shares are beneficially held. Until distributed
to the Participant, the Trustee shall hold such stock dividends in accordance
with the terms of the PSU Trust Agreement.
7.3 VOTING RIGHTS.
Each Participant shall be entitled to receive notice of and attend all
meetings of the holders of Common Shares and the Trustee shall vote the rights
associated with any Common Shares as directed by the Participant for whom such
Common Shares are held in his or her account under the PSU Fund.
7.4 NOTIFICATION OF RIGHTS.
The Trustee shall promptly transmit to each Participant all notices of
conversion, redemption, tender, exchange, subscription or other rights or powers
that the Trustee receives from the Company relating to the Common Shares held in
the Participant's account under the PSU Fund. The Participants shall have no
ability to exercise any rights associated with unvested Performance Share Units.
ARTICLE VIII
GENERAL
8.1 ADJUSTMENTS.
(a) The aggregate number of Performance Share Units earned under this Plan
shall be proportionally adjusted for an increase or decrease in the
number of Common Shares due to a stock split or share consolidation.
(b) The Committee shall have the discretion to make appropriate
adjustments to exclude the effect of extraordinary corporate
transactions, such as acquisitions, divestitures, recapitalizations
and reorganizations, and shall have the discretion to not take into
account extraordinary or non-recurring accounting charges and items,
insofar as they may otherwise affect the results under the applicable
Performance Goals.
8.2 NON-TRANSFERABILITY.
Performance Share Units may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by a Participant's last will and
testament or by the laws of descent and distribution. All rights with respect to
Performance Share Units earned by a Participant under the Plan shall be
exercisable during his lifetime only by such Participant. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of any Performance
Share Units contrary to the provisions of this Plan, or upon the levy of any
attachment or similar process upon the Performance Share Units or upon a
Participant's beneficial rights to such Performance Share Units, the Performance
Share Units and such rights shall, at the election of the Committee, in its
discretion, cease and terminate immediately.
8.3 BENEFICIARY DESIGNATION.
Each Participant under the Plan may, subject to compliance with all
applicable laws, name, from time to time, any beneficiary or beneficiaries (who
may be named contingently or successively) to whom any benefit under the Plan is
to be paid in the event of such Participant's death before such Participant
receives any or all of such benefit. Each designation will revoke all prior
designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Committee during his lifetime. In the absence of any such designation,
benefits remaining unpaid at the Participant's death shall be paid to his
estate.
8.4 COMPLIANCE WITH STATUTES AND REGULATIONS.
The granting of Awards and the purchase and delivery of Common Shares by
the Trustee under this Plan upon the vesting of Performance Share Units shall be
carried out in compliance with applicable law, including, without limitation,
the rules, regulations and by-laws of the Toronto Stock Exchange, the New York
Stock Exchange, the U.S. Securities Exchange Act of 1934, as amended, and the
rules and regulations (including Rule 10b-5) promulgated thereunder, and the
policies and regulations of applicable securities regulatory authorities. If the
Committee determines in its discretion that, in order to comply with any such
statutes or regulations, certain action is necessary or desirable as
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a condition of or in connection with the granting of an Award or the purchase or
delivery of Common Shares under this Plan, no Award may be granted and no Common
Shares may be purchased or delivered unless that action shall have been
completed in a manner satisfactory to the Committee.
8.5 NO RIGHT TO EMPLOYMENT.
Nothing contained in this Plan or in any Award granted under this Plan
shall confer upon any person any rights to continued employment with an Employer
or interfere in any way with the rights of an Employer in connection with the
employment or termination of employment of any such person.
8.6 PARTICIPATION.
No Employee shall have a right to be selected as a Participant or, having
been so selected, to be selected again as a Participant.
8.7 OBLIGATION TO WITHHOLD.
(a) If, for any reason whatsoever, an Employer becomes obligated to
withhold and/or remit to any applicable tax authority (whether
domestic or foreign) any amount in connection with this Plan in
respect of a Participant, then the Employer shall provide written
notice of such obligation to the Participant and shall make the
necessary arrangements, as acceptable to the Employer, in connection
with the amount that must be withheld and/or remitted.
(b) If, for any reason whatsoever, an Employer becomes obligated to make
any tax payment or primary Class 1 national insurance contribution in
the United Kingdom in respect of the acquisition of Common Shares by a
Participant pursuant to this Plan (the "UK TAX LIABILITY") or
otherwise in relation to the Common Shares so acquired then, by virtue
of his or her participation in the Plan, each Participant acknowledges
that the applicable Employer shall be entitled to recover all such
amounts from the Participant by deduction, withholding or by any means
whatsoever. For the avoidance of doubt, the Company or another
Employer (or an agent instructed by the Company or such other
Employer) shall be entitled to retain, out of the aggregate number of
Common Shares to which the Participant would otherwise be entitled
pursuant to the Plan, and sell as agent for the Participant such
number of Common Shares as in the opinion of the Company or such other
Employer will realise an amount equivalent to the UK Tax Liability and
to pay such proceeds to the appropriate Employer to reimburse it for
the UK Tax Liability. The Company may also require a Participant to
enter into a taxation agreement contained within the Award Agreement.
8.8 RIGHT TO AMEND AND TERMINATE.
Except as restricted by Section 8.9 and subject to applicable laws and
regulations of governmental authorities and applicable stock exchanges (i) the
Committee or the Board may amend any provisions of the Plan at any time, and
(ii) the Committee or the Board may terminate the Plan at any time, in either
case in their discretion. If the Plan is so terminated, no further Awards shall
be granted but the Awards then outstanding shall continue in full force and
effect in accordance with the provisions of this Plan.
8.9 RESTRICTIONS.
Notwithstanding Section 8.8, no such amendment or termination of the Plan
shall divest any Participant of his or her existing rights under the Plan with
respect to any Awards previously granted to such Participant without the prior
written consent of the Participant except as may be required to avoid adverse
tax consequences to any Participant, including but not limited to, modifications
with respect to exemption from the requirements of section 409A of the United
States Internal Revenue Code of 1986, as amended, or compliance with the
requirements thereof.
8.10 GOVERNING LAW.
The Plan is established under the laws of the Province of Ontario and the
rights of all parties and the construction and effect of each and every
provision of this Plan shall be according to the laws of the Province of Ontario
and the laws of Canada applicable therein.
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8.11 LANGUAGE.
The Company states its express wish that this Plan and all documents
related thereto be drafted in the English language only; la societe a par les
presentes exprime sa volonte expresse que ce regime, de meme que tous les
documents y afferents, soient rediges en anglais seulement.
8.12 SUBJECT TO APPROVAL.
The Plan is adopted subject to the approval, if required, of the Toronto
Stock Exchange, The New York Stock Exchange and the shareholders of the Company
and any other required regulatory or stock exchange approval. To the extent a
provision of the Plan requires regulatory approval which is not received, such
provision shall be severed from the remainder of the Plan until the approval is
received and the remainder of the Plan shall remain in effect.
NOW THEREFORE, this Plan is hereby adopted as of the effective date
described in Section 1.2.
COTT CORPORATION
By:
--------------------------------------
Name:
Title:
By:
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Name:
Title:
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APPENDIX D
COTT CORPORATION
SHARE APPRECIATION RIGHTS PLAN
ARTICLE I
PURPOSE AND ESTABLISHMENT OF PLAN
1.1 PURPOSE.
The purpose of the Plan is to foster and promote the long-term financial
success of the Company and its Subsidiaries by providing incentive compensation,
based on the appreciation in value of the Common Shares, to key employees and
directors of the Company and its Subsidiaries, thereby providing additional
incentive for their efforts in promoting the continued growth and success of the
business of the Company, as well as rewarding exceptional performance and aiding
the Company and its Subsidiaries in attracting and retaining personnel.
1.2 EFFECTIVE DATE.
The Plan shall become effective upon its approval by a majority of the
Company's shareholders at the Company's next annual meeting held after the
approval of the Plan by the Board.
ARTICLE II
DEFINITIONS
2.1 INTERPRETATION.
In this Plan, the following terms shall have the following meanings:
(a) "BOARD" means the Board of Directors of the Company;
(b) "CAUSE" means any action by a Participant or inaction by a Participant
that constitutes: (i) a breach of a written employment agreement by
that Participant; or (ii) misconduct, dishonesty, disloyalty,
disobedience or action that might reasonably injure the Company or any
of its Subsidiaries or their respective business interests or
reputation;
(c) "COMMITTEE" means the Human Resources and Compensation Committee of
the Board;
(d) "COMMON SHARES" means the common shares in the capital of the Company;
(e) "COMPANY" means Cott Corporation, a corporation amalgamated under the
laws of Canada;
(f) "EMPLOYER" means, in respect of a Participant, the Company or
Subsidiary of the Company of which such Participant is an employee or
director;
(g) "FAIR MARKET VALUE" means, with respect to a Common Share on any
determination date, the closing price of the Common Shares on the New
York Stock Exchange on the last trading day on which Common Shares
traded prior to such date; provided that if no Common Shares are
traded in the five trading days prior to the determination date, the
Committee shall determine Fair Market Value on a reasonable basis
using a method that complies with section 409A of the United States
Internal Revenue Code of 1986, as amended, and guidance issued
thereunder;
(h) "FISCAL YEAR" means the 12-month period beginning the first Sunday
following the immediately preceding Saturday closest to December 31st
and ending on the Fiscal Year End;
(i) "FISCAL YEAR END" means, with respect to each Fiscal Year, the
Saturday closest to December 31 of such Fiscal Year;
(j) "GRANT CONFIRMATION" means the written confirmation provided to the
Participant by the Company substantially in the form of Schedule 2;
(k) "GRANT DATE" means, with respect to a particular grant, the date of
the Grant Confirmation;
D-1
(l) "NORMAL RETIREMENT" means retirement from office or employment with
the applicable Employer (at the election of the Participant and as
agreed to by his or her Employer);
(m) "PARTICIPANT" means a full-time, part-time or contract employee or
director of an Employer who has been granted Share Appreciation Rights
hereunder;
(n) "PERMANENT DISABILITY" means the complete and permanent incapacity of
a Participant, as determined by a licensed medical practitioner
approved by the Committee, due to a medically determinable physical or
mental impairment which prevents such Participant from performing
substantially all of the essential duties of his or her office or
employment;
(o) "PLAN" means the Cott Corporation Share Appreciation Rights Plan, as
amended from time to time;
(p) "SAR FUND" means the trust fund or funds established under the SAR
Trust Agreement, which for purposes of the Plan constitutes an
"employee benefit plan" for purposes of the Tax Act;
(q) "SAR TRUST AGREEMENT" means the agreement or agreements by and among
the Company, the Trustee, and the Agent (as defined therein) to carry
out the purposes of the Plan in respect of Common Shares purchased on
account of vested Share Appreciation Rights, if any, and any income
attributable thereto in accordance with the terms of the Plan;
(r) "SHARE APPRECIATION RIGHTS" means share appreciation rights granted
pursuant to Article IV of the Plan;
(s) "SUBSIDIARY" has the meaning assigned thereto in the Securities Act
(Ontario), as amended, and "SUBSIDIARIES" shall have a corresponding
meaning;
(t) "TAX ACT" means the Income Tax Act (Canada) and all regulations
thereunder, as amended or restated from time to time. Any reference in
the Agreement to a provision of the Tax Act includes any successor
provision thereto;
(u) "TERMINATED PARTICIPANT" means a Participant who has incurred a
Termination Date and shall include, where context requires, the
personal representative(s) of a Participant;
(v) "TERMINATION DATE" means the Participant's last day of active service
with his or her Employer (determined without regard to any notice of
termination owing pursuant to statute, regulation, agreement or common
law);
(w) "TRUSTEE" means MRS Trust or its successor trustee under the SAR Trust
Agreement; and
(x) "VESTING DATE" means, with respect to any Share Appreciation Rights,
the earlier of (i) the third anniversary of the Grant Date of such
Share Appreciation Rights, and (ii) December 1 of the third calendar
year following the end of the first Fiscal Year with respect to which
the services to which the Share Appreciation Rights relate were
provided; provided, that, if the vesting of any Share Appreciation
Rights is accelerated as provided in Sections 5.2 or 5.3, the "VESTING
DATE" shall mean the date on which such accelerated vesting is deemed
to have occurred.
ARTICLE III
ADMINISTRATION OF THE PLAN
3.1 ADMINISTRATION OF THE PLAN.
The Plan shall be administered by the Committee. The Committee shall have
the power and authority to:
(a) adopt rules and regulations for implementing the Plan;
(b) other than with respect to the Chief Executive Officer of the Company
and members of the Committee, determine the eligibility of persons to
participate in the Plan, when Share Appreciation Rights shall be
granted to eligible persons and the number of Share Appreciation
Rights granted to each Participant;
(c) interpret and construe the provisions of the Plan, and any such
interpretation and construction of the Plan by the Committee shall be
final in all respects and, in particular, shall not be subject to any
appeals whatsoever;
(d) subject to statutory and regulatory requirements, make exceptions to
the Plan in circumstances which it determines to be exceptional;
D-2
(e) delegate such administrative duties and powers as it may see fit with
respect to this Plan (excluding, for greater certainty, the power to
grant Share Appreciation Rights) to any officers of the Company or its
Subsidiaries (and any such duties performed or powers exercised by any
such officers shall be deemed to have been performed or exercised, as
the case may be, by the Committee), such delegation to be evidenced by
a written resolution adopted by the Committee; and
(f) take such other steps as they determine to be necessary or desirable
to give effect to the Plan.
Any decision, approval or determination made by a person or group of persons
delegated the ability to make such decision, approval or determination pursuant
to (e) above shall be deemed to be a decision, approval or determination, as the
case may be, of the Committee; provided, that two officers of the Company, one
of whom must be the Chief Executive Officer, the Chief Financial Officer, the
Senior Vice President, Corporate Resources, or the Secretary, are hereby
authorized to sign and execute all instruments and documents and do all things
necessary or desirable for carrying out the provisions of the Plan.
ARTICLE IV
OPERATION OF PLAN
4.1 ELIGIBILITY AND PARTICIPATION.
(a) All full-time, part-time and contract employees and directors of the
Company and its Subsidiaries are eligible for consideration to
participate in the Plan. Such full-time, part-time or contract
employees and directors of the Company and its Subsidiaries as are
designated from time to time by the Committee, in its discretion, upon
the recommendation of management of the Company or the applicable
Employer, shall be entitled to participate in the Plan. Except with
respect to the Chief Executive Officer of the Company and members of
the Committee, the Committee shall determine, in its discretion, the
amounts, terms and conditions of the Share Appreciation Rights granted
hereunder (subject to the limit on the maximum number of Share
Appreciation Rights that may be granted set forth in Section 4.1(b)
below). Any grant of Share Appreciation Rights to the Chief Executive
Officer of the Company and the amounts, terms and conditions of such
Share Appreciation Rights (subject to the limit on the maximum number
of Share Appreciation Rights that may be granted set forth below),
shall require the prior approval of the independent (as understood
within the rules of the New York Stock Exchange and applicable
Canadian securities laws) members of the Board, upon the
recommendation of the Committee. Any grant of Share Appreciation
Rights to members of the Committee and the amounts, terms and
conditions of such Share Appreciation Rights (subject to the limit on
the maximum number of Share Appreciation Rights that may be granted
set forth below), shall by approved by a majority of the members of
the Board who are not members of the Committee.
(b) The maximum number of Share Appreciation Rights that may be granted to
an individual Participant in a Fiscal Year shall not exceed 50% of the
aggregate number of Share Appreciation Rights granted to all
Participants under this Plan in such Fiscal Year.
(c) Subject to the foregoing, Share Appreciation Rights may be granted by
the Committee at any time and from time to time to new Participants,
or to already-participating Participants, or to a greater or lesser
number of Participants, and may include or exclude previous
Participants, as the Committee shall determine in its discretion. All
Share Appreciation Rights granted hereunder shall be evidenced by an
agreement between the Company and the Participant substantially in the
form of Schedule 1 and a Grant Confirmation delivered by the Committee
to the Participant.
(d) Except as required by this Plan, Share Appreciation Rights and the
agreements and Grant Confirmations evidencing same need not contain
similar provisions. The Committee's determinations under the Plan
(including determinations of which employees and directors are to
receive Share Appreciation Rights, the form, amount and timing of such
Share Appreciation Rights, the terms and provisions of such Share
Appreciation Rights and the agreements and Grant Confirmations
evidencing same) need not be uniform and may be made by the Committee
selectively among Participants who receive, or are eligible to receive
Share Appreciation Rights under the Plan.
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ARTICLE V
VESTING
5.1 VESTING GENERALLY.
A Participant's Share Appreciation Rights shall vest on the Vesting Date
applicable to such Share Appreciation Rights; provided, that except as provided
in Section 5.2, no Share Appreciation Rights shall vest unless the Participant
is in the employ of or is a director of his or her Employer as of the applicable
Vesting Date and has been continuously employed and/or served as a director
since the Grant Date of such Share Appreciation Rights. Any Share Appreciation
Rights that do not vest in accordance with the provisions of this Plan shall be
forfeited and all contingent rights of a Participant thereunder shall cease.
5.2 TERMINATION OF EMPLOYMENT.
(a) In the event a Participant's employment with or service as a director
of his or her Employer is terminated for Cause (as determined by the
Committee in its discretion) or by the Participant voluntarily (other
than upon Normal Retirement), all of the Participant's unvested Share
Appreciation Rights will be forfeited immediately.
(b) In the event a Participant's employment or service as a director is
terminated by the Employer without Cause, all of the Participant's
unvested Share Appreciation Rights will be forfeited immediately,
unless otherwise determined by the Committee, in its discretion, and
if so determined all or such portion of the Participant's unvested
Share Appreciation Rights as is determined by the Committee shall vest
on the date specified by the Committee.
(c) In the event of a Participant's death while in the employ of or
serving as a director of his or her Employer, such Participant's
unvested Share Appreciation Rights shall immediately vest in full as
of the Participant's date of death.
(d) In the event a Participant's employment with or service as a director
of his or her Employer is terminated due to Permanent Disability or
Normal Retirement, such Participant's unvested Share Appreciation
Rights shall vest on the date that would have been such Participant's
Vesting Date had the Participant remained employed with, or in the
service of, the Employer.
5.3 AMALGAMATION, LIQUIDATION OR CHANGE OF CONTROL.
If there is:
(a) a consolidation, merger or amalgamation of the Company with or into
any other corporation whereby the voting shareholders of the Company
immediately prior to such event receive less than 50% of the voting
shares of the consolidated, merged or amalgamated corporation;
(b) a sale by the Company of all or substantially all of the Company's
undertakings and assets; or
(c) a proposal by or with respect to the Company being made in connection
with a liquidation, dissolution or winding-up of the Company,
then all unvested Share Appreciation Rights shall, notwithstanding anything to
the contrary contained in the terms relating to such grant of Share Appreciation
Rights, vest in full upon the occurrence of any such event and be payable in
accordance with Article VI.
ARTICLE VI
PAYMENT OF SHARE APPRECIATION RIGHTS
6.1 PAYMENT IN RESPECT OF SHARE APPRECIATION RIGHTS.
(a) Any payment with respect to vested Share Appreciation Rights, net of
any applicable statutory withholdings other than with respect to UK
Participants, for whom any payments shall be subject to Section
8.7(b), shall be in the form of that number of Common Shares having an
aggregate value (determined by reference to the Fair Market Value of
the Common Shares on the Vesting Date applicable to such Share
Appreciation Rights) equal to the product of: (i) the amount, if any,
by which the Fair Market Value of one Common Share on the
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Vesting Date of such Share Appreciation Rights exceeds the Fair Market
Value of one Common Share on the related Grant Date; multiplied by
(ii) the number of Share Appreciation Rights vesting on such Vesting
Date.
(b) The Company shall cause the Employer of each Participant whose Share
Appreciation Rights have vested hereunder to contribute to the Trustee
an amount sufficient to permit the Trustee to purchase, prior to the
time specified in Section 6.1(c) below, the number of Common Shares
required with respect to such vested Share Appreciation Rights. The
Trustee shall use such funds to purchase such Common Shares on the New
York Stock Exchange at the prevailing market price for Common Shares
as of the time and date of such purchase.
(c) Common Shares purchased by the Trustee under this Plan shall be
registered in the name of the Trustee for the benefit of the
respective Participant as beneficial owner, or, in the event of death,
a designated beneficiary, and transferred to the Participant's account
under the SAR Fund within 30 days following the applicable Vesting
Date, net of any applicable statutory withholdings.
(d) The Trustee, in its capacity as trustee of the SAR Fund, shall make
provision for the reporting and withholding of any Canadian, U.S., UK
or Mexican federal, provincial, state or local taxes that may be
required to be withheld prior to such transfer and shall complete
applicable tax withholding and reporting and remit the amounts
withheld to the relevant Employer to pay to the appropriate taxing
authorities. Until distributed to the Participant, the Trustee, in it
capacity as trustee of the SAR Fund, shall hold all such Common Shares
in accordance with the terms of the SAR Trust Agreement.
(e) Notwithstanding the foregoing, in no event shall the number of Common
Shares distributed under the Plan with respect to a Fiscal Year exceed
1.0% of the total number of Common Shares outstanding as of the first
day of such Fiscal Year.
6.2 WITHDRAWAL OF VESTED INTEREST.
A Participant may, at any time and from time to time, by a written notice
to the Company in the form approved by the Committee, request subject to Section
6.4, the delivery to him or her of the share certificates representing all or a
portion of the Common Shares held in the Participant's account under the SAR
Fund, net of any applicable statutory withholdings. The designated Common Shares
shall be delivered by the Trustee within 30 days following the delivery of the
written notice.
6.3 PAYOUT OF VESTED INTEREST AT TERMINATION.
A Terminated Participant must deliver written direction, in the manner
prescribed by the Committee, to the Committee within ninety (90) days following
his or her Termination Date to request delivery to him or her of share
certificates evidencing all Common Shares to which he or she is entitled
hereunder. If a Terminated Participant fails to deliver such written direction
to the Committee within said ninety (90)-day period, the Committee, subject to
Section 6.4, shall instruct the Trustee to deliver to the Terminated Participant
the share certificates evidencing all of the Common Shares credited to the
Terminated Participant's account as of the Termination Date.
6.4 RESTRICTIONS ON VESTED SHARES.
Except as set forth in the Company's policies respecting the trading of the
Common Shares by Employees or as restricted by applicable law, Common Shares
that have been distributed to a Participant hereunder are not subject to any
restrictions concerning their sale or use.
6.5 NO PARTIAL SHARES.
Only certificates representing whole Common Shares shall be transferred to
a Participant's account under Section 6.1(c) or delivered under Sections 6.2 and
6.3. If a Participant is entitled to a fraction of a Common Share under Section
6.1, such entitlement shall be satisfied by payment to the Participant within 30
days following the applicable Vesting Date of the cash equivalent of such
fraction, determined by reference to the Fair Market Value of such Common Share
on the Vesting Date and on the date of grant in accordance with Section 6.1(a).
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ARTICLE VII
DIVIDENDS AND OTHER RIGHTS
7.1 CASH EARNINGS.
Cash dividends or earnings, if any, received by the Trustee in respect of
Common Shares held in the SAR Fund shall be held by the Trustee for the benefit
of the Participant for whom such Common Shares are beneficially held. Until
distributed to the Participant, the Trustee shall hold such cash amounts in
accordance with the terms of the SAR Trust Agreement.
7.2 STOCK DIVIDENDS.
Stock dividends, if any, received by the Trustee in respect of Common
Shares held in the SAR Fund shall be held by the Trustee for the benefit of the
Participant for whom such Common Shares are beneficially held. Until distributed
to the Participant, the Trustee shall hold such stock dividends in accordance
with the terms of the SAR Trust Agreement.
7.3 VOTING RIGHTS.
Each Participant shall be entitled to receive notice of and attend all
meetings of the holders of Common Shares and the Trustee shall vote the rights
associated with any Common Shares as directed by the Participant for whom such
Common Shares are held in his or her account under the SAR Fund.
7.4 NOTIFICATION OF RIGHTS.
The Trustee shall promptly transmit to each Participant all notices of
conversion, redemption, tender, exchange, subscription or other rights or powers
that the Trustee receives from the Company relating to the Common Shares held in
the Participant's account under the SAR Fund. The Participants shall have no
ability to exercise any rights associated with unvested Share Appreciation
Rights.
ARTICLE VIII
GENERAL
8.1 DILUTION OR OTHER ADJUSTMENTS.
In the event of a change in capitalization affecting the Common Shares,
such as payment of a stock dividend, a subdivision, consolidation or
reclassification of the Common Shares or other relevant changes in the capital
stock of the Company, such proportionate adjustments, if any, as the Committee
in its discretion may deem appropriate to reflect such change shall be made by
the Company with respect to the number of Common Shares to be paid to a
Participant in respect of his or her vested Share Appreciation Rights.
8.2 NON-TRANSFERABILITY.
Share Appreciation Rights may not be sold, transferred, pledged, assigned,
or otherwise alienated or hypothecated, other than by a Participant's last will
and testament or by the laws of descent and distribution. Upon any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of any Share
Appreciation Rights contrary to the provisions of this Plan, or upon the levy of
any attachment or similar process upon the Share Appreciation Rights or upon a
Participant's beneficial rights to such Share Appreciation Rights, the Share
Appreciation Rights and such rights shall, at the election of the Committee, in
its discretion, cease and terminate immediately.
8.3 BENEFICIARY DESIGNATION.
Each Participant under the Plan may, subject to compliance with applicable
laws, name, from time to time, any beneficiary or beneficiaries (who may be
named contingently or successively) to whom any benefit under the Plan is to be
paid in the event of such Participant's death before such Participant receives
any or all of such benefit. Each designation will revoke all prior designations
by the same Participant, shall be in a form prescribed by the Committee, and
will be effective only when filed by the Participant in writing with the
Committee during his lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant's death shall be paid to his estate.
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8.4 COMPLIANCE WITH STATUTES AND REGULATIONS.
The granting of Share Appreciation Rights and the purchase of Common Shares
by the Trustee under this Plan upon the vesting of such Share Appreciation
Rights shall be carried out in compliance with applicable law, including,
without limitation, the rules, regulations and by-laws of the Toronto Stock
Exchange, the New York Stock Exchange, the U.S. Securities Exchange Act of 1934,
as amended, and the rules and regulations (including Rule 10b-5) promulgated
thereunder, and the policies and regulations of applicable securities regulatory
authorities. If the Committee determines in its discretion that, in order to
comply with any such statutes or regulations, certain action is necessary or
desirable as a condition of or in connection with the granting of a Share
Appreciation Right or the purchase or delivery of Common Shares under this Plan,
no Share Appreciation Right may be granted and no Common Shares may be purchased
or delivered unless that action shall have been completed in a manner
satisfactory to the Committee.
8.5 NO RIGHT TO EMPLOYMENT.
Nothing contained in this Plan or in any Share Appreciation Right granted
under this Plan shall confer upon any person any rights to continued employment
with or service as a director of an Employer or interfere in any way with the
rights of an Employer in connection with the employment or termination of
employment or service as a director of any such person.
8.6 PARTICIPATION.
No employee or director of an Employer shall have a right to be selected as
a Participant or, having been so selected, to be selected again as a
Participant.
8.7 OBLIGATION TO WITHHOLD.
(a) If, for any reason whatsoever, an Employer becomes obligated to
withhold and/or remit to any applicable tax authority (whether
domestic or foreign) any amount in connection with this Plan in
respect of a Participant, then the Company or such Subsidiary shall
provide written notice of such obligation to the Participant and shall
make the necessary arrangements, as acceptable to the Company or such
Subsidiary, in connection with the amount that must be withheld and/or
remitted.
(b) If, for any reason whatsoever, the Company or any of its Subsidiaries
becomes obligated to make any tax payment or primary Class 1 national
insurance contribution in the United Kingdom in respect of the
acquisition of Common Shares by a Participant pursuant to this Plan
(the "UK TAX LIABILITY") or otherwise in relation to the Common Shares
so acquired then, by virtue of his or her participation in the Plan,
each Participant acknowledges that the applicable Employer shall be
entitled to recover all such amounts from the Participant by
deduction, withholding or by any means whatsoever. For the avoidance
of doubt, the applicable Employer (or an agent instructed by such
Employer) shall be entitled to retain, out of the aggregate number of
Common Shares to which the Participant would otherwise be entitled
pursuant to the Plan, and sell as agent for the Participant such
number of Common Shares as in the opinion of the Employer will realise
an amount equivalent to the UK Tax Liability and to pay such proceeds
to the appropriate Employer to reimburse it for the UK Tax Liability.
The Company may also require a Participant to enter into a taxation
agreement contained within the agreement granting Share Appreciation
Rights to the Participant.
8.8 RIGHT TO AMEND AND TERMINATE.
Except as restricted by Section 8.9 and subject to applicable laws and
regulations of governmental authorities and applicable stock exchanges (i) the
Committee or the Board may amend any provisions of the Plan at any time, and
(ii) the Committee or the Board may terminate the Plan at any time, in either
case in their discretion. If the Plan is so terminated, no further Share
Appreciation Rights shall be granted but the Share Appreciation Rights then
outstanding shall continue in full force and effect in accordance with the
provisions of this Plan.
8.9 RESTRICTIONS.
Notwithstanding Section 8.8, no such amendment or termination of the Plan
shall divest any Participant of his or her existing rights under the Plan with
respect to any Share Appreciation Rights previously granted to such Participant
without the prior written consent of the Participant.
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8.10 GOVERNING LAW.
The Plan is established under the laws of the Province of Ontario and the
rights of all parties and the construction and effect of each and every
provision of this Plan shall be according to the laws of the Province of Ontario
and the laws of Canada applicable therein.
8.11 LANGUAGE.
The Company states its express wish that this Plan and all documents
related thereto be drafted in the English language only; la societe a par les
presentes exprime sa volonte expresse que ce regime, de meme que tous les
documents y afferents, soient rediges en anglais seulement.
8.12 SUBJECT TO APPROVAL.
The Plan is adopted subject to the approval, if required, of the Toronto
Stock Exchange, The New York Stock Exchange and the shareholders of the Company
and any other required regulatory or stock exchange approval. To the extent a
provision of the Plan requires regulatory approval which is not received, such
provision shall be severed from the remainder of the Plan until the approval is
received and the remainder of the Plan shall remain in effect.
NOW THEREFORE, this Plan is hereby adopted as of the effective date
described in Section 1.2.
COTT CORPORATION
Per:
--------------------------------------
Per:
--------------------------------------
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APPENDIX E
MANDATE OF THE BOARD OF DIRECTORS
PURPOSE
The purpose of this mandate is to set out the responsibilities of the Board
of Directors of the Corporation. The Board of Directors is committed to
fulfilling its statutory mandate to supervise the management of the business and
affairs of the Corporation with the highest standards of ethical conduct and in
the best interests of the Corporation. The Board approves the strategic
direction of the Corporation and oversees the performance of the Corporation's
business and management. The management of the Corporation is responsible for
presenting strategic plans to the Board for review and approval and for
implementing the Corporation's strategic direction.
This mandate should be read in conjunction with the Corporate Governance
Guidelines of the Corporation which set out additional responsibilities of the
Board of Directors and contain guidelines pertaining to, inter alia, board size,
selection, expectations, committees and meetings.
RESPONSIBILITIES
1. To the extent feasible, the Board of Directors shall satisfy itself as to
the integrity of the Chief Executive Officer and other senior officers and
that the Chief Executive Officer and other senior officers create a culture
of integrity throughout the Corporation.
2. Review and approve the annual operating plan (including the capital
budget), strategic plan (which takes into account, among other things, the
opportunities and risks facing the Corporation's business) and business
objectives of the Corporation that are submitted by management and monitor
the implementation by management of the strategic plan. During at least one
meeting each year, the Board of Directors will review the Corporation's
long-term strategic plans and the principal issues that the Corporation
expects to face in the future.
3. Identify and review the principal business risks of the Corporation's
business and oversee, with the assistance of the Audit Committee, the
implementation and monitoring of appropriate risk management systems and
the monitoring of risks.
4. Ensure, with the assistance of the Corporate Governance Committee, the
effective functioning of the Board of Directors and its committees in
compliance with the corporate governance requirements of the Toronto Stock
Exchange, the New York Stock Exchange and applicable legislation, and that
such compliance is reviewed periodically by the Corporate Governance
Committee.
5. Develop the Corporation's approach to corporate governance. The Corporate
Governance Committee shall develop a set of corporate governance principles
and guidelines that are specifically applicable to the Corporation.
6. Satisfy itself that internal controls and management information systems
for the Corporation are in place, are evaluated as part of the internal
auditing process and reviewed periodically on the initiative of the Audit
Committee.
7. Assess the performance of the Corporation's executive officers, including
monitoring the establishment of appropriate systems for succession planning
as set forth in the Corporate Governance Guidelines of the Corporation
(including appointing, training and monitoring senior management) and for
periodically monitoring the compensation levels of such executive officers
based on determinations and recommendations made by the Human Resources and
Compensation Committee.
8. Ensure that the Corporation has in place a policy for effective
communication with shareowners, other stakeholders and the public
generally.
9. Review and, where appropriate approve, the recommendations made by the
various committees of the Board of Directors, including, without
limitation, to: select nominees for election to the Board; appoint
directors to fill vacancies on the Board; appoint and replace members of
the various committees of the Board and the lead director of each such
committee; and, establish the form and amount of director compensation.
The Board of Directors has delegated to the Chief Executive Officer,
working with the other executive officers of the Corporation and its affiliates,
the authority and responsibility for managing the business of the Corporation in
a manner consistent with the standards of the Corporation.
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The Chief Executive Officer shall seek the advice and, in appropriate
situations, the approval of the Board with respect to extraordinary actions to
be undertaken by the Corporation, including those that would make a significant
change in the financial structure or control of the Corporation, the acquisition
or disposition of any significant business, the entry of the Corporation into a
major new line of business or transactions involving related parties.
MEASURES FOR RECEIVING SHAREOWNER FEEDBACK
The Corporation shall provide a mechanism for receiving feedback from
shareowners regarding its publicly disseminated materials and otherwise. Persons
designated to receive such information shall be required to provide a summary of
the feedback to the Board of Directors on a semi-annual basis or at such other
more frequent intervals as they see fit. Specific procedures for permitting
shareowner feedback and communication with the Board will be prescribed by the
Corporation's communications policy.
EXPECTATIONS OF DIRECTORS
The Board of Directors shall develop and update, in conjunction with the
Corporate Governance Committee, specific expectations of directors and such
expectations shall be set out in the Corporate Governance Guidelines of the
Corporation.
ANNUAL EVALUATION
At least annually, the Board of Directors through the Corporate Governance
Committee shall, in a manner it determines to be appropriate:
- Conduct a review and evaluation of the performance of the Board and its
members, its committees and their members, including the compliance of
the Board with this mandate and of the committees with their respective
charters.
- Review and assess the adequacy of this mandate on an annual basis.
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APPENDIX F
AUDIT COMMITTEE (THE "COMMITTEE")
CHARTER
PURPOSE
The Committee is appointed by the Board of Directors (the "Board") to
assist the Board in monitoring (1) the integrity of the financial statements of
the Corporation, (2) the compliance by the Corporation with legal and regulatory
requirements, (3) the independent auditors' qualifications and independence, and
(4) the performance of the Corporation's internal auditors and independent
auditors.
RESPONSIBILITIES
1. The Committee shall satisfy itself, on behalf of the Board, that:
(a) the Corporation's quarterly and annual financial statements should be
approved and included in the Corporation's regulatory filings;
(b) the information contained in the Corporation's quarterly financial
statements, Annual Report to shareowners and other financial
disclosure information contained in documents such as Management's
Discussion and Analysis of Financial Condition and Results of
Operations ("MD&A"), the Annual Information Form and Form 10-K and the
annual proxy statement and the financial information contained in any
prospectus is not materially erroneous, misleading or incomplete;
(c) the Corporation has implemented appropriate systems of internal
control over financial controls and reporting and the safeguarding of
the Corporation's assets and that these are operating effectively;
(d) the audit function has been effectively carried out and that any
matter which the independent auditors wish to bring to the attention
of the Board has been addressed; and
(e) the Corporation's independent auditors are qualified and independent
of management.
2. The Committee shall report regularly to the Board. The Committee should
review with the full Board any issues that arise with respect to the
quality and integrity of the Corporation's financial statements, the
Corporation's compliance with legal and regulatory requirements, the
performance and independence of the Corporation's independent auditors, and
the performance of the internal auditors.
3. The Committee shall meet separately, periodically, with management, with
the internal auditors and with the independent auditors.
4. The Committee shall discuss the annual audited financial statements and
quarterly financial statements with management and the independent
auditors, including the Corporation's disclosures under MD&A and recommend
to the Board whether the audited financial statements should be included in
the Corporation's Form 10-K. The Committee shall also review all of the
Corporation's financial statements, MD&A and earnings press releases prior
to public disclosure thereof by the Corporation.
5. The Committee shall discuss with management and the independent auditors
significant financial reporting issues and judgments made in connection
with the preparation of the Corporation's financial statements, including
any significant changes in the Corporation's selection or application of
accounting principles, any major issues as to the adequacy of the
Corporation's internal controls and any special steps adopted in light of
material control deficiencies. The Committee shall ensure that adequate
procedures are in place for reviewing the Corporation's disclosure of
financial information extracted or derived from the Corporation's financial
statements and periodically assess the adequacy of those procedures. The
annual and interim financial statements must be approved by the full Board
prior to their filing and release (unless, in the case only of the interim
financial statements, the Board delegates this authority to the Committee).
6. The Committee shall prepare the audit report required by the rules of the
Securities and Exchange Commission and other applicable securities
regulatory authorities to be included in the Corporation's annual proxy
statement.
7. The Committee is directly responsible for the resolution of disagreements
between management and the independent auditors regarding financial
reporting.
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8. The Committee shall discuss with management the Corporation's earnings
press releases, as well as financial information and earnings guidance
provided to analysts and rating agencies. Such discussion may be done
generally (consisting of discussing the types of information to be
disclosed and the types of presentations to be made).
9. The Committee shall discuss with management the Corporation's policies with
respect to risk assessment and risk management, including major financial
risk exposures and the steps management has taken to monitor and control
such exposure.
10. The Committee shall review the effect of regulatory and accounting
initiatives as well as off-balance sheet structures, if any, on the
Corporation's financial statements.
11. Subject to compliance with the requirements of applicable laws, the
Committee shall have the sole authority to appoint, retain or replace the
independent auditors (subject, if applicable, to shareholder ratification).
The Committee shall be directly responsible for the compensation and
oversight of the work of the independent auditors for the purpose of
preparing or issuing an audit report or performing other audit, review or
attest services. The independent auditors shall report directly to the
Committee.
12. The Committee shall review with the independent auditors any audit problems
or difficulties and management's response. This review should include a
discussion of (a) any restrictions on the scope of the independent auditors'
activities or on access to requested information, and (b) any significant
disagreements with management. The Committee may review, as it deems
appropriate, (i) any accounting adjustments that were noted or proposed by
the independent auditors but were "passed" (as immaterial or otherwise) (ii)
any communications between the audit team and the audit firm's national
office respecting auditing or accounting issues presented by the engagement;
and (iii) any "management" or "internal control" letter issued, or proposed
to be issued, by the audit firm to the Corporation.
13. Subject to compliance with the requirements of applicable law, the Committee
shall set clear hiring policies for employees or former employees and
partners or former partners of the current and former independent auditors.
14. (a) The Committee shall, at least annually, obtain and review a report from
the independent auditors describing (i) the independent auditors'
internal quality-control procedures, (ii) any material issues raised by
the most recent internal quality-control review, or peer review, of the
firm, or by any inquiry or investigation by governmental or
professional authorities within the preceding five years respecting one
or more independent audits carried out by the firm, (iii) any steps
taken to deal with any such issues, and (iv) all relationships between
the independent auditors and the Corporation.
(b) Based on the above mentioned report, the Committee shall evaluate the
qualifications, performance and independence of the independent
auditors. In this evaluation, the Committee shall (i) consider whether
the independent auditors' quality controls are adequate and the
provision of permitted non-audit services is compatible with
maintaining the independent auditors' independence, (ii) evaluate the
lead partner of the independent auditors' team and make sure that
there is a regular rotation of the lead partner, (iii) evaluate the
independent auditors' team and make sure that there is a regular
rotation in compliance with applicable laws, and (iv) take into
account the opinions of management and internal auditors. The
Committee shall present its conclusions with respect to the
independent auditors to the Board.
15. The Committee shall review and discuss quarterly reports from the
independent auditors (required by Section 10A of the Securities Exchange Act
of 1934 (the "Exchange Act")) on (a) all critical accounting policies and
practices to be used, (b) all alternative treatments of financial
information within generally accepted accounting principles that have been
discussed with management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the independent
auditors, and (c) other material written communications between the
independent auditors and management, such as any management letter or
schedule of unadjusted differences.
16. The Committee shall be responsible for the pre-approval of all auditing
services and permitted non-audit services (including the fees and terms
thereof) to be performed for the Corporation by its independent auditors,
subject to the de minimus exceptions for non-audit services described in
Section 10A(i)(1)(B) of the Exchange Act which are approved by the Committee
prior to the completion of the audit.
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17. The Committee shall review the Corporation's internal accounting controls
and information gathering systems, as well as the risks, priorities and
deficiencies, if any, identified by the Corporation's independent and
internal auditors, and ensure that appropriate corrective action is taken
with respect thereto.
18. The Committee shall review the scope and results of audit plans of the
independent auditors and the objectivity, effectiveness and resources of the
Corporation's internal auditors.
19. The Committee shall review the performance and the remuneration of the
Corporation's internal auditors and shall approve all decisions in
connection therewith. The internal auditors shall report directly to the
Committee.
20. The Committee shall monitor and review the Corporation's (and its
affiliates) compliance with environmental laws and regulations and ensure
that a compliance program is developed and maintained by the Corporation.
21. The Committee shall establish procedures for (a) the receipt, retention and
treatment of complaints received by the Corporation regarding accounting,
internal accounting controls, or auditing matters, and (b) the confidential
anonymous submission by employees of the issuer of concerns regarding
questionable accounting or auditing matters.
22. The members of the Committee shall have the right for the purpose of
performing their duties to inspect all the books and records of the
Corporation and its subsidiaries and of discussing such accounts and records
and any matters relating to the financial position of the Corporation with
the officers and independent and internal auditors of the Corporation and
its subsidiaries and any member of the Committee may require the independent
and internal auditors to attend any or every meeting of the Committee.
23. It is understood that in order to properly carry out its responsibilities,
the Committee shall have the right, to the extent it deems necessary or
appropriate, to retain independent legal, accounting or other advisors, at
the expense of the Corporation.
24. The audit functions of the Committee may not be delegated to another
committee.
25. The Committee shall be responsible for those matters assigned to it under
the Corporation's Code of Business Conduct and Ethics and Code of Ethics for
Senior Officers.
26. The Committee shall review and reassess the adequacy of this Charter
periodically, at least on an annual basis, as conditions dictate. The
Committee shall annually review and assess the Committee's own performance.
STRUCTURE
1. The Board shall elect annually from among its members a committee to be
known as the Audit Committee to be composed of at least three independent
directors, none of whom shall (a) accept directly or indirectly from the
Corporation or any subsidiary of the Corporation any consulting, advisory
or other compensatory fee or (b) be affiliated with the Corporation or (c)
be officers or employees of the Corporation or of any of its affiliates, or
have been an officer or employee of the Corporation, any of its affiliates
or the independent auditors in the three years prior to being appointed to
the Committee or (d) be an immediate family member of any of these persons.
2. Each member of the Committee shall meet the independence, experience and
financial literacy requirements of any stock exchange upon which the
Corporation's stock is listed from time to time and in accordance with
applicable law, including applicable listing standards.
3. Committee members shall not simultaneously serve on the audit committees of
more than three other public companies unless the Board determines that
simultaneous service on more than three other audit committees would not
impair such member's ability to effectively serve on the Committee. If such
a determination is made, it must be disclosed in the Corporation's annual
proxy statement.
4. A majority of the members of the Committee shall constitute a quorum. No
business may be transacted by the Committee except at a meeting of its
members at which a quorum of the Committee is present (in person or by
means of telephone conference whereby each participant has the opportunity
to speak to and hear one another) or by a resolution in writing signed by
all the members of the Committee. Polling of Committee members in lieu of a
meeting is not permitted.
5. Each member of the Committee shall hold such office until the next annual
meeting of shareowners after election as a member of the Committee.
However, any member of the Committee may be removed or replaced at any time
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by the Board and shall cease to be a member of the Committee as soon as
such member ceases to be a director or otherwise ceases to be qualified to
be a member of the Committee.
6. The Committee shall appoint one of its members to act as Chairman (the
"Chairman"). The Chairman will appoint a secretary who will keep minutes of
all meetings (the "Secretary"), which shall be circulated to members of the
Board upon completion. The Secretary need not be a member of the Committee
or a director and can be changed by simple notice from the Chairman.
7. The Committee will meet as many times as is necessary to carry out its
responsibilities, and shall meet without members of management present from
time to time as requested by the Chairman of the Committee.
8. The time at which and the place where the meetings of the Committee shall
be held, the calling of meetings and the procedure in all respects of such
meeting shall be determined by the Committee, unless otherwise provided for
in the by-laws of the Corporation or otherwise determined by resolution of
the Board.
9. The members of the Committee shall be entitled to receive such remuneration
for acting as members of the Committee as the Board may from time to time
determine.
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(COTT LOGO)
Cott Corporation
207 Queen's Quay West,
Suite 340
Toronto, Ontario
M5J 1A7 Canada
www.cott.com
[COTT LOGO] [COMPUTERSHARE LOGO]
9th Floor, 100 University Avenue
Toronto, Ontario M5J 2Y1
www.computershare.com
SECURITY CLASS
HOLDER ACCOUNT NUMBER
FORM OF PROXY - ANNUAL AND SPECIAL MEETING OF COTT CORPORATION TO BE HELD ON
APRIL 20, 2006
THIS FORM OF PROXY IS SOLICITED BY AND ON BEHALF OF MANAGEMENT.
NOTES TO PROXY
1. EVERY HOLDER HAS THE RIGHT TO APPOINT SOME OTHER PERSON OF THEIR CHOICE,
WHO NEED NOT BE A HOLDER, TO ATTEND AND ACT ON THEIR BEHALF AT THE MEETING.
IF YOU WISH TO APPOINT A PERSON OTHER THAN THE PERSONS WHOSE NAMES ARE
PRINTED HEREIN, PLEASE INSERT THE NAME OF YOUR CHOSEN PROXYHOLDER IN THE
SPACE PROVIDED (SEE REVERSE).
2. If the securities are registered in the name of more than one owner (for
example, joint ownership, trustees, executors, etc.), then all those
registered should sign this proxy. If you are voting on behalf of a
corporation or another individual you may be required to provide
documentation evidencing your power to sign this proxy with signing
capacity stated.
3. This proxy should be signed in the exact manner as the name appears on the
proxy.
4. If this proxy is not dated, it will be deemed to bear the date on which it
is mailed by Management to the holder.
5. THE SECURITIES REPRESENTED BY THIS PROXY WILL BE VOTED OR WITHHELD FROM
VOTING IN ACCORDANCE WITH THE INSTRUCTIONS OF THE HOLDER, HOWEVER, IF YOU
DO NOT SPECIFY HOW TO VOTE IN RESPECT OF ANY MATTER, YOUR PROXYHOLDER IS
ENTITLED TO VOTE YOUR SHARES AS HE OR SHE SEES FIT. IF THIS PROXY DOES NOT
SPECIFY HOW TO VOTE ON A MATTER, AND IF YOU HAVE AUTHORIZED A DIRECTOR OR
OFFICER OF COTT CORPORATION TO ACT AS YOUR PROXYHOLDER, THIS PROXY WILL BE
VOTED AS RECOMMENDED BY MANAGEMENT. IN PARTICULAR, IF YOUR PROXY DOES NOT
SPECIFY HOW TO VOTE, THIS PROXY WILL BE VOTED FOR THE NOMINEES LISTED IN
RESOLUTION NUMBER 1. ELECTION OF DIRECTORS, FOR THE APPOINTMENT OF AUDITORS
SET OUT IN RESOLUTION NUMBER 2. APPOINTMENT OF AUDITORS AND FOR THE
RESOLUTIONS NUMBERED 3 AND 4.
6. This proxy confers discretionary authority in respect of amendments or
variations to matters identified in the Notice of Meeting or other matters
that may properly come before the Meeting and at any continuation of the
Meeting after an adjournment thereof.
7. This proxy should be read in conjunction with the accompanying
documentation provided by Management.
Proxies submitted must be received by 4:30 p.m. (local time in Toronto, Canada)
on April 19, 2006.
THANK YOU
THIS FORM OF PROXY IS SOLICITED BY AND ON BEHALF OF MANAGEMENT
APPOINTMENT OF PROXYHOLDER
PRINT THE NAME OF THE PERSON YOU ARE
I/WE BEING SHAREOWNER(S) OF COTT CORPORATION APPOINTING IF THIS PERSON IS SOMEONE
HEREBY APPOINT: Frank E. Weise III, Chairman, or OR OTHER THAN THE CHAIRMAN OR PRESIDENT
failing him, John K. Sheppard, President and CEO AND CEO
as my/our proxyholder with full power of substitution and to vote in accordance
with the following direction (or if no directions have been given, as the
proxyholder sees fit) at the Annual and Special Meeting of shareowners of Cott
Corporation to be held at the Glenn Gould Studio, Canadian Broadcasting Centre,
250 Front Street West, Toronto, Ontario, Canada, on Thursday, April 20, 2006 at
8:30 a.m. (local time in Toronto, Canada), and at any continuation of the
Meeting after an adjournment thereof. DISCRETIONARY AUTHORITY IS HEREBY
CONFERRED WITH RESPECT TO ANY AMENDMENTS OR VARIATIONS TO MATTERS IDENTIFIED IN
THE NOTICE OF MEETING OR OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE MEETING
AND AT ANY CONTINUATION OF THE MEETING AFTER AN ADJOURNMENT THEREOF. As of March
16, 2006, Management is not aware of any such amendments, variations or other
matters to be presented at the Meeting.
1. ELECTION OF DIRECTORS The proposed nominees named in the accompanying Proxy
Circular are:
01. Colin J. Adair; 02. W. John Bennett; 03. Serge Gouin; 04. Stephen H.
Halperin; 05. Betty Jane Hess; 06. Philip B. Livingston; 07. Christine A. Magee;
08. Andrew Prozes; 09. John K. Sheppard; 10. Donald G. Watt; 11. Frank E. Weise
III.
FOR all nominees listed above: [ ]
Please specify the
name of the individual(s)
from whom you wish to
FOR all nominees listed above other than: [ ] withhold your vote:
------------------------
WITHHOLD vote for all nominees listed above: [ ]
2. APPOINTMENT OF AUDITORS
Appointment of PricewaterhouseCoopers LLP as Auditors [ ] FOR [ ] WITHHOLD
RESOLUTIONS The Board of Directors recommends a vote for the following
resolutions. Please read the resolutions in full in the accompanying Proxy
Circular.
3. Approving the performance share unit plan in accordance with the resolution
set out as Appendix "A" of the Proxy Circular. See Appendix "A" to the Proxy
Circular For [ ] Against [ ]
4. Approving the share appreciation rights plan in accordance with the
resolution set out as Appendix "B" of the Proxy Circular. See Appendix "B" to
the Proxy Circular For [ ] Against [ ]
AUTHORIZED SIGNATURE(s) - SIGN HERE - THIS SECTION MUST BE COMPLETED FOR YOUR
INSTRUCTIONS TO BE EXECUTED.
I/We authorize you to act in accordance with my/our instructions set out above.
I/We hereby revoke any proxy previously given with respect to the Meeting. IF NO
VOTING INSTRUCTIONS ARE INDICATED ABOVE, THIS PROXY WILL BE VOTED AS RECOMMENDED
BY MANAGEMENT.
Signature(s)
--------------------------------- --------------------------------
Date
FINANCIAL STATEMENTS REQUEST
In accordance with Canadian securities Mark this box if you
regulations, shareowners may elect to would like to receive
receive interim financial statements, [ ] interim financial
if they so request. If you wish to reports by mail.
receive such mailings, please mark
your selection.
If you do not mark the box, or do not return this PROXY, then it will be assumed
you do NOT want to receive interim financial statements.