SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16 UNDER
THE SECURITIES EXCHANGE ACT OF 1934

For the month of December, 2009

Shaw Communications Inc.

(Translation of registrant’s name into English)

Suite 900, 630 – 3^rd Avenue S.W., Calgary, Alberta T2P 4L4 (403) 750-4500

(Address of principal executive offices)

     Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F   o		Form 40-F   þ

     Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):   o

     Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):   o

     Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes   o		No   þ

     If “ Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-                     

 

 

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant, Shaw Communications Inc., has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:		December 9, 2009
		Shaw Communications Inc.

By: /s/ Steve Wilson

Steve Wilson
Sr. V.P., Chief Financial Officer
Shaw Communications Inc.

TABLE OF CONTENTS

 

 

SHAW COMMUNICATIONS INC.

 

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

 

The annual general meeting of shareholders of Shaw Communications Inc. (the “Corporation”) will be held as follows:

 

 

for the following purposes:

 

 

By Order of the Board of Directors,

 

(signed) Douglas J. Black, Q.C.
Corporate Secretary

 

Calgary, Alberta

November 24, 2009

 

 

Holders of Class A Shares of record at the close of business on November 30, 2009 are the only shareholders entitled to vote at the meeting. Holders of Class B Non-Voting Shares are entitled to attend and speak at the meeting, but are not entitled to vote on any matter proposed for consideration.

 

If you cannot attend the meeting in person, you are encouraged to complete the accompanying proxy and to return it in the enclosed envelope to CIBC Mellon Trust Company, 600 The Dome Tower, 333 - 7th Avenue S.W., Calgary, Alberta, T2P 2Z1 (mailing address: Proxy Dept., CIBC Mellon Trust Company, P.O. Box 721, Agincourt, Ontario, M1S 0A1), to be received not later than 48 hours (excluding Saturdays, Sundays and holidays) before the time fixed for the meeting or an adjournment thereof.

 

SHAW COMMUNICATIONS INC.

 

PROXY CIRCULAR

 

The information contained in this proxy circular is provided in connection with the solicitation of proxies by and on behalf of management of Shaw Communications Inc. (the “Corporation”) for use at the annual general meeting (the “Meeting”) of shareholders of the Corporation to be held on January 14, 2010, and any adjournments thereof, as set forth in the attached Notice of Meeting.

 

Unless otherwise noted, the information contained in this proxy circular is given as of November 24, 2009. All sums are expressed in Canadian dollars, unless otherwise noted.

 

 

Information concerning the nominees for election to the Board of Directors (the “Board”) of the Corporation is set forth below, along with certain other information relating to meetings of the Board and its committees.

 

The number of directors to be elected is 15. Directors will hold office until the next annual meeting of shareholders of the Corporation or until their successors are elected or appointed. Management of the Corporation recommends voting in favour of each nominee listed below.

 

Nominees for Election to the Board of Directors

 

The following table sets out the name of each director, together with his or her municipality of residence, age, year first elected or appointed a director, biography and comparative ownership of securities of the Corporation for the years 2009 and 2008.

 

 

 

Notes:

 

 

Meetings Held and Attendance of Directors

 

The following table summarizes the meetings of the Board and its committees (Audit, Corporate Governance and Nominating, and Human Resources and Compensation) held during the fiscal year ended August 31, 2009, and the attendance of individual directors of the Corporation at such meetings. No Executive Committee meetings were held during the fiscal year ended August 31, 2009.

 

 

 

Notes:

 

 

Following each regular meeting, the Board and its committees conduct “in camera” sessions at which no management directors or members of management are present. The in camera portion of each regular Board meeting generally consists of one session without the presence of any member of management or any management director (other than the Executive Chair) and one session without the presence of any member of management, any management director or the Executive Chair. The in camera sessions are intended not only to encourage the Board and its committees to fully and independently fulfil their mandates, but also to facilitate the performance of the fiduciary duties and responsibilities of the Board and its committees on behalf of shareholders of the Corporation.

 

 

The firm of Ernst & Young LLP, Chartered Accountants, the present auditors of the Corporation, has been nominated to serve as auditors of the Corporation to hold office until the next annual general meeting of shareholders of the Corporation. The Audit Committee has recommended to the Board and to shareholders the nomination of Ernst & Young LLP as the Corporation’s auditors.

Audit Fees

 

The aggregate amounts paid or accrued by the Corporation with respect to fees payable to Ernst & Young LLP for audit (including financings and Sarbanes-Oxley Act related services), audit-related, tax and other services in the fiscal years ended August 31, 2009 and 2008 were as follows:

 

 

The tax fees paid in fiscal 2009 and 2008 were related to linear property tax compliance.

 

The Audit Committee of the Corporation considered and agreed that the above fees are compatible with maintaining the independence of the Corporation’s auditors. Further, the Audit Committee determined that, in order to ensure the continued independence of the auditors, only limited non-audit services will be provided to the Corporation by Ernst & Young LLP and in such case, only with the prior approval of the Audit Committee. The Chair of the Audit Committee has been delegated authority to approve the retainer of Ernst & Young LLP to provide non-audit services in extraordinary circumstances where it is not feasible or practical to convene a meeting of the Audit Committee, subject to an aggregate limit of $150,000 in fees payable to Ernst & Young LLP for such services at any time until ratified by the Audit Committee. The Chair of the Audit Committee is required to report any such services approved by him to the Audit Committee.

 

This is a management proxy circular and proxies are hereby solicited by or on behalf of the management of the Corporation for use at the Meeting or any adjournments thereof. It is expected that the solicitation will primarily be by mail, but may also be made by telephone or other means of telecommunication by directors, officers or employees of the Corporation. The cost of the solicitation will be borne by the Corporation.

 

Each person named in the enclosed form of proxy is a director and officer of the Corporation. A shareholder who wishes to appoint some other person to represent him or her at the Meeting may do so either by inserting the name of that person, who need not be a shareholder, in the space provided in the form of proxy and striking out the names of the specified persons, or by completing another form of proxy. In either case, the shareholder must deliver or send the completed form of proxy to CIBC Mellon Trust Company, 600 The Dome Tower, 333 – 7th Avenue S.W., Calgary, Alberta, T2P 2Z1 (mailing address: Proxy Dept., CIBC Mellon Trust Company, P.O. Box 721, Agincourt, Ontario, M1S 0A1), so that it will be received not later than 48 hours (excluding Saturdays, Sundays and holidays) before the time fixed for the Meeting or an adjournment thereof.

 

A shareholder who has given a proxy may revoke it, in any manner permitted by law, including by signing a proxy bearing a later date or a notice of revocation and, in either case, delivering it to the Corporation’s registered office up to the day before the Meeting or to the Chair of the Meeting on the day of the Meeting.

 

Where a choice is specified, the persons named in the enclosed form of proxy will vote the shares in respect of which they are appointed in accordance with the directions contained therein. In the absence of such directions, it is intended that such shares will be voted for the adoption of all resolutions referred to in the Notice of Meeting.

 

The enclosed form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identified in the Notice of Meeting and with respect to other matters which may properly come before the Meeting. At the date of this proxy circular, management of the Corporation knows of no such amendments, variations or other matters to come before the Meeting other than the matters referred to in the Notice of Meeting. If any such amendment, variation or other matter which is not now known should properly come before the Meeting, then the persons named in the form of proxy will vote on such matters in accordance with their best judgement with respect to the shares represented by such proxy.

 

The information set forth in this section is of significant importance to shareholders who hold class A participating shares (“Class A Shares”) in the capital of the Corporation through brokers and their nominees and not in their own name. Shareholders who do not hold their Class A Shares in their own name (referred to in this proxy circular as “Beneficial Shareholders”) should note that only proxies deposited by shareholders whose names appear on the records of the Corporation as the registered holders of the Class A Shares can be recognized and acted upon at the Meeting. If Class A Shares are listed in an account statement provided to a shareholder by a broker, then in almost all cases those shares will not be registered under the name of the shareholder on the records of the Corporation. Such shares will more likely be registered under the name of the shareholder’s broker or an agent of that broker. Shares held by brokers or their nominees can only be voted for, or withheld from voting, or voted against any resolution upon the instructions of the Beneficial Shareholder. Without specific instructions, brokers and nominees are prohibited from voting shares for their clients.

 

Applicable regulatory policy requires intermediaries and brokers to seek voting instructions from Beneficial Shareholders in advance of shareholders’ meetings. Every intermediary and broker has its own mailing procedures and provides its own return instructions, which should be carefully followed by Beneficial Shareholders in order to ensure that their Class A Shares are voted at the Meeting. Often, the form of proxy supplied to a Beneficial Shareholder by its broker is identical to the form of the proxy provided to registered shareholders; however, its purpose is limited to instructing the registered shareholder how to vote on behalf of the Beneficial Shareholder. A Beneficial Shareholder receiving a proxy from an intermediary cannot use that proxy to vote shares directly at the Meeting; rather the proxy must be returned to the intermediary well in advance of the Meeting in order to have the shares voted.

 

Only the holders of Class A Shares of record at the close of business on November 30, 2009, the record date fixed by the directors of the Corporation, will be entitled to vote on all matters at the Meeting. Each holder of Class A Shares is entitled to one vote for each such share held. As of November 24, 2009, there were 22,520,064 Class A Shares and 414,300,650 Class B non-voting participating shares (“Class B Non-Voting Shares”) in the capital of the Corporation outstanding.

 

The only person who, to the knowledge of the directors and executive officers of the Corporation, beneficially owns, directly or indirectly, or exercises control or direction over, more than 10% of the Class A Shares is JR Shaw who beneficially owns, controls or directs 17,784,208 Class A Shares, representing approximately 79% of the issued and outstanding Class A Shares. JR Shaw, members of his family and corporations owned or controlled by them have entered into a Voting Trust Agreement relating to all Class A Shares they own, control or direct. The voting rights with respect to such shares are exercised by the representative of a committee of five trustees. The Corporation has been advised that all of such Class A Shares will be voted in favour of the resolutions referred to in the Notice of the Meeting. The Corporation therefore anticipates that these resolutions will be approved.

 

Holders of Class B Non-Voting Shares are not entitled to vote at meetings of shareholders of the Corporation, except as provided by law, and will not be entitled to vote on any matter at the Meeting. In the event of a take-over bid, in certain circumstances which are fully described in the Corporation’s Annual Information Form dated November 30, 2009, a holder of Class B Non-Voting Shares may be entitled to convert such shares into Class A Shares for purposes of tendering to the take-over bid.

 

The following discussion and analysis examines the compensation earned during the last financial year of the Corporation by the Corporation’s Chief Executive Officer, Chief Financial Officer and the three most highly compensated executive officers (collectively, the “Named Executive Officers”) who served as executive officers of the Corporation for the financial year ended August 31, 2009.

 

The Corporation’s overall approach is to ensure fair and equitable total compensation for its senior executive team which includes the Named Executive Officers: the Executive Chair, the Chief Executive Officer and Vice Chair, the President, the Senior Vice President, Operations, and the Senior Vice President and Chief Financial Officer.

 

Under the guidance of the Human Resources and Compensation Committee, the Corporation has taken a strategic approach in the design of its compensation program to ensure transparency and alignment with business objectives and performance. This strategy has been successful, resulting in increased shareholder value in the short, medium and long-term.

 

The Human Resources and Compensation Committee has historically adopted a philosophy of transparency in its compensation programs rewarding performance with competitive base salaries, annual performance and success sharing bonuses, stock option awards, and retirement plans. In times of economic or business adversity, the Corporation does not: pay bonuses; issue stock options; or re-price previously issued stock options. In fact, the Corporation has never re-priced options.

 

Executive Compensation Guiding Principles

 

The guiding principles of the executive compensation philosophy of the Corporation are grounded in several clear principles.

 

The first and foremost principle is to:

 

 

In achieving this principle, the Corporation must be flexible and progressive in its business strategies and must meet the challenges of growth, new technology, the regulatory structure, competition and the general economic environment. Therefore, the Corporation’s compensation programs need to:

 

 

The second principle addresses the components of compensation. The Corporation’s philosophy is to provide a transparent approach to executive compensation. The executive compensation package consists of a mix of compensation elements that ensure executives have: 1) a significant “at risk” component of total compensation that reflects their ability to influence business outcomes and performance; and 2) fixed elements that provide security and enable the Corporation to attract and retain key employees. The compensation elements consist of:

 

 

 

The third principle is to consider the Corporation’s executive compensation practices in light of the marketplace, as well as long-term leadership development and executive retention. As such, the programs provide a level of compensation to ensure the Corporation remains competitive and continues to attract, retain and motivate high caliber leaders.

 

In assessing competitiveness, the Corporation measures total compensation relative to a group of comparator companies. The primary comparators are a group of cable and telecom companies in Canada and the United States. This analysis is cross referenced to other comparator groups based on companies with similar market capitalization, 5-year Total Shareholder Return (“TSR”) returns, service operating income before amortization¹ and other Canadian Large-Cap industry leading companies.

 

Purpose and Attributes of Executive Compensation Components

 

 

Base pay is designed to provide a level of fixed compensation that is above the average of the comparator group for similar roles and responsibilities. It is reviewed annually taking into account market conditions, level/scope of responsibility, the accountabilities of each individual and the Corporation’s lean executive structure.

 

 

This element of “at risk” compensation is designed to reinforce and help drive the achievement of the Corporation’s and an individual’s annual goals. Payments are made on a cash basis and are performance driven.

 

 

The purpose of the long-term incentive plan is to provide additional compensation on a periodic basis to ensure a continued balanced performance focus.

 

In line with the principles of transparency and simplicity, executives participate in only one long-term incentive plan, stock options. This component of executive compensation has been and remains significantly below most companies in the comparator group. In the past, the Corporation has preferred to deliver value to executives in the form of rewards for performance through the bonus program and, as a result, longer term incentives such as stock option awards have historically been limited. It has been recognized over recent years that with the growth of the Corporation, a more consistent approach is required with respect to long-term incentives throughout the senior levels of management.

 

 

The Human Resources and Compensation Committee approves the membership of the SERP for senior executives of the organization. This plan is designed to reflect significant contributions the selected senior executives have made and will make to the Corporation over a period of time. The SERP plan was established in 2001 and reflects the Corporation’s historic preference to deliver competitive compensation through elements other than long-term incentive awards. The SERP requires members to achieve a minimum vesting level before any payment or award. This SERP, which forms part of the senior executive’s total compensation, is in addition to the pension benefits earned through the Corporation’s Defined Contribution Plan, which is standard for all employees.

 

All senior executives are members of the Corporation’s group benefits plan, which is also standard for all employees.

 

Collectively, these elements of executive compensation provide:

 

 

 

     ¹ See definitions under Key Performance Drivers in Management’s Discussion and Analysis included in the 2009 Annual Report.

     ² The minimum vesting criteria for the SERP requires the executives to be at least 50 years of age with 10 years of service or 55 years of age with five years of service. Currently, two of the five Named Executive Officers do not meet the minimum vesting criteria, thus their SERP benefits could also be deemed “at risk”.

 

Performance Measure

 

Under the guidance of the Human Resources and Compensation Committee, short and long term incentives are determined by reviewing the performance of the Corporation and individual performance. Actual bonus amounts are made on a discretionary basis taking into account a number of different elements.

 

 

Free cash flow¹ (“FCF”) is a key component of the Corporation’s overall business performance, which supports return of capital initiatives to shareholders and debt reduction, as required. In the last three fiscal years the Corporation has generated in excess of $1.3 billion in FCF and returned the majority of this capital to shareholders. This was done primarily in the form of dividend payments, as total dividends paid to shareholders in fiscal 2009 increased to over $350 million compared to $200 million in fiscal 2007.

 

The Corporation recognizes that FCF may fluctuate year-to-year, as capital investments are made to develop and grow the business and as extraneous factors arise, such as becoming fully cash taxable in fiscal 2010. In fiscal 2009 the Board of Directors set a FCF goal of at least $500 million, which was achieved. This represents FCF growth of $50 million or 11% compared to the previous fiscal year. Excluding the impact of cash taxes during the year, fiscal 2009 FCF growth was $75 million or 17% compared to the previous year’s untaxed FCF. This growth was achieved in conjunction with continued investment in the network and infrastructure, and capital spending increased almost $50 million to over $775 million.

 

The Corporation has provided preliminary FCF guidance for fiscal 2010 and the Board of Directors will take into account possible risks, opportunities and developments in the competitive market dynamics when evaluating the performance of the senior executive team in achieving the fiscal 2010 targets.

 

 

Service operating income before amortization and the ability to grow this financial measure is one of the key financial metrics driving the valuation of the Corporation. Over the last three years the Corporation has been able to grow service operating income before amortization by $460 million or almost 43%. This sustained growth was achieved in an increasingly competitive market and reinforces the value proposition of the Corporation’s products and services.

 

The executive team’s focus on cost control and capital efficiencies has yielded attractive financial results in fiscal 2009. In fiscal 2009, the Corporation achieved consolidated service operating income before amortization of $1.54 billion, which represents a $130 million or 9% increase over the previous year. The Corporation’s cable service operating income before amortization growth of 10% was in line with 2009 guidance and the Corporation achieved satellite service operating income before amortization growth of 6% compared to 2009 guidance of “nominal growth”.

 

Financial results continue to be in the upper quartile of performance and the senior executives focus on controlling costs, along with the resulting operating margins¹ , are key factors supporting the premium valuation multiple compared to the Corporation’s industry peer group. The senior executive team’s focus on operations continues to produce best-in-class operating margins. During fiscal 2009, the Corporation’s consolidated operating margin was 45%, and over the last three years the Company’s operating margin has expanded by 1.6%. The Corporation continues to be one of the most profitable companies in its industry.

 

 

The Corporation is one of the only companies within its North American peer group that has been able to grow subscriber base in all product categories over the last year. The competitive environment continues to increase as telecommunication companies across the Corporation’s operating areas aggressively expand their service offerings. Despite a more competitive environment, and the fact that the Western Canadian economy experienced weakness, Basic subscriber growth of almost 30,000 was achieved in fiscal 2009. This growth exceeded fiscal 2008 growth of just over 20,000 Basic customers.

 

Digital television customer growth far exceeded the expectations of the executive team at the beginning of the fiscal year, with growth of almost 390,000 Digital customers. At the beginning of fiscal 2009 approximately 40% of Basic customers subscribed to Digital service, and at the end of fiscal 2009 there were almost 1.3 million Digital customers, representing over 57% of Basic customers taking the Digital television product.

 

 

     ¹ See definitions under Key Performance Drivers in Management’s Discussion and Analysis included in the 2009 Annual Report.

The Corporation continues to grow its broadband business and win incremental market share. During the year 110,000 customers were added, maintaining one of the strongest broadband businesses in North America. Over the last two years the Corporation increased the penetration rate of the service by 8% and now the equivalent of 73% of Basic subscribers take the Internet service, which represents one of the highest penetration rates in North America.

 

The Digital Phone product has been a great success and the Corporation has 830,000 Digital Phone lines since its first market launch in February 2005. The product continues to be rolled out to smaller markets and the service is available to approximately 94% of the customer base. Significant customer growth was achieved in fiscal 2009, adding over 210,000 Digital Phone lines with over 38% of Basic subscribers who have the product available now taking the telephone service.

 

 

The Corporation’s executive team continues to focus on the core businesses and to deliver on long-term shareholder value creation initiatives. During fiscal 2009 Internet speeds were increased by 50%. The Corporation believes this investment in infrastructure provides further differentiation from the competition. The Corporation was also one of the first Internet Service Providers (“ISP”) in North America to commercially launch a 100 mega bit per second (“Mbps”) Internet service using DOCSIS 3.0 technology. Currently, telecommunication companies are unable to match the Corporation’s broadband speeds and this provides a competitive advantage now and for the future.

 

The Corporation remains focused on efficiently deploying capital in a prudent and return focused manner. At the end of fiscal 2008, it had one of the lowest digital television penetration rates amongst its North American peer group. The executive team recognized this growth opportunity and launched a rental program for digital set-top boxes during fiscal 2009. In the past, the economics of this business were not as attractive and therefore the Corporation decided to focus capital on higher returning projects. As the digital television business evolved, incremental digital revenue opportunities increased and set-top box costs declined. These dynamics changed significantly over the last three years and the Corporation launched the rental program when the economics merited a more aggressive approach to the business. The rental program helped drive sales and added almost 390,000 customers in fiscal 2009 compared to just over 140,000 in fiscal 2008. The Corporation now has over 57% of its customers subscribing to the Digital service and the executive team has set a goal of achieving 80% Digital penetration, as a percentage of Basic customers, by the end of fiscal 2011.

 

The Corporation continued to invest substantial capital into its assets and infrastructure during fiscal 2009. These investments in fibre construction, node segmentation, plant upgrades, facilities, and billing and other information technology systems are necessary to maintain the quality of products and services provided by the Company and demanded by customers. The executive team is actively involved in making these capital and operating decisions and are focused on ensuring long-term value and profitability is being generated from the appropriate investments.

 

During fiscal 2009 the executive team put additional focus on the small and home business market with a push on all products, including television, Internet and telephony. Results to-date have been encouraging and the Corporation believes that growth opportunities within this segment are attractive.

 

The Corporation’s efforts to maintain a strong balance sheet and financial metrics resulted in achieving investment grade status with all three rating agencies during fiscal 2009. This was an important objective and milestone from both the Board and the executive team’s perspective. This investment grade rating assisted in raising $2.5 billion in debt since March 2009. These proceeds were secured at attractive long-term rates during periods of volatile credit market conditions. These new funds enabled the Corporation to complete a significant refinancing of more expensive US$ denominated debt in October 2009 and also eliminate most refinancing risk through the end of calendar 2012.

 

The Corporation continued to evaluate and execute strategic acquisitions with fiscal discipline. Successful acquisitions during the year included the assets of the Campbell River, British Columbia cable system for $46 million. Since the acquisition closed in February 2009 the customer base has grown and significant synergies have been realized due to the close proximity of the system to the Corporation’s other operations on Vancouver Island.

 

In July 2009 the Corporation announced that it had entered into an agreement to purchase privately held Mountain Cablevision Ltd. (“Mountain Cable”). This transaction closed in late October, 2009. Mountain Cable is based in Hamilton, Ontario and is one of the larger remaining independent cable companies in Canada. The Corporation believes that the outlook for the Canadian cable industry is attractive and that acquiring Mountain Cable represented a unique opportunity to grow the core business.

 

During the year the Corporation took steps to strengthen and increase the alignment and focus of the senior team. This also included steps to further succession planning. Over 80% of the Corporation’s leadership positions are filled by internal candidates. Employee engagement has also been a key focus over the last several years and significant improvements have been achieved. The 2009 survey results indicate the Corporation improved into a range categorized as “best in class” companies. Retention of senior leaders is also critical, particularly given that the Corporation runs with a lean team of talented individuals. At the Vice President level and up, the Corporation experienced no voluntary turnover in 2009. Overall it reduced voluntary turnover of all employees by 50%.

 

 

Overall, the Board believes the performance of the senior executive team has made a significant contribution to the impressive growth and success of the Corporation. The financial results in fiscal 2009, and over a longer period, have been exceptional. Over the past five years revenues and service operating income before amortization have increased by over $1.3 billion and $600 million, respectively. This represents revenue growth of 63% (10% compounded annual growth rate (“CAGR”)) and service operating income before amortization growth of 65% (11% CAGR). Over the same time period FCF has totaled almost $1.9 billion and the majority of this capital has been returned to shareholders in the form of dividend payments and share repurchases. Equity value has grown 72% or $3.4 billion since the beginning of 2005. During this same time period, total cash compensation paid to the Named Executive Officers has grown by $13 million. The Board considers the performance of the senior executive team, and the entire senior management group, as exceptional.

 

Comparator Group Analysis

 

The Human Resources and Compensation Committee annually reviews the total compensation and compensation practices of the Corporation’s senior executives and compared these to the following 21 Canadian and 10 US companies:

 

 

Note: US companies are in italics.

 

The above companies were selected to align with the criteria for each of the sub-groups detailed below and ensure there is a sufficient scope of comparator organizations to make the analysis meaningful.

 

Besides benchmarking the Corporation’s senior management compensation to the overall comparator group, the external consultant examines the Corporation’s competitive positioning versus 5 sub-groups as requested by the Human Resources and Compensation Committee. These sub-groups are:

 

 

Part of this review entails a competitive analysis undertaken by external compensation experts (currently Hewitt Associates, a worldwide human resources consulting company). The competitive review is conducted based on the principles noted above. The consultant’s report includes: matches of the Corporation’s Named Executive Officers total

compensation with the comparator groups; and a summary of how the Corporation’s executive compensation approach compares with the comparator group in the following specific areas:

 

 

Governance

 

The Human Resources and Compensation Committee is made up of independent directors with many years of diverse business experience throughout North America. The committee is responsible for ensuring effective human resource programs and philosophies are developed and implemented in conformity with the Corporation’s vision, values and strategic objectives to continue to ensure the recruitment and attraction of the best talent at all levels.

 

The committee, through meetings, presentations and reports, has a good knowledge of the key drivers and issues affecting the Corporation and regularly meets with the executive leaders.

 

Consistent with the committee’s charter and based on input from management, the committee strategically reviews executive compensation and the quantum of subsequent awards for all employees within the Corporation and each of the Named Executive Officers, including:

 

 

The Human Resources and Compensation Committee is engaged in discussion with and considers/reviews recommendations from the CEO regarding:

 

 

As part of the executive compensation review the Human Resources and Compensation Committee makes its decisions and recommendations to the full Board on the compensation levels and stock option grants for each of the Named Executive Officers based on each of the above mentioned guiding principles with particular reference to the performance measures: FCF, service operating income before amortization, subscriber growth, the management of talent and leadership development, as well as other business initiatives/strategic planning.

SUMMARY COMPENSATION TABLE

 

The following table sets forth compensation earned during the last financial year of the Corporation by the Named Executive Officers.

 

 

 

Notes:

 

 

INCENTIVE PLAN AWARDS — STOCK OPTIONS

 

Options to acquire Class B Non-Voting Shares are granted pursuant to the Corporation’s stock option plan. The stock option plan of the Corporation provides that options may be granted to directors, officers, employees and consultants of the Corporation and for such number of Class B Non-Voting Shares as the Board, or a committee thereof, determines in its discretion, at an exercise price not less than the closing price of the Class B Non-Voting Shares on the Toronto Stock Exchange (the “TSX”) on the trading day immediately preceding the date on which the option is granted. An option shall not be immediately exercisable, but rather, shall be exercisable on vesting dates determined by the Board from time to time; provided that the Board may not grant options with vesting terms more favourable than 50% of the original grant on each of the first and second anniversary dates. Unless otherwise determined by the Board, options expire 10 years from the date of grant, and subject to limited exceptions, must be exercised while the optionee remains as a director, officer, employee or consultant of the Corporation. Provision is made in the plan for early termination of options in the event of death, disability or cessation of employment or service arrangement (other than retirement), as the case may be. Options

are not transferable or assignable, unless the transfer or assignment is permitted under applicable securities laws and is in respect of options to purchase 10,000 Class B Non-Voting Shares or greater; and provided further that such transfer or assignment is approved by two senior officers of the Corporation, one of whom must be either the Chief Executive Officer or the Chief Financial Officer of the Corporation.

 

The maximum number of Class B Non-Voting Shares issuable under the stock option plan of the Corporation may not exceed 52,000,000 Class B Non-Voting Shares. The plan provides that: (i) the maximum number of Class B Non-Voting Shares which may be reserved for issuance to insiders of the Corporation under the plan and all other security based compensation arrangements of the Corporation is limited to 10% of the number of Class B Non-Voting Shares outstanding at the date of grant (on a non-diluted basis) and (ii) the maximum number of Class B Non-Voting Shares which may be issued to insiders of the Corporation under the plan and all other security based compensation arrangements of the Corporation within a one year period is limited to 10% of the number of Class B Non-Voting Shares outstanding at the time of the issuance (on a non-diluted basis). Subject to applicable law and approval of the Board, the Corporation may provide financial assistance in connection with the exercise of an option, with recourse to the Class B Non-Voting shares purchased upon such exercise. The plan contains anti-dilution, other adjustment and “change of control” provisions.

 

Outstanding Option-Based Awards

 

The following table sets forth details with respect to stock options held by the Named Executive Officers as of August 31, 2009.

 

 

 

Note:

 

 

Incentive Plan Awards — Value Vested or Earned During the Year

 

The following table sets forth details on the vesting and payouts of awards under the Corporation’s incentive plans during the fiscal year ended August 31, 2009.

 

 

 

Notes:

 

 

PENSION PLANS

 

The Corporation maintains both a defined contribution pension plan and a defined benefit pension plan, as described below.

 

Defined Contribution Plan

 

The Corporation provides all eligible employees with a defined contribution pension plan (also known as a money purchase plan). Under this plan, the Corporation makes annual contributions up to a maximum of 5% of each employee’s annual salary to a maximum contribution allowable under the Income Tax Act (Canada). Funds are accumulated under the employee’s name and used on retirement to purchase one of several types of annuity at the option of the employee. Contributions on behalf of the Named Executive Officers are included in “Pension Value” in the Summary Compensation Table under the heading “Statement of Executive Compensation”. As a defined contribution plan, this pension plan of the Corporation is fully funded and is not subject to surpluses or deficiencies.

 

The following table presents the benefits accumulated under the Corporation’s defined contribution plan for the Named Executive Officers. The actual benefits payable upon retirement will be determined by the size of each participant’s account values (based on the amount of actual contribution and realized investment returns), interest rates at the time benefits commence and the type of retirement vehicle selected (life income fund, life annuity, joint annuity, etc.).

 

 

 

Notes:

 

 

Defined Benefit Plan (SERP)

 

Effective September 1, 2002, the Corporation established a SERP for its most senior executive officers. The SERP is a non-contributory defined benefit pension plan which is unfunded.

 

Benefits under the SERP are based on the officer’s length of service and his or her highest three year average rate of SERP eligible earnings (base salary plus annual cash bonus) during his or her years of service with the Corporation. The

SERP provides for payments equal to 5% of SERP eligible earnings for each of the first ten years that an executive officer is in a SERP eligible position and 1.5% for each SERP eligible year thereafter. The maximum annual pension that an officer may earn under the SERP is 70% of average SERP pensionable earnings.

 

An executive officer of the Corporation must be in a SERP-eligible position for 5 years to qualify to receive a pension. Officers who retire at age 60 or later will receive a full pension as will those officers who retire after age 55 with 10 years of SERP-eligible service. Officers between the ages 55 and 60 with less than 10 years of SERP-eligible service and officers between the ages 50 and 55 with 15 years of SERP-eligible service are eligible to retire with a discounted pension.

 

The following table presents the credited number of years of service at August 31, 2009 and the estimated annual retirement benefits payable to Named Executive Officers for service up to August 31, 2009 and at age 65. In addition, the total accrued pension obligation for each Named Executive Officer is shown along with the changes to the obligation during the financial year ended August 31, 2009.

 

 

 

Notes:

 

 

The Corporation’s obligations and related costs of the SERP benefits earned by executive officers are actuarially determined using the projected benefit method, pro-rated on service, and management’s best estimate of salary escalation and retirement ages of officers. The pension expense with respect to the SERP for the fiscal year ended August 31, 2009 was $27.5 million. The expected aggregate benefit payments for the fiscal year ended August 31, 2010, as actuarially determined, are approximately $1.4 million. The accrued benefit obligation of the SERP at August 31, 2009 was $195.7 million, of which $106.4 million has been recognized by the Corporation as a liability in its accounts in accordance with Canadian generally accepted accounting principles. In the event of a change of control of, or merger involving, the Corporation, the SERP becomes fully vested and fully funded immediately.

 

Further information with respect to the SERP, and the Corporation’s accounting policy with respect thereto, is set forth in Notes 1 and 17 to the audited annual consolidated financial statements of the Corporation for the year ended August 31, 2009. See “Other Information — Additional Information”.

 

An employee share purchase plan (the “ESPP”) was introduced in 1998 to provide employees of the Corporation with an incentive to increase the profitability of the Corporation and a means to participate in that increased profitability.

 

Generally, all non-unionized full time or part time employees of the Corporation and certain of its subsidiaries are eligible to enrol in the ESPP. Executive officers of the Corporation, including the Named Executive Officers, are entitled to participate in the ESPP on the same basis as all other employees of the Corporation.

 

Under the ESPP, each employee contributes, through payroll deductions, a minimum of $25.00 per semi-monthly pay period or $50.00 per monthly pay period to a maximum of 5% of the participant’s monthly basic compensation. The Corporation contributes an amount equal to 25% of the participant’s contributions for that month. Canadian Western Trust Company, as trustee under the ESPP, or its nominee acquires Class B Non-Voting Shares for the benefit of

participants through the facilities of the TSX using monies contributed to the ESPP. A participant may withdraw up to 100% of the shares vested in his or her account up to twice in any 12 month period.

 

As of August 31, 2009, approximately 62% of eligible employees of the Corporation purchased Class B Non-Voting Shares under the ESPP. Participation has increased from 52% last year. At August 31, 2009, an aggregate of approximately 1,721,510 Class B Non-Voting Shares were held under the ESPP.

 

In 1997, the Corporation entered into an agreement with its Executive Chair, JR Shaw, which provides for, amongst other things, an annual incentive bonus. The agreement recognizes JR Shaw’s central role in founding and building the Corporation and ensures that the Corporation retains and utilizes the full benefits of his 40 years of industry experience. As Executive Chair, JR Shaw continues to provide broad stewardship and strategic vision for the Corporation. In addition, his stature as a national corporate leader and his positive long-standing reputation with government, regulatory, investor and banking communities enhances the Corporation’s capacity to achieve its strategic and financial goals.

 

The agreement with JR Shaw provides for an incentive bonus that is paid to him annually, provided the Corporation reaches its financial targets. The agreement also specifies that the amount is to be between 0.5% and 1.0% of the Corporation’s service operating income before amortization (as reported in the Corporation’s annual consolidated financial statements) calculated excluding the results of Shaw Direct (the “Income Base”) for the year in which it is to be paid. The Corporation met its financial targets and JR Shaw voluntarily elected to cap the bonus paid to him by the Corporation at $6,326,730, equal to the amount paid under the agreement since fiscal 2002. This represents 0.5% of the Income Base for fiscal 2009.

 

No other Named Executive Officer has an employment contract with the Corporation.

 

The Human Resources and Compensation Committee is comprised of four independent directors, Willard H. Yuill (Chair), Harold A. Roozen, JC Sparkman and Sheila C. Weatherill. The Human Resources and Compensation Committee is governed by its charter which details the mandate, composition and responsibilities of the committee. This is reviewed annually to ensure the committee fulfils its mandate. The Human Resources and Compensation Committee has the responsibility of annually reviewing and recommending to the Board the compensation package for the Named Executive Officers. It also has responsibility for annually reviewing and approving the compensation packages for the other senior officers of the Corporation, as well as periodically reviewing and recommending to the Board the compensation for the Board of Directors of the Corporation. In addition, the Human Resources and Compensation Committee reviews and approves changes to the Corporation’s compensation policies in respect of matters such as incentive-compensation (bonus) plans, pension plans and employee benefit plans and the structure and granting of stock options or other equity-based plans. Further, the Human Resources and Compensation Committee approves the appointment of senior management recruited from outside the Corporation, as well as the promotion of senior management within the Corporation.

 

The following graph compares the cumulative five year return of the Class B Non-Voting Shares (assuming $100 invested on August 31, 2004 and reinvestment of dividends) with the Standard & Poor’s/TSX Composite Index.

 

Relative Total Return Performance
Shaw Communications Inc. vs. S&P/TSX Composite
August 31, 2004 to August 31, 2009

 

 

 

Note:

 

 

Cash Compensation

 

Directors of the Corporation are currently remunerated for their services as directors according to the fee schedule set forth in the table below.

 

 

 

Notes:

 

 

The fees paid to directors of the Corporation are payable in Canadian dollars for directors resident in Canada and in U.S. dollars for all other directors. The Corporation also reimburses directors for out-of-pocket expenses incurred in attending Board and committee meetings.