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 2010

Commission File Number: 001-14684

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-

     The information contained in this report on Form 6-K and any exhibits hereto shall be deemed filed with the Securities and Exchange Commission (“SEC”) solely for purpose of being and hereby are incorporated by reference into and as part of the Registration Statement on Form F-10 (File No. 333-170416) filed by the registrant under the Securities Act of 1933, as amended.

 

 

SIGNATURE

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

	Shaw Communications Inc.
Date:  December 9, 2010	By:	/s/   Steve Wilson
		Name:  Steve Wilson
		Title:    Sr. V.P., Chief Financial Officer

 

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:

 

Date:		Thursday, January 13, 2011
Time:		11:00 a.m. (Mountain time)
Location:		Shaw – Barlow Trail Building 2400–32nd Avenue NE Calgary, Alberta

 

for the following purposes:

 

 

By Order of the Board of Directors,

 

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

 

Calgary, Alberta

November 23, 2010

 

Holders of Class A Shares of record at the close of business on November 29, 2010 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 13, 2011, 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 23, 2010. All sums are expressed in Canadian dollars.

 

 

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 16. 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 2010 and 2009.

 

 

 

Notes:

 

 

 

Meetings Held and Attendance of Directors

 

The following table summarizes the meetings of the Board and its committees (Executive, Audit, Corporate Governance and Nominating, and Human Resources and Compensation) held during the fiscal year ended August 31, 2010, and the attendance of individual directors of the Corporation at such meetings.

 

 

 

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 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 fulfill 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, regulatory reporting requirements and Sarbanes-Oxley Act related services), audit-related, tax and other services in the fiscal years ended August 31, 2010 and 2009 were as follows:

 

 

The audit related fees in fiscal 2010 were in respect of tax due diligence services related to the acquisition of the broadcasting business of Canwest Global Communications Corp. (“Canwest”). The tax fees paid in fiscal 2010 include tax advisory services in respect of the aforementioned acquisition and linear property tax compliance. The tax fees paid in fiscal 2009 were related to linear property tax compliance. The other fees paid in fiscal 2010 were in respect of training provided to certain employees for the upcoming transition to International Financial Reporting Standards (IFRS) in fiscal 2012.

 

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 29, 2010, 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 23, 2010, there were 22,520,064 Class A Shares and 411,562,592 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 17,782,600 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 5, 2010, 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, 2010.

 

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 Executive Vice President, 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, and service operating income before amortization¹.

 

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 generally standard for all employees.

 

All senior executives are members of the Corporation’s group benefits plan, which is also generally 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 2010 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.

 

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 $1.5 billion in FCF and returned a significant portion of this capital to shareholders. This was done primarily in the form of dividend payments and share repurchases. Total dividends paid to shareholders over the past three years exceeded $1.0 billion and share repurchases approximated $250 million.

 

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 2010 the Board set a FCF goal of at least $500 million, which was achieved. Excluding the impact of cash taxes and the one-time CRTC Part II fee recovery during the year, fiscal 2010 FCF growth was $90 million or 17% compared to the previous year’s FCF, excluding cash taxes. This growth was achieved in conjunction with continued investment in the network and infrastructure with capital spending in the core cable and satellite businesses increasing almost $70 million to over $840 million.

 

The Corporation has provided preliminary FCF guidance for fiscal 2011 and the Board 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 2011 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, excluding the impact of a one-time CRTC Part II fee recovery in fiscal 2010, the Corporation has been able to grow service operating income before amortization by $444 million or over 35%. 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 2010. In fiscal 2010, the Corporation achieved consolidated service operating income before amortization of $1.76 billion, which, excluding the impact of a one-time CRTC Part II fee recovery, represents an increase of $143 million or over 9% compared to the previous year. The Corporation’s service operating income before amortization growth of over 14%, or approximately 8% organic growth, was in line with 2010 guidance.

 

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 2010, the Corporation’s consolidated operating margin, adjusted to exclude the one time CRTC Part II fee recovery, was 45%, and was consistent with 2009 and 2008, reflecting continued solid performance in the highly competitive landscape. The Corporation continues to be one of the most profitable companies in its industry.

 

 

The Corporation was 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. Basic subscriber growth of over 2,000 was achieved in fiscal 2010.

 

Digital television customer growth of almost 330,000 Digital customers was in line with the expectations of the executive team. At the end of fiscal 2010 there were over 1.6 million Digital customers, representing over 70% of Basic customers taking the Digital television product.

 

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

 

 

     ¹ See definitions under Key Performance Drivers in Management’s Discussion and Analysis included in the 2010 Annual Report.

two years, the Corporation increased the penetration rate of the service by 8% and now the equivalent of 78% 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 almost 1,100,000 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 95% of the customer base. Record customer growth was achieved in fiscal 2010, adding over 230,000 Digital Phone lines with the equivalent of 50% of Basic subscribers who have the product available 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 2010 the Corporation commenced trials of a 1 Gigabit Internet service utilizing Fibre-to-the-Premises (FTTP) and will be able to support new cutting-edge Internet applications that will require faster download speeds. The Corporation believes this investment in infrastructure provides further differentiation from the competition. During 2009 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. This service offering was expanded during 2010 and is now available in over 85% of the Corporation’s footprint. Currently, telecommunication companies are unable to match the Corporation’s broadband speeds and this provides a competitive advantage now and for the foreseeable 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. The rental program helped drive sales and added over 700,000 customers in 2 years. The Corporation now has over 70% 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 2010. 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 2010 the executive team continued the additional focus on the small and home business market with a push on all products, including television, Internet and telephony. Of the total customer growth during fiscal 2010, approximately 10% was in the small and home office market and the Corporation believes that growth opportunities within this segment continue to be 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, with $1.9 billion raised in fiscal 2010. These proceeds were secured at attractive long-term rates during periods of volatile credit market conditions. These new funds enabled the Corporation to complete a significant refinancing of more expensive US$ 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. During 2008 the Corporation participated in the Canadian Advanced Wireless Spectrum (“AWS”) auction and was successful in acquiring 20 megahertz of spectrum across most of its cable footprint for a cost of approximately $191 million. In early September 2009, the Company received its ownership compliance decision from Industry Canada and was granted its AWS licenses. During fiscal 2010 the Company announced its intention to move forward on the rollout of its wireless strategy and commenced activities on its wireless infrastructure build with plans for an initial launch in late calendar 2011. During 2010 the Corporation invested approximately $100 million in the wireless infrastructure build.

 

Also during 2010 the Corporation announced that it had entered into agreements to acquire 100% of the broadcasting business of Canwest including all of CW Media, the company that owns the specialty channels acquired from Alliance Atlantis Communications Inc. in 2007. The total consideration, including assumed debt, was approximately $2.0 billion. Certain portions of the acquisition were completed in fiscal 2010 and the remaining portions were completed in October 2010 after receipt of CRTC approval. The Corporation’s executive team understands that technology is driving change in

the Canadian broadcasting system, transforming content distribution and viewership. This strategic acquisition allows the Corporation to unite broadcasting services and content with its advanced distribution platforms to offer customers the choices they want in this rapidly evolving landscape.

 

Another successful acquisition in 2010 included the purchase of the privately held Mountain Cablevision Limited. (“Mountain Cable”). This transaction closed in late October 2009. Mountain Cable is based in Hamilton, Ontario and was 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 its core business.

 

 

During the year the Corporation continued to strengthen and increase the alignment and focus of the senior team. This also included steps to further succession planning. The Corporation’s Board announced the orderly evolution of executive management responsibilities with the appointment of Bradley S. Shaw into the Chief Executive Officer role effective November 17, 2010. Mr. Shaw has been an employee of the Corporation since 1987, moving through a succession of increasingly responsible positions, most recently as Executive Vice President. This transfer of responsibilities will serve the Corporation’s shareholders and stakeholders for many years to come.

 

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 2010. Overall voluntary turnover of all employees continued to decline by a further 50% compared to the prior year.

 

 

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 2010, and over a longer period, have been exceptional. Over the past five years, revenues and service operating income before amortization, excluding the one-time CRTC Part II fee recovery in 2010, have increased by over $1.5 billion and $700 million, respectively. This represents revenue growth of 68% (11% compounded annual growth rate (“CAGR”)) and service operating income before amortization growth of 71% (11% CAGR). Over the same time period, FCF has totaled almost $2.1 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 $4.0 billion since the beginning of 2006. During this same time period, total cash compensation paid to the Named Executive Officers has grown by $15 million, or approximately 80%. 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 of the Corporation’s senior executives and compensation practices of the Corporation compared 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. This group of comparable companies was also used for the review in 2009.

 

Besides benchmarking the Corporation’s senior management compensation to the overall comparator group, the external consultant examines the Corporation’s competitive positioning versus 4 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 Aon 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 Chief Executive Officer 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 following 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.

 

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

 

 

 

Notes:

 

 

 

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 or cessation of employment or service arrangement (other than disability or 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, 2010.

 

 

 

Notes:

 

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, 2010.

 

 

 

Notes:

 

 

During fiscal 2010 the Corporation maintained both a defined contribution pension plan and a defined benefit pension plan, as described below, in which the Named Executive Officers participate.

 

Defined Contribution Plan

 

Under this plan, which is generally made available to all eligible employees, 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, 2010 and the estimated annual retirement benefits payable to Named Executive Officers for service up to August 31, 2010 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, 2010.

 

 

 

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, 2010 was $29.3 million. As at August 31, 2010 the expected aggregate benefit payments for the fiscal year ended August 31, 2011, as actuarially determined, are approximately $1.4 million. The accrued benefit obligation of the SERP at August 31, 2010 was $274.6 million, of which $134.3 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, 2010. 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 two times in any 12 month period.

 

As of August 31, 2010, approximately 66% of eligible employees of the Corporation purchased Class B Non-Voting Shares under the ESPP. At August 31, 2010, an aggregate of approximately 2,084,535 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 0.42% of the Income Base for fiscal 2010.

 

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

 

The Human Resources and Compensation Committee is comprised of three independent directors, Willard H. Yuill (Chair), 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, 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, 2005 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, 2005 to August 31, 2010

 

 

 

All historical pricing information is taken from data supplied by Bloomberg.

 

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.

Director Compensation Table

 

The following table sets out the compensation paid to each of the Corporation’s directors for the financial year ended August 31, 2010. Fees Earned includes the cash compensation that was paid or would have been paid to each director of the Corporation for meetings held during the fiscal year ended August 31, 2010 if such director had not chosen to participate in the Corporation’s DDSU Plan. See also “Statement of Executive Compensation — Compensation of Directors — DDSU Plan”.

 

 

 

Notes:

 

 

Outstanding Option-Based Awards

 

The following table sets forth details with respect to stock options held by the directors of the Corporation, other than those that are Named Executive Officers, as of August 31, 2010.

 

 

 

Notes:

 

 

Incentive Plan Awards — Value Vested or Earned During the Year

 

The following table sets forth details on the vesting of awards under the Corporation’s incentive plans during the fiscal year ended August 31, 2010.

 

 

 

Notes:

 

 

DDSU Plan

 

The Corporation has adopted a Directors’ Deferred Share Unit Plan (“DDSU Plan”) for directors. Effective January 1, 2004, directors may elect under the DDSU Plan to receive 25%, 50%, 75% or 100% of their annual cash compensation in the form of deferred share units (“DSUs”), provided that any director who has not met the applicable share ownership guideline is generally required to elect to receive at least 25% of his or her annual compensation in DSUs. The number of DSUs to be credited to a director’s account on each payment date is equal to the number of Class B Non-Voting Shares that could have been purchased on the payment date with the amount of compensation allocated to the DDSU Plan. On each dividend payment date for the Class B Non-Voting Shares, an additional number of DSUs is credited to a director’s DSU account, equivalent to the number of Class B Non-Voting Shares that could have been acquired on that

date by notional dividend reinvestment. DSUs will be paid out in cash when the director ceases to hold office as a director or on a date elected by the director during the year following cessation of directorship. The payout will be calculated by multiplying the number of DSUs by the then current market value of a Class B Non-Voting Share.

 

Share Ownership Guideline

 

The Board supports ownership of the Corporation’s shares by its directors and has established a related share ownership guideline. The guideline level of ownership by each director is such number of Class A Shares, Class B Non-Voting Shares and DSUs having an aggregate market value of at least $250,000. As previously stated, any director who has not met the share ownership guideline is generally required to elect to receive at least 25% of his or her annual compensation in DSUs. Currently, the directors set out for nomination herein as a group own or control a 14% economic interest in all of the Corporation’s outstanding share capital, divided as follows: 12% by the Shaw family group, as controlling shareholders, and 2% by those directors who are not members of the Shaw family group. For these non-controlling directors, this represents an average ownership position in excess of $11 million, with a median value of $750,000. This compares favourably to the median dollar value of equity held by the “typical” Canadian Spencer Stuart Board Index (“CSSBI”) director, being approximately $325,000 as at December 31, 2008, according to the 14th annual CSSBI published by the global executive recruiting firm Spencer Stuart which studies director compensation, governance practices and trends for 100 of the largest publicly traded Canadian companies (annual revenues exceeding $1 billion).

 

For information concerning the shares, DSUs and options held by each director nominated for election at the Meeting, see the table under the heading “Business of the Meeting — Election of Directors.”

 

As of August 31, 2010, the Corporation had one compensation plan under which equity securities of the Corporation are authorized for issuance, as summarized in the table below. Under such plan, options to acquire an aggregate of 23,993,150 Class B Non-Voting Shares were outstanding as of August 31, 2010, representing approximately 5.8% of the Class B Non-Voting Shares issued and outstanding as of such date.

 

Equity Compensation Plan Information

 

 

 

Notes:

 

 

Certain executive officers and employees of the Corporation are currently indebted to the Corporation, as set forth in the following tables. Except for routine indebtedness, no other director or executive officer of the Corporation is or has been indebted to the Corporation. In compliance with the Sarbanes-Oxley Act of 2002, the Corporation has not granted loans to any director or officer of the Corporation since July 29, 2002.

 

Aggregate Indebtedness

 

The following table sets forth the aggregate indebtedness outstanding as at October 31, 2010 of all directors, executive officers and employees, current or former, of the Corporation or any of its subsidiaries, none of which was in connection with a purchase of securities of the Corporation.

 

 

Table of Indebtedness of Directors and Executive Officers

 

 

 

Notes:

 

 

Other than as disclosed herein, management of the Corporation is unaware of any material interest of any director or executive officer of the Corporation, of any management nominee for election as a director of the Corporation or of any person who beneficially owns (directly or indirectly) or exercises control or direction over shares carrying more than 10% of the voting rights attached to all voting shares of the Corporation, or any associate or affiliate of any such person, in any

transaction since the beginning of the last completed financial year of the Corporation or in any proposed transaction that has materially affected or would materially affect the Corporation or any of its subsidiaries.

 

On November 16, 2009, the Corporation announced that it received the approval of the TSX to renew its normal course issuer bid. Pursuant to such normal course issuer bid, the Corporation was authorized to acquire up to an additional 35,000,000 Class B Non-Voting Shares, being approximately 10% of the then public float of Class B Non-Voting Shares, until the expiry of the bid on November 18, 2010. Under such normal course issuer bid, the Corporation purchased 6,100,000 Class B Non-Voting Shares and immediately cancelled the same in fiscal 2010.

 

The Corporation believes that purchases of outstanding Class B Non-Voting Shares are in the best interests of the Corporation and its shareholders, and that such purchases constitute a desirable use of the Corporation’s free cash flow that is expected to enhance the value of the remaining Class B Non-Voting Shares.

 

Additional information concerning the Corporation, including the Corporation’s Business Conduct Standards, Annual Information Form dated November 5, 2010, consolidated interim and annual financial statements and management’s discussion and analysis thereon, is available through the Internet on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) which may be accessed at www.sedar.com. Copies of such information may also be obtained on request without charge from the Corporate Secretary of the Corporation, Suite 900, 630 — 3rd Avenue S.W., Calgary, Alberta, Canada, T2P 4L4, Telephone (403) 750-4500.

 

Financial information of the Corporation is provided in the Corporation’s consolidated corporate financial statements, and management’s discussion and analysis thereon, for the Corporation’s fiscal year ended August 31, 2010. Copies of such financial statements may be obtained in the manner set forth above.

 

Copies of any documents referred to in the proxy circular as being available on the Corporation’s website, www.shaw.ca, may also be obtained in the manner set forth above.

 

The Board and management of the Corporation recognize that effective corporate governance is central to the prudent direction and operation of the Corporation in a manner that ultimately enhances shareholder value. The following discussion outlines the Corporation’s system of corporate governance, including with respect to various matters addressed by National Instrument 58-101 — Disclosure of Corporate Governance Practices and National Policy 58-201 — Corporate Governance Guidelines.

 

The corporate governance practices and policies of the Corporation have been developed under the general stewardship of the Corporate Governance and Nominating Committee of the Board. The Corporate Governance and Nominating Committee believes that the corporate governance practices of the Corporation are appropriate for a company such as the Corporation. As a result of evolving laws, policies and practices, including the Sarbanes-Oxley Act of 2002 and the corporate governance rules adopted by the New York Stock Exchange (the “NYSE”), the Corporate Governance and Nominating Committee continuously reviews the practices and policies of the Corporation to ensure that the Corporation complies with all applicable requirements. In this regard, the Corporate Governance and Nominating Committee has developed and implemented, and continues to develop, implement and refine, formal policies and procedures that reflect the Corporation’s commitment to corporate governance.

 

The Board has responsibility for supervising and overseeing the management of the business of the Corporation. As part of its stewardship of the Corporation, and in addition to the obligations of the Board mandated by law, the Board has specific responsibility for strategic planning; the selection and monitoring of management, including the Chief Executive Officer; management succession planning; the identification and management of the principal risks associated with the Corporation’s business; and the implementation and assessment of internal controls, disclosure controls and other systems and procedures consistent with applicable laws and good corporate practice. These duties and obligations, among others, are set forth in a written Board mandate that has been adopted and is reviewed on an on-going basis by the Board. A copy of the Board mandate is appended to this proxy circular as Exhibit A hereto.

 

Certain of the powers, duties and responsibilities of the Board have been delegated to committees of the Board, as described under the heading “Statement of Corporate Governance — Committees of the Board”.

 

With respect to strategic planning, the Board establishes the overall strategic objectives for the Corporation, annually reviews and approves management’s strategic plans and, on an on-going basis, reviews emerging trends, opportunities, risks and issues with management. The Board receives updates from management on strategic developments at least eight times per year (at the end of each fiscal quarter and at mid-quarter) and reviews and adjusts consolidated and divisional budgets, plans and objectives of the Corporation as may be required. The Board also reviews and approves strategic transactions that are not considered to be in the ordinary course of business, as well as other items of significance, including significant acquisitions, dispositions and financings.

 

The Board is currently composed of 16 directors, 12 of whom have been determined by the Board to be independent directors. For further information in this regard, see the table under the heading “Statement of Corporate Governance — Corporate Governance Disclosure and Compliance with Corporate Governance Guidelines”.

 

Subject to applicable law, the Board may delegate its powers, duties and responsibilities to committees of the Board. In this regard, the Board has established four standing committees: Executive, Audit, Corporate Governance and Nominating, and Human Resources and Compensation. The membership of each committee as at the date of this document is set forth below. For information about the attendance of members at meetings of the committees, see “Business of the Meeting — Election of Directors — Meetings Held and Attendance of Directors”.