Corporate Governance, Accountability and Transparency

The Ottawa International Airport Authority's mission is to be a leader in providing quality, safe, secure, sustainable and affordable transportation services to the airport's customers and communities and be a driver of economic growth within Canada's Capital Region.

THE BOARD OF DIRECTORS

The adoption of the National Airports Policy in 1994 resulted in the creation of local airport authorities across the country. These authorities were created with community-appointed Boards of Directors which were tasked with overseeing the management of their local facility.

The Ottawa International Airport Authority's Board of Directors follows these guidelines, which are included in the Authority's by-laws:

• includes professional representation nominated by all three levels of government as well as community and business organizations;
• Directors shall not be elected officials or government employees;
• each Director has a fiduciary duty to the Airport Authority;
• meets 8 to 10 times during the year;
• views its principal responsibility as overseeing the conduct of the business and supervising management to ensure that long-term goals and strategies are met; and
• must meet Conflict of Interest rules; adhere to the Code of Business Conduct, and the Public Accountability Principles.

Each Director has filed a conflict of interest declaration for 2014, as required by the Authority's by-laws. Furthermore, all Directors are in compliance with the conflict of interest and code of conduct guidelines noted above.

REVISED BY-LAWS

The Authority established by-laws at incorporation in 1995, which were amended in 2003, in 2010 and again in 2014 following its continuance under the Canada Not-for-profit Corporations Act. Under the current by-laws the selecting bodies that provide nominees to the 14-member Board are as follows:

A Director's term of office is a maximum of three years. Each Director may be re-elected for additional terms, but may not serve as a Director for more than nine years.

The qualifications required of a Director are included in the by-laws. Collectively, the Directors shall have experience in the fields of law, engineering, accounting and management, and air carrier management. In addition, the by-laws include restrictions to eliminate possible conflicts of interest arising from relationships with selecting bodies, thereby ensuring the independence of Directors and reinforcing their fiduciary responsibilities to the Authority. The Governance Committee has the power to ensure that the selecting bodies provide candidates for nomination to the Board having the skills and expertise necessary for the Board as a whole to carry out its duties.

The following represents the composition of the Board of Directors as at December 31, 2014:

(1) Member of Audit Committee
(2) Member of Governance Committee
(3) Member of Human Resources and Compensation Committee
(4) Member of Major Infrastructure and Environment Committee

DIRECTORS' COMPENSATION IN 2014

ATTENDANCE AT BOARD AND COMMITTEE MEETINGS

Note 1- new board member effective April 30, 2014
Note 2- term ended on April 30, 2014

COMMITTEES OF THE BOARD

Following is a list of Committees of the Board and the general mandate of each:

GOVERNANCE COMMITTEE

• oversight and initiation of procedures to deliver best practices in the area of corporate governance;
• review the Annual Report as prepared by the President;
• establish the nomination procedures, the skill sets required for nominees and the length of term of selected nominees;
• evaluate and recommend nominees to the Board;
• oversee the application of Conflict of Interest rules to Board membersand nominees;
• develop a process for nomination of Chair of the Board and oversee such process;
• review the annual Board evaluation process and any associated recommendations for change;
• review recommendations of the Chair of the Board regarding composition of Committees of the Board and appointment of Committee Chairs;
• review changes to Charters of all Board Committees and recommend changes for Board approval;
• review Director compensation and recommend any changes for Board approval; and
• review the Authority's structures and procedures to ensure the Board is able to function independent from management.

MAJOR INFRASTRUCTURE AND ENVIRONMENT COMMITTEE

• oversee the Authority's major infrastructure projects; and
• oversee best practices in the area of environmental stewardship.

AUDIT COMMITTEE

• assist the Board in fulfilling its oversight responsibilities with regard to financial risk management, financial reporting and audit functions;
• review selection, appointment, compensation, retention, and termination and oversee the work of the Authority's external auditor. Recommend to the Members the appointment of the external auditor for approval. Monitor audit engagement partner rotation requirements. The external auditor reports to the Audit Committee;
• annually review with the external auditors and management matters relating to conduct of the annual audit and any recommendations of the auditors regarding internal controls;
• annually review proposed fiscal operating and capital budgets for recommendation to and approval by the Board;
• review the annual audited financial statements of the Authority for recommendation to and approval by the Board;
• review and approve quarterly financial statements of the Authority;
• review the appointment and performance of the chief internal auditor and all matters relating to the work plan of the internal audit function,
• including significant reports prepared by internal audit together with management's response and follow-up to these reports;
• oversee the Authority's processes for enterprise risk management; and review matters having a material financial impact on the Authority, including financing requirements and options, and recommendation to the Board.

HUMAN RESOURCES AND COMPENSATION COMMITTEE

• review succession plans for senior management;
• review the competitiveness and appropriateness of the Authority's policies regarding management compensation, including the incentive plan, pension plans, benefits, and all other aspects of compensation;
• recommend to the Board the remuneration plan for excluded employees as well as changes to collective agreements for unionized employees; and
• review the results of the tri-annual employee satisfaction survey.

Other ad-hoc committees may be formed from time to time that include members of the Board of Directors.

ACCOUNTABILITY

The Authority's policy is to be accountable to the community and to be transparent in relations with its business and customers. The Authority's mandate, as set out in its Articles of Continuance, establishes a standard against which its performance can be measured.

The mandate of the Authority is:

• to manage, operate and develop the Ottawa Macdonald-Cartier International Airport, the premises of which will be leased to the Authority by Transport Canada, and any other airport in the National Capital Region for which the Authority becomes responsible, in a safe, secure, efficient, cost effective and financially viable manner with reasonable airport user charges and equitable access to all carriers;
• to undertake and promote the development of airport lands, for which it is responsible, for uses that are compatible with air transportation activities; and
• to expand transportation facilities and generate economic activity in ways which are compatible with air transportation activities.

In executing its objects, the Authority shall confer regularly with governments and community entities on matters affecting the operation and development of the airports for which it is responsible and shall engage only in those activities that are consistent with its objects.

The Authority accounts for its actions to the community in a number of ways:

• by publishing an Annual Report;
• by hosting an Annual Public Meeting;
• by hosting an annual meeting with selecting bodies;
• by establishing and/or reporting to the following consultation committees:
• Airport Noise Committee
• Airline Consultative Committee
• Airport Operators Committee
• Community Consultative Committee
• Airside Safety Committee;
• through meetings and/or consultations with local city officials;
• through extensive public consultations on the periodic renewal of the Airport Master Plan, which was updated in 1998 and again in early 2008, and the Land Use Plan, which was last updated in 2008, and approved by the Minister of Transport in 2009; and
• by maintaining a corporate website at www.yow.ca.

In addition, a performance review must be conducted at least once every five years, in keeping with the Authority's Ground Lease with Transport Canada. This performance review was last completed in April 2012.

TRANSPARENCY

Procurement and contracting

The Authority is transparent in its procurement practices. The Public Accountability Principles for Canadian Airport Authorities and the Authority's Ground Lease require that all contracts for the procurement of goods, services, and construction services with a value in excess of $109,000 ($75,000 in 1994 dollars adjusted for CPI), must be awarded through a competitive public tendering process, or be disclosed in the Authority's Annual Report together with the reasons why they were not awarded through a public competitive process.

Contracts in excess of $109,000 that were not awarded on the basis of a public competitive process during 2014 can be seen in the chart below.

Executive Management Salary Ranges

The base salary range for the President of the Authority in 2014 was between $250,000 and $300,000. The base salary range for each of the Vice Presidents in 2014 was between $130,000 and $215,000.

In addition, under the management incentive plan for non-represented loyees, the President and the Vice Presidents receive appropriate payments for performance based on achieving targets/objectives that are consistent with the Authority's Strategic Plan.

Fees and Charges

The Authority provides 60 days advance notice in local news media for all changes in user charges (excluding rent), together with an explanation for the noted increase. This includes parking rates, aeronautical fees charged to air carriers, and airport improvement fees (AIF).

While the Authority's goal is to keep the aeronautical fees it charges air carriers constant, it has been necessary to adjust these fees on a few occasions. The Authority's process for adjusting aeronautical fees and charges includes:

• prior to any change, consulting with air carriers through the Airline Consultative Committee, with necessary explanations and calculations showing how these fees were determined, at least 90 days in advance of the effective date of the change; and
• providing 60 days notice of the increase in fees to the airlines.

The Authority publicizes the reason for imposing an AIF, or for making changes to the fee. It last did this when it announced on December 14, 2013 that it would be increasing its fee to $23 effective on March 1, 2014. The purpose of the existing AIF is to pay for the construction of and the debt associated with the Airport Authority's major infrastructure construction programs.

The process for adjusting AIFs is similar to the process for adjusting fees and charges, including public notice in the local news media.

PUBLIC ACCESS TO DOCUMENTS

In accordance with Public Accountability Principles for Canadian Airport Authorities, the Ottawa Airport Authority makes available by appointment the following documents for examination, at no charge, during its usual business hours:

• the current Airport Master Plan;
• a summary of the Authority's current Business and Strategic Plans;
• the most recent and the previous annual financial statements of the Authority, with the accompanying auditors reports (included in each year's Annual Report);
• its five most recent Annual Reports, each of which includes a general summary of the Authority's affairs during the previous fiscal year;
• summaries of the Authority's five most recent Business Plans;
• the Authority's Articles of Incorporation (its letters patent) and Bylaws, including any amendments;
• all signed airport transfer agreements; and
• a summary of the Authority's Five-year Performance Review document.

Contacting the Authority

There are a number of methods available to the public to contact and provide input to the Authority:

• submit questions, comments or concerns through the Authority's website www.yow.ca;
• complete a customer comment card which is available at both of the airport's information kiosks;
• call the general inquiries lines at 613-248-2125 or 613-248-2141;
• call the noise information line at 613-248-2023;
• call or write to individual Airport Authority departments at the following address:
  Suite 2500, 1000 Airport Parkway Private,
  Ottawa, ON Canada K1V 9B4;
• fax questions, comments or concerns to 613-248-2068
• twitter.com/flyyow; and
• facebook.com/flyyow.

In addition, the Authority conducts quarterly customer satisfaction surveys in the Passenger Terminal Building.

The Authority's policy is to respond to all questions, comments and concerns as expeditiously as possible.