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GOVERNANCE PRACTICE

BOARD OF DIRECTORS

The Board of Directors is comprised of 10 directors.  The Board of Directors considers six of them to be “independent” to the Company.  Messrs. Alain Bouchard, Richard Fortin, Réal Plourde and Jacques D’Amours are not independent directors, each being a senior officer of the Company.  Mr. Jean Élie was nominated by Metro Inc., a significant shareholder, but is not otherwise related to the Company or Metro.  The Board does consider Mr. Élie to be an independent director given that the Company does not have significant business dealings with Metro and that Metro does not control the Company.  The five other directors, Messrs. Desrosiers, Longpré, Sauriol and Turmel and Mrs. Mélanie Kau, are independent directors given that they do not have any business interests or other relationships with the Company or its principal shareholders.

The Board of Directors holds regularly scheduled meetings of the Board at which non-independent directors and members of management are not in attendance. 

The Chairman of the Board is not an independent director.  Therefore, the Board of Directors has established procedures enabling it to function independently of management, including the appointment of an unrelated director to act as Lead Director.  The Lead Director’s responsibilities include the following:

• To ensure that the responsibilities of the Board of Directors are well understood by both the Board of Directors itself and management, and that the boundaries between the responsibilities of each are clearly understood and observed.
• Ensure that the resources available to the Board of Directors (especially up-to-date and relevant information) are adequate and enable it to perform its work.
• Adopt, together with the Chairman of the Board of Directors, procedures and meeting schedules so that the Board of Directors and its committees can effectively and efficiently accomplish their work.
• Ensure that duties assigned to the competent committees are effectively carried out and that the results are communicated to the Board of Directors.

MANDATE OF THE BOARD OF DIRECTORS

The Board of Directors adopted a Board of Directors’ Charter in order to identify the specific responsibilities of the Board of Directors which is as follows.

I. Mandate
The Board of Directors oversees the Company's management of its commercial activities and internal affairs with a view to increasing the long-term return on shareholder equity.  The Board makes major policy decisions and reviews the performance and efficiency of the management team entrusted with the responsibility for administering the Company's day-to-day business.

In accordance with the Companies Act (Quebec) and its By-Laws, the Board of Directors may delegate certain tasks and responsibilities to board committees.  However, such delegation does not remove the board’s general management responsibilities of the Company.

II.Responsibilities
In addition to making decisions that fall within its jurisdiction, in accordance with the law, the main responsibilities of the Board of
Directors are as follows:

A. Strategic planning:
1. Revising and approving the Company’s strategic plan and priorities while taking into account opportunities and risks, the Company’s financial and tax strategy and its business plan.
2. Revising and discussing the Company’s strategic plan and priorities during an annual meeting with senior management.
3. Evaluating the Company’s performance with respect to the strategic plan and business plan and, in particular, assessing the Company’s operating results based on the established objectives.

B. Human resources:
4. Ensuring, wherever possible, that the Chief Executive Officer and other members of senior management are honest and that they create a culture of integrity throughout the Company.
5. Determining the size and structure of the Board of Directors and its committees based on the expertise, skills and personal qualities required of the members of the Board in order to ensure adequate decision making.
6. Approving and submitting the list of candidates for the position of director, to be voted on by shareholders, as proposed by the Human Resources and Corporate Governance Committee.
7. Ensuring effective planning regarding the succession of the Company’s senior managers, including their appointment and compensation.
8. Ensuring that an annual performance evaluation is carried out for the Chief Executive Officer and other members of senior management, while taking into account the Board’s expectations and the objectives set by the Human Resources and Corporate Governance Committee.

C.Finance and internal control procedures:
9. Revising the main risks associated with the Company’s activities, as identified by management, and ensuring that they are managed effectively. The main risks are revised during the quarterly meetings of the Audit Committee and the Board of Directors.
10. Ensuring the integrity of the quality of the Company’s internal control and management systems.
11. Adopting a communications policy that involves the full disclosure of all important matters related to the Company’s activities, in particular those dealing with how the Company interacts with analysts and the public. The communications policy must also outline measures to take to avoid the selective disclosure of information.

D. Governance:
12. Developing the Company’s governance policies and practices and revising governance structures and procedures with respect to the governance standards in effect and in accordance with the best practices considered applicable in this instance.
13. Approving the appointment of the Lead Director based on the recommendation of the Human Resources and Corporate Governance Committee.
14. Developing and approving the job descriptions for the Chairman of the Board and committee presidents as well as for the Lead Director.
15. Adopting a written code of conduct and ethics that applies to the Company’s officers and employees and revising and modifying it where necessary. The Board of Directors is responsible for ensuring that the code is respected. The Board, or a Board committee, may grant dispensations to directors or senior management with regard to the code.
16. Implementing, in co-operation with the Lead Director, a procedure to follow for evaluating the effectiveness and contribution of the Board and its members as well as the Board committees and their members.
17. Assessing and approving the contents of important disclosure documents, namely the Annual Information Form, the Management Proxy Circular, as well as any document that the Company must disclose or file with the appropriate regulatory authorities.
18. Ensuring that the appropriate measures are implemented to promote communication with clients, employees, shareholders, investors and the public.

POSITION DESCRIPTIONS

The Board of Directors has developed Charters for the Audit and Human Resources and Corporate Governance committees of the Board, as well as respective position descriptions for the Chair of the Board, for the Lead Director, for the Committee chairs and for the President and Chief Executive Officer to compliment the Board of Directors’ Charter.

ORIENTATION AND CONTINUING EDUCATION

The Company has developed and updates a director’s guide for new members of the Board of Directors as well as for existing members.  New members of the Board of Directors receive training in the form of presentations and up-to-date documentation containing basic information on the Company and its industry.  Management make presentations on various aspects of the Company’s business to the Board of Directors on a regular basis.  The Board also has put in place a pre-determined budget for continuing education which process is overseen by the Lead Director.

ETHICAL BUSINESS CONDUCT

The Company has in place a written code of ethics and conduct for its officers and employees (the “ Code “). The Human Resources and Corporate Governance Committee is responsible for the Code implementation within the Company.  The Code is distributed and signed by each employee of the Company upon hire.  The Code pertains namely to conflict of interest, the use of the Company’s assets, fair treatment of the clients, providers, competitors and other Company employees.  In addition, the Code includes a communication policy whose objective is to ensure that disclosure to the investing public regarding the Company is made in a timely manner by the Company authorized representatives, in keeping with the facts, accurately and widely, in accordance with the applicable statutory and regulatory requirements.  Pursuant to the Code, all employees of the Company shall report any activity which seems not to be in line with the Code or laws and regulations.

The Company has adopted a code of ethics and conduct for its board members which indicates namely that if a director who finds themself in a conflict of interest during any Board of Directors or Committee meeting must immediately declare their interest and refrain from participating in any discussion about the conflicting issue or from voting thereon.

NOMINATION OF DIRECTORS

The Board of Directors has delegated to the Human Resources and Corporate Governance Committee, the task of evaluating and recommending to the Board of Directors, together with the Chairman of the Board of Directors, new nominees for the position of Director.  The Committee determines the skills, abilities and personal attributes required of new directors with a view to creating value for shareholders.

The Human Resources and Corporate Governance Committee is exclusively comprised of independent directors.  The members are Messrs. Jean Élie, Roger Longpré and Jean-Pierre Sauriol.

This Committee, together with the Lead Director and the Chairman of the Board of Directors, is responsible for the review and proposing policies and practices for the compensation of directors to ensure that compensation realistically reflects the responsibilities and risks involved in carrying out their mandate as directors, as well as means for encouraging directors to hold shares in the Company.  The Committee takes into account, in particular, the work load and comparative figures on the compensation of board members of a group of comparable Canadian companies with North American operations.  During the fiscal year, the Committee retained the services of Groupe Conseil Aon Inc. to review Board compensation and to recommend a Board compensation policy, which was approved by the Board.

COMPENSATION

The Human Resources and Corporate Governance Committee is established by the Board of Directors to assist the Board in fulfilling its responsibilities relating to matters of human resources and corporate governance, namely compensation, establishing succession plan and development of senior management.  The Committee has the responsibility for evaluating and making recommendations to the Board regarding the compensation of the Company’s executives and the equity-based and incentive compensation plans, policies and programs of the Company.

The Committee reviews and approves corporate goals and objectives relevant to the total compensation package of the President and Chief Executive Officer, recommends a performance evaluation process for the President and Chief Executive Officer, evaluates the performance of the President and Chief Executive Officer in light of these goals and objectives and using this process, makes recommendations to the Board with respect to the President and Chief Executive Officer’s compensation level based on this evaluation. In addition, the Committee consults with the President and Chief Executive Officer, to evaluate the Company’s executives, other than the President and Chief Executive Officer, and makes recommendations to the Board with respect to the total compensation package for the Company’s executives, other than the President and Chief Executive Officer, and directors’ compensation. The Committee retained the services of specialized firm for the compensation of the independents directors, executives and officers of the Company.

OTHER BOARD COMMITTEES

Audit Committee
Information relating to the Audit Committee of the Company may be found under section “Audit Committee Disclosure” of the 2006 Annual Information Form.

Executive Committee
The Executive Committee is comprised of Alain Bouchard, Richard Fortin, Réal Plourde and Jacques D’Amours, all members of Management.

The Executive Committee has the authority to exercise, from time to time, all the powers of the Board of Directors, except the powers that may not be delegated to a committee pursuant to the laws governing the Company and subject to any restrictions imposed by the Board of Directors, within the limits of the mandates and responsibilities of other committees of the Board of Directors in accordance with current corporate governance guidelines.  The Executive Committee must also advise the Board of all decisions of a strategic nature.

ASSESSMENTS

The Human Resources and Corporate Governance Committee examines on an annual basis, together with the Chairman of the Board and the Lead Director, the performance and contribution of directors nominated for re-election and ensures that they are still eligible pursuant to applicable laws.  The Committee reviews the size of the Board on a annual basis and reports to the Board.  In addition, the Lead Director meets with each director on an personal basis to assess the operation of the Board and committees, the participation of individual directors, the adequacy of information given to directors and communication between the Board and management.  Thereafter, the Lead Directors reports to the Human Resources and Corporate Governance Committee.