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INVESTING FOR OUR CONTRIBUTORS & BENEFICIARIES

2017 Annual Report

Table of Contents

Operational Highlights 2

Performance 3

Chairperson's Report 4

President's Message 7

Purpose 10

Advantages 12

Global Investments 14

Our People 16

Senior Management Team 17

Our Mission and Investment Strategy 18

Management's Discussion & Analysis 42

Compensation Discussion & Analysis 70

Governance Practices of the Board of Directors 86

Financial Statements and Notes 97

CPP Investment Board is an investment organization established to help ensure the Canada Pension Plan (CPP) will be there for generations to come. We compete around the world to secure and manage public and private assets to maximize returns and deliver sustainable value. We have global teams who bring deep expertise and local knowledge. We ensure the Fund has both asset and geographic diversi?cation to make the Fund more resilient to single-market volatility and to safeguard the best interests of current and future bene?ciaries against other factors affecting the funding of the CPP. Our success depends on the strength of our governance framework, which safeguards our sole investment focus while upholding our accountability to the 20 million CPP contributors and bene?ciaries.

1CPP Investment Board 2017 Annual Report

Operational Highlights

Scaling Our Investment Programs

> Grew equity programs in Public Market

Investments by $10.0 billion in assets

under management through new and follow-on investments, including an approximate 20% stake in Advanced

Disposal Services, Inc., the fourth largest

solid waste company in the U.S. > Committed $14.0 billion in Investment

Partnerships including the acquisition of

an 8.3% stake in MISA Investments

Limited through our Thematic Investing

team. MISA is the parent company of

Viking Cruises, a market-leading river

and ocean cruise operator with strong long-term growth drivers. > Deployed $9.9 billion in Private

Investments including the acquisition

of Ascot Underwriting Holdings Ltd. and certain related entities, together with Ascot's management, for

US$1.1 billion. Ascot is a Lloyd's of

London syndicate and a global specialty

insurance underwriter with expertise spanning multiple lines of businesses. > Committed $12.9 billion in Real Assets including our rst infrastructure investment in Mexico, a stake in the concessionaire of the Arco Norte toll road, one of the largest federal toll road concessions in Mexico.

Developing Talent

> Over 800 employees took part in organization-wide training programs. > Expanded and improved our talent development initiatives including the launch of a leadership development program for Managing Directors. > Welcomed the inaugural cohort of female students through the Women in Capital

Markets Internship Program.

> Provided more opportunities for employees to receive cross-functional training via secondments and international assignments. > Increased campus hiring for both full-time and summer internship roles. > Reinforced and renewed employee commitment to our unique culture through the annual

Living our Guiding

Principles sessions held across the

entire organization.

Ex panding Our Global

Investment Activities

Grew our investments outside Canada

from $225.8 billion to $264.7 billion during the year; this represents 83.5% of our total assets.

Co ntinuing to Enhance Our

Investment Framework

> Completed the development of key tools for managing and governing the total

Fund, including an enhanced daily process

to optimize the Fund's return-risk factor exposures, leverage and liquidity, and a new Long-Term Risk Measure for use starting in scal 2018 (as described on page 26).

Com pleting the Straight-through

Processing of

Publicly Traded

Securities

> Completed the implementation of new trade execution and processing systems to support listed and over-the-counter securities across our public market portfolios. The benets of this project include improved efciencies, reduced operational risk and enhanced agility.

2CPP Investment Board 2017 Annual Report

Performance

-20-15-10-5051015 20

1708 09 10 11 12 13 14 15 16

RATE OF RETURN (NET NOMINAL)

For the Year Ended March 31 (%)

CUMULATIVE NET INCOME

FROM OPERATIONS

Fiscal Years 2007-2017 ($ billions)

11. 8%

Fiscal 2017 Rate of Return

(net nominal) $33.5 Billion

Net Income After All

CPPIB Costs

$316.7 Billion

CPP Fund Value at

March 31, 2017

6.7%

10-Year Annualized Rate

of Return (net nominal)

11. 8%

Five-Year Annualized Rate

of Return (net nominal) $146.1 Billion

Cumulative Net Income

for 10-Year Period

After All CPPIB Costs

23.1%

Real Assets

21.5%

Fixed Income

55.4%

Public and Private Equities

47.1%
$149.1 Billion in Private Assets

ASSET MIX

As at March 31, 2017

1. Ne t of external debt issuances.

Foreign developed market

public equities 27.9%

Foreign developed market

private equities 16.3% 174.5
8.0

5.12.3

159.1

Investment

IncomeInvestment

Management

FeesTransaction

CostsOperating

Expenses

Net

Income

Government bonds, Cash and

Absolute return strategies

1 16.0%

Real estate 12.6%

Infrastructure 7.7%Emerging market

public equities 5.7%

Credit investments 5.5%

Canadian public equities 3.3%

Other real assets 2.8%

Emerging market private equities 1.8%Canadian private equities 0.4%

3CPP Investment Board 2017 Annual Report

CPPIB serves a strong public purpose,

playing a signi?cant role in supporting

Canada's national retirement income

security system, and the con?dence you place in your CPP retirement funds. We believe that transparency is the foundation of the trust that our stakeholders place in us. The con?dence you have in CPPIB safeguards our singular focus on investing in your best interests, protected from other preoccupations, and at arm's length from governments.

Among the Board's prime responsibilities is

to ensure that Management carries out full and timely disclosure to the Board and to the Canadian public. This Annual Report is only one facet of our extensive disclosure, which is described on page 40 of this report. CPPIB's Board holds itself highly accountable through an annual assessment process that evaluates the performance of the Board as a whole, as well as individual committees, the Chairperson and each

Director (see page 89). Most importantly,

the Board and Management's aspirations are closely aligned in a steadfast commitment to high standards of organizational culture and conduct, and a drive to create governance structures and strategies that support enduring value for our contributors and bene?ciaries.

Global Competitiveness: A Source of

Pride and Strength

The celebration this year of Canada's 150

th anniversary provides a special context within which to consider key attributes that contribute to our nation's success. Among these is the outward-looking nature of

Canadians. The relatively small size of our

nation's population and of our economy compels us to reach out to the world and, from an economic perspective, to reach out to global markets to achieve growth.

The same can be said of CPPIB. Our global

mindset allows us to capitalize on attractive long-term investment opportunities wherever these arise. This ability to "punch above our weight" in the global marketplace is a signi?cant advantage for our bene?ciaries.

Our geographic diversi?cation serves as

a prudent hedge against the CPP's heavy exposure in our home market. With the exception of investment returns, virtually all other factors that impact the economic viability of the Fund - including real wage growth, birth rates, longevity, demographics and immigration - are domestic.

Chairperson's

Report

Dear fellow contributors to and beneciaries of the

Canada Pension Plan,

I am pleased to report to you on the work of CPPIB over the past year, on your behalf.

Dr. Heather Munroe-Blum, Chairperson

4CPP Investment Board 2017 Annual Report

The Canadian market, representing less

than 3% of the world's capital markets today, is too small and undiversi?ed for

CPPIB to achieve its investment mandate

and properly manage risk if it invested primarily at home. By seeking out the best opportunities around the world in talented people, technology, assets and investment partners, we serve the best interests of

Canadians at home.

For Canada and for CPPIB, our global

perspectives and global networks are great strengths, and that is worth celebrating.

This sesquicentennial year also marks a

pivotal juncture for one of Canada's most treasured assets, the Canada Pension Plan.

In March 2017, legislation became effective

to enhance the CPP. Anticipating the implementation of this legislation, CPPIB's

Management has been working diligently

to ensure the organization will be ready to manage the Additional CPP beginning in

2019, and the Board is con?dent that CPPIB

will be well-positioned to do so.

Former Canadian Prime Minister and

former federal Finance Minister, The

Right Honourable Paul Martin, played an

instrumental role during the development of the CPP reforms in the 1990s. In a foreword written for the Chinese translation of Fixing the Future , a book chronicling the steps taken to ensure Canada Pension Plan's stability, he wrote: "To all those who ask, what is the secret to the CPPIB's success: There is no secret. It is the independence of the Board combined with the crisp and unconfused language created to describe the investment board's mandate."

CPPIB's long-term objective is to maximize

returns without undue risk of loss, having regard to the factors that may affect the funding of the CPP. In pursuing this objective, we anticipate short-term periods of market volatility, and our current risk pro?le anticipates losses of at least 12% one year in ten. Over time, we expect that this risk pro?le will deliver superior long-term returns.

Within this strategic framework, ?scal 2017

was a good year for CPPIB. Our diversi?ed portfolio achieved a net return of 11.8% after all costs. Assets increased by $37.8 billion, of which $33.5 billion came from the net income generated by CPPIB from investment activities, after all costs,

and $4.3 billion from net contributions to the CPP. Our 10-year real rate of return of 5.1%, after all CPPIB costs, remains above the 3.9% average rate of return that the Chief Actuary of Canada assumes in

assessing the sustainability of the CPP. In his latest triennial review issued in September

2016, the Chief Actuary reported that the

Base CPP is sustainable until at least 2090.

Ongoing Oversight of CPPIB"s

Investment Strategy

The Board's oversight of CPPIB's investment

strategy is as much about managing risk as it is about managing opportunities.

The changes in the geopolitical landscape

in the past year - Brexit, a new U.S. administration, and political changes across

Europe and Asia - intensi?ed further the

need for Board efforts to ensure a deep understanding of the factors affecting world events in order for us to provide effective oversight of the organization. This included engagement of Management on its strategy in light of signi?cant geopolitical developments.

Last year, the Board held a meeting in

Europe, similar to one it held in Asia in

2014. Such meetings provide the Board

with the opportunity to immerse ourselves in our international operations, over a few full days, meeting face-to-face with CPPIB's employees and investment partners globally.

This on-the-ground experience is essential

to the Board's ability to provide meaningful governance oversight and direction to the globally invested CPP Fund.

The Board was holding its international

meeting in London and Brussels during the

Brexit vote. Our presence there at that

historic moment gave us unique insight into the challenges and geopolitical risks that global investment organizations like ours will face in the years ahead, as well as the investment opportunities.

Climate change is a key element of risk for

any responsible long-term investor, and the

Board works with Management to ensure

CPPIB is prepared to address this challenge.

Climate change is incorporated into the

Enterprise Risk Management framework

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