TIDMBH29
RNS Number : 6385T
Canadian Imperial Bank of Commerce
08 December 2011
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Canadian Imperial Bank of Commerce
ANNUAL
INFORMATION
FORM
November 30, 2011
FORWARD LOOKING STATEMENTS
................................................................................ 3
INFORMATION INCORPORATED BY REFERENCE
.................................................
...... 4
CORPORATE STRUCTURE
................................................................................................ 4
Name, Address and Incorporation
................................................................... 4
Intercorporate Relationships
............................................................................. 4
DESCRIPTION OF THE BUSINESS
................................................................................ 5
The CIBC Organization
.......................................................................................
. 5
Competitive Conditions
....................................................................................... 5
Social and Environmental Policies
................................................................. 6
Risk Factors
.......................................................................................
................... 6
GENERAL DEVELOPMENT OF THE BUSINESS
............................................................. 6
Three Year History
......................................................................................
........ 6
DIVIDENDS
.................................................................................................
........................ 8
CAPITAL
STRUCTURE........................................................................................
.........
....... 8
Credit Ratings
.....................................................................................
................ 8
MARKET FOR SECURITIES
............................................................................................. 8
Prior sales 9
Trading Prices and Volume ..............................................
............................... 9
DIRECTORS AND OFFICERS
............................................................................................ 10
Directors and Board Committees
.................................................................... 10
Executive Officers
......................................................................................
.......... 10
Shareholdings of Directors and Executive
Officers ..................................... 11
Corporate Cease Trade Orders or Bankruptcies
.......................................... 11
Penalties or Sanctions
...................................................................................... 12
Personal Bankruptcies
...................................................................................... 12
Conflicts of Interest
......................................................................................
...... 12
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
.................................................. 12
INTEREST OF MANAGEMENT AND OTHERS IN
MATERIAL TRANSACTIONS ......... 13
TRANSFER AGENT AND REGISTRAR
............................................................................ 13
EXPERTS
.................................................................................................
............................. 13
AUDIT COMMITTEE
.................................................................................................
..........
PRE-APPROVAL POLICIES AND PROCEDURES 13
............................................................
14
FEES FOR SERVICES PROVIDED BY SHAREHOLDERS'
AUDITORS......................... 14
ADDITIONAL INFORMATION
.......................................................................................... 15
Appendix A Rating Definitions
................................................................................. 16
Appendix B Audit Committee Mandate
................................................................... 18
Appendix C Policy on the Scope of Services
of the Shareholders' Auditors ... 27
A NOTE ABOUT FORWARD-LOOKING STATEMENTS:
From time to time, we make written or oral forward-looking
statements within the meaning of certain securities laws, including
in this Annual Information Form, in other filings with Canadian
securities regulators or the U.S. Securities and Exchange
Commission and in other communications. These statements include,
but are not limited to, statements about our operations, business
lines, financial condition, risk management, priorities, targets,
ongoing objectives, strategies and outlook for 2012 and subsequent
periods. Forward-looking statements are typically identified by the
words "believe", "expect", "anticipate", "intend", "estimate" and
other similar expressions or future or conditional verbs such as
"will", "should", "would" and "could". By their nature, these
statements require us to make assumptions and are subject to
inherent risks and uncertainties that may be general or specific. A
variety of factors, many of which are beyond our control, affect
our operations, performance and results, and could cause actual
results to differ materially from the expectations expressed in any
of our forward-looking statements. These factors include: credit,
market, liquidity, strategic, operational, reputation and legal,
regulatory and environmental risk; legislative or regulatory
developments in the jurisdictions where we operate, amendments to,
and interpretations of, risk-based capital guidelines and reporting
instructions; the resolution of legal proceedings and related
matters; the effect of changes to accounting standards, rules and
interpretations; changes in our estimates of reserves and
allowances; changes in tax laws; changes to our credit ratings;
political conditions and developments; the possible effect on our
business of international conflicts and the war on terror; natural
disasters, public health emergencies, disruptions to public
infrastructure and other catastrophic events; reliance on third
parties to provide components of our business infrastructure; the
accuracy and completeness of information provided to us by clients
and counterparties; the failure of third parties to comply with
their obligations to us and our affiliates; intensifying
competition from established competitors and new entrants in the
financial services industry; technological change; global capital
market activity; changes in monetary and economic policy; currency
value fluctuations; general business and economic conditions
worldwide, as well as in Canada, the U.S. and other countries where
we have operations; changes in market rates and prices which may
adversely affect the value of financial products; our success in
developing and introducing new products and services, expanding
existing distribution channels, developing new distribution
channels and realizing increased revenue from these channels;
changes in client spending and saving habits; our ability to
attract and retain key employees and executives; our
ability to successfully execute our strategies and complete and
integrate acquisitions and joint ventures; and our ability to
anticipate and manage the risks associated with these factors. This
list is not exhaustive of the factors that may affect any of our
forward-looking statements. These and other factors should be
considered carefully and readers should not place undue reliance on
our forward-looking statements. We do not undertake to update any
forward-looking statement that is contained in this Annual
Information Form or in other communications except as required by
law.
INFORMATION INCORPORATED BY REFERENCE
Certain disclosure in this Annual Information Form (AIF) is
derived and incorporated by reference from CIBC's 2011 Annual
Report for the year ended October 31, 2011 (2011 AR). The table
below identifies pages from the 2011 AR which are incorporated by
reference into this AIF.
AIF Item 2011 AR - Page
Reference
----------------------------------------------------------------------------------------------- ---------------
CORPORATE STRUCTURE
Intercorporate Relationships
................................................
NARRATIVE DESCRIPTION OF THE
BUSINESS
The CIBC Organization ........................................................... 187
Environmental Risk .................................................................
26-100
Risk Factors ...............................................................................
87
DIVIDENDS ................................................................................
63-87
CAPITAL STRUCTURE ............................................................
163-166
DIRECTORS AND BOARD COMMITTEES
.............................. 162-167
LEGAL PROCEEDINGS ............................................................. 6-7
TRANSFER AGENT AND REGISTRAR 183
.....................................
235
AUDIT COMMITTEE ..................................................................
Fees for Services provided by
Shareholders' Auditors..... 108
----------------------------------------------------------------------------------------------- ---------------
Unless otherwise specified, this AIF presents information as at
October 31, 2011.
CORPORATE STRUCTURE
Name, Address and Incorporation
Canadian Imperial Bank of Commerce (CIBC) is a diversified
financial institution governed by the Bank Act (Canada) (Bank Act).
CIBC was formed through the amalgamation of The Canadian Bank of
Commerce and Imperial Bank of Canada in 1961. The Canadian Bank of
Commerce was originally incorporated as Bank of Canada by special
act of the legislature of the Province of Canada in 1858.
Subsequently, the name was changed to The Canadian Bank of Commerce
and it opened for business under that name in 1867. Imperial Bank
of Canada was incorporated in 1875 by special act of the Parliament
of Canada and commenced operations in that year. The address of the
registered and head office of CIBC is Commerce Court, Toronto,
Ontario, Canada, M5L 1A2.
Intercorporate Relationships
Information about the intercorporate relationships among CIBC
and its principal subsidiaries is provided on page 187 of the 2011
AR.
DESCRIPTION OF THE BUSINESS
The CIBC Organization
CIBC is a leading Canadian-based, global financial institution.
CIBC serves its clients through three major Strategic Business
Units (SBUs): Retail and Business Banking, Wealth Management and
Wholesale Banking.
During the year, we announced a new organizational structure.
Beginning in the third quarter of 2011, wealth management and
international banking operations (including CIBC FirstCaribbean)
were removed from CIBC Retail Markets and included in the newly
created Wealth Management SBU and Corporate and Other,
respectively, with prior period information restated accordingly.
Following these changes, CIBC Retail Markets comprising the
remaining businesses was renamed Retail and Business Banking. Under
the new organizational structure, CIBC now has three SBUs - Retail
and Business Banking, Wealth Management and Wholesale Banking.
Retail and Business Banking provides clients across Canada with
financial products, advice and services through nearly 1,100
branches as well as ABMs, mobile sales forces, telephone banking,
online and mobile banking.
Wealth Management comprises asset management, retail brokerage
and private wealth management businesses, providing a suite of
investment and relationship based advisory services to
institutional, retail and high net worth clients.
Wholesale Banking provides credit, capital markets, investment
banking, merchant banking and research products and services to
government, institutional, corporate and retail investment clients
in Canada and in key markets around the world. Wholesale Banking
also conducts treasury execution activities.
CIBC's three major operating groups are supported by six
functional groups: Technology and Operations; Corporate
Development; Finance; Treasury; Administration; and Risk
Management. Information about CIBC's business lines and functional
groups is provided in CIBC's Management Discussion and Analysis for
the year ended October 31, 2011 included on pages 26-100 of the
2011 Annual Report.
A more complete description of services provided by Retail and
Business Banking, Wealth Management and Wholesale Banking can be
found in the 2011 Annual Report on pages 41-47.
Competitive Conditions
CIBC was the fifth largest Canadian chartered bank in terms of
market capitalization as of October 31, 2011.
During fiscal 2011, CIBC and its main competitors operated in an
environment of decelerating economic growth, while benefiting from
reasonably healthy credit quality. Economic activity leveled off in
the spring as consumers grew more cautious about additional
debt-financed spending, and production difficulties adversely
impacted the energy and auto sectors, but the economy regained
forward momentum in the third calendar quarter as those two
industries' impediments eased. A continuation of very low mortgage
rates has supported high levels of home building and rising house
prices.
Capital spending, particularly in the energy sector, provided a
lift to growth that helped offset a softer environment for consumer
spending. Despite a tightening in mortgage insurance rules,
mortgage demand remained reasonably brisk, but consumer credit
slowed markedly after running well above income gains in the prior
few years, a trend that pushed debt loads, but not the cost of
servicing that debt, to a new high as a share of income. A lower
unemployment rate further improved household credit quality as the
lagged impacts of the earlier recession faded.
The Wholesale Banking business benefited from the improvement in
credit quality and a generally healthy overall tone to financial
markets in the first few quarters of the 2011 fiscal year.
Government deficit financing kept wholesale debt markets active, as
did growth in business capital spending, while equity issuance was
also brisk until global growth uncertainties challenged markets in
the third calendar quarter.
Finally, while Canadian banks remain relatively well capitalized
compared to global peers, significant reforms to the current
capital framework have been proposed to strengthen global capital
standards and promote a more resilient banking sector.
Social and Environmental Policies
Additional information about our environmental policies and
environmental risks can be found under "Management of Risk -
Environmental Risk" on page 87 of our 2011 AR.
Risk Factors
A discussion of risk factors related to CIBC and its business,
and the steps taken to manage those risks appears throughout the
2011 MD&A and in particular under the heading "Management of
Risks" on pages 63 to 87 of the 2011 AR.
GENERAL DEVELOPMENT OF THE BUSINESS
Three Year History
CIBC's first principle is to be a lower risk bank. As a lower
risk bank, CIBC targets value creation for stakeholders by
delivering on its strategic imperative of consistent and
sustainable earnings over the long term.
For many years, CIBC has reported a scorecard of financial
objectives to measure and report on our progress to external
stakeholders. These measures are categorized into four key areas of
shareholder value:
1. Earnings growth
-- Average annual EPS growth of 5-10%
-- Loan loss ratio of 50-65 bps through the cycle
-- Efficiency ratio at the median of industry peers
2. Return on equity
-- ROE of at least 20% through the cycle
3. Total shareholder return
-- 40-50% dividend payout ratio to common shareholders
-- Total shareholder return that exceeds the industry average
4. Balance sheet strength
-- Minimum Tier 1 and total capital ratios of 8.5% and 11.5% respectively
-- Allocate 75% of economic capital to retail businesses
CIBC made progress against each of these objectives in 2011.
1. Earnings Growth
In 2011, CIBC reported fully diluted cash EPS[1] of $7.39,
compared with $5.95 in 2010, and $2.73 in 2009. Results in each of
these years were impacted by losses in the structured credit
run-off business and other significant items. Diluted EPS for 2011
was $7.31 compared to $5.87 in 2010 and $2.65 in 2009.
In 2011 CIBC's loan loss ratio (defined as specific provision
for credit losses as a percentage of loans and bankers'
acceptances, measured on a managed basis(1) ) improved to 48 basis
points compared to 56 basis points in 2010 and 70 basis points in
2009. The improvement from 2009 to 2011 was supported primarily by
lower write-offs in the cards and personal lending businesses.
CIBC's cash efficiency ratio (TEB) (defined as non-interest
expenses as a percentage of revenue, measured on a cash and
taxable-equivalent basis(1) ) was 58.8% in 2011 compared to 57.6%
in 2010 and 66.4% in 2009. The higher ratio in 2011, compared to
2010 is primarily the result of expenses growing at a faster rate
than revenue. The improvement in 2010 compared to 2009 was
primarily supported by revenue growth. Based on the most recent
publicly reported results of the industry peer group, CIBC has
maintained its efficiency ratio at the industry median in 2011.
CIBC's efficiency ratio was 60.0% in 2011 compared to 58.1% in 2010
and 67.1% in 2009.
2. Return on Equity
Return on equity in 2011 is 21.3% compared to 19.4% in 2010 and
9.4% in 2009. The improvement in 2011 and 2010 is driven by
earnings growth that more than offset higher average shareholders'
equity.
3. Total Shareholder Return
CIBC's 2011 dividend payout ratio was 47.9% compared to 59.1% in
2010 and 131.3% in 2009. The payout ratio was lower as a result of
higher earnings that more than offset the $0.03 quarterly dividend
increase to $0.90 per share announced starting in the fourth
quarter of 2011.
CIBC's rolling 5 year total shareholder return in 2011 was 9.3%
compared to 24.3% for the S&P/TSX Composite Banks Index. In
2010 CIBC's rolling 5 year shareholder return was 36.6% compared to
50.2% for the S&P/TSX Composite Banks Index. In 2009, CIBC's
rolling 5 year total shareholder return was 4.5% compared to 47.4%
for the index.
4. Balance Sheet Strength
CIBC's Tier 1 and Total capital ratios were 14.7% and 18.4% at
the end of 2011. These ratios were up from 13.9% and 17.8%
respectively at the end of 2010. Capital ratios in 2011 benefitted
from an increase in both Tier 1 and Total regulatory capital that
more than offset higher risk weighted assets. Tier 1 and Total
capital ratios were 12.1% and 16.1% respectively in 2009. The
increase in capital ratios in 2010 compared to 2009 was due to
lower risk weighted assets and higher Tier 1 and Total regulatory
capital. At the end of 2011, the retail allocation (which for this
purpose includes Retail and Business Banking, Wealth Management and
International Banking), was 77% of economic capital(1) up from 74%
in 2010 and 69% in 2009.
DIVIDENDS
CIBC has a common share dividend policy of maintaining a balance
between the distribution of profits to shareholders and the need to
retain earnings consistent with capital strength and supporting
growth in its businesses. In the context of this overall policy,
CIBC has a medium term objective for a dividend payout ratio of
40-50% of earnings attributable to common shareholders and seeks to
create a pattern of stable growth in dividends per common share, as
appropriate.
The cash dividends declared and paid per share for each class of
CIBC shares and restrictions on the payment of dividends can be
found on pages 163 to 166 of the 2011 AR.
CAPITAL STRUCTURE
A description of CIBC's capital structure is provided on pages
162 to 167 of the 2011 AR.
Credit Ratings
Credit ratings are important to CIBC's borrowing costs and
ability to raise funds in the wholesale debt markets. CIBC's credit
ratings are discussed on page 84 of the 2011 MD&A under the
heading "Management of Risk - Liquidity Risk". Credit ratings
should not be construed as a recommendation to buy, sell, or hold
CIBC securities. Ratings may be revised or withdrawn by the
respective rating agencies at any time.
Definitions of rating categories as at October 31, 2011 have
been obtained from the respective rating agencies' websites and are
outlined in Appendix A. More detailed explanations of the various
rating categories may be obtained directly from the rating
agencies.
MARKET FOR SECURITIES[2]
CIBC maintains a listing of its common shares on the Toronto
Stock Exchange and the New York Stock Exchange. CIBC maintains a
listing of its preferred shares on the Toronto Stock Exchange.
The following subordinated debt securities issued by CIBC are
listed on the London Stock Exchange:
-- US Dollar Floating Rate Debenture Notes Due 2084 with
interest at 6-month US$ LIBOR plus 0.25%. To CIBC's knowledge the
issue did not trade on the exchange during the year ended October
31, 2011,
-- US Dollar Floating Rate Subordinated Capital Debentures Due
2085 with interest at 6-month US$ LIBOR plus 0.125%. To CIBC's
knowledge the issue did not trade on the exchange during the year
ended October 31, 2011.
Prior Sales
CIBC sold one issue of subordinated debt securities during the
year ended October 31, 2011. The issue is not listed or quoted on
an exchange:
$1.5 billion 3.15% Debentures due November 2, 2020 (Subordinated
Indebtedness) were issued on November 2, 2010, at a price of
99.789%.
Trading Prices and Volume
Nov 10 Dec 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Oct 11
---------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Common
Shares
High $80.03 $81.37 $78.59 $83.65 $85.56 $85.53 $84.81 $80.25 $77.10 $76.75 $76.98 $76.42
Low $74.75 $76.45 $75.12 $76.14 $80.61 $80.25 $79.56 $75.40 $72.38 $67.32 $69.26 $68.90
Vol
('000) 25267 29302 27586 27506 30518 19119 22056 31795 24070 42415 35322 25539
Pref.
Series 18
High $25.69 $25.18 $25.58 $25.48 $25.60 $25.55 $25.60 $25.63 $25.82 $25.81 $25.97 $25.89
Low $24.91 $24.48 $24.65 $25.16 $25.15 $24.93 $25.34 $25.16 $25.15 $25.14 $25.30 $25.30
Vol
('000) 452 157 171 150 143 198 116 180 119 113 106 143
Pref.
Series 26
High $25.69 $25.60 $25.68 $25.83 $25.79 $25.58 $25.59 $25.59 $25.41 $25.49 $25.75 $25.29
Low $25.26 $25.08 $25.05 $25.34 $25.27 $25.00 $25.35 $25.05 $25.06 $25.00 $25.14 $24.80
Vol
('000) 304 206 409 276 381 271 526 329 210 218 146 1552
Pref.
Series 27
High $25.49 $25.34 $25.42 $25.60 $25.60 $25.54 $25.63 $25.47 $25.36 $25.35 $25.42 $25.18
Low $25.02 $24.85 $24.79 $25.07 $25.17 $24.79 $25.25 $25.00 $25.05 $25.00 $25.01 $24.81
Vol
('000) 622 104 187 250 257 302 546 398 156 187 208 370
Pref.
Series 29
High $25.39 $25.09 $25.00 $25.45 $25.77 $25.56 $25.59 $25.35 $25.40 $25.31 $25.29 $25.01
Low $24.67 $24.00 $24.26 $24.96 $25.10 $24.90 $25.19 $24.94 $24.96 $24.66 $24.88 $24.64
Vol
('000) 343 230 191 456 376 236 563 256 385 235 416 455
Pref.
Series 31
High $23.25 $22.79 $23.73 $24.39 $24.45 $24.55 $25.35 $25.30 $25.20 $25.40 $25.57 $25.49
Low $22.47 $21.68 $22.10 $23.51 $23.70 $23.56 $24.50 $24.49 $24.64 $24.85 $25.05 $24.90
Vol
('000) 498 529 922 718 586 429 644 623 303 806 285 283
Pref.
Series 32
High $22.77 $22.20 $23.37 $24.35 $24.12 $24.15 $25.00 $25.09 $24.95 $25.24 $25.47 $25.40
Low $21.77 $21.11 $21.39 $23.20 $23.37 $23.20 $24.02 $24.35 $24.40 $24.37 $24.98 $24.89
Vol
('000) 303 437 584 439 316 521 391 734 439 547 392 277
Pref.
Series 33
High $27.69 $27.35 $27.00 $27.00 $27.00 $27.00 $27.35 $27.15 $27.13 $27.08 $27.08 $26.68
Low $26.78 $26.07 $26.30 $26.30 $26.30 $26.26 $26.65 $26.35 $26.44 $26.10 $26.15 $25.95
Vol
('000) 170 269 161 133 185 147 148 272 294 137 85 128
Pref.
Series 35
High $28.63 $28.13 $27.69 $27.76 $27.96 $27.90 $27.95 $27.94 $27.69 $27.74 $27.75 $27.35
Low $27.85 $27.56 $27.30 $27.38 $27.40 $27.38 $27.50 $27.10 $27.20 $27.00 $27.02 $26.96
Vol
('000) 327 570 169 459 312 321 221 428 319 251 165 196
Pref.
Series 37
High $28.60 $28.30 $27.89 $28.00 $28.31 $27.95 $28.07 $28.00 $27.80 $27.89 $28.00 $27.50
Low $28.00 $27.59 $27.20 $27.47 $27.36 $27.40 $27.65 $27.44 $27.40 $27.25 $27.14 $26.94
Vol
('000) 137 184 193 206 183 101 253 243 108 144 133 64
DIRECTORS AND OFFICERS
Directors and Board Committees
Information concerning the directors and board committees of
CIBC is found on pages 6 to 7 of the 2011 AR.
All of the directors have held their business affiliations
indicated on page 7 of the 2011 AR for the past five years with the
exception of the following:
(i) Dominic D'Alessandro was previously President and Chief
Executive Officer of Manulife Financial Corporation from 1994 to
2009;
(ii) Luc Desjardins was previously President & Chief
Executive Officer of Transcontinental Inc. from 2004 to 2008 and
Equity Partner, The Sterling Group, LP from 2008 to November
2011;
(iii) John P. Manley was previously Counsel, McCarthy Tetrault LLP from 2004 to October 2009;
(iv) Jane L. Peverett was previously President & Chief
Executive Officer of British Columbia Transmission Corporation from
2005 to January 2009;
(v) Leslie Rahl was previously President and Founder of Capital
Market Risk Advisors, Inc. from 1994 to 2009;
(vi) Katharine B. Stevenson was previously Treasurer, Nortel
Networks Corporation from 1999 to 2007; and
(vii) Ronald W. Tysoe was previously Senior Advisor of Perella
Weinberg Partners LP from 2006 to October 2007.
Directors are elected annually. Under the Bank Act and CIBC's
By-laws, a director's term expires at the close of the next annual
meeting of common shareholders, which is scheduled on April 26,
2012.
Executive Officers
The following are CIBC's executive officers, their titles and
their municipalities of residence, as at November 30, 2011:
Name Title Municipality
of Residence
McCaughey, President and Chief Executive Toronto
G.T. (Gerry) Officer, CIBC
Capatides, Senior Executive Vice-President, Morristown,
M.G. (Mike) Chief Administrative Officer NJ
and General Counsel
Dodig, V.G. Senior Executive Vice-President, Toronto
(Victor) CIBC and Group Head, Wealth
Management
Glass, K.A. Senior Executive Vice-President, Toronto
(Kevin) CIBC and Chief Financial Officer
Nesbitt, R.W. Senior Executive Vice-President, Toronto
(Richard) CIBC and Group Head, Wholesale,
International and Technology
and Operations
Prentice, P.E.J. Senior Executive Vice-President Calgary
(Jim) and Vice-Chair, CIBC
Venn, R.E. Senior Executive Vice-President, Toronto
(Richard) CIBC and Advisor to the Chief
Executive Officer's Office
Williamson, Senior Executive Vice-President, Toronto
J.D. (David) CIBC and Group Head, Retail
and Business Banking
Woods, T.D. Senior Executive Vice-President Toronto
(Tom) and Chief Risk Officer
All of the executive officers have held their present business
affiliations for more than five years except for Kevin Glass who
was Chief Financial Officer at Revera Inc. from 2006 to 2008;
Richard Nesbitt who was Chief Executive Officer from 2004 to 2008
at the Toronto Stock Exchange Group; Jim Prentice who was Member of
Parliament in the Canadian House of Commons from 2004 to 2010, and
was appointed to the following ministries during this period:
Minister of the Environment (2008), Minister of Industry (2007),
Minister of Indian Affairs and Northern Development (2006) and
David Williamson who joined CIBC in January 2008.
Shareholdings of Directors and Executive Officers
To the knowledge of CIBC, as at October 31, 2011, the directors
and executive officers of CIBC as a group, beneficially owned,
directly or indirectly, or exercised control or direction over less
than 1% of the outstanding common shares of CIBC and FirstCaribbean
International Bank Limited.
Corporate Cease Trade Orders or Bankruptcies
Except as set out below, to the knowledge of CIBC, in the last
ten years, no director or executive officer of CIBC is or has been
a director, chief executive officer or chief financial officer of
an issuer that, while that person was acting in that capacity, (a)
was subject to a cease trade order or similar order, or an order
that denied the issuer access to any exemption under securities
legislation, for a period of more than 30 consecutive days or (b)
was the subject of an event that resulted, after that person ceased
to be a director or chief executive officer or chief financial
officer, in the issuer being the subject of a cease trade order or
similar order or an order that denied the issuer access to any
exemption under securities legislation, for a period of more than
30 consecutive days. Except as set out below, to the knowledge of
CIBC, in the last ten years, no director or executive officer of
CIBC is or has been a director or executive officer of an issuer
that, while that person was acting in that capacity or within a
year of that person ceasing to act in that capacity, became
bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency or was subject to or instituted any
proceedings, arrangement or compromise with creditors or had a
receiver, receiver manager or trustee appointed to hold its
assets.
(i) Mr. Gordon D. Giffin, a director of CIBC, was a director of
AbitibiBowater Inc. from October 29, 2007 until his resignation on
January 22, 2009. In April 2009, AbitibiBowater Inc. and certain of
its U.S. and Canadian subsidiaries filed voluntary petitions in the
United States Bankruptcy Court for the District of Delaware for
relief under the provisions of Chapter 11 and Chapter 15 of the
U.S. Bankruptcy Code, as amended, and sought creditor protection
under the Companies' Creditors Arrangement Act (CCAA) with the
Superior Court of Quebec in Canada;
(ii) Mr. John P. Manley, a director of CIBC, was a director of
Nortel Networks Corporation and Nortel Networks Limited
(collectively, the Nortel Companies), when the Ontario Securities
Commission (OSC) made final an order prohibiting all trading by
directors, officers and certain current and former employees of the
Nortel Companies on May 31, 2004, by reason of the Nortel Companies
having announced the need to restate certain of their previously
reported financial results and the resulting delays in filing their
interim and annual financial statements for certain periods by the
required filing dates under Ontario securities laws. This order was
revoked by the OSC on June 21, 2005;
Mr. Manley was also a director of the Nortel Companies when the
Nortel Companies announced on March 10, 2006 the need to restate
certain of their previously reported financial results and the
resulting delay in the filing of certain 2005 financial statements
by the required filing dates. The OSC issued a final management
cease trade order on April 10, 2006 prohibiting all of the
directors, officers and certain current and former employees,
including Mr. Manley, from trading in securities of the Nortel
Companies until two business days following the receipt by the OSC
of all of the filings the Nortel Companies were required to make
under Ontario securities laws. The British Columbia Securities
Commission (BCSC) and Quebec Securities Commission (QSC) issued
similar orders. The OSC lifted the cease trade order effective June
8, 2006. The BCSC and the QSC lifted their cease trade orders
shortly thereafter;
Mr. Manley was a director of the Nortel Companies when the
Nortel Companies and certain other Canadian subsidiaries initiated
creditor protection proceedings under the CCAA in Canada on January
14, 2009. Certain U.S. subsidiaries filed voluntary petitions in
the United States under Chapter 11 of the U.S. Bankruptcy Code, and
certain Europe, Middle East and Africa subsidiaries made
consequential filings in Europe and the Middle East. These
proceedings are ongoing. Mr. Manley resigned as a director of the
Nortel Companies on August 10, 2009;
(iii) Ms. Leslie Rahl, a director of CIBC, was a director of the
Federal National Mortgage Association (Fannie Mae) on September 6,
2008 when, at the request of the Secretary of the U.S. Department
of the Treasury, the Chairman of the Board of Governors of the U.S.
Federal Reserve and the Director of the U.S. Federal Housing
Finance Authority (FHFA), the Board of Directors of Fannie Mae
adopted a resolution consenting to putting Fannie Mae into
conservatorship. After obtaining consent, the Director of FHFA
appointed FHFA as conservator on September 6, 2008. On September
18, 2008, Ms. Rahl resigned as a director of Fannie Mae; and
(iv) Mr. Charles Sirois, a director of CIBC, was Chairman of the
Board of Microcell Telecommunications Inc. (Microcell) when it
elected and was granted protection to restructure its capital under
the CCAA in January 2003. In May 2003, Microcell successfully
emerged from the CCAA proceedings and was restructured pursuant to
a plan of reorganization and of compromise and arrangement filed in
February 2003, adopted by its affected creditors and judicially
sanctioned. Mr. Sirois ceased to be a director of Microcell in
2004.
Penalties or Sanctions
To the knowledge of CIBC, no director or executive officer of
CIBC, (i) has been subject to any penalties or sanctions imposed by
a court relating to securities legislation or by a securities
regulatory authority or has entered into a settlement agreement
with a securities regulatory authority, or (ii) has been subject to
any other penalties or sanctions imposed by a court or regulatory
body that would likely be considered important to a reasonable
investor in making an investment decision.
Personal Bankruptcies
To the knowledge of CIBC, in the last ten years, no director or
executive officer has become bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency, or was subject to
or instituted any proceedings, arrangement or compromise with
creditors, or had a receiver, receiver manager or trustee appointed
to hold the assets of the director or executive officer.
Conflicts of Interest
To the knowledge of CIBC, no director or executive officer of
CIBC has an existing or potential material conflict of interest
with CIBC or any of its subsidiaries.
LEGAL PROCEEDINGS AND REGULATORY ACTIONS
A description of legal proceedings to which CIBC is a party is
provided under the heading "Contingent liabilities" on page 183 of
the 2011 AR.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
To the knowledge of CIBC, no director or executive officer of
CIBC, or any of their associates has any material interest,
directly or indirectly, in any transaction within the three most
recently completed financial years that has materially affected or
will materially affect CIBC.
TRANSFER AGENT AND REGISTRAR
The addresses for CIBC's transfer agent and registrar are
provided on page 235 of the 2011 AR.
EXPERTS
Ernst & Young LLP, Chartered Accountants, Licensed Public
Accountants, Toronto, Ontario, is the external auditor who prepared
the Independent auditors' reports of registered public accounting
firm to shareholders - Report on financial statements and Report on
internal controls under standards of the Public Company Accounting
Oversight Board (United States). Ernst & Young LLP is
independent with respect to CIBC within the meaning of the Rules of
Professional Conduct of the Institute of Chartered Accountants of
Ontario, United States federal securities laws and the rules and
regulations thereunder, including the independence rules adopted by
the United States Securities and Exchange Commission pursuant to
the Sarbanes-Oxley Act of 2002; and applicable independence
requirements of the Public Company Accounting Oversight Board
(United States).
AUDIT COMMITTEE
The Audit Committee Mandate as approved by the Board is included
in Appendix B. The members of the Audit Committee are listed below.
Each member of the Audit Committee is independent and financially
literate as defined by Canadian securities laws. Each Audit
Committee member has been designated by the Board as an "audit
committee financial expert" as defined by the rules of the United
States Securities and Exchange Commission.
Education and Experience
This section describes the education and experience of CIBC's
Audit Committee members that is relevant to the performance of
their responsibilities in that role.
Each member of the Audit Committee currently is, or has
previously been, in charge of, or an advisor or a consultant to, a
significant business operation, often as president, chief executive
officer or chief financial officer of a large public company and in
the case of Mr. John Manley, the Minister of Finance for the
Government of Canada. Given the breadth and complexity of a
financial institution's accounting issues, the Audit Committee
members participate from time to time in internal or external
sessions related to accounting matters or developments. Travel and
attendance costs are paid by CIBC. Further detail on the education
and experience of each Audit Committee member is set out below.
John P. Manley P.C., O.C.
Mr. Manley is President and Chief Executive Officer of the
Canadian Council of Chief Executives (CCCE). Prior to joining the
CCCE, Mr. Manley was Counsel, McCarthy Tetrault LLP. Throughout
more than 15 years of public service, Mr. Manley held several
senior portfolios in the Canadian federal government from November
1993 to December 2004, including Deputy Prime Minister and Finance
Minister. Mr. Manley is a director and member of the audit
committee of CAE Inc. and Canadian Pacific Railway Limited. He is
also a member of the board of directors of The Conference Board of
Canada, the Institute for Research on Public Policy, and the
Advisory Board of Canada 2020. Mr. Manley is also Chair of the
International Advisory Board of the University of Toronto Munk
School of Global Affairs. Mr. Manley holds a Bachelor of Arts
degree from Carleton University and a J.D. degree from the
University of Ottawa, as well as honorary doctorates from three
universities.
Jane L. Peverett, FCMA, ICD.D
Ms. Peverett was President and Chief Executive Officer of
British Columbia Transmission Corporation (BCTC) from 2005 to 2009.
From 2003 to 2005 Ms. Peverett was Chief Financial Officer of BCTC.
Prior to joining BCTC, Ms. Peverett was with Westcoast Energy Inc.,
from 1988 to 2003, where she held progressively senior finance,
regulatory and executive roles. In 2001 she was appointed President
and Chief Executive Officer of Union Gas Limited. Ms. Peverett is a
director and Chair of British Columbia Ferry Authority, a director
and chair of the audit committee of EnCana Corporation, a director
and member of the audit committee of Northwest Natural Gas Company
and a director of Associated Electric & Gas Insurance Services
Limited. Ms. Peverett was named by RaderEnergy as one of the 50 Key
Women in Energy on a Global Basis in 2004, she received a PEAK
award honouring women's excellence in the field of finance in 2005,
and in 2009 was named one of the Influential Women in Business in
Vancouver. Ms. Peverett holds a Bachelor of Commerce degree from
McMaster University and a Master of Business Administration degree
from Queen's University. She is a Certified Management Accountant
and a fellow of the Society of Management Accountants.
Robert J. Steacy
Mr. Steacy is a retired Chief Financial Officer of Torstar
Corporation, a major Canadian media company, with over 20 years of
senior financial officer experience. Mr. Steacy was Executive Vice
President and Chief Financial Officer of Torstar Corporation from
2002 to 2005, Vice President Finance from 1989 to 2002, and
Director, Finance from 1983 to 1988. He has served on the boards of
Torstar subsidiaries, investments and also on a number of
not-for-profit boards including University of Toronto Press where
he was chair of the human resources committee and a member of the
audit committee. Mr. Steacy is a director and chair of the audit
committees of Domtar Corporation, Cineplex Inc. and Postmedia
Network Canada Corp. and is a director of OCP Holdings Corporation,
a private company. Mr. Steacy holds a Bachelor of Commerce
(Honours) degree from Queen's University and is a Chartered
Accountant.
Ronald W. Tysoe (Chair of the Audit Committee)
Mr. Tysoe was a Senior Advisor with Perella Weinberg Partners LP
from October 2006 to October 2007. Mr. Tysoe was Vice-Chair of
Macy's Inc. (formerly Federated Department Stores, Inc.) from 1990
until October 2006 and served as Chief Financial Officer of
Federated Department Stores, Inc. from 1990 to 1997. Mr. Tysoe is a
director and member of the audit committees of Pzena Investment
Management, Inc. and Taubman Centers, Inc., and he is a director
and chair of the audit committees of Scripps Networks Interactive
Inc. and Cintas Corporation. Mr. Tysoe holds both a Bachelor of
Commerce degree and a Bachelor of Laws degree from the University
of British Columbia.
PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee has adopted a policy for the engagement of
the shareholders' auditors. The text of the policy is included in
Appendix C.
FEES FOR SERVICES PROVIDED BY SHAREHOLDERS' AUDITORS
The information on professional service fees by Shareholders'
Auditors is provided on page 108 of the 2011 AR.
ADDITIONAL INFORMATION
Additional information with respect to CIBC, including
directors' and officers' remuneration and indebtedness, principal
holders of CIBC's securities and securities authorized for issuance
under equity compensation plans, where applicable, is contained in
CIBC's management proxy circular for its most recent annual meeting
of shareholders that included in its proceedings the election of
directors. Additional financial information is provided in CIBC's
financial statements and Management's Discussion and Analysis for
its most recently completed financial year. These documents, as
well as additional information relating to CIBC, are available on
SEDAR at www.sedar.com.
Appendix A
Rating Definitions
Dominion Bond Rating Service (DBRS)
Short-Term Debt Rating: R-1 (high)
Short-term debt ratings indicate the risk that a borrower will
not be able to meet its short- term debt obligations in a timely
manner. Short-term debt rated R-1 (high) is of the highest credit
quality, indicative of an entity with an exceptionally high
capacity to be able to repay short term financial liabilities as
they become due. R-1 is the highest of six short-term debt rating
categories. The R-1 and R-2 categories may be further denoted as
"high", "middle" and "low" subcategories.
Senior Debt Rating: AA
Subordinated Debt Rating: AA (low)
Long-term debt ratings provide an assessment of the risk that
the issuer will not be able to meet its obligations under the terms
of the issue. Long-term debt rated AA is ranked in the second
highest of 10 categories. It is considered to be of superior credit
quality, with capacity for payment considered to be high. Entities
rated AA are unlikely to be significantly susceptible to future
events.
Preferred Shares Rating: Pfd-1(low)
Preferred share ratings provide an assessment of the risk that
the issuer will not be able to meet its dividend and principal
obligations in a timely manner. A Pfd-1 rating is the highest of 6
categories for preferred shares. Preferred shares rated Pfd-1 are
of superior credit quality, supported by entities with strong
earnings and balance sheet attributes.
(For long-term debt and preferred shares, DBRS rating categories
may be denoted by the subcategories "high" or "low". The absence of
a "high" or "low" designation indicates the rating is in the middle
of the category.)
Moody's
Short-Term Debt Rating: P-1
Short-term debt ratings are assessments of a borrower's ability
to repay short-term obligations. There are four categories of
ratings with P-1 being rated the highest. Borrowers rated P-1 have
a superior ability to repay short-term debt obligations.
Senior Debt Rating: Aa2
Subordinated Debt Rating: Aa3
Long-term debt ratings reflect an assessment of whether or not
an issuer's financial obligations with an original maturity of 1
year or more will be met. The Aa rating category includes debt
judged to be of high quality and very low credit risk and is the
second highest of 9 categories.
Preferred Shares Rating: Baa1
A Baa rating is the fourth highest of nine categories used by
Moody's. Preferred shares carrying this rating are considered to be
subject to moderate credit risk and to be medium grade obligations
that may have certain speculative attributes.
(The modifiers 1, 2 and 3 are used with certain ratings
categories to indicate that the obligation ranks in the higher,
mid-range or lower end of the rating category respectively.)
Standard & Poor's (S&P)
Short-Term Debt Rating: A-1
A short-term borrowing rated A-1 is rated in the highest of nine
categories used by S&P. The borrower's capacity to meet its
financial obligations with respect to the debt is strong.
Senior Debt Rating: A+
Subordinated Debt Rating: A
The A rating is the third highest of ten categories used to
assess the ability of the borrower to meet its financial
obligations on long-term debt as they become due. Although the
borrower's ability to meet its financial commitment is strong,
obligations rated A are somewhat more vulnerable to the negative
effects of changes in circumstances and economic conditions than
obligations in higher rated categories. A "+" or "-" grade may be
used to denote the relative standing of a rating within a major
rating category, and the absence of a "+" or "-" indicates the
rating is in the middle of the category.
Preferred Shares (Canadian Preferred Share Scale)
Rating: P-1(Low)/P-2(High)
P-1 and P-2 are the highest and second highest of the eight
categories used by S&P in its Canadian Preferred Share Scale,
which is used to rank the creditworthiness of an issuer with
respect to preferred share obligations issued in Canada. "High" and
"Low" may be used to indicate the relative standing of a credit
within a particular rating category, and the absence of such a
designation indicates a rating in the middle of the category.
Fitch
Short-Term Debt Rating: F1+
This rating indicates the highest credit quality and the
strongest capacity for timely payment of short-term financial
commitments. The F1 rating is in the highest of seven categories
used for short-term debt.
Senior Debt Rating: AA-
AA is the second highest rating category of eleven ratings
categories used for long-term debt and indicates an assessment of
very high credit quality and very low credit risk. This rating
indicates a very strong capacity for timely payment that is not
significantly vulnerable to foreseeable events.
Subordinated Debt Rating: A+
Preferred Shares Rating: A
The A rating is in the third highest category for long-term
obligations and indicates an assessment of high credit quality and
low credit risk. The capacity for payment of obligations is
considered strong, but may however be more susceptible to changes
in circumstances or in economic conditions than that of higher
rating categories.
(The designation "+" or "-" may be used to denote relative
position within major rating categories. The absence of such a
designation indicates a rating in the middle of a category.)
Appendix B
Canadian Imperial Bank of Commerce
Audit Committee Mandate
1. PURPOSE
(1) The primary functions of the Audit Committee are to: fulfill
its responsibilities for reviewing the integrity of CIBC's
financial statements, financial disclosures and internal control
over financial reporting; monitor the system of internal control;
monitor CIBC's compliance with legal and regulatory requirements;
select the external auditors for shareholder approval; review the
qualifications, independence and performance of the external
auditors; review the qualifications, independence and performance
of CIBC's internal auditors; and act as the Audit Committee for
certain federally regulated subsidiaries.
2. MEMBERSHIP AND ORGANIZATION
(1) Composition - The Audit Committee shall consist of not less
than three or more than six independent members of the Board. At
the invitation of the Audit Committee, members of CIBC's management
and others may attend Audit Committee meetings, as the Audit
Committee considers necessary or desirable.
(2) Appointment and Removal of Audit Committee Members - Each
member of the Audit Committee shall be appointed by the Board on an
annual basis and shall serve at the pleasure of the Board, or until
the earlier of: (a) the close of the next annual meeting of
shareholders of CIBC at which the member's term of office expires;
(b) the death of the member; or (c) the resignation,
disqualification or removal of the member from the Audit Committee
or from the Board. The Board may fill a vacancy in the membership
of the Audit Committee.
(3) Chair - At the time of the annual appointment of the members
of the Audit Committee, the Board shall appoint a Chair of the
Audit Committee. The Chair shall: be a member of the Audit
Committee; preside over all Audit Committee meetings; coordinate
the Audit Committee's compliance with this mandate; work with
management to develop the Audit Committee's annual workplan and
meeting agendas; and provide reports on the work of the Audit
Committee to the Board. The Chair may vote on any matter requiring
a vote and shall provide a second vote in the case of a tie
vote.
(4) Independence - Each member of the Audit Committee shall meet
the independence standards established by the Board and the
additional requirements listed in Exhibit A to this mandate.
(5) Financial Literacy - Members of the Audit Committee shall be
financially literate or agree to become financially literate within
a reasonable period of time following the member's appointment. An
individual is financially literate if he or she has the ability to
read and understand a set of financial statements that present a
breadth and level of complexity of accounting issues that are
generally comparable to the breadth and complexity of the issues
that can reasonably be expected to be raised in CIBC's financial
statements.
(6) Service on Multiple Audit Committees - No member of the
Audit Committee may serve on the audit committees of more than two
other public companies, unless the Board determines that this
simultaneous service would not impair the ability of the member to
effectively serve on the Audit Committee.
3. MEETINGS
(1) Meetings - The members of the Audit Committee shall hold
meetings as are required to carry out this mandate, and in any case
no less than four meetings annually. The external auditors are
entitled to attend and be heard at each Audit Committee meeting.
The Chair, any member of the Audit Committee, the external
auditors, the Chief Auditor, the Chair of the Board or the Chief
Executive Officer may call a meeting of the Audit Committee by
notifying the Corporate Secretary of CIBC who will notify the
members of the Audit Committee. The Chair shall chair all Audit
Committee meetings that he or she attends, and in the absence of
the Chair, the members of the Audit Committee present may appoint a
Chair from their number for a meeting.
(2) Notices of Meetings - Notices of Audit Committee meetings
may be provided by prepaid mail, personal delivery, facsimile,
electronic-mail or telephone, provided that the method of
notification chosen shall be capable of being received by members
of the Audit Committee and the external auditors at least 24 hours
before an Audit Committee meeting at the member's contact
information last recorded with the Corporate Secretary. Any member
of the Audit Committee may in any manner waive notice of an Audit
Committee meeting and attendance at an Audit Committee meeting is
waiver of notice of the meeting, except where a member attends for
the express purpose of objecting to the transaction of any business
on the grounds that the meeting is not properly called.
(3) Secretary and Minutes - The Corporate Secretary, his or her
designate or any other person the Audit Committee requests, shall
act as secretary at Audit Committee meetings. Minutes of Audit
Committee meetings shall be recorded and maintained by the
Corporate Secretary and subsequently presented to the Audit
Committee for approval.
(4) Quorum - A majority of the members of the Audit Committee
shall constitute a quorum. If a quorum cannot be obtained for an
Audit Committee meeting, members of the Board who would qualify as
members of the Audit Committee may, at the request of the Chair or
the Chair of the Board, serve as members of the Audit Committee for
that meeting.
(5) Resident Canadian Majority - The Audit Committee shall not
transact business at an Audit Committee meeting unless a majority
of the members present are "resident Canadians" under the Bank Act
(Canada).
(6) Access to Management and Outside Advisors - The Audit
Committee shall have unrestricted access to management and
employees of CIBC, and, from time to time may hold unscheduled or
regularly scheduled meetings or portions of regularly scheduled
meetings with the Chief Auditor, the external auditors, the
Executive Vice-President and Deputy General Counsel, Legal,
Governance and Control, the Chief Financial Officer or the Chief
Executive Officer. The Audit Committee shall have the authority to
retain and terminate external legal counsel, consultants or other
advisors to assist it in fulfilling its responsibilities and to set
and pay the compensation for these advisors without consulting or
obtaining the approval of the Board or any officer of CIBC. CIBC
shall provide appropriate funding, as determined by the Audit
Committee, for the services of these advisors.
(7) Meetings Without Management - The Audit Committee shall hold
unscheduled or regularly scheduled meetings, or portions of
regularly scheduled meetings, at which management is not
present.
(8) Access to Other Committees - The Chair or any member of the
Audit Committee may request the input of another Board committee on
any accountability or responsibility set out in this mandate.
4. ACCOUNTABILITIES AND RESPONSIBILITIES
The Audit Committee shall have the accountabilities and
responsibilities set out below as well as any other
accountabilities that are specifically delegated to the Audit
Committee by the Board. In addition to these functions and
responsibilities, the Audit Committee shall perform the duties
required of an audit committee by the Bank Act (Canada),
requirements of the stock exchanges on which the securities of CIBC
are listed and all other applicable laws.
(1) Financial Reporting
(a) General - The Audit Committee is responsible for reviewing
the integrity of CIBC's financial statements and financial
disclosures. Management is responsible for the preparation,
presentation and integrity of CIBC's financial statements and
financial disclosures and for the appropriateness of the accounting
principles and the reporting policies used by CIBC. The external
auditors are responsible for auditing CIBC's annual consolidated
financial statements and for reviewing CIBC's unaudited interim
financial statements.
(b) Review of Annual Financial Reports - The Audit Committee
shall review the annual consolidated audited financial statements
of CIBC, the external auditors' report thereon and the related
management's discussion and analysis (MD&A) of CIBC's financial
condition and results of operations and management's report that
they present fairly, in all material respects in accordance with
Canadian generally accepted accounting principles (GAAP), or any
other generally accepted accounting principles in which the
financial statements of CIBC are prepared from time to time, the
financial condition, results of operations and cash flows of CIBC.
After completing its review, if advisable, the Audit Committee
shall approve and recommend for Board approval the annual financial
statements and the related MD&A.
(c) Review of Interim Financial Reports - The Audit Committee
shall review the interim consolidated financial statements of CIBC,
the external auditors' review report thereon and the related
MD&A and management's report that they present fairly, in all
material respects in accordance with GAAP, the financial condition,
results of operations and cash flows of CIBC. After completing its
review, if advisable, the Audit Committee shall approve and
recommend for Board approval the interim financial statements and
the related MD&A.
(d) Review Considerations - In conducting its review of the
annual financial statements or the interim financial statements,
the Audit Committee shall:
(i) meet with management and the external auditors to discuss
the financial statements and MD&A;
(ii) review the disclosures in the financial statements;
(iii) review the audit report or review report prepared by the external auditors;
(iv) discuss with management, the external auditors and internal
legal counsel, as requested, any litigation claim or other
contingency that could have a material effect on the financial
statements;
(v) review critical accounting policies and other significant
estimates and judgments underlying the financial statements as
presented by management;
(vi) review any material effects of regulatory accounting
initiatives, significant transactions or off-balance sheet
structures on the financial statements as presented by
management;
(vii) review any material changes in accounting policies and
practices and their impact on the financial statements as presented
by management or the external auditors;
(viii) review management's and the external auditors' reports on
the effectiveness of internal control over financial reporting;
(ix) review results of CIBC's whistleblowing program; and
(x) review any other matters, related to the financial
statements, that are brought forward by the internal auditors,
external auditors, management or which are required to be
communicated to the Audit Committee under accounting policies,
auditing standards or applicable law.
(e) Approval of Other Disclosures - The Audit Committee shall
review and, if advisable, approve or recommend for Board approval:
(i) the annual information form of CIBC; (ii) the Form 40F of CIBC;
(iii) financial disclosure in a press release disclosing financial
results, a prospectus or other securities offering document of
CIBC; and (iv) any other material financial disclosure.
(2) External Auditors
(a) General - The Audit Committee shall be responsible for
oversight of the work of the external auditors in auditing and
reviewing CIBC's financial statements and internal controls over
financial reporting including the resolution of disagreements
between management and the external auditors regarding financial
reporting.
(b) Appointment and Compensation - The Audit Committee shall
review and, if advisable, select and recommend: (i) for shareholder
approval, the appointment of the external auditors; and (ii) for
shareholder or Board approval, as applicable, the compensation of
the external auditors.
(c) Annual Review Report - At least annually, the Audit
Committee shall obtain and review a report by the external auditors
describing: (i) their internal quality-control procedures; and (ii)
any material issues raised by their most recent internal
quality-control review, peer review or by any inquiry or
investigation by governmental or professional authorities within
the preceding five years respecting one or more independent audits
carried out by the external auditors and any steps taken to deal
with any of these issues.
(d) Audit Plan - At least annually, the Audit Committee shall
review and approve the external auditors' annual audit plan. The
Audit Committee shall consider and review with the external
auditors any material changes to the scope of the plan.
(e) Independence of External Auditors - At least annually, and
before the external auditors issue their report on the annual
financial statements, the Audit Committee shall: obtain from the
external auditors a formal written statement describing all
relationships between the external auditors and CIBC; discuss with
the external auditors any disclosed relationships or services that
may affect the objectivity and independence of the external
auditors; and obtain written confirmation from the external
auditors that they are independent within the meaning of the Rules
of Professional Conduct/Code of Ethics adopted by the provincial
institute or order of chartered accountants to which they belong
and within the meaning of United States federal securities laws and
the rules and regulations thereunder, including the independence
rules adopted by the Securities and Exchange Commission pursuant to
the Sarbanes-Oxley Act of 2002, and Rule 3600T of the Public
Company Accounting Oversight Board.
(f) Evaluation and Rotation of Lead Partner - At least annually,
the Audit Committee shall review the qualifications and performance
of the external auditors. The Audit Committee shall obtain a report
from the external auditors annually confirming that they are in
compliance with all audit firm and regulatory requirements relating
to partner rotation and that the engagement team collectively
possesses the experience and competence to perform an appropriate
audit.
(g) Pre-Approval of Audit and Non-Audit Services - The Audit
Committee shall pre-approve any retainer of the external auditors
for any audit and non-audit service to CIBC or its subsidiaries in
accordance with applicable law and Board approved policies and
procedures. The Audit Committee may delegate pre-approval authority
to a member of the Audit Committee. The decisions of any member of
the Audit Committee to whom this authority has been delegated must
be presented to the full Audit Committee at its next scheduled
Audit Committee meeting.
(h) Hiring Practices - The Audit Committee shall review and
approve guidelines regarding the hiring of employees or former
employees of the external auditors or former external auditors.
(3) Internal Audit Function
(a) Organizational Framework - At least annually, the Audit
Committee shall review and approve the Internal Audit
organizational framework and charter (developed in accordance with
professional standards promulgated by the Institute of Internal
Auditors), having regard to its role as an independent control
function.
(b) Chief Auditor - The Audit Committee shall review and, if
advisable, approve the appointment or removal of the Chief Auditor.
At least annually, the Audit Committee shall review and approve the
mandate and goals of the Chief Auditor and review an assessment of
the effectiveness of the Chief Auditor.
(c) Effectiveness Review - At least annually, the Audit
Committee shall:
(i) review the Internal Audit function's financial plan and
staff resources and recommend for Board approval;
(ii) review management's assessment of the independence and
effectiveness of the Internal Audit function;
(iii) review any difficulties encountered by the Chief Auditor
in the course of internal audits, including any restrictions on the
scope of internal audit work or access to required information;
and
(iv) review the compliance of Internal Audit with professional
standards promulgated by the Institute of Internal Auditors.
On a periodic basis, the Audit Committee shall engage an
independent third party to assess the Internal Audit function in
accordance with professional standards promulgated by the Institute
of Internal Auditors and the Audit Committee shall review the
results of that assessment.
(d) Audit Plan - The Audit Committee shall review and approve
the annual audit plan presented by the Chief Auditor. The Chief
Auditor, on a quarterly basis, will review the status of the audit
plan and any changes needed, including a review of:
(i) the results of audit activities, including any significant
issues reported to management and management's response and/or
corrective actions;
(ii) the status of identified control weaknesses;
(iii) the adequacy and degree of compliance by CIBC with its systems of internal control.
(e) Succession Planning - At least annually, the Audit Committee
shall review succession plans for the Chief Auditor.
(4) Finance Function
(a) Organizational Framework - At least annually, the Audit
Committee shall review and approve the Finance organizational
framework, having regard to its role as an independent control
function.
(b) Chief Financial Officer - The Audit Committee shall review
and, if advisable, approve the appointment or removal of the Chief
Financial Officer. At least annually, the Audit Committee shall
review and approve the mandate and goals of the Chief Financial
Officer and review an assessment of the effectiveness of the Chief
Financial Officer.
(c) Effectiveness Review - At least annually, the Audit
Committee shall:
(i) review the Finance function's financial plan and staff
resources and recommend for Board approval;
(ii) review management's assessment of the effectiveness of the
Finance function.
On a periodic basis, the Audit Committee shall engage an
independent third party to assess the Finance function and the
Audit Committee shall review the results of that assessment.
(d) Succession Planning - At least annually, the Audit Committee
shall review succession plans for the Chief Financial Officer.
(5) Compliance Function
(a) Organizational Framework - At least annually, the Audit
Committee shall review and approve the Compliance organizational
framework, having regard to its role as an independent control
function.
(b) Chief Compliance Officer- The Audit Committee shall review
and, if advisable, approve the appointment or removal of the Chief
Compliance Officer. At least annually, the Audit Committee shall
review and approve the mandate and goals of the Chief Compliance
Officer and review an assessment of the effectiveness of the Chief
Compliance Officer.
(c) Effectiveness Review - At least annually, the Audit
Committee shall:
(i) review the Compliance function's financial plan and staff
resources and recommend for Board approval;
(ii) review management's assessment of the effectiveness of the
Compliance function.
On a periodic basis, the Audit Committee shall engage an
independent third party to assess the effectiveness of the
Compliance function and the Audit Committee shall review the
results of that assessment.
(d) Compliance Plans - The Audit Committee shall review and
approve the annual compliance plan presented by the Chief
Compliance Officer. The Chief Compliance Officer, on a quarterly
basis, will review the status of the compliance plan and any
changes needed.
(e) Succession Planning - At least annually, the Audit Committee
shall review succession plans for the Chief Compliance Officer.
(6) Internal Controls
(a) General - The Audit Committee shall monitor the system of
internal control.
(b) Establishment, Review and Approval - The Audit Committee
shall require management to implement and maintain appropriate
policies and systems of internal control in accordance with
applicable laws, regulations and guidance, including internal
control over financial reporting and disclosure and to review,
evaluate and approve these procedures. At least annually, the Audit
Committee shall consider and review with management, the external
auditors, the Chief Auditor, the Executive Vice-President and
Deputy General Counsel, Legal, Governance and Control, and the
Chief Compliance Officer:
(i) the effectiveness of, or weaknesses or deficiencies in: the
design or operation of CIBC's internal controls (including
computerized information system controls and security); the overall
control environment for managing business risks; and accounting,
financial and disclosure controls (including, without limitation,
controls over financial reporting), operational controls, and legal
and regulatory controls (including with respect to money laundering
and terrorist financing) and the impact of any identified
weaknesses in internal controls on management's conclusions;
(ii) any significant changes in internal control over financial
reporting that are disclosed, or considered for disclosure,
including those in CIBC's periodic regulatory filings;
(iii) any material issues raised by any inquiry or investigation by CIBC's regulators;
(iv) CIBC's fraud prevention and detection program, including
deficiencies in internal controls that may impact the integrity of
financial information, or may expose CIBC to other significant
internal or external fraud losses and the extent of those losses
and any disciplinary action in respect of fraud taken against
management or other employees who have a significant role in
financial reporting;
(v) CIBC's business continuity management and insurance
programs, including, reviewing and recommending for Board approval
a resolution establishing certain limits of insurance, to meet the
requirements of the Protection of Assets (Banks) Regulations to the
Bank Act (Canada); and
(vi) any related significant issues and recommendations of the
external auditors and internal auditors together with management's
responses thereto, including the timetable for implementation of
recommendations to correct weaknesses including those relating to
internal controls over financial reporting and disclosure
controls.
(7) Certain Federally Regulated Subsidiaries - The Audit
Committee shall be the audit committee for certain federally
regulated subsidiaries of CIBC, as determined by the Audit
Committee from time to time, that require an audit committee under
applicable law. In meeting its Audit Committee responsibilities
with respect to these subsidiaries, the Audit Committee shall:
(a) review the annual financial statements of the subsidiary
prior to approval by its board of directors;
(b) review regulatory returns of the subsidiary as required
under applicable law;
(c) require management of the subsidiary to implement and
maintain appropriate internal controls over financial reporting and
financial disclosure controls and procedures and approve, review
and evaluate these procedures;
(d) review the effectiveness of the subsidiary's internal
control over financial reporting and financial disclosure,
including computerized information system controls and security,
the overall control environment and accounting and financial
controls (including, without limitation, controls over financial
reporting), and the impact of any identified weaknesses in internal
control over financial reporting on management's conclusions with
respect to their effectiveness;
(e) review any related significant issues and recommendations of
the external and internal auditors together with management's
responses thereto, including the timetable for implementation of
recommendations to correct weaknesses in internal controls;
(f) review investments and transactions that could adversely
affect the well being of the subsidiary; and
(g) meet with the external auditors of the subsidiary to discuss
the annual financial statements and the returns and transactions of
such subsidiary, if applicable.
(8) Regulatory Reports and Returns - The Audit Committee shall
provide or review, as applicable, all reports and returns required
of the Audit Committee under applicable law.
(9) Compliance with Legal and Regulatory Requirements - The
Audit Committee shall receive and review regular reports from the
Chief Compliance Officer, the Executive Vice-President and Deputy
General Counsel, Legal, Governance and Control, CIBC's General
Counsel, the Chief Anti-Money Laundering Officer, the Chief Auditor
and other management members on: legal or compliance matters that
may have a material impact on CIBC; the effectiveness of CIBC's
compliance policies and programs, including those related to money
laundering and terrorist financing; and any material reports
received from regulators. The Audit Committee shall review
management's evaluation of and representations relating to
compliance with specific regulatory requirements, and management's
plans to remediate any deficiencies identified.
(10) Whistleblowing Procedures - The Audit Committee shall
ensure that procedures are established for the receipt, retention
and treatment of complaints received by CIBC from employees or
others, confidentially and anonymously, regarding accounting,
internal accounting controls, or auditing matters. The Committee
shall review management reports on the procedures.
(11) Adverse Investments and Transactions - The Audit Committee
shall review any investments and transactions that could adversely
affect the well-being of CIBC.
(12) Audit Committee Disclosure - The Audit Committee shall
review and approve any audit committee disclosures required by
securities regulators in CIBC's disclosure documents.
(13) Assessment of Regulatory Compliance - The Audit Committee
shall review management's assessment of compliance with laws and
regulations as they pertain to responsibilities under this mandate,
report any material findings to the Board and recommend changes it
considers appropriate.
(14) Delegation - The Audit Committee may designate a
sub-committee to review any matter within this mandate as the Audit
Committee deems appropriate.
5. REPORTING TO THE BOARD
(1) The Chair shall report to the Board, as required by
applicable law or as deemed necessary by the Audit Committee or as
requested by the Board, on matters arising at Audit Committee
meetings and, where applicable, shall present the Audit Committee's
recommendation to the Board for its approval.
6. COMMITTEE MEMBER DEVELOPMENT AND PERFORMANCE REVIEW
(1) The Chair shall co-ordinate orientation and continuing
director development programs relating to this mandate for Audit
Committee members.
(2) At least annually, the Audit Committee shall evaluate and
review the performance of the Audit Committee and each of its
members and the adequacy of this mandate. This review will be
undertaken in consultation with the Corporate Governance Committee
of the Board.
7. CURRENCY OF THE AUDIT COMMITTEE MANDATE
(1) This mandate was last revised and approved by the Board on
August 31, 2011.
Exhibit "A"
U.S. Securities and Exchange Commission Standards Implementing
the Sarbanes Oxley Act of 2002 (the "SOX Standards")
-- A member of the Audit Committee ("Member") must be
"independent" under the SOX Standards. In order to be considered
independent, a Member may not, other than in his or her capacity as
a Member of the Audit Committee, the Board of Directors, or any
other Board committee:
(a) accept directly or indirectly any consulting, advisory or
other compensatory fees from CIBC or any subsidiary thereof,
excluding fixed amounts of compensation under a retirement plan
(including deferred compensation) for prior service with CIBC
(provided such compensation is not contingent in any way on
continued service); or
(b) be an "affiliated" person of CIBC or a subsidiary of CIBC.
The following words used above have the following meanings:
-- A Member is "affiliated" with CIBC or a subsidiary if he or
she directly, or indirectly through one or more intermediaries,
controls, or is controlled by or is under common control with, CIBC
or a subsidiary.
-- A person is not deemed to be in control of a specified person if the person:
(a) is not the beneficial owner, directly or indirectly, of more
than 10% of any class of voting equity securities; and
(b) is not an "executive officer" of the specified person.
-- A Member is also affiliated if he or she is:
(a) an executive officer of an affiliate of CIBC;
(b) an employee of an affiliate of CIBC;
(c) a general partner of an affiliate of CIBC; or
(d) a managing member of an affiliate of CIBC.
-- "Executive officer" means the President (or Chief Executive
Officer), any Vice President in charge of a principal business
unit, division or function (such as sales, administration or
finance), any other officer who performs a policy making function,
or any other person who performs similar policy making functions
for the entity. Executive officers of subsidiaries may be deemed
executive officers of an entity if they perform such policy-making
functions for the entity.
-- "Indirect" acceptance of any consulting, advisory or other
compensatory fee, includes acceptance by a spouse, minor child or
minor stepchild, child or stepchild sharing a home with the Member,
or by an entity in which such Member is a partner, member, an
officer such as a managing director occupying a comparable position
or an executive officer, or occupies a similar position (except
limited partners, non-managing members and those occupying similar
positions who, in each case, have no active role in providing
services to the entity) and which provides accounting, consulting,
legal, investment banking or financial advisory services to CIBC or
any subsidiary of CIBC.
Appendix C
CIBC Policy on the Scope of Services of the Shareholders'
Auditors
1. Summary
This policy is designed to provide a consistent approach for the
engagement of the shareholders' auditors; it also establishes the
roles and responsibilities of those involved in external audit
engagements and must be followed by all employees responsible for
the engagement of shareholders' auditors.
2. Intent
The purpose of this policy is to set parameters for the
engagement of the shareholders' auditors by CIBC consistent with
CIBC corporate governance expectations and applicable law,
including the U.S. Sarbanes-Oxley Act and SEC Rules. Failure to
comply with this policy may result in the disqualification of
CIBC's appointed shareholders' auditors to conduct the financial
statement and internal control audits for CIBC.
Contravention of any provision of this Policy by an employee may
result in disciplinary action up to and including termination of
employment for cause, without notice or pay in lieu of notice. Such
conduct may also affect individual performance assessments and
compensation.
Contravention of any provision of this Policy by a contractor
may result in action by CIBC up to and including termination of
his/her governing contract, without notice.
3. Audience / Scope
This policy applies to all employees of CIBC and its
subsidiaries, as well as contractors providing services to CIBC,
involved in the approval or reporting on the engagements of the
shareholders' auditors.
This Policy covers all work that might be performed by the
shareholders' auditors through engagements with CIBC or its
subsidiaries.
The term shareholders' auditors refers to the firm of
accountants that is appointed to perform the audit of the
consolidated financial statements of CIBC and its subsidiaries. The
current shareholders' auditors are Ernst & Young LLP, including
any Ernst & Young International, Ltd. or Ernst & Young
Global Limited member or affiliated firm of Ernst & Young.
4. Policy Requirements
4.1 Scope of work and authorization standards:
4.1.1 All work performed by the shareholders' auditors for CIBC
or its subsidiaries (includes all majority owned entities) will be
pre-approved by the Audit Committee. The Audit Committee may
delegate authority to pre-approve such work to subcommittees
consisting of one or more of its members, provided that any work so
pre-approved must be ratified by the full Audit Committee at the
next meeting of the Audit Committee. The Audit Committee may also
establish pre-approval policies and procedures that are specific to
a particular service. In order to meet this responsibility, for
each fiscal quarter a pre-approved spending limit by category of
allowable work is established and displayed in the Appendix. The
EVP Finance Shared Services will monitor and report to the Audit
Committee the quarterly cumulative use of the pre-approved limits.
(See Appendix for Examples of Services)
4.1.2 In the event that a non-audit service is provided by the
shareholders' auditors that was not recognized at the time of the
engagement to be a non-audit service, such service must be brought
to the attention of the Audit Committee or its delegate for
approval.
4.1.3 The shareholders' auditors will only perform audit,
audit-related and tax work. Examples of "audit", "audit-related"
and "tax work" are included in the Appendix.
4.1.4 The shareholders' auditors will be prohibited from
performing corporate recovery work for a CIBC corporate credit
customer when CIBC is in a position to direct the choice of the
financial advisors or consultants.
4.1.5 The Audit Committee may approve exceptions to (3) and (4)
above when it determines that such an exception is in the
overriding best interests of CIBC and it is determined that such an
exception does not impair the independence of the shareholders'
auditors. However, certain non-audit activities are generally
prohibited and generally will not be considered for exception from
this policy. These non-audit activities are listed in the
Appendix.
4.2 Ongoing relationship standards:
4.2.1 The lead and concurring partners on the engagement will
serve for a maximum of five years and then be subject to a
five-year time out from serving on CIBC audits.
4.2.2 Other than the lead and the concurring partners, audit
partners who have responsibility for decision-making on significant
auditing, accounting and reporting matters will serve for a maximum
of seven years and then be subject to a two-year time out from
serving on CIBC audits, unless the audit partner performs less than
10 hours of audit, review or attest services.
4.2.3 CIBC will not employ, in a financial reporting oversight
role, a member of the shareholders' auditors engagement team within
12 months of the final closure of the audit in which that
individual last participated.
5. Monitoring/Oversight Mechanism
5.1 On a quarterly basis, the EVP Finance Shared Services will
prepare and present to the Audit Committee a summary report of all
engagements of the shareholders' auditors that are currently
underway or have been completed since the prior quarter's report,
including engagements entered into pursuant to pre-approved
quarterly limits. The summary report will describe the nature of
each engagement, confirm that each engagement is in compliance with
this policy and state the fees received by the shareholders'
auditors for each engagement.
5.2 Business management will make either oral or written
presentations to the Audit Committee or its designee seeking
pre-approvals for engagements of the shareholders' auditors.
5.3 On a quarterly basis, the shareholders' auditors will
certify to the Audit Committee that all engagements with CIBC have
been in compliance with this policy and will confirm that the
shareholders' auditors continues to be "independent" under
applicable laws, rules and guidelines. As well, quarterly the
shareholders' auditors will table at the Audit Committee a
classification and continuity schedule of all partners and staff
that must be tracked in order to ensure adherence to the Ongoing
Relationship Standards.
5.4 The EVP Finance Shared Services will be a signatory on all contracts of engagement with the shareholders' auditors.
6. Roles and Responsibilities
The EVP Finance Shared Services is accountable for the
management of this Policy and providing interpretations on its
application.
7. Maintenance and Review
This policy is effective from the date of approval by the Audit
Committee of CIBC, November 30, 2011 and applies to all subsequent
engagements. The next annual review will be in December 2012.
This policy is required to be reviewed at least annually and
submitted to the Audit Committee of the Board of Directors for
review and approval. Material changes are submitted to the CIBC
Governance and Control Committee for approval prior to submission
to the Audit Committee. Any significant updates are communicated on
CIBC Today.
8. Links
-- Procedures for Implementing the Scope of Services Policy
Appendix to the Scope of Services of the Shareholders'
Auditors
Audit
$'000 Core Audit Fees (A-1) Note 1 Note 1
Prospectus / Regulatory Filings
(A-2) 75 900
Additional Audit Fees (A-3) 100 1,500
Other services requiring
specific pre-approval 0 0
Audit
Related
Employee benefit plan audits
$'000 (AR-1) 150 400
Due diligence services in
connection with mergers,
acquisitions, divestitures
and restructuring (AR-2) 100 300
Interpretation of accounting,
tax and reporting standards
(AR-3) 100 400
Attest services not required
by Statute or regulation
(AR-4) 100 300
Information technology review
and advisory services (AR-5) 100 675
Translation services (AR-6) 200 400
Agreed upon procedures reports
or statutory compliance (AR-7) 100 500
Other services requiring
specific pre-approval 0 0
------- -------
Tax
$'000 Tax compliance services (T-1) 100 350
Assistance with tax audits
and appeals to regulatory
agencies (T-2) 100 300
Tax advice or assistance
regarding statutory, regulatory
or administrative developments
(T-3) 100 300
Review of financial statement
implications (T-4) 100 300
General tax planning and
advice relating to mergers
and acquisitions and financing
structures (T-5) 100 300
Other tax consultations (T-6) 200 500
Other services requiring
specific pre-approval 0 0
------- -------
Other
Consulting and other advisory
$'000 services (O-1) 25 100
Other services requiring
specific pre-approval 0 0
--------------------------------------------- ------- -------
Prohibited Prohibited
-------------
$'000
* Bookkeeping or other services related to the
accounting records or Financial Statements of CIBC
-----------
* Financial information systems design and
implementation
* Appraisal or valuation services, fairness opinions,
or contributions-in-kind reports
* Actuarial services
* Internal audit outsourcing services
* Management functions or human resources
* Broker or dealer, investment advisor, or investment
banking services
* Legal services
* Corporate recovery services paid directly by CIBC or
for a corporate credit customer of CIBC where CIBC is
able to direct the choice of financial advisors or
consultants by virtue of its credit position with the
client
* Expert services unrelated to the audit
* Any other services that the Public Accounting
Oversight Board in the US determines, by regulation,
is impermissible
Note 1 Core audit fees are approved by the Audit Committee of
the CIBC Board of Directors at the annual CIBC Board Meeting
[1] Non GAAP Measure - refer to pages 39-40 of CIBC's 2011
Annual Report.
[2] From time to time securities of CIBC may be listed on other
stock exchanges or quotation systems by investors, brokers or
others without the consent or involvement of CIBC. This section
does not include debt instruments that are classified as
deposits.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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