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Canadian Imperial Bank of Commerce/CAN – ‘40-F’ for 10/31/02 – ‘EX-6’

On:  Wednesday, 1/15/03, at 1:38pm ET   ·   For:  10/31/02   ·   Accession #:  1206774-3-20   ·   File #:  1-14678

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 1/15/03  Canadian Imperial B… Commerce/CAN 40-F       10/31/02    9:628K                                   DG3/FA

Annual Report by a Canadian Issuer   —   Form 40-F
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 40-F        Annual Report by a Canadian Issuer                     6     24K 
 2: EX-1        Underwriting Agreement                                 1      5K 
 3: EX-2        Plan of Acquisition, Reorganization, Arrangement,     11     42K 
                          Liquidation or Succession                              
 4: EX-3        Articles of Incorporation/Organization or By-Laws    120±   426K 
 5: EX-4        Instrument Defining the Rights of Security Holders   102±   461K 
 6: EX-5        Opinion re: Legality                                   1      8K 
 7: EX-6        Opinion re: Discount on Capital Shares                18±    72K 
 9: EX-8        Opinion re: Tax Matters                                1      8K 
 8: EX-7        Opinion re: Liquidation Preference                     1      8K 


EX-6   —   Opinion re: Discount on Capital Shares

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Exhibit 6 TEN-YEAR STATISTICAL REVIEW Ten-Year Statistical Review -------------------------------------------------------------------------------- [Enlarge/Download Table] CONDENSED CONSOLIDATED STATEMENTS OF INCOME $ millions, for the years ended October 31 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 -------------------------------------------------------------------------------------------------------------------------------- Net interest income (TEB)(1) $ 5,621 $ 4,693 $ 4,413 $ 4,537 $4,438 $4,641 $4,567 $4,169 $4,107 $3,835 Deduct taxable equivalent adjustment 111 144 131 129 101 124 104 95 105 90 -------------------------------------------------------------------------------------------------------------------------------- Net interest income (consolidated statement of income basis) 5,510 4,549 4,282 4,408 4,337 4,517 4,463 4,074 4,002 3,745 Non-interest income 5,531 6,613 7,797 5,728 4,804 3,980 2,892 2,258 2,252 1,903 -------------------------------------------------------------------------------------------------------------------------------- Total revenue 11,041 11,162 12,079 10,136 9,141 8,497 7,355 6,332 6,254 5,648 Provision for credit losses 1,500 1,100 1,220 750 480 610 480 680 880 920 Non-interest expenses 9,129 8,226 8,096 7,998 7,125 5,372 4,584 3,991 3,907 3,544 -------------------------------------------------------------------------------------------------------------------------------- Income before taxes and non-controlling interests 412 1,836 2,763 1,388 1,536 2,515 2,291 1,661 1,467 1,184 Income taxes (279) 92 641 320 460 937 911 635 550 435 Non-controlling interests in net income of subsidiaries 38 58 62 39 20 27 14 11 27 19 -------------------------------------------------------------------------------------------------------------------------------- Net income $ 653 $ 1,686 $ 2,060 $ 1,029 $1,056 $1,551 $1,366 $1,015 $ 890 $ 730 ================================================================================================================================ Dividends on preferred shares $ 161 $ 121 $ 128 $ 112 $ 116 $ 98 $ 112 $ 111 $ 141 $ 131 Net income applicable to common shares $ 492 $ 1,565 $ 1,932 $ 917 $ 940 $1,453 $1,254 $ 904 $ 749 $ 599 ================================================================================================================================ (1) Taxable equivalent basis, as described in footnote (1) in Quarterly Review on page 127. [Enlarge/Download Table] ---------------------------------------------------------------------------------------------------- CONDENSED CONSOLIDATED BALANCE SHEETS $ millions, as at October 31 2002 2001 2000 1999 1998 ---------------------------------------------------------------------------------------------------- Assets Cash resources $ 9,512 $ 11,350 $ 10,679 $ 12,527 $ 10,795 Securities 65,292 74,794 69,242 59,492 60,970 Loans(1) Residential mortgages 66,612 58,751 51,921 46,637 43,199 Personal and credit card loans 30,784 28,411 27,939 24,751 24,563 Business and government loans 41,961 46,693 47,567 47,552 49,811 Securities borrowed or purchased under resale agreements 16,020 24,079 20,461 19,158 36,293 Allowance for credit losses (2,288) (2,294) (2,236) (1,748) (1,609) Customers' liability under acceptances 6,848 8,100 9,088 9,296 10,995 Derivative instruments market valuation 24,717 25,723 23,847 24,449 37,157 Land, buildings and equipment 2,247 1,769 1,508 2,213 2,201 Other assets 11,588 10,098 7,686 6,004 7,055 ---------------------------------------------------------------------------------------------------- $273,293 $287,474 $267,702 $250,331 $281,430 ==================================================================================================== Liabilities and shareholders' equity Deposits Individuals $ 67,975 $ 66,826 $ 63,109 $ 60,878 $ 59,993 Businesses and governments 117,986 114,270 103,141 85,940 84,862 Banks 10,669 13,256 13,382 13,223 15,020 Acceptances 6,878 8,100 9,088 9,296 10,995 Obligations related to securities lent or sold short or under repurchase agreements 18,051 32,616 28,191 29,203 48,659 Derivative instruments market valuation 24,794 26,395 24,374 25,097 36,245 Other liabilities 10,980 10,112 10,630 11,092 9,806 Subordinated indebtedness 3,627 3,999 4,418 4,544 4,714 Shareholders' equity Preferred shares 3,088 2,299 1,876 1,933 1,961 Common shares 2,842 2,827 2,868 3,035 3,128 Contributed surplus 26 -- -- -- -- Retained earnings 6,377 6,774 6,625 6,090 6,047 ---------------------------------------------------------------------------------------------------- $273,293 $287,474 $267,702 $250,331 $281,430 ==================================================================================================== $ millions, as at October 31 1997 1996 1995 1994 1993 ---------------------------------------------------------------------------------------------------- Assets Cash resources $ 7,931 $ 8,120 $ 15,419 $ 9,436 $ 7,880 Securities 45,252 39,817 38,255 28,753 24,167 Loans(1) Residential mortgages 40,039 36,932 34,686 32,248 30,746 Personal and credit card loans 22,305 20,132 18,716 16,953 14,802 Business and government loans 47,107 45,642 44,013 45,715 48,529 Securities borrowed or purchased under resale agreements 37,629 32,534 14,173 6,584 5,124 Allowance for credit losses (1,591) (1,422) (1,467) (1,562) (2,020) Customers' liability under acceptances 10,375 8,733 8,315 7,259 7,069 Derivative instruments market valuation 21,977 13,314 9,207 7,100 7,600 Land, buildings and equipment 2,071 1,983 2,013 1,995 1,951 Other assets 4,894 4,447 3,178 2,894 2,268 ---------------------------------------------------------------------------------------------------- $237,989 $210,232 $186,508 $157,375 $148,116 ==================================================================================================== Liabilities and shareholders' equity Deposits Individuals $ 59,188 $ 61,484 $ 61,061 $ 59,040 $ 57,265 Businesses and governments 60,272 43,705 45,738 36,213 34,357 Banks 19,438 22,232 22,683 20,209 19,283 Acceptances 10,375 8,733 8,315 7,259 7,069 Obligations related to securities lent or sold short or under repurchase agreements 43,932 41,907 22,211 10,569 7,523 Derivative instruments market valuation 21,376 12,500 8,135 6,373 6,860 Other liabilities 8,267 7,041 6,015 5,836 4,802 Subordinated indebtedness 4,894 3,892 3,671 3,441 3,003 Shareholders' equity Preferred shares 1,518 1,068 1,355 1,691 1,878 Common shares 3,105 3,055 3,202 3,200 3,016 Contributed surplus -- -- -- -- -- Retained earnings 5,624 4,615 4,122 3,544 3,060 ---------------------------------------------------------------------------------------------------- $237,989 $210,232 $186,508 $157,375 $148,116 ==================================================================================================== (1) Comparative figures have been reclassified to conform with the presentation used in 2002. -------------------------------------------------------------------------------- 128 CIBC ANNUAL REPORT 2002
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TEN-YEAR STATISTICAL REVIEW [Enlarge/Download Table] CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY $ millions, as at or for the years ended October 31 2002 2001 2000 1999 1998 ---------------------------------------------------------------------------------------------------------- Balance at beginning of year $11,900 $11,369 $11,058 $11,136 $10,247 Adjustment for change in accounting policy (42)(1) (140)(2) -- -- -- Premium on redemption/repurchase of share capital Preferred -- -- (17) -- (10) Common (269) (736) (873) (397) -- Changes in share capital Preferred 800 400 (80) -- 391 Common 15 (41) (167) (93) 23 Changes in contributed surplus 26 -- -- -- -- Net income 653 1,686 2,060 1,029 1,056 Dividends Preferred (161) (121) (128) (112) (116) Common (577) (536) (501) (492) (498) Other (12) 19 17 (13) 43 ---------------------------------------------------------------------------------------------------------- Balance at end of year $12,333 $11,900 $11,369 $11,058 $11,136 ========================================================================================================== $ millions, as at or for the years ended October 31 1997 1996 1995 1994 1993 --------------------------------------------------------------------------------------------------- Balance at beginning of year $ 8,738 $8,679 $8,435 $7,954 $6,638 Adjustment for change in accounting policy -- (94)(3) -- -- -- Premium on redemption/repurchase of share capital Preferred -- (34) -- -- -- Common -- (281) -- -- -- Changes in share capital Preferred 436 (290) (336) (187) 418 Common 50 (147) 2 184 583 Changes in contributed surplus -- -- -- -- -- Net income 1,551 1,366 1,015 890 730 Dividends Preferred (98) (112) (111) (141) (131) Common (434) (352) (320) (281) (263) Other 4 3 (6) 16 (21) --------------------------------------------------------------------------------------------------- Balance at end of year $10,247 $8,738 $8,679 $8,435 $7,954 =================================================================================================== (1) Represents the effect of implementing the CICA handbook section 3870, "Stock-Based Compensation and Other Stock-Based Payments," which introduced the requirement to account for SARs based on quoted market price on an ongoing basis. Additionally, CIBC adopted the fair value-based method to account for stock transactions with employees and non-officer Directors, as encouraged by section 3870. (2) Represents the effect of implementing the CICA handbook section 3461, "Employee Future Benefits," which introduced the requirement to accrue the cost of post-retirement and post-employment benefits during the years employees provide services to CIBC. (3) Represents the effect of implementing the CICA handbook section 3025, "Impaired Loans," which introduced the requirement to discount expected cash flows on impaired loans when determining the allowance for credit losses. [Enlarge/Download Table] ---------------------------------------------------------------------------------------------- SELECT FINANCIAL MEASURES As at or for the years ended October 31 2002 2001 2000 1999 1998 ---------------------------------------------------------------------------------------------- Return on common equity(1) 5.1% 16.1% 20.5% 9.8% 10.3% Return on average assets 0.22% 0.60% 0.78% 0.38% 0.38% Average common shareholders' equity ($ millions) $ 9,566 $ 9,739 $ 9,420 $ 9,323 $ 9,100 Average assets ($ millions) $292,510 $278,798 $263,119 $271,844 $278,823 Average assets to average common equity 30.6 28.6 27.9 29.2 30.6 Tier 1 capital ratio 8.7% 9.0% 8.7% 8.3% 7.7% Total capital ratio 11.3% 12.0% 12.1% 11.5% 10.8% Net interest margin (TEB)(2) 1.92% 1.68% 1.68% 1.67% 1.59% Efficiency ratio(3) 81.9% 72.8% 66.3% 77.9% 77.1% ============================================================================================== As at or for the years ended October 31 1997 1996 1995 1994 1993 ---------------------------------------------------------------------------------------------- Return on common equity(1) 17.7% 17.1% 12.9% 11.7% 10.6% Return on average assets 0.66% 0.70% 0.61% 0.57% 0.51% Average common shareholders' equity ($ millions) $ 8,195 $ 7,332 $ 7,003 $ 6,393 $ 5,664 Average assets ($ millions) $236,025 $196,063 $165,846 $155,640 $144,041 Average assets to average common equity 28.8 26.7 23.7 24.3 25.4 Tier 1 capital ratio 7.0% 6.6% 7.0% 7.1% 6.9% Total capital ratio 9.8% 9.0% 9.6% 9.9% 9.7% Net interest margin (TEB)(2) 1.97% 2.33% 2.51% 2.64% 2.66% Efficiency ratio(3) 62.3% 61.5% 62.1% 61.4% 61.8% ============================================================================================== (1) Net income applicable to common shares divided by average common shareholders' equity for the year. (2) Taxable equivalent basis, as described in footnote (1) in Quarterly Review on page 127. (3) Efficiency ratio may also be referred to as non-interest expenses to revenue ratio. Calculated as non-interest expenses divided by the sum of net interest income (taxable equivalent basis) and non-interest income. [Enlarge/Download Table] ------------------------------------------------------------------------------------------------------ COMMON SHARE INFORMATION As at or for the years ended October 31 2002 2001 2000 1999 1998 ------------------------------------------------------------------------------------------------------ Average number outstanding (thousands) 360,553 372,305 388,951 409,789 415,030 Per share - basic earnings(1) $ 1.37 $ 4.19 $ 4.95 $ 2.23 $ 2.24 - diluted earnings(1) $ 1.35 $ 4.13 $ 4.90 $ 2.21 $ 2.22 - dividends $ 1.60 $ 1.44 $ 1.29 $ 1.20 $ 1.20 - book value(2) $ 25.75 $ 26.44 $ 25.17 $ 22.68 $ 22.08 Share price(3) - high $ 57.70 $ 57.00 $ 50.50 $ 42.60 $ 59.80 - low $ 34.26 $ 43.20 $ 30.50 $ 28.00 $ 24.40 - close $ 38.75 $ 48.82 $ 48.40 $ 31.70 $ 30.65 Price to earnings multiple(4) (12-month trailing) 28.9 11.7 9.8 14.2 13.7 Dividend payout ratio(5) >100% 34.2% 25.9% 53.6% 53.0% ====================================================================================================== As at or for the years ended October 31 1997 1996 1995 1994 1993 ------------------------------------------------------------------------------------------------------- Average number outstanding (thousands) 413,545 415,028 432,614 425,464 401,366 Per share - basic earnings(1) $ 3.51 $ 2.94 $ 2.09 $ 1.76 $ 1.50 - diluted earnings(1) $ 3.49 $ 2.93 $ 2.09 $ 1.76 $ 1.50 - dividends $ 1.05 $ 0.85 $ 0.74 $ 0.66 $ 0.66 - book value(2) $ 21.07 $ 18.62 $ 16.93 $ 15.59 $ 14.45 Share price(3) - high $ 41.75 $ 28.30 $ 18.57 $ 18.13 $ 16.82 - low $ 26.55 $ 18.00 $ 15.57 $ 14.00 $ 11.82 - close $ 41.20 $ 27.85 $ 18.19 $ 16.00 $ 15.82 Price to earnings multiple(4) (12-month trailing) 11.7 9.5 8.7 9.1 10.6 Dividend payout ratio(5) 29.9% 28.1% 35.4% 37.5% 43.9% ======================================================================================================= (1) On November 1, 2001, CIBC retroactively adopted the requirements of the CICA handbook section 3500, "Earnings Per Share." Comparative figures have been restated. (2) Common shareholders' equity divided by the number of common shares issued and outstanding at end of year. (3) The high and low price during the year, and closing price on the last trading day of the year, on the Toronto Stock Exchange. (4) Closing common share price expressed as a multiple of net income per common share for the year. Comparative figures have been restated to conform with the presentation used in 2002. (5) Total common share dividends divided by net income applicable to common shares for the year. [Enlarge/Download Table] ---------------------------------------------------------------------------------------------------------------------------- DIVIDENDS ON PREFERRED SHARES(1) For the years ended October 31 2002 2001 2000 1999 1998 1997 1996 1995 1994 1993 ---------------------------------------------------------------------------------------------------------------------------- Class A Series 4 -- -- -- -- -- $3.4106 $4.7360 $6.0900 $4.5840 $4.5840 Series 5 -- -- -- -- -- $0.8240 $1.1600 $1.4728 $1.1057 $1.1273 Series 6 -- -- -- -- -- -- -- -- $2.4349 $2.2500 Series 7 -- -- -- -- -- -- -- $ 4,208 $ 3,507 $ 4,034 Series 8 -- -- -- -- -- -- -- $0.6706 $2.2200 $2.2200 Series 9 -- -- -- -- $1.1375 $2.2750 $2.2750 $2.2750 $2.2750 $2.2750 Series 10 -- -- -- -- -- -- $2.8175 $2.5555 $2.5786 $2.4423 Series 11 -- -- -- -- -- -- $2.4060 $2.2125 $2.2125 $2.2125 Series 12 -- -- $2.4100 $2.4267 $2.4097 $2.2462 $2.2188 $2.1856 $2.2054 $1.4983 Series 13 -- -- $1.7500 $1.7500 $1.7500 $1.7500 $1.7500 $1.7500 $1.7500 $1.2490 Series 14 $1.4875 $1.4875 $1.4875 $1.4875 $1.4875 $1.4870 $1.1197 -- -- -- Series 15 $1.4125 $1.4125 $1.4125 $1.4125 $1.4125 $1.4110 -- -- -- -- Series 16 $2.2244 $2.1724 $2.0948 $2.1093 $2.0946 $1.1367 -- -- -- -- Series 17 $1.3625 $1.3625 $1.3625 $1.3625 $1.3625 $0.7880 -- -- -- -- Series 18 $1.3750 $1.3750 $1.3750 $1.3750 $1.3628 -- -- -- -- -- Series 19 $1.2375 $1.2375 $1.2375 $1.2375 $0.7404 -- -- -- -- -- Series 20 $2.0276 $1.9801 $1.9095 $1.9227 $1.1703 -- -- -- -- -- Series 21 $1.5000 $1.5000 $1.1372 -- -- -- -- -- -- -- Series 22 $2.4606 $2.4031 $1.7713 -- -- -- -- -- -- -- Series 23 $1.3250 $0.9938 -- -- -- -- -- -- -- -- Series 24 $1.2962 -- -- -- -- -- -- -- -- -- Series 25 $0.8048 -- -- -- -- -- -- -- -- -- ---------------------------------------------------------------------------------------------------------------------------- (1) The dividends are adjusted for the number of days during the year that the share is outstanding at the time of issuance and redemption. -------------------------------------------------------------------------------- 129 CIBC ANNUAL REPORT 2002
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DIRECTORS OF THE BANK Directors of the Bank -------------------------------------------------------------------------------- DOUGLAS G. BASSETT ('80) O.C., O.Ont., LL.D., D.Litt. Chairman Windward Investments (Toronto, Ontario, Canada) JALYNN H. BENNETT ('94) C.M. President Jalynn H. Bennett and Associates Ltd. (Toronto, Ontario, Canada) THE LORD BLACK OF CROSSHARBOUR ('77) P.C. (Can), O.C., KCSG Chairman and Chief Executive Officer Argus Corporation Limited (London, England) PAT M. DELBRIDGE ('93) President PDA Partners Inc. (Toronto, Ontario, Canada) WILLIAM L. DUKE ('91) Farmer (Redvers, Saskatchewan, Canada) IVAN E.H. DUVAR ('89) B.E., DCL, P.Eng. President and Chief Executive Officer MIJAC Inc. (Amherst, Nova Scotia, Canada) WILLIAM A. ETHERINGTON ('94) Lead Director CIBC (Toronto, Ontario, Canada) A.L. FLOOD ('89) C.M. Company Director CIBC (Thornhill, Ontario, Canada) MARGOT A. FRANSSEN ('92) O.C. President and Partner The Body Shop Canada (Toronto, Ontario, Canada) R.D. FULLERTON ('74) Company Director CIBC (Toronto, Ontario, Canada) HON. GORDON D. GIFFIN ('01) Senior Partner McKenna Long & Aldridge (Atlanta, Georgia, U.S.A.) HON. JAMES A. GRANT ('91) P.C., Q.C. Partner Stikeman Elliott (Montreal, Quebec, Canada) ALBERT E.P. HICKMAN ('89) Chairman and President Hickman Motors Limited (St. John's, Newfoundland, and Labrador, Canada) JOHN S. HUNKIN ('93) Chairman and Chief Executive Officer CIBC (Toronto, Ontario, Canada) W. DARCY McKEOUGH ('78) O.C., B.A., LL.D. Chairman McKeough Supply Inc. (Chatham, Ontario, Canada) ARNOLD NAIMARK ('87) O.C., M.D., LL.D., F.R.C.P.(C), F.R.S. (Can.) Past President The University of Manitoba Director Centre for the Advancement of Medicine (Winnipeg, Manitoba, Canada) MICHAEL E.J. PHELPS ('89) O.C., B.A., LL.B., LL.M., LL.D. Chairman Dornoch Capital Inc. (Vancouver, British Columbia, Canada) CHARLES SIROIS ('97) C.M., B.Fin., M.Fin., C.Q. Chairman and Chief Executive Officer Telesystem Ltd. (Montreal, Quebec, Canada) STEPHEN G. SNYDER ('00) B.Sc., M.B.A. President and Chief Executive Officer TransAlta Corporation (Calgary, Alberta, Canada) W. GALEN WESTON ('78) O.C. Chairman George Weston Limited Loblaw Companies Limited (Toronto, Ontario, Canada) As at October 31, 2002, the directors and senior officers of CIBC as a group, beneficially owned, directly or indirectly, or exercised control or direction of less than 1% of the outstanding common shares of CIBC. To the knowledge of CIBC, no director or senior officer of CIBC beneficially owned or controlled voting securities of any subsidiaries of CIBC. -------------------------------------------------------------------------------- 130 CIBC ANNUAL REPORT 2002
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SENIOR OFFICERS Senior Officers -------------------------------------------------------------------------------- SENIOR EXECUTIVE TEAM HUNKIN, J.S. (JOHN) Chairman and Chief Executive Officer DENHAM, G.H. (JILL) Vice-Chair CIBC Retail Markets FOX, W.C. (WAYNE) Vice-Chair and Chief Risk Officer Treasury, Balance Sheet and Risk Management KASSIE, D.J. (DAVID) Vice-Chair CIBC Chairman and Chief Executive Officer CIBC World Markets LALONDE, R.A. (RON) Senior Executive Vice-President and Chief Administrative Officer Administration McCAUGHEY, G.T. (GERALD) Vice-Chair CIBC Wealth Management VENN, R.E. (RICHARD) Senior Executive Vice-President Corporate Development WOELLER, M.D. (MIKE) Senior Executive Vice-President and Chief Information Officer Technology and Operations OFFICERS ADOLPHE, K.J.E. (KEVIN) Managing Director and Chief Administrative and Financial Officer CIBC World Markets BAXENDALE, S.A. (SONIA) Executive Vice-President Global Private Banking and Investment Management Services CIBC Wealth Management CAPATIDES, M.G. (MICHAEL) Executive Vice-President and General Counsel Legal and Compliance Administration CATHCART, R. (RON) Executive Vice-President Retail Credit Adjudication Treasury, Balance Sheet and Risk Management CHORNOBOY, D. (DOUGLAS) Senior Vice-President and Controller Administration CROUCHER, C. (CHRISTINE) Executive Vice-President CIBC Card Products, Collections, Retail and Small Business Lending ELLIOTT, M.A. (MARY ANNE) Executive Vice-President Retail Markets Projects CIBC Retail Markets FERGUSON, D.S. (DAN) Executive Vice-President Corporate and Commercial Adjudication Treasury, Balance Sheet and Risk Management FISHER, P.T. (PAUL) Vice-President and Corporate Secretary Administration GETTINGS, W.E. (ED) Executive Vice-President CIBC Mortgages Inc. and Insurance CIBC Retail Markets GRAHAM, S.D. (STEPHEN) Executive Vice-President and Chief Marketing Officer CIBC Retail Markets GRAY, C.J. (CAROL) Executive Vice-President Small Business Banking CIBC Retail Markets HORROCKS, M.G. (MICHAEL) Executive Vice-President and Treasurer Treasury, Balance Sheet and Risk Management HUMBER, K.A. (KATHRYN) Senior Vice-President Investor Relations Administration KILGOUR, P.K.M. (KEN) Executive Vice-President Credit Asset and Merchant Banking Portfolio Management Treasury, Balance Sheet and Risk Management LALONDE, K.W. (KENN) Executive Vice-President Personal Banking CIBC Retail Markets LAUZON, M. (MICHEL) President and Chief Operating Officer TAL Global Asset Management CIBC Wealth Management LINDSAY, D.R. (DON) Managing Director Canadian Investment and Corporate Banking and Head of Asia Pacific Region CIBC World Markets MacDONALD, B.E. (BARBARA) Senior Vice-President and Chief Accountant Administration MacLACHLAN, L.W. (LACH) Senior Vice-President and Ombudsman Office of the Chairman and Chief Executive Officer McGIRR, S.R. (STEVE) Managing Director Global Debt Capital Markets and Foreign Exchange CIBC World Markets McNAIR, S.M. (STEVEN) Executive Vice-President Imperial Service CIBC Wealth Management McSHERRY, J.R. (JAMES) Executive Vice-President and Managing Director Commercial Banking CIBC World Markets MONAHAN, T.S. (TOM) Managing Director and Head of CIBC Wood Gundy and CIBC Investors Edge CIBC Wealth Management PHILLIPS, J.M. (JOYCE) Executive Vice-President Human Resources Administration PURI, P. (PANKAJ) Executive Vice-President and Chief Auditor Internal Audit and Corporate Security Administration RAFTUS, S.T. (STUART) Managing Director and Head of CIBC Oppenheimer Private Client Group CIBC Wealth Management ROGERS, P.D. (PAUL) Managing Director USA Region CIBC World Markets SCHMID, G. (GERRARD) Executive Vice-President and Chief Operating Officer CIBC Retail Markets SHAW, B.G. (BRIAN) Managing Director Institutional Equities and Commodities Products CIBC World Markets WAITE, R.E. (BOB) Senior Vice-President Corporate Communications and Public Affairs Administration WOODS, T.D. (TOM) Executive Vice-President and Chief Financial Officer Administration -------------------------------------------------------------------------------- 131 CIBC ANNUAL REPORT 2002
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CORPORATE GOVERNANCE For more information on how CIBC manages and governs, see: Lead Director's Message page 12 Management of Risk and Balance Sheet Resources page 55 Regulatory page 70 Related Party Procedures page 70 -------------------------------------------------------------------------------- Corporate Governance -------------------------------------------------------------------------------- CIBC's Board of Directors regularly reviews enhancements to its governance practices. Certain events in the past year have reinforced the need for adherence to the best corporate governance principles, as well as the need to do so with integrity and accountability. CIBC Lead Director, William Etherington, discusses some of the initiatives the board has taken to enhance CIBC's governance policies and practices in 2002 in his Message on page 12 of this report. The board believes that good governance requires constant review and adjustment; it requires both proper structure and principled execution. The fundamental statutory duty of the Board of Directors is to supervise the management of the business of CIBC. The board recognizes the importance of the protection and enhancement of long-term shareholder value, particularly in this current unsettled environment. In 2001, the board initiated a formal assessment process for itself and its members; this has now become an ongoing process. In 2002, the board used the results of this assessment to assist it in enhancing its governance practices. Through the board, CIBC has made substantial progress in strengthening its governance practices and has responded quickly and effectively to external events which have eroded investor confidence in the North American marketplace. The quality, composition and effectiveness of the board, both collectively and of its individual directors, are of fundamental importance. The Board of Directors of CIBC has delegated some of the detailed work to monitor and enhance these governance elements to the Corporate Governance Committee (although it remains a significant responsibility of the full board). This committee nominates directors for approval by the board and by the shareholders at the annual meeting. Such appointments are made annually and reflect the committee's evaluation of the individual's contributions. The board seeks the highest quality individuals to serve on the board, while also considering diversity, the geographical size of Canada, and the importance of CIBC's business interests in jurisdictions outside of Canada. The Corporate Governance Committee also makes recommendations to the board concerning any proposed changes in the objectives or responsibilities of the board and its committees. The terms of reference of all committees were amended by the board in June 2002 with the re-allocation of a number of duties between committees. In addition, the mandates of the chairman and chief executive officer and of the lead director were revised to clarify their respective duties. All committees review the information required to perform committee work effectively. In certain cases, this will include the retention of independent consultants and advisers. For some years, the Management Resources and Compensation and the Audit committees have retained consulting firms from both Canada and the United States to advise them on various issues. In 2001 and early 2002, the Corporate Governance Committee also retained an external consultant to provide services related to board, committee and director assessment. The Canada Deposit Insurance Corporation (CDIC) issued new standards of sound business and financial practices in 2002 to which all its member institutions, including CIBC, are required to adhere. Under the management of the lead director and the Corporate Governance Committee, the board undertook a self-assessment of its practices against these standards. The board also received a report from management on its systems of internal controls and the control framework in place at CIBC for the management of risk, based on the results of an extensive control self-assessment process undertaken throughout the corporation. CIBC has submitted to CDIC its required attestations of compliance to the standards for the current reporting year, which include a formal resolution passed by the Board of Directors. The system of internal controls is part of the corporate governance structures, policies and procedures which have enabled the board to conclude that CIBC is in full compliance with the Guidelines for Corporate Governance established by the Toronto Stock Exchange, and will be outlined in the Management Proxy Circular. -------------------------------------------------------------------------------- 132 CIBC ANNUAL REPORT 2002
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BOARD COMMITTEES Board Committees -------------------------------------------------------------------------------- The board believes that its proper governance and effectiveness in carrying out its duties is greatly enhanced by the use of committees. The mandates of each of the four board committees were reviewed by each committee at the beginning of 2002. Revisions to these mandates were recommended to the full board on June 6, 2002, and changes were agreed upon. The Corporate Governance Committee reviews corporate governance matters pertaining to the Shareholders and the Board of Directors. The committee: o Has the specific and ongoing responsibility to review the state of CIBC's corporate governance as to quality and effectiveness and to recommend enhancements to the Board of Directors. o Reviews the performance of the chief executive officer (CEO) and succession planning for the CEO. o Reviews the role and composition of the board and its committees and the methods and processes by which the board fulfills its duties. o Reviews the performance of the board, its committees and the directors. o Considers board and committee agendas and the quality of material being presented. o Establishes criteria for election and re-election as a director, thereby managing the director nomination process. o Reviews and monitors CIBC's compliance with the CDIC standards relating to board responsibilities. Members: J.H. Bennett, I.E.H. Duvar, W.A. Etherington (Chair)*, J.A. Grant, M.E.J. Phelps The Management Resources and Compensation Committee provides, on behalf of the board, detailed review, oversight and approval of CIBC's policies, practices and procedures relating to human resources to ensure ongoing, long-term development and deployment of high-calibre senior management resources. The committee: o Reviews compensation to ensure the relationship between senior management performance and compensation is appropriate and set with reference to competitive benchmarks. o Reviews human resource matters with emphasis on overall strategy and programs relating to the recruitment, development and retention of personnel. o Reviews overall compensation programs. o Monitors succession planning for senior management other than the CEO. o Approves investment policies and oversees the administration of the pension plan to ensure fiduciary obligations are met in accordance with established rules, policies and guidelines. Members: J.H. Bennett, M.A. Franssen, M.E.J. Phelps (Chair), C. Sirois, S.G. Snyder The Audit Committee oversees CIBC's financial reporting procedures to satisfy itself that there are adequate internal controls over accounting and financial reporting systems. The committee: o Reviews the annual and quarterly statements prior to approval by the board and other published or regulatory financial statements. o Reviews and monitors CIBC's compliance with the CDIC standards relating to strategic management/business planning, risk management process, operational risk management, fiduciary risk management, control environment, independent internal audit and business conduct/ethical behaviour. o Examines the mandate, nature and scope of CIBC's internal and external audit work, including the independence of the external auditors. o Monitors procedures established by the board to provide disclosure of information to customers. o Reviews and monitors legislative amendments impacting the financial services sector. o Meets annually, together with the Risk Management Committee, with the Superintendent of Financial Institutions Canada; and regularly with CIBC's executive vice-president, legal and compliance, chief accountant, chief auditor and the shareholders' auditors. o Acts as the Audit Committee of certain CIBC subsidiaries and in so doing carries out review and approval of their financial reporting and control procedures. o Acts as the Conduct Review Committee for CIBC and for certain regulated subsidiaries of CIBC. o Monitors procedures established by the Board of Directors to identify and resolve conflicts of interest and restrict the use of confidential information as required by the Bank Act. o Reviews procedures and practices with respect to self-dealing and establishes criteria to measure materiality of such transactions. Members: D.G. Bassett, P.M. Delbridge, W.L. Duke, I.E.H. Duvar (Chair), R.D. Fullerton, G.D. Giffin The Risk Management Committee ensures policy guidelines and systems exist and are being followed to maintain credit, market and liquidity risks at an acceptable level. The committee: o Reviews and approves delegated authorities for credit and market risks. o Reviews and monitors CIBC's compliance with CDIC standards relating to credit, market (including structural) and liquidity risk management. o Reviews and approves credits above certain threshold amounts and reviews impaired loans and anticipated loan losses regularly. o Reviews and recommends to the Board of Directors investment and lending policies, standards and procedures. Members: A.L. Flood, J.A. Grant (Chair), A.E.P. Hickman, W.D. McKeough, A. Naimark Information on the number of board and committee meetings held and director attendance will be included in the Management Proxy Circular. All committees are composed entirely of outside directors. * W.A. Etherington, Lead Director, is an ex-officio member of the Management Resources and Compensation Committee, the Audit Committee and the Risk Management Committee. 133 CIBC ANNUAL REPORT 2002

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