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Granite REIT Inc. – ‘6-K’ for 5/16/17 – ‘EX-99.1’

On:  Tuesday, 5/16/17, at 4:21pm ET   ·   For:  5/16/17   ·   Accession #:  1193125-17-172141   ·   File #:  1-35772

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

 5/16/17  Granite REIT Inc.                 6-K         5/16/17    4:3.9M                                   Donnelley … Solutions/FA

Document/Exhibit                   Description                      Pages   Size 

 1: 6-K         Report by a Foreign Private Issuer                  HTML     12K 
 2: EX-99.1     Miscellaneous Exhibit                               HTML    521K 
 3: EX-99.2     Miscellaneous Exhibit                               HTML     11K 
 4: EX-99.3     Miscellaneous Exhibit                               HTML     25K 

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Exhibit 99.1

Granite is well positioned to achieve its growth and diversification objectives and create sustainable income and long-term value for all unitholders
GLOBAL PLATFORM FOR GROWTH          REDUCED COST OF CAPITAL          INDUSTRY LEADING BALANCE SHEET
GAME CHANGING LEASE EXTENSIONS          STRATEGIC REVIEW COMPLETE          CONSISTENT OUTPERFORMANCE
GRANITE: 56%        S&P/TSX CAPPED REIT INDEX: 20%        2013        2017
TOTAL RETURN SINCE REIT CONVERSION 03-JAN-15 TO 05-MAY-17
Don’t allow short-term oriented dissidents to put this significant opportunity at risk Vote only the WHITE proxy to continue Granite’s proven strategy for value creation and strong momentum
GRANITE REIT

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May 15, 2017

Dear Granite Unitholders:

Since 2011, Granite’s Board and management have executed a strategy that has driven significant gains for Granite investors and positioned Granite for continued success in 2017 and beyond. Granite is one of the best performing REITs in Canada. It generated a total cumulative return to unitholders of approximately 24.5% in 2016, compared to 17.4% for the S&P/TSX Capped REIT Total Return Index. Since converting to a REIT on January 3, 2013, Granite has generated a total cumulative return of 55.9%, compared to a total cumulative return of 19.8% for the S&P/TSX Capped REIT Total Return Index over the same time period.

Now, two dissident unitholders, FrontFour Capital and Sandpiper Group, have stated that they intend to nominate their respective principals – Zach George and Samir Manji – for election to the Granite Board.

The dissidents have a track record of value destruction in the real estate sector, a history of related party transactions and a short-term orientation. Moreover, the arguments they have made against Granite are weak, misleading or false.

But don’t just take our word for it. Here is what an RBC Capital Markets research analyst wrote about the dissidents’ views regarding Granite:

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In addition to achieving these positive results and providing superior returns to unitholders, we have also been diligent in maintaining strong corporate governance, which includes a board renewal process that commenced last year and resulted in the addition in 2016 of two new highly accomplished Board members, Donald Clow and Brydon Cruise, and two other highly qualified and experienced individuals, Remco Daal and Kelly Marshall, being nominated for election at our upcoming meeting of unitholders. Together, they add fresh perspective and further deepen the Board’s skill set and expertise in real estate investment and other areas that are important to Granite’s business. This board renewal process will continue into 2018 and beyond.

Granite has an international platform that provides it with access to investment opportunities across Europe and North America. It is well positioned to create sustainable value because of the actions we have taken to strengthen and de-risk our asset base, create stable and highly visible long-term cash flows, and reduce our cost of capital to enable us to pursue our strategy of acquiring high quality real estate assets using our proven disciplined approach. The dissidents’ agenda is aimed at pushing Granite to take short-sighted actions that would threaten our ability to continue to capitalize on the strong foundation for growth we have established.

Unitholders are urged to carefully consider the contents of Granite’s proxy circular and then only vote the WHITE proxy FOR Granite’s nominees, well in advance of the proxy voting deadline of 10:00 a.m. (Toronto time) on Tuesday, June 13, 2017.

Thank you for your continued trust in and support of Granite,

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REASONS TO VOTE FOR GRANITE’S NOMINEES

Granite is one of the best performing REITs in Canada

Granite generated a total cumulative return to unitholders of approximately 24.5% in 2016, compared to 17.4% for the S&P/TSX Capped REIT Index. Since converting to a REIT on January 3, 2013, Granite has generated a total cumulative return of 55.9%, compared to a total cumulative return of 19.8% for the S&P/TSX Capped REIT Index over the same time period.

Granite has delivered leading returns for unitholders

Granite has executed on its strategy and is well positioned for growth

Since 2011, when the dual class share structure of Granite’s predecessor, MI Developments Inc., was eliminated and the board of that company was reconstituted, Granite has converted to a REIT, de-risked its portfolio, diversified its asset base, created greater value than its peers, reduced its cost of capital and built the financial firepower to capitalize on significant growth opportunities ahead.

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REASONS TO VOTE FOR GRANITE’S NOMINEES

Following the exploration of a potential sale of certain of Granite’s assets, in June 2015, the Board initiated a comprehensive review of all strategic alternatives that could be in the best interests of unitholders. Independent financial advisors were engaged to assist Granite in the review process.

The Board carefully considered a number of strategic alternatives, including transformational acquisitions, a sale of Granite, the sale of some or all of Granite’s special purpose assets to one or more potential acquirers, including Magna, a substantial issuer bid, paying a special distribution to unitholders, and maintaining the current strategy. The strategic review reaffirmed Granite’s current strategy and provided the Board with critical external perspectives on the value of Granite’s assets.

Based on this review, the Board determined in March 2016 that its current strategy offered the greatest value to unitholders. That decision has since been validated by Granite’s performance. Since the completion of the strategic review, Granite has returned 38% for unitholders compared to 16% for the S&P/TSX Capped REIT Index and eliminated the discount to consensus net asset value per unit. Granite’s current unit price is significantly higher than the price offered under any acquisition proposal received or any alternative pursued by Granite during the review process.

Coming out of the review in March 2016, and with the benefit of what it learned from the review, Granite made it a priority to renew and extend five particular special purpose property leases with Magna. Granite exceeded this objective in October 2016 when it extended and renewed leases for not only the five specified leases, but an additional ten leases with Magna, including two additional leases for special purpose properties. This provided Granite with:

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REASONS TO VOTE FOR GRANITE’S NOMINEES

Granite has an international platform that provides it with access to investment opportunities across Europe and North America. As a result of successfully executing on its strategy, Granite is now much better positioned to pursue its strategy of acquiring high quality real estate assets using its proven disciplined approach.

Granite has a highly qualified, highly engaged Board

Granite has an experienced, engaged Board that has overseen the creation of growing and sustainable value.

In 2016, the Board began a board renewal process pursuant to which it has considered a number of qualified candidates and their ability to make meaningful contributions to the Board and its stewardship of Granite’s business. This process resulted in the addition in 2016 of two new highly accomplished Board members, Donald Clow, President and Chief Executive Officer of Crombie Real Estate Investment Trust, and Brydon Cruise, Chairman and Managing Partner of Brookfield Financial Securities LP.

Also as part of this process, two additional highly qualified individuals, both of whom have real estate investing experience, are being nominated for election to the Board at the unitholders meeting, Remco Daal, President of Canadian Real Estate at QuadReal, and Kelly Marshall, Managing Partner, Global Corporate Finance of Brookfield Asset Management.

As a group, the nominees proposed by Granite for election at the unitholders meeting have extensive experience in business-critical areas, including real estate investment, accounting, finance, legal, governance and human resources. For additional information regarding Granite’s nominees, please see “Matters to be Acted Upon at the Meetings – Election of Trustees of Granite REIT”.

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REASONS TO REJECT DISSIDENT NOMINEES

On May 8, 2017, the dissidents announced their intention to nominate directors to Granite’s Board at the meetings of Granite’s unitholders. They did not indicate who their nominees will be, but they privately indicated to Granite that the respective principals of FrontFour and Sandpiper, Zach George and Samir Manji, would be their nominees.

Granite urges its unitholders to consider the following reasons to vote the WHITE proxy FOR Granite’s nominees and WITHHOLD from voting for any nominees proposed by the dissidents.

FrontFour activist campaigns have destroyed value in the real estate sector

FrontFour has a dismal track record in the real estate sector. While seeking to be an agent of (presumably positive) change, the facts suggest otherwise:

Huntingdon: Three nominees of FrontFour were appointed to the board of Huntingdon as part of a settlement on January 17, 2008. Huntingdon’s performance from that date to August 2009, when it entered into a transaction with IAT Air Cargo Facilities Income Fund, and to August 2014, when its acquisition by Slate Asset Management LP was announced, severely lagged that of the S&P/TSX Capped REIT Index.

IAT Air Cargo: Three FrontFour nominees were appointed to IAT’s Board on September 15, 2008, shortly after FrontFour increased its ownership interest in IAT to approximately 45%. The result was more value destruction, with IAT’s performance comparing unfavourably to that of the S&P/TSX Capped REIT Index.

Trez Capital Mortgage Investment Corporation: Zach George, co-founder of FrontFour and apparent dissident nominee, was appointed to the board of Trez Capital as part of a settlement on May 9, 2016. Trez Capital’s performance from that date to May 5, 2017 significantly lagged that of the S&P/TSX Real Estate Index.

The value creation at FAM REIT – of which Zach George was Chairman – significantly trailed that of Granite and FAM REIT’s peers

Mr. George is the former Chairman of FAM REIT, a REIT that notably underperformed Granite as well as its own peer group over Mr. George’s tenure at FAM REIT. Granite outperformed FAM REIT on an aggregate return and NAV per unit growth basis from January 3, 2013 to August 11, 2014 – the period corresponding with Granite’s conversion to a REIT until the day prior to the announcement of a transaction between FAM REIT, Huntingdon and Slate Asset Management.

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REASONS TO REJECT DISSIDENT NOMINEES

Under FrontFour’s watch, FAM REIT made dilutive acquisitions that diminished Net Asset Value per unit

The dissidents are suggesting that Granite should seek to grow quickly. We agree. As noted above, Granite is currently well positioned to capitalize on its strong foundation for growth, and it will make acquisitions in a disciplined and prudent manner.

In contrast, with Zach George as Chairman, FAM REIT made a number of highly dilutive acquisitions. During his tenure, Net Asset Value per unit declined by approximately 16% over a span of two years from its initial public offering to its transaction with Slate Asset Management. During the same two-year period, FAM REIT’s large and small cap peers saw their Net Asset Value per unit grow by approximately 8% and 10%, respectively.

Eventually, with Zach George as its Chairman, FAM REIT completed a transaction with Slate Asset Management that resulted in a 7.6% decline in FAM REIT’s IFRS fair value per unit.

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REASONS TO REJECT DISSIDENT NOMINEES

Under FrontFour’s watch, both Huntingdon and FAM REIT participated in controversial related party transactions

FAM REIT entered into a related party contract with another FrontFour-controlled entity by hiring Huntingdon as its external manager under one of the most expensive management contracts at the time. The external management contract included uncommon leasing and financing fees that provided an incentive for FrontFour nominees on the FAM REIT Board to pursue acquisitions or lease renewals, regardless of their value to FAM REIT unitholders and often at their expense.

In addition, FrontFour played a central role in the following two controversial related-party transactions during its tenure at Huntingdon and FAM REIT.

Huntingdon – IAT Air Cargo

Huntingdon, FAM REIT – Slate Asset Management

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REASONS TO REJECT DISSIDENT NOMINEES

FrontFour’s holdings suggest it has a short-term strategy

The dissidents suggest that their interests are aligned with those of other Granite unitholders, but FrontFour’s holdings suggest a short-term focus. According to public sources, FrontFour has an average investment holding period of only approximately three calendar quarters.

Unitholders should be aware that over 20% of FrontFour’s position in Granite is held in call options with strike prices ranging from $42.00 to $50.00, of which 92% have an expiry date of July 21, 2017 – just 36 days after the scheduled date of Granite’s annual meeting. These holdings suggest that the dissidents are focused on a short-term strategy that could result in a jump in the price of Granite units prior to the expiry date of their options.

FrontFour does not have the same incentives as other unitholders. The dissidents’ interest in Granite should be viewed through this lens as unitholders consider which nominees will best represent their interests on the Board.

FrontFour’s performance has been dismal and it has been suffering significant redemptions

According to public sources, FrontFour has significantly underperformed the broader market, with a -4.5% alpha (which represents underperformance relative to a broader market index) over the last three years relative to the S&P 500, and FrontFour’s assets under management have dropped by more than 27%, from approximately U.S.$430 million to approximately U.S.$310 million.

This performance is telling for Granite unitholders. The fact of the matter is that FrontFour’s investors – those with the best insight into FrontFour’s judgment and performance – are voting with their wallets and feet.

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REASONS TO REJECT DISSIDENT NOMINEES

Mr. Manji’s main venture, Amica Mature Lifestyles, also underperformed

Sandpiper principal and apparent dissident nominee, Samir Manji, is the former Chairman and CEO of Amica Mature Lifestyles Inc. Amica’s performance under Mr. Manji’s leadership also trailed that of its peers.

Amica, under Samir Manji’s watch, was involved in several related party transactions

During the years that Samir Manji was the CEO of Amica, Amica also engaged in numerous related party transactions with entities controlled by members of the Manji family.

The dissidents’ actions are disingenuous

The dissidents have made false, contradictory or deliberately misleading statements about their intentions with respect to Granite.

After advising Granite, through their legal advisors, in late April that they intend to replace three to five members of the Granite Board, they subsequently had a meeting with two Granite Board members at which they asked if they could suggest two individuals for consideration by the Board as part of its ongoing board renewal process, to which Granite agreed. They changed tack again the next day when a press article reported that the dissidents were pushing for board changes at Granite, citing “people familiar with the matter, who asked not be identified”. They also wrote to Granite that day, seeking “minority representation” on the board and a “resolution” by the end of the week, notwithstanding that they had still not provided any names or other information regarding their proposed candidates.

After advising Granite on Sunday, May 7^th that their proposed candidates would be Mr. George and Mr. Manji, the dissidents issued a press release the following day and made public a presentation that they had already been making to market participants, stating that they intend to nominate independent trustees to the Granite Board, but failing to identify their nominees. To date, they still have not publicly announced the identity of their independent nominees.

This pattern of inconsistent and unconstructive behaviour raises questions regarding the dissidents true objectives with respect to Granite.

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REASONS TO REJECT DISSIDENT NOMINEES

Misleading and inaccurate statements made by the dissidents

Dissidents’ attempt to take credit for Granite’s strong unit price performance

The dissidents insinuate that Granite’s strong unit price performance has been driven by their buying. In coming to this conclusion they ignore the true driver of Granite’s recent unit price increase: the momentum stemming from management’s key initiatives, including the completion of the Magna lease extensions in October 2016, the completion of the debt financing in December 2016 and the release of strong results in March 2017.

Granite’s financial advisor has advised that transactions amounting to 20% of trading volume would not have a significant impact on the trading price of Granite’s stapled units.

For example:

The comparison is intended to mislead. If the dissidents’ criticisms of Granite were valid, they simply wouldn’t need to play games like this. The facts would speak for themselves.

General and Administrative (“G&A”) Expenses

The dissidents purport to be concerned about the level of Granite’s G&A expenses, yet they omit the following facts from their analysis:

The dissidents refer to Granite having conducted a “failed” strategic review. The Board’s review of strategic alternatives reaffirmed Granite’s current strategy and provided valuable external perspectives on the value of Granite’s assets. Since the conclusion of the strategic review process, Granite has returned 38% for unitholders compared to 16% for the S&P/TSX Capped REIT Index. Granite’s current unit price is significantly higher than the price offered under any acquisition proposal received or any other alternative pursued by Granite during the review process.

*  *  *  *  *  *  *  *

Granite is one of the best-performing REITs in Canada, has strong corporate governance, and is well positioned to pursue its acquisition strategy. Do not let short-term oriented dissidents with a history of value destruction jeopardize your investment. Vote only the WHITE proxy FOR Granite’s nominees to the Board, well in advance of the proxy voting deadline of 10:00 a.m. (Toronto time) on Tuesday, June 13, 2017.

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YOUR VOTE IS EXTREMELY IMPORTANT.

SUBMIT ONLY THE WHITE FORM OF PROXY TODAY OR IN ANY EVENT

BY NO LATER THAN 10:00 A.M. (TORONTO TIME) ON JUNE 13, 2017

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YOUR VOTE IS VERY IMPORTANT – HOW TO CAST YOUR VOTE

Vote only the WHITE form of proxy today or no later than 10:00 a.m. (TORONTO TIME) on June 13, 2017.

Time is short. In order to ensure that your proxy is received in time for the joint annual general meetings to be held on Thursday, June 15, 2017, we recommend that you vote in one of the following ways as soon as possible.

If you have any questions or require any assistance in executing your proxy or voting instruction form, please call:

North American Toll Free Number: 1-866-822-1237

Outside North America, Banks, Brokers and Collect Calls: 1-201-806-7301

Email: inquiries@dfking.com

North American Toll Free Facsimile: 1-888-509-5907

Facsimile: 1-647-351-3176

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All monetary amounts referred to in this Circular are presented in Canadian dollars, unless otherwise noted.

FORWARD-LOOKING STATEMENTS AND IFRS AND NON-IFRS FINANCIAL MEASURES

Forward-looking Statements

This Circular contains statements that, to the extent they are not recitations of historical fact, may constitute ‘‘forward-looking statements’’ or ‘‘forward-looking information’’ within the meaning of applicable securities legislation, including the United States Securities Act of 1933, as amended, the United States Securities Exchange Act of 1934, as amended, and applicable Canadian securities legislation. Forward-looking statements and forward-looking information may include, among others, statements regarding Granite’s future plans, goals, strategies, intentions, beliefs, estimates, costs, objectives, economic performance, expectations, or foresight or the assumptions underlying any of the foregoing. Words such as ‘‘may’’, ‘‘would’’, ‘‘could’’, ‘‘should’’, ‘‘will’’, ‘‘likely’’, ‘‘expect’’, ‘‘anticipate’’, ‘‘believe’’, ‘‘intend’’, ‘‘plan’’, ‘‘forecast’’, ‘‘project’’, ‘‘estimate’’, ‘‘seek’’ and similar expressions are used to identify forward-looking statements and forward-looking information. Forward-looking statements and forward-looking information should not be read as guarantees of future events, performance or results and will not necessarily be accurate indications of whether or the times at or by which such future performance will be achieved. Undue reliance should not be placed on such statements. In particular, there can be no assurance that the intended developments in Granite’s business and financial condition, including, the expansion and diversification of Granite’s real estate portfolio, can be achieved in a timely manner, with the expected impact or at all.

Forward-looking statements and forward-looking information are based on information available at the time and/or Management’s good faith assumptions and analyses made in light of Granite’s perception of historical trends, current conditions and expected future developments, as well as other factors Granite believes are appropriate in the circumstances, and are subject to known and unknown risks, uncertainties and other unpredictable factors, many of which are beyond Granite’s control, that could cause actual events or results to differ materially from such forward-looking statements and forward-looking information. Important factors that could cause such differences include, but are not limited to, the risk of changes to tax or other laws and treaties that may adversely affect Granite REIT’s mutual fund trust status under the Income Tax Act (Canada) or the effective tax rate in other jurisdictions in which Granite operates; economic, market and competitive conditions and other risks that may adversely affect Granite’s ability to achieve desired developments in its relationships with its tenants, expand and diversify its real estate portfolio and increase its leverage; and the risks set forth in the ‘‘Risk Factors’’ section in Granite’s Annual Information Form for 2016 dated March 1, 2017, filed on SEDAR at www.sedar.com and attached as Exhibit 1 to the Trust’s Annual Report on Form 40-F for the year ended December 31, 2016 filed with the SEC and available online on EDGAR at www.sec.gov, all of which investors are strongly advised to review. The ‘‘Risk Factors’’ section also contains information about the material factors or assumptions underlying such forward-looking statements and forward-looking information. Forward-looking statements and forward-looking information speak only as of the date the statements and information were made and unless otherwise required by applicable securities laws, Granite expressly disclaims any intention and undertakes no obligation to update or revise any forward-looking statements or forward-looking information contained in this press release to reflect subsequent information, events or circumstances or otherwise.

IFRS and Non-IFRS Financial Measures

In addition to using financial measures determined in accordance with International Financial Reporting Standards (“IFRS”), Granite also uses certain non-IFRS measures in managing its business including to measure financial and operating performance as well as for capital allocation decisions and valuation purposes. Granite believes that providing these measures on a supplemental basis to the IFRS results is helpful to investors in assessing the overall performance of Granite’s business. These non-IFRS measures include net operating income (‘‘NOI’’), funds from operations (‘‘FFO’’), adjusted funds from operations (‘‘AFFO’’), net asset value (‘‘NAV’’) before and after deferred taxes, FFO payout ratio, AFFO payout ratio, leverage ratio, interest coverage ratio, net leverage ratio, indebtedness ratio, unencumbered asset coverage

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ratio and any related per unit amounts. Investors are cautioned that these measures do not have standardized meanings prescribed under IFRS and, therefore, should not be construed as alternatives to net income, cash flow from operating activities or any other measure calculated in accordance with IFRS. Additionally, because these terms do not have standardized meanings prescribed by IFRS, they may not be comparable to similarly titled measures used by other reporting issuers. Refer to ‘‘Non-IFRS Measures’’ in Management’s Discussion and Analysis of Results of Operations and Financial Position for Granite’s interim period ended March 30, 2017 for definitions and reconciliations of non-IFRS measures to IFRS financial measures.

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JOINT NOTICE OF ANNUAL GENERAL MEETINGS OF HOLDERS OF STAPLED UNITS

JOINT NOTICE is hereby given that the Annual General Meetings of holders of stapled units (collectively, the “Meetings”), being the annual general meeting of unitholders of Granite Real Estate Investment Trust (“Granite REIT”) and the annual general meeting of shareholders of Granite REIT Inc. (“Granite GP” and, together with Granite REIT, “Granite”), will be held concurrently at St. Andrew’s Club & Conference Centre, 150 King Street West, 27^th Floor, Toronto, Ontario, Canada, on Thursday, June 15, 2017, commencing at 10:00 a.m. (Toronto time) for the following purposes:

Only shareholders and unitholders of record at the close of business on May 9, 2017 will be entitled to receive notice of, to attend and to vote at the Meetings or any adjournment(s) or postponement(s) thereof.

Your vote is important to us, regardless of the number of stapled units held. Please vote today using only the WHITE proxy.

A Management Information Circular / Proxy Statement and a WHITE form of proxy are enclosed with this Joint Notice of Annual General Meetings of holders of stapled units of Granite. The Management Information Circular / Proxy Statement provides additional information concerning the matters to be dealt with at the Meetings. If you are unable to be present at the Meetings in person, please complete, date and sign the enclosed proxy and return it in the enclosed envelope provided for that purpose in accordance with the instructions set out in the section entitled “Appointment and Revocation of Proxies” of the enclosed Management Information Circular / Proxy Statement. All proxies must be received by 10:00 a.m. (Toronto time) on Tuesday, June 13, 2017, or not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time the Meetings, if adjourned, are reconvened, or, if the Meetings are postponed, are convened. The Chair of the Meetings may waive or extend the proxy cut-off without notice.

Proxies must be returned to one of the following locations: (a) Computershare Investor Services Inc., Granite’s registrar and transfer agent, at 100 University Avenue, 8th Floor, Toronto, Ontario, Canada M5J 2Y1, addressed to the Proxy Department; or (b) the principal executive offices of Granite at 77 King Street West, Suite 4010, P.O. Box 159, Toronto-Dominion Centre, Toronto, Ontario M5K 1H1, addressed to the Chief Executive Officer of Granite REIT and Granite GP. Shareholders and unitholders may elect to vote by use of the telephone or via the internet in accordance with the instructions on the applicable WHITE form of proxy.

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If you have any questions about voting your proxy, or did not receive a proxy, please call Granite’s proxy solicitor, D.F. King at 1-866-822-1237 (toll free in North America) or 1-201-806-7301 (outside North America) or email at inquiries@dfking.com.

May 15, 2017

Toronto, Ontario

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MANAGEMENT INFORMATION CIRCULAR / PROXY STATEMENT

The Meeting Materials and Solicitation of Proxies

This joint Management Information Circular / Proxy Statement dated May 15, 2017 (the “Circular”), accompanying joint Notice of Annual General Meetings (the “Notice”), and accompanying WHITE form(s) of proxy and all attachments thereto (collectively, the “Meeting Materials”) are furnished to owners (“Unitholders”) of stapled units (“Stapled Units”) (each consisting of one trust unit (a “REIT Unit”) of Granite Real Estate Investment Trust (“Granite REIT”) and one common share (a “GP Share”) of Granite REIT Inc. (“Granite GP”)) in connection with the solicitation by and on behalf of the management of Granite REIT and Granite GP (“Management”) of WHITE proxies to be used at the Annual General Meetings of Unitholders (the “Meetings”) to be held at St. Andrew’s Club & Conference Centre, 150 King Street West, 27^th Floor, Toronto, Ontario, Canada, on Thursday, June 15, 2017, commencing at 10:00 a.m. (Toronto time), and at any adjournment(s) or postponement(s) thereof, for the purposes set forth in the Notice.

This Circular contains information about both Granite REIT and Granite GP in accordance with exemptions granted by Canadian securities regulatory authorities dated December 21, 2012. For periods prior to January 3, 2013, the date upon which Granite Real Estate Inc. (“Granite Co.”) converted from a corporate structure to a stapled unit real estate investment trust structure pursuant to the Business Corporations Act (Québec) (the “2013 Arrangement”), this Circular also contains information about Granite Co. Throughout this Circular, unless otherwise specified or the context otherwise indicates, “we”, “us”, “our” and “Granite” refer to the combined Granite REIT and Granite GP and their subsidiaries and investees and, for periods prior to implementation of the 2013 Arrangement, their predecessor Granite Co. and its predecessors and subsidiaries.

As provided in the Amended and Restated Declaration of Trust of Granite REIT dated January 3, 2013 (the “Granite REIT Declaration of Trust”) and the articles of Granite GP, each REIT Unit is “stapled” to a GP Share (and each GP Share is “stapled” to a REIT Unit) such that they trade together as Stapled Units (unless and until an “Event of Uncoupling”, as defined, occurs). References in this Circular to “Unitholders” refer to holders of Stapled Units including, as applicable and as the context may require, to such persons as holders of REIT Units and/or holders of GP Shares comprising Stapled Units.

The Meeting Materials are being mailed to Unitholders of record as of the close of business on May 9, 2017. Granite will bear all costs associated with the preparation and mailing of the Meeting Materials, as well as the cost of the solicitation of proxies. The solicitation will be primarily by mail; however, officers and employees of Granite may also directly solicit proxies (but not for additional compensation) personally, by telephone, by facsimile or by other means of electronic transmission. Banks, brokerage houses and other custodians and nominees or fiduciaries will be requested to forward proxy solicitation materials to their principals and to obtain authorizations for the execution of proxies and will be reimbursed for their reasonable expenses in doing so.

D.F. King has been retained by Granite as proxy solicitation agent in connection with the solicitation of proxies for the Meetings. For solicitation services provided by D.F. King, it will receive a fee of up to $175,000, plus a per call fee. If you have any questions or require more information with regard to voting your proxy, please contact D.F. King, toll free in North America at 1-866-822-1237 or at 1-201-806-7301 outside of North America; or by e-mail at inquiries@dfking.com. Granite may cause a soliciting dealer group to be formed, and pay customary fees for such services.

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APPOINTMENT AND REVOCATION OF PROXIES

Registered Holders

The persons named as the appointed proxy holder in the accompanying WHITE form(s) of proxy are Management appointees and are officers of Granite. A Unitholder has the right to appoint a person (who need not be a Unitholder) to attend and act for and on such Unitholder’s behalf at the Meetings other than the Management appointees named in the accompanying WHITE form(s) of proxy. This right may be exercised by inserting in the blank space the name of the person the Unitholder wishes to appoint as proxyholder, or by completing, signing and submitting another proper form of proxy naming such person as proxyholder.

Unitholders desiring to be represented at the Meetings by proxy must deposit their forms of proxy at one of the following locations:

by 10:00 a.m. (Toronto time) on June 15, 2017 or not less than 48 hours (excluding Saturdays, Sundays and holidays) before the time any adjourned Meeting is reconvened or any postponed Meeting is convened. A revocation of proxy may also be deposited with the Chair of the Meetings on the day of the Meetings, or any adjournment(s) or postponement(s) thereof. If a Unitholder who has completed a proxy attends the Meetings in person, any votes cast by such Unitholder on a poll will be counted and the proxy will be disregarded.

Rather than returning the proxy by mail or hand delivery, registered Unitholders may also elect to vote by telephone or via the internet. Those registered holders electing to vote by telephone require a touch-tone telephone to transmit their voting preferences. Registered Unitholders electing to vote by telephone or via the internet must follow the instructions included in the WHITE form(s) of proxy received from Granite.

Non-Registered Holders

Only registered Unitholders and persons appointed as proxyholders are permitted to attend and vote at the Meetings. However, in many cases, Stapled Units beneficially owned by a Unitholder (a “Non-Registered Holder”) are registered either:

The Meeting Materials are being sent to both registered and non-registered owners of Stapled Units. In accordance with National Instrument 54-101 — Communication with Beneficial Owners of Securities of a Reporting Issuer, Granite is delivering the Meeting Materials directly to depositories and other intermediaries for onward distribution to Non-Registered Holders. Typically, intermediaries will use a service company to forward the Meeting Materials to, and to obtain voting instructions from, beneficial owners.

If you are a Non-Registered Holder, you should follow the instructions received from the intermediary through which your Stapled Units are held. Generally, Non-Registered Holders will receive either:

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The purpose of these procedures is to permit Non-Registered Holders to direct the voting of the Stapled Units they beneficially own. Non-Registered Holders that wish to vote in person at the Meetings must insert their name in the space provided on the form of proxy or VIF and adhere to the signing and return instructions provided on the form. If you are a Non-Registered Holder, you should follow the instructions on the document you receive and contact your intermediary promptly if you need assistance.

Revocation

A registered Unitholder may revoke a proxy that has already been deposited by:

A Non-Registered Holder who wishes to revoke his or her proxy or VIF must make appropriate arrangements with the intermediary through which his or her Stapled Units are held.

Signature of Proxy

A form of proxy must be executed by the Unitholder or his or her attorney authorized in writing, or if the Unitholder is a corporation, the form of proxy should be signed in its corporate name by an authorized officer. A proxy signed by a person acting as attorney or in some other representative capacity should reflect such person’s capacity following his or her signature and should be accompanied by the appropriate instrument evidencing qualification and authority to act (unless such instrument has been previously filed with Granite).

Voting of Proxies

The persons named in the accompanying WHITE form of proxy will vote the Stapled Units in respect of which they are appointed in accordance with the direction of the Unitholder appointing them. Where a choice for a matter is not specified, Stapled Units will be voted as the proxyholder sees fit. Unless contrary instructions are provided, Stapled Units represented by WHITE proxies received by Management will be voted as follows:

Exercise of Discretion of Proxy

The accompanying WHITE form(s) of proxy confers discretionary authority upon the persons named therein with respect to any amendments or variations to matters identified in the Notice and with respect to such other business or matters which may properly come before the Meetings or any adjournment(s) or postponement(s) thereof. As of the date of this Circular, Granite is not aware of any such amendments or variations or any other matters to be addressed at the Meetings.

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Record Date

The board of trustees of Granite REIT and the board of directors of Granite GP have each fixed the close of business on May 9, 2017 as the record date (the “Record Date”) for the Meetings. Only holders of record of REIT Units and GP Shares (forming Stapled Units) at the close of business on the Record Date are entitled to receive notice of and to vote at the Meetings.

INTERESTS OF CERTAIN PERSONS IN THE MATTERS TO BE CONSIDERED AT THE MEETINGS

Except as otherwise disclosed in this Circular, Management is not aware of any trustee, director or executive officer of Granite or any nominee for election as a trustee or director, nor any associate or affiliate of any of the foregoing persons, having any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meetings other than the election of trustees and directors.

VOTING SECURITIES AND THEIR PRINCIPAL HOLDERS

As at April 30, 2017, there were issued and outstanding 47,144,336 Stapled Units. Holders of REIT Units are entitled to cast one vote per REIT Unit held by them on each matter to be acted on by holders of REIT Units at the Meetings, and holders of GP Shares are entitled to cast one vote per GP Share held by them on each matter to be acted on by holders of GP Shares at the Meetings.

The following table sets forth information with respect to the only Unitholders known to the trustees, directors or officers of Granite as at April 30, 2017 to own beneficially, directly or indirectly, or exercise control or direction over, 10% or more of the issued and outstanding Stapled Units:

Notes:

MATTERS TO BE ACTED UPON AT THE MEETINGS

Election of Trustees of Granite REIT

The Granite REIT Declaration of Trust provides for a number of trustees to be fixed by the trustees from time to time, subject to a minimum of three and a maximum of 15 trustees. The number of trustees is currently set at eight. The term of office of each currently-serving trustee expires at the time of the Meetings unless successors are not elected, in which case the trustees remain in office until their successors are elected or appointed in accordance with applicable law and the Granite REIT Declaration of Trust.

In 2016, the Board began a board renewal process pursuant to which it has considered a number of qualified candidates and their ability to make meaningful contributions to the Board and its stewardship of Granite’s business. Pursuant to that process, Brydon Cruise was appointed a trustee and a director of Granite GP in April, 2016 and Donald Clow was appointed a trustee and a director of Granite GP in November, 2016. Also as part of that process, two current trustees who joined the Board in 2011, Mr. Brody and Mr. Gilbertson, will be retiring from the Board this year and are not standing for re-election at the Meetings. Granite would like to thank Messrs. Brody and Gilbertson for their contributions as members of the Board.

Two new nominees, Remco Daal and Kelly Marshall, are being nominated for election at the Meetings. The Board believes that Messrs. Daal and Marshall will be excellent additions to the Board. Information regarding each of them is set forth below.

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Management proposes to nominate, and the persons named in the accompanying WHITE forms of proxy will, in the absence of instructions to the contrary, vote for the election as trustees of the eight persons whose names are set forth below (the “Proposed Trustees”).

Management does not contemplate that any of the Proposed Trustees will be unable to serve as a trustee. If, as a result of circumstances not now contemplated, any Proposed Trustee is unavailable to serve as a trustee, the WHITE proxy will be voted for the election of such other person or persons as Management may select. Each trustee elected will hold office until the conclusion of the next annual general meeting of unitholders of Granite REIT, or until his/her respective successor is elected or appointed in accordance with applicable law and the Granite REIT Declaration of Trust.

The Boards have adopted a majority voting policy (the “Majority Voting Policy”). Pursuant to the Majority Voting Policy, a nominee for election as a trustee of Granite REIT or a director of Granite GP shall immediately tender his or her resignation to the Boards if, in an uncontested election, such nominee receives a greater number of votes “withheld” from his or her election than votes “for” such election. The Majority Voting Policy provides that the Boards will consider a recommendation of the Corporate Governance and Nominating Committee with respect to such resignation and determine whether to accept or reject such resignation within 90 days following the applicable election. The Corporate Governance and Nominating Committee shall recommend acceptance of the resignation, and the Board shall accept the resignation, except in situations where exceptional circumstances would warrant the trustee or director continuing to serve on the Board. Following the applicable Board’s decision on the resignation, the Board will promptly disclose, via press release, its decision whether to accept the resignation offer, and if the Board decides to reject the resignation, the press release will fully state the reasons for that decision.

The following table sets forth information with respect to each of the Proposed Trustees, including the number and value of securities of Granite REIT and Granite GP beneficially owned, directly or indirectly, or over which control or direction is exercised by each such Proposed Trustee as at April 30, 2017.

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Notes:

To the knowledge of Granite, there are no arrangements or understandings between any Proposed Trustee and any other person or company, except the trustees, directors and executive officers of Granite acting solely in such capacity, pursuant to which any Proposed Trustee is to be elected as a trustee of Granite REIT or as a director of Granite GP.

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Cease Trade Orders and Bankruptcies

To the knowledge of Granite, as at April 30, 2017, except as disclosed below, none of the Proposed Trustees:

From on or about July 31, 1989 to February 10, 2016, Mr. Forsayeth was a director of Item Décor Inc. (formerly, Fraser Furniture Inc./Les Ameublements Fraser Inc.) a small private family retail furniture business. Subsequent to Mr. Forsayeth resigning as a director, Item Décor Inc., on April 29, 2016, voluntarily filed for bankruptcy under Section 49 of the Canadian Bankruptcy and Insolvency Act.

Mr. Voorheis was a director of Hollinger Inc. (“Hollinger”) from May 2006 to June 2008 and its chief executive officer from April 2007 to June 2008. Mr. Voorheis agreed to join the Hollinger board at the request of a shareholder to deal with certain management misconduct. Prior to Mr. Voorheis’ involvement in Hollinger (on May 18, 2004), the OSC issued a temporary cease trade order that prohibited certain directors, officers and insiders of Hollinger from trading in securities of Hollinger, subject to certain exceptions, as a result of Hollinger’s failure to file financial statements on a timely basis as required under Ontario securities laws. On June 1, 2004, the OSC issued a management cease trade order (the “MCTO”) (later varied on March 8, 2005, August 10, 2005 and April 28, 2006). The April 28, 2006 variation added the then current directors and officers of Hollinger to the list of persons subject to the MCTO. The MCTO was later revoked on April 10, 2007 by an OSC order, after remediation by Hollinger of its historical continuous disclosure record on March 7, 2007. Related cease trade orders were also issued by securities regulatory authorities in British Columbia on May 31, 2004 and Alberta on June 10, 2004 but were revoked, or expired, following the revocation of the MCTO by the OSC.

On August 1, 2007, Hollinger obtained an initial order for creditor protection from the court under the Companies’ Creditors Arrangement Act (Canada) and made a concurrent application for a companion order

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under Chapter 15 of the United States Bankruptcy Code. These proceedings included Hollinger and its wholly-owned subsidiaries, Sugra Limited and 4322525 Canada Inc. The initial order and the United States proceedings provided for an initial stay period of 30 days, and were subsequently extended. On May 26, 2008, the Court approved an agreement (announced by Hollinger on May 14, 2008) between Hollinger and its two principal creditors addressing matters in dispute among those parties and which stated that Mr. Voorheis would be resigning as an officer and director of Hollinger. On June 17, 2008, Mr. Voorheis resigned as a director and officer of Hollinger. Hollinger’s Series II preference shares and the common shares are subject to a cease trade order issued by the OSC on July 23, 2008. Hollinger has stated that the cease trade order was issued as a result of Hollinger’s determination, in the interests of reducing its costs for the benefit of its stakeholders, not to prepare and file annual audited financial statements and other annual disclosure documents in respect of Hollinger’s financial year ended March 31, 2008. Consequently, following June 30, 2008, Hollinger has been in default of its continuous disclosure filing requirements under Canadian securities laws.

Mr. Voorheis was a director of Sun Times Media Group, Inc. (“Sun Times”) from August 2007 to June 2008. Mr. Voorheis agreed to join the Sun Times board at the request of a Hollinger shareholder to deal with certain management misconduct. On March 31, 2009, Sun Times and its domestic subsidiaries filed voluntary petitions under Chapter 11 of the United States Bankruptcy Code.

Mr. Voorheis and Mr. Dey were appointed directors of Coventree Inc. (“Coventree”) in April 2008. On December 7, 2009, the OSC commenced proceedings against Coventree and certain of its officers in connection to events which occurred prior to Mr. Voorheis and Mr. Dey’s involvement with Coventree. The proceedings relate to whether Coventree complied with its disclosure obligations in its prospectus relating to the initial public offering of its shares, and its timely disclosure obligations in 2007 prior to the market for certain asset-backed commercial paper freezing up on August 13, 2007 (collectively “Coventree Proceedings”). On November 8, 2011, the OSC issued orders in connection with the Coventree Proceedings which included an order that until its winding up is completed, trading in any securities by Coventree cease and that any Ontario securities law exemptions not apply to Coventree, provided that this order will not prevent the winding up of Coventree or trades in securities reasonably related to that winding up. Coventree appealed the OSC order at the Ontario Divisional Court in late 2012. On March 19, 2013, the decision of the OSC was upheld by the Ontario Divisional Court. On September 17, 2013, leave to appeal to the Court of Appeal for Ontario was denied.

On June 30, 2010, the shareholders of Coventree approved a special resolution authorizing the winding up of Coventree and the distribution of its remaining assets, if any, to shareholders pursuant to the plan of liquidation and distribution. The Liquidation Plan commenced on February 15, 2012, when a liquidator was appointed for the purposes of winding up Coventree’s affairs and Mr. Voorheis and Mr. Dey resigned as directors, and Mr. Voorheis became an inspector of the company’s liquidation on that date.

Election of Directors of Granite GP

Under the articles of Granite GP, the board of directors is to consist of a minimum of three directors and the board is authorized to determine the number of directors of Granite GP by resolution from time to time. The number of directors of Granite GP is currently set at eight. The term of office of each currently-serving director expires at the time of the Meetings unless successors are not elected, in which case the directors remain in office until their successors are elected or appointed in accordance with applicable law and the articles of Granite GP.

Management proposes to nominate, and the persons named in the accompanying WHITE forms of proxy will, in the absence of instructions to the contrary, vote for the election as directors of the eight persons who are Proposed Trustees and whose names are set forth above under the heading “Election of Trustees of Granite REIT” (the “Proposed Directors”). See “Election of Trustees of Granite REIT” for details.

Management does not contemplate that any of the Proposed Directors will be unable to serve as a director. If, as a result of circumstances not now contemplated, any Proposed Director is unavailable to serve as a director, the proxy will be voted for the election of such other person or persons as Management

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may select. Each director elected will hold office until immediately before the election of directors at the next annual general meeting of shareholders of Granite GP, or until his/her respective successor is elected or appointed in accordance with applicable law and the articles of Granite GP.

The table in the section entitled “Election of Trustees of Granite REIT” sets forth information with respect to each of the Proposed Directors, including the number and value of securities of Granite REIT and Granite GP beneficially owned, directly or indirectly, or over which control or direction is exercised by each such Proposed Director, as at April 30, 2017.

To the knowledge of Granite, there are no arrangements or understandings between any Proposed Director and any other person or company, except the trustees, directors and executive officers of Granite acting solely in such capacity, pursuant to which any Proposed Director is to be elected as a director of Granite GP or a trustee of Granite REIT.

Cease Trade Orders and Bankruptcies

See “Election of Trustees of Granite REIT — Cease Trade Orders and Bankruptcies” for details which are also applicable to the Proposed Directors.

Re-Appointment of Auditor of Granite REIT

At the Meetings, Unitholders will be asked to re-appoint Deloitte LLP as the independent external auditor (the “Auditor”) of Granite REIT, based on the recommendation of the Audit Committee of Granite REIT and the board of trustees. Deloitte LLP was appointed as Auditor of Granite REIT on January 3, 2013 in connection with completion of the 2013 Arrangement. Under the Granite REIT Declaration of Trust, the trustees have the authority to determine the Auditor’s remuneration.

The persons named in the accompanying WHITE forms of proxy will, in the absence of instructions to the contrary, vote for the re-appointment of Deloitte LLP as the Auditor of Granite REIT to hold office until the next annual general meeting of unitholders of Granite REIT.

Representatives of Deloitte LLP are expected to attend the Meetings, will have an opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate questions.

Re-Appointment of Auditor of Granite GP

At the Meetings, Unitholders will be asked to re-appoint Deloitte LLP as the Auditor of Granite GP, based on the recommendation of the Audit Committee of Granite GP and the board of directors. Deloitte LLP was appointed as Auditor of Granite GP on January 3, 2013 in connection with completion of the 2013 Arrangement.

The persons named in the accompanying WHITE forms of proxy will, in the absence of instructions to the contrary, vote for the re-appointment of Deloitte LLP as the Auditor of Granite GP to hold office until the next annual general meeting of shareholders of Granite GP and for authorizing the directors to fix the Auditor’s remuneration.

Representatives of Deloitte LLP are expected to attend the Meetings, will have an opportunity to make a statement if they so desire, and are expected to be available to respond to appropriate questions.

Review and Consideration of Financial Statements

Management, on behalf of the trustees of Granite REIT and the directors of Granite GP, will submit to the Unitholders at the Meetings the combined financial statements of Granite REIT and Granite GP for the financial year ended December 31, 2016 and the report of Deloitte LLP, the auditor of Granite, thereon, but no vote by the Unitholders with respect thereto is required or proposed to be taken. The combined financial statements and Deloitte LLP’s report are included in Granite’s 2016 annual report, which is available on Granite’s website at www.granitereit.com and on the Canadian Securities Administrators’ System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com.

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STATEMENT OF EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Introduction

Unless otherwise specified or the context otherwise indicates, in this Compensation Discussion and Analysis, (i) references to the “Board” refer to the Board of Directors of Granite GP, and (ii) references to the “Compensation Committee” refer to the Compensation Committee of the Board of Directors of Granite GP.

The Compensation Committee is responsible for overseeing compensation for Granite’s Board and executive officers and making recommendations in respect thereof to the Board, consistent with Granite’s compensation philosophy and corporate governance objectives. The Compensation Committee executes its mandate in consultation with Management and any independent compensation consultants that may be retained from time to time. The Board, however, makes the ultimate decisions with respect to compensation, following consideration of the Compensation Committee’s recommendations.

Overview of Compensation Philosophy

Granite’s compensation philosophy is designed to recognize and reward the successful execution of Granite’s business strategy by linking a significant portion of executive compensation to performance. The Board exercises discretion in its annual review of performance. The review considers both overall organizational performance and individual executive performance.

With respect to overall organizational performance, the Board assesses Granite’s achievements relative to its strategic objectives. The Board also considers Granite’s performance against pre-established metrics. With respect to individual performance, the Board evaluates each executive’s performance in the areas of Granite’s business for which the executive is responsible, together with, but not limited to, risk management, leadership, teamwork and culture, and recognizes the individual’s key responsibilities and contributions toward Granite’s overall performance.

The Board does not allocate weightings to particular components of its assessment and seeks to avoid overly specific objective-setting that could leave executives with too narrow or too inflexible a focus.

Granite’s compensation philosophy is intended to:

Compensation Committee Mandate

The current members of the Compensation Committee are Brydon Cruise (Chair), Michael Brody, Peter Dey and Gerald Miller. Each member of the Compensation Committee is independent within the meaning of National Instrument 58-101 — Disclosure of Corporate Governance Practices and the applicable rules and regulations of the United States Securities and Exchange Commission (the “SEC”) and the New York Stock Exchange (the “NYSE”). Messrs. Brody, Dey and Miller were appointed to the Compensation Committee of Granite Co. prior to the 2013 Arrangement, and were then appointed to the Compensation Committee of the Board of Granite GP on January 3, 2013 upon completion of the 2013 Arrangement. Mr. Cruise was appointed to the Compensation Committee of Granite GP on June 16, 2016. All of them have diverse experience which contributes to the Compensation Committee’s achievement of its objectives.

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The responsibilities of the Compensation Committee, as set forth in its Board-approved charter, are that it shall:

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The Compensation Committee has the authority to engage and compensate any outside advisor that it determines to be necessary to permit it to carry out its duties. Before retaining such an advisor, the Compensation Committee shall consider the independence of such advisor, including any independence factors that it is required to consider by law or applicable stock exchange rules.

Role of Management

Members of the executive team assist the Compensation Committee in executing its duties by compiling information to be used by the Compensation Committee in its determinations and reporting on historical compensation levels, methods of compensation, evidence of organizational and individual performance, and recent compensation trends and regulatory initiatives. Management also makes recommendations with respect to equity-based grants for eligible employees below the executive level.

The Compensation Committee consults the CEO for input into its review of the performance of the other executives, which performance assessment affects both short-term and long-term incentive awards. Given the close working relationship of the CEO and other executives, the Compensation Committee believes the CEO’s assessment of the performance and contribution of the other executives is valuable. While the CEO may be invited to attend Compensation Committee meetings, he is not present during in camera sessions of the Compensation Committee or when the Compensation Committee is considering his compensation.

Elements of Executive Compensation

Compensation of Granite’s executives includes the following components:

The Compensation Committee believes these elements of compensation, when combined, form an appropriate mix of compensation. These elements provide competitive income, link a significant portion of Granite’s executives’ compensation to organizational and individual performance (which induces and rewards behaviour that creates long-term value for Unitholders) and encourage retention with time-based vesting attached to long-term equity-based incentives. Over time, the Compensation Committee has considered it appropriate to increase the proportion of total executive compensation that is comprised of equity-based compensation. The Compensation Committee considers each element independently of the other elements, and also reviews the totality of the elements to ensure an appropriate mix and level of compensation.

In making its recommendations to the Board regarding the 2016 compensation of Granite’s executives, the Compensation Committee conducted a peer comparison of issuers in the real estate industry of a similar size to Granite (i.e., Allied Properties REIT, Artis REIT, Chartwell Retirement Residences and Cominar REIT), although the Compensation Committee did not specifically identify a median or percentile for total compensation of Granite’s executives relative to the identified peers.

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The Compensation Committee also considered certain factors that the Board believes make Granite unique in the Canadian REIT marketplace. The Board believes the following factors require Granite to have a management team and board with specific skills, experience and expertise:

Non-CEO Named Executive Officers

This section discusses the compensation of those persons who were named executive officers (“NEOs”) in respect of 2016, other than the CEO, being John De Aragon, Ilias Konstantopoulos, Lorne Kumer and Stefan Wierzbinski. For a discussion of compensation of the CEO, see “— CEO Compensation”.

Base Salary

The Compensation Committee believes that the base salaries of Granite’s executives must be sufficiently competitive in the market to enable recruitment and encourage retention while reflecting the scope of responsibility, skill and experience of each executive. Base salaries of Granite’s executives were initially set forth in each executive’s employment agreement. Increases to base salaries have been approved by the Board from time to time in circumstances where an executive’s performance has exceeded expectations and an increase appropriately reflects his or her responsibilities and contribution to Granite’s overall performance. See “— Summary Compensation Table”, column entitled “Salary” for base salary information.

STIP

Granite’s STIP consists of a performance-based annual cash bonus dependent upon the Board’s assessment of overall organizational and individual performance. The assessment focuses on the execution of Granite’s strategy and is not quantified in advance on the basis of a formulaic approach.

Granite’s STIP is intended to incentivize executive performance and promote the alignment of personal compensation with the successful execution of key components of Granite’s strategy.

For 2016, the target for STIP awards was (i) 75% of base salary for Mr. De Aragon and (ii) 50% of base salary for Mr. Konstantopoulos, Mr. Kumer and Mr. Wierzbinski. The exercise of the Board’s discretion in its performance assessment is not formally restricted by a minimum or maximum STIP amount.

For each non-CEO NEO, Mr. Forsayeth undertook an assessment of the NEO’s contributions to Granite’s results and provided the Compensation Committee and the Board with a summary of the NEO’s personal achievements in the year and his views on the NEO’s individual performance.

The Board recognized and discussed the relative importance and merits of Granite’s achievements in 2016 and the progress made as measured against Granite’s strategic objectives, which achievements included:

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The Board considered Granite’s performance against pre-determined metrics and targets that included:

The Board determined that Granite had exceeded the targets for outperformance of the REIT Index (as the total unit return on the Stapled Units in 2016 was 24.5%, 40.8% higher than the 17.4% return of the REIT Index), and normalized FFO. The Special Purpose Properties Objective was significantly exceeded when Granite entered into agreements with Magna in October 2016 to extend or renew early and extend the leases for 15 properties that included those that were the subject of the Special Purpose Properties Objective plus two additional special purpose properties. As a result of significantly exceeding the Special Purpose Properties Objective, the targeted weighted average lease term threshold was significantly exceeded, resulting in a weighted average lease term by square footage at December 31, 2016 of 7.0 years.

Achievement of the Special Purpose Properties Objective had been Granite’s stated top strategic priority in 2016. This key priority has now been achieved and in each case the lease term has been extended beyond the original contractual lease renewal term. In addition, Granite has successfully collaborated with Magna to extend or renew early and extend the leases of another 10 properties, including two additional special purpose properties, and agreed to acquire for an economic return certain building expansions at those two special purpose properties in support of Magna’s overall growth plan. This provided Granite with:

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This achievement with respect to the Special Purpose Properties Objective was the most significant factor in relation to the STIP awards of Mr. De Aragon and Mr. Kumer, who, along with Mr. Forsayeth, conducted the negotiations that led to the agreements with Magna. See also “— Employment Agreements” for further discussion of the Special Purpose Properties Objective in relation to Mr. De Aragon’s 2016 compensation.

Individual factors considered in the evaluation of Mr. Wierzbinski included his supporting role in the achievement with respect to the Special Purpose Properties Objective, his successful execution on the sale of two non-core properties, and his contribution to a strategic objective of Granite and the successful resolution of certain European tax audits.

The Board also considered executive achievements in the following areas:

Based on the CEO’s assessment, and having considered and discussed both organizational and individual performance, the Board found that each non-CEO NEO either met or exceeded expectations for 2016 based on his individual performance and contribution to Granite’s objectives. The Board determined, in its discretion, that each non-CEO NEO should receive a STIP award at or in excess of his target for 2016. See “— Summary Compensation Table”, column entitled “Annual Incentive Plans” for STIP award information. The following table sets out the percentage of base salary that was used in calculating the STIP award made to each NEO:

Note:

LTIP

Granite’s LTIP consists of an annual restricted stapled unit (“RSU”) award granted pursuant to Granite’s Executive Deferred Stapled Unit Plan. The quantum of the RSU award, generally within a pre-established range, is dependent primarily upon the Board’s discretionary assessment of the executive’s performance in the prior year, the Board’s consideration of previous grants of equity-based incentives, and other factors the Board considers relevant. Consistent with the Compensation Committee’s intention to increase, over time, the proportion of total executive compensation that has been comprised of equity-based compensation, Granite awards regular annual RSUs, rather than more cash under the STIP, to retain executives and induce and reward behavior that creates long-term value for Unitholders by aligning the interests of executives with long-term Unitholder interests. In order to achieve this, the future value of the LTIP awards tracks the value of Granite’s Stapled Units and the LTIP awards generally do not fully vest until the conclusion of three years following the grant date. For a description of the Executive Deferred Stapled Unit

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Plan under which the RSUs are awarded, please see “— Equity Compensation Plan Information —Description of the Executive Deferred Stapled Unit Plan”.

In consultation with Granite’s advisors, the Board considered and determined to revise Granite’s disclosure practices with respect to Granite’s regular annual LTIP awards to reflect that grants of such award made in a particular year are granted with respect to the prior year’s performance, rather than in respect of the year of grant. This change was made in order to reflect that regular annual equity grants are intended primarily to reward recent performance and achievements. The revised grant disclosure impacts how regular annual equity grants made in 2016 and prior years were reported. As a result, RSUs granted in 2016, that would previously have been reported as 2016 compensation for the NEOs, will instead be reflected as part of 2015 compensation (the year prior to the year of grant), and RSUs granted under regular annual grants in 2017, which would previously have been reported as 2017 compensation in next year’s management information circular, are reflected as part of 2016 compensation herein.

The minimum values of the regular annual LTIP awards (at the time of grant) made in 2017 in respect of performance in 2016 were $100,000 for Mr. De Aragon and $50,000 for Messrs. Konstantopoulos, Kumer and Wierzbinski, and the maximum values of the regular annual LTIP awards were $100,000 for Messrs. Konstantopoulos, Kumer and Wierzbinski. In 2017, in recognition of the personal achievements in 2016 of each of the non-CEO NEOs and their contribution to overall organization performance in 2016, including the role of such NEOs in the achievement of the Special Purpose Properties Objective and the other factors discussed under “— STIP”, the Board exercised its discretion to approve LTIP awards of $350,000 to Mr. De Aragon and LTIP awards of the maximum value to each other non-CEO NEO.

Pursuant to his employment agreement, upon joining Granite, Mr. Konstantopoulos received a one-time special RSU grant of $200,000 in 2017, which grant was prospective in nature and is reported as 2016 compensation, as 2016 was the year in which his employment commenced.

Mr. De Aragon also received Amending Agreement RSUs in 2016 pursuant to his Amending Agreement. See “— Employment Agreements”.

Perquisites and Other Benefits

Perquisites and other benefits do not represent a significant portion of the overall compensation of Granite’s executives. The perquisites provided to the executives in 2016 included insurance benefits, health benefits and other limited, customary executive perquisites.

CEO Compensation

Mr. Forsayeth was appointed Chief Executive Officer on March 31, 2016 and the Board approved a base salary for him of $500,000 effective that date. There has been no increase to Mr. Forsayeth’s base salary for 2017.

Mr. Forsayeth’s target STIP award for 2016 was 75% of his base salary. In its discretionary assessment of Mr. Forsayeth’s performance, the Board considers Granite’s objectives and results achieved, Mr. Forsayeth’s individual performance, and other factors the Board considers relevant to the role of CEO. Key results that were considered in determining Mr. Forsayeth’s STIP award for 2016 included his leadership role with respect to the factors described above under “Non-CEO Named Executive Officers —STIP” and his central role in the negotiations that led to the agreements with Magna that resulted in Granite significantly exceeding the Special Purpose Properties Objective. After considering the foregoing, the Board determined that Mr. Forsayeth should receive a STIP award of 150% of his 2016 base salary. See “— Summary Compensation Table”, column entitled “Annual Incentive Plans” for STIP award information.

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For 2016, the minimum value of Mr. Forsayeth’s LTIP award (at the time of grant) was $100,000. Using the process utilized for determining the quantum of LTIP awards for non-CEO NEOs, as described above under “— Non-CEO Named Executive Officers —LTIP”, in recognition of Mr. Forsayeth’s individual performance and the achievements considered in determining his STIP award, the Board exercised its discretion to approve a regular annual LTIP award of $400,000 to Mr. Forsayeth.

Mr. Forsayeth also received Amending Agreement RSUs in 2016 pursuant to his Amending Agreement. See “— Employment Agreements”.

Mr. Forsayeth received benefits and perquisites available to Granite’s executives consistent with those described above under “Non-CEO Named Executive Officers — Perquisites and Other Benefits.”

Employment Agreements

Each NEO is party to an employment agreement with Granite. Each such employment agreement establishes the NEO’s base salary and right to participate in Granite’s STIP, LTIP and benefit programs and provides for certain payments and benefits on their involuntary termination without cause.

Each NEO, except Mr. Konstantopoulos, is required by his employment agreement not to solicit officers, employees or agents of Granite for 12 months following the termination of his employment. Pursuant to their employment agreements, all NEOs are also required to maintain the confidentiality of Granite’s confidential information. Mr. Kumer’s employment agreement also restricts him from engaging in certain activities that would be competitive with Granite’s business until the day that is six months after the end of his period of active employment with Granite.

For amounts payable to NEOs on a change of control or the termination of their employment, see “— Change of Control and Termination Benefits”.

Following Granite’s strategic review, which concluded in March 2016, achievement of the Special Purpose Properties Objective had been Granite’s stated top strategic priority. The successful resolution of the Special Purpose Properties Objective was strategically important to de-risk Granite’s real estate portfolio, help to solidify future cash flows and ultimately determine the appropriate balance sheet leverage for Granite going forward and thereby facilitate Granite’s ability to achieve its growth and diversification objectives. On June 16, 2016, further to discussions with Mr. Forsayeth and Mr. De Aragon, the Board approved in principle amended employment terms and conditions for such executives intended to facilitate the accomplishment of this strategic objective, which would involve potentially lengthy, high-stakes negotiations in which such executives were to play central roles. Such amended employment terms and conditions were designed to (i) incentivize Mr. Forsayeth and Mr. De Aragon to remain in employment until March 31, 2018 in order to facilitate the achievement of the Special Purpose Properties Objective, (ii) motivate such executives to achieve such objective, (iii) appropriately reward such executives in the event that such objective was achieved, and (iv) protect Granite, in the event that such objective were not achieved, and the Board were to determine to terminate Mr. Forsayeth or Mr. De Aragon, from being required to make significant severance payments. The Board approved the retention and amendment agreements with Mr. Forsayeth and Mr. De Aragon (the “Amending Agreements”) on November 3, 2016.

Pursuant to the Amending Agreements:

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Such RSU awards, being prospective in nature, are included as compensation in the year of grant (2016) in the appropriate column in the table at “Summary Compensation Table”.

The Board will consider during the period prior to March 31, 2018 what further arrangements, if any, Granite wishes to enter into with each of Mr. Forsayeth and Mr. De Aragon.

Risks Associated with Compensation Policies and Practices

In performing its duties, the Compensation Committee considers the implications of the possible risks associated with Granite’s compensation policies and practices. This includes identifying any such policies or practices that may encourage executive officers to take inappropriate or excessive risks, identifying risks arising from such policies and practices that could have a material adverse effect on Granite, and considering the possible risk implications of Granite’s compensation policies and practices and any proposed changes to them.

The Compensation Committee annually reviews and assesses Granite’s compensation policies and practices in relation to such risks, including assessing such policies and practices in light of practices identified by the Canadian Securities Administrators as potentially encouraging executive officers to expose Granite to inappropriate or excessive risks. It is the Compensation Committee’s view that Granite’s compensation policies and practices do not encourage inappropriate or excessive risk-taking.

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Granite has built the following procedures into its senior executive compensation structure with the goal of mitigating any excessive risks that might result from its executive compensation policies and practices.

Purchases of Certain Financial Instruments by Executives and Directors

Granite’s trustees, directors and executives are prohibited under Granite’s Insider Trading and Blackout Policy from purchasing financial instruments that are designed to hedge or offset a decrease in market value of equity securities granted as compensation or held, directly or indirectly, by the trustee, director or executive.

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Performance Graph

The following graph compares the total cumulative Unitholder return for the period from December 31, 2011 to December 31, 2016 with the cumulative returns of the S&P/TSX Composite Total Return Index and the REIT Index for such period.

Cumulative Total Returns

Value of CDN. $100 Invested on December 31, 2011

Note:

The trends identified by the above performance graph show a strong increase in cumulative Unitholder return since December 31, 2011 and that the Stapled Units have significantly outperformed the S&P/TSX Composite Total Return Index and the S&P/TSX Capped REIT Total Return Index during that period. The total cumulative return from December 31, 2011 to December 31, 2016 for $100 invested in Stapled Units was $79.87, compared to $48.64 for the S&P/TSX Composite Total Return Index and $36.78 for the S&P/TSX Capped REIT Total Return Index.

Between January 1, 2012 and December 31, 2016, the total cumulative return to Unitholders per $100 invested, as a percentage, has been greater than the percentage increase in total compensation paid to NEOs in 2016 as compared to 2012. As noted above, Granite’s compensation philosophy is in part intended to align executive interests with those of Unitholders by emphasizing “at risk” compensation tied to Granite’s Stapled Unit price. Part of the total compensation for all NEOs has been paid in RSUs, and this type of compensation provides a direct alignment of Management and Unitholder interests. Furthermore, one of the metrics used by the Board to assess Granite’s overall organizational performance has been Granite’s total return in a given year compared to the total returns of the REIT Index over the same period.

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Summary Compensation Table

The following table provides information respecting compensation received in or in respect of the financial years ended December 31, 2016, 2015 and 2014 by each of Granite’s NEOs. Unless indicated otherwise, all amounts were paid or are payable in Canadian dollars.

Notes:

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Incentive Plan Awards

Outstanding Share-Based Awards

The following table provides information regarding the incentive plan awards outstanding as of December 31, 2016 for each NEO. There are no option-based awards outstanding as of December 31, 2016 for NEOs.

Notes:

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Value Vested or Earned During the Year

The following table provides information regarding all option-based or share-based awards that have vested, and all non-equity incentive plan compensation earned, during the financial year ended December 31, 2016.

Notes:

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CEO Stapled Unit Ownership Guidelines

Granite has adopted a guideline whereby within two years from his appointment as CEO on March 31, 2016, Mr. Forsayeth must hold Stapled Units, RSUs or a combination thereof having either an aggregate market value or an aggregate cost to him equal to at least three times his annual base salary as at the date upon which he asserts that he has complied with such requirement. As at April 30, 2017, Mr. Forsayeth has exceeded this requirement.

Change of Control and Termination Benefits

Change of Control Benefits

The change of control provisions in the employment agreements for Mr. Forsayeth, Mr. De Aragon and Mr. Konstantopoulos provide that in the event of a “Change of Control” (generally defined as (a) the acquisition of control in law of Granite by a third party, or (b) the sale, transfer or other disposition of all or substantially all of the assets of Granite to one or more third parties), if such NEO terminates his employment, or if Granite terminates the NEO’s employment, in each case during the six-month period prior to the public announcement of the Change of Control (assuming that Granite has knowledge of the potential Change of Control) or in the 12-month period following the Change of Control, he will be entitled to receive a retiring allowance equal to 24 months (in the case of Mr. Forsayeth and Mr. De Aragon) or 18 months (in the case of Mr. Konstantopoulos) of “Total Compensation” (defined as (i) payment in lieu of base salary, (ii) payment in lieu of annual bonus equal to the greater of the annual bonus awarded in the year prior to the year of termination and the executive’s target bonus at the time of termination, and (iii) $200,000 (in the case of Mr. Forsayeth and Mr. De Aragon) or $100,000 (in the case of Mr. Konstantopoulos) in lieu of foregone annual equity compensation awards). In addition, all unvested RSUs or other unvested equity based compensation will accelerate and vest, and, subject to certain exceptions, Granite will continue the executive’s benefit coverage during the 24- or 18-month period, as the case may be.

The change of control provisions in the employment agreement for Mr. Kumer provide that in the event of a “Change of Control” (generally defined as (i) the acquisition of control in law of Granite by a third party, or (ii) the sale, transfer or other disposition of all or substantially all of the assets of Granite to one or more third parties), if he terminates his employment or if Granite terminates his employment, in either case in the six-month period prior to or the 12-month period following a Change of Control, then he will be entitled to receive a payment equal to the sum of two times his base annual salary and two times the amount of his annual cash performance bonus target (at the lower and not at the maximum level) for the year in which the termination of his employment occurs. In the event of such a termination, his then outstanding RSUs and performance stapled units (“PSUs”) (or other unvested equity based compensation) will be treated in accordance with the terms of the Executive Deferred Stapled Unit Plan.

There are no change of control benefits in the employment agreement for Mr. Wierzbinski.

Termination Benefits

Prior to their entry into the Amending Agreements, Mr. Forsayeth’s and Mr. De Aragon’s employment contracts provided that their respective employment could be terminated by Granite by giving written notice and compensation in lieu of notice consisting of payment of a retiring allowance equal to 24 months of “Total Compensation” (defined as (i) payment in lieu of base salary, (ii) payment in lieu of annual bonus equal to the greater of the annual bonus awarded in the year prior to the year of termination and the executive’s target bonus at the time of termination, and (iii) $200,000 in lieu of foregone annual equity compensation awards). In addition, all unvested RSUs or other unvested equity based compensation would accelerate and vest, and, subject to certain exceptions, Granite would continue the executive’s benefit coverage during the 24-month period.

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As discussed under “— Employment Agreements”, the Board approved the Amending Agreements between Granite and each of Mr. Forsayeth and Mr. De Aragon, respectively, on November 3, 2016. Pursuant to the Amending Agreements, the termination provisions of Granite’s employment agreements with Mr. Forsayeth and Mr. De Aragon have changed as follows:

The Board will consider during the period prior to March 31, 2018 what further arrangements, if any, Granite wishes to enter into with each of Mr. Forsayeth and Mr. De Aragon.

Mr. Konstantopoulos’ employment contract provides that his employment may be terminated by Granite by giving written notice and compensation in lieu of notice consisting of payment of a retiring allowance equal to 18 months of “Total Compensation” (defined as (i) payment in lieu of base salary, (ii) payment in lieu of annual bonus equal to the greater of the annual bonus awarded in the year prior to the year of termination and the executive’s target bonus at the time of termination, and (iii) $100,000 in lieu of foregone annual equity compensation awards). In addition, all unvested RSUs or other unvested equity based compensation will accelerate and vest, and, subject to certain exceptions, Granite will continue Mr. Konstantopoulos’ benefit coverage during the 18-month period.

Mr. Kumer’s employment contract provides that his employment may be terminated by Granite by giving written notice and compensation in lieu of notice consisting of (i) payments of all outstanding amounts under the employment agreement that have been earned and are owing (including any unpaid salary and a pro-rated annual short term incentive bonus payment calculated based on the target bonus in the year of termination), (ii) payments (in equal monthly instalments commencing within 30 days after the termination of employment) by way of salary continuation to a maximum amount equal to the sum of 1.5 times his base annual salary and 1.5 times the amount of his annual cash performance bonus target (at the lower and not at the maximum level) for the year in which the termination of his employment occurs (provided that if Mr. Kumer engages in alternative employment at any time during the period of 18 months following his termination, Granite will (a) cease paying salary continuation and cash performance bonus payments effective the first day on which Mr. Kumer commences alternative employment and (b) pay to Mr. Kumer one-half of the amount of salary and cash performance bonus that would have been paid to Mr. Kumer during the balance of such 18 month period, subject to all necessary deductions), and (iii) continued participation in Granite’s benefit plans until the earlier of the expiry of such 18 month period or the date Mr. Kumer commences alternative employment. In such event. Mr. Kumer’s then outstanding RSUs and PSUs (or other unvested equity based compensation) will be treated in accordance with the terms of the Executive Deferred Stapled Unit Plan.

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The employment agreement for each of Mr. Forsayeth, Mr. De Aragon and Mr. Kumer provides that such executive officer may resign upon 45 days’ notice, in which case Granite will have the right to elect to pay him his base salary for the remainder of the notice period and either continue benefits or provide payment in lieu of benefits for the remainder of the notice period and, if Granite so elects, his employment shall terminate immediately upon such payment. In this event, Granite shall pay him a pro rata portion of his annual target performance bonus and (i) in the case of Mr. Forsayeth, all unvested RSUs, other than Amending Agreement RSUs, which shall be forfeited and cancelled, shall vest pro-rated based on the number of days of employment in each vesting period; (ii) in the case of Mr. Kumer, all unvested RSUs shall vest pro-rated based on the number of days of employment in each vesting period; and (iii) in the case of Mr. De Aragon, all unvested RSUs will be forfeited and cancelled. If Mr. Forsayeth resigns prior to March 31, 2018 for any event that could constitute constructive dismissal under Canadian law, he will be entitled to all of the compensation and benefits described in the first paragraph above under “— Termination Benefits”. Mr. Konstantopoulos’ employment contract does not include any provisions regarding the terms on which he may resign.

Mr. Wierzbinski’s employment contract provides that his employment may be terminated by Granite by giving written notice and compensation in lieu of notice consisting of (i) payments of all outstanding amounts under the employment agreement that have been earned and are owing (including any unpaid salary and short term incentive bonus payment), (ii) payments by way of salary continuation for a six-month period equal to the sum of his base salary and a pro-rated annual discretionary cash performance bonus, if any, for the year in which the termination of his employment occurs, and (iii) continued use of an automobile leased by Granite for a six-month period. In such event, Mr. Wierzbinski’s then outstanding RSUs (or other unvested equity based compensation) will be treated in accordance with the terms of the Executive Deferred Stapled Unit Plan.

Mr. Wierzbinski may resign upon six months’ notice, in which case Granite will pay him his base salary and provide the continued use of an automobile leased by Granite for the remainder of the notice period. In this event, Granite shall pay Mr. Wierzbinski a pro rata portion of his discretionary performance bonus, if any, and all unvested RSUs and PSUs will be forfeited and cancelled.

Summary of Change of Control and Termination Benefits

The following table provides details regarding the estimated payments to each of the NEOs currently employed by Granite (i) in the event of termination (without cause) on December 31, 2016 in connection with a “Change of Control” as described above, and (ii) in the event of termination by Granite (without cause) on December 31, 2016 other than in connection with a Change of Control.

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Trustee/Director Compensation

Granite’s Board has approved a trustee and director compensation program that rewards non-executive trustees and directors (for purposes of this section, “Directors”) for the time and effort they are expected to devote to Granite matters. This compensation covers activities of Directors both as trustees of Granite REIT and as directors of Granite GP.

The program emphasizes the alignment of Directors with the interests of Granite’s Unitholders. Directors (other than Mr. Forsayeth, who is subject to a stock-based ownership requirement described above under “— Compensation Discussion and Analysis — CEO Stapled Unit Ownership Guidelines”) are subject to a stock-based ownership requirement that they hold within three years of becoming a Director Stapled Units, deferred share units or a combination thereof having either an aggregate market value or an aggregate cost equal to at least three times the amount of their annual cash Board retainer. All such current Directors, except Donald Clow, who was appointed to the Board on November 22, 2016, currently surpass this ownership requirement by holding Stapled Units, deferred share units or a combination thereof with a value that is six or more times the amount required. See “Election of Trustees of Granite REIT” above for the total number and value of Stapled Units and deferred share units held by each Director proposed to be elected at the Meetings.

Following the elimination in 2011 of the dual class share structure of Granite Co. (then named MI Developments Inc.) and the reconstitution of Granite Co.’s board of directors, the Directors’ standard compensation arrangements were established. The amount of such compensation was determined by the Board upon recommendation of the Compensation Committee in consultation with Granite Co.’s advisors and was considered to be appropriate in light of the time commitment required from the Directors at that time. This standard compensation remained unchanged until the end of 2016, except for a $3,000 increase in 2013 to the travel fee per meeting for those who must travel four hours or more by air to attend a meeting.

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With the achievement of the Special Purpose Properties Objective in October 2016, the Board believes that the time commitment required from the Directors will be less significant than it has been in previous years. The Board has considered this development and, in consultation with its advisors, has reduced the standard compensation arrangements for Directors to levels that it believes are appropriate in light of the time and effort required from the Directors and the factors that the Board believes make Granite unique in the Canadian REIT marketplace set out above under “— Elements of Executive Compensation”.

The following chart sets out the standard compensation arrangements for Directors, as at January 1, 2016 and as of the date hereof following the compensation reduction referred to above: