CGI Group Inc.

Corporate governance

Compensation of Directors

Reprinted from CGI’s Notice of Annual Meeting and Management Proxy Circular dated December 13, 2011.

Board of Directors and Standing Committee Fees

Messrs. Serge Godin, André Imbeau and Michael E. Roach are not compensated for their roles as directors of the Company.  The compensation paid to Messrs. Godin, Imbeau and Roach is disclosed in the Summary Compensation Table earlier in this document.

The compensation paid to outside directors for the year ended September 30, 2011 was based on the elements of directors’ compensation set out in the following table:

Towers Watson recommended to the Committee, based on its compensation survey, that the annual Board retainer be increased from $50,000 to $75,000.  The Committee concurred and in its recommendation to the Board of Directors added the proviso that the $25,000 increase in retainer fees be paid as a rule in DSUs.  However, a DSU participant may elect to receive the equivalent of his or her mandatory portion in cash instead of in DSUs if i) the participant is not a resident of Canada for income tax purposes, or ii) the participant purchases in the open market the same number of CGI subordinate voting shares he or she would have received in the form of DSUs, or iii) the participant is otherwise exempted by the Board of Directors.  The recommendations of the Committee were adopted by the Board of Directors effective as of October 1, 2010.  All other components of directors’ compensation remain unchanged for the 2011 fiscal year.

Stock Options and Deferred Stock Units Granted to Directors

Members who join the Board of Directors for the first time are entitled to a grant of 4,000 stock options on the date of their election or appointment. In addition, members of the Board of Directors receive annually a grant of 4,000 options.  These options are granted to directors under the Share Option Plan.

For the fiscal year ended September 30, 2011, members of the Board of Directors were entitled to choose to receive part or all of their retainer fees in DSUs.  The number of DSUs granted to a member is equal to the amount of the retainer due to be paid in DSUs divided by the closing price of CGI’s Class A subordinate voting shares on the Toronto Stock Exchange on the day immediately preceding the payment date.  Once granted, the value at any time of the DSUs credited to a director’s DSU account is determined based on the market price of CGI’s Class A subordinate voting shares.

Effective October 1, 2010, and on the advice of Towers Watson, the annual Board retainer component of the directors’ remuneration for service on the Company’s Board of Directors was increased from $50,000 to $75,000.  Directors are required to receive the increased portion of the annual retainer entirely in DSUs.  However, a DSU participant may elect to receive the equivalent of his or her mandatory portion in cash instead of in DSUs if i) the participant is not a resident of Canada for income tax purposes or ii) the participant purchases in the open market the same number of CGI Class A subordinate voting shares he or she would have received in the form of DSUs, or iii) the participant is otherwise exempted by the Board of Directors.

The value of DSUs is payable only upon the member’s departure from the Board of Directors. The amount paid corresponds to the number of DSUs accumulated by the member multiplied by the closing price of CGI’s Class A subordinate voting shares on the payment date selected by the director.  Directors may select a payment date for the DSUs subsequent to their departure, but such date cannot be later than December 31 of the calendar year following the year in which they leave the Board of Directors.  The amount is paid in cash and is subject to applicable withholding taxes.

For each DSU acquired in lieu of cash retainer fees, the director receives two stock options under the Share Option Plan. Each stock option is issued with a ten‑year exercise period and vests at the time of grant.  The exercise price is equal to the closing price of CGI’s Class A subordinate voting shares on the Toronto Stock Exchange on the trading day immediately preceding the date of the grant.

The vesting of the 4,000 options granted to the members of the Board of Directors during the year ended September 30, 2011 under the Share Option Plan depended on the degree of achievement of profitability and growth objectives.  The performance targets required to be met in order for the stock options to vest were the same as those set for the Named Executive Officers.  Based on CGI’s performance for the fiscal year ended September 30, 2011, 62.5% of the options became eligible to vest.  One-quarter of the options eligible to vest based on the achievement of the objectives vested on November 9, 2011 when the results for the fiscal year ended September 30, 2011 were approved by the Board of Directors, one-quarter will vest on the second anniversary of the grant on October 1, 2012, one-quarter will vest on the third anniversary of the grant on October 1, 2013, and the final quarter will vest on the fourth anniversary of the grant on October 1, 2014.  Options that did not become eligible to vest as a result of the vesting conditions were forfeited and cancelled.