NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To ... - Gildan

Furthermore, the Compensation and Human Resources Committee believes that Options continue to be an
important component of long-term incentives and, as part of their long-term compensation for fiscal 2007, the
committee has granted Options to the Corporation’s executives. None of the Options granted in fiscal 2007 are
exercisable prior to the second anniversary of the grant date, and 25% are exercisable on and after the second, third,
fourth and fifth anniversary of the grant date. In addition, such Options have a term of seven (7) years.
The following summarizes in tabular form the Corporation’s short and long-term incentive programs:
Compensation Component Short-Term (SCORES) Restricted Share Units Options
Applies to: - Full-time Canadian employees not
subject
bonuses
to plant-level productivity
- Certain salaried offshore employees
Granting conditions: - Target award adjusted for Corporate
Financial Factor (all employees)
- Strategic Multiplier (senior executives
for fiscal 2006) or individual
performance (below senior executive
level)
-15-
- Director level and above
- High potential employees
- Adjusted for individual performance
if significantly above or below
expectations
Performance period: - 1 year - Treasury RSUs (minimum 5 years)
- Non-Treasury RSUs (maximum
3 years)
Maximum: - Senior executives – up to 3 times target
(up to 2 times target in fiscal 2007)
- Other employees – up to 2 times target
Link to performance: - ROA and Strategic Multiplier objectives
(senior executives) (ROA only in fiscal
2007)
- ROA and personal objectives (below
senior executive level)
- Target - Target
- 50% performance vests based on the
Corporation’s average ROA
performance for the period relative
to a comparator group of companies
- Value of pay-out at vesting depends
on share price growth
- Director level and above
- High potential employees
- Adjusted for individual
performance if significantly
above or below expectations
- Post fiscal 2006 –7-year term
- Pre fiscal 2007–10-year term
- Gain depends on growth in
share price
The Corporation’s approach to retirement is consistent with its entrepreneurial culture, which places an
emphasis on performance-based compensation and the participation of executives in the creation of shareholder
value. Retirement benefits are provided in the form of annual defined contributions by the Corporation of 5% of
salary. The Corporation’s benefits and perquisites programs (other than for retirement savings as described in this
paragraph) are aligned with the local market median.
To demonstrate the link between Named Executive Officer compensation and business performance, the
following table shows the total cost of compensation to the Named Executive Officers as a percentage of the
Corporation’s net income after tax for fiscal 2006, 2005 and 2004:
Total Cost of Compensation to Named
Executive Officers (1)
(US$)
Total Cost of Compensation to Named Executive Officers/
Total Net Earnings of Corporation for Fiscal Year
(%)
2006 4,009,793 3.8
2005 4,349,701 5.1
2004 3,103,349 5.2
(1) The “Total Cost of Compensation to Named Executive Officers” is the sum of the amounts under the “Salary”, “Bonus”, “Other Annual
Compensation” and “All Other Compensation” columns in the Summary Compensation Table under “Executive Compensation” for 2006, 2005 and
2004 plus the value of RSU grants to the Named Executive Officers that have been amortized over their respective vesting periods. Total cost of
compensation for Named Executive Officers was converted to U.S. dollars, where required, using an exchange rate of US$0.8741 in 2006,
US$0.8149 in 2005 and US$0.7535 in 2004.