MAGNA INTERNATIONAL INC.

Management
Proxy Circular
Annual Meeting – May 7, 2020

magna.com
Magna International Inc.
337 Magna Drive
Aurora, Ontario
Canada L4G 7K1
Telephone: (905) 726-2462

CONNECT WITH MAGNA

company’s succession planning practices are performing well,setting-up the leadership team for the future. Since 2018, four of
Magna’s Operating Groups have seamlessly transitioned
leadership, as did two of the company’s most senior executiveroles. Three more executive roles will transition due to planned
retirements in 2020, with successors in place and ramping-up.
Early this year, the Board appointed a new President, Swamy
Kotagiri. He has not only demonstrated success in helping thecompany pivot toward the industry’s high-tech future while serving
as its Chief Technology Officer, but is driving cultural change as
reflected by his motto: ‘‘operate like a start-up and innovate as atech company’’.

17MAR202022322200
DEAR MAGNA SHAREHOLDER,
Despite some challenges during 2019, the Board was pleased
with the company’s performance during the year. On one hand,
there were a number of factors which weighed on Magna’s
financial results, including lower production volumes, the strike atGeneral Motors’ North American facilities, technical challenges weexperienced on three advanced driver assistance programs in
Europe and non-cash impairment charges recorded against thevalue of our interests in transmission joint ventures in Europe andChina. However, the story of 2019 is better told by the company’s
strength and resilience in the face of these challenges – its
success in managing numerous complex program launches, trackrecord of winning new business in traditional as well as new
product areas, and returning of capital to shareholders.
But each year brings its own challenges. The COVID-19(Coronavirus) pandemic is quickly becoming the defining event of2020 and, at this stressful time, the Board wants to express ourcollective concern for the well-being of all Magna employees, aswell as those of the company’s customers, suppliers and business
partners. In the best of days, the company’s success is
attributable to the dedication of over 165,000 employees aroundthe world. In these challenging times, their resilience is ourstrength. We are confident the COVID-19 challenge will pass andMagna will continue to thrive as it has in the past.
One of the things that allows the Board the confidence of belief in
Magna’s future is its seasoned leadership. The five NEOs identified
in this proxy circular have over 125 years of Magna management
experience among them. But this is not just about the past – theThis mindset becomes ever more critical as the world’s
environmental and air quality challenges escalate. Magna has astrategy that is aligned with sustainable goals through a mission
focused on products and processes which are smarter, cleaner,safer and lighter. Management is actively tackling climate-related
sustainability in its operations, including by seeking ways toreduce energy use and identify renewable energy opportunities.
Beyond climate and the environment, Magna is making strides
with its diversity and inclusion program and continues to be agood partner to the communities in which we operate throughgeneral corporate philanthropy, as well as a program of social
giving aligned with seven of the United Nations’ Sustainable
Development Goals.
The Board itself continues to evolve in order to enable us tocontinue acting effectively as stewards of your investment. During
2019, you elected Lisa Westlake, who quickly integrated herself
with the Board and demonstrated her deep expertise in areas
related to talent management. And, early this year, the Board
welcomed back the Honourable Peter Harder, P.C., who previously
served on the Board from 2012 to 2016 and brings extensive
experience in areas of foreign affairs, international trade,governance and public policy. You can read about the Board’s
efforts on your behalf throughout this proxy circular.
This year, due to the COVID-19 pandemic, we will be holding avirtual-only shareholder meeting to reduce any potential risks
related to virus transmission through large gatherings. Rest
assured, you will have the opportunity to participate, provide
feedback and ask questions just as you would in a live meeting.
Full details of how to do so are set out in the ‘‘How to Vote Your
Shares’’ section of the proxy circular. We look forward to yourcontinued support on May 7th.
Sincerely,

28MAR201921022918
William L. Young
ChairmanProxy Summary
In this summary, we highlight certain information you will find in various parts of the management information
circular/proxy statement (the ‘‘Circular’’) which follows. This summary does not contain all of the information thatyou should consider. Please review the entire Circular carefully before casting your vote.

BOARD VOTERECOMMENDATIONFOR MORE
INFORMATION

Receive the audited consolidated financial statements and the reportof the auditors for the year ended December 31, 2019

N/A

Page 122

Vote on electing the directors for the ensuing year

FOR

Page 13

3

Vote on reappointing the auditors and authorizing the Audit
Committee to set their remuneration

FOR

Page 28

4

Vote on the advisory, non-binding resolution on Magna’s approach to
executive compensation (‘‘Say on Pay’’)

FOR

Page 30

ITEM

BUSINESS OF THE MEETING

1

PROXY SUMMARY

Business of the Meeting

Selected 2019 Financial Results
SALES

DILUTED EPS

U.S. $ MILLIONSCASH FLOW FROMOPERATING ACTIVITIES

U.S. $

U.S. $ MILLIONS

40,827

6.61

39,431

5.59

2018

RETURN ON
EQUITY(1)

2019

2018

RETURN ON
INVESTED CAPITAL(1)(2)

2019

3,718

3,960

2018

2019

DIVIDENDS PAIDPER SHARE(3)U.S. $

1.46

19.7%
15.5%

1.32
14.9%
10.1%

1.10
1.00
0.88

2018

2019

2018

2019

2015

2016

2017

2018

2019

1. Return on Equity and Return on Invested Capital are non‐GAAP financial measures. Definitions and reconciliations to the most directly comparable financial measures calculated in accordance with
U.S. GAAP, can be found in the company’s Annual Report for the Year Ended December 31, 2019, in the Management’s Discussion and Analysis of Results of Operations and Financial Position section.
The Magna International Inc. 2019 Annual Report has been posted on the company’s website through the investors link at www.magna.com.
2. The recognition of operating lease right‐of‐use assets during 2019 in accordance with the adoption of the accounting standard Accounting Standards Codification 842‐Leases impacted 2019 Returnon Invested Capital by 1.0%.
3. A two‐for‐one stock split was approved February 24, 2015. Dividends are shown on a post‐stock split basis.

12MAR202000093178

Proxy Summary

1Election of Directors – 2020 Nominees
DIRECTOR
DIVERSITY

DIRECTORTENURE

DIRECTORAGE

WOMEN:
33%

AVERAGE:
6 YEARSAVERAGE:
64 YEARS

0-4 years: 5 nominees

Male:

8 nominees

50-59 years: 4 nominees

5-9 years: 6 nominees

Female: 4 nominees

60-69 years: 6 nominees

10+ years: 1 nominee

Total: 12 nominees

70+ years:

2 nominees

Total:

12 nominees

Total:

12 nominees

2019 Average
Votes FOR:

Independent
Nominees:

Financially
Literate:

>97%

83%

100%

William L. Young (Chairman) MBA, PEng
Independent
Joined: 2011
CGCNC (Chair)

Financial
Experts:%
7FEB202023123256

64

Donald J. Walker PEng
Management
Joined: 2005

8FEB202004523198
Scott B. Bonham MBA
Non-Independent, Non-Executive
Joined: 2012

8FEB202004522911
Robert F. MacLellan CPA, MBA
Independent
Joined: 2018
Audit Committee (Chair)

8FEB202004522768

19MAR202022380138

Peter G. Bowie FCPA, MBA

Cynthia A. Niekamp MBA

Independent
Joined: 2012
Audit Committee

Independent
Joined: 2014
Audit Committee

25MAR202017191039
Mary S. Chan MSc
Independent
Joined: 2017
Technology Committee

8FEB202004522482
William A. Ruh MSc
Independent
Joined: 2017
Technology Committee

8FEB202004521903

19MAR202022380291

Hon. V. Peter Harder P.C., LLD

Dr. Indira V. Samarasekera PhD, PEng

Independent
New Nominee
CGCNC

Independent
Joined: 2014
CGCNC

19MAR202022380973
Dr. Kurt J. Lauk MBA, PhD
Independent
Joined: 2011
Technology Committee (Chair)

8FEB202004522197

8FEB202004522051
Lisa S. Westlake MBA
Independent
Joined: 2019
CGCNC

19MAR202022380442

Additional information about the Nominees, including their biographies, skills and compensation can be foundstarting on page 13 of the Circular.

2

Proxy SummaryReappointment of Deloitte
<1%

36%

AUDIT FEES
2019

95%

>99%

6

Audit / Related Fees

2019 Votes FOR

Fiscal Yrs as auditor

59%

18MAR202012493691
Audit

Audit-related

Tax

Other
Permitted
18MAR202012493551

Deloitte, an Independent Registered Public Accounting Firm, was first appointed Magna’s independent auditors on
May 8, 2014 and has audited Magna’s consolidated financial statements for the fiscal years ended December 31,
2014 and after. Deloitte reports directly to the Audit Committee, which oversees the firm’s work, evaluates its
performance and sets its compensation.
The Audit Committee believes that Deloitte provides value to Magna’s shareholders through its methodical,
independent challenge to Magna’s external financial reporting. Deloitte’s audit approach is based on an audit risk
assessment, which is continuously updated throughout the year. Audit risks identified in the risk assessment are
addressed through pin-pointing audit procedures which reflect Deloitte’s understanding of Magna-specific factors
as well as the general business environment in which Magna operates. The firm’s communications to the Audit
Committee demonstrate strong audit quality, professional skepticism and innovation in the audit, including throughthe effective use of data analytics. The Audit Committee is satisfied that Deloitte’s integrated audit team consists ofaudit professionals and specialists who are qualified and experienced to provide audit services in the regions inwhich Magna operates. The firm has demonstrated a commitment to promoting a learning culture within its own
team and sharing the firm’s insights, perspectives and best practices with the Audit Committee, the Board, internal
audit, as well as management and Magna’s finance teams.
Additional information about Deloitte, including its independence, services and fees can be found starting at
page 28 of the Circular.

Compensation Structure
Magna’s executive compensation framework has been structured to promote effective short- and long-term
decision-making through balanced incentives aimed at profitable growth in a lean manufacturing business, as well
as long-term value creation in a rapidly evolving industry. Some of the ways we seek to achieve these objectives
include:Compensation Framework Feature

PurposeMinimal fixed compensationPerformance-conditioned profit
sharing bonus / STIPerformance-conditioned
multi-metric LTI






No pensions / retirement benefits
Significant share maintenancerequirement

Benefits

Low base salaries and highly variable compensation help create an owner’s mindset
Motivates managers to achieve consistent profitability in order to maintain consistent compensation
Incents profit growth to grow compensation
Promotes entrepreneurialism
Drives strong managerial focus on lean/efficient operations through effective management of costs
Connects compensation to the operational impact of everyday decisions
ROIC PSUs incent efficient capital allocation and value creationrTSR PSUs create sensitivity to stock market performance and return of capital to shareholders, inthe form of dividends, as well as alignment with shareholders
Capped PSU payouts help mitigate risk by promoting responsible decision-making and discouraging
excessive risk-taking
Stock options incent absolute TSR growth
Reinforces an owner’s mindset and incents long-term growth in equity value as a pension-alternative
Reinforces an owner’s mindset
Alignment with shareholders
Helps mitigate risk
Substantially consistent with those of other employees in the same office/jurisdiction

Proxy Summary

3

PROXY SUMMARY

5%

2019 CEO Compensation
Target total direct CEO compensation for 2019 had previously been set by the CGCNC at $19.830 million,
unchanged from the 2018 target.
COMPENSATION ELEMENT
Base Salary
STI (actual)
LTIs (at target)
Total Direct Compensation
All Other Compensation
Total Compensation (as reported)

Fixed
At Risk
At Risk
–
–
–

2019
($)

2018
($)

325,000
5,795,000
11,900,000
18,020,000
186,000
18,206,000

325,000
7,727,000
11,900,000
19,952,000
121,000
20,073,000

The CGCNC recommends that you consider CEO compensation in the context of company performance overdifferent time periods. The Compensation and Performance Report which starts at page 31 of the Circular presents
the CGCNC’s perspective. Some of the performance metrics discussed by the CGCNC in that report in thecommittee’s assessment of the alignment between CEO pay and company performance, include:

Donald Walker

2019
2018
2017

ACTUAL TDC(1)($)

REALIZED/REALIZABLEVALUE AS OF DEC 31, 2019($)

18,020,000
19,952,000
20,203,000

14,634,000
17,734,000
27,836,000

REALIZED/REALIZABLE VS
ACTUAL TDC(%)

CUMULATIVE
TSR(2)(%)

ROIC(3)
(%)

18.8
11.1
+37.8

24.3
2.1
36.4

12.0
14.5
16.1

Note:
1.
Actual TDC includes base salary, STI and the grant date fair value of LTI compensation awarded during the year, as reported in the Summary
Compensation Table each year.
2.
Represents the cumulative total shareholder return, assuming reinvestment of dividends, for the period from January 1 of the respective year to
December 31, 2019.
3.
Represents ROIC for purposes of the ROIC PSUs, as defined in Section C of the CD&A.

The CGCNC believes that the outcomes in the table above demonstrate an appropriate relationship between pay
and performance over time that is linked to the experience of the shareholder. In particular, the data points above
demonstrate that realized/realizable pay for a given year provides reasonable upside potential and downsideexposure based on shareholder value creation as measured by absolute total shareholder return, return on invested
capital and relative total shareholder return.
A full discussion of our approach to executive compensation can be found starting on page 36 of the Circular.

4

Proxy Summary

Corporate Governance
The highlights of our approach to corporate governance are as follows:
CORPORATE GOVERNANCE OVERVIEW







Annual Say on Pay vote







Annual director election; no slate ballots
Majority voting policy and prompt disclosure of vote results
Advance Notice By-Law
Independent Board Chair
100% of Board Committee members are independent
Committees with full authority to retain independent
advisors
Director orientation and continuing education
Rigorous annual Board/Director effectiveness evaluation
Equity maintenance requirement and mandatory deferral of
director fees creates alignment with shareholders
Anti-hedging restrictions for directors, officers andemployees








PROXY SUMMARY

Active Board engagement in, and approval of strategy
Broad oversight of risk
Strong oversight of management succession planning
Active shareholder engagement
Commitment to culture of ethics and compliance
Diverse range of Nominee skills, expertise andbackgrounds
Diversity statement in Board Charter
Director tenure guideline
Limitation on director interlocks






A full discussion of our approach to corporate governance can be found starting on page 62 of the Circular.

Sustainability
At Magna, we recognize the reality of climate change and its impact on the planet. As a result, we are focused on
doing the right things today so that our corporate interests do not come at the expense of the viability of life forthe generations that follow.
Our approach to sustainable value creation involves:

designing, engineering, manufacturing and delivering innovative product solutions for our customers,
which achieve shared goals of reduced weight, lower fuel consumption and reduced carbon emissions;

continuing to optimize and innovate our manufacturing processes for resource and input efficiency, as wellas product quality;enhancing the energy efficiency of our plants to reduce greenhouse gas emissions;

exploring opportunities to transition to renewable energy;treating our employees fairly; andserving as a good community partner, particularly in the communities in which our employees live
and work.

Our Sustainability Report, which is appended to our Annual Information Form / Annual Report on Form 40-F, aims
to provide our stakeholders with a better understanding of how we approach the creation of sustainable, long-termvalue and our management of sustainability-related risks. The report has been structured to align with the Task
Force on Climate-Related Financial Disclosures (TCFD) framework, as well as the Sustainability AccountingStandards Board’s (SASB) Auto Parts accounting standard, where possible.

Proxy Summary5

Management Information Circular/Proxy Statement

Table of Contents
Voting Information
How To Vote Your Shares

89Business of the Meeting
Financial Statements
Election of Directors
Nominee Skills and Expertise
Biographies of 2020 Nominees
Director Compensation
Reappointment of Deloitte as Magna’s Independent Auditors
Say on Pay
Compensation and Performance Report
Compensation Discussion & Analysis
Summary Compensation Table
Incentive Plans and Awards

12
13
15
18
24
28
30
31
36
56
58

Corporate GovernanceCorporate Governance at Magna
Governance Environment
About the Board
Board Independence
Board Effectiveness
Shareholder Democracy and Engagement
Ethical Conduct
Sustainability at Magna
Board Committees and Committee Reports
Report of the Audit Committee
Report of the Corporate Governance, Compensation and Nominating Committee
Report of the Technology Committee

62
63
64
65
70
74
76
76
77
77
80
82

Additional Information
Additional Information
Definitions and Interpretation

84
86

18MAR202018164391

Date:

Thursday, May 7, 2020

Time:

10:00 a.m. (Toronto time)

Place:

Virtual-only meeting
via live audio webcast online atwww.virtualshareholdermeeting.com/MGA2020

Due to concerns regarding the COVID-19(Coronavirus) pandemic, we have opted tohold a virtual-only meeting, conducted via live
audio webcast, in which shareholders will
have an equal opportunity to participate
online regardless of geographic location.

You are receiving this notice of Magna’s Annual Meeting of Shareholders (the ‘‘Meeting’’) since you held Magna
Common Shares at the close of business on March 20, 2020. You are entitled to vote your shares at the Meeting,which is being held to:1.

receive Magna’s consolidated financial statements and the independent auditors’ report thereon for the
fiscal year ended December 31, 2019;2.

elect twelve directors;

3.

reappoint Deloitte LLP as our independent auditors and authorize the Audit Committee to fix theindependent auditors’ remuneration;

4.

vote, in an advisory, non-binding manner, on Magna’s approach to executive compensation (‘‘Say on
Pay’’) described in the accompanying Management Information Circular/Proxy Statement (the ‘‘Circular’’);and5.

transact any other business that may properly come before the Meeting.

The Circular relating to the Meeting contains more information on the matters to be addressed at the Meeting. The
section of the Circular titled ‘‘How to Vote Your Shares’’ contains detailed information to help you understand how
to vote your shares within the applicable time limits. The time limit for deposit of proxies may be waived or
extended by the Chair of the Meeting at his or her discretion.
Magna has elected to use the Notice and Access rules permitted by Canadian securities regulators to deliver the
Circular to both our registered and non-registered shareholders. This means that instead of receiving the Circularby mail, shareholders will receive a written notification with instructions on how to access the Circular online,
together with a form of proxy or voting instruction form, as applicable. The Circular is available on our website at
magna.com, on SEDAR at sedar.com and on EDGAR at sec.gov.
By order of the Board of Directors.

28MAR201921015761
March 27, 2020
Aurora, Ontario

BASSEM A. SHAKEEL
Vice-President and Corporate Secretary

NOTICE

Notice of Annual Meeting of
Shareholders

Management Information
Circular/Proxy Statement
This Circular is being provided to you in connection with the Annual Meeting of Magna’s shareholders(the ‘‘Meeting’’), which will be held on Thursday, May 7, 2020 commencing at 10:00 a.m. (Toronto time) via live
audio webcast online at www.virtualshareholdermeeting.com/MGA2020.

Voting Information
Record Date

March 20, 2020 is the record date for the Meeting (the ‘‘Record Date’’). Only holdersof our Common Shares as of the close of business on the Record Date are entitled
to receive notice of and vote at the Meeting.

Outstanding Shares,
Votes and Quorum

As of the Record Date, 298,925,167 Magna Common Shares were issued andoutstanding. Each Magna Common Share is entitled to one vote. A quorum ofshareholders is needed to hold the Meeting and transact business. Under our
by-laws, quorum means at least two persons holding, or representing by proxy, atleast 25% of our outstanding Common Shares.

Principal
Shareholders

To our knowledge, no shareholder beneficially owns or exercises control or direction,
directly or indirectly, over 10% or more of Magna’s Common Shares outstanding as
at the Record Date.

1%

7%

SHAREHOLDER GROUP

CommonCOMMONSHARES
SharesHELD
Held

Public Shareholders
Magna Directors and Executive Officers (N = 21)
Magna Employee Deferred Profit Sharing Plans (Canada, U.S.,
Europe)NUMBEROF SHARESPERCENTAGE
OF SHARES

275,243,428
3,141,001
20,540,738

92.0
1.1
6.9

92%

PublicNorth American and European DPSPs

To the best of our knowledge, all of these shares will be voted FOR the electionof directors, the re-appointment of the auditors and the ‘‘Say on Pay’’ advisory
resolution.

24MAR202000295145

Directors/Executive Officers

Individual Voting

At the Meeting, shareholders will vote for each nominee for election to the Board,
individually. We do not use slate voting.

Majority Voting

We have adopted a majority voting policy which is described under ‘‘Corporate
Governance’’ and each nominee for election to the Board has agreed to abide bysuch policy.

Voting Results

Detailed voting results will be promptly disclosed in a press release issued and filed
on the Meeting date.

You may request a paper copy of this Circular, at no cost, up to one year from the date the Circular was filed on SEDAR. You may
make such a request at any time prior to or following the Meeting by contacting Broadridge at 1-855-887-2243 (Registered Holders)or 1-877-907-7643 (Non-Registered Holders) and following the instructions. Shareholders who have already signed up for electronicdelivery of proxy materials will continue to receive them by e-mail.

8

Voting Information

Your Vote Is
ImportantYour vote is important. This Circular tells you who can vote, what you will be voting
on and how to vote. Please read the information below to ensure your shares areproperly voted. Since the meeting is being held as a virtual-only meeting, there aredifferences in how the Meeting will be conducted compared to our prior annual
meetings. However, shareholders will have an equal opportunity to participate at themeeting online, regardless of geographic location.

Registered vs.
Non-Registered
Shareholder

How you vote your shares depends on whether you are a registered shareholder
or a non-registered shareholder. In either case, there are different ways to vote,but shareholders will not be able to attend the Meeting and vote in person due toelevated health risks related to the COVID-19 (Coronavirus) pandemic.
Registered Shareholder: You are a registered shareholder if you hold one or moreshare certificates which indicate your name and the number of Magna Common
Shares which you own. As a registered shareholder, you will receive a form of proxyfrom Broadridge Investor Communications Corporation representing the shares you
hold. If you are a registered shareholder, refer to ‘‘How to Vote – Registered
Shareholders’’.
Non-Registered Shareholder: You are a non-registered shareholder if a securities
dealer, broker, bank, trust company or other nominee holds your shares for you, orfor someone else on your behalf. As a non-registered shareholder, you will most
likely receive a Voting Instruction Form from Broadridge Investor Communications
Corporation, although in some cases you may receive a form of proxy from thesecurities dealer, broker, bank, trust company or other nominee holding your shares.
If you are a non-registered shareholder, refer to ‘‘How to Vote – Non-Registered
Shareholders’’.

Proxies Are Being
Solicited by
Management

Management is soliciting your proxy in connection with the matters to beaddressed at the Meeting (or any adjournment(s) or postponement(s)thereof) to be held at the time set out in the accompanying Notice of Annual
Meeting. We will bear all costs incurred in connection with Management’s
solicitation of proxies, including the cost of preparing and mailing this Circular andaccompanying materials. Proxies will be solicited primarily by mail, although ourofficers and employees may (for no additional compensation) also directly solicit
proxies by phone, fax or other electronic methods. Banks, brokerage houses andother custodians, nominees or fiduciaries will be requested to forward proxysolicitation material to the persons on whose behalf they hold Magna shares and toobtain authorizations for the execution of proxies. These institutions will bereimbursed for their reasonable expenses in doing so.

Voting Information

9

VOTING INFORMATION

How To Vote Your Shares

These securityholder materials are being sent to both registeredand non-registered owners of Magna Common Shares.

HOW TO VOTE –REGISTERED SHAREHOLDERSHOW TO VOTE –NON-REGISTERED SHAREHOLDERS

If you are a registered shareholder, you may vote either by proxy orby completing an online ballot during the Meeting.
Submitting Votes by Proxy

If you are a non-registered shareholder, the intermediary holding on
your behalf (and not Magna) has assumed responsibility for(i) delivering these materials to you and (ii) executing your proper
voting instructions.

There are four ways to submit your vote by proxy:

Submitting Voting Instructions
There are four ways to submit your vote by Voting Instruction Form:

8FEB202006025324 smartphone
8FEB2020045126718FEB202004520084
internet 8FEB202004532839
mailtelephone

8FEB202006025324 smartphone
8FEB2020045126718FEB202004520084
internet 8FEB202004532839
mailtelephone

The form of proxy contains instructions for each of these methods.

If you are voting by smartphone, internet or telephone, you will need
the pre-printed Control Number on your form of proxy.

The Voting Instruction Form contains instructions for each of thesemethods.

A proxy submitted by mail must be in writing, dated the date on
which you signed it and be signed by you (or your authorizedattorney). If such a proxy is being submitted on behalf of a corporateshareholder, the proxy must be signed by an authorized officer or
attorney of that corporation. If a proxy submitted by mail is not dated,
it will be deemed to bear the date on which it was sent to you.

If you are a non-registered shareholder and have received a Voting
Instruction Form from Broadridge Investor Communications, youmust complete and submit your vote by smartphone, internet, mailor telephone, in accordance with the instructions on the form.

If you are voting your shares by proxy, you must ensure that yourcompleted, signed and dated proxy form or your smartphone,internet or telephone vote is received by Broadridge Investor
Communications not later than 5:00 p.m. (Toronto time) on
May 5, 2020. If the Meeting is adjourned or postponed, you mustensure that your completed and signed proxy form or yoursmartphone, internet or telephone vote is received by Broadridge notlater than 48 hours (excluding Saturdays, Sundays and holidays) prior
to the time of the Meeting.
Appointment of Proxyholder
Unless you specify otherwise or appoint a proxyholder, theMagna officers whose names are pre-printed on the form ofproxy will vote your shares:

FOR the election to the Magna Board of Directors of all of thenominees named in this Circular;

FOR the reappointment of Deloitte as Magna’s independent
auditors and the authorization of the Audit Committee to fix theindependent auditors’ remuneration; andFOR the advisory resolution to accept the approach to
executive compensation disclosed in this Circular.

You have the right to appoint someone else (who need not bea shareholder) as your proxyholder; however, if you do, that
person must vote your shares on your behalf during the virtual
Meeting. To appoint someone else as your proxyholder, insert theperson’s name in the space provided on the form of proxy andprovide an appointee identification number as indicated.

10

Voting Information

Your completed, signed and dated Voting Instruction Form or yoursmartphone, internet or telephone vote must be received by
Broadridge not later than 5:00 p.m. (Toronto time) on May 5,
2020. If the Meeting is adjourned or postponed, you must ensurethat your completed, signed and dated Voting Instruction Form or
your smartphone, internet or telephone vote is received by
Broadridge not later than 48 hours (excluding Saturdays, Sundays
and holidays) prior to the time of the Meeting. If a Voting Instruction
Form submitted by mail or fax is not dated, it will be deemed to bear
the date on which it was sent to you.
Additionally, Magna may use Broadridge’s QuickVote service toassist beneficial shareholders with voting their shares. Broadridge will
tabulate the results of all the instructions received and then provide
the appropriate instructions respecting the shares to be represented
at the Meeting.
In some cases, you may have received a form of proxy instead of a
Voting Instruction Form, even though you are a non-registeredshareholder. Such a form of proxy will likely be stamped by the
securities dealer, broker, bank, trust company or other nominee orintermediary holding your shares and be restricted as to the numberof shares to which it relates. In this case, you must complete theform of proxy and submit it to Broadridge as described to the left
under ‘‘How to Vote – Registered Shareholders – Submitting Votes
By Proxy’’.
If you choose to vote by proxy, you are giving the person (referred toas a ‘‘proxyholder’’) or people named on your form of proxy theauthority to vote your shares on your behalf at the Meeting (including
any adjournment or postponement of the Meeting).

HOW TO VOTE –NON-REGISTERED SHAREHOLDERS (cont’d)

Appointment of Proxyholder (cont’d)

Voting Online During the Meeting

You may indicate on the form of proxy how you want yourproxyholder to vote your shares, or you can let your proxyholder
decide for you. If you do not specify on the form of proxy how you
want your shares to be voted, your proxyholder will have thediscretion to vote your shares as they see fit.

If you have received a Voting Instruction Form and wish to voteonline during the Meeting, you must first appoint yourself as aproxyholder by completing, signing and returning the Voting
Instruction Form or completing the equivalent electronic form online,
in each case and returning it to Broadridge not later than 5:00 pm(Toronto time) on May 5, 2020.

The form of proxy accompanying this Circular gives the proxyholder
discretion with respect to any amendments or changes to mattersdescribed in the Notice of Annual Meeting and with respect to any
other matters which may properly come before the Meeting(including any adjournment or postponement of the Meeting). As ofthe date of this Circular, we are not aware of any amendments,changes or other matters to be addressed at the Meeting.
Voting Online During the Meeting
The Meeting will be held virtually via internet webcast. As aregistered shareholder, you or your duly appointed proxyholder, will
be able to cast votes and ask questions during the Meeting. To doso, you or your duly appointed proxyholder can access the Meetingon May 7, 2020 at 10:00 am (Toronto time) by visitingwww.virtualshareholdermeeting.com/MGA2020. To participate in
the Meeting, registered shareholders will need the control number
pre-printed on the form of proxy. Duly appointed proxyholders willneed the appointee identification number provided in the form ofproxy by the registered holder of the shares being represented.
If you vote online during the Meeting and had previously completed
and returned your form of proxy, your proxy will be automatically
revoked and any votes you cast on a poll at the Meeting will count.
Revoking a Vote Made by Proxy
You have the right to revoke a proxy by ANY of the following
methods:
Vote again by phone, internet or smartphone not later than
5:00 p.m. (Toronto time) on May 5, 2020 (or not later than
48 hours (excluding Saturdays, Sundays and holidays) prior to
the time of the adjourned or postponed Meeting);



Deliver by mail another completed and signed form of proxy,
dated later than the first form of proxy, such that it is received
by Broadridge not later than 5:00 p.m. (Toronto time) on May 5,2020 (or not later than 48 hours (excluding Saturdays, Sundays
and holidays) prior to the time of the adjourned or postponed
Meeting);Deliver to us at the following address a signed written noticerevoking the proxy, provided it is received not later than
5:00 p.m. (Toronto time) on May 6, 2020 (or not later than
5:00 p.m. on the last business day prior to the date of the
adjourned or postponed Meeting):

If you have received a form of proxy and wish to vote online during
the Meeting, you must insert your name in the blank space provided
on the form of proxy. If you are voting your shares by proxy, youmust ensure that your completed and signed proxy form or yourphone or internet or smartphone vote is received by Broadridge notlater than 5:00 p.m. (Toronto time) on May 5, 2020.
If the Meeting is adjourned or postponed, you must ensure that yourcompleted and signed Voting Instruction Form (or equivalent
electronic form online) is received by Broadridge not later than
48 hours (excluding Saturdays, Sundays and holidays) prior to thetime of the adjourned or postponed Meeting.
The Meeting will be held virtually via internet webcast. As a
non-registered shareholder who has duly appointed yourself orsomeone else as proxyholder, you or your such duly appointed
proxyholder will be able to cast votes and ask question during theMeeting. To do so, you or your duly appointed proxyholder canaccess the Meeting on May 7, 2020 at 10:00 am (Toronto time)by visiting www.virtualshareholdermeeting.com/MGA2020. To
participate in the Meeting, you will need the appointee identification
number provided in the voting instruction form for the shares being
represented.
If you have not appointed yourself as a proxyholder in accordancewith the instructions on your Voting Instruction Form, you canparticipate in the Meeting as a guest. Guests will be able to listen to
the Meeting proceedings, but will not be able to vote or ask
questions.
Revoking a Voting Instruction Form or Proxy
If you wish to revoke a Voting Instruction Form or form of proxy forany matter on which a vote has not already been cast, you must
contact your securities dealer, broker, bank, trust company or othernominee or intermediary (for a form of proxy sent to you by suchintermediary) and comply with any applicable requirements relating to
the revocation of votes made by Voting Instruction Form or proxy.

Magna International Inc.
337 Magna Drive
Aurora, Ontario, Canada L4G 7K1
Attention: Corporate Secretary

Voting Information

11

VOTING INFORMATIONHOW TO VOTE –REGISTERED SHAREHOLDERS (cont’d)1Financial Statements

8FEB202006022731

Magna’s consolidated financial statements for the fiscal year ended December 31, 2019, together with theindependent auditors’ report on those statements, will be presented at the Meeting. No shareholder vote isrequired in connection with the financial statements or independent auditors’ report. The independent auditors’
report on our financial statements for the fiscal year ended December 31, 2019 was unqualified and without
reservation. Both of these items are contained in our 2019 Annual Report, which is available on our website atwww.magna.com.
Selected financial results for 2019 are found below. However, we encourage shareholders to review our complete
financial statements and the independent auditors’ report thereon.
SALES

DILUTED EPS

U.S. $ MILLIONSCASH FLOW FROMOPERATING ACTIVITIES

U.S. $

U.S. $ MILLIONS

40,827

6.61

39,431

5.59

2018

RETURN ON
EQUITY(1)

2019

2018

RETURN ON
INVESTED CAPITAL(1)(2)

2019

3,718

3,960

2018

2019

DIVIDENDS PAIDPER SHARE(3)U.S. $

1.46

19.7%
15.5%

1.32
14.9%
10.1%

1.10
1.00
0.88

2018

2019

2018

2019

2015

2016

2017

2018

2019

1. Return on Equity and Return on Invested Capital are non‐GAAP financial measures. Definitions and reconciliations to the most directly comparable financial measures calculated in accordance with
U.S. GAAP, can be found in the company’s Annual Report for the Year Ended December 31, 2019, in the Management’s Discussion and Analysis of Results of Operations and Financial Position section.
The Magna International Inc. 2019 Annual Report has been posted on the company’s website through the investors link at www.magna.com.
2. The recognition of operating lease right‐of‐use assets during 2019 in accordance with the adoption of the accounting standard Accounting Standards Codification 842‐Leases impacted 2019 Returnon Invested Capital by 1.0%.
3. A two‐for‐one stock split was approved February 24, 2015. Dividends are shown on a post‐stock split basis.

12MAR202000093178

12

Business of the Meeting2Election of Directors
14
15
17
18
24

ELECTION OF
DIRECTORSIN THIS SECTION ...
2020 Nomination Process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nominee Skills and Expertise . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Nominees’ Equity Ownership . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Biographies of 2020 Nominees . . . . . . . . . . . . . . . . . . . . . . . . . .
Director Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18MAR202018164127

1 yr

6 yrs

83%

33%

>97%

Term

Avg. Tenure

Independent

Women

Average 2019
Votes FOR

BUSINESS OF THE
MEETING

7FEB202023123121

17MAR202022232188
The Board recommends that you vote FOR each of the 12 nominees.
NOMINEE OVERVIEWNOMINEE

AGE

DIRECTOR SINCE

PRINCIPAL OCCUPATION

Scott B. Bonham

58

May 10, 2012

Co-Founder, Intentional Capitaland Corporate Director

INDEPENDENCE(1)FINANCIAL
LITERACY

FINANCIAL
EXPERTISE

COMMITTEEMEMBERSHIPS

NI

✓

✓

–

✓

Peter G. Bowie

73

May 10, 2012

Corporate Director

I✓

Mary S. Chan

57

August 10, 2017Managing Partner of VectoIQ LLP
and Corporate Director

I

✓

Audit
Technology

Hon. V. Peter Harder

67

January 10, 2020(2)Senator and Corporate Director

I✓

Dr. Kurt J. Lauk73

May 4, 2011

Co-Founder & President,
Globe CP GmbH

I

✓

✓

Technology(Chairman)

Robert F. MacLellan

65

May 10, 2018

Chairman, Northleaf CapitalPartners and Corporate Director

I

✓

✓

Audit
(Chairman)

✓

Audit

CGCNC

Cynthia A. Niekamp

60

May 8, 2014

Corporate Director

I✓

William A. Ruh

58

May 11, 2017

Chief Executive Officer, Digital
Lendlease Group

I✓

Technology

Dr. Indira V. Samarasekera

67

May 8, 2014

Senior Advisor, Bennett Jones LLP
and Corporate Director

I

✓

CGCNC

Donald J. Walker

63

November 7, 2005

Chief Executive Officer of Magna

M✓

Lisa S. Westlake

58

May 9, 2019

Corporate Director

I

✓

✓

CGCNC

William L. Young

65

May 4, 2011

Corporate Director

I

✓

✓

CGCNC
(Chairman)

–

Note:
1.
I = Independent; M = Management; NI = Non-Independent, Non-Executive
2.
Mr. Harder was appointed to the Board on January 10, 2020. He previously served on Magna’s Board from May 10, 2012 until March 21, 2016.

Business of the Meeting13

Board Overview
Board’s Role
Directors are elected by shareholders to act as stewards of the company. The Board is Magna’s highest decisionmaking body, except to the extent certain rights have been reserved for shareholders under applicable law or Magna’s
articles of incorporation or by-laws. Among other things, the Board is responsible for appointing our Chief Executive
Officer, overseeing Management, shaping and overseeing implementation of our long-term strategy, satisfying itself thatmaterial risks are being managed appropriately, reviewing and approving financial statements, establishing our systems
of corporate governance and executive compensation, as well as overseeing our corporate culture. In fulfilling theirduties, directors are required under applicable law to act in the best interests of the company.

2020 Nomination Process
Nominees for election at the Meeting include eleven directors who were elected at our 2019 annual meeting ofshareholders (Scott B. Bonham; Peter G. Bowie; Mary S. Chan; Dr. Kurt J. Lauk; Robert F. MacLellan; Cynthia A.
Niekamp; William A. Ruh; Dr. Indira V. Samarasekera; Donald J. Walker; Lisa S. Westlake; and William L. Young) and
one candidate (Hon. V. Peter Harder) who was appointed to the Board effective January 10, 2020.
In recommending to the Board the nominees who currently serve as directors on our Board, the CGCNC considered anumber of factors, including:







the nominees’ respective skills, expertise and experience, as well as the extent to which the nominees meetthe minimum qualifications described above;
results of the Board’s annual self-assessment process, which incorporates both a self-evaluation and a peer
review process;individual voting results from the 2019 annual meeting; andfeedback from the Board’s independent advisors and others.

Mr. Harder was appointed as a Director effective January 10, 2020, following his resignation as Government
Representative in the Senate of Canada. In appointing Mr. Harder, the CGCNC considered a variety of factors, including
his extensive public policy, foreign affairs and international trade experience, as well as his demonstrated expertise
regarding compensation issues and compensation governance. The CGCNC also considered his prior service on the
Board from May 2012 to March 2016, including feedback from the board effectiveness evaluations from that time
period.
The CGCNC and the Board are confident that each of the twelve nominees:

exceeds the minimum requirements set out in our Board Charter and the Business Corporations Act (Ontario)(‘‘OBCA’’);has skills, experience and expertise that provide the Board with the necessary insight to effectively carry out its
mandate; andwill, if elected, provide responsible oversight as a steward of the corporation, including prudent oversightof Management.

Refer to ‘‘Nominees for Election to the Board’’ for detailed information regarding the skills, expertise and other relevant
information which you should consider in casting your vote for each nominee.
Unless otherwise instructed, the Magna officers whose names have been pre-printed on the form of proxyor Voting Instruction Form intend to vote FOR each such nominee.

14

Business of the Meeting

Nominees for Election to the Board

MBA, PEng

William L. Young

MBA

PEng

Lisa S. Westlake

Donald J. Walker

PhD, PEng

Dr. Indira V. Samarasekera

MSc

William A. Ruh

MBA

CPA, MBA

Cynthia A. Niekamp

Robert F. MacLellan

MBA, PhD

Dr. Kurt J. Lauk

LLD

MSc

Hon. V. Peter Harder

Mary S. Chan

FCPA, MBAPeter G. Bowie

MBA

Scott B. Bonham

The CGCNC seeks to recruit candidates who reflect a diversity of skills, experience, perspectives and backgrounds
which are relevant to Magna’s business. While the specific mix may vary from time to time and alternative
categories may be considered in addition to or instead of those below, the following skills matrix lists the types ofexperience generally sought by the CGCNC and includes each nominee’s self-assessed ranking of his or her
experience level for each item.

ELECTION OF
DIRECTORS

Nominee Skills and Expertise

➁

➀

➂

➁

➀

➀

➁

➁

➂

➂

➁

➂

➀

➂

➀

➂

➀

➂

➀

➂

➂

➀

➂

➁

➀

➀

➂

➁

➁

➀

➀

➁

➂

➀

➀

➁

➁

➀

➁

➀

➁

➀

➀

➁

➀

➀

➀

➀

➀

➀

➀

➀

➀

➂

➀

➁

➁

➀

➀

➂

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➂

➁

➂

➀

➁

➁

➂

➀

➀

➁

➁

➁

➁

➀

➁

➂

➀

➀

➀

➁

➁

➀

➀

➀

➀

➂

➀

➁

➀

➂

➁

➀

➀

➀

➁

➂

➁

➀

➁

➀

➁

➀

➁

➀

➁

➀

➀

➁

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➀

➂

➀

➀

➀

➂

➀

➀

➀

➁

➀

➀

➁

Ranking Legend➀➁➂

Significant expertise/experience
Strong familiarity
General understanding

Business of the Meeting

15

BUSINESS OF THE
MEETING

8FEB202006022607
25MAR202017191180
8FEB202004520469
25FEB202001303630
8FEB202004514108
8FEB202004515952
8FEB202004505459
8FEB202006032590
8FEB202004512178
8FEB202004510113
8FEB202004515685
8FEB202006032203
Accounting/Audit: technical expertise with financial statements andfinancial reporting matters; understanding of critical accounting
policies, technical issues relevant to the internal and external audit, as
well as internal controls.
Automotive: practical experience with automobile manufacturers or
suppliers; solid understanding of industry dynamics on a global orregional basis; knowledge of World Class Manufacturing; orexperience in comparable capital-intensive manufacturing industries.
Finance/Financial Advisory: senior financial management roles
and/or financial advisory roles; expertise related to capital allocation,
capital structure or capital markets.
Governance/Board: sophisticated understanding of corporate
governance practices and norms; prior board experience; expertisewith stakeholder management or engagement.
High-Growth Markets: a track record of operational success orother experience in markets other than North America and Western
Europe, such as China.
Large Cap Company: board, management and/or other applicable
experience with companies that have a market capitalization inexcess of $10 billion.
Legal/Regulatory/Public Policy: experience with legal andregulatory compliance oversight; experience in relevant areas ofgovernment or public policy.
Mergers & Acquisitions (‘‘M&A’’): management or board-level
experience with complex M&A in different industries and/or different
geographic regions.
R&D/Innovation/Technology: domain expertise and skill intechnology/innovation; practical experience with technologicaltransformation and disruption.
Risk Oversight: practical expertise in risk governance, including
enterprise risk management frameworks; knowledge/understandingof risk monitoring and mitigation.
Senior/Executive Leadership: demonstrated track record ofleadership, mature judgment, operating success and value creationin complex organizations and/or in progressively challenging roles.
Strategy Development: board, senior management and/or otherexperience in strategy development, analysis or oversight.
Talent Management/Compensation: hands-on experiencedeveloping, managing, compensating and motivating employees.

Nominee Independence
Ten out of twelve, or 83%, of the nominees for election at the Meeting are independent. A summary of the
independence determination for each nominee is set forth below:

NOMINEE

INDEPENDENT

Scott B. Bonham(1)Peter G. Bowie
Mary S. Chan
Hon. V. Peter Harder
Dr. Kurt J. Lauk
Robert F. MacLellan
Cynthia A. Niekamp
William A. Ruh
Dr. Indira V. Samarasekera
Donald J. Walker
Lisa S. Westlake
William L. YoungNONINDEPENDENTBASIS FOR
DETERMINATION✓

Consultant to Magna
No material relationshipNo material relationshipNo material relationshipNo material relationshipNo material relationshipNo material relationshipNo material relationshipNo material relationshipManagement
No material relationshipNo material relationship

✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓

Note:
1.
Mr. Bonham has been determined to be a non-independent, non-executive director as a result of his consulting relationship, the terms of which aredescribed under ‘‘Interests of Management and Other Insiders in Certain Transactions’’ elsewhere in this Circular.

Nominees’ Meeting AttendanceDirectors are expected to attend all Board meetings, as well as all meetings of standing Committees on which they
serve, and are welcome to attend any other Committee meetings. However, we recognize that scheduling conflicts
are unavoidable from time to time, particularly in the first year of a director’s tenure, and also where meetings arecalled on short notice. Our Board Charter requires Directors to attend a minimum of 75% of regularly scheduled
Board and applicable standing Committee meetings, except where an absence is due to medical or other valid
reason. The nominees who served on the Board during 2019 achieved 100% attendance at all Board andapplicable Committee meetings (in aggregate), as set forth below.

NOMINEE

BOARD#%

AUDIT(1)#%CGCNC(1)#%TECHNOLOGY(1)#%Scott B. BonhamPeter G. Bowie
Mary S. Chan
Dr. Kurt J. Lauk
Robert F. MacLellan
Cynthia A. Niekamp
William A. Ruh
Dr. Indira V. Samarasekera
Donald J. Walker
Lisa S. Westlake(2)William L. Young

7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
7/7
3/3
7/7

–
6/6
–
–
6/6
6/6
–
–
–
–
–

–
–
–
–
–
–
5/5
8/8
–
3/3
8/8

–
–
4/4
4/4
–
–
4/4
–
–
–
–

100
100
100
100
100
100
100
100
100
100
100

–
100
–
–
100
100
–
–
–
–
–

–
–
–
–
–
–
100
100
–
100
100

–
–
100
100
–
–
100
–
–
–
–

TOTAL
#

%

7/7
13/13
11/11
11/11
13/13
13/13
16/16
15/15
7/7
6/6
15/15

100
100
100
100
100
100
100
100
100
100
100

Notes:
1.
Attendance figures for Audit, CGCNC and Technology include only those directors who served as members of such committees during 2019.
2.
Ms. Westlake was elected to the Board on May 9, 2019.

16

Business of the Meeting2019 Annual Meeting Vote Results
Each of the nominees standing for re-election received a substantial majority of votes ‘‘for’’ his or her election at
our 2019 annual meeting of shareholders, as set forth in the table below.

Scott B. BonhamPeter G. Bowie
Mary S. Chan
Dr. Kurt J. Lauk
Robert F. MacLellan
Cynthia A. Niekamp
William A. Ruh
Dr. Indira V. Samarasekera
Donald J. Walker
Lisa S. Westlake
William L. YoungVOTES FOR(%)

VOTES WITHHELD
(%)

98.3
99.8
99.5
99.7
78.5
99.9
98.0
98.1
99.9
99.9
98.1

1.7
0.2
0.5
0.3
21.5
0.1
2.0
1.9
0.1
0.1
1.9

ELECTION OF
DIRECTORS2019NOMINEE

We believe it is important that each Independent Director be economically aligned with shareholders. We try toachieve such alignment in two principal ways:
Equity Maintenance Requirement: Each Independent Director other than the Board Chair is required tohold a minimum of $750,000 of Magna Common Shares and/or Deferred Share Units (‘‘DSUs’’) within five
years of joining the Board. The Board Chair is required to hold a minimum of $1,500,000 of Magna
Common Shares and/or DSUs within three years of becoming Chair.
Mandatory Deferral of Compensation: Until the equity maintenance requirement has been achieved, aminimum of 60% of the Independent Director annual retainer is paid in the form of DSUs. Once an
Independent Director has achieved the minimum equity maintenance requirement, a minimum of 40% is
automatically deferred in the form of DSUs, subject to the director’s election to defer a greater amount.
DSUs are notional units, the value of which is tied to the market value of our Common Shares. The value
represented by an Independent Director’s DSUs can only be realized following his or her departure fromthe Board and remains ‘‘at risk’’ until that time.
Each of Magna’s nominees is in compliance with the minimum equity maintenance requirement and many exceed
it. New directors are entitled to a five year period in which to accumulate the minimum required value of Common
Shares and/or DSUs.
The twelve nominees held Magna Common Shares and/or DSUs with the following total value, as of theRecord Date:
NOMINEE
Scott B. BonhamPeter G. Bowie
Mary S. Chan
Hon. V. Peter Harder
Dr. Kurt J. Lauk
Robert F. MacLellan
Cynthia A. Niekamp
William A. Ruh
Dr. Indira V. Samarasekera
Donald J. Walker
Lisa S. Westlake
William L. Young

COMMON SHARES
(#)

DSUS
(#)

TOTAL EQUITY‘‘AT RISK’’(1)($)

EQUITY MAINTENANCEREQUIREMENT(2)

–
7,000
–
–
110
–
6,600
–
–
1,866,605
2,000
1,860

60,45650,232
13,020729
32,6308,770
11,125
14,82233,780NIL
3,719
110,485

1,563,000
1,480,000
337,000
19,000847,000
227,000
458,000
383,000
874,000
48,270,000
148,000
2,905,000

Exceeds
Exceeds
Complies
Complies
Exceeds
Complies
Complies
Exceeds
Exceeds
Exceeds
Complies
Exceeds

Note:1.
In calculating the value of total equity at risk, we have used the closing price of Magna Common Shares on the NYSE on the Record Date.
2.
‘‘Complies’’ signifies a director who: (a) is within his or her first five years of tenure and accumulating equity value to achieve the minimum equity
requirement; or (b) achieved the minimum equity requirement, but whose equity value subsequently fell below such minimum solely due to fluctuationin Magna’s stock price.

Business of the Meeting

17

BUSINESS OF THE
MEETING

Nominees’ Equity Ownership

Biographies of 2020 Nominees
Scott B. Bonham MBA

6FEB201923194388

California, U.S.A.
Age: 58
Tenure: ~8Other Current Public Company
Boards:Bank of Nova Scotia (Audit;
Corporate Governance)
Loblaw Companies Limited(Audit; Risk and Compliance)
Total 2019 Compensation:$822,000
Equity-at-risk (Record Date):$1,563,000

NON-INDEPENDENTNON-EXECUTIVE
Mr. Bonham brings to the Board a technot-for-profits including the Canadian Instinology/innovation-centred perspective tute for Advanced Research. Mr. Bonham
which reflects his deep understanding
has a B.Sc in electrical engineeringof the long-term value creation poten(Queen’s) and an MBA (Harvard).
tial possessed by some of the world’s
Together with Dr. Indira Samarasekera, Mr.
most innovative companies.
Bonham serves as a director of the Bank of
Mr. Bonham is the Co-Founder of Intentional
Nova Scotia, which provides routine banking
Capital, a privately-held real estate investservices to Magna. Magna’s fees to thementmanagement
Bank of Nova Scotia incompany. He also co2019 represented lessfounded GGV Capital,
than 0.01% of theanexpansion-stage
bank’s 2019 revenues
2019 MEETING
2019 ANNUAL MEETING and are not material toventure capital firm,
ATTENDANCEVOTING RESULT
where he served as a
Magna or the bank.
Partner (2000-2011),
Effective January 1,
and as a Venture Partner (2011-2015). Mr.
2018, Mr. Bonham became a consultant toBonham previously served in various roles
the company. Refer to ‘‘Interests of Managewith the Capital Group Companies
ment and Other Insiders in Certain Transac(1996-2000), Silicon Graphics (1992-1996),
tions’’ for terms of his consulting
Booz, Allen & Hamilton (1989-1992) andarrangement.
General Motors of Canada. He is currently aboard member of innovation-related

100% >98%

Significant expertise/experience:
Automotive
Finance/Financial AdvisoryHigh-Growth Markets
Large Cap Company

Peter G. Bowie FCPA, MBA

6FEB201923200374

Ontario, Canada
Age: 73
Tenure: ~8Other Current Public Company
Boards:NoneTotal 2019 Compensation:$221,000

Equity-at-risk (Record Date):$1,480,000

Business of the Meeting

R&D/Innovation/Technology
Senior/Executive Leadership
Strategy Development

INDEPENDENT

Audit Committee

Mr. Bowie brings to the Board financial
well as an MBA (Ottawa) and has received anexpertise, a dedication to Audit Comhonorary doctorate (Ottawa). Mr. Bowie committee excellence, a strong understandpleted the Advanced Management Programing of strategy and risk, as well as(Harvard) and is a Fellow of the Institute ofdetailed insight of political and ecoChartered Accountants of Ontario, as well as the
nomic dynamics within China.
Australian Institute of Corporate Directors. In
Mr. Bowie is a corporate director who previously
2018, Mr. Bowie completed the Certificate of Artiserved as the Chief Executive of Deloitte China
ficial Intelligence Implications for Business Stratfrom 2003 to 2008, as
egy (MIT Sloan School ofwell as senior partner andBusiness)andalso
a member of the board
received the Association ofand the management
International Certified Pro2019 MEETING
2019 ANNUAL MEETING fessional
committee of Deloitte
Accountants’
ATTENDANCEVOTING RESULT
China until his retirement
certifications related tofrom the firm in 2010. Mr.
Cybersecurity FundamenBowie was also previously Chairman of Deloittetals for finance and accounting professionals andCanada (1998-2000), a member of the firm’s
cybersecurity risk management. In 2019,
management committee and a member of the
Mr Bowie completed the MIT Sloan School ofboard and governance committees of Deloitte
Business Certificate Program in Digital Business
International. He is a past member of the board
Strategy; as well as participation in the CPAof the Asian Corporate Governance Association
Canada Conference for Audit Committees andand has served on a variety of boards in thethe Australian Institute Program Building Cyber
private and non-governmental organization secResilience. He previously served on the board oftors. Mr. Bowie has a B.Comm (St. Mary’s), as
COSCO Holding Company Ltd.

100% >99%

Significant expertise/experience:
Accounting/Audit
Finance/Financial AdvisoryGovernance/BoardHigh-Growth Markets
Large Cap Company

18









M&A
Risk OversightSenior/Executive Leadership
Strategy Development
Talent Management/Compensation

Ms. Chan brings to the Board extensive
Motors Company (2012-2015), where she
experience in connected cars, autonowas responsible for building the next genermous and semi-autonomous vehicles,
ation of connected vehicle product and seras well as demonstrated executive
vices. At GM, Ms. Chan led the industry-firstleadership success in the mobility comlaunch of 4G LTE connectivity across GM’s
munications infrastructure, products
global brands in the U.S., China, Europe andand services industry.
Mexico. Ms. Chan was also previously
Ms. Chan has been a
Senior VP & Generalmanaging partner ofManager,Enterprise
VectoIQ LLP (since
Mobility Solutions &2015), an advisory firm
Services,Dell
Inc.
2019 MEETING
2019 ANNUAL MEETING (2009-2012), and hadthat partners with orgaATTENDANCEVOTING RESULT
nizations participating
progressive executive
in the transition towards
roles, including Execumobility as a service and an autonomous
tive VP Wireless Network Business Unit, at
vehicle society. Prior to joining VectoIQ, she
Alcatel-Lucent Inc. (1996-2009). Ms. Chanserved as President, Global Connectedholds B.Sc. and M.Sc. degrees in Electrical
Consumer & OnStar Service of General
Engineering (Columbia).

New Jersey, U.S.A.
Age: 57
Tenure: 2+

100% >99%

Other Current Public Company
Boards:
Dialog Semiconductor PLC(Nominating; Compensation)
SBA Communications
Corporation (Compensation,
Governance & Nomination)
Microelectronics Technology Inc.
Significant expertise/experience:(Audit) (Ms. Chan will not beAutomotive
standing for re-election to thisHigh-Growth Markets
board)

Large Cap Company
Total 2019 Compensation:
R&D/Innovation/Technology$244,000
Equity-at-risk (Record Date):$337,000

Hon. V. Peter Harder, P.C., LLD

27FEB202017350762

Ontario, Canada
Age: 67
Tenure: <1

Other Current Public Company
Boards*:NoneTotal 2019 Compensation:
N/A – New Nominee

Equity-at-risk (Record Date):$19,000* Mr. Harder was a director of Arise Technologies
Corporation (‘‘Arise’’) until June 24, 2011. Arise was deemed
to have made an assignment into bankruptcy on April 11,
2012.

Technology Committee

INDEPENDENT

Senior/Executive Leadership
Strategy Development
Talent Management/Compensation

CGCNC

Mr. Harder, who previously served on
Deputy Minister in the Government of
our Board from May 2012 to
Canada (1991-2007). While Deputy Minister
March 2016, brings to the Board a Canaof Foreign Affairs, he served the Prime Minisdian-centred, globally-aware perspec- ter’s Personal Representative to the G-8 andtive which draws upon his extensive
as the first co-chair of the Canada-China
experience in foreign affairs and interStrategic Working Group. After leaving thenational trade. In particular, he possesses
public service in 2007, Mr. Harder served asa valuable understandthe President of theing of the workings ofCanada-China Business
China’s political estabCouncil(2008-2015)
lishment, as well as its
and as a director to a
NEW NOMINEE
economic drivers, in
number of major Canaaddition to Canadadian corporations as well
China trade and investas charitable and notment issues. Mr. Harder also brings demonfor-profit organizations.
strated expertise regarding compensation
Mr. Harder holds degrees from the University
issues and compensation governance.
of Waterloo (BA) and Queen’s University (MA)Mr. Harder currently serves as a member ofand has received an honorary doctorate
the Senate of Canada and was the first inde(LLD) from the University of Waterloo. He ispendent Government Representative in thethe recipient of the Queen Elizabeth II Golden
Senate (2016-2020). Prior to his appointment(2002) and Diamond (2012) Jubilee Medals
to the Senate, Mr. Harder was a long-serving
as well as the Prime Minister’s Outstanding
Achievement Award (2000) for public service.

Significant expertise/experience:
Governance/BoardHigh-Growth Markets
Large Cap Company

Legal/Regulatory/Public
PolicyELECTION OF
DIRECTORS

6FEB201923205025

INDEPENDENT

Risk OversightSenior/Executive Leadership
Strategy Development
Talent Management/Compensation

Business of the Meeting

19

BUSINESS OF THE
MEETING

Mary S. Chan MSc

Dr. Kurt J. Lauk MBA, PhD

6FEB201923211189

Baden-Württemberg,
Germany
Age: 73
Tenure: ~9Other Current Public Company
Boards:NoneTotal 2019 Compensation:$323,000
Equity-at-risk (Record Date):$847,000

Dr. Lauk brings to the Board valuable
extensive European automotive industry
insights regarding the European auto- experience, primarily through his positions
motive industry and the global activities
as Member of the Board of Managementof European OEMs and suppliers, and Head of World Wide Commercial Vehitogether with a focus on long-termcles
DivisionofDaimler
Chryslerstrategy and a strong understanding of(1996-1999), as well as Deputy Chief Executechnology/innovation both within andtive Officer and Chief Financial Officer (withoutside the automotive industry.
responsibility for finance, controlling and
Dr. Lauk is the comarketing) of Audi AG
founder and President(1989-1992). He curof Globe CP GmbH, a
rently serves as a Trusprivate investment firmtee of the International
2019 MEETING
2019 ANNUAL MEETING Institute for Strategic
established in 2000. His
ATTENDANCEVOTING RESULT
variedexperience
Studies in London andincludes service as a
was an honorary proMemberofEuropeanParliament
fessor with a chair for international studies at(2004-2009), including as a Member of Ecothe European Business School in Reichartnomic and Monetary Affairs Committee andshausen, Germany. Dr. Lauk possesses
Deputy Member of the Foreign and Security
both a PhD in international politics (Kiel), as
Affairs Committee. Dr. Lauk possesses
well as an MBA (Stanford).

100% >99%

Significant expertise/experience:
Accounting/Audit
AutomotiveHigh-Growth Markets
Large Cap Company

Robert F. MacLellan CPA, MBA

6FEB201923213248

Ontario, Canada
Age: 65
Tenure: ~2

Other Current Public Company
Boards:
T. Rowe Price Group, Inc.
(Compensation (Chair); Audit)
Total 2019 Compensation:$230,000

Equity-at-risk (Record Date):$227,000

Chairman of theTechnology Committee

INDEPENDENT






M&A
R&D/Innovation/Technology
Senior/Executive Leadership
Strategy Development

Chairman of the
Audit Committee

INDEPENDENT

Mr. MacLellan brings to the Board sigcapacities with TDBFG (1995-2003). Priornificant financial and accounting acuboards include WIND Mobile Group, ACE
men, a track record of executive
Aviation Holdings Inc., Yellow Pages Group
leadership success, blue-chip board
and Maple Leaf Sports and Entertainment
experience and the perspective of theLtd. Mr. MacLellan is currently Chairman ofinstitutional investment community.
the Board of Right to Play International, an
Mr. MacLellan serves as the non-executive
organization that uses sport and play to
Chairman of Northleaf Capital Partners, anempower and educate youth. He is a
independent
globalChartered Accountant
equity and infrastrucand has a B.Comm.
ture fund manager and(Carleton) and an MBA
advisor (since 2009),(Harvard).
2019
MEETING
2019
ANNUALMEETINGprior to which he was
Mr. MacLellan serves as
ATTENDANCEVOTINGRESULT
the Chief Investment
an independent director
Officer of TD Bankof T. Rowe Price Group,
Financial Group (TDBFG) (2003-2008)
Inc., which is one of Magna’s largest sharewhere he was responsible for overseeing theholders. As an independent director ofmanagement of investments for its
T. Rowe Price, Mr. MacLellan has no involveEmployee Pension Fund, The Torontoment in portfolio investment decisions.
Dominion Bank, TD Mutual Funds and TD
Capital Group. He served in various other

100% >78%** Mr. MacLellan was elected to the Board on May 10, 2018 and missed one Board meeting and one Audit Committee
meeting due to an unresolvable scheduling conflict that pre-dated his election to the Board. This conflict was known to andwaived by Magna’s chairman at the time Mr. MacLellan was first nominated in 2018.

Significant expertise/experience:
Accounting/Audit
Finance/Financial AdvisoryGovernance/Board
Large Cap Company

M&A

20

Business of the Meeting






Risk OversightSenior/Executive Leadership
Strategy Development
Talent Management/Compensation

6FEB201923215476

Michigan, U.S.A.
Age: 60
Tenure: ~6

Other Current Public Company
Boards:Ball Corporation (Human
Resources; Finance)
Total 2019 Compensation:$225,000

INDEPENDENT

Audit Committee

Ms. Niekamp brings to the Board extenPresident & General Manager, BorgWarnersive senior management and board Torq Transfer Systems (2004-2008);
experience within the global automotive
MeadWestvaco Corporation (1995-2004);
parts industry, including through execuTRW (1990-1995); and General Motors
tive-level general management, P&L,
(1983-1990). Ms. Niekamp, a National
operational, strategy and finance roles.
Association of Corporate Directors fellow,
Ms. Niekamp is a corserves on the advisory
porate director who
board of Purdue Univermost recently served assity School of Industrial
the Senior Vice-PresiEngineering and previ2019 MEETING
2019 ANNUAL MEETING
dent, Automotive Coatously served on the
ATTENDANCEVOTING RESULT
ings, of PPG Industries,
boards of Rockwood
Inc. She possesses
Holdings, Delphi Corp.
over 30 years of automotive and otherand Cooper Tire and Rubber, as well as
industrial manufacturing experience throughBerkshire Applied Technology Council.
her prior roles at PPG (2009-2016);
Ms. Niekamp has a B.Sc. in industrial engiBorgWarner, where she served as
neering (Purdue), as well as an MBA(Harvard).

100% >99%

ELECTION OF
DIRECTORS

Cynthia A. Niekamp MBA

Equity-at-risk (Record Date):
Significant expertise/experience:
Automotive
Finance/Financial AdvisoryGovernance/BoardHigh-Growth Markets
Large Cap Company

William A. Ruh MSc

6FEB201923221889

New South Wales,
Australia
Age: 58
Tenure: ~3

Other Current Public Company
Boards:NoneTotal 2019 Compensation:$265,000
Equity-at-risk (Record Date):$383,000

M&A
Senior/Executive Leadership
Strategy Development
Talent Management/Compensation






INDEPENDENTTechnology Committee

Mr. Ruh brings to the Board a track
responsibility for developing advanced serrecord of success in managing the digivices and solutions; Software AG, Inc.
tal transformation of large industrial(2001-2004); and The Advisory Board Comcompanies. He possesses a wealth ofpany (2000-2001), among others. Mr. Ruhexpertise in advanced software and has served on the boards of Pivotal
automation solutions, including cloudSoftware, Cadmakers, Akrometrix, Taleris,
based platforms, analytics machine
the American Chamber of Commerce Auslearning and cybersecurity, developed
tralia and the Bay Area Council. Mr. Ruh is anover the course of aaccomplished author of
thirty year career inbooks and papers. He
the software industry.
has a B.Sc. and M.Sc.
Mr. Ruh is the Chiefin computer science2019 MEETING
2019 ANNUAL MEETING from California State
Executive Officer, Digital
ATTENDANCEVOTINGRESULTof Lendlease Group, an
University,
Fullerton
international property
where he is a member
and infrastructure group. Prior to joiningof the Advisory Board for the School ofLendlease, he served as the chief executive
Engineering.
officer for GE Digital as well as the senior vicepresident and Chief Digital Officer (CDO) forGE (2011-2018). Other pervious roles
included executive roles at: Cisco Systems,
Inc. (2004-2011) where he held global

100%

Significant expertise/experience:
Large Cap Company

Legal/Regulatory/Public Policy
R&D/Innovation/Technology

98%






Risk OversightSenior/Executive Leadership
Strategy Development
Talent Management/Compensation

Business of the Meeting

21

BUSINESS OF THE
MEETING$458,000

Dr. Indira V. Samarasekera PhD, PEng

6FEB201923223817

British Columbia,
CanadaAge: 67
Tenure: ~6

Other Current Public Company Boards:
Bank of Nova Scotia (Human
Resources; Corporate Governance)
TC Energy (Audit; Governance)Stelco Holdings Inc.
Total 2019 Compensation:$253,000
Equity-at-risk (Record Date):$874,000

INDEPENDENT

CGCNC

Dr. Samarasekera brings to the Board a Innovation Council as well as Canada’s Global
proven record of technical expertise,
Commerce Strategy. She possesses an M.Sc
demonstrated leadership, tangible sucin mechanical engineering (California), as wellcess in building international relationships as a PhD in metallurgical engineering (British
and a long-standing commitment to R&D/ Columbia) and is a professional engineer
innovation.
(P.Eng. – British Columbia) who has been
Dr. Samarasekera is a corporate director andelected as a Foreign Associate of the National
Senior Advisor at Bennett Jones, LLP. Dr.
Academy of Engineering in the U.S.
Samarasekera served as
Together with Scott Bonthe President and Viceham, Dr. Samarasekera
Chancellor of the Universerves as a director atsity of Alberta fromthe Bank of Nova Scotia,
2019 MEETING
2019 ANNUAL MEETING which provides routine(2005-2015). She is interATTENDANCEVOTING RESULT
nationally recognized asbanking services toa leading metallurgical
Magna. Magna’s fees toengineer, including for her work on steel prothe Bank of Nova Scotia in 2019 represented
cess engineering for which she was appointed
less than 0.01% of the bank’s 2019 revenues
an Officer of the Order of Canada. Among otherand are not material to Magna or the bank.
things, Dr. Samarasekera was previously amember of Canada’s Science, Technology and100% >98%

Significant expertise/experience:
Governance/Board
Large Cap Company

Legal/Regulatory/Public Policy

Donald J. Walker PEng

6FEB201923225905

Ontario, Canada
Age: 63
Tenure: ~14

Other Current Public Company
Boards:NoneTotal 2019 Compensation:$18,206,000
Equity-at-risk (Record Date):$48,270,000

Business of the Meeting

R&D/Innovation/Technology
Senior/Executive Leadership
Strategy Development

MANAGEMENT

Chief Executive Officer

Mr. Walker, Magna’s Chief Executive 2014 Outstanding CEO of the Year. He
Officer, is Management’s sole represenwas also named to Fortune Magazine’s
tative on the Board. He brings extensive
Businessperson of the Year list in 2015;
knowledge and understanding of the
Financial Post Magazine’s 2016 Power List
automotive industry, as well as theof 25 Most Influential Individuals; Canadiancompany’s culture, operations, key per- Business Magazine’s 2016 ranking of
sonnel, customers, suppliers and theCanada’s Most Powerful Business People;
complex drivers of its success. He has
and Motor Trend Magazine’s 2017 Powerdemonstrated a commitment to transparent
List. Mr Walker was also recognized by theand effective leadership, responsiveness to
Glassdoor Employees’ Choice Award as
the Board and integrity in all aspects of theone of the Top CEO’s in Canada in bothcompany’s business, while pushing the2017 and 2018 and in 2018, was selectedorganization to reach its
as one of the Automofull potential throughtive News All-Stars.
World Class ManufacMr. Walker previously
turing, innovation andserved as Magna’s Co2019 MEETING
2019 ANNUAL MEETING Chief Executive Officer
leadershipdevelopATTENDANCEVOTING RESULT
ment. Mr. Walker con(2005-2010) and Presitinues to actively shapedent and Chief ExecuMagna’s strategic vision and mission in contive Officer (1994-2001). He was formerly
junction with the Board, with an unwavering
the President, Chief Executive Officer andfocus on excellence in execution/implemenChairman of Intier Automotive Inc.
tation and legal/regulatory compliance, as(2001-2005), spent seven years at General
well as prudence in stewardship over theMotors in various engineering and manufaccompany’s assets, employees, reputation
turing positions. He is currently the Chair ofand value. Two areas Mr. Walker is personthe Canadian Automotive Partnership Counally championing within Magna are suscil (CAPC). Mr. Walker is a professional engitainability, as well as diversity and inclusion.
neer (P.Eng. – Ontario) with a B.Sc in
Mr. Walker was Canada’s
mechanical engineering (Waterloo).

100% >99%

Significant expertise/experience:
Automotive
Finance/Financial AdvisoryGovernance/BoardHigh-Growth Markets
Large Cap Company

M&A

22









R&D/Innovation/Technology
Risk OversightSenior/Executive Leadership
Strategy Development
Talent Management/Compensation

Other Current Public Company
Boards:NoneTotal 2019 Compensation:$145,000
Equity-at-risk (Record Date):$148,000

Ms. Westlake brings to the Board extenresources and finance roles with Moody’s
sive global experience in both humanCorporation, including Chief Human
resources and finance, as well as an
Resources Officer (2008-2017), Vice-Presiestablished reputation for her leader- dent, Investor Relations (2006-2008) andship abilities in organizational transfor- Managing Director, Finance (2004-2006). In
mations, leveraging technology to drivea career which spans nearly 35 years,
innovation, stakeholder and crisis manMs. Westlake also had a range of Financial
agement, as well as enterprise risk
Officer and other senior roles at: American
management.
Express
Company
Ms. Westlake most
(1996-2003); The Dunrecently served as the& Bradstreet CorporaChief
Humantion (1989-1995); and2019 MEETING
2019 ANNUAL MEETING Lehman
Resources Officer ofBrothers
ATTENDANCEVOTING RESULT
global information and(1984-1987). Ms. Westanalytics services firm,lake has a B.A. in bioIHS Markit Ltd. (2017-2018), prior to which
chemistry (Dartmouth), as well as an MBA
she served in a range of senior human(Columbia).

100% >99%

Significant expertise/experience:Finance/Financial AdvisoryGovernance/BoardHigh-Growth Markets
Large Cap Company

M&A

William L. Young MBA, PEng

4FEB201914042969

Massachusetts, U.S.A.
Age: 65
Tenure: ~9Other Current Public Company
Boards*:
Intact Financial Corporation(Compliance Review & Corporate
Governance (Chairman); Human
Resources & Compensation)
Total 2019 Compensation:$500,000

Equity-at-risk (Record Date):$2,905,000

CGCNC






Risk OversightSenior/Executive Leadership
Strategy Development
Talent Management/Compensation

Chairman of the Board
Chairman of the CGCNC

INDEPENDENT

Mr. Young, the Chairman of the Board
founded and was a partner of Monitor Clipper(since 2012), brings to the Board an Partners, a private equity firm established ininclusive, consensus-building leader- 1998. He is also a founding partner of Westship style, anchored by strong businessbourne Management Group (since 1988). Mr.
acumen developed across a broad Young possesses significant operational experirange of businesses and industries. He
ence, as well as extensive mergers and acquisihas been highly effective in cultivating a con- tions experience. He currently serves on the
structive but independent relationship withboard of the Canadian Institute for Advanced
Management, as well
Research, together withas open, candid diaMr. Bonham, and also
logue with shareholders
acts as Chairman of theand shareholder repreCIFAR board. Mr. Young2019 MEETING
2019 ANNUAL MEETING is Chair Emeritus of thesentative organizations.
ATTENDANCEVOTING RESULT
In his capacity as ChairBoard of Trustees ofman of the CGCNC, Mr.
Queen’s University (KingYoung has been instrumental in the evolution
ston, Ontario) (which he chaired from 2006 toof Magna’s unique compensation structure 2012) and has significant private company
in a manner which reasonably preserves its
board and board leadership experience over thecore elements while responsively addressing last 20 years, including a number of European
constructive feedback received from shareand U.S.-based companies. Mr. Young is a proholders and others.
fessional engineer (P.Eng. – Ontario) with a B.Sc
Mr. Young is a corporate director with extenin chemical engineering (Queen’s) and an MBA
sive experience in private equity. He co- (Harvard).

100% >98%* Mr. Young was a director of Pharmetics (2011) Inc., aprivate company, until he resigned in connection with thesale of Pharmetics in September 2017. Approximately fivemonths after the sale, in February 2018, Pharmetics filed a
Notice of Intention to Make a Proposal under the
Bankruptcy and Insolvency Act (Canada) and was
subsequently declared bankrupt as of March 16, 2018.
Significant expertise/experience:

Governance/Board
Large Cap Company
M&A




ELECTION OF
DIRECTORS

13MAR201901053274

New Jersey, U.S.A.
Age: 58
Tenure: ~1

INDEPENDENT

Senior Leadership
Strategy Development

Business of the Meeting

23

BUSINESS OF THE
MEETING

Lisa S. Westlake MBA

Director Compensation
Objectives of Director Compensation
We have structured the compensation for our Independent Directors with the aim of attracting and retaining skilled
independent directors and aligning their interests with the interests of our long-term shareholders. To accomplishthese objectives, we believe that such compensation must be competitive with that paid by our S&P/TSX60 peer
companies, as well as the global automotive and industrial peers in our executive compensation peer group.
Additionally, we believe that a significant portion of such compensation must be deferred until departure from theBoard, thus tying the redemption value to the market value of our Common Shares and placing it ‘‘at risk’’ to alignthe interests of Independent Directors with those of shareholders. Management directors do not receive anycompensation for serving as directors.

Compensation Structure
We compensate Independent Directors through a combination of:

Annual Retainer: Independent Directors are paid an annual retainer of $150,000, of which $90,000(60%) is automatically deferred in the form of DSUs and $60,000 (40%) is paid in cash. In addition to the
portion automatically deferred in the form of DSUs, Independent Directors may defer up to 100% of their
cash compensation in the form of DSUs. Once an Independent Director has achieved the minimum equity
maintenance requirement ($750,000 over five years), a minimum of $60,000 (40%) is automaticallydeferred in the form of DSUs, subject to the director’s election to defer a greater amount.



Board Chair Retainer: The Chair is paid a flat annual retainer of $500,000 for all work performed in any
capacity other than as a special committee chair. Of such amount, $300,000 (60%) is automaticallydeferred in the form of DSUs and $200,000 (40%) is paid in cash, subject to the Chair’s election to defer
up to 100% of his or her cash compensation in the form of DSUs. Once the Board Chair has achieved
the minimum equity maintenance requirement ($1,500,000 over three years), a minimum of $200,000(40%) is automatically deferred in the form of DSUs, subject to the Board Chair’s election to defer agreater amount.

Committee Chair and Committee Member Retainers: In recognition of the additional workload of our
Committee Chairs and Committee members, additional retainers are paid to each Independent Director
acting in any such capacity. These retainers are set at $25,000 for each standing Board Committee. In
the case of special committees which may be formed from time to time, the retainer is set at $25,000,
unless otherwise determined by the Board. Committee Chair retainers are payable in cash, subject to an
Independent Director’s election to defer up to 100% of his or her cash compensation in the formof DSUs.



Meeting and Work Fees: Meeting and work fees are intended to compensate Independent Directors
based on their respective contributions of time and effort to Magna matters. The amounts of these fees
are listed in the fee schedule below and are payable in cash, subject to an Independent Director’s election
to defer up to 100% of his or her cash compensation in the form of DSUs.

The CGCNC has responsibility for reviewing Independent Director compensation and typically reviews it
approximately every two to three years, with the last such review in 2017.

24

Business of the Meeting

The current schedule of retainers and fees payable to our Independent Directors is set forth below. No changes
were made to the fee schedule in 2019.
RETAINER/FEE TYPEAMOUNT($)

Comprehensive Board Chair annual retainer

500,000

Independent Director annual retainer
Committee member annual retainer
Additional Committee Chair annual retainer
Audit
CGCNC
Technology Committee
Special Committees (unless otherwise determined by the Board)
Per meeting fee
Written resolution
Additional services (per day)Travel days (per day)

150,000
25,000ELECTION OF
DIRECTORS

25,00025,00025,00025,000
2,000
400
4,000
4,000

The following table sets forth a summary of the compensation earned by all individuals who served as Independent
Directors during the year ended December 31, 2019.

FEES
NAME

EARNED(1)
% OF
($)
FEES

SHAREBASEDAWARDS(2)
% OF
($)
FEES

OPTIONBASEDAWARDS($)

NON-EQUITYINCENTIVE PLAN
COMPENSATION($)

PENSION
VALUE
($)

ALL
OTHER
($)

TOTAL
($)

Scott B. BonhamPeter G. Bowie
Mary S. Chan
Dr. Kurt J. Lauk
Robert F. MacLellan
Cynthia A. Niekamp
William A. Ruh
Dr. Indira V. Samarasekera
Lisa S. Westlake(4)William L. Young

NIL
NIL
NIL
263,000
NIL
165,000
NIL
NIL
NIL
350,000

–
–
–
81
–
73
–
–
–
70

150,000
221,000
244,000
60,000230,000
60,000265,000
253,000
145,000
150,000

18
100
100
19
100
27
100
100
100
30

NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL

672,000(3)
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL

822,000
221,000
244,000
323,000
230,000
225,000
265,000
253,000
145,000
500,000

Lawrence D. Worrall

30,00023

98,000

77

NIL

NIL

NIL

NIL

128,000

Notes:
1.
Consists of all retainers and fees paid to the director in cash. NIL indicates that 100% of the retainers and fees earned were deferred in the formof DSUs.
2.
Consists of retainers and fees deferred in the form of DSUs pursuant to the DSU Plan (as defined under ‘‘Deferred Share Units’’).
3.
Mr. Bonham provides consulting services to Magna for a fee of $56,000 per month, as described under ‘‘Interests of Management and Other Insiders
in Certain Transactions.’’4.
Ms. Westlake was elected to the Board on May 9, 2019.

Business of the Meeting

25

BUSINESS OF THE
MEETING2019 Independent Directors’ Compensation

Deferred Share Units
Mandatory Deferral Creates Alignment With Shareholders
We maintain a Non-Employee Director Share-Based Compensation Plan (the ‘‘DSU Plan’’) which governs theretainers and fees that are deferred in the form of DSUs. In addition to the 60% of the annual retainer that is
automatically deferred, each Independent Director may annually elect to defer up to 100% (in increments of 10%)of his or her total annual cash compensation from Magna (including Board and Committee retainers, meeting
attendance fees, work and travel day payments and written resolution fees). Once the minimum equity
maintenance requirement has been met, 40% of the annual retainer is automatically deferred in the form of DSUs,
subject to an Independent Director’s election to defer a greater proportion. All DSUs are fully vested on the date
allocated to an Independent Director under the DSU Plan. Amounts deferred under the DSU Plan cannot be
redeemed until an Independent Director’s departure from the Board. The mandatory deferral aims to align theinterests of Independent Directors with those of shareholders.

DSU Value is ‘‘At Risk’’
DSUs are notional stock units. The value of a DSU increases or decreases in relation to the NYSE market price of
one Magna Common Share and dividend equivalents are credited in the form of additional DSUs at the sametimes and in the same amounts as dividends that are declared and paid on our Common Shares. Upon an
Independent Director’s departure from the Board, we will deliver Magna Common Shares equal to the number ofwhole DSUs credited to the Independent Director in satisfaction of the redemption value of the DSUs.

Outstanding Share-Based Awards
The following table sets forth outstanding share-based awards (DSUs) for all individuals who served as
Independent Directors during the year ended December 31, 2019:
OPTION-BASED AWARDSSHARE-BASED AWARDSNUMBERSHARESOR UNITS
THAT
HAVE
NOT
VESTED(#)

MARKET OR
PAYOUT VALUEOF SHAREBASEDAWARDS
THAT HAVENOT VESTED($)

MARKET OR
PAYOUT VALUEOF VESTEDSHARE-BASEDAWARDS NOTPAID OUT OR
DISTRIBUTED(1)($)

OF

NUMBER OF
SECURITIESUNDERLYINGUNEXERCISEDOPTIONS(#)

OPTION
EXERCISEPRICE($)

OPTION
EXPIRATIONDATE(MM/DD/YY)

VALUE OFUNEXERCISED
IN-THEMONEYOPTIONS($)

Scott B. BonhamPeter G. Bowie
Mary S. Chan
Dr. Kurt J. Lauk
Robert F. MacLellan
Cynthia A. Niekamp
William A. Ruh
Dr. Indira V. Samarasekera
Lisa S. Westlake
William L. Young

NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL

3,230,000
2,671,000
660,000
1,749,000
424,000
586,000
757,000
1,791,000
157,000
5,921,000

Lawrence D. Worrall(2)

NIL

NIL

NIL

NIL

NIL

NIL

NIL

NAME

Notes:
1.
Represents the value of Independent Directors’ aggregate DSU balance, which includes dividends credited in the form of additional DSUs, based on
the closing price of Magna Common Shares on the NYSE on December 31, 2019.
2.
Mr. Worrall retired from the Board on May 9, 2019 and redeemed all outstanding DSUs prior to December 31, 2019.

26

Business of the MeetingIncentive Plan-Awards – Value Vested During the YearThe values of option-based and share-based awards (DSUs) which vested in the year ended December 31, 2019are set forth below in respect of each of our Independent Directors who served during 2019:SHARE-BASED AWARDS –VALUE VESTEDDURING THE YEAR(1)($)

NON-EQUITY INCENTIVE
PLAN COMPENSATION –VALUE EARNEDDURING THE YEAR($)

Scott B. BonhamPeter G. Bowie
Mary S. Chan
Dr. Kurt J. Lauk
Robert F. MacLellan
Cynthia A. Niekamp
William A. Ruh
Dr. Indira V. Samarasekera
Lisa S. Westlake
William L. Young

NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL

233,000
288,000
258,000
105,000
238,000
75,000282,000
297,000
147,000
301,000

NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL
NIL

Lawrence D. Worrall(2)NIL

118,000

NIL

Notes:
1.
Represents the aggregate grant date value of retainers and fees deferred in the form of DSUs in 2019 as disclosed in the table ‘‘2019 Independent
Directors’ Compensation’’, together with dividends credited in the form of additional DSUs on Independent Directors’ aggregate DSU balance (which
includes DSUs granted in prior years) as follows:
DIVIDENDS ON
AGGREGATE DSUS($)

2.

DIVIDENDS ON
AGGREGATE DSUS($)

Scott B. Bonham

83,000William A. Ruh

17,000Peter G. Bowie

67,000Dr. Indira V. Samarasekera

44,000Mary S. Chan

14,000Lisa S. Westlake

2,000

Dr. Kurt J. Lauk45,000William L. Young

151,000

Robert F. MacLellan

8,000

Lawrence D. Worrall

20,000Cynthia A. Niekamp

15,000

Mr. Worrall retired from the Board on May 9, 2019.

Trading Blackouts and Restriction on Hedging Magna
Securities
Trading Blackouts
Directors are subject to the terms of our Insider Trading and Reporting Policy and Code of Conduct & Ethics, bothof which restrict directors from trading in Magna securities while they have knowledge of material, non-public
information. One way in which we enforce trading restrictions is by imposing trading ‘‘blackouts’’ on directors for
specified periods prior to the release of our financial statements and as required in connection with material
acquisitions, divestitures or other transactions. The regular quarterly trading blackouts commence at 11:59 p.m. on
the last day of each fiscal quarter and end 48 hours after the public release of our quarterly financial statements.
Special trading blackouts related to material transactions extend to 48 hours after the public disclosure of thematerial transaction or other conclusion of the transaction.

Anti-Hedging Restrictions
Directors are not permitted to engage in activities which would enable them to improperly profit from changes inour stock price or reduce their economic exposure to a decrease in our stock price. Prohibited activities include‘‘puts’’, ‘‘collars’’, equity swaps, hedges, derivative transactions and any transaction aimed at limiting a director’s
exposure to a loss or risk of loss in the value of the Magna securities which he or she holds.

Business of the Meeting

27

BUSINESS OF THE
MEETINGNAME

ELECTION OF
DIRECTORSOPTION-BASED AWARDS –VALUE VESTEDDURING THE YEAR($)

Reappointment of
Deloitte as Magna’s
Independent Auditors

3

8FEB202006023240

95%

>99%

6

Audit / Related Fees

2019 Votes FOR

Fiscal Yrs as auditor
18MAR202012493691

Deloitte, an Independent Registered Public Accounting Firm, was first appointed Magna’s independent auditors on
May 8, 2014 and has audited Magna’s consolidated financial statements for the fiscal years ended December 31,
2014 and after. Deloitte reports directly to the Audit Committee, which oversees the firm’s work, evaluates its
performance and sets its compensation.
The Audit Committee believes that Deloitte provides value to Magna’s shareholders through its methodical,
independent challenge to Magna’s external financial reporting. Deloitte’s audit approach is based on an audit risk
assessment, which is continuously updated throughout the year. Audit risks identified in the risk assessment are
addressed through pin-pointing audit procedures which reflect Deloitte’s understanding of Magna-specific factors
as well as the general business environment in which Magna operates. The firm’s communications to the Audit
Committee demonstrate strong audit quality, professional skepticism and innovation in the audit, including throughthe effective use of data analytics. The Audit Committee is satisfied that Deloitte’s integrated audit team consists ofaudit professionals and specialists who are qualified and experienced to provide audit services in the regions inwhich Magna operates. The firm has demonstrated a commitment to promoting a learning culture within its own
team and sharing the firm’s insights, perspectives and best practices with the Audit Committee, the Board, internal
audit, as well as management and Magna’s finance teams.

Accordingly, the Audit Committee recommends that you vote
FOR reappointment of Deloitte.
Deloitte’s Independence
In order to protect Deloitte’s independence, the Audit Committee has a process for pre-approving all services
provided by, and related fees to be paid to, Deloitte. This process includes quarterly review of any incremental
services proposed to be provided by Deloitte, together with associated costs. Audit Committee approval is required
for any services that have not previously been pre-approved. In assessing the impact of any proposed services on
auditor independence, the Audit Committee considers whether:

28

the services are consistent with applicable auditor independence rules;

Business of the Meeting

the independent auditors are best positioned to provide the most effective and efficient service, for reasons
such as familiarity with Magna’s business, people, culture, accounting systems and risk profile; andthe services enhance Magna’s ability to manage or control risks and improve audit quality.

Services and Fees
Services provided by independent auditors may fall into one of the following categories: audit services, auditrelated services, tax services and other permitted services. The nature of the services in each of these categories
is detailed below.
None of the services provided by Deloitte in 2019 were treated as exempt from pre-approval pursuant to thede minimis provision of paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X.

REAPPOINTMENT OFDELOITTE

The Audit Committee has also established a process to pre-approve the future hiring (if any) of current and former
partners and employees of Deloitte engaged on Magna’s account in the prior three fiscal years. There were nosuch hirings in 2019.

<1%

5%
36%

AUDIT FEES
2019

59%

Audit

Audit-related

Tax

Other Permitted
18MAR202012493551

2019% OF TOTALTYPE OF SERVICES

FEES
($)

Audit(1)
Audit-related(2)Tax(3)
Other Permitted(4)Total

8,809,000
5,386,000
744,000
60,00014,999,000

59
36
5
<1
100

FEES
($)

2018
% OF TOTAL

9,276,000
5,340,000
695,000
60,00015,371,000

60
35
5
<1
100

Notes:
1.
Services performed in order to comply with the standards of the Public Company Accounting Oversight
Board (United States) (‘‘PCAOB’’), including integrated audit of the consolidated financial statements andquarterly reviews. In some cases, these may include an appropriate allocation of fees for tax services or
accounting consultations, to the extent such services were necessary to comply with the standards of the
PCAOB. This category includes the audit of our internal control over financial reporting for purposes ofSection 404 of the Sarbanes-Oxley Act of 2002.
2.
Assurance and related services, including such things as due diligence relating to mergers and acquisitions,accounting consultations and audits in connection with acquisitions, services related to statutory audits ofcertain foreign subsidiaries, attest services that are not required by statute or regulation and consultation
concerning financial accounting and reporting standards. Audit-related services actually provided by Deloitte
in respect of 2019 consisted of: services related to statutory audits of certain foreign subsidiaries, assurance
service and procedures related to attest engagements not required by statute or regulation, as well as otherassurance services.
3.
Tax compliance, planning and advisory services, excluding any such services required in order to comply withthe standards of the PCAOB which are included under ‘‘Audit Services’’. The tax services actually provided
by Deloitte in respect of 2019 consisted of: domestic and international tax advisory, compliance and researchservices, as well as transfer pricing advisory services.
4.
All permitted services not falling under any of the previous categories.

Unless otherwise instructed, the persons designated in the form of proxy or Voting Instruction Formintend to vote FOR the resolution reappointing Deloitte.
Representatives of Deloitte are expected to participate at the Meeting, will have the opportunity to make astatement if they so desire and are expected to be available to respond to appropriate questions fromshareholders.

Business of the Meeting

29

BUSINESS OF THE
MEETING

Pursuant to this approval process, the Audit Committee approved and Magna was billed the following fees forservices provided by Deloitte in respect of 2019 and 2018:

4
84%
2019
Say on Pay

Say on Pay
IN THIS SECTION ...
Compensation and Performance Report. . . . . . . . . . . . . . . . . . . .
Compensation Discussion & Analysis . . . . . . . . . . . . . . . . . . . . . .
Summary Compensation Table. . . . . . . . . . . . . . . . . . . . . . . . . . .
Incentive Plans and Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

31
36
56
58

18MAR202018164256
At the Meeting, shareholders will again have the opportunity to cast an advisory, non-binding voteon Magna’s approach to executive compensation – this is often referred to as ‘‘Say on Pay’’. We
most recently held a Say on Pay vote at our May 9, 2019 annual meeting of shareholders, which
was supported by a strong majority (84%) of the votes cast on the resolution. Although Say on
Pay votes are non-binding, the CGCNC will consider the results when assessing futurecompensation decisions.

7FEB202023123522
The text of the resolution reads as follows:‘‘Resolved, on an advisory basis and not to diminish the roles and responsibilities of the board of
directors, that the shareholders accept the approach to executive compensation disclosed in theaccompanying Management Information Circular/Proxy Statement.’’
Our approach to executive compensation is set out in detail in the Compensation and Performance Report and the
CD&A in this Circular. Included in these sections is a detailed discussion and benchmarking results demonstrating
the relationship between executive compensation and corporate performance over a three-year period. We
encourage you to carefully read these sections of this Circular.

The Board recommends that you vote FOR our Say on Pay resolution
Unless otherwise instructed, the Magna officers whose names have been pre-printed on the form ofproxy or Voting Instruction Form intend to vote FOR the Say on Pay resolution.

30

Business of the Meeting

Compensation and Performance
Report
The CGCNC supports the Board by assessing compensation and benchmarking data within the context ofcorporate performance, corporate strategy, risk considerations, as well as the general objectives underlying
Magna’s system of executive compensation. Based on Committee members’ expertise and judgement, as well as
the perspectives and advice of the CGCNC’s independent advisors, the CGCNC makes recommendations to theBoard to assist it in fulfilling its responsibilities related to executive compensation matters.
Magna’s executive compensation system has been structured to promote effective decision-making over the shortand long-term through a package of balanced incentives aimed at profitable growth in the context of a leanmanufacturing business and highly competitive industry. Additionally, Magna’s approach to compensation aims to
incent long-term value creation (measured by multiple metrics) and strong alignment of interests between
executives and shareholders. Ultimately, any system of compensation must support a company’s objectives inattracting, motivating and retaining world class leaders, including through the opportunity of achieving superior
compensation for superior performance. The CGCNC believes that Magna’s executive compensation system
continues to be successful in achieving all of these objectives.
The sections which follow outline Magna’s 2019 performance, compensation outcomes for the company’s CEO,and the extent to which compensation was aligned with performance.

Magna’s Financial and Operating Performance in 2019
Operating results in 2019 were challenged by a number of factors, including:significantly lower production volumes (including as a result of a 40-day GM labour strike);
a $700 million non-cash impairment of assets in three of our equity-accounted joint ventures;increased engineering and other costs in our advanced driver assistance systems business;higher spending associated with electrification, autonomy and R&D; andhigher warranty costs.
In spite of these challenges, there were a number of operational and strategic highlights, including:a $524 million gain on sale of a business unit;
numerous successful product launches;
operational improvements at a number of operating Divisions;seamless succession of four Operating Group Presidents;
completion of an acquisition within our Seating Group;strong cash generation despite lower production volumes; and
a program award by BMW for dual-clutch transmissions (including hybrid variants) which represents thelargest production order for transmission technologies in Magna’s history.

Business of the Meeting

31

BUSINESS OF THE
MEETING

Dear Shareholder,

COMPENSATION/PERFORMANCE

March 27, 2020

Selected 2019 financial results and metrics include:2019

VS. 2018$39.431 billion
8FEB202004510238 3.4%
8FEB202004510238 24.7%$2.223 billion$5.59
8FEB202004510238 15.4%$3.960 billion
8FEB202006031420 6.5%
15.5%
8FEB202004510238 420 bps
10.1%
8FEB202004510238 480 bps

Sales
Income from operations before income taxes
Diluted Earnings per Share
Cash flow from operations
Return on Equity(1)Return on Invested Capital(1)

Note:
1.
Return on Equity and Return on Invested Capital are non-GAAP financial measures which we believe are useful to both management and investors intheir analysis of our results of operations, and reflect our ability to generate returns.

Return of capital – dividends
Return of capital – share repurchases

2019

2017-2019$449 million$1.289 billion$1.297 billion$4.391 billion

A full discussion of Magna’s 2019 financial performance can be found in the Management’s Discussion andAnalysis of Results of Operations and Financial Position for the year ended December 31, 2019.

2019 CEO Compensation
Compensation for Magna’s CEO, Don Walker, is comprised of a significantly below-market base salary, a formuladriven short-term cash incentive (STI) which is directly tied to profitability in the year, as well as three long-term
incentives (LTIs) tied to value-creation on both an absolute basis and relative to industry peers. The base salaryand STI represent 40% of Mr. Walker’s target total direct compensation (TDC), with LTIs comprising 60%.
Mr. Walker’s target TDC level was set by the Board in 2017 at $19.830 million and has been held at that level eversince.
Target TDC, as well as 2019 and 2018 TDC compensation for Mr. Walker were as follows:

Base Salary
STI
LTIs (at target)
ROIC PSUsrTSR PSUs
Stock Options

TARGET TDC($)

2019 ACTUAL TDC($)

2018 ACTUAL TDC($)

325,000
7,600,000

325,000
5,795,000

325,000
7,727,000

4,760,000
2,380,000
4,760,000

2019 STI vs Target STI

2019 STI vs 2018 STI-23.8% -25.0%

29FEB202015102592

LTI’s consist of two types of performance stock units (PSUs), with three-year performance periods, as well as stock
options with rateable vesting over three years and a seven-year life. As of the end of the year, the 2019 ROIC
PSUs and 2019 TSR PSUs granted to Mr. Walker were tracking below target, although the stock options granted
in 2019 were slightly ‘‘in-the-money.’’32

Business of the Meeting

Donald Walker

REALIZED/REALIZABLEVALUE AS OF DEC 31, 2019($)

REALIZED/REALIZABLE VS
ACTUAL TDC(%)

CUMULATIVE
TSR(2)(%)

ROIC(3)(%)

18,020,000
19,952,000
20,203,000

14,634,000
17,734,000
27,836,000

18.8
11.1
37.8

24.3
2.1
36.4

12.0
14.5
16.1

Note:
1.
Actual TDC includes base salary, STI and the grant date fair value of LTI compensation awarded during the year, as reported in the Summary
Compensation Table each year.
2.
Represents the cumulative total shareholder return, assuming reinvestment of dividends, for the period from January 1 of the respective year to
December 31, 2019.
3.
Represents ROIC for purposes of the ROIC PSUs, as defined in Section C of the CD&A.

We believe that the outcomes in the table above demonstrate an appropriate relationship between pay andperformance over time that is linked to the experience of the shareholder. In particular, the analysis demonstrates
that realized/realizable pay for a given year provides reasonable upside potential and downside exposure based onshareholder value creation as measured by TSR, ROIC and rTSR. The linkage becomes even more apparent when
we consider the impact of the COVID-19 (Coronavirus) pandemic on both investors’ equity values in 2020, as wellrealizable compensation for Magna NEOs.

Pay for Performance
The Say on Pay vote at the Meeting represents your opportunity to express to us your view as to whether thecompany’s approach to executive compensation generates outcomes that are justified by Magna’s performance.
There is no single way of assessing the relationship between pay and performance, nor any one metric on its own
which can convey a complete picture as to such relationship. In considering the outcomes discussed above, we
also reflected on the following:the sensitivity of the STI to the deterioration in ‘‘Income from operations before income taxes’’ (‘‘Pre-Tax
Profit’’);

the variability of compensation with changes in Pre-Tax Profit, ROIC, rTSR and absolute TSR, as reflectedin the realized/realizable compensation analysis;the company’s record of creating value, as evidenced by three-year ROIC performance above thecompany’s cost of capital, as well as significantly above-median rTSR performance, in each case as
described under ‘‘Incentive Plans and Awards’’ in this Circular; andBusiness of the Meeting

33

COMPENSATION/PERFORMANCE

2019
2018
2017

ACTUAL TDC(1)($)

BUSINESS OF THE
MEETINGThe CGCNC engaged its independent compensation advisor, Hugessen, to perform a ‘‘realized/realizable’’compensation analysis of Mr. Walker’s compensation over the last three years in order to help the CGCNC inassessing compensation outcomes. Realized/realizable compensation provides an indication of how the different
elements of compensation are actually performing as of a point in time. Such an analysis for Mr. Walker’s
realized/realizable compensation as of December 31, 2019 takes into account his base salary and actual STI
earned for each year shown, together with:
the realized value of ROIC PSUs and rTSR PSUs for which the performance period is complete,
factoring-in the applicable payout level and change in share price;
the December 31, 2019:
value of the ROIC PSUs and rTSR PSUs for which the performance period is not yet complete,
factoring-in the implied payout level and change in share price; and‘‘in-the-money’’ value of stock options granted.

Magna’s continuing profitability and strong cash flow generation, even in a challenging year such as 2019,
which enable a balanced approach to investments for future growth and return of capital toshareholders; andIn light of all of the above, we concluded that compensation outcomes are justified by performance. Despite
reaching this conclusion, we continue with our efforts to migrate compensation towards the median of thecompany’s peer group for successors to Magna’s long-tenured NEOs.
To assist shareholders in reaching your own conclusions regarding the linkage between executive compensationand performance, we have included the pay for performance graphs below. The first graph depicts the alignment
between CEO compensation and rTSR performance against the companies in Magna’s executive compensation
peer group, while the second depicts such alignment against Magna’s rTSR peer group. Although the executive
compensation peer group reflects companies which are closer to Magna in size and scale across multiple metrics,
the rTSR peer group reflects Magna’s industry competitors for investment capital and talent.
Each of the peer groups has limitations – for example, the executive compensation peer group includes companies
from different industries, with different business cycles, growth drivers, geographic markets and other factors. While
the rTSR peer group provides commonality on these factors, there are other factors which are not accounted for,such as differences in compensation structures and tenure of the respective peer CEOs (with tenure often being
correlated to amount of compensation). Moreover, for both graphs, TDC awarded to Mr. Walker for 2017, 2018and 2019 is compared to TDC awarded to peer CEOs for 2017 and 2018, together with projected peer CEO TDC
for 2019 based on an assumed compensation growth rate.
Ultimately, both of these depictions of the alignment between pay and performance may be helpful, but any
conclusions from either or both together should not be overstated. We recommend that you consider the
information in such graphs in the context of all of the information and analyses in this report, prior to casting yourvote on the Say on Pay resolution.

Compensation Peers vs. Magna
100%

Honeywell

Magna

3-Year Total Compensation Rank

90%

Caterpillar
C

80%

Deere & Co
ITW

70%
Cummins

60%

P
Parker-Hannifin
Ingersoll-Rand

50%
EmersonElectric
E
Raytheon

40%
E
Eaton
Corp

30%

BorgWarner
gWa
Wa
St
Stanley
B&D

20%

nson Controls
Johnson
Lear

10%

P
PACCAR

0%0%

Goodyear

10%

20%

30%

40%

50%

60%

70%

3-Year TSR Performance Rank

34

Business of the Meeting

80%

90%

100%

29FEB202001231309

TSR Peers vs. Magna
Magna

100%
AdientBorgWarner

80%
Lear

70%
mar
Linamar60%
rica Axle
American50%
Dana

COMPENSATION/PERFORMANCE

3-Year Total Compensation Rank

90%

40%
Visteon30%
Tenneco20%

Autoliv
Martinrea

10%0%Gentex

0%

10%

20%

30%

40%

50%

60%

70%

3-Year TSR Performance Rank

80%

90%

100%

29FEB202001231642

In Closing
Overall, we are satisfied with the compensation outcomes being generated in relation to performance under thecompany’s executive compensation system and believe that the significant decline in CEO pay in a year in which
operational performance was challenged validates the structural changes introduced in 2017. As we have stated in
the Compensation and Performance report since that time, we remain focused on migrating executive
compensation levels toward the median of the company’s executive compensation peer group as incumbent NEOs
retire and are succeeded by new NEOs. Two members of Executive Management (former Chief Legal Officer andChief Human Resource Officer) have seamlessly transitioned to retirement in the last two years, with an additional
three retirements (Chief Legal Officer, President of Magna Asia and EVP Corporate Projects and Strategy
Developments) planned for 2020. In each case, compensation for the successor executive has reflected a
reduction in compensation as compared to the retiring executive. While the entire Board is fully engaged inplanning for the eventual succession of Magna’s CEO, the CGCNC has been actively engaged in modelingappropriate compensation levels and other compensation terms for his eventual successor, consistent with thestated goal of migrating executive compensation levels toward the median of the company’s executive
compensation peer group.
At our May 7, 2020 annual meeting, you will have the opportunity to express your views on Magna’s approach to
executive compensation through the advisory Say on Pay vote. In casting your vote, we trust that you will give
careful consideration to the perspectives we have shared in this report, and our recommendation that you vote
FOR Magna’s Say on Pay resolution.
We look forward to your support at our 2020 annual meeting.
William L. Young(Chairman)
Hon. V. Peter Harder

Dr. Indira V. Samarasekera

Lisa S. Westlake

Business of the Meeting

35

BUSINESS OF THE
MEETING

Perfect alignment between pay and performance is represented by the diagonal solid line from bottom left to top
right in the graph below, while the space between the diagonal and dashed lines represents a zone of generalalignment.

Compensation Discussion &Analysis
Key Terms Used in This Section
CD&A:

the Compensation Discussion & Analysis section of this Circular

executive compensation peer group:

the group of companies discussed in Section B of this CD&A,
against which the compensation of our Executives is compared or
benchmarked

Fasken:the CGCNC’s independent legal advisors, Fasken Martineau
DuMoulin LLP

Hugessen:

the CGCNC’s independent compensation advisor, Hugessen
Consulting

LTIs:

long-term incentives in the form of PSUs and stock options

Named Executive Officers or NEOs:

our five most highly compensated executive officers

PSUs:

performance stock units

ROIC:

the company’s return on invested capital, calculated as set forth in
Section C of this CD&A

RSUs:

restricted stock units

rTSR

TSR, relative to the rTSR peer grouprTSR peer group:

the group of companies discussed in Section B of this CD&A,
against which Magna’s rTSR is measured in connection with thecompany’s rTSR PSUs

STI

short-term incentive in the form of a profit sharing bonus

TSR:

Total Shareholder Return

Section Summary
This CD&A is divided into the following sections:
SECTIONDESCRIPTIONA

Discusses the role of compensation in our corporate culture and the objectives of our executive
compensation program and other matters

37

B

Addresses the Board’s responsibility for executive compensation, as well as the scope of the CGCNC’s
role and discusses the CGCNC’s process for making compensation decisions

39

C

Provides an overview and detailed description of the elements of our executive compensation program

44

D

Describes our compensation risk mitigation practices

55

The Summary Compensation Table follows on page 56.

36

PAGE

Business of the Meeting

A. Compensation Philosophy & Objectives
Corporate Culture and Compensation

Approach to Employee Compensation
Magna is committed to an operating philosophy based on fairness and concern for people. This philosophy is partof our ‘‘Fair Enterprise’’ culture in which employees and management share the responsibility to help ensure our
success. Our Employee’s Charter sets out this philosophy through six fundamental principles:








job security;
safe and healthful workplace;fair treatment;competitive wages and benefits;
employee equity and profit participation;communication and information; andan employee hotline.

BUSINESS OF THE
MEETING

Our commitments to employees in respect of each of the above principles is described in more detail in our
Annual Information Form / Annual Report on Form 40-F filed concurrently with this Circular.
Two of the above principles in the Employee’s Charter directly address employee compensation:
Competitive Wages and Benefits: we are committed to providing our employees with information whichenables them to compare their total compensation, including wages and benefits, with those earned by
employees of direct competitors and local companies with which our subsidiaries compete for employees.
Where an employee’s compensation is found not to be competitive, it will be adjusted.
Employee Equity and Profit Participation: we believe that our employees should share in our financial
success. Accordingly, 10% of our qualifying annual pre-tax profit before profit sharing is shared among
participating employees in the form of cash or cash and Magna equity. In addition to rewarding employees fortheir contribution to our success, this helps create an ‘‘owner’s mindset’’ among employees and aligns theirinterests with those of shareholders. We are proud of the fact that the aggregate number of Magna Common
Shares held in the Employee Equity and Profit Participation Plan for our Canadian, U.S. and European
employees make participating employees (collectively) one of our single largest shareholding group. For
participating employees in countries where equity participation is not practical, we offer profit sharing in cash.
In some countries, employees share in our profits through a statutory profit sharing arrangement rather thanour Employee Equity and Profit Participation Plan. Corporate, Operating Group and other managers on
management profit sharing programs are not eligible to participate in the Employee Equity and Profit
Participation Plan.
Employees who participate in the Employee Equity and Profit Participation Plan typically receive the equity portionof their profit share in the form of deferred compensation, which is intended to promote employees’ efforts to savemoney for their retirement years. In connection with its oversight responsibilities related to talent management andemployee pension plans, the CGCNC receives annual reports relating to aggregate annual profit sharing throughBusiness of the Meeting

CD&A

Our unique, entrepreneurial corporate culture seeks to balance the interests of key stakeholders, such as
shareholders, employees and management, including by establishing a framework for each such type of
stakeholder to share in our profitability. We believe that our corporate culture has been a critical factor in our past
growth and success and expect it will continue to be a critical factor in our ability to create long-term shareholder
value. In particular, the employee and management profit sharing elements of our culture have proven to be
essential to our ability to attract and retain our skilled, entrepreneurial employees and managers, as well as tocreate effective incentives for them to achieve strong performance in a cyclical and highly competitive industry.

37

the Employee Equity and Profit Participation Plan. Among other things, this enables the CGCNC to consider
aggregate management profit sharing for Executive Management in relation to aggregate profit sharing for
employee participation in the Employee Equity and Profit Participation Plan.

Executive Compensation Philosophy
Magna’s strategy is to create long-term value for shareholders through continued growth and success as a leading
global mobility technology company. We operate a complex business in a highly competitive, cyclical, leanmanufacturing industry in which disciplined cost management, manufacturing excellence, effective program
management, as well as constant innovation are critical to short-term profitability. At the same time, the automotive
industry is undergoing significant change, which is creating opportunities and challenges from trends such as: themigration of value towards electronics; disruptive technologies; electric, autonomous and shared vehicles; as wellas the emergence of digital/data-driven business models. Realizing value from these opportunities will, among
other things, require careful capital allocation decisions, disciplined acquisition choices, methodical equity
investments in strategic partners and investments in innovation/R&D, which may not generate immediate returns.
Magna’s enhanced compensation framework has been structured to promote effective short- and long-term
decision-making in the above context through balanced incentives aimed at profitable growth in a leanmanufacturing business, as well as long-term value creation in a rapidly evolving industry. Some of the ways weseek to achieve these objectives include:
Compensation Framework Feature

PurposeMinimal fixed compensationPerformance-conditioned profit
sharing bonus / STIPerformance-conditioned
multi-metric LTI






Low base salaries and highly variable compensation help create an owner’s mindset
Motivates managers to achieve consistent profitability in order to maintain consistentcompensation
Incents profit growth to grow compensation
Promotes entrepreneurialism
Drives strong managerial focus on lean/efficient operations through effective
management of costs
Connects compensation to the operational impact of everyday decisions
ROIC PSUs incent efficient capital allocation and value creationrTSR PSUs create sensitivity to stock market performance and return of capital toshareholders, in the form of dividends, as well as alignment with shareholders
Capped PSU payouts help mitigate risk by promoting responsible decision-making anddiscouraging excessive risk-taking
Stock options incent absolute TSR growth

No pensions / retirement benefits

Reinforces an owner’s mindset and incents long-term growth in equity value as apension-alternative

Significant share maintenancerequirement

Reinforces an owner’s mindset
Alignment with shareholders
Helps mitigate risk



Substantially consistent with those of other employees in the same office/jurisdiction

Benefits



Additionally, all compensation systems must be successful in attracting, motivating and retaining world-classmanagers. We seek to provide executives with competitive compensation packages, including the opportunity toachieve superior compensation for superior performance. The next section of this CD&A describes the process
through which compensation decisions are made, including compensation benchmarking practices we use to help
structure competitive compensation packages.
As discussed earlier, the profit sharing elements of our executive compensation program were developed within thecontext of an entrepreneurial culture which, by definition, requires some degree of risk-taking in order to achieve
growth. Recognizing that the consequences of excessive risk-taking may be felt most acutely by shareholders, ourexecutive compensation program seeks to encourage and reward responsible business decision-making andreasonable risk-taking. We seek to achieve this through a variety of methods, which are discussed in Section D ofthis CD&A.

38

Business of the Meeting

B. Compensation Decision-Making: Responsibility and Process
Role of Our Board
Our Board oversees our system of executive compensation including by satisfying itself that our system is effective
in attracting, retaining and motivating skilled executives who can achieve our strategic objectives. The Board alsoannually assesses the company’s performance and that of the Chief Executive Officer in relation to pre-defined
objectives approved by the Board.

Role of the CGCNC
CD&A

The Board has delegated to the CGCNC responsibility for annually reviewing, considering and making
recommendations related to executive compensation matters generally. More specifically, the CGCNC has beendelegated responsibility for making recommendations with respect to the application of our executive
compensation program to members of Executive Management, including the NEOs discussed in this CD&A.
While some NEOs, such as our Chief Executive Officer and Chief Financial Officer, are usually invited to participate
in CGCNC meetings, final compensation decisions affecting NEOs are typically made by the CGCNC without any
NEOs present in order to ensure the independence of the decision-making process.

The CGCNC looks to the Chief Executive Officer to assess the performance of and make recommendations
regarding the compensation levels of his direct reports. Such performance assessments are considered by the
CGCNC in the context of LTI awards to members of the executive team, as well as proposed compensation
changes for such executives. The CGCNC also looks to the Chief Executive Officer to put forward his generalrecommendation regarding LTI awards to all other proposed recipients.

CGCNC Selects and Retains Its Own Independent Advisors
In reviewing, considering and making recommendations on executive compensation matters, the CGCNC
considers the advice of its independent advisors, Hugessen and Fasken, both of which have been selected andretained directly by the CGCNC. The CGCNC met in camera with its independent advisors as part of each of the
CGCNC’s meetings attended by them during 2019.

Role of the Independent Compensation Advisor
Hugessen has acted as the CGCNC’s compensation advisor since December 2012. Hugessen only provides
board-side advice, had no relationship with Magna or its Board prior to December 2012 and does not provide any
services to Magna other than the advisory services provided to the CGCNC. One or more representatives ofHugessen are invited to attend CGCNC meetings at which executive compensation matters are discussed.
Hugessen reports directly to and seeks its instructions directly from the CGCNC and communicates as neededwith the CGCNC Chair between meetings.
The scope of Hugessen’s services generally includes advice related to executive and director compensation
program structure and design, benchmarking data and observations, as well as pay for performance analytics. In
addition, Hugessen provides the CGCNC with contextual information relating to compensation best practices andemerging trends. The services provided by Hugessen to the CGCNC in 2019 included:







analysis of Magna’s relative performance and NEO compensation;
advice regarding compensation-setting decisions for certain non-NEO members of Executive
Management;
consideration of and recommendations related to 2020 target compensation levels;
advice related to LTIs; andongoing review and advice on compensation recommendations presented for CGCNC approval.

Business of the Meeting

39

BUSINESS OF THE
MEETING

Role of Our Chief Executive Officer

Hugessen’s advice was only one of a number of factors (discussed below) which were reviewed and considered by
the CGCNC in making its executive compensation recommendations to the Board.
The fees billed by Hugessen for the services it provided to the CGCNC in 2019 and 2018 were:DESCRIPTION OF SERVICES
Executive compensation services provided to CGCNC
All other services for Magna
Total

2019

2018

(C$)

(%)

(C$)

(%)

158,000
NIL
158,000100
NIL

130,000
NIL
130,000100
NIL

CGCNC Considers a Wide Range of Factors in its Executive Compensation
Decisions
In connection with executive compensation decisions, the CGCNC will normally consider a wide range of factors,
including:
















Magna’s core operating and compensation philosophies and principles;alignment of management, employee and shareholder interests to create long-term shareholder value;
our financial, operating, stock price, ROIC, TSR and rTSR performance;long-term strategic objectives;compensation risk considerations;compensation benchmarking data;
pay for performance alignment data;
individual executive performance;
performance of prior LTI grants;
the recommendations of our Chief Executive Officer with respect to his direct reports;
the advice and recommendations of the CGCNC’s independent advisors;
accounting impact and potential dilution to shareholders from equity compensation;
feedback received from shareholders and other stakeholders;
general information relating to executive compensation trends and developments; andretention, succession and other relevant considerations.

In making recommendations to the Independent Directors, the CGCNC does not rely solely on any one of theabove or other factors.

CGCNC Discretion
The CGCNC maintains complete discretion with respect to target total direct compensation levels under theenhanced framework, as well as the form of STIs and LTIs and the performance goals/targets applied to LTI
compensation. Under Magna’s executive compensation framework, the CGCNC has the discretion to reduce profit
sharing percentages on 12 months’ advance notice to the executive.
Situations requiring CGCNC discretion may arise from time to time with respect to the calculation of the bonus
base for profit sharing, the ROIC PSUs or rTSR PSUs. Such a situation involving Magna’s $200 million equity
investment in Lyft, Inc. (‘‘Lyft’’) arose in 2018. As disclosed in Magna’s 2019 Circular, since the strategic investment
in Lyft and R&D cost-sharing would from the outset have impacted both profitability (R&D cost-sharing) and ROIC
(equity investment), the CGCNC sought to avoid the inherent disincentive by:40

excluding the $200 million equity investment from the calculation of ROIC for purposes of the ROIC
PSUs;

Business of the Meeting

addressing a gain or loss on sale of the Lyft shares by:in case of a loss, recording the entire loss in the year of sale for purposes of profit sharing bonuses
and ROIC PSUs;
in the event of a gain, recording only the portion of the gain above a ROIC target of 14% for profit
sharing and ROIC PSU purposes, subject to a maximum recognized gain of $400 million; andlimiting any gain included in calculating profit sharing bouses to $400 million.
Lastly, during 2019, the CGCNC also considered whether to exercise its discretion to modify the calculation of
Pre-Tax Profit for purposes of calculating the STI. During 2019, Magna sold its non-core Fluid Pressure & Controls(‘‘FP&C’’) business unit and realized a pre-tax gain of $524 million. This gain is included in determining Pre-Tax
Profit for financial statement purposes and thus would, absent CGCNC intervention, be included in calculating
Pre-Tax Profit for compensation purposes. However, as the gain on sale of FP&C was significant, the CGCNC
considered whether to limit the amount of the gain included in Pre-Tax Profit to the amounts expensed (and thus
reducing Pre-Tax Profit) in the form of restructuring and other charges in the prior three years, which enhanced thevalue of FP&C to the buyer. Some of the factors considered by the CGCNC included the:








$240 million net reduction in Pre-Tax Profit, when the $524 million FP&C gain was weighed against$764 million of items factored into the ‘‘Other expense, net’’ line of the financial statements;
almost 25% reduction in Pre-Tax Profit (and thus STI compensation) from 2018 to 2019 due to the above
factors, together with the impact of lower Sales, driven primarily by factors outside Management control,
as well as other factors;
importance of maintaining balanced incentives, including those promoting maximization of value forshareholders when non-core assets or business units are sold; andvalue placed by the CGCNC on objectivity in the determination of the STI.

Ultimately, in the context of all of the above, the CGCNC felt it would not be equitable to make modifications tolimit inclusion of the FP&C gain, but retains the ability to do so in future situations, as appropriate.
The CGCNC and Executive Management have a common understanding that, as part of the Board’s review of theterms of any proposed material acquisition or disposition, the CGCNC will work with Executive Management to
identify potential changes to executives’ current employment contract terms, including profit sharing percentages,
to ensure that executive compensation arrangements remain appropriate following such transactions.

Target Compensation Setting
Under Magna’s executive compensation framework, the CGCNC determines target total direct compensation for
the Chief Executive Officer, who proposes to the CGCNC target total direct compensation levels for his direct
reports. The CGCNC assesses proposed target total direct compensation levels in the context of the various
factors described above and approves the target. It determines the target amounts to be granted in the form of
long-term equity, based on a 60%/40% equity/cash split for the Chief Executive Officer, 55%/45% split for the
Chief Financial and Chief Operating Officer and 50%/50% split for each other member of Executive Management.
The CGCNC maintained target 2019 total direct compensation for the company’s Chief Executive Officer, President
and Chief Marketing Officer unchanged from their respective 2018 levels and set target 2019 total direct

Business of the Meeting

41

BUSINESS OF THE
MEETING

In 2019, a new lease accounting standard took effect which was aimed at increasing transparency andcomparability among organizations by recognizing lease assets and lease liabilities on the balance sheet. The
recognition of operating lease right of use assets during 2019 impacted ROIC by 1.0%. In order to allow forconsistency and comparability in ROIC calculations for purposes of the ROIC PSUs, including those granted prior
to the lease standard taking effect, the CGCNC excluded the impact on ROIC from the accounting change.

CD&A

The Lyft shares were sold during 2019 with no impact on compensation, and Magna exited its alliance with Lyft
early in 2020.

compensation for the Chief Financial Officer and Chief Operating Officer ~5% lower than their prior target, as
follows:
TARGET TOTAL DIRECTCOMPENSATION
($)

Name
Donald J. Walker
Vincent J. Galifi
Tommy J. Skudutis
Seetarama S. Kotagiri
James J. Tobin

19,830,000
7,953,000
7,953,000
4,309,000
3,315,000

Executive Compensation Peer GroupIn setting target total compensation levels for members of Executive Management, the CGCNC considers
benchmarking data from Magna’s executive compensation peer group. Such data provides the CGCNC with abasis for determining Magna’s pay for performance, including through ‘‘back-testing’’ of realizable pay. It also
serves as a market reference point in setting compensation within a reasonable competitive range.
Magna’s executive compensation peer group consists of 18 companies from a broad comparator universe
composed primarily of North American public companies which are direct industry peers or capital goods
comparables. The broad universe of comparator companies was identified and screened by Hugessen in 2018using a three-tiered approach, with broader screening criteria for companies in the automotive industry andnarrower criteria for companies in other industries, as follows:
Automotive:

1/5x to 5x Magna’s Total Revenue and Total Enterprise Value (‘‘TEV’’)

Close Capital Goods:

1/3x to 3x Magna’s Total Revenue and TEV

Other Capital Goods:

1/2x to 1.5x Magna’s Total Revenue and TEV

In recommending potential companies for inclusion in the peer group, Hugessen considered feedback from the
CGCNC and Management and also applied its judgment to the results of the quantitative screens discussed
above. Based on the above approach, the executive compensation peer group approved by the CGCNC in 2018
and affirmed without changes in 2019 consists of the following companies:
EXECUTIVE COMPENSATION PEER GROUP
Adient plc
BorgWarner Inc.
Caterpillar Inc.
Cummins Inc.
Deere & Company
Delphi Technologies PLC
Eaton Corp.
Emerson Electric Co.
Honeywell International Inc.

42

Business of the Meeting

Illinois Tool Works Inc.
Ingersoll-Rand PLC
Johnson Controls Inc.
Lear Corp.
PACCAR Inc.
Parker-Hannifin Corp.
Raytheon Company
Stanley Black & Decker, Inc.
The Goodyear Tire & Rubber Company

rTSR Peer GroupThe CGCNC also uses a peer group against which performance is assessed for purposes of the rTSR PSUs. The
rTSR peer group consists of 12 automotive suppliers selected from a comparator universe of publicly traded North
American companies in the automotive industry. The selected peers are considered to be Magna’s most directcompetitors for business and investor capital, based on such factors as coverage by equity research analysts, aswell as inclusion in industry indices and in the peer groups of peer companies. The rTSR peer group also contains
the following, each of which counts as the equivalent of a single company within the peer group:

a composite peer consisting of the three publicly-traded, North American automobile OEMs;a composite peer consisting of three publicly-traded European automotive suppliers; andthe S&P500 index.

CD&A



The complete rTSR peer group consists of the following companies and remained unchanged in 2019:
rTSR PEER GROUP
Gentex Corp.
Lear Corp.
Linamar Corp.
Martinrea International Inc.
Tenneco Inc.
Visteon Corp.
Continental / Faurecia / Valeo (Composite Peer)S&P 500 Index

Business of the Meeting

BUSINESS OF THE
MEETING

Adient plc
American Axle Manufacturing & Holdings Inc.
Autoliv, Inc.
BorgWarner Inc.
Dana Holding Corporation
Delphi Technologies plc
FiatChrysler / Ford / General Motors (Composite Peer)

43

C. Elements of Magna’s 2019 Executive Compensation Program
2019 NEOs

Magna’s Named Executive Officers in 2019 were:
Donald J. Walker
Vincent J. Galifi
Tommy J. Skudutis
Seetarama S. Kotagiri
James J. Tobin







Employment Contracts

Chief Executive Officer
Chief Financial Officer
Chief Operating Officer
President and President, Power & Vision
Chief Marketing Officer and President, Magna Asia

Each NEO is subject to an employment agreement which specifies various key
terms, including:target total compensation, as well as base salary, STI percentage and target LTI
values;standard benefits to be provided;
terms on which compensation can be clawed-back;the securities maintenance amount applicable to the executive; andthe basis on which the executive’s employment may be terminated.








Our 2019 compensation program for the NEOs consisted of the following elements:

Overview

1
Base
Salary1.
Base Salaries:2
Short-Term
Incentive

3Long-Term
Incentives

4
Benefits

8FEB202006030775

We maintain base salaries for NEOs which are positioned significantly below basesalaries in our executive compensation peer group. These low base salaries areintended to:
maximize the incentive for each executive to pursue profitability for the benefit of
all of Magna’s stakeholders;
reinforce the link between executive pay and corporate performance; andreflect and reinforce our entrepreneurial corporate culture.



During 2019, the NEOs received identical base salaries of $325,000.
NAME
Donald J. Walker
Vincent J. Galifi
Tommy J. Skudutis
Seetarama S. Kotagiri
James J. Tobin

44

Business of the Meeting

BASE SALARY($)
325,000
325,000
325,000
325,000
325,000

2.
Short-Term
Incentive

The STI for each NEO is an annual profit sharing bonus, which is completely‘‘at-risk’’. In order to create maximum incentive to achieve profitability, the profit
sharing bonus is earned from the first dollar of profit. This form of incentive is deeply
rooted in our entrepreneurial culture, has been a critical factor in our past successand we believe will be an important factor in our future success.

CD&A

The STI for each NEO in 2019 consisted solely of a cash bonus based on our
Pre-Tax Profit, as stated in our audited financial statements for the fiscal year ended
December 31, 2019. The use of Pre-Tax Profit, an audited financial measure,provides simplicity and enhanced transparency to the Board, shareholders and theNEOs whose compensation is determined based on that metric.
Profit sharing percentages and STIs for the NEOs were as follows in 2019:

PRE-TAXPROFIT($)

PERCENTAGE(%)
Donald J. Walker
Vincent J. Galifi
Tommy J. Skudutis
Seetarama S. Kotagiri
James J. Tobin

0.25800.1096
0.1096
0.05500.04202,246,184,000

STI($)
5,795,000
2,462,000
2,462,000
1,235,000
943,000

Recognition ofIndividual and Team
Performance

An NEO’s profit share reflects a number of factors specific to the individual, including
nature of the role, seniority/tenure and other factors. However, the direct link to
Magna’s profits ultimately reflects Magna’s overall performance.

CGCNC Discretion
Over Profit Shares

At the same time, the CGCNC maintains discretion over certain factors that may
impact the calculation of Pre-Tax Profit for compensation purposes, as describedunder ‘‘CGCNC Discretion’’ in Section B of this CD&A. The CGCNC also maintains
discretion to reduce NEOs’ profit sharing percentages on 12 months’ advancenotice.
In addition, in conjunction with the Board’s approval of a material acquisition or
disposition, the CGCNC may equitably adjust profit sharing percentages to ensure
executive compensation arrangements remain appropriate following any suchtransaction.

STI Paid in Quarterly
Installments

The STI paid to NEOs is paid in installments. Installments for the first three fiscal
quarters of each year are paid following the end of each fiscal quarter, based on our
year-to-date profits. Following the end of each fiscal year, we calculate the profit
sharing bonus each NEO is entitled to for that fiscal year, subtract the installments
paid for the first three quarters and pay the difference as the final installment.

Business of the Meeting

45

BUSINESS OF THE
MEETINGPROFITSHARING3.
Long-Term
Incentives:

LTIs for all of the NEOs consist of ROIC PSUs, rTSR PSUs and regular stock
options. The three-part LTI is structured to reward a broad range of value-creating
behaviour using multiple metrics. A majority (60%) of the total value granted by the
CGCNC in the form of LTIs in respect of 2019 was in the form of performanceconditioned PSUs, the maximum realizable number of which is capped at 200% of
target. The PSUs are completely ‘‘at risk’’ since performance below specified
thresholds can result in no PSUs being paid out.
LTIs in the form of PSUs (at target) and stock options granted to NEOs in respect of2019 were as follows:
NAME

ROIC PSUS($/#)

rTSR PSUS($/#)

STOCK OPTIONS($/#)

TOTAL LTI($)

Donald J. Walker$4,760,000
92,123$1,760,000
34,062$1,760,000
34,062$ 830,000
16,063$ 664,000
12,851$2,380,000
46,062$ 880,000
17,031$ 880,000
17,031$ 415,000
8,032$ 332,000
6,425$4,760,000
409,286$1,760,000
151,333$1,760,000
151,333$ 830,000
71,367$ 664,000
57,094

11,900,000

Vincent J. Galifi
Tommy J. Skudutis
Seetarama S. Kotagiri
James J. Tobin

ROIC PSUs

4,400,000
4,400,000
2,075,000
1,660,000

The ROIC PSUs are intended to incent and reward capital-efficient value creation
over a three-year performance period. The performance period for the ROIC PSUs
granted in respect of 2019 is January 1, 2019 to December 31, 2021.
The number of ROIC PSUs realized by an NEO following the performance perioddepends on the target number granted by the CGCNC, Magna’s return on invested
capital performance in relation to its cost of capital and the payout scale approvedby the CGCNC. The maximum number of ROIC PSUs which can be realized iscapped at 200% of target, but no PSUs may ultimately be earned if ROIC
performance falls below the payout threshold.
The dollar value of compensation realized by an NEO following the performance
period will depend on the final number of ROIC PSUs paid-out, as well as the
trading price of our Common Shares.
When ROIC PSUs are redeemed following the performance period, we deliver
Common Shares acquired on the market under our share repurchase program, withdividends paid in cash based on the final number of ROIC PSUs.

46

Business of the Meeting

ROIC is defined as:
ROIC is calculated as A  B, where:
A = (Net Income before Interest and Income Taxes – Equity Income) multiplied by(1 – assumed Tax Rate of 25%), plus Equity Income

The CGCNC may exercise discretion to address various situations in order to ensure
consistency and comparability in ROIC goal-setting and measurement, as discussed
under ‘‘CGCNC Discretion’’ in Section B of this CD&A.

CD&A

B = Total Assets (excluding Cash, Deferred Tax Assets and Operating Lease Rightof Use Assets) less Current Liabilities (excluding Short-term Borrowings, Long-term
Debt due within one-year and Current portion of Operating Lease Liabilities)

PERFORMANCE LEVEL
Maximum
TargetThreshold (Cost of Capital)
Below Threshold

ROIC
(%)

PAYOUT(% OF TARGET)

19.0
13.5 to 14.5
9
–

200
100
50
0

As an exception to the foregoing payout scale, if Magna’s ROIC (determined in themanner discussed below) is below the Threshold / Cost of Capital but three-year
rTSR as determined for purposes of the rTSR PSUs is greater than or equal to the55th percentile of the rTSR peer group, then 50% of the target number of ROIC
PSUs will be paid out.
In determining the payout scale for the ROIC PSUs, the CGCNC considered aten-year ROIC back-testing analysis. Over such time period, the back-testing
analysis implied that the number of ROIC PSUs paid out would have been roughly attarget had they been in place throughout that time period, with zero PSUs or anumber of PSUs below-target paid-out in roughly one-third of those years. Such
results were within the range of market practice, according to the CGCNC’s
compensation advisor.

Business of the Meeting

47

BUSINESS OF THE
MEETING

The following table sets out the payout scale for the ROIC PSUs (interpolation
applies for points between the payout levels):Since Magna operates in a cyclical industry, we average the implied payout for eachof the three individual years of the performance period to determine the actual ROICPSU payout. This means that a year of ROIC performance which is below our costof capital will count as 0% in the payout calculation, but cannot be a negative
percentage. The effect of this is that the ROIC PSU payout will not directly
correspond to our three-year compound average ROIC. During automotive industry
downturn years, it is possible that ROIC could be negative, due to a deterioration in
EBIT tied to a significant drop in vehicle production volumes. Based on back-testing,negative ROIC would not be expected in normal industry downturns, but it was
experienced during the 2008-2009 global recession. By calculating ROIC PSU
payout based on the average implied payouts for each of the years of theperformance period, extreme outlier years (such as 2008) cannot have adisproportionate impact on the payout calculation. The feature also operates to placea cap on ROIC performance above the maximum level, thus preventing positive
outlier years from having a disproportionate impact on the payout calculation.

rTSR PSUs

The rTSR PSUs are intended to incent and reward creation of shareholder value,
relative to the companies in the rTSR peer group approved by the CGCNC. The
performance period for the rTSR PSUs granted in respect of 2019 is January 1,
2019 to December 31, 2021.
The number of rTSR PSUs realized by an NEO following the performance perioddepends on the target number granted by the CGCNC, Magna’s three-year rTSR
performance and the payout scale approved by the CGCNC. The number of rTSR
PSUs which can be realized is capped at 200% of target and no rTSR PSUs would
be paid for rTSR performance below the 25th percentile of the rTSR peer group. The
dollar value of compensation realized by an NEO following the performance period
will depend on the final number of rTSR PSUs paid-out, as well as the trading priceof our Common Shares. When rTSR PSUs are redeemed following the performance
period, we deliver Common Shares acquired on the market under our share
repurchase program, with dividends paid in cash based on the final number of rTSR
PSUs.
The following table sets out the payout scale for the rTSR PSUs (interpolation
applies for points between the payout levels):

PERFORMANCE LEVEL
Maximum
Above Target
TargetBelow Target
Threshold

THREE-YEAR
rTSR(PERCENTILE)

PAYOUT(% OF TARGET)> 75th
65th
50th
35th
< 25th

200
150
100
50
0

As an exception to the foregoing payout scale, if the company’s three-year rTSR isgreater than the target level, thus demonstrating value creation, but absolute
three-year TSR is negative, the number of rTSR PSUs paid out will be capped at thetarget level. This feature recognizes that payouts should not exceed target where
shareholders have experienced a deterioration in the absolute value of their holdings.

48

Business of the MeetingStock Options

Stock options serve as a tool to incent absolute share price returns over the
medium- to long-term (three to seven years). Magna’s stock options vest in equal
one-third tranches on the first three anniversaries of the grant date and expire on theseventh anniversary of the grant date. The CGCNC is committed to responsible
option granting practices, including by maintaining annual option grants to allparticipants below 1% of our issued and outstanding shares. Options are not priced
during trading blackouts and are granted at an exercise price equal to market priceon the NYSE.

Donald J. Walker
Vincent J. Galifi
Tommy J. Skudutis
Seetarama S. Kotagiri
James J. Tobin

February 25, 2019

EXERCISE
PRICE
($)

54.44

NO. OFOPTIONSCOMPENSATION
VALUE
($)

409,286
151,333
151,333
71,36757,0944,760,000
1,760,000
1,760,000
830,000
664,000

Stock Option Plans

Stock option grants are made under our 2009 Incentive Stock Option Plan, which
was approved by shareholders in May 2010. The 2009 Option Plan is discussed infurther detail under ‘‘Incentive Plan Awards’’.

Post-Retirement
Hold-Back

If an NEO ceases to be employed by Magna (including any affiliates) within one year
following the date of a stock option exercise, he must hold shares with a market
value (at the exercise date) equal to the net after-tax gain until the one-year
anniversary of the exercise date.

Anti-Hedging
Restrictions

Executives are not permitted to engage in activities which would enable them toimproperly profit from changes in our stock price or reduce their economic exposure
to a decrease in our stock price. Prohibited activities include ‘‘puts’’, ‘‘collars’’, equity
swaps, hedges, derivative transactions and any transaction aimed at limiting an
executive’s exposure to a loss or risk of loss in the value of the Magna securities
which he holds.

Automatic
Securities
Disposition Plans

Executives are permitted to enter into automatic securities disposition plans(‘‘ASDPs’’), which are also known as Rule 10b5-1 Plans. Such plans allow
executives to establish a plan for the sale of Common Shares held by the executive
and exercise of stock options granted to them, subject to meeting all legal
requirements applicable to such plans. Among other things, an executive may only
enter into, modify or terminate a plan while he or she is not under a trading blackout
or otherwise in possession of material undisclosed information. None of the NEOs
had an ASDP in place during 2019.

Business of the Meeting

49

BUSINESS OF THE
MEETING

GRANT
DATE

CD&A

Stock options are typically granted in late February or early March of a year. Stock
options in respect of 2019 compensation were granted to the NEOs as follows:Benefits

Benefits provided to NEOs are the same as those provided to other employees inthe same country, with a few exceptions discussed below. As discussed earlier,
Magna does not provide a defined benefit pension plan or other retirement benefits
to NEOs, consistent with our compensation approach to employees generally.

Medical, Dental andDisability Benefits

NEOs receive the same medical, dental and disability benefits as other employees inthe same country.

CEO and CFO Life
Insurance
Premiums
Are Reimbursed

NEOs other than Donald Walker and Vincent Galifi receive the same insurance
benefits as those available to other employees in the same country. In addition tothese standard insurance benefits, we reimbursed life insurance premiums on
insurance policies for Donald Walker and Vincent Galifi. During 2019, the premiums
reimbursed were as follows:

4.

Donald J. Walker:
Vincent J. Galifi:$128,000(1)$46,000(1)

Note:
1.

Converted from C$ at the BoC exchange rate on December 31, 2019.

Life insurance premium reimbursements are not grossed-up for income tax.

‘‘Perks’’ are Limited

We provide limited ‘‘perks’’ to NEOs consisting of occasional access to corporate
aircraft for personal use and access to corporate facilities, in each case when not
required for business purposes and subject to reimbursement as discussed below.

Occasional
Personal Use of
Corporate Aircraft
Is Subject to Partial
Reimbursement

NEOs are permitted occasional access to corporate aircraft for personal use, in
accordance with policies approved by the CGCNC. Any personal use must be
reimbursed at 150% of an equivalent business class airfare for the same route.
However, the difference between the ‘‘aggregate variable operating cost’’ of thepersonal flight and the amount reimbursed by the executive is treated as a ‘‘perk’’and is disclosed in the Summary Compensation Table under ‘‘All Other
Compensation’’.
We add together all variable costs for operating the aircraft for a fiscal year, including
fuel, maintenance, customs charges, landing and handling fees, data andcommunications charges and any other similar costs and divide that total by the
number of hours flown during the year to calculate a cost per flight hour. The cost
per flight hour multiplied by the flight hours for a personal flight, minus the amountreimbursed by the executive, is the value of the ‘‘perk’’.

Other Perks

50

NEOs are entitled to access the Magna Golf Club adjacent to the company’s head
office for business purposes. Applicable charges relating to personal use are paid forby the executive at the club’s regular rates.

Business of the Meeting

Executive Equity
Ownership
Each NEO is subject to a securities maintenance requirement set forth in his
employment contract. If an NEO falls below the securities maintenance requirement,
his bonus would be withheld until he demonstrates compliance with the requirement.

NAME

MAINTENANCEREQUIREMENT($)

NO. OFSHARES
AND RSUSHELD AS OF
12/31/19(#)

Donald J. Walker
Vincent J. Galifi
Tommy J. Skudutis
Seetarama S. Kotagiri
James J. Tobin

10,000,000
4,000,000
4,000,000
2,000,000
1,250,000

1,765,375
790,512150,21193,781
48,872EQUITY

12/31/19
VALUE OFSHARES
AND RSUS($)
96,813,000
43,352,000
8,238,000
5,143,000
2,680,000

CD&A

Executive
Management
Securities
MaintenanceRequirements

Termination/Severance
Payments are Limited
to a Maximum of
24 Months
Compensation

NEO’s are typically entitled to 12 months’ severance pay, plus one additional monthof severance pay for each year employed by Magna (including any subsidiaries), to a
maximum of 24 months’ severance (the ‘‘Notice Period’’) in the event of termination
without cause. Based on their years of service to Magna, NEOs’ severance periods
are as follows:

NAME
Donald J. Walker
Vincent J. Galifi
Tommy J. Skudutis
Seetarama S. Kotagiri
James J. Tobin

TENURE WITHMAGNA
(YEARS)

SEVERANCEENTITLEMENT(# MONTHS)

30+
30+
28+
19+
17+

24
24
24
18
24

Severance payments are based on the average of an NEO’s base salary and STIs
for the 12 fiscal quarters prior to the termination.
A summary showing the treatment of each compensation element in different
termination scenarios is set forth below under ‘‘Summary of Treatment ofCompensation on Resignation, Retirement, Termination or Change in Control’’.

Business of the Meeting

51

BUSINESS OF THE
MEETING

Termination/
SeveranceChange in Control
Protections
Double-Trigger

We maintain ‘‘double trigger’’ change in control protection for the NEOs; however,such protection does not provide any enhanced severance. The primary benefit is
the acceleration of any unvested stock options in the event that a change in control
is followed by termination of employment or constructive dismissal for ‘‘good
reason’’. In a change in control scenario, treatment of outstanding stock options willneed to be addressed by the CGCNC. Depending on the nature of the acquiror,
outstanding options could become exercisable into equity of the acquiror. However,outstanding options could also be accelerated, in which case there would be no
incremental benefit to the executive of his change in control protection.
The definition of ‘‘good reason’’ for purposes of the change in control protection
applies only in the event of the following:






52

Business of the Meetinga material reduction in the executive’s position, duties, authority or
responsibilities;
Magna requiring the executive to work at a location which is more than
100 kms from where he is based at the time of the change in control; or
any other action which would constitute constructive dismissal at law.

Summary of Treatmentof Compensation on Resignation,
Retirement, Termination,
or Change in Control

Retirement

Termination –CauseTermination –No Cause

Base Salary

Pro-rated to effectivedate

Pro-rated to effectivedate

Pro-rated to effective
dateAnnual Bonus – Cash

Pro-rated to effectivedate

Pro-rated to effectivedate

Pro-rated to effective
date

Average ofcompensation
excluding LTIs for thelast 12 fiscal quarters
paid out over
severance period(up to 24 months) as
salary continuation(bi-weekly) or
lump-sum.

Average ofcompensation
excluding LTIs for thelast 12 fiscal quarters
paid out over
severance period(up to 24 months) as
salary continuation(bi-weekly) or
lump-sum.

ROIC PSUs andrTSR PSUs

PSUs granted in yearof resignation areredeemed on regularpayout date, subject topayout conditions
established at time of
grant (0% to 200%)
and pro ration toreflect the proportionof the year worked.

PSUs granted in yearof retirement areredeemed on regularpayout date, subject topayout conditions
established at time of
grant (0% to 200%).

Forfeiture ofunredeemed PSUs

PSUs granted in yearof termination areredeemed on regularpayout date, subject topayout conditions
established at time of
grant (0% to 200%)
and pro ration toreflect the proportionof the year worked.

PSUs granted in yearof termination areredeemed on regularpayout date, subject topayout conditions
established at time of
grant (0% to 200%)
and pro ration toreflect the proportionof the year worked.

Stock Options

Unvested andunexercised options
expire on earlier of
option expiry date andthree months after
effective date ofresignation.

Unvested andunexercised options
expire on earlier of
option expiry date andthree years after
effective date ofretirement. Option
expiry is not
accelerated where
NEO has been
designated to be a‘‘Good Leaver’’.(1)All unexercised options
are cancelled on
effective date of
termination.

Unvested andunexercised options
expire on earlier of
option expiry date andthree months after
effective date of
termination.

Vested options can be
exercised until earlierof option expiry dateand 12 months after
Notice Period(as defined above).
Unvested options
accelerate and can be
exercised until samedate.

Benefits & Perks

None

None

None

None

None

Pension

None

None

None

None

None

Note:
1.
‘‘Good Leaver’’ applies where an applicable retiring NEO does not receive severance and enters into a retirement agreement approved by the Board
which establishes a reasonable notice period prior to the NEO’s retirement date, outlines his transitional responsibilities and reaffirms his
non-competition and non-solicitation obligations. Currently, Good Leaver treatment has been offered solely to the Chief Executive Officer, Chief
Financial Officer and Chief Operating Officer.

Business of the Meeting

53

BUSINESS OF THE
MEETING

Element ofCompensation

CD&A

Resignation

Termination
Without Cause on
Change inControlSummary of
Incremental
Severance,
Termination andChange in Control
Payments

The table below shows the value of the estimated incremental payments or benefits
that would accrue to each NEO upon termination of his or her employment following
resignation, normal retirement, termination without cause, termination with cause andtermination without cause on change in control. For stock options, the values shown
represent the in-the-money value of any grants the vesting of which would
accelerate as a result of each termination circumstance below.

Donald J. Walker
Severance
ROIC PSUsrTSR PSUs
Stock Options
Benefits & Perks
PensionResignation

Retirement

Termination –CauseTermination
Without Cause($)

Termination Without
Cause on Change
in Control
($)

NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL

14,983,000
NIL
NIL
NIL
NIL
NIL

14,983,000
NIL
NIL
2,953,000
NIL
NIL

Total
Vincent J. Galifi
Severance
ROIC PSUsrTSR PSUs
Stock Options
Benefits & Perks
Pension17,936,000
NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL

7,251,000
NIL
NIL
NIL
NIL
NIL

Total
Tommy J. Skudutis
Severance
ROIC PSUsrTSR PSUs
Stock Options
Benefits & Perks
Pension

8,411,000
NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL

8,228,000
NIL
NIL
NIL
NIL
NIL

Total
Seetarama S. Kotagiri
Severance
ROIC PSUsrTSR PSUs
Stock Options
Benefits & Perks
Pension

NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL

2,801,000
NIL
NIL
NIL
NIL
NIL

Total

2,801,000
NIL
NIL
237,000
NIL
NIL
3,038,000

NIL
NIL
NIL
NIL
NIL
NIL
Total

8,228,000
NIL
NIL
251,000
NIL
NIL
8,479,000

NIL
NIL
NIL
NIL
NIL
NIL

James J. Tobin
Severance
ROIC PSUsrTSR PSUs
Stock Options
Benefits & Perks
Pension7,251,000
NIL
NIL
1,160,000
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL

NIL
NIL
NIL
NIL
NIL
NIL

3,923,000
NIL
NIL
NIL
NIL
NIL

3,923,000
NIL
NIL
103,000
NIL
NIL
4,026,000

Note:
1.

54

Represents the in-the-money value of options, the vesting of which is accelerated in case of a change incontrol followed by an act of ‘‘good reason’’ resulting in a ‘‘double-trigger change’’ in control, using the closing
price of Magna Common Shares on the TSX on December 31, 2019, converted at the BoC exchange rate onsuch date for options denominated in C$.

Business of the Meeting

D. Compensation Risk Management






















Board/CGCNC oversight of executive compensation generally;
independent advice and recommendations on compensation matters provided
by compensation consultants and legal advisors directly selected and retainedby the CGCNC;
Board/CGCNC discretion to determine target total compensation and adjust
profit-sharing percentages on notice or in case of M&A transactions;complete Board/CGCNC discretion over LTI structure;mix of compensation vehicles and metrics;
links between executive compensation and consequences of management
decision-making, including due to dollar-for-dollar impact of impairments andrestructuring charges on profit-sharing pool;
performance conditioning of PSUs and 200% cap on the maximum number of
PSUs which can be realized;
compensation clawback in the event of a financial restatement (excluding a
restatement resulting from retroactive application of a change to GAAP);
forfeiture risk applicable to PSUs, stock options and unreleased restricted
shares in certain circumstances;significant levels of personal wealth ‘‘at risk’’ due to equity maintenancerequirements;
post-retirement holdback of option shares resulting from option exercise
occurring within one-year prior to retirement; andanti-hedging restrictions.

Business of the Meeting

55

CD&A

The CGCNC has considered whether Magna’s executive compensation system may
encourage excessive risk taking. The CGCNC concluded that the potential risks
created by any particular element of the system are appropriately mitigated by otherelements and that the overall level of risk is reasonable in light of the nature of
Magna’s business and the automotive industry. In reaching this conclusion, the
CGCNC considered the methods described below which are employed to help
establish an appropriate balance between risk and reward, as well as to encourage
responsible decision-making:

BUSINESS OF THE
MEETING

Overall Level ofCompensation Risk is
Reasonable in Light ofNature of Magna’s
Business and Industry

Summary Compensation Table
The following table sets forth a summary of all compensation earned in respect of 2019, 2018 and 2017 by theindividuals who were our Named Executive Officers in respect of 2019. All amounts are presented in U.S. dollars
and any applicable amounts in other currencies have been converted to U.S. dollars.
NON-EQUITY INCENTIVE
PLAN COMPENSATION($)
SHARE-OPTION-BASEDAWARDS(1)BASED
AWARDS(2)LONG-PENSION

TERM

VALUE

($)

ANNUAL(3)($)($)

ALL OTHERCOMPENSATION
($)

TOTAL
COMPENSATION
($)

($)

4,760,000

5,795,000

NIL

NIL

186,000(4)7,140,000

4,760,000

7,727,000

18,206,000

NIL

NIL

121,000(4)325,000

7,140,000

4,760,000

20,073,000

7,978,000

NIL

NIL

155,000(4)2019

325,000

2,732,000

20,358,000

1,760,000

2,462,000

NIL

NIL

46,000(5)2018

325,000

7,325,000

2,898,000

1,932,000

3,660,000

NIL

NIL

44,000(5)2017

8,859,000

325,000

2,898,000

1,932,000

3,779,000

NIL

NIL

64,000(5)8,998,000

2019

325,000

2,732,000

1,760,000

2,462,000

NIL

NIL

NIL

7,279,000

2018

325,000

3,464,000

350,000

4,409,000

NIL

NIL

25,000(6)8,573,000

2017

325,000

3,522,000

350,000

4,496,000

NIL

NIL

18,000(6)8,711,000

Seetarama S. Kotagiri
President andPresident, Power & Vision2019

325,000

1,245,000

830,000

1,235,000

NIL

NIL

31,000(7)3,666,000

2018

325,000

1,745,000

830,000

2,098,000

NIL

NIL

NIL

4,998,000

2017

325,000

1,281,000

374,000

1,294,000

NIL

NIL

NIL

3,274,000

James J. Tobin
Chief Marketing Officer
and President, Magna Asia

2019

325,000

996,000

664,000

943,000

NIL

NIL

NIL

2,928,000

2018

325,000

996,000

664,000

1,220,000

NIL

NIL

NIL

3,205,000

2017

325,000

1,354,000

170,000

1,648,000

NIL

NIL

NIL

3,497,000

NAME AND PRINCIPAL POSITIONYEARSALARY($)($)

Donald J. Walker
Chief Executive Officer

2019

325,000

7,140,000

2018

325,0002017
Vincent J. Galifi
Executive Vice-President
and Chief Financial Officer
Tommy J. Skudutis
Chief Operating Officer

Notes:
1.
Amounts disclosed in this column represent the grant value (at target) of PSUs and, where applicable, the grant date fair value of annual profit sharing
bonuses deferred in the form of RSUs.
2.
Amounts disclosed in this column represent the compensation value intended to be conferred by the Board in the form of the stock options. In valuingsuch options, the CGCNC initially made reference to the value of a time-vested stock option determined using the Black-Scholes option pricing
model, as set forth in the table below. Where the inputs and assumptions used in the Black-Scholes option pricing model would have resulted in avalue below 20% of the option exercise price, which the CGCNC deemed to be unreasonably low, the CGCNC imposed a ‘‘floor’’ value of 20% of theexercise price.
The Black-Scholes option pricing model requires the input of a number of assumptions, including expected dividend yields, expected stock pricevolatility, expected time until exercise and risk-free interest rates. Although the assumptions used reflect our best estimates, they involve inherent
uncertainties based on market conditions generally outside Magna’s control. If other assumptions are used, the stock option value disclosed could besignificantly impacted.
The weighted average assumptions used in measuring the Black-Scholes fair value and ‘‘floor value’’ of stock options applicable to 2019, 2018 and2017 NEO compensation are as follows:
FEBRUARY 25,
2019(a)56

AUGUST 14,
2017(d)MARCH 8,2017(e)

2.51%

2.61%

2.62%

1.74%

2.02%

Expected dividend yield

2.00%

2.00%

2.00%

2.00%

2.00%

Expected volatility (rounded)

27%

26%

25%

25%

26%

Expected time until exercise

4.5 years

4.5 years

4.5 years

4.5 years

4.5 years$11.63$13.13$11.20

$8.53

$8.35

—

—

—

$9.12

$8.55

‘‘Floor Value’’d.
e.

MARCH 19,2018(c)Risk-free interest rate

Grant Date Fair Value per option (Black-Scholes)

a.
b.
c.

MAY 14,
2018(b)

Options granted to all NEOs in respect of 2019 compensation and Mr. Skudutis in respect of 2018 compensation.
Options granted to S. Kotagiri and J. Tobin (in respect of 2018 compensation).
Options granted to D. Walker, V. Galifi, S. Kotagiri (all in respect of 2018 compensation) and T. Skudutis and J. Tobin (in respect of 2017
compensation).
Options granted to S. Kotagiri (in respect of 2017 compensation).
Options granted to D. Walker and V. Galifi (in respect of 2017 compensation).

Business of the Meeting

Amounts disclosed in this column represent annual profit sharing bonuses paid in cash.
Amounts disclosed in this column consist of:
DESCRIPTION
2019($)
Amounts reimbursed by Magna in respect of premiums paid by Mr. Walker
on a life insurance policy
Personal use of corporate aircraft
Total

5.

Amounts disclosed in this column consist of:
DESCRIPTION

121,000

132,000

58,000186,000

32,000121,000

NIL
155,0002019($)

Amounts disclosed in this column consist of:
DESCRIPTION

2018
($)
44,00048,000NIL
46,00016,00044,000NIL
64,000

2018
($)
NIL

Amounts disclosed in this column consist of:
DESCRIPTION

2017
($)
25,0002019($)

Personal use of corporate aircraft

2017
($)

46,0002019($)

Personal use of corporate aircraft
7.

2017
($)

128,000

Amounts reimbursed by Magna in respect of premiums paid by Mr. Galifi
on a life insurance policy
Personal use of corporate aircraft
Total
6.

2018
($)

2018
($)

18,0002017($)

31,000NIL

NIL

SUMMARYCOMPENSATION TABLE

3.
4.

TSR ($)The graph below shows the five-year total return of Magna Common Shares on the TSX and NYSE as comparedto the S&P/TSX and S&P500 composite indices, respectively, assuming investment of C$100 and $100 on
December 31, 2014 and reinvestment of dividends.
200

200

150

150

100

100

50

50

0
2014

2015

2016

Magna Common Shares (TSX)
S&P500 Total Return2017

S&P/TSX Total Return

CEO Compensation (reported)

2018

2019

Magna Common Shares (NYSE)

29FEB202001231490

FISCAL YEARSDECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2014
2015
2016
2017
2018
2019

Magna Common Shares (TSX)
S&P/TSX Total Return

C$100.00
C$100.00

C$90.90
C$91.68

C$96.76
C$111.01

C$121.00
C$121.11

C$107.77
C$110.34

C$127.57
C$135.59

Magna Common Shares (NYSE)
S&P500 Total Return$100.00$100.00$75.93$101.38$83.24$113.51$111.23$138.29$91.35$132.23$113.55$173.86

CEO Compensation (indexed)

100.0097.91

101.81

96.01

94.67

85.59

If a shareholder had invested C$100 in Magna Common Shares on the TSX on December 31, 2014, thecumulative value of that investment would have been over 27% higher by December 31, 2019. In the case of aninvestment of $100 in Magna Common Shares on the NYSE on the same date, the total cumulative value of thatinvestment would have been around 13% higher by December 31, 2019. If Mr. Walker’s total compensation (proxy
reported) was similarly indexed, it would have been over 14% lower as of December 31, 2019 compared to
December 31, 2014.

Business of the Meeting

57

BUSINESS OF THE
MEETING

Magna’s Total Shareholder Return PerformanceIncentive Plans and Awards
Stock Option Plans

Stock option grants are made under the 2009 Plan, which was approved byshareholders on May 6, 2010 and is administered by the CGCNC.

Eligible Participants
Under 2009 Plan

Under the 2009 Plan, stock options may be granted to employees of and consultants
to Magna and its subsidiaries. The CGCNC does not foresee options being granted toconsultants, except in limited circumstances such as where an individual performs
services for Magna through a consulting arrangement for tax or other similar reasons.
No options were granted to consultants in 2019 or to date in 2020.

2009 Plan Limits

The maximum number of Common Shares:

issued to Magna ‘‘insiders’’ within any one-year period; andissuable to Magna insiders at any time,

under the option plans and any other security-based compensation arrangements(as defined in the TSX Company Manual) cannot exceed 10% of our total issued
and outstanding Common Shares, respectively.

Option Exercise Prices
are at or Above Market
Price on Date of Grant

Exercise prices are determined at the time of grant, but cannot be less than theclosing price of a Common Share on the TSX (for options denominated in Canadiandollars) or NYSE (for options denominated in U.S. dollars) on the trading day
immediately prior to the date of grant.

3-Year Option Vesting;
7-Year Option Life

Time-vested options granted under the 2009 Plan vest in equal proportions on eachof the first three anniversaries of the grant date, unless otherwise determined by the
CGCNC. Subject to accelerated expiry of time-vested options in certain
circumstances, options granted under the 2009 Plan expire seven years after grant,
unless otherwise determined by the CGCNC. On cancellation or surrender of options
under the 2009 Plan, the underlying shares are added back to the number ofCommon Shares reserved for issuance and are available for re-grant.

Amending the2009 Plan

The 2009 Plan gives the Board the power to amend the plan, except for thefollowing types of amendments which require shareholder approval:









increases to the number of shares reserved for issuance under the plan
(excluding an equitable increase in connection with certain capitalreorganizations);
a reduction in the exercise price of an option;
an extension of an option term (excluding certain limited extensions to allow theexercise of options which expire during or within two business days after theend of a trading blackout);
an increase in the 10% limit on option shares issuable to insiders, as describedabove; andamendment of the amending provision of the plan.

There were no amendments to the 2009 Plan during 2019.

58

Business of the Meeting

The full text of the amended and restated 2009 Plan is available on our website(www.magna.com).

EquityCompensation Plan
Information

As of December 31, 2019 and the Record Date, compensation plans under which
our Common Shares are authorized for issuance are as follows:

PLAN CATEGORY

Equity compensation plans approved by
securityholders:2009 Plan

WEIGHTED-AVERAGE

ISSUED UPON EXERCISE OFOUTSTANDING OPTIONS,WARRANTS AND RIGHTS

EXERCISE PRICE OFOUTSTANDING OPTIONS,WARRANTS AND RIGHTSNUMBER OF SECURITIESREMAINING AVAILABLE FOR
FUTURE ISSUANCE UNDEREQUITY COMPENSATION PLANS

12/31/2019(#)

RECORDDATE(#)

12/31/2019($)

RECORDDATE($)

12/31/2019(#)

RECORDDATE(#)

8,361,751

9,722,110

49.10

49.51

4,772,379

3,378,095

Taking into account the 1,665,353 options granted in calendar 2019, Magna’sburn-rate option dilution and overhang were as follows as of December 31, 2019:

0.6% 2.8% 4.3%
Burn-Rate(1)Option Dilution(2)BUSINESS OF THE
MEETING

Option Burn-Rate,
Dilution and Overhang

NUMBER OF SECURITIES TO BE

INCENTIVE PLANS
AND AWARDS

Copies of Option Plan
on Magna.com

Option7FEB202023123389
Overhang(3)Notes:
1.

Represents stock options granted in calendar 2019, expressed as a proportion of the number of Magna
Common Shares which were outstanding as of December 31, 2019.

2.

Represents all stock options previously granted but not exercised as of December 31, 2019, expressed as aproportion of the number of Magna Common Shares which were outstanding as of such date.

3.

Represents all stock options available for grant and all stock options previously granted but not exercised as ofDecember 31, 2019, expressed as a proportion of the number of Magna Common Shares which were
outstanding as of such date.

Business of the Meeting59Outstanding Option
and Share-BasedAwardsOutstanding option-based awards for each of our Named Executive Officers as ofDecember 31, 2019 were as follows:

OPTION-BASED AWARDSNUMBER OF
SECURITIESUNDERLYINGUNEXERCISEDOPTIONS(1)(#)
Donald J. Walker

Total
Vincent J. Galifi

Total
Tommy J. Skudutis

Total
Seetarama S. Kotagiri

Total
James J. Tobin

Total

264,000
320,414417,878
137,979
556,725
425,000
409,286
2,531,282
112,782
144,186
47,619225,964
176,562
151,333
858,446
101,270
45,296
31,250181,428
359,244
24,50037,88861,047
20,90641,00862,144
11,42471,367330,284
40,00045,846
61,773
20,441
15,17950,57157,094
290,904

OPTION
EXERCISEPRICE

OPTION
EXPIRATIONDATE(MM/DD/YY)

C$53.35$54.53$38.23$43.05$42.73$55.64$54.4403/04/21
02/25/22
02/28/23
02/26/24
03/07/24
03/18/25
02/24/26$54.53$38.23$43.05$42.73$55.64$54.4402/25/22
02/28/23
02/26/24
03/07/24
03/18/25
02/24/26$54.53$43.05$55.64$54.4402/25/22
02/26/24
03/18/25
02/24/26$48.05$54.53$38.23$43.05$45.62$55.64$63.17$54.4403/04/21
02/25/22
02/28/23
02/26/24
08/13/24
03/18/25
05/13/25
02/24/26$48.05$54.53$38.23$43.05$55.64$63.17$54.4403/04/21
02/25/22
02/28/23
02/26/24
03/18/25
03/13/25
02/24/26

VALUE OFUNEXERCISED
IN-THEMONEYOPTIONS(2)($)
3,627,000
99,0006,941,000
1,627,000
6,742,000
NIL
164,000
19,200,000
35,0002,395,000
561,000
2,736,000
NIL
61,0005,788,000
31,000534,000
NIL
73,000638,000
166,000
12,0001,014,000
246,000
378,000
NIL
NIL
29,0001,845,000
272,000
14,0001,026,000
241,000
NIL
NIL
23,0001,576,000

SHARE-BASED AWARDS
MARKET OR
MARKET OR
PAYOUTPAYOUT
VALUE OFNUMBER OF
VALUE OFVESTEDSHARE-BASED SHARE-BASED SHARE-BASEDAWARDS THAT AWARDS THAT AWARDS NOTHAVE NOTHAVE NOTPAID OUT OR
VESTED(3)VESTED(3)DISTRIBUTED(#)($)($)(4)
429,353

23,546,000

NIL

169,273

9,283,000

NIL

72,503

3,976,000

6,082,000

74,0994,064,000

2,135,000

42,6202,337,000

NIL

Notes:
1.
Includes both vested and unvested options.
2.
Determined using the closing price of Magna Common Shares on the TSX on December 31, 2019 and the BoC exchange rate on such date for
options denominated in C$. Value shown reflects in-the-money value of all options, whether or not exercisable as of December 31, 2019.
3.
Represents ROIC PSUs and rTSR PSUs, at target.
4.
Represents the market value of previously granted, unreleased restricted shares and any RSUs which had not been redeemed as at December 31,
2019. The value shown was determined using the closing price of Magna Common Shares on the NYSE on December 31, 2019.

60

Business of the Meeting

NAME
Donald J. Walker
Vincent J. Galifi
Tommy J. Skudutis
Seetarama S. Kotagiri
James J. Tobin

The values of option-based and share-based awards which vested, and non-equity
incentive plan compensation earned, during the year ended December 31, 2019, areset forth below:

OPTION-BASED AWARDS –VALUE VESTEDSHARE-BASED AWARDS –VALUE VESTEDNON-EQUITY INCENTIVE PLAN
COMPENSATION – VALUE

DURING THE YEAR(1)DURING THE YEAR(2)EARNED DURING THE YEAR(3)

($)

($)

($)

4,834,000
1,750,000
1,140,000
536,000
515,000

3,516,000
1,213,000
1,154,000
533,000
521,000

5,795,000
2,462,000
2,462,000
1,235,000
943,000

INCENTIVE PLANS
AND AWARDS

Incentive Plan
Awards – Value
Vested During
the Year

Notes:
1.
Represents the vesting date value of previouly granted stock options which vested during 2019 and assumes that any such options which werein-the-money were exercised on the vesting date.
2.
Represents the vesting date value of 2016 ROIC PSUs and 2016 TSR PSUs, together with dividends thereon, as of February 21, 2019.
3.
Represents the value of profit sharing bonuses paid in cash in respect of 2019.

LTIs awarded to NEOs in respect of 2017 consisted of ROIC PSUs (40%), rTSR PSUs (20%) and stock options (40%).
The ROIC PSUs and rTSR PSUs, which covered a performance period from January 1, 2017 to December 31, 2019,vested on February 20, 2020, following review by the CGCNC and Board approval of the payouts.
The 2017 ROIC PSU payout was at the 106% level on a payout scale of 0% to 200%, as follows:
ROIC Performance
Payout Level
3-yr Avg. Payout

2017

2018

2019

16.1%
136%

14.5%
100%
106%

12.0%
82%

The 2017 rTSR PSU payout was at the 190% level on a payout scale of 0% to 200%, based on a TSR rank offifth out of 16, which placed Magna at the 80th percentile of the rTSR peer group, as follows:
rTSR PEER

TSR
(%)

RANK

Martinrea International Inc.
Gentex Corp.
S&P500FiatChrysler/Ford/GM
Magna
Autoliv, Inc.
BorgWarner Inc.
Visteon Corporation

68.0
53.6
50.1
34.4
32.2
15.4
15.1
10.0

1
2
3
4
5
6
7
8

rTSR PEER

TSR
(%)

RANK

Lear Corporation
Dana Incorporated
Continental/Faurecia/Valeo
Linamar Corporation
American Axle Mfg. Holdings
Adient plc
Delphi Technologies plc
Tenneco Inc.

7.0
0.8
-1.4
-16.5
-42.6
-59.3
-62.5
-77.8

9
10
11
12
13
14
15
16

As a result of the foregoing, the number of 2017 ROIC PSUs and 2017 rTSR PSUs realized by each NEO effective
February 21, 2019, was as follows:
NAME
Donald J. Walker
Vincent J. Galifi
Tommy J. Skudutis
Seetarama S. Kotagiri
James J. Tobin

ROIC PSUS
AT TARGET(#)

ROIC PSUSREALIZED(#)

rTSR PSUS ATTARGET(#)

rTSR PSUSREALIZED(#)

108,378
43,9897,969
12,386
3,871

114,880
46,628
8,447
13,1294,103

54,18921,994
3,985
6,192
1,935

102,959
41,788
7,571
11,764
3,676

Business of the Meeting

61

BUSINESS OF THE
MEETING2017 PSU Awards – Performance and Payout

Corporate Governance
IN THIS SECTION ...
Governance Environment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
About the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Independence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Board Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shareholder Democracy and Engagement . . . . . . . . . . . . . . . . . . . . . . .
Ethical Conduct . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sustainability at Magna . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

63
64
65
70
74
76
76

19MAR202012215180

Corporate Governance At Magna
Magna believes that strong corporate governance practices are essential to fostering stakeholder trust andconfidence, management accountability and long-term shareholder value. This commitment to sound and effective
governance starts with a diverse, experienced and highly-skilled Board that:

is informed, active and engaged;

functions independently of Management;embraces evaluation and continuous development;values transparency and is accountable to stakeholders; andfosters a culture of integrity and ethical conduct.

The manner in which these important characteristics support the Board in fulfilling its stewardship role are detailed
in this section. Details about our Nominees for election at the Meeting, including their biographies, skills andexperience, tenure and compensation can be found in the ‘‘Business of the Meeting – Election of Directors’’ sectionof this Circular.
Our approach to corporate governance is set forth in our Board Charter, which is available on our website(www.magna.com) and has been filed on SEDAR (www.sedar.com). The Board Charter is reviewed at least
annually and updated as needed to reflect evolving best practices in corporate governance.
CORPORATE GOVERNANCE OVERVIEW
Active Board engagement in, and approval of strategy
Broad oversight of risk
Strong oversight of management succession planning
Active shareholder engagement
Commitment to culture of ethics and compliance
Diverse range of Nominee skills, expertise andbackgrounds
Diversity statement in Board Charter
Director tenure guideline
Limitation on director interlocks








Annual Say on Pay vote62

Corporate GovernanceAnnual director election; no slate ballots
Majority voting policy and prompt disclosure of vote results
Advance Notice By-Law
Independent Board Chair
100% of Board Committee members are independent
Committees with full authority to retain independent
advisors
Director orientation and continuing education
Rigorous annual Board/Director effectiveness evaluation
Equity maintenance requirement and mandatory deferral of
director fees until retirement creates alignment withshareholders
Anti-hedging restrictions for directors, officers andemployees












Governance Environment
Regulation
Magna’s Common Shares are listed on the TSX (stock symbol: MG) and the NYSE (stock symbol: MGA). In
addition to being subject to regulation by these stock exchanges, we are subject to securities and corporate
governance regulation by the Canadian Securities Administrators (‘‘CSA’’), including the Ontario Securities
Commission, which is Magna’s primary securities regulator. Magna is also regulated by the United States Securities
and Exchange Commission (‘‘SEC’’) as a ‘‘foreign private issuer’’.
We meet or exceed all of the guidelines established by the CSA in National Policy 58-201 – Corporate Governance
Guidelines. Additionally, although we are not required to comply with most of NYSE’s Corporate GovernanceStandards, our practices meet or exceed them in all material respects. Any differences between our governancepractices and NYSE’s Corporate Governance Standards are discussed in the ‘‘Statement of Significant GovernanceDifferences (NYSE)’’ which can be found on our website (www.magna.com).

Best Practices
Magna also monitors the voting policies, corporate governance guidelines and recommended best practices of ourlargest institutional shareholders, shareholder representative organizations, such as the Canadian Coalition for Good
Governance, as well as proxy advisory firms, such as Institutional Shareholder Services and Glass Lewis & Co.

Governance Framework
The diagram below summarizes our governance structure, with key elements described in the sections which
follow.

SHAREHOLDERSAPPOINTELECTOPERATINGGROUPMANAGEMENT

BOARD
OF
DIRECTORSAPPOINTCORPORATEGOVERNANCEAPPOINTINDEPENDENTAUDITORAPPOINTEXECUTIVE
MANAGEMENTREPORT

CORPORATEMANAGEMENTAPPOINTAPPOINTDIVISIONALMANAGEMENTTECHNOLOGYCOMMITTEECGCNCAPPOINTINDEPENDENTCOMPENSATIONADVISORAPPOINTAPPOINTINDEPENDENTLEGALADVISORAPPOINTAUDITCOMMITTEEREPORT

INTERNAL
AUDIT

5MAR202011463574
Corporate Governance63About the Board
Board Size and Term
Our articles of incorporation permit a Board size of between five and fifteen directors, with the exact number to be
determined by the Board. Over the last ten years, our Board has ranged between nine and twelve directors, withan average of ten. For 2020, twelve nominees have been put forward for election by shareholders. The Board
believes that this is an appropriate number of nominees in light of the scale and complexity of Magna’s businessand the markets in which we operate, as well as the range of skills needed to effectively oversee the company’s
strategy and risks, provide strategic guidance and advice to Executive Management, staff Board Committees andaddress planned director retirements effectively. Each director is elected for a one-year term expiring at our next
annual meeting of shareholders.

Minimum Qualifications for Service as a Director of Magna
In addition to the minimum qualifications specified in the OBCA, our Board Charter requires that each director
possess the following attributes:








personal and professional integrity;
significant achievement in his or her field;
experience and expertise relevant to our business;a reputation for sound and mature business judgment;
the commitment and ability to devote the necessary time and effort in order to conduct his or her duties
effectively; andgeneral ability to read and understand financial statements.

Beyond the above minimum qualifications for service, we expect all of our directors to attend all Board andCommittee meetings. However, we recognize that scheduling conflicts are unavoidable from time to time,
particularly in the case of meetings which are called on short notice. Accordingly, directors are subject to aminimum attendance requirement of 75% for all regularly scheduled Board and Committee meetings, except wherean absence is due to a medical or other valid reason.
In order to be able to devote the necessary time and effort to the activities of the Board and its committees,
directors serving on the Board may not sit on a total of more than four public company boards (including ours)
without the prior approval of the CGCNC. A director on our Board who serves as a chief executive officer (orequivalent position) of another public company, may not serve on the board of any other public company otherthan the company of which he or she is a chief executive officer, while he or she serves on our Board without theprior approval of the CGCNC. Our chief executive officer is allowed to serve on the board of one other publiccompany, but does not currently serve on any other public company boards.

Board Leadership
Our Board is led by an independent Board Chair who is annually selected by the Independent Directors fromamong themselves. William Young has served as our independent Chairman since May 2012.
The Board Chair’s basic duties include presiding over Board meetings, including in camera sessions at each suchmeeting involving the Independent Directors, overseeing Board Committees and coordinating Board activities with
Committee Chairs. Other duties of the Board Chair, as described in the Board Charter include:




64

agenda-setting for Board meetings;
representing the Board in discussions with third parties;
representing the Board in discussions with Executive Management;

Corporate Governancegenerally ensuring that the Board functions independently of Executive Management;
assisting in recruiting director candidates who have been identified by the CGCNC; andoverseeing the annual evaluation process of the Board and its Committees.

The Board can delegate additional responsibilities to the Board Chair at any time. Any change to the
responsibilities listed in the Board Charter must be approved by the Board.

Board Committee Structure
The Board carries out its duties in part through standing Committees. Each Independent Director is expected toserve on at least one standing Committee, but may attend the meetings of any other Committee. Committee
staffing assignments are made with the aim of best matching the skills and expertise of Independent Directors to
the Committee mandates in order to maximize the overall effectiveness of the Board and its Committees.
The Board currently maintains three standing committees to assist it in carrying out its duties:

Audit Committee;
CGCNC; andTechnology Committee.

All of the Board Committees are staffed and chaired by Independent Directors, and operate under Committee Charters,
which are available on our website (www.magna.com) and on SEDAR (www.sedar.com). Each Committee has prepareda report appearing later in this Circular, summarizing the Committee’s mandate and membership, highlighting key
accomplishments and identifying major areas of focus.
In addition to the Board’s standing Committees, the Board may establish special committees composed entirely of
Independent Directors to review and make recommendations on specific matters or transactions. There were no
special committees during 2019.

Director Compensation

Board Independence
Shareholders are best served by a strong Board which exercises independent judgment, as well as prudent andeffective oversight on behalf of shareholders. Assuming all of the Nominees listed in this Circular are elected with amajority of votes, ten out of twelve, or 83%, of the directors on our Board will be ‘‘independent’’. This exceeds theminimum two-thirds independence requirement contained in our Board Charter and recommended by the
Canadian Coalition for Good Governance, as well as the recommendation in National Policy 58-201 that a majorityof directors be independent.

Definition of Independence
A Magna director is considered to be independent only after the Board has affirmatively determined that thedirector has no direct or indirect material relationship which could interfere with the exercise of his or her
independent judgment. This approach to determining director independence draws upon the definitions containedin Section 1.4 of National Instrument 52-110 (‘‘NI 52-110’’) and Section 303A.02 of the NYSE’s Corporate

Corporate Governance65

CORPORATEGOVERNANCE

Compensation for our Independent Directors is structured to attract and retain skilled independent directors andalign their interests with the interests of our long-term shareholders. The details of our director compensation
structure and 2019 independent director compensation can be found in the ‘‘Business of the Meeting – Director
Compensation’’ section of this Circular.

Governance Listing Standards, as well as the specific relationships identified in those instruments as precluding aperson from being determined to be an independent director.
Audit Committee members are subject to a higher standard of independence than other directors, consistent with
Section 1.5 of NI 52-110. Under this standard, a person cannot be considered an independent director for
purposes of Audit Committee membership if he or she is a partner, member, executive officer, managing director or
person in similar position at an accounting, consulting, legal, investment banking or financial advisory services firm
providing services to Magna (including any subsidiary) for consulting, advisory or other compensatory fees.
In determining whether any candidate for service on the Board is independent, information is typically compiled
from a variety of sources, including: written questionnaires completed by directors/candidates; information
previously provided to us by directors; our records relating to relationships with accounting, consulting, legal,
investment banking or financial advisory services firms, together with information provided to us by such firms; andpublicly available information. The CGCNC is provided with a summary of all such relationships (whether or notmaterial) known by Magna based on the foregoing sources. Following the CGCNC’s consideration and assessmentof such information, it presents its recommendation to the Board for approval.

Additional Ways In Which Independence is Fostered
Aside from the two-thirds independence requirement, there are other ways in which Board independence isfostered, including:











separation of the roles of Board Chair and Chief Executive Officer, together with position descriptions
defining such roles;a requirement that the Chief Executive Officer resign from the Board when he or she retires fromManagement;
the use of in camera sessions at every Board and Committee meeting;the right of the Board and each Committee to engage independent legal, financial and other advisors at
Magna’s expense;
limitations on board interlocks;
Board and Committee Chairs’ authority over meeting agendas and attendees; andIndependent Directors’ right to discuss any matter with any employee or any advisor to the company, as
well as any independent advisor retained by the Board or a Committee.

Committee Independence
The Board believes that Committee independence is critical to enabling the Board to exercise prudent and effective
oversight. In addition to permitting only Independent Directors to serve on Committees, Committee independence
is promoted in a number of ways, including the:








66

use of in camera sessions at every Committee meeting;right of each Committee to retain independent advisors at Magna’s expense;
inclusion in each Committee Charter of a position description for the Committee Chair;Committee Chairs’ authority over meeting agendas and attendees;
Committee members’ right to discuss any matter with any employee or any advisor to the company, as
well as any independent advisor retained by the Board or a Committee; andright of any Committee member to call a Committee meeting.

Corporate GovernanceInterlocks
Our Board Charter limits the number of boards on which our directors can serve together. There is currently one
Board interlock as follows:
PUBLIC COMPANY
The Bank of Nova Scotia

DIRECTOR
Indira V. Samarasekera
Scott B. Bonham

COMMITTEESHuman Resources;
Corporate Governance
Audit & Conduct Review;
Corporate Governance

The CGCNC is satisfied that the above interlock does not impair the ability of the interlocking directors to exercise
independent judgement as members of the Board. None of our directors serve on any board together with amember of Magna’s Management.

CEO Position Description
A position description has been developed for the Chief Executive Officer to further promote the independence of
the Board and to define the limits of the Chief Executive’s authority. His basic duties and responsibilities include:











overall direction of Magna’s operations, including top-level customer contact;
development and implementation of Magna’s product, geographic, customer, merger/acquisition andgrowth strategies;
promotion of Magna’s decentralized, entrepreneurial corporate culture, as well as its culture of integrity;
development of Magna’s management reporting structure;
management succession planning;
together with the CGCNC, determination of compensation for members of Corporate Management;
human resources management;interaction with the Board on behalf of Management; andcommunication with key stakeholders.

Where a director has a conflict of interest regarding any matter before the Board, the conflicted director must
declare his or her interest, depart the portion of the meeting during which the matter is discussed and abstain fromvoting on the matter. However, the OBCA permits directors to vote on their own compensation for serving
as directors.
The CGCNC is generally responsible for reviewing and making recommendations to the Board regarding related
party transactions. In the case of a related party transaction which is material in value, the unconflicted membersof the Board may choose to establish a special committee composed solely of Independent Directors to review
and make recommendations to the Board. Related party transactions include those between Magna (including any
subsidiary) and a director, officer or person owning more than 10% of our Common Shares. In reviewing andmaking recommendations regarding related party transactions, the CGCNC seeks to ensure that transaction terms
reflect those which would typically be negotiated between arm’s length parties, any value paid in the transaction
represents fair market value and that the transaction is in the best interests of the company. There were no such
related party transactions during 2019.

Board’s Stewardship Role
The Board is responsible for the overall stewardship of Magna. To this end, the Board: supervises the managementof the business and affairs of Magna in accordance with the legal requirements set out in the OBCA, as well as

Corporate Governance67

CORPORATEGOVERNANCE

Director Conflicts of Interest and Related Party Transactions

other applicable law; and, jointly with Management, seeks to create long-term shareholder value. The Board’s
stewardship role, specific responsibilities, compositional requirements and various other matters are set forth in our
Board Charter.
Consistent with the standard of care for directors under the OBCA, each director on the Board seeks to act
honestly and in good faith with a view to the best interests of the corporation and to exercise the care, diligenceand skill that a reasonably prudent person would exercise in comparable circumstances. The standard of care
under Ontario corporate law differs from that of some other common law jurisdictions, by requiring directors to act
in the ‘‘best interests of the corporation’’ as opposed to the ‘‘best interests of shareholders’’. This distinction
effectively recognizes that while individual shareholders may have conflicting interests, investment intents andinvesting horizons, the stewards of a corporation must act with a view to the interests of the corporation as awhole. Consistent with case law developed under the OBCA and equivalent federal and provincial corporate
statutes in Canada, Magna’s Board seeks to consider and balance the impact of its decisions on its affectedstakeholders, including shareholders, other security holders and employees.

Primary Board Responsibilities
The Board Charter identifies the following as the Board’s primary responsibilities:


Corporate Culture and Approach to Corporate Governance: Magna maintains a uniqueentrepreneurial corporate culture which we believe has been critical to our past success and expect willbe critical to our future success. The Board oversees Magna’s culture and overall approach to corporate
governance, including by determining the specific policies and practices which the Board believes to be in
the best interests of the company. The Board has delegated to the CGCNC the responsibility for making
recommendations with respect to corporate governance matters.

Oversight of Executive Management: The Board appoints the Chief Executive Officer, assesses his
performance, determines his compensation and provides strategic advice to him and other members of
the Executive Management team. Additionally, the Board satisfies itself as to the integrity of each memberof Executive Management and the creation by the Executive Management team of a culture of integrityand ethical business conduct throughout the company.

Executive Compensation: The Board oversees our system of executive compensation by structuring
incentives aimed at attracting, retaining and motivating skilled executives to responsibly achieve the longterm objectives established through the company’s strategic planning process. The Board has delegatedto the CGCNC the responsibility for making recommendations on executive compensation matters. The
CD&A section of this Circular contains a detailed discussion of how the Board and CGCNC fulfill their
responsibilities related to executive compensation decisions.

Succession Planning: The Board satisfies itself that the company has developed appropriate succession
plans identifying potential future candidates for all positions within Executive Management, management of
Magna’s Operating Groups and other key positions in the company. In fulfilling these responsibilities, theBoard aims to satisfy itself that Magna’s succession processes:have been structured to enable the Board to promptly address an unplanned succession event
involving members of Executive Management;will facilitate seamless transitions of members of Executive Management and Operating Groupmanagement, as such managers retire, are promoted to new roles or leave the company; and
include robust and effective talent management practices to identify, reward, retain, develop andpromote high-performing employees.
The Board receives regular updates on Magna’s leadership development and succession planning
activities, from our Chief Executive Officer and our Chief Human Resources Officer. Additionally, the Board
has multiple opportunities each year to meet and engage with key managers and high-performing
employees. Overall, the Board is satisfied that Magna has in place appropriate succession plans

68

Corporate Governanceaddressing key positions within the company, including the Chief Executive Officer’s, as well as aleadership development system which supports the company’s succession planning objectives moregenerally.
Strategic Planning: The Board oversees the development and implementation of the company’s
long-term strategy, as well as its near-term (typically three-year) business plan. In fulfilling this
responsibility, the Board meets with Executive Management and Operating Group Management in two or
more dedicated sessions each year, during which the Board:
assesses strategic priorities in light of automotive industry trends and developments;

engages with and provides advice and guidance to, Executive Management on the company’s
approach to product portfolio, key customers, geographic footprint, core and emerging technologies,
R&D priorities, acquisitions/divestitures, talent management and other areas of strategy;considers consolidated and Operating Group three-year business plans, together with sensitivity
analyses of the consolidated business plan;evaluates short-, medium- and long-term risks that could erode the value of the company’sbusinesses and business units, together with Management actions to mitigate such risks;engages in scenario planning to model the impact of events such as potential economic downturns;
provides input on capital allocation priorities, as well as capital structure, and approves a capital
expenditure budget for the year;approves a three-year consolidated business plan and updated strategic plan; andjointly identifies with Executive Management action plans to address at subsequent Board meetings
any open questions/issues arising from the business planning/strategy session.

Capital Allocation: In approving capital, the Board is focused on ensuring that the company can deliveron the Board-approved, long-term strategic priorities, while still meeting its near-term product andprogram commitments to customers. Updates regarding changes in capital expenditure needs from theapproved budget are presented quarterly and further Board approval is required where the company’s
capital expenditures are forecast to exceed the Board-approved amount for that year.

Enterprise Risk Management: The Board satisfies itself as to the existence of effective processes to
identify and mitigate (to the extent practicable) Magna’s principal business risks. In fulfilling its oversight
responsibility, the Board satisfies itself that Management has implemented appropriate strategies toaddress the strategic and competitive challenges faced by the company over different time horizons,
manage day-to-day operational risks, promote legal and regulatory compliance and ethical conduct,
safeguard corporate assets and maintain appropriate financial and internal controls designed to protect
the integrity of Magna’s financial statements. The Board’s approach to enterprise risk recognizes that risk
and reward are ‘‘flip sides of the same coin’’, but that management decision-making must be infused withboth an awareness and understanding of such risks, as well as a clear understanding of the limits of riskthat the Board will accept.
The Board maintains risk oversight responsibility for strategic risks and has delegated specific areas ofrisk oversight to its standing Committees so that the directors on such Committees can bring their

Corporate Governance69

CORPORATEGOVERNANCE

The company’s strategy is discussed in the company’s Annual Information Form/Annual Report on
Form 40-F filed concurrently with this Circular.

particular knowledge and expertise to the risks falling within the Committee’s authority. The key risks
overseen by the Board and each standing Board Committee are as follows:
Board

Strategic risk including CEO succession, operations, capital structure and product portfolio

Enterprise-wide Cybersecurity and IT

Audit Committee

CGCNC



Financial ReportingCorporate GovernanceTaxationCompensation

Material Litigation/Regulatory Risk

Ethics and Legal Compliance

Leadership
Development/Succession Planning

Sustainability, including health andsafety and environmental
complianceTechnology CommitteeTechnology risks, including
product-embedded and solution
software cybersecurity risks

Each Committee’s risk mandate is described further in the Committee’s Charter.
Disclosure: We have established and maintain policies and procedures designed to ensure that material
information is disclosed to stakeholders is timely, factual, accurate and in compliance with the applicableregulatory and legal requirements to which Magna is subject. We maintain a disclosure committee
comprised of senior management, tasked with reviewing and approving all material information and public
regulatory filings prior to such information being made public and/or filed with applicable regulatory
agencies. Each Board Committee also reviews the material information relevant to its mandate to be
included in regulatory filings prior to consideration and approval by the Board.

Shareholder Engagement: Our Board recognizes that being accessible and engaging in open, regulardialogue with shareholders is a vital element of strong corporate governance. The shareholder
engagement activities of the Board are discussed in greater detail later in this Corporate Governancesection.



Fundamental Corporate Actions: In addition to identifying the above responsibilities, the Board Charter
helps to define the role of the Board with respect to various fundamental actions, such as financial
statements, material public disclosure documents, business plans and capital expenditure budgets,material financing documents, major organizational restructurings, material acquisitions and divestitures, aswell as major corporate policies. We believe that the identification and definition of Board responsibility forthe foregoing items promotes Board independence.

Board EffectivenessRecruitment and Nomination Process
The CGCNC recommends to the Board the nominees for election at each annual meeting of the company’s
shareholders. In carrying out this function, the CGCNC annually reviews:






70

the composition of the Board relative to Magna’s strategic priorities;
feedback regarding Board composition received during the annual Board effectiveness evaluation;
the diversity of skills, experience, perspectives and backgrounds already represented on the Board;planned or pending director retirements; andother factors.

Corporate GovernanceIt then seeks to address any potential gaps through recruitment of one or more additional directors identified withthe assistance of a professional search firm. Potential candidates may also be recommended by existing directors,
members of Management, external advisors, shareholders or others. The names of candidates identified by any
such parties are provided to the search firm retained by the CGCNC for its recommendation as to suitability. The
CGCNC will typically interview a short-list of three to five candidates for each Board seat it seeks to fill.
A detailed description of our 2020 recruitment process and subsequent nomination of the Hon. V. Peter Hardercan be found in the ‘‘Business of the Meeting – Election of Directors’’ section of this Circular.

Diversity
We believe that shareholders benefit from a strong, independent board composed of highly-engaged directors
representing a diverse range of skills, experience, perspectives and backgrounds. Rather than adopting specificdiversity targets, which tend to be arbitrary, the Board has tasked the CGCNC with the responsibility of
establishing director recruitment procedures that are aimed at eliciting a diverse range of candidates, without
discrimination on the basis of any diversity attributes, including age, gender, cultural background, religion, physicalability and sexual orientation. The CGCNC uses a professional search firm which operates under firm instruction
not to exclude any candidate on the basis of any personal characteristic or attribute which is unrelated to theindividual’s ability to carry out his or her duties as a director. The Board is satisfied that the above approach has
been effective in achieving a diverse Board, as exemplified by the balance of female directors (33% of theNominees), as well as the range of industries, cultural, geographic, functional and other perspectives represented
by the Nominees.

On a global basis, approximately 26% of the employees in our wholly-owned operations are women. A total of
approximately 3,600 employees in our wholly-owned operations occupy key positions with around 550 of such
employees, or 15%, being women. Underrepresentation of women in our workforce is most pronounced inengineering, IT, operations and product engineering career streams, a consistent trend throughout the automotive
industry.
Recognizing the importance of improving gender diversity within key technical career streams, many of theorganizations we have partnered with promote gender diversity in technical career streams. Our current strategic
partnerships include: Build a Dream; Centre for Automotive Diversity, Inclusion & Advancement (CADIA); Catalyst;
Engineers Canada; FIRST Robotics – Girls in STEM; Gartner, Inc.; her Career; Institute of Electrical and Electronic
Engineers (IEEE); Inforum; KnowledgeStart; Ontario Society of Professional Engineers; Society of Automotive
Engineers (SAE) International; The Art of Leadership for Women; The Knowledge Society; Women in Automotive;
Women in Manufacturing; and Women’s Executive Network (WXN).
The Board as a whole continues to advocate for improved gender representation and encourage Executive
Management to take actions to improve gender representation in leadership positions technical/engineering career
streams and other key roles within the company’s workforce. In addition to their strong advocacy, the female
directors of the Board have sought opportunities to mentor and share their experiences with the company’s
high-performing female employees.
Our approach to diversity is described in greater detail in our Sustainability Report.

Corporate Governance71

CORPORATEGOVERNANCE

Diversity within our employee population is also important to us and we strive to create an inclusive work
environment throughout the company. We have taken a number of steps in this regard, including: development andimplementation of a diversity awareness program; creation of a Global Diversity & Inclusion Council headed by twosenior leaders; fostering the establishment of employee resource groups (‘‘ERGs’’), including a Women at Magna
ERC; and establishment of strategic partnerships with a broad range of organizations dedicated to raising the
profile of women in the automotive industry.

Age and Term Limits
We have not established firm age or tenure limits for directors, which may be arbitrary. The CGCNC is committed
to ensuring that Independent Directors remain active, engaged and effective participants on the Board and thatthey are able to function independently of Management. Decisions regarding continued service on the Board by an
Independent Director are based primarily on the Board’s skills needs and the Independent Director’s performance,
as determined through the Board’s annual effectiveness evaluation, which includes peer review components.
Subject to the foregoing, an Independent Director may as a general rule serve for up to twelve years.
Expected director retirement dates based on the twelve-year tenure guideline, are as follows:
Name

Retirement Year

Kurt J. Lauk

2023

William L. Young

2023

Peter G. Bowie

2024

Scott B. Bonham

2024

Indira V. Samarasekera

2026

Cynthia A. Niekamp

2026

William A. Ruh

2029

Mary S. Chan

2029

Robert F. MacLellan

2030

Lisa S. Westlake

2031

V. Peter Harder

2032

Annual Board Effectiveness Assessment
Magna maintains an annual Board effectiveness assessment process which aims to assist in the identification ofshort and long-term Board priorities, as well as the assessment of the overall functioning of the Board, its
Committees and individual directors. The effectiveness assessment, which is overseen by the CGCNC, typicallyconsists of the following components:
Board Effectiveness
Questionnaire
Detailed questionnairecompleted by eachdirector, which
includes selfassessment and peer
review components

Feedback

Implementation of
Changes

Following completionof the questionnaire
and interview
components, theBoard Chair and theexternal facilitator
review overall findings
with the CGCNC. Suchfindings and the
CGCNC’srecommendations arethen presented to anddiscussed with the
Board

Board Chair and theChief Executive Officer
meet to agree on anaction plan to address
the feedback andimplement the Board’s
recommendations

Individual Interviews

Confidential
one-on-one interviewsof each director by the
Board Chair tofollow‐up oncomments made in thequestionnaires, elicit
any other feedback
and communicate toeach director general
feedback from the peer
review questions in
the questionnaire

Confidential
one‐on‐one interviewsof each director by an
external facilitator, toelicit feedback
regarding the Board
Chair’s performance,
as well as any otherfeedback which a
director may prefer tocommunicate
anonymously

8FEB202004502951
Director Orientation and Education
We are committed to ensuring that Independent Directors are provided with a comprehensive orientation aimed atproviding them with a solid understanding of a broad range of topics, including:72

our business and operations;consolidated and Operating Group strategic and business plans;

Corporate Governance















trends and risks impacting the automotive industry;
our capital structure;
key enterprise risks and risk mitigation policies and practices;
our system of internal controls;
our internal audit program;the external auditors’ audit approach and areas of emphasis;
our human resources policies and practices, including talent management, diversity and inclusion, as wellas succession planning;
our approach to sustainability and environmental and health/safety policies and practices;
our Code of Conduct & Ethics, as well as our legal compliance program;
our system of corporate governance;
fiduciary duties and legal responsibilities applicable to directors of an Ontario corporation; andother matters.

We also aim to provide all directors with a continuing education program to assist them in furthering theirunderstanding of our business and operations and the automotive industry, as well as emerging trends and issues,
including in such areas as:








corporate governance;risk management;
approach to talent management;
executive compensation;
ethics and compliance;
mergers and acquisitions; andlegal/regulatory matters.

Independent Directors are encouraged to participate in additional director education activities of their choosing, at
our expense. We maintain Board memberships to the Institute of Corporate Directors, as well as the National
Association of Corporate Directors and encourage Independent Directors to attend conferences, seminars andwebinars organized by these or other organizations. Additionally, directors are routinely provided with thought
leadership materials on a range of topics from a number of respected external sources, including: investor
representative organizations such as the Canadian Coalition for Good Governance; various law, accounting,management consulting and executive compensation firms; automotive industry news sources; and generalpublications relating to public companies. Further, we regularly distribute media articles relating to Magna and theautomotive industry, as well as analyst reports and updates relating to Magna, its competitors and the automotive
industry.

Corporate Governance73

CORPORATEGOVERNANCE

Our director education program is developed based on priorities identified by the Board and may include various
elements, including: site visits to our facilities; video overviews of manufacturing facilities; guided visits to major autoshows; in-boardroom presentations by members of Management, external advisors or others; third-party led training
programs; membership in organizations representing independent directors; and subscriptions to relevant periodicals
or other educational resources.

Board and Committee education topics during 2019 included the following:
TOPIC

PRESENTER

ATTENDED BY

Global Economic Outlook

Chief Global
Economist, Deloitte

Full Board

Operating Group Reviews

Management

Full Board

Talent Management

Management

Full Board / CGCNC

Automotive Industry Trends

Management

Full Board

Trends Impacting Magna Product Lines

Management

Full Board

Review of Capital Structure and Strategy

Citibank

Full Board

The Future of HR

Management

Full Board

Lyft Investment/Project Update

Management

Full Board / Tech Cmte

Product Warranty, Recalls & Recall InsuranceManagement

Full Board

Cyber Update

Management

Full Board

Advanced Driver Assistance Systems

Management

Tech Cmte

Global Battery Market – CATL & BYD

Management

Tech Cmte

Magna Powertrain Winter Test 2019

Management

Tech Cmte

Industry 4.0 – New Industrial Revolution

Management

Tech Cmte

Achieving the Next S-Curve of Performance Through Big Data andAdvanced Analytics in Manufacturing

McKinsey Consulting

Tech Cmte

Significant Accounting Policies and Critical Accounting Estimates

Management

Audit Cmte

New Lease Accounting Standard

Management

Audit Cmte

Cybersecurity

Management

Audit Cmte

Data Privacy

Management

Audit Cmte

Labour Relations Overview

Management

CGCNC

Diversity & Inclusion

Management

CGCNC

Health & Safety Incidents Review

Management

CGCNC

D&O Insurance Overview

Management

CGCNC

Shareholder Democracy and Engagement
Shareholder Democracy
Magna’s approach to corporate governance reflects the following basic principles of shareholder democracy:
One Share, One Vote: We have a single class of shares, with each share entitled to one vote.



Majority Voting: Under applicable corporate law, shareholders can only vote ‘‘for’’ or ‘‘withhold’’ theirvote for director nominees. A ‘‘withhold’’ vote is an abstention or non-vote instead of a vote against thenominee. As a result, a single ‘‘for’’ vote can result in a nominee being elected, no matter how many
votes were withheld. We have adopted a majority voting policy in our Board Charter, under which we treat‘‘withhold’’ votes as if they were votes against a nominee in the case of an uncontested election (i.e. one
in which the number of nominees equals the number of Board positions). A nominee who is legallyelected as a director but receives more ‘‘withhold’’ votes than ‘‘for’’ votes must immediately tender aresignation to the Chair of the CGCNC.
Detailed voting results are promptly disclosed in a press release issued after each shareholder meeting, sothat shareholders can easily understand the level of support for each nominee, as well as each other itemof business at the meeting.
Unless there are exceptional circumstances, the CGCNC and Board must accept the resignation, effective
within no more than 90 days after the annual meeting. We will promptly disclose in a press release thedetermination made by the Board and, in the event they reject a resignation under the majority voting

74

Corporate Governancepolicy, we will disclose the nature of the exceptional circumstances underlying the refusal to accept the
resignation.
Where the CGCNC accepts a director’s resignation under our majority voting policy, it may recommend
and the Independent Directors may accept one of the following three outcomes:leave the resulting vacancy unfilled;
fill the vacancy by appointing someone other than the director who resigned; orcall a special meeting of shareholders at which a nominee other than the one who resigned will be
proposed for election.
Advance Notice By-Law: Shareholders wishing to nominate a candidate for election to our Board at anannual meeting of shareholders or any special meeting where one of the purposes of the meeting is theelection of directors, may do so by complying with the advance notice provisions of our corporate
By-Law. These provisions, which are intended to provide a fair and transparent process for shareholder
nominations set out, among other things that timely written notice of the nomination(s) must be provided
by the nominating shareholder to Magna’s Corporate Secretary within the timelines, and must include theinformation, specified in the By-Law. The full text of our By-Law is available on our website(www.magna.com) and filed on SEDAR (www.sedar.com).

Shareholder Proposals and Communication: Subject to meeting certain technical requirements,
shareholders are entitled under applicable corporate law to put forward proposals to be voted on at a
meeting of shareholders. The Board will give serious consideration to the voting results for shareholder
proposals, even if they are only advisory in nature.
Proposals of shareholders intended to be presented at our Annual Meeting of Shareholders to be held in
2021 must be received by us at our principal executive offices on or before March 8, 2021 in order to be
included in our 2021 Management Information Circular/Proxy Statement.



Corporate Transactions Involving the Issuance of 25% or More of Our Issued and Outstanding
Common Shares: Corporate transactions involving the issuance of a significant proportion of Common
Shares may be material and should be approved by shareholders. In the event of a transaction which
would involve the issuance of 25% or more of our issued and outstanding Common Shares, we willobtain shareholder approval before proceeding with the transaction.

We value constructive dialogue with shareholders and potential investors and regularly engage with shareholders
and shareholder representative organizations throughout the year to better understand their perspectives regarding
Magna. Where possible, we consider the feedback received from such meetings in refining Magna’s policies,
practices and/or public disclosures.
The Board’s shareholder engagement activities are led by Mr. Young, the Chairman of the Board and the CGCNC.
Board-led discussions typically relate to matters such as corporate governance and executive compensation.
Significant shareholder and investor outreach is also conducted by members of our Executive Management teamas part of our regular investor relations activities. Feedback communicated by shareholders and investors to the
Executive Management team is shared with the CGCNC on a quarterly basis and the Chairman reports to the
CGCNC and the full Board on a quarterly basis regarding shareholder engagement activities conducted by him.

Corporate Governance75

CORPORATEGOVERNANCE

Shareholder Engagement

Shareholders wishing to engage with the Board may do so by contacting the Board Chair, any Committee Chair or
any other Independent Director through the office of the company’s Corporate Secretary, as follows:
337 Magna Drive
Aurora, Ontario
CanadaL4G 7K1
Telephone: (905) 726-2462
shareholderengagement@magna.com

Ethical Conduct
Ethical Business Conduct
We maintain a Code of Conduct & Ethics, which is disclosed on the corporate governance section of our website(www.magna.com) in multiple languages. The Code, which is administered and overseen by the Audit Committee,
applies equally to all of our directors, officers and employees. The Code is reviewed regularly and proposed
amendments must be approved by the Board. Any waivers of the Code for directors or executive officers must be
approved by the Audit Committee, while waivers for other employees must be approved by our Chief Legal Officer,
Corporate Secretary or Chief Human Resources Officer. No waivers of the Code were requested or granted
in 2019.
We maintain an ethics and legal compliance training program (‘‘ELC Program’’), which aims to assist employees inunderstanding the values, standards and principles underlying the Code of Conduct & Ethics, as well as theapplication of such values, standards and principles to real-life situations encountered by employees in different
roles. Our ELC Program, which is overseen by the Audit Committee, involves multiple elements, including both live
and online training on legal compliance and ethics topics generally, as well as the application of our compliancepolicies and procedures to factual scenarios.
We maintain a confidential and anonymous whistle-blowing line known as the Magna Hotline, which is overseen by
the Audit Committee. Stakeholders may make submissions to the Magna Hotline by phone or internet.
Submissions are received and tracked by an independent third-party service provider. Non HR-related reports to
the Hotline are reviewed by Magna’s Internal Audit Department and, when appropriate, an investigation isconducted.

Sustainability at Magna
Our 2020 Annual Information Form/Annual Report on Form 40-F, which was filed in conjunction with this Circular,
contains a Sustainability Report which aims to provide our stakeholders with a better understanding of how weapproach the creation of sustainable, long-term value and our management of sustainability-related risks. The
report has been structured to align with the Task Force on Climate-related Financial Disclosures (TCFD) framework,
as well as the Sustainability Accounting Standards Board’s (SASB) Auto Parts accounting standard, where
possible. We recognize that the report may not currently provide stakeholders with all of the information sought
through such frameworks; however, we intend to evolve and enhance our disclosure as our collection andvalidation of the applicable data improves.

76

Corporate GovernanceBoard Committees andCommittee Reports
Committees
This Board currently maintains three standing committees to assist it in carrying out its duties:

Audit Committee;
CGCNC; andTechnology Committee.

Committee Reports

Report of the Audit Committee
MandateThe Audit Committee’s primary role is to satisfy itself on behalf of shareholders that the company’s financial
statements are accurate in all material respects and can be relied upon by shareholders. This necessarily involves
diligent oversight of the company’s: system of internal controls; finance and accounting policies; internal andexternal audits; relationship with the independent auditor; financial risk mitigation strategies; and the integrity of its
financial reports and disclosures. The Audit Committee Charter has been filed on SEDAR (www.sedar.com) and isavailable in the Leadership and Governance section of Magna’s website (www.magna.com).

AUDIT COMMITTEEREPORT

A report of each standing Board Committee follows. Each report summarizes the Committee’s mandate,composition and principal activities in respect of 2019 and to date in 2020. In addition, a separate CGCNC reporton compensation and performance can be found on page 31 of this Circular.

The Audit Committee Charter requires that the committee be composed of between three and five Independent
Directors, each of whom is ‘‘financially literate’’ and at least one of whom is a ‘‘financial expert’’, as those terms aredefined under applicable law. Audit Committee members cannot serve on the audit committees of more than threeboards of public companies in total. The Audit Committee complied with these requirements throughout 2019.
SERVES ON 3
MEMBERS
Robert F. MacLellan (Chairman)
Peter G. Bowie
Cynthia A. Niekamp
Lawrence D. Worrall (until May 9, 2019)

INDEPENDENTFINANCIALLY
LITERATE

FINANCIAL
EXPERT

OR FEWER
AUDITCOMMITTEES2019
ATTENDANCE

✓
✓
✓
✓

✓
✓
✓
✓

✓
✓
✓
✓

✓
✓
✓
✓

100%
100%
100%
100%

In appointing members to the Audit Committee, the Board considers the relevant expertise brought to the Audit
Committee by each member, including through the financial leadership and oversight experience gained by each ofthem in their principal occupations and/or other boards on which they serve. There was one change to the Audit
Committee’s composition during 2019 – Mr. Worrall’s resignation from the Audit Committee in connection with hisplanned retirement from the Board. Mr. MacLellan was appointed Audit Committee Chairman following Mr. Worrall’s
retirement.

Corporate Governance77

CORPORATEGOVERNANCE

Composition

2019 Accomplishments and Key Areas of Focus
Through the Audit Committee’s work during 2019 and the first few months of 2020, the Audit Committee has
fulfilled all of the requirements under its charter, including satisfying itself regarding the integrity of Magna’s financial
statements and financial reporting. Some of the specific elements of work in this regard included:
Financial Reporting and Internal Controls:

received presentations from the company’s Chief Financial Officer and other members of the Finance
Department at each quarterly meeting;

reviewed significant accounting policies and critical accounting estimates/judgements;satisfied itself, on behalf of shareholders, as to:

financial statement disclosures related to the lease accounting standard (ASC 842 – Leases);

impairments related to Magna’s equity interests in certain joint ventures, as well as certain long-lived
assets;the company’s accounting for warranty costs;

disclosure controls and procedures, as well as the effectiveness of internal controls over financial
reporting; andapproved and recommended to the Board all quarterly and annual financial statements, MD&A andearnings press releases.

Oversight of Internal Audit:reviewed and approved the Internal Audit work plan and budget;

assessed the results of a third-party Quality Assurance Review of IAD;



received quarterly updates regarding the execution of the Internal Audit work plan, as well as
Management follow-up on items identified by the IAD, including through in camera sessions at eachquarterly Audit Committee meeting; andoversaw the selection and appointment of a new Vice-President, Internal Audit.

External Audit Effectiveness:reviewed and approved Deloitte’s integrated audit plan, preliminary and final fees, as well as scope of andfees for additional audit and all non-audit services arising through the year;discussed audit, accounting and internal controls matters, as well as all required communications, with
Deloitte, including through in camera sessions at each quarterly Audit Committee meeting;

assessed with Deloitte all audit risks identified as significant, as well as Deloitte’s audit responses toaddress such risks;reviewed with Deloitte its integrated audit results, including with respect to:



78



revenue recognition;

significant M&A transactions (sale of Fluid Pressure & Controls group and acquisition of VIZA
Geca S.A);

impairment of Magna’s equity interests in three equity-accounted joint ventures; andprocedures related to the new lease accounting standard (ASC 842 – Leases);

performed an annual audit effectiveness assessment of Deloitte;

Corporate Governancereviewed and discussed with Deloitte the Critical Audit Matters identified for inclusion in Deloitte’s reporton Magna’s 2019 financial statements;

considered the results of regulatory inspections; and

continued to monitor the integration of audit quality indicators, as well as audit quality initiatives anddevelopments to promote continuous audit improvement.

Ethics and Compliance:

received updates from Magna’s Chief Compliance Officer regarding the company’s Ethics and Legal
Compliance Program, including administration of the Code of Conduct and Ethics, compliance training
initiatives and activities of the company’s Compliance Council.

Whistle-Blowing:

reviewed summaries of matters reported and investigated through Magna’s Hotline; andsatisfied itself that the Hotline provides an effective mechanism for the reporting of fraud and/or breachesof the Code of Conduct and Ethics.

Cybersecurity

For 2020, the Audit Committee will continue to focus on the accuracy of the company’s financial statements andeffectiveness of internal controls.

Committee Approval of ReportManagement is responsible for the preparation and presentation of Magna’s consolidated financial statements, thefinancial reporting process and the development and maintenance of Magna’s system of internal controls. The
company’s external auditors are responsible for performing an independent audit on, and issuing their reports in
respect of Magna’s consolidated financial statements in accordance with the standards of the Public Company
Accounting Oversight Board (United States) (‘‘PCAOB’’), as well as the effectiveness of Magna’s internal control
over financial reporting, in accordance with the standards of the PCAOB. The Audit Committee monitors andoversees these processes in accordance with the Audit Committee Charter and applicable law.
Based on these reviews and discussions, including a review of Deloitte’s Report on Financial Statements andReport on Internal Controls, the Audit Committee recommended to the Board and the Board approved Magna’s
consolidated financial statements and MD&A in respect of the fiscal year ended December 31, 2019.
The Audit Committee is satisfied that it has fulfilled the duties and responsibilities assigned to it under its charter inrespect of the year ended December 31, 2019. This report is dated as of March 27, 2020 and is submitted by the
Audit Committee.

6FEB201923213248

6FEB201923200374

6FEB201923215476

Robert F. MacLellan(Chairman)

Peter G. Bowie

Cynthia A. Niekamp

Corporate Governance79

AUDIT COMMITTEEREPORT

received updates regarding cybersecurity risk, including with respect to IT security initiatives incident
monitoring and reporting, as well as risk mitigation.

CORPORATEGOVERNANCE

Report of the Corporate
Governance, Compensation and
Nominating Committee
MandateThe CGCNC assists the Board in fulfilling its oversight responsibilities with respect to corporate governance,
executive and incentive compensation, as well as both executive and Board succession planning. The CGCNC
Charter has been filed on SEDAR (www.sedar.com) and is available in the Leadership & Governance section of
Magna’s website (www.magna.com).

Composition
The CGCNC Charter requires that the committee be composed of between three and five Independent Directors.
The CGCNC complied with this requirement throughout 2019.
MEMBERS
William L. Young (Chairman)
Dr. Indira V. Samarasekera
Lisa S. Westlake (from May 9, 2019)
William A. Ruh (until May 9, 2019)

INDEPENDENT

2019 ATTENDANCE

✓
✓
✓
✓

100%
100%
100%
100%

In appointing members to the CGCNC, the Board considers the relevant expertise brought to the CGCNC by eachmember, including through the leadership, compensation and governance experience gained by each of them intheir principal occupations and/or other boards on which they serve. The CGCNC’s composition changed during
2019 through the planned resignation from the committee of Mr. Ruh following the election of Ms. Westlake andher appointment to the Committee.

2019 Accomplishments and Key Areas of Focus
During 2019 and the first few months of 2020, the CGCNC fulfilled all of the requirements under its Charter,
including with respect to Magna’s overall system of corporate governance, executive and incentive compensation,
Board composition, succession planning and other matters. Some of the CGCNC’s significant activities andaccomplishments in these areas in respect of 2019 include:
Succession Planning:

received regular updates regarding the company’s broad-based Leadership Development and Succession(‘‘LDS’’) program;

monitored the seamless transitions of two key roles within Executive Management and preparations forthe planned retirement in 2020 of three members of Executive Management;

Executive Compensation:
80

initiated compensation modeling in connection with Executive Management succession changes;

Corporate Governancecontinued to assess and set target compensation levels for Executive Management;

approved long-term incentive grants for members of Executive Management and oversaw payouts of the2016 ROIC and TSR PSUs early in 2019, as well as the 2017 ROIC and TSR PSUs early in 2020; andsatisfied itself on behalf of shareholders that there remains an appropriate linkage between pay andperformance in Magna’s system of executive compensation, as well as a range of incentives which
continue to be effective in attracting, motivating and retaining key employees.

Talent Management:

received presentations on, and provided input into, initiatives related to employer branding and talentattraction; andreviewed, and provided input into, Magna’s overall strategy related to diversity and inclusion in the workplace,including as to the success of efforts related to gender diversity in technical and management roles.

Sustainability/ESG:

reviewed and provided input into the company’s efforts to enhance its climate-change sustainability
strategy and its approach to related disclosures; andsatisfied itself as to the continued effectiveness of Magna’s environmental and occupational health/safety
management programs.



oversaw the transition of Audit Committee chairmanship in connection with the retirement in 2019 ofLawrence Worrall;

identified the need for additional Board expertise in talent management, as well as public policy, resulting
in the recruitment to the Board of Lisa Westlake in 2019 and Senator Peter Harder early in 2020; and

continued to enhance and administer the annual Board Effectiveness Evaluation described in the‘‘Corporate Governance’’ section of this Circular.

CGCNC
REPORT

Board Composition and Effectiveness:

Looking forward, the CGCNC’s 2020 work plan continues to prioritize talent management, sustainability andexecutive succession planning, although executive compensation oversight remains a core element of its agenda.

Committee Approval of Report

4FEB201914042969

27FEB202017350762

6FEB201923223817

13MAR201901053274

William L. Young(Chairman)

Hon. V. Peter Harder

Dr. Indira V. Samarasekera

Lisa S. Westlake

Corporate Governance

CORPORATEGOVERNANCE

Based on the foregoing and all of the other activities undertaken or overseen by the CGCNC, the CGCNC is
satisfied that it has fulfilled the duties and responsibilities assigned to it under its charter in respect of the year
ended December 31, 2019. This report is dated as of March 27, 2020 and is submitted by the CGCNC.

81

Report of the Technology
Committee
MandateThe Technology Committee assists the Board in fulfilling its oversight responsibilities with respect to disruptive andother technological trends and risks, as well as the company’s efforts to address them. The mandate of theTechnology Committee has been filed on SEDAR (www.sedar.com) and is available in the Leadership &Governance section of Magna’s website (www.magna.com).

Composition
The Technology Committee Charter requires that the committee be composed of between three and five
Independent Directors. The Technology Committee complied with this requirement throughout 2019.
MEMBERS
Dr. Kurt J. Lauk (Chairman)
Mary S. Chan
William A. Ruh

INDEPENDENT

2019 ATTENDANCE

✓
✓
✓

100%
100%
100%

In appointing members to the Technology Committee, the Board considers the relevant expertise brought to thecommittee by each member, including through the manufacturing and technology management experience gainedby each of them in their principal occupations and/or other boards on which they serve.

2019 Accomplishments and Key Areas of Focus
During 2019 and the first few months of 2020, the Technology Committee fulfilled the requirements of its Charter.
Some of the Technology Committee’s significant activities and accomplishments in respect of 2019 include:
Technology Trends, Opportunities and Risks
engaged in ‘‘deep dive’’ reviews of advanced driver assistance systems (‘‘ADAS’’), including factors related
to the readiness of the company’s ADAS business to realize opportunities presented by market trends;

continued to review the company’s progress in closing product or skills gaps in critical areas such as
powertrain electrification, and made recommendations to the Board to address same; and

received presentations related to Industry 4.0, advanced manufacturing and application of ‘‘big data’’ inmanufacturing, including case studies within the company’s own operations, as well as in othercompanies’ operations.

Technology Investment and M&A Strategy

82quarterly reviewed status of Magna’s investments in technology start-ups and investment funds, including
as to investment rationale, technology and overall value proposition;assessed and discussed with Executive Management the approach to the company’s strategic alliancewith, and equity investment in, Lyft Inc., including Magna’s exit from the alliance in early 2020 and sale ofequity in 2019; andreviewed and made recommendations regarding the potential for specific joint venture/acquistion
opportunities to address product or skills gaps.

Corporate GovernanceLooking forward, the Technology Committee’s 2020 work plan prioritizes alternative propulsion systems, digitization,
data for manufacturing and product cybersecurity as key substantive areas for ‘‘deep dives’’.

Committee Approval of Report
Based on the foregoing and all of the other activities undertaken or overseen by the Technology Committee, thecommittee is satisfied that it has fulfilled the duties and responsibilities assigned to it under its charter in respect of
the year ended December 31, 2019. This report is dated as of March 27, 2020 and is submitted by theTechnology Committee.

6FEB201923205025

6FEB201923221889

Dr. Kurt J. Lauk
(Chairman)

Mary S. Chan

William A. Ruh

CORPORATEGOVERNANCETECHNOLOGYCOMMITTEE REPORT

6FEB201923211189

Corporate Governance83Additional Information
Interests ofManagement andOther Insiders in
CertainTransactions

Effective January 1, 2018, Scott Bonham became a consultant to the company.
Under the consulting agreement between Mr. Bonham and a subsidiary of thecompany, Mr. Bonham provides venture capital and technology advisory services to
Magna for a fee of $56,000 per month ($672,000 per year). The scope of
responsibilities has been established by mutual agreement with Magna’s Chief
Executive Officer and the services rendered by Mr. Bonham will be under the general
overall direction of Magna’s Chief Executive Officer and Chief Technology Officer. The
consulting contract runs for a three-year term from January 1, 2018 to
December 31, 2020, but was amended to reduce the fee to $28,000 per month($336,000 per year) effective from April 1, 2020 to the end of the term. As
Mr. Bonham was asked to remain on the Board as a non-independent,
non-executive director, he will continue to receive an annual Board retainer of$150,000 payable entirely in the form of DSUs, in order to maintain alignment withshareholders generally and the Independent Directors serving on the Board. As a
non-independent director, Mr. Bonham does not sit on any Board Committees.
Mr. Bonham, together with William Young serve together on the board of theCanadian Institute for Advanced Research (‘‘CIFAR’’), a not-for-profit focused on
advanced research and study. Magna has made a multi-year commitment to CIFAR,
which included C$150,000 in 2019, and will involve the same amount for 2020.
Neither Mr. Bonham nor Mr. Young participated in the discussion on the proposal tofund CIFAR, which funding was approved by the CGCNC in the absence of
Mr. Young. The amount of Magna’s contribution to CIFAR is not material to Magna.
Neither Mr. Young nor Mr. Bonham receive any compensation from CIFAR for service
on the CIFAR board.
During 2019, a non-independent trust (the ‘‘Trust’’) which exists to make orderlypurchases of Magna shares for employees for transfer to the Employee Equity andProfit Participation Program, borrowed up to $37 million from Magna to facilitate thepurchase of Common Shares. At December 31, 2019, the Trust’s indebtedness to
Magna was $37 million.

84

Additional Information

Indebtedness of
Directors, Executive
Officers andEmployees

None of Magna’s present or former directors or executive officers (including any of
their associates) were indebted at any time during 2019 to Magna or its subsidiaries.
As at the Record Date, present and former employees of Magna and its subsidiaries
owed Magna and its subsidiaries of approximately $0.7 million in aggregate.

Directors’ andOfficers’ Insurance

Effective September 1, 2019, Magna renewed its directors’ and officers’ liability
insurance for a one-year renewal period. This insurance provides, among othercoverages, coverage of up to $300 million (in the aggregate for all claims madeduring the policy year) for officers and directors of Magna and its subsidiaries,
subject to a self-insured retention of $5 million for securities claims and $1 million for
all other claims. This policy does not provide coverage for losses arising from theintentional breach of fiduciary responsibilities under statutory or common law or fromviolations of or the enforcement of pollutant laws and regulations. The aggregate
premium payable in respect of the policy year September 1, 2019 to September 1,
2020 for the directors’ and officers’ liability portion of this insurance policy wasapproximately $2.0 million.

Contacting the
Board

Shareholders wishing to communicate with the Board Chair or any other director
may do so through the office of the Corporate Secretary at 337 Magna Drive,
Aurora, Ontario, Canada, L4G 7K1, telephone (905) 726-2462 or by email
shareholderengagement@magna.com.

Approval of Circular

The Board has approved the contents and mailing of this Circular.

28MAR201921015761
Bassem A. Shakeel
Vice-President and Corporate Secretary
March 27, 2020

Additional Information

85

ADDITIONAL
INFORMATION

Magna files an Annual Information Form with the Ontario Securities Commission and Annual Report on Form 40-F with the
U.S. Securities and Exchange Commission. A copy of Magna’s most recent Annual Information Form, this Circular and theAnnual Report containing Magna’s consolidated financial statements and MD&A, will be sent to any person upon request in
writing addressed to the Secretary at Magna’s principal executive offices set out in this Circular. Such copies will be sent
to any shareholder without charge. Copies of Magna’s disclosure documents and additional information relating to Magnamay be obtained by accessing the disclosure documents available on the internet on the Canadian System for Electronic
Document Analysis and Retrieval (SEDAR) at www.sedar.com. Financial information is provided in Magna’s comparative
consolidated financial statements and MD&A for fiscal 2019. For more information about Magna, visit Magna’s website
at www.magna.com.

Definitions and Interpretation
Certain DefinedTerms

In this document, referred to as this ‘‘Circular’’, the terms ‘‘you’’ and ‘‘your’’ refer tothe shareholder, while ‘‘we’’, ‘‘us’’, ‘‘our’’, the ‘‘company’’ and ‘‘Magna’’ refer toMagna International Inc. and, where applicable, its subsidiaries. In this Circular, areference to ‘‘fiscal year’’ is a reference to the fiscal or financial year from January 1
to December 31 of the year stated.
We also use the following defined terms throughout this Circular:

Board:

our Board of Directors.

BoC:

the Bank of Canada.

C$:

Canadian dollars.

CGCNC:

the Corporate Governance, Compensation and Nominating Committee of our Board.

Deloitte:

Deloitte LLP

DSUs:
Independent
Directors:

deferred share units.
our directors or nominees who have been determined to be independent on thebasis described under ‘‘Nominees for Election to the Board – Nominee
Independence’’.

NYSE:

The New York Stock Exchange.

OBCA:

the Business Corporations Act (Ontario).

TSX:
Currency, Exchange
Rates and Share
Pricesthe Toronto Stock Exchange.
Dollar amounts in this Circular are stated in U.S. dollars, unless otherwise indicated,and have been rounded to the nearest thousand. In a number of instances in thisCircular, information based on our share price has been calculated on the basis of theCanadian dollar closing price of our Common Shares on the TSX and converted to
U.S. dollars based on the BoC exchange rate on the applicable date.

REFERENCE DATE
December 31, 2019
March 20, 2020

Information
Currency
Websites notincorporated by
Reference

86

NYSE SHARE
PRICE
(US$)

TSX SHARE
PRICE
(C$)

BOC EXCHANGE
RATE(C$1.00 = US$)

54.84
25.86

71.20
37.90

0.76990.6977The information in this Circular is current as of March 20, 2020, unless otherwise
stated.
Information contained on or otherwise accessible through Magna’s website and otherwebsites, though referenced herein, does not form part of and is not incorporated byreference into this Circular.

Definitions and Interpretation

Transfer Agent and Registrar
Computershare Trust Company of Canada
100 University Avenue, 8th Floor
Toronto, Ontario, Canada M5J 2Y1
Telephone:
1 (800) 564-6253
Computershare Trust Company N.A.
462 S. 4th Street
Louisville, Kentucky, USA 40202
Telephone:
1 (800) 962-4284
From all other countries
Telephone:
1 (514) 982-7555
www.computershare.com

Exchange Listings
Common Shares
Toronto Stock Exchange MG
New York Stock Exchange MGA

Corporate Office
Magna International Inc.
337 Magna Drive,
Aurora, Ontario, Canada L4G 7K1
Telephone: (905) 726-2462
Fax: (905) 726-7164
www.magna.com

MAGNA INTERNATIONAL INC.

Management
Proxy Circular
Annual Meeting – May 7, 2020

magna.com
Magna International Inc.
337 Magna Drive
Aurora, Ontario
Canada L4G 7K1
Telephone: (905) 726-2462

CONNECT WITH MAGNA