May 1, Christina Zacharuk President and CEO Public Sector Employers Council Secretariat 2 nd Floor, 880 Douglas Street Victoria, BC V8W 2B7

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1 May 1, 2017 Christina Zacharuk President and CEO Public Sectr Emplyers Cuncil Secretariat 2 nd Flr, 880 Duglas Street Victria, BC V8W 2B7 Re: Attestatin letter fr Executive British Clumbia Lttery Crpratin, Fiscal Reprting Perid 2016/17 I have read the Public Sectr Executive Reprting Guidelines as prepared by the Public Sectr Emplyer s Cuncil Secretariat and understand it is my respnsibility as Bard Chair t be aware f executive cmpensatin paid as reprted by British Clumbia Lttery Crpratin (BCLC) management. I hereby attest that, the executive cmpensatin transactins, as reprted by BCLC fr the fiscal reprting perid 2016/17, in all material respects, were within apprved cmpensatin plans1. Yurs truly, Bud Smith Chair, Bard f Directrs Enclsure(s) 1 The apprved cmpensatin plans referenced in this attestatin letter are cmprised f the fllwing: a) The British Clumbia Lttery Crpratin Plan apprved by BCLC s Bard f Directrs n Octber 29, 2015 and apprved by PSEC n January 26, 2016.

2 Public Sectr Executive Reprting Frm British Clumbia Lttery Crpratin Reprting fr Fiscal Year 2016/17 Statement f Executive May 2017 Table f Cntents Item 1 General Prvisins Item 2 Discussin and Analysis BCLC Statement f Executive

3 Statement f Executive 1.1 PURPOSE BCLC is required t disclse all cmpensatin prvided t the Chief Executive Officer and the next fur highest paid executives fr the services they have prvided t the rganizatin. This dcument utlines the design, prvisins and ttal value f executive cmpensatin fr the fiscal year ending March 31, 2017 fr the British Clumbia Lttery Crpratin (BCLC). 2.1 COMPENSATION DISCUSSION AND ANALYSIS Philsphy BCLC s cmpensatin philsphy and plan is aligned t a cmmn cmpensatin philsphy fr the B.C. Public Sectr and has embdied the fllwing fur cre principles: Perfrmance prgrams supprt and prmte a perfrmance-based rganizatinal culture. Differentiatin Differentiatin f salary is supprted where there are differences in the scpe f the psitin within an rganizatin, and/r due t superir individual team cntributins. Accuntability decisins are bjective and based upn a clear and well dcumented business ratinale that demnstrates the apprpriate expenditure f public funds. Transparent prgrams are designed, managed and cmmunicated in a manner that ensures the prgram is clearly understd by emplyees and the public while prtecting individual persnal infrmatin. BCLC Statement f Executive

4 BCLC s Guiding Principles fr Reward and 1. Merit-based cmpensatin We will differentiate cmpensatin and rewards fr high perfrming emplyees. 2. Externally cmpetitive We strive t pay base salaries at median (50 th percentile) f a rle s market rate. 3. Internally equitable High-perfrming emplyees will prgress thrugh the range at a faster pace than accmplishing emplyees as perfrmance achievement is taken int accunt fr mvement thrugh the range. 4. Relevant cmparatrs The market will be based n cmparable crwn crpratins and natinal jurisdictins, with the exceptin f special market rles which will include specific private sectr rganizatins (aligned by rle, market, and gegraphy). 5. A ttal rewards perspective We will cmmunicate a hlistic view f rewards t staff and leadership that includes base cmpensatin (salary, hldback, benefits) alng with develpment, recgnitin, and ther quantifiable rewards that are prvided t emplyees. 6. Transparent and accuntable Practices will be transparent and accuntable t emplyees, leadership, the Bard f Directrs, and key public sectr stakehlders. Ttal Rewards Overview The cmpensatin prgram includes bth a base pay and hldback incentive cmpnent. The hldback incentive is applicable t management and executive. All management and executive emplyees have a prtin f their salary at risk, payable subject t the achievement f crprate and individual bjectives. Equity is achieved thrugh a frmalized jb evaluatin system that evaluates jbs and level f cmpensatin n the basis f cmplexity. Emplyees prgress thrugh a salary range based n individual perfrmance and mastery f the jb. The Benefits and Wrk/Life balance cmpnent f the Ttal Rewards package is designed t prvide cmpetitive and cmprehensive cverage fr emplyees and their families and t recgnize the imprtance f wrk life balance in being a cntributr t a high perfrmance culture. Any Ttal Rewards ffered must be in cmpliance with any gvernment regulatins and guidelines in place. BCLC Statement f Executive

5 2.1.2 Gvernance The Bard f Directrs (BOD) and the Human Resurces and Cmmittee (HR&C) have versight f BCLC s executive cmpensatin. The terms f reference (as it pertains t ttal cmpensatin) are utlined belw: Bard f Directrs Mnitr and, at least annually, review the CEO s perfrmance against agreed upn annual bjectives; Apprve the CEO s cmpensatin Review cmpensatin plans fr senir management including salary, incentive, benefit and pensin plans; Apprve certain matters relating t all emplyees, including: The Crpratin s brad cmpensatin strategy and philsphy; New benefit prgrams r material changes t existing prgrams; and Material changes t the emplyee pensin plans; Human Resurce and Cmmittee Annually review and recmmend t the BOD fr apprval the Ttal philsphy and principles, ensuring they meet applicable Gvernment requirements Annually review and apprve the salary plan (including, if applicable, merit increase budget) fr the upcming fiscal year; Annually review and apprve the resurce plan (prpsed FTE) fr the upcming fiscal year; Review and recmmend t the BOD fr apprval any material changes t benefit prgrams; and Fr purpses f administering the CEO/Executive/Management incentive hldback plans, review and recmmend t the BOD fr apprval: The crprate bjectives fr the next fiscal year The CEO bjectives fr the next fiscal year; and The incentive hldback plan payut after fiscal year-end results are cnfirmed Review and make recmmendatins t the BOD respecting the terms and cnditins f the pensin plans f which BCLC is an administratr. BCLC Statement f Executive

6 2.1.3 Frms f Ttal cmpensatin fr the Executive includes base salary, hldback incentive, benefits, pensin, supplementary pensin, and vacatin. Fllwing is a descriptin f each ttal cmpensatin element. Base Pay BCLC s cmpensatin plan is market-based and salary ranges are reflective f the 50 th percentile f the market. Salaries are allcated thrugh a frmal jb evaluatin prcess and within apprved salary bands. Annual salary increases fr the Executive are determined based n individual perfrmance. The salary freeze fr management and executive emplyees annunced September 12, 2012 remains in effect. Hldback Incentive BCLC s Hldback Incentive is aimed at directly linking emplyee perfrmance t pay, ensuring that accuntability cascades dwn thrugh the rganizatin. Success is measured n the achievement f bth crprate bjectives and individual bjectives, aligning emplyee cntributins t the strategic pririties f the rganizatin. BCLC s Hldback Incentive is earned each year based n the achievement f a financial trigger, crprate bjectives and individual bjectives. The hldback incentive plan is nt remunerated (crprate r individual) if the financial trigger is nt achieved. Fiscal Year 2016/17 Targets Crprate Gals Trigger Threshld Target Net Incme befre taxes (millins) 1, , ,294.8 Net Win (millins) 2, ,288.4 BCLC Statement f Executive

7 Benefit Plan BCLC prvides a cst-shared flexible benefit prgram, which gives emplyees the flexibility t chse medical, extended health, dental, AD&D, and life insurance. Lng Term Disability premiums are paid fr by the emplyee. Vacatin Twenty days f vacatin is prvided fr executive upn jining BCLC, unless therwise negtiated as part f the emplyment cntract. Annual rate f vacatin accrual increases at established years f service until the maximum accrued vacatin rate is met. The maximum accrued vacatin prvided t Executive is 35 days. Thirty days vacatin is prvided t the CEO. Registered Pensin Plan (RPP) BCLC prvides a defined benefit pensin plan which is a shared cst between the emplyee and the Crpratin. Emplyees cntribute 4.4% f their mnthly earnings that are less than r equal t the Year s Maximum Pensinable Earnings (YMPE) and 6.0% f their annual earnings that are in excess f the YMPE. The Crpratin cntributes additinal amunts necessary t pay fr the prmised pensin. An actuary wh is certified in the determinatin f pensin funding requirements calculates the amunt f the Crpratin s cntributin. Supplemental Registered Pensin Plan (SRP) BCLC has a Supplemental Registered Plan fr Vice-Presidents. The SRP prvides a pensin payable at retirement n r after age 55. The pensin is calculated using the frmula frm the RPP, withut Incme Tax Act maximum pensin limits impsed n the RPP. The excess ver the RPP is payable frm the SRP. In ther wrds, the SRP prvides the pensin that the Incme Tax Act will nt allw t be paid frm the RPP. The SRP is simply a mirrr f the RPP, with tw exceptins: The Vice Presidents d nt have t cntribute t the SRP. If a Vice President terminates emplyment befre age 55, n benefit is payable frm the SRP. Supplemental Registered Pensin Plan (CEO) The CEO Supplemental Registered Pensin is similar t the SRP fr Vice Presidents with ne exceptin; the CEO receives 1.5 years f pensinable service credit fr each year f eligible service. BCLC Statement f Executive

8 BC Lttery Crpratin Summary Table at 2017 Previus Tw Years Ttals Ttal Name and Psitin Salary Hldback/Bnus/ Incentive Plan Benefits Pensin All Other (expanded belw) 2016/2017 Ttal 2015/ /2015 Jim Lightbdy, President $ 285,265 $ 30,522 $ 13,284 $ 67,500 $ 18,489 $ 415,060 $ 394,324 $ 386,964 Mnica Bhm, Vice President, egaming $ 214,669 $ 23,093 $ 12,727 $ 12,600 $ 6,987 $ 270,076 Bradley Desmarais, Vice President, Casin and Cmmunity Gaming $ 210,972 $ 22,695 $ 13,161 $ 15,800 $ 6,923 $ 269,551 $ 259,444 $ 247,716 Susan Dlinski, Vice President, Scial Respnsibility and Cmmunicatin $ 216,644 $ 23,348 $ 12,197 $ 8,800 $ 8,215 $ 269,204 $ 242,215 Lynette DuJhn, Chief Infrmatin Officer $ 13,400 - $ 1,145 $ 1,100 $ 19,238 $ 34,883 Kevin Gass, Vice President, Lttery Gaming $ 241,211 $ 25,995 $ 12,306 $ 35,600 $ 11,152 $ 326,264 $ 298,754 $ 301,367 Rbert Kreker, Vice President Crprate Security & Cmpliance $ 213,721 $ 22,991 $ 12,651 $ 15,400 $ 6,987 $ 271,750

9 Summary Other Table at 2017 Name And Psitin All Other Severance Vacatin payut Leave payut Vehicle / Transprtatin Allwance Perquisites / ther Allwances Jim Lightbdy, President $ 18,489 - $ 18, Mnica Bhm, Vice President, egaming $ 6, $ 6, Bradley Desmarais, Vice President, Casin and Cmmunity Gaming Susan Dlinski, Vice President, Scial Respnsibility and Cmmunicatin Other $ 6, $ 6, $ 8, $ 8, Lynette DuJhn, Chief Infrmatin Officer $ 19,238 - $ 19, Kevin Gass, Vice President, Lttery Gaming $ 11,152 - $ 4,165 - $ 6, Rbert Kreker, Vice President Crprate Security & Cmpliance $ 6, $ 6,

10 Ntes Jim Lightbdy, President Mnica Bhm, Vice President, egaming General Nte: This is the first year that Ms. Bhm has been reprted n the Executive Disclsure Bradley Desmarais, Vice President, Casin and Cmmunity Gaming Susan Dlinski, Vice President, Scial Respnsibility and Cmmunicatin General Nte: Base Salary adjusted in recgnitin f reduced hldback ptential, effective April 2016 Lynette DuJhn, Chief Infrmatin Officer General Nte: Ms Dujhn resigned effective Apr 12, 2016 Kevin Gass, Vice President, Lttery Gaming General Nte: Base Salary adjusted in recgnitin f reduced hldback ptential, effective April 2016 Rbert Kreker, Vice President Crprate Security & Cmpliance General Nte: This is the first year that Mr. Kreker has been reprted n the Executive Disclsure