Canadian Pacific Kansas City Ltd 10-K/A, filed Mar 23, 2023

About this 10-K/A

Canadian Pacific Kansas City Ltd (CP)

10-K/A 2023-03-23 For: 2022-12-31

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Added on April 11, 2026

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Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company

Canadian Pacific Kansas City Ltd filed this 10-K/A on March 23, 2023, covering the fiscal year ended December 31, 2022.

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Canada		98-0355078
(State or Other Jurisdiction of Incorporation or Organization)		(IRS Employer Identification No.)

7550 Ogden Dale Road S.E. Calgary, Alberta, Canada		T2C 4X9
(Address of Principal Executive Offices)		(Zip Code)


Title of Each Class	Trading Symbol(s)	Name of Each Exchange on which Registered
Common Shares , without par value, of Canadian Pacific Railway Limited	CP	New York Stock Exchange Toronto Stock Exchange
Perpetual 4% Consolidated Debenture Stock of Canadian Pacific Railway Company	CP/40 BC87	New York Stock Exchange London Stock Exchange


PART III

Item 10	Directors, Executive Officers and Corporate Governance	1

Item 11	Executive Compensation	8

Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	51

Item 13	Certain Relationships and Related Transactions, and Director Independence	52

Item 14	Principal Accounting Fees and Services	53


PART IV

Item 15	Exhibits, Financial Statement Schedule	54

Item 16	Form 10-K Summary	54

	Signatures	55


OVERALL 2022 ATTENDANCE		100%

Meeting Attendance⁽¹⁾

Board	11 of 11	100%
Audit and Finance	5 of 5	100%
Governance	6 of 6	100%
Compensation	3 of 3	100%
Risk and Sustainability	3 of 3	100%


OVERALL 2022 ATTENDANCE		100%

Meeting Attendance

Board	11 of 11	100%
Governance (Chair) ⁽¹⁾	6 of 6	100%
Risk and Sustainability	3 of 3	100%


Matthew H. Paull
		Independent Age: 71 Director since: January 26, 2016 Residence: Wilmette, Illinois, U.S.A. 2022 voting results: 97.57% for


Compensation Discussion & Analysis			9
Our Approach to Executive Compensation			10
Compensation Governance			13
Compensation Program			18
2022 Executive Compensation			19
Named Executive Officer Profiles			29
Share Performance			34


Executive Compensation Details			35
Summary Compensation Table			35
Incentive Plan Awards			38
Retirement Plans			42
Termination and Change in Control			45
CEO Pay Ratio			47


Class I railroads	Capital Intensive Companies in Canada

BNSF Railway Company	Barrick Gold Corporation	Kinross Gold Corporation

Canadian National Railway Company	BCE Inc.	Rogers Communications Inc.

CSX Corporation	Cenovus Energy Inc.	Suncor Energy Inc.

Kansas City Southern	Enbridge Inc.	TC Energy Corporation

Norfolk Southern Corporation	Fortis Inc.	TELUS Corporation

Union Pacific Corporation	Imperial Oil Limited


Executive Level	Ownership requirement (as a multiple of base salary)	Our NEOs are compliant with ownership guidelines: • Mr. Creel, Mr. Velani, Mr. Redd and Mr. Ellis have achieved their ownership requirements. • Mr. Brooks is expected to meet his ownership requirement within the specified period.
CEO	6x
Executive Vice-President	4x
Senior Vice-President	2x
Vice-President	1.5 to 2x
Senior management	1x



Executive	Requirement (as a multiple of salary)	Minimum ownership value ($) ⁽¹⁾	Shares ($)	Deferred share units ($)⁽²⁾	Total ownership value ($)⁽³⁾	Total ownership (as a multiple of salary)

Keith Creel	6x	9,751,680	9,587,934	16,507,476	26,095,410	16.06x

Nadeem Velani⁽²⁾	4x	3,416,688	353,639	5,984,379	6,338,018	7.42x

John Brooks	4x	3,304,736	1,266,885	1,702,926	2,969,811	3.59x

Mark Redd⁽²⁾	4x	3,196,384	2,334,627	2,187,596	4,522,223	5.66x

Jeffrey Ellis	2x	1,210,000	644,101	1,668,229	2,312,330	3.82x



Compensation Committee advisor FW Cook		Management Compensation advisor Willis Towers Watson
• Compensation Committee retains FW Cook to act as an independent compensation advisor, attending committee meetings (unless otherwise requested by the Committee Chair) • the Compensation Committee approves all compensation-related fees and work performed by FW Cook		• management engages Willis Towers Watson to provide market survey data, analysis and advice to management related to compensation matters



	2022				2021

	Committee advisor		Management advisor		Committee advisor		Management advisor

Fees	FW Cook ⁽¹⁾		Willis Towers Watson		FW Cook⁽¹⁾		Willis Towers Watson

Executive compensation-related fees	$	119,864	$	57,808	$	226,608	$	88,394

Other fees⁽²⁾	$	0	$	1,161,580	$	0	$	1,525,184

Total fees	$	119,864	$	1,219,388	$	226,608	$	1,613,578


Element	Purpose	Risk mitigating features	Why it is important

Salary Fixed cash (see page 19)	• competitive level of fixed pay to reflect scope of responsibilities and market data • reviewed annually	• benchmarked against our comparator group to ensure market competitiveness	• attract and retain talent • no automatic or guaranteed increases to promote a performance culture

Short-term incentive Variable cash bonus (see page 19)	• performance-based incentive to reward achievement of annual corporate and individual objectives to attract and retain highly qualified leaders • established target awards based on level of employee	• year-end performance is measured against predetermined, approved targets • actual payouts are based on the achievement of corporate and individual objectives • payouts range from 0% to a maximum of 200% of target awards	• motivate high corporate and individual performance • performance metrics are aligned to the strategic plan and approved annually • align personal objectives with area of responsibility and role in achieving financial, safety and operating results

Deferred compensation Deferred share units (see page 43)	• encourages share ownership while aligning management interests with growth in shareholder value • executives and senior management can elect to receive their short-term incentive and their annual PSU grant in DSUs if they have not yet met their share ownership requirement • company provides a 25% match of the deferral amount in DSUs, subject to a cap	• deferral limited to the amount required to meet the executive’s share ownership guidelines • helps retain key executive talent • matching DSUs vest after three years and matching PDSUs vest immediately	• sustained alignment of executive and shareholder interests because the value of DSUs is tied directly to our share price • cannot be redeemed for cash until a minimum of six months after the executive leaves the Company

Long-term incentive Performance share units (see page 22)	• equity-based incentive to align with shareholder interests and focuses on three-year performance • accounts for 60% of an executive’s long-term incentive award • vest after three years	• use predefined market and financial metrics • the number of units that vest is based on a performance factor that is capped • no guarantee of a minimum payout	• focuses the leadership team on achieving challenging medium-term performance goals • payout based on share price and company performance • attract and retain highly qualified leaders

Long-term incentive Stock options (see page 22)	• equity-based incentive to align with long-term performance and growth in share price • accounts for 40% of an executive’s long-term incentive award • vests over four years, term is seven years	• focuses on appreciation in our share price, aligning with shareholder interests • only granted to senior management and executives	• focuses the leadership team on creating sustainable long-term value

Pension Defined contribution and defined benefit pension plans (see page 42)	• pension benefit based on pay, age and service and is competitive with the market • supplemental plan for senior management and executives	• balances risk management of pay packages that have a high percentage of variable pay	• attract and retain highly qualified leaders

Perquisites Flexible spending account (see page 36)	• market competitive benefit to support health and well-being	• capped perquisites for the CEO and executives	• attract and retain highly qualified leaders


Executive	2022 (in USD)	percent change from 2021	2021 (in USD)
Keith Creel	1,200,000	0.5%	1,193,513
Nadeem Velani	660,000	3.1%	640,000
John Brooks	610,000	5.2%	580,000
Mark Redd⁽¹⁾	590,000	12.4%	525,000
Jeffrey Ellis⁽¹⁾	475,000	11.8%	425,000


Purpose		• performance-based incentive to achieve predefined annual corporate and individual performance goals that are tied directly to our strategy and operational objectives
Term		• measure performance over a one-year period
Payout		• corporate performance is assessed against financial, safety and operational measures • individual performance is assessed based on individual performance objectives • awards are pro-rated for eligibility in calendar performance year and can range from 0 to 200 percent of base salary • cash awards are paid out in February following the performance year
Restrictions		• must meet minimum level of corporate and individual performance • must achieve corporate operating income hurdle for any payout on individual or corporate performance to occur • performance modifier for each metric is capped at 2x target for exceptional performance • actual award is capped at a maximum of 200 percent of target to limit payout and excessive risk-taking


Our STIP target is based on a percentage of base salary and reviewed annually for market competitiveness. Our 2022 market review resulted in a STIP target adjustment for Mr. Redd to maintain his target total direct compensation positioning relative to the competitive market.		STIP target as a percent of base salary
	Executive	Minimum	Target	Maximum
	Keith Creel	0%	125%	250%
	Nadeem Velani	0%	100%	200%
	John Brooks	0%	100%	200%
	Mark Redd	0%	100%	200%
	Jeffrey Ellis	0%	80%	160%



Performance measure (Weighting)	Why the measure is important	Threshold (50%)		Target (100%)		Maximum (200%)		2022 Reported Result		2022 STIP Result		Score
Financial measures
STIP Operating ratio (35%) Operating expenses divided by total revenues based on an assumed fuel price and foreign exchange rate	Continues our focus on driving down costs while focusing on growth strategy		57.6%		57.3%		57.0%		61.4%⁽¹⁾		58.7%⁽²⁾		0%
STIP Operating income (35%) ($ millions) Total revenues less total operating expenses based on an assumed foreign exchange rate	Highlights the importance of revenue growth to our corporate strategy		3,410		3,490		3,565		3,403⁽¹⁾		3,334⁽²⁾		0%
Safety measures
FRA Train Accident Frequency (10%) Number of FRA-reportable train accidents which meet FRA reporting thresholds per million train miles	CP has long been an industry leader in rail safety and we are more focused on it than ever, committed to protecting our people, our communities, our environment and our customers’ goods		1.10		1.02		0.96		0.93		0.93		200%
FRA Personal Injury Frequency (10%) Number of FRA-reportable injuries per 200,000 employee hours	As the safety of our employees is our top priority, we introduced FRA Personal Injury as an additional safety metric under our STIP beginning 2020		1.05		1.00		0.95		1.01		1.01		90%
Operating measure
Trip Plan Compliance (10%) Calculated as the number of shipments completed on time (less than 12 hours late vs. baseline plan), divided by the total number of shipments completed	Trip plan compliance is a detailed schedule of performance and the core of CP’s product offering. It balances between customer needs and what we are capable of delivering safely It is critical to the service we provide customers and to our growth strategy		75%		80%		85%		64%		64%		0%
Corporate performance factor													29%


	Performance share units (60%)	Stock options (40%)

Purpose	• notional share units to align compensation with medium-term financial and market objectives	• equity-based compensation to align executives with long-term performance of our shares and business

Term	• three years	• seven years

Vesting	• the number of units that vest is based on performance over a three-year period • cliff vest at the end of three years to the extent performance vesting conditions are met and Board approves	• vest 25% annually over four years beginning on the first anniversary of the grant date

Payout	• paid out in cash based on units vested and the average closing share price for the 30 trading days prior to the end of the performance period on the TSX or NYSE • may be paid out in shares at the discretion of the CEO • accumulates quarterly dividends • no guarantee of a minimum payout • if performance is exceptional on all measures the Board may approve a payout of up to 249%	• right to buy Company shares at a specified price after vesting • does not attract dividends • only have value if our share price increases above the exercise price

Restrictions	• must achieve threshold performance level on a measure otherwise the payout factor for that measure is zero and a portion of the award is not paid out	• no exercises can be made during a blackout period • financial assistance is not provided to facilitate the purchase of shares under the stock option plan

Assignment	• not permitted other than by operation of law	• options will continue to vest and expire on the scheduled expiry date if the holder’s employment ends due to permanent disability. If an option holder dies, the options will expire 12 months following the date of death and may be exercised by the holder’s estate. • can only be assigned to the holder’s family trust, holding corporation or retirement trust, or a legal representative of a holder’s estate or a person who acquires the holder’s rights by bequest or inheritance
Termination Provisions

Resignation	• all units forfeited	• 30 days to exercise any vested options; unvested options are forfeited

Retirement	• units continue to vest providing the unit holder meets the retirement age and service requirements and has a minimum participation period of six months during a performance period	• options continue to vest and expire on the earlier of five years from retirement or the original expiry date

Termination without Cause	• pro-rated to termination date with payout based on actual performance as long as unit holder has a minimum of six months of service in the performance period	• six months to exercise vested options; unvested options continue to vest for six months following termination date

Termination with Cause	• all units forfeited	• all options forfeited

Change of Control	• if a PSU unit holder is terminated without cause following a change of control, PSUs credited prior to the change of control vest as of the termination date, and PSUs credited after the change of control are forfeited	• if the optionholder is terminated without cause following a change of control, then all options vest immediately⁽¹⁾


Executive	2022 long-term incentive award (grant value) ($)⁽¹⁾		Grant price		Allocation
					Performance share units				Stock options
					($)		(#)		($)		(#)
Keith Creel^(2),(3)		11,616,154	US$	71.40 (NYSE)		6,960,936		74,919		4,655,218		208,107
Nadeem Velani		3,194,126		$90.94 (TSX)		1,878,184		20,653		1,315,942		64,255
John Brooks ^(1),(3)		2,818,037	US$	71.40 (NYSE)		1,648,366		17,741		1,169,671		52,289
Mark Redd ^(1),(3)		2,498,469	US$	71.40 (NYSE)		1,461,426		15,729		1,037,043		46,360
Jeffrey Ellis		1,606,731		$90.94 (TSX)		944,776		10,389		661,955		32,322



		As a percent of the number of shares outstanding
Maximum number of shares that, together with any other share compensation arrangement, may be reserved for issuance to insiders as options		10%
Maximum number of shares that may be issued under the option plan and any other share compensation arrangements to insiders in a one-year period		10%
Maximum number of shares that may be issued under the option plan and any other share compensation arrangements to any insider in a one-year period		5%
		As a percent of the number of shares outstanding at the time the shares were reserved
Maximum number of shares that may be reserved for issuance to any person as options		5%



as at December 31	2020		2021		2022
Number of options granted		1,086,200		1,346,358		839,108
Weighted number of shares outstanding		677,193,050		679,709,375		929,976,385
Burn rate		0.16%		0.20%		0.09%



	Number of options/shares		Percent of outstanding shares
Options outstanding (as at December 31, 2022)		7,353,133		0.79%
Options available to grant (as at December 31, 2022)		22,511,317		2.42%
Shares issued on exercise of options in 2022		840,303		0.09%
Options granted in 2022		839,108		0.09%


	Compensation awarded ($)		Realized and realizable value of compensation as at December 31, 2022				Value of $100
							Keith Creel		Shareholder
Year			($)		Period		($)		($)
2020		16,026,481		32,117,366		Jan 1, 2020 to Dec 31, 2022		200		156
2021⁽¹⁾		25,883,203		16,939,310		Jan 1, 2021 to Dec 31, 2022		65		116
2022⁽²⁾		13,743,780		10,639,834		Jan 1, 2022 to Dec 31, 2022		77		112



Nadeem S. Velani		Executive Vice-President and Chief Financial Officer



John K. Brooks		Executive Vice-President and Chief Marketing Officer


at December 31	2018		2019		2020		2021		2022
CP TSR (C$)		107		147		198		206		230
CP TSR (US$)		98		142		196		205		214
S&P/TSX Composite Index (C$)		91		112		118		148		139
S&P 500 Index (US$)		96		126		149		191		157
TDC ($ thousands)		22,210		27,352		31,855		41,754		28,917


Executive and principal position	Year		Salary ($) ⁽¹⁾		Share-based awards ($)⁽²⁾		Option-based awards ($)⁽³⁾		Non-equity incentive plan compensation - annual incentive plan ($)⁽⁴⁾		Pension Values ($)⁽⁵⁾		All other compensation ($)⁽⁶⁾		Total Compensation ($)

Keith E. Creel		2022		1,561,560		6,960,936		4,655,218		566,066		499,916		279,850		14,523,546
President and Chief		2021		1,496,068		7,138,547		14,910,982		2,337,606		608,541		237,237		26,728,981
Executive Officer		2020		1,601,097		6,826,446		4,156,579		3,442,359		546,767		242,948		16,816,196

Nadeem S. Velani		2022		833,193		1,878,184		1,315,942		399,325		232,289		69,608		4,728,541
Executive Vice-President		2021		806,821		1,684,658		997,455		1,102,552		248,433		53,715		4,893,634
and Chief Financial Officer		2020		790,366		1,818,076		1,157,441		1,263,452		226,331		66,336		5,322,002

John K. Brooks		2022		788,913		1,712,572		1,169,671		371,098		289,889		96,199		4,428,342
Executive Vice-President		2021		722,525		1,566,074		920,156		999,666		534,527		90,248		4,833,196
and Chief Marketing Officer		2020		735,100		1,548,288		942,743		1,149,741		557,101		83,767		5,016,740

Mark A. Redd		2022		757,194		1,513,731		1,037,043		358,931		137,801		100,518		3,905,218
Executive Vice-President		2021		645,748		1,444,831		1,010,560		814,384		104,262		89,381		4,109,166
Operations		2020		595,081		1,155,272		693,849		827,327		93,038		79,781		3,444,348

Jeffrey J. Ellis		2022		596,571		944,776		661,955		226,270		157,656		61,385		2,648,613
Chief Legal Officer		2021		554,274		947,383		514,607		616,166		143,932		51,938		2,828,300
and Corporate Secretary		2020		520,967		954,825		520,534		638,004		125,011		44,457		2,803,798



		Willis Towers Watson Expected Life Binomial Valuation

Assumptions		TSX / NYSE

Term		3 years

Vesting Schedule		3 year cliff

Payout Range % (threshold-target-max)		50 - 100 - 270

Risk of Forfeiture		5%

PSU Value (as a % of grant price)		84%



	Willis Towers Watson Expected Life Binomial Valuation

Assumptions	NYSE		TSX

Option Term		7 years		7 years

Vesting Schedule		4 year pro-rated		4 year pro-rated

Expected Life		4.75 years		4.75 years

Dividend Yield (1-year historical)		0.86%		0.86%

Volatility (3-year daily)		24.8%		24.0%

Risk-free Rate (yield curve)		0.25% - 0.75%		0.1% - 0.6%

Risk of Forfeiture		5%		5%

Stock Option Value (as a % of grant price)		19%		18%


	Perquisites												Other compensation

Executive	Personal use of company aircraft ($)^(a)		Auto benefits ($)^(b)		Housing allowance ($)^(c)		Financial and tax planning ($)^(d)		Additional medical ($)^(e)		Club benefits ($)^(f)		401(k) match ($)^(g)		Employer share purchase plan match ($)^(h)		Total ($)

Keith Creel		151,069		28,631		3,652		26,026		-		32,533		7,027		30,912		279,850

Nadeem Velani		-		40,416		-		-		1,495		11,200		-		16,497		69,608

John Brooks		-		40,636		-		12,883		2,405		14,575		10,080		15,620		96,199

Mark Redd		-		46,161		-		12,883		-		14,575		11,907		14,992		100,518

Jeffrey Ellis		-		38,373		-		-		-		11,200		-		11,812		61,385



			Option-based awards⁽¹⁾										Share-based awards⁽²⁾


Executive	Grant date		Number of securities underlying unexercised options (#)		Option exercise price ($)		Option expiration date		Value of unexercised in-the-money options ($) ⁽¹⁾		Grant type		Number of shares or units of shares that have not vested (#)		Market or payout value of share-based awards that have not vested ($)		Market or payout value of vested share-based awards not paid out or distributed ($)

Keith Creel⁽³⁾		31-Jan-14		199,500		33.77		31-Jan-24		13,402,410
		24-Jul-14		239,700		42.06		24-Jul-24		14,115,933
		22-Jan-16		276,250		23.36		22-Jan-26		19,167,858
		20-Jan-17		35,838		30.20		20-Jan-24		2,154,646
		1-Feb-17		79,376		30.23		1-Feb-24		4,769,004
		1-Feb-17		749,797		30.23		1-Feb-24		45,048,692
		22-Jan-18		215,740		37.17		22-Jan-25		10,934,059
		25-Jan-19		271,010		41.06		25-Jan-26		12,307,386
		31-Jan-20		287,160		53.16		31-Jan-27		8,334,759
		29-Jan-21		237,145		67.24		29-Jan-28		2,360,741
		27-Mar-21		517,385		71.64		27-Mar-28		2,067,201
		31-Jan-22		208,107		71.40		31-Jan-29		899,134
		6-Feb-13										DSU						16,507,476
		31-Jan-20										PSU						18,739,151
		29-Jan-21										PSU		85,897		8,677,694
		31-Jan-22										PSU		75,359		7,613,075
Total				3,317,008						135,561,823				161,256		16,290,769		35,246,627

Nadeem Velani		23-Jan-15		1,000		43.76		23-Jan-25		57,190
		22-Jan-16		14,635		33.15		22-Jan-26		992,253
		22-Jan-18		66,300		46.33		22-Jan-25		3,621,306
		25-Jan-19		81,565		54.30		25-Jan-26		3,805,007
		31-Jan-20		87,275		70.31		31-Jan-27		2,674,106
		29-Jan-21		57,790		85.93		29-Jan-28		868,006
		31-Jan-22		64,255		90.94		31-Jan-29		643,193
		26-Feb-14										DSU						350,153
		19-Feb-15										DSU						177,156
		24-Feb-17										DSU						321,416
		22-Feb-19										DSU						699,444
		31-Jan-20										DSU						4,436,210
		31-Jan-20										PSU						1,011,142
		29-Jan-21										PSU		19,884		2,007,244
		31-Jan-22										PSU		20,774		2,097,132
Total				372,820						12,661,061				40,658		4,104,376		6,995,521