Director and Executive Compensation

Board of Directors

As of May 6, 2011, MOSAID has seven directors, including six independent directors (Ian Giffen, Jerry Mills, Normand Paquette, Barry Reiter, Carl Schlachte and John Veschi) and one director who is not considered independent (John Lindgren, President and Chief Executive Officer). Director compensation is paid only to non-employee directors.

Summary of Cash Compensation

Non-employee director compensation is structured as follows:

• Board Chairman retainer of $60,000 per year;
• Non-employee Director retainer of $60,000 per year;
• Audit Committee Chairman retainer of $20,000 per year;
• Committee Chairman retainer of $10,00 per year;
• Committee member retainer of $1,500 per year; and
• Additional committee retainer of $5,000

MOSAID also reimburses non-employee directors for related travel and out of pocket expenses.

Summary of Equity Compensation

Non-employee directors receive grants of options, pursuant to MOSAID's Employee and Director Stock Option Plan, in an amount determined by the Board, but which in total cannot exceed 0.25% of the total common shares outstanding. The exercise price for options is set at the closing market price of MOSAID's common shares on the day preceding the day they are granted. Non-employee directors are also eligible to receive deferred share units ("DSUs") pursuant to MOSAID's Deferred Share Unit Plan. See the Deferred Share Unit Plan

Executives

MOSAID's executive compensation program is designed to attract and retain competent, committed individuals, who will ensure MOSAID's long-term success. Target compensation is intended to be competitive in the industry and is based upon outside market data as well as individual performance and experience level. The Human Resources Committee has emphasized the pay for performance philosophy in order to maintain MOSAID's position in a highly competitive business environment. The key components in determining the total compensation of the executives are:

• annual base salary;
• annual bonus awards; and
• long-term incentives consisting of stock options and/or deferred share units.

The amount of emphasis on each component varies depending on the executive.

Annual Base Salary

The mid-point of the salary range for each executive is targeted at the 75^th percentile of the applicable comparator group. Actual salaries take into consideration the individual's position, responsibilities, and contribution to MOSAID's performance.

Annual Bonus Awards

The bonus portion of the target compensation is keyed to pre-set business targets, both at corporate and at division or department levels. Bonus payments are calculated by comparing actual business results to those pre-set targets. The bonus portion of the compensation is at risk and is keyed to the attainment of business targets in MOSAID's internal operating plan. Accordingly, if these predetermined specific business targets are not met, the executives will be paid less than the target rate for their respective positions. If the business targets are exceeded then the executives will have the potential to be paid in excess of the target rate.

Long Term Incentives

Deferred Share Unit Plan

MOSAID believes the interests of MOSAID's executives and non-employee directors should be aligned with the interests of its shareholders. Therefore, on September 30, 2005, MOSAID implemented a Deferred Share Unit Plan (the "DSU Plan"). Under the DSU Plan, executives and non-employee directors are entitled to elect to receive option grants to which they may be entitled, if any, during the following year, in the form of an equivalent number of DSUs rather than options. The total number of DSUs which can be granted to an executive is capped at the Ownership Threshold amount set out in the DSU Ownership Threshold Policy applicable to the specific executive. See the DSU Ownership Threshold Policy. DSUs granted in lieu of options currently vest over a four year period, 25% on the first, second, third and fourth anniversaries of the grant date. DSUs do not have an exercise price. A DSU's value is based on the weighted average trading price of MOSAID's common shares on the Toronto Stock Exchange on the five days immediately preceding the Distribution Date (as defined below) and can only be settled using cash consideration, no earlier than 90 days following the date the executive or non-employee director has retired from, or ceased to hold, all positions with the Corporation (the "Separation Date") and no later than the last business day of the calendar year following the calendar year in which the Separation Date occurs (the "Distribution Date"). Non-employee directors may also opt to receive their annual director retainer, or a percentage thereof, in the form of DSUs. DSUs awarded in lieu of a director's retainer are fully vested at the time of award. Vested DSUs are credited with dividend equivalents in the form of additional DSUs.

Employee and Director Stock Option Plan

Increasing shareholder value is a paramount objective for MOSAID and all its executives. Therefore, executives typically participate in the Employee and Director Stock Option Plan (the "ESOP"). Under the ESOP, eligible employees, directors and consultants ("Participants") receive stock options to purchase common shares as determined by the Human Resources Committee in such numbers and on such terms, including vesting, as determined by the Human Resources Committee. See the ESOP 

Employee Stock Purchase Plan

Eligible employees are entitled to participate in MOSAID's Employee Stock Purchase Plan (the "Stock Purchase Plan"), which was designed to encourage employees to become MOSAID shareholders. Under the Stock Purchase Plan, active employees regularly employed by MOSAID or any of its subsidiaries and who have been employed for at least three months, may contribute a percentage of their total salary to purchase common shares. The purchase price for the shares under the Stock Purchase Plan is the lesser of 90% of the fair market value, as determined by calculating the weighted average sale price for board lots as posted on the Toronto Stock Exchange the ten trading days immediately preceding (i) the first day of the offering period in which the purchase date falls or (ii) the purchase date.

Compensation of the President and Chief Executive Officer

The annual compensation plan for the President and Chief Executive Officer is determined by the Human Resources Committee, and reviewed and approved by the Board. The compensation of the President and Chief Executive Officer is set at a target amount which represents a competitive market rate based on the incumbent's experience and compensation surveys.

Indebtedness of any Directors, Executive Officers and Senior Officers

Management is not aware of any indebtedness outstanding by its non-employee directors, senior officers or executives to MOSAID, or any guarantees, support agreements, letters of credit or other similar arrangements provided by MOSAID to any of its non-employee directors, senior officers or executives.

Please note: Information contained in the Investor Relations section of MOSAID's web site was accurate at the time of posting, but may have been superseded by subsequent disclosures.