British Columbia Ferry Services Inc.

Statement of Executive Compensation

For the fiscal year ended March 31, 2010

Dated June 30, 2010

 Table of Contents

Page

1. Purpose of the Document 2

2. The Company 2

3. Named Executive Officers 3

4. Executive Compensation 4

5. Other Compensation Provisions 12

6. Directors 13

7. Director Compensation 13

British Columbia Ferry Services Inc. 1

1. Purpose of the Document
The Canadian Securities Administrators (CSA) have mandated disclosure obligations for executive and
director compensation of issuers not previously subject to such requirements. The new rules apply to
issuers with the financial year ending December 31, 2008 or later. 1 All direct and indirect
compensation to certain executive officers and directors for, or in connection with, services they have
provided to the company or a subsidiary of the company must be disclosed in a manner consistent
with Form 51-102F6. 2 British Columbia Ferry Services Inc. (referred to as the Company or BC Ferries
in this document) has met this requirement by preparing this document and filing it accordingly.

The objective of this disclosure is to communicate the compensation the Board of Directors of the
Company intended the Company to pay, make payable, award, grant, give or otherwise provide to
each named executive officer and director for the financial year. This disclosure will provide insight
into executive compensation as a key aspect of the overall stewardship and governance of the
Company and will help investors understand how decisions about executive compensation are made. 3

Since the creation of BC Ferries in 2003, the Company has worked hard to inform stakeholders of its
activities and practices. This document is designed to inform BC Ferries’ stakeholders of the
Company’s compensation philosophy, objectives and practices and how they are directly connected to
the Company’s goals and performance.

2. The Company
BC Ferries is a private company incorporated under the Business Corporations Act of British Columbia,
owned by the B.C. Ferry Authority and subject to the Coastal Ferry Act of British Columbia.

The vision, mission and definition of success of the Company are as follows:

Vision
To provide a continuously improving west coast travel experience that consistently exceeds customer
expectations and reflects the innovation and pride of our employees.

Mission
To provide safe, reliable and efficient marine transportation services which consistently exceed the
expectations of our customers, employees and communities, while creating enterprise value.

Definition of success
To provide to our customers integrated marine transportation services that are safe, reliable and
continuously improving, while delivering best value for money and operating in a manner that
preserves our financial integrity. 4

1
BC Ferries is a venture issuer and as such must meet the new CSA rules commencing with the fiscal year ended
March 31, 2009.
2
CSA - Rules and Policies, (2008) 31 OSCB, page 12048.
3
CSA - Rules and Policies, (2008) 31 OSCB, page 12048.
4
BC Ferries’ Business Plan for Fiscal Year Ending March 31, 2010 (Fiscal 2010).

British Columbia Ferry Services Inc. 2

Goals
The Company has five key goals as follows:

 Safety
To continuously improve the safety of our operations inclusive of vessels, terminals and facilities.

 Operational reliability
To continuously improve the operational reliability of vessels, terminals and facilities.

 Continuous improvement
To be better at everything we do.

 Value for money

To continuously improve value to our customers at every point along the customer experience
chain.

 Financial integrity
To achieve key financial targets, ensuring that sufficient capital and retained earnings are
available to revitalize our fleet, facilities and infrastructure.

The Company has developed supporting strategies and tactics for each of the five goals.

Performance Measures
The Board of Directors and management of BC Ferries have also implemented long-term performance
measures to gauge the progress of the business and its ongoing commitment to continuous
improvement and these measures include a customer satisfaction rating, cost per passenger,
earnings, employee safety, passenger safety, operational reliability and asset reinvestment. 5

3. Named Executive Officers

BC Ferries is managed by the President & Chief Executive Officer (“CEO”) and his executive
management team. This document pertains to the President & CEO and four members of his executive
management team. For the purposes of this document, these five executive officers are referred to as
named executive officers 6 of the Company and are as follows:

David L. Hahn President & CEO

Michael J. Corrigan Executive Vice President & Chief Operating Officer
Glen N. Schwartz Executive Vice President, Human Resources & Corporate Development
Robert P. Clarke Executive Vice President & Chief Financial Officer
Captain Trafford M. Taylor Executive Vice President, New Vessel Construction & Industry Affairs

In considering the compensation of the named executive officers, which includes the ability to
compare compensation provided at BC Ferries with that provided for similar positions in other
companies, it is important to understand the broad scope of the executive officer responsibilities at BC
Ferries. All of the positions have responsibility for the formulation and implementation of corporate
strategy.

The President & CEO of BC Ferries is the most senior officer of the Company, providing leadership and
guidance in all facets of the Company’s business. The President & CEO is appointed by and reports to
the Board of Directors and is ultimately responsible for managing the Company.

The Executive Vice President & Chief Operating Officer of BC Ferries manages the operations of the
Company and has a broad span of responsibility that includes line and staff functions. He plays a
major leadership role in all aspects of safety. He reports directly to the President & CEO.

5
BC Ferries Business Plan for Fiscal Year Ending March 31, 2010 (Fiscal 2010).
6
As prescribed by Form 51-102F6.

British Columbia Ferry Services Inc. 3

The Executive Vice President, Human Resources & Corporate Development of BC Ferries has overall
responsibility for human resources - crewing and human resources – policy, including industrial
relations. He also has responsibility for marketing, communications, public affairs and business
development. He reports directly to the President & CEO.

The Executive Vice President & Chief Financial Officer of BC Ferries is responsible for all aspects of the
financial affairs and financial reporting of the Company. His responsibilities include supply chain
management and strategic planning and he plays a significant role in the capital program of the
Company. He reports directly to the President & CEO and plays a direct role in supporting the work of
the Audit & Finance Committee of the Board of Directors.

The Executive Vice President, New Vessel Construction & Industry Affairs, is a position somewhat
unique to BC Ferries and reflects the very significant vessel replacement program underway in a
Company that has one of the largest and, until recently, one of oldest fleets in the world. It includes
industry affairs and the important relationships that BC Ferries has with Transport Canada and a
number of international maritime organizations. He reports directly to the President & CEO.

4. Executive Compensation 7
BC Ferries’ compensation for its named executive officers is intended to support the Company in
achieving its mission and key strategic imperatives. BC Ferries’ Board of Directors, led by its Human
Resources & Compensation Committee, engages and works closely with an independent third party
compensation expert on all aspects of compensation to named executive officers. For several years,
Hewitt Associates has provided advice and guidance on compensation objectives and principles, and
the appropriate compensation mix to achieve them, and data and analysis on comparable positions in
other companies across Canada. For the fiscal year ended March 31, 2010, a comparator group of
over 90 Canadian companies was used to assist BC Ferries in meeting its compensation objectives and
principles. See Schedule 1 for a list of those companies.

Compensation Objectives and Principles

Compensation for named executive officers at BC Ferries has the following objectives:
 Attract and retain talented senior executive officers by providing total compensation
competitive with that of other senior executives employed by companies of similar size,
complexity and lines of business;
 Motivate senior executives to achieve strong financial and operational performance;
 Emphasize performance-based compensation, which balances rewards for short-term and
long-term results;
 Reward individual performance; and
 Encourage long-term commitment to BC Ferries.

Compensation for the named executive officers at BC Ferries links compensation and the achievement
of business objectives in the short-term and long-term by providing components of fixed
compensation and compensation at risk. Compensation at risk is designed to be a significant
component of overall compensation.

Compensation is reviewed regularly and informed by market data and analysis, using independent
third-party compensation experts to assist in the process.

7
On June 3, 2010, the Province of British Columbia passed legislation - Bill 20 Miscellaneous Statutes Amendment
Act (No.3), 2010 (Bill 20) to amend several statutes, including the Coastal Ferry Act. The amendments to the
Coastal Ferry Act respond to the Comptroller General’s Report on Review of Transportation Governance Models,
released November 6, 2009, and include provisions that when brought into force, will change the governance and
regulatory framework within which the B.C. Ferry Authority and BC Ferries operate. The governance changes
include broadening the mandate of the B.C. Ferry Authority to include responsibility for the compensation plan for
BC Ferries’ President & CEO and Executive Vice Presidents, the remuneration provided under such plan, not to be
greater than the remuneration that provincial public sector employers in British Columbia provide to individuals
who, in those organizations, perform similar services or hold similar positions to that BC Ferries executive officer.
The provisions contained in Bill 20 in respect of the compensation plan for BC Ferries’ President & CEO and
Executive Vice Presidents exclude the current incumbents in those positions (the named executive officers) for so
long as that executive officer remains in his current position.

British Columbia Ferry Services Inc. 4

In comparing compensation with other organizations and in establishing appropriate compensation
levels within BC Ferries, the Company focuses on quantifying all aspects of total compensation. The
Company’s objective has been to provide total compensation to named executive officers that is
competitive with comparable market positions and, therefore, targets median compensation which
neither leads nor lags the market.

Compensation Mix
The key elements of the compensation program for the named executive officers are base salary, at
risk variable compensation which comprises short and long-term incentives, benefits and pension. All
of these elements of compensation have been designed to meet the Company’s compensation
objectives and principles.

At present, at risk variable compensation is targeted at 110 per cent of base salary for the President &
CEO and 70 per cent of base salary for the other four named executive officers. These are targets only
and in recent years there have been several occasions when targets were not fully met and, therefore,
less than the target amount was paid.

The elements of the Company’s compensation for the named executive officers are differentiated on
the following basis:
 Base salary – based on the responsibility and level of experience of the individual.
 Short-term incentive – based on the annual financial performance of the Company and the
performance of the individual.
 Long-term incentive – based on Company performance against long-term strategic measures
and the leadership of the senior executive.
 Benefits:
– basic health and welfare benefits, such as basic medical, dental, extended health, life
insurance, long term disability, short term disability, paid by the Company;
– $10,000 per year is made available to the President & CEO and $5,000 per year is
made available to each of the other four named executive officers under an executive
health spending account;
– annual vehicle allowance of $10,800 per year with a vehicle being a work requirement;
– ferry travel pass program.
 Pension:
– defined benefit pension plan (Public Service Pension Plan of British Columbia) with the
Company making the full required pension contributions on behalf of each named
executive officer – benefits accrue at 2 per cent a year to a maximum of 70 per cent
of the employee’s salary; salary being the average base salary over the employee’s
best five years – this plan is available to all employees of the Company;
– supplemental benefit in the form of a supplemental retirement benefit agreement for 3
named executive officers, with the Company making the full contribution required –
these plans provide an annual benefit on retirement equal to a percentage of average
earnings times the number of years of service less the benefit payable under the
Public Service Pension Plan of British Columbia; the applicable percentage of average
earnings being 5 per cent in the case of the supplemental retirement benefit
agreement for the President & CEO and 3.2 per cent in the case of the supplemental
retirement benefit agreements for the other two named executive officers - these
plans have been designed with assistance from independent third-party compensation
experts and were designed to provide an incentive for retention of these executives –
none of these plans are vested as of March 31, 2010.

Base Salaries
Base salaries of named executive officers reflect a balance of market conditions, the levels of
responsibility and accountability of each individual, unique talents and the level of demonstrated
performance.

Base salary ranges with mid-points are established with guidance from independent third-party
compensation experts.

British Columbia Ferry Services Inc. 5

Incentive Compensation
The Company currently has in place two strategies for at risk pay: a short-term incentive plan and a
long-term incentive plan. Each plan has a potential target award of 55 per cent of base pay for the
President & CEO (for a total of 110 per cent) and 35 per cent of base pay for other named executive
officers (for a total of 70 per cent).

Short Term Incentive Compensation

The short-term incentive plan is designed to link compensation of the named executive officers with
the achievement of specific annual operating objectives that are important to supporting the overall
business strategy. By its nature, the plan responds to the Company’s pay-for-performance philosophy.

The amount of individual short-term incentive plan awards, if any, is determined by taking into
consideration both corporate financial performance (50 per cent) and the named executive officer’s
performance and contribution to the Company based on specific targets or requirements (50 per cent).
Awards under the short-term incentive plan are made in the form of cash payments and are not
included in determining pension benefits.

For the fiscal year ended March 31, 2010, net earnings was the short-term incentive measure for
corporate financial performance. In the case of the President & CEO, other measures related to his
performance and contribution to the Company were as follows:
 Focusing on safety and achieving a specified passenger safety index and employee safety
index result;
 Achieving specified fuel cost reductions;
 Implementing the action plan for the next phase of the Sail Safe plan for safety improvement;
 Achieving specified on-time performance;
 Achieving a specified customer satisfaction rating;
 Increasing management presence onboard the vessels;
 Successfully launching the travel centre in downtown Vancouver by a specified date;
 Successfully launching the drop trailer program and achieving a specified number of trailers;
and,
 Reviewing areas for future growth of the Company and developing long range plans for the
minor route system.

For the other four named executive officers, other measures related to performance and contribution
to the Company and were based on those applying to the President & CEO, but also included other
specific measures related to individual responsibilities as follows:
 Delivery of an operating plan for the year at or better than a stated budget;
 Developing and training leaders and successors in the Company;
 Facilitating productive union/management relations;
 Managing the Company’s relationship with the Ferry Advisory Committees;
 Developing a performance term three minor routes strategy;
 Achieving divisional and/or functional goals within a specified budget;
 Leveraging pricing opportunity promotions and launching a major product or marketing
initiative;
 Achieving effective work force planning and on-time performance; and
 Managing the transition of the Company’s financials to International Financial Reporting
Standards.

British Columbia Ferry Services Inc. 6

 Long Term Incentive Plan
Unlike many other companies, BC Ferries is not able to provide equity compensation to its executive
officers. In order to provide compensation that would be, to some degree, comparable to that
provided by other Canadian companies, the Company has established a long term incentive plan. The
long-term incentive plan is based on the Company’s overriding objective to be successful and create
sustained economic value and therefore the need to be:
 Efficient so as to satisfy public and regulatory expectations;
 Effective so as to satisfy customer and stakeholder requirements; and
 Financially viable so as to fund growth and reinvestment through retained earnings and capital
markets. Over time, the Company will revitalize the entire fleet, facilities and infrastructure of
the Company.

The long-term incentive plan was established to reflect the five key goals of the Company outlined
earlier in this document, the strategic imperatives cited above, and to provide an incentive to the
Company’s named executive officers to achieve the continuous long-term optimization of the
Company’s economic and enterprise value. In establishing the long-term incentive plan, the intent was
to attract and retain senior executives by providing an award consistent with comparator companies
and good industry compensation practices.

Long-term incentive plan awards are based on actual corporate results in meeting specific
performance measures and targets pre-set by the Board of Directors. For the fiscal year ended March
31, 2010, the measures used in the long-term incentive plan pertained to financial integrity, customer
value, passenger and employee safety and operational reliability.

Performance terms cover three year periods and run successively. Awards under the plan are made
annually in the form of cash payments. For the fiscal year ended March 31, 2010, the base salary used
for the annual long-term incentive plan calculation was the average over the three year performance
term of the named executive officer’s base salary at April 1, 2007 for the first two years of the term,
and the named executive officer’s base salary at July 1, 2009 for the third year of the term.

Benefits are reviewed regularly with a view to keeping them comparable with good industry practice.
For example, the Company has eliminated the ability of named executive officers and others in the
Company to bank current vacation time not taken. Employees are encouraged to take vacation and
unused vacation time lapses. In this way, the Company avoids the build-up of potentially significant
liabilities.

Supplemental Retirement Benefit Agreements

The Company has implemented supplemental retirement benefit agreements in three instances for
Messrs. Hahn, Corrigan and Schwartz. These agreements are designed to meet specific long-term
objectives of the Company and to ensure the retention of these executives. In addition, the Company
cannot make any enhancements to the Public Service Pension Plan of British Columbia and has instead
made separate, explicit and appropriately funded supplemental retirement provisions.

A supplemental retirement benefit agreement was implemented in 2006 for Mr. Hahn for the specific
purpose of providing a retention element in Mr. Hahn’s compensation. Mr. Hahn had been approached
by recruiters and other companies for employment, and the Company wished to ensure his continued
employment. Mr. Hahn’s agreement provides that he is not vested in any amount under the
agreement for the first four years of the agreement. Vesting begins in year five of the agreement with
full vesting after year seven, when Mr. Hahn reaches the age of 62.

The supplemental retirement benefit agreements for Messrs. Corrigan and Schwartz were
implemented in 2008 to ensure continued retention and provide additional pension compensation to
these individuals. The benefits under the agreements do not fully vest for Mr. Corrigan until July,
2018, and for Mr. Schwartz until July, 2016.

British Columbia Ferry Services Inc. 7

Compensation Decision Process
The compensation program for the President & CEO is the responsibility of the Board of Directors,
while the compensation program for other named executive officers is approved by the Board of
Directors on the recommendation of the President & CEO.

On an annual basis, the Board of Directors, led by its Human Resources & Compensation Committee,
sets the performance requirements for the President & CEO, evaluates the performance against those
requirements and reviews overall compensation by component using industry benchmarks. Industry
benchmarks are currently provided by Hewitt Associates and pertain to a large industry comparator
group of over 90 companies. 8

The President & CEO sets the performance requirements of his direct reports and evaluates each
member of the senior executive annually with respect to the achievement of results, leadership skills,
retention risk, and value to achieving corporate strategy. The evaluation results, in conjunction with
market compensation data obtained by Hewitt Associates, are used by the President & CEO to make
changes in base salary and the payment of incentives to the four other named executive officers. Base
salary ranges and incentive plans are approved by the Board of Directors.

On an annual basis, the President & CEO formally assesses each senior executive member’s
development. The President & CEO uses these assessments to design and update succession plans for
all senior executive positions, including the position of President & CEO. These plans are reviewed by
the Human Resources & Compensation Committee on an annual basis. With respect to all named
executive officers, succession planning is an important issue that receives ongoing and regular
attention by the Board of Directors and the President & CEO of the Company.

Compensation for Named Executive Officers

A summary of compensation for each of the named executive officers is shown in Table 1.1. Total
compensation for each of the named executive officers is at or below the median of similar positions in
both comparator groups referred to earlier. This is consistent with the Company’s objective to provide
total compensation to named executive officers that is competitive with comparable market positions
and therefore targets median compensation which neither leads nor lags the market.

8
The large comparator group of over 90 Canadian companies as shown in Schedule 1 at the end of this document
was developed in the fiscal year ended March 31, 2009, and used specifically to assess the current target
compensation of named executive officers against market compensation levels. This large comparator group
includes companies from a wide range of industrial sectors and includes organizations in the private as well as
public sectors. Several British Columbian companies, including large organizations in the British Columbia public
sector, are included in the group. There is also a comparator group of 17 western-based Canadian companies in
the transportation, utilities and other industrial sectors. This smaller group, which is shown in Schedule 2 of this
document, was used as another source to validate the compensation of named executive officers. Because of the
differences in size among the comparator companies, regression analysis is used wherever possible to determine
the market compensation levels. In the fiscal year ended March 31, 2009, Hewitt Associates assessed the target
compensation of the named executive officers, excluding the position of Executive Vice President, New Vessel
Construction & Industry Affairs, against each of the two comparator groups. Hewitt found that, on balance, there
was no material difference in the results using the two different comparator groups. Based on the overall results of
the study, Hewitt suggested there was no need for change in the target total compensation of the named executive
officers of BC Ferries, and no changes were made in the fiscal years ended March 31, 2009 and March 31, 2010.

British Columbia Ferry Services Inc. 8

 Table 1.1
Summary Compensation for Named Executive Officers
for the fiscal years ended March 31st
($)

Name and Year Salary Share- Option- Annual Long Term Pension2 Other Total
Position based based Incentive Incentive Compensation Compensation
Awards Awards Plans1 Plans1

David L. 2010 500,000 Nil Nil 292,353 236,859 98,927 N/A3 1,128,139
Hahn 2009 494,923 Nil Nil 233,750 209,994 96,013 N/A3 1,034,680
President &
CEO

Michael J. 2010 320,000 Nil Nil 117,947 97,044 63,579 N/A3 598,570
Corrigan 2009 317,462 Nil Nil 95,200 87,251 61,834 N/A3 561,747
Executive
Vice
President &
Chief
Operating
Officer

Glen N. 2010 295,000 Nil Nil 105,119 89,301 58,670 N/A3 548,090
Schwartz 2009 292,462 Nil Nil 87,763 79,598 57,019 N/A3 516,842
Executive
Vice
President,
Human
Resources &
Corporate
Development

Robert P. 2010 290,000 Nil Nil 102,322 85,688 57,688 N/A3 535,698
Clarke 2009 284,923 Nil Nil 86,275 75,006 55,567 N/A3 501,771
Executive
Vice
President &
Chief
Financial
Officer

Capt. 2010 132,212 Nil Nil Nil 75,621 53,075 60,9753,4,5 321,883
Trafford M. 2009 272,462 Nil Nil 81,813 78,067 53,167 N/A3 485,509
Taylor
Executive
Vice
President,
New Vessel
Construction
& Industry
Affairs

Notes:
1. For the fiscal year ended March 31, 2009, the targeted financial performance of the Company was not met
and the full target incentive was not earned, while for the fiscal year ended March 31, 2010, the targeted
financial performance of the Company was exceeded and this contributed to the incentives paid for each
of the named executive officers exceeding the targets.
2. See “Executive Compensation – Compensation Mix” and “Executive Compensation – Supplemental
Retirement Benefit Agreements” above. The amounts shown are the amounts contributed to the Public
Service Pension Plan of British Columbia, the only arrangement under which the named executive officers
have a vested and payable interest. At March 31, 2010, none of the named executive officers had any
amount vested under the supplemental retirement benefit agreements and, therefore, no amounts were
payable under those agreements for the fiscal year. During the fiscal year, the Company has expensed
the following amounts to fund this arrangement: David L. Hahn - $425,000, Michael J. Corrigan - $40,000,
and Glen N. Schwartz - $35,000. Until vested, if these executive officers were no longer employed, these
amounts would be credited back to the Company. The amount for Mr. Hahn reflects the shorter time
between the date of establishment of the agreement and his proposed retirement date.

British Columbia Ferry Services Inc. 9

 3. Other compensation includes benefits which are below the reporting thresholds. These benefits were
outlined earlier in this document. Vehicle allowances are provided as vehicles are required for work
purposes. There is a ferry travel pass program for named executive officers and their eligible family
members. This program may generate a taxable benefit and taxable income related to this program is
included in the salary paid and total compensation shown in the table.

4. Captain Taylor ended full-time service in the Company on June 11, 2009. Subsequent to June 11, 2009,
he worked for the Company on a part-time basis on projects requested by the President & CEO. Captain
Taylor’s responsibilities as Executive Vice President, New Vessel Construction & Industry Affairs were
allocated among the other named executive officers in this document effective June 11, 2009.

5. In the fiscal year ended March 31, 2010, Captain Taylor received a cash payment of $60,975 for vacation
time not taken and banked in years prior to the introduction by the Company of the policy eliminating the
ability of named executive officers and others in the Company to bank vacation time not taken.

The Company does not provide option or share-based compensation to named executive officers.

Table 1.2 outlines short and long-term incentive plan compensation for the named executive officers.
This information is also reported in Table 1.1. Short-term incentive plan compensation is based on
Company and individual performance. Long-term incentive plan compensation is based on Company
performance. As indicated earlier, compensation at risk is designed to be a significant component of
overall compensation.

Table 1.2
Incentive Plan Awards for Named Executive Officers
for the fiscal year ended March 31, 2010
($)

Name and Option-based Share-based Non-equity incentive

Position Awards – Awards - plan compensation –
Value vested Value vested Value earned1

David L. Hahn Nil Nil 529,212

President & CEO

Michael J. Corrigan Nil Nil 214,991

Executive Vice President &
Chief Operating Officer

Glen N. Schwartz Nil Nil 194,420

Executive Vice President, Human
Resources & Corporate Development

Robert P. Clarke Nil Nil 188,010

Executive Vice President &
Chief Financial Officer

Capt. Trafford M. Taylor Nil Nil 75,621

Executive Vice President, New Vessel
Construction & Industry Affairs

Note 1:
 Non-equity incentive plan compensation includes short and long-term incentives which are performance-
based and outlined earlier in this document, as well as reported in Table 1.1.
 The long-term incentive plan is based on successive terms of three years. As a result, two years in the
2008/09 to 2010/11 performance term and one year in the 2009/10 to 2011/12 performance term have
been completed as of March 31, 2010.
 In the fiscal year ended March 31, 2010, Mr. Hahn earned a short-term incentive of $292,353 and a long-
term incentive of $236,859; Mr. Corrigan earned a short-term incentive of $117,947 and a long-term
incentive of $97,044; Mr. Schwartz earned a short-term incentive of $105,119 and a long-term incentive
of $89,301; Mr. Clarke earned a short-term incentive of $102,322 and a long-term incentive of $85,688;
and Captain Taylor earned a long-term incentive of $75,621.

British Columbia Ferry Services Inc. 10

Pension plan benefits are shown in Table 1.3 (A) and Table 1.3 (B) and pertain only to defined benefit
plans. The Company does not offer its named executive officers or other employees of the Company
defined contribution plans.

Table 1.3 (A)

Defined Benefit Plans for Named Executive Officers
for the fiscal year ended March 31, 2010

Public Service Pension Plan of British Columbia

The following Table has been completed using the same assumptions and methods used for financial statement
reporting purposes under the accounting principles used to prepare the Company’s financial statements, as
permitted by NI 52-107.

Name and Years of Annual Annual Accrued Compensatory Non- Accrued

Position1 credited benefits benefits obligation Change compensatory obligation
service payable payable at start change at year
March 31, at age 65 of year end
2010
($) ($) ($) ($) ($) ($)
David L. Hahn 6.9 59,544 63,216 Nil Nil Nil Nil
President & CEO

Michael J. Corrigan 7.1 30,708 41,724 Nil Nil Nil Nil

Executive Vice President &
Chief Operating Officer

Glen N. Schwartz 5.8 24,816 31,536 Nil Nil Nil Nil

Executive Vice President,
Human Resources &
Corporate Development

Robert P. Clarke 25.7 132,600 135,624 Nil Nil Nil Nil

Executive Vice President &
Chief Financial Officer

Capt. Trafford M. Taylor 18.7 99,096 99,096 Nil Nil Nil Nil
Executive Vice President,
New Vessel Construction
& Industry Affairs

Note:
1. Each of the named executive officers participates in the Public Service Pension Plan of British Columbia, a
multi employer defined benefit plan established by the Province of British Columbia. The Company makes
the full required pension contributions on behalf of each named executive officer (see Table 1.1), but has
no other obligations under the plan.

British Columbia Ferry Services Inc. 11

 Table 1.3 (B)
Defined Benefit Plans for Named Executive Officers
for the fiscal year ended March 31, 2010

Supplemental Retirement Benefit Agreement

The following Table has been completed using the same assumptions and methods used for financial statement
reporting purposes under the accounting principles used to prepare the Company’s financial statements, as
permitted by NI 52-107.

Name and Years of Annual Annual Accrued Compensatory Non- Accrued

Position credited benefits benefits obligation Change compensatory obligation
service payable payable at start change at year
March 31, at age 622 of year end 1
20101
($) ($) ($) ($) ($) ($)
David L. Hahn 6.9 Nil 218,000 1,286,800 425,000 Nil 1,711,800
President & CEO

Michael J. Corrigan 7.1 Nil 224,000 40,000 40,000 Nil 80,000

Executive Vice President &
Chief Operating Officer

Glen N. Schwartz 5.8 Nil 102,000 35,000 35,000 Nil 70,000

Executive Vice President,
Human Resources &
Corporate Development

Notes:
1. Messrs. Hahn, Corrigan and Schwartz have a benefit under separate Supplemental Retirement Benefit
Agreements. No benefits were payable at March 31, 2010, under the Supplemental Retirement Benefit
Agreements as they were not yet vested.
2. The annual benefits payable under the supplemental retirement benefit agreements for Messrs. Hahn,
Corrigan and Schwartz are only payable if they become vested in the amounts under the agreements.
This number excludes the benefits that would be payable at age 62 under the Public Service Pension Plan
of British Columbia.

5. Other Compensation Provisions

The named executive officers have specific employment contracts with the Company. Three of these
contracts make specific provision for payment by the Company for termination without just cause and
payments in these circumstances range from 18 to 30 months of base salary, short-term incentive and
benefits.

Captain Trafford M. Taylor, Executive Vice President, New Vessel Construction & Industry Affairs,
ended full-time service in the Company on June 11, 2009. Subsequent to June 11, 2009, he worked
for the Company on a part-time basis on projects requested by the President & CEO. Captain Taylor’s
responsibilities as Executive Vice President, New Vessel Construction & Industry Affairs were allocated
among the other named executive officers in this document effective June 11, 2009.

British Columbia Ferry Services Inc. 12

6. Directors
The directors of BC Ferries are governors and stewards of the Company and therefore directly
responsible for overseeing the Company’s activities. As at March 31, 2010, there were thirteen
directors of the Company and they are named in Table 2.1. As at April 1, 2010, there were twelve
directors of the Company. Collectively, the directors of BC Ferries carry the broad range of experience
and expertise that is necessary to oversee a company of the importance, complexity and diversity of
BC Ferries in an efficient and cost effective manner.

7. Director Compensation 9
The Board of Directors of BC Ferries has a Governance & Nominating Committee that reviews and
makes recommendations to the Board of Directors on director compensation. Compensation for
directors is reviewed annually with detailed analysis undertaken at least every second year. This
process is informed by analyzing market comparable data and by engaging an independent third-party
compensation expert to assist in the process. For the last several years, Hewitt Associates has been
engaged as the independent third-party compensation expert by the committee of the board
responsible for reviewing director compensation.

For validating director compensation, market comparable data has been drawn, when possible, from
17 companies. These companies are listed in Schedule 2 at the end of this document.

Some of these 17 companies are private-sector based while others are in the public sector. They are
in transportation, utilities and other industrial sectors. All of the companies have significant operations
in Western Canada. 10

Director compensation at BC Ferries has been designed to be at or below the median of the
comparable group outlined above. BC Ferries does not want to lead or lag the market for director
compensation, but provide reasonable compensation that attracts quality individuals who have the
experience and expertise to oversee a company of the importance and complexity of BC Ferries.

For director compensation, BC Ferries has provided annual and meeting fees consistent with best
practices and the objective of keeping overall director compensation at or below the median of the
comparator group. For the fiscal year ended March 31, 2010, annual fees were $140,000 for the chair
of the board and $48,000 for other directors. In addition, a $15,000 annual fee was paid to the chair
of the Audit & Finance Committee, while other committee chairs each received an annual fee of
$10,000. Each member of each committee, other than the chair of the committee, received an annual
fee of $3,000. Meeting fees were $1,500 per day.

Only one fee was provided to board members who sat on both BC Ferries and the B.C. Ferry Authority.
In addition, the board chair received no additional compensation for participating in committee
meetings. Meeting fees were reduced to $750 when the meeting was undertaken by teleconference
and ran for two hours or less.

9
Bill 20 (see footnote 7) includes provisions that when brought into force, will broaden the mandate of the B.C.
Ferry Authority to include responsibility for the compensation plan for the directors of BC Ferries, the remuneration
provided under such plan not to be greater than the remuneration that provincial public sector organizations in
British Columbia provide to their directors. The B.C. Ferry Authority is required to establish and adopt such a
compensation plan for directors of BC Ferries by September 30, 2010. Also effective that date Bill 20 stipulates
that: the President & CEO of the Company cannot be a director of B.C. Ferry Authority or BC Ferries; a director of
the B.C. Ferry Authority cannot also be a director of BC Ferries; and the directors of BC Ferries must be replaced.
With respect to the remuneration of directors of B.C. Ferry Authority, Bill 20 requires that effective October 1,
2010, other than for an incumbent director (until such time as his or her current term of appointment expires or he
or she ceases to be a director of the B.C. Ferry Authority) the remuneration provided must be in an amount and
manner consistent with provincial public sector organizations in British Columbia.

10
From time to time in previous fiscal years, this comparator group has changed as a result of mergers and
amalgamations or changes in corporate ownership.

British Columbia Ferry Services Inc. 13

Meeting attendance for board members is an important issue and one that the Company monitors on a
regular basis. In the fiscal year ended March 31, 2010, meeting attendance by board members
exceeded 98 per cent.

Actual director compensation paid for the fiscal year ended March 31, 2010, is outlined in Table 2.1.

Table 2.1
Director Compensation
for the fiscal year ended March 31, 20101
($)

Name Fees Share- Option- Non-equity Pension Other Total

Earned6 based based incentive value compensation compensation
Awards Awards plan
compensation

Elizabeth J. Harrison2 * 149,004 Nil Nil Nil Nil Nil 149,004

Mark L. Cullen3 72,246 Nil Nil Nil Nil Nil 72,246

Christopher G. Gardner * 68,250 Nil Nil Nil Nil Nil 68,250

4
David L. Hahn Nil Nil Nil Nil Nil Nil Nil

Holly A. Haston-Grant * 69,000 Nil Nil Nil Nil Nil 69,000

Donald P. Hayes * 68,250 Nil Nil Nil Nil Nil 68,250

Brian G. Kenning * 78,246 Nil Nil Nil Nil Nil 78,246

Gordon R. Larkin * 67,500 Nil Nil Nil Nil Nil 67,500

A. Daniel Miller 74,496 Nil Nil Nil Nil Nil 74,496

Jane L. Peverett * 67,500 Nil Nil Nil Nil Nil 67,500

Stephen E. Smith * 68,250 Nil Nil Nil Nil Nil 68,250

Wayne H. Stoilen 67,500 Nil Nil Nil Nil Nil 67,500

Graham M. Wilson * 80,250 Nil Nil Nil Nil Nil 80,250

Notes:
1. Fees are for service during the fiscal year ended March 31, 2010.
2. Elizabeth J. Harrison served as the chair of the board during the fiscal year ended March 31, 2010.
3. Mark L. Cullen completed his term of appointment and ceased to be a director of the Company on March
31, 2010.
4. David L. Hahn, President & CEO of the Company, received no additional compensation, beyond what he
received as President & CEO of the Company, for serving on the board of directors.
5. Those directors whose names are marked with an asterisk also served as directors of the B.C. Ferry
Authority during the fiscal year ended March 31, 2010.
6. There is a ferry travel pass program for directors and their eligible family members which only applies
while the director serves on the board of directors. This program may generate a taxable benefit and
taxable income related to this program is included in the fees earned and total compensation shown in the
table.

British Columbia Ferry Services Inc. 14

 Schedule 1
Comparator Group of 92 Companies

AbitibiBowater Inc. Hudson Bay Company

Acklands-Grainger Inc. Hydro One
ACNielsen Canada Hydro Quebec
Ainsworth Engineered Canada LP Insurance Corporation of BC
Alberto-Culver Canada Inc IESO
Alcan Inc. IMAX Corporation
AltaLink LP International Forest Products
Andrew Peller Limited John Deere Canada Limited
Ash City Kinross Gold Corp
BC Hydro Loblaw Companies Limited
BC Transmission Maple Leaf Foods Inc.
Bombardier Aerospace Marriott Hotels and Resorts Canada
Brewster Inc. McDonald’s Restaurants of Canada
Brookfield LePage Johnson Controls Newfoundland Power Inc.
Canadian National Railway Nike Canada Limited
Canadian Tire Corporation Norbord Industries Inc.
Canfor Corporation OPG
Catalyst Paper Corporation Panasonic Canada Inc.
CGC Inc. Priszm Canada Income Fund
Cineplex Entertainment LP Reitmans (Canada) Limited
Coca Cola Bottling Company Rogers Cable Communications
Davis+Henderson Income Fund Rogers Communications Inc.
Deloitte & Touche LLP Rogers Media
Diageo Canada Inc Rogers Retail
Emera Inc Rogers Wireless
Emergis Inc. RONA Inc.
Enbridge Gas Distribution Sandoz Canada Inc.
EnCana Corporation SaskEnergy
ENMAX Corporation Sask Tel
EPCOR Group of companies Sears Canada Inc.
Essilor Canada Limite Shoppers Drug Mart Corporation
Farm Credit Siemens Canada
First Calgary Savings & Credit Union Teknion Corporation
Ford Motor Company of Canada TELUS Corporation
FortisAlberta Terasen Gas Inc.
FortisBC The Brick Group Income Fund
Fraser Papers Inc. The Home Depot Canada
Gaz Metro Inc. The North West Company
General Dynamics Canada The TDL Group Corp.
General Electric Canada TimberWest Forest Corporation
GlaxoSmithKline Inc. TransAlta Corporation
Groupe St-Hubert Inc. Vancouver International Airport Authority
Halifax International Airport Authority Vancouver Port Authority
Harry Winston Diamond Corp West Fraser Timber Co. Ltd.
Heidelberg Canada Graphic Equipment Western Forest Products Inc.
Hershey Canada Inc. Wrigley Canada

Source: Hewitt Associates

British Columbia Ferry Services Inc. 15

 Schedule 2
Comparator Group of 17 Companies

AltaGas Income Trust

BC Hydro
Canadian Utilities Limited
Canfor Corporation
Catalyst Paper Corporation
CHC Helicopter Corporation
ENMAX Corporation
Finning International Inc.
Insurance Corporation of British Columbia
International Forest Products Limited
Intrawest Corporation
TELUS Corporation
TransAlta Corporation
TransCanada Corporation
Vancouver International Airport Authority
Vancouver Port Authority
West Fraser Timber Co. Ltd.

Source: Hewitt Associates

British Columbia Ferry Services Inc. 16