15    Stock Based Compensation

a)     Share Option Plan

The Company has a Share Option Plan under which common shares are reserved for directors, officers and employees. Under the terms of the plan, reserved common shares may be granted as options, performance units or restricted shares.

Following is the continuity of common shares reserved for future grants under the Share Option Plan:

If all outstanding performance units with variable performance criteria vest at the maximum performance level, a grant of an additional 127,844 common shares would be required to satisfy the commitment, reducing the shares available for future grants to 471,304.

b)     Compensation Expense

For performance units and restricted stock, the grant date fair value is the price of common shares on the date of grant. The Company records compensation expense on a straight line basis over the vesting period based on the number of common shares believed probable of issuance on ultimate vesting.

In 2006, total compensation expense recognized related to the Company’s Share Option Plan was $16,960 (2005—$5,575, 2004—$1,123).

During 2006 and 2005, contributed surplus was increased by the tax benefit resulting from option exercises of $2,941 and $11,071.

c)     Share options

The options, which are exercisable within ten years, are granted at a price established by the Board of not less than the last Toronto Stock Exchange board lot trading price on the day of the grant. The options vested over one to three years. Outstanding options at December 31, 2006 expire between 2007 and 2013.

Following is the continuity of granted options outstanding with the weighted average exercise price in Canadian dollars:

Following is the range of exercise prices in Canadian dollars and contractual life of outstanding and exercisable options under the plan as of December 31, 2006:

Intrinsic value for stock options is defined as the difference between the current market value and the grant price. The total intrinsic value of the outstanding and exercisable options at December 31, 2006 is CDN $10,943. The total intrinsic value of options exercised during the years ended 2006, 2005 and 2004 was CDN $4,179, $39,818 and $27,093, respectively.

d)     Performance units

The performance units, which require no payment by the holder, vest at the end of three years based on continued employment and achievement of certain Company performance objectives. Upon vesting, 148,719 of the performance units will be converted to one common share. Depending on the level of achievement of the performance objectives, the remaining 127,844 performance units will convert to common shares at a percentage ranging from 0% to 200%. Holders of vested performance units are entitled to payment of an amount equal to dividends declared during the vesting period.

Following is the continuity of granted performance units outstanding:

The total fair value of the performance units which vested during 2006 was $6,217.

e)     Restricted shares

Under the Company’s Share Option Plan, the Company has granted restricted shares to officers of the Company. The shares vest at the end of three years based on continued employment and achievement of certain Company performance objectives. During the vesting period the holders of the restricted shares are entitled to all the rights of a common shareholder including dividends and voting. The rights of the holders to dispose of the shares are restricted until the shares are vested.

Following is the continuity of restricted shares outstanding:

The total fair value of the restricted shares which vested during 2006 was $6,584.

f)      Unrecognized compensation cost related to share-based payments at December 31, 2006 was $21,762, which is expected to be recognized over the weighted-average vesting period of 2.1 years.