Notes to the Consolidated Financial Statements
(Years ended December 31, 2007 and 2006 (In thousands of dollars, except per share amounts)

15.  Interim bonus and long-term incentive plan:

Effective January 1, 2001, TSX introduced an interim bonus plan (in lieu of a long-term incentive plan) for employees or officers at or above the director-level of TSX and its designated subsidiaries. The interim bonus plan provided eligible employees with a deferred award based on the annual financial performance of the Company. Amounts earned in 2001 were converted into deferred share units for executive officers and restricted share units for other participants based on the price of one common share of the Company in conjunction with the public offering of the Company. Amounts earned in 2002 were converted into deferred share units or restricted share units based on the value of one common share of the Company
on December 31, 2002.

Deferred share units vested over a three year period ended December 31, 2005, but can only be redeemed upon termination of employment or retirement by cash payment. Restricted share units vested and were redeemed in cash by December 31, 2005.

In January 2004, the Board approved a long-term incentive plan for employees or officers at or above the director-level of the Company and its designated subsidiaries or employees below the director-level designated by the CEO of the Company, which provides for the granting of restricted share units (“RSUs”). The amount of the award payable at the end of three years will be determined by the total shareholder return at the end of the three year period. Total shareholder return represents the appreciation in share price of the Company plus dividends paid on a common share of the Company, measured at the time RSUs vest.

The Company records its obligation under the long-term incentive plan, if any, in the period in which the award is earned. The Company has purchased swaps to economically hedge against the impact of its share price fluctuations on the non-performance based portion of the long-term incentive plan (note 19). As at December 31, 2007, the total accrual for the RSUs is $7,420 (December 31, 2006 – $11,330) and is included in accounts payable and accrued liabilities and other liabilities. In prior years, the RSUs obligation was estimated and recorded at a targeted payout amount which was not
necessarily based on the maximum amount that might be paid.

The maximum amount to be paid is not known until the awards have vested and will be based on total shareholder return to the time of payout. Effective January 1, 2007, the Company changed its method of estimating the RSUs obligation. The accrual is based on actual dividends paid, continuation of the most recent quarterly dividend and the closing price of the Company’s common shares for the period. Having monitored fluctuations in the Company’s share price, the Company concluded that accruing its obligation in this manner provided a better estimate of the RSUs payout compared with an estimate based on target. The impact of this change in methodology for making the estimate was to increase the RSUs
obligation and compensation and benefits costs by $1,118 for the year ended December 31, 2007.