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A few highlights of our approach to governance include: 

▶ Audit and Corporate Governance and Compensation committees composed entirely of independent directors (as defined by applicable securities laws); 

▶ Governance policies and procedures that apply equally to the individual businesses in Capstone’s portfolio, ensuring consistency and reliability in reporting and risk management; 

▶ A Code of Business Conduct and Ethics that encourages and promotes a culture of ethical business conduct and must be followed by all directors, executive officers, employees and contractors of Capstone; 

▶ An annual evaluation of the effectiveness of the Board and individual directors to ensure the Board is fulfi lling its oversight role in the most effective manner; and 

▶ A majority voting policy, which requires director nominees to be elected by a majority of shareholder votes. 

In 2014, Capstone is poised to build on its successes. We have a strong financial foundation, a growing portfolio of quality businesses, and a seasoned management team with more than 100 years of combined experience in acquiring, fi nancing, developing and managing diverse infrastructure businesses in Canada and internationally. This team has a deeply personal interest in Capstone’s success. A significant proportion of management’s short- and long-term incentive compensation is bound to financial performance metrics as well as to share price performance and the total return we deliver to shareholders. This structure promotes prudent decision-making that maximizes long-term shareholder value. 

## Integrity and Professionalism 

We seek out directors who have demonstrated integrity and high ethical standards, a proven record of sound business judgment and who are committed to representing the long-term interests of Capstone’s shareholders. 

## “BUILDING TODAY FOR TOMORROW IS THE FOUNDATION OF OUR APPROACH TO MANAGING AND GOVERNING CAPSTONE.” 

V. James Sardo, Chairman of the Board of Directors 

Indeed, the development, improvement and delivery of core infrastructure services in Canada and internationally is a critical task requiring a long-term focus and commitment. Canada’s infrastructure deficit alone — the investment needed in roads, transportation, electricity, water and other essential services — is estimated to be as high as $570 billion. The magnitude of this deficit is echoed globally in OECD countries. Private sector involvement will increasingly be required to maintain, rejuvenate and build the critical, essential infrastructure upon which economic growth and quality of life depends. As a result, I am confi dent there are tremendous opportunities for Capstone to grow and diversify its portfolio while delivering increasing value for shareholders. And we are fortunate to have talented, disciplined employees at all levels of the organization who are ready to take on new challenges and who are motivated to succeed. 

Simply, we are building Capstone to stand the test of time: for today, tomorrow, the next 10 years, and decades beyond. As we execute our strategy, we are committed to serving shareholders’ interests with integrity, discipline and transparency. 

The people of Capstone and I deeply appreciate the investment you have made in our company and thank you for your continuing support. 

Sincerely, 

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## Performance 

We seek to build a Board with a diversity of backgrounds, skills and experience and annually review the competencies, skills and personal qualities of each director to maintain the composition of the Board in a way that bolsters the overall stewardship of the company. 

