Directors’ Report
to Shareholders

Power Corporation and its group companies experienced strong momentum in 2023 as the benefits from strategic actions taken over the past several years continued to emerge.

These actions contributed to higher per share earnings and adjusted net asset value in 2023 and attractive shareholder returns.

Our actions are guided by the strategy we announced in 2019 as part of our corporate reorganization, which included three value creation levers:

1

realize higher organic growth at our publicly traded operating companies;

2

add to that growth through M&A; and

3

create additional returns through various opportunities at the Power Corporation level.

The strategy includes narrowing our focus to financial services, simplifying our structure and communicating actively with our various stakeholders.

The core purpose of most of our businesses is to provide financial security to individuals, the need for which was reinforced in 2023. The environment was a difficult one for millions of people, with many under financial stress due to higher inflation and interest rates. Others faced the tragic consequences of military conflicts ongoing in many parts of the world. Against this backdrop, the companies in our group remained highly focused on contributing to the well-being of their communities and building even more inclusive workplaces, while providing products and services that benefit society.

Great-West Lifeco is benefiting from the active repositioning of its portfolio

Great-West Lifeco delivered strong financial results in 2023, with diversified growth across its businesses led by Empower, a leading U.S. retirement and wealth management business.

Great-West Lifeco is repositioning its portfolio of businesses through strategic actions and disciplined execution to grow its franchise and create value over the long term.

In 2023, Great-West Lifeco announced the sale of Putnam, unlocking the value of Putnam and allowing Great-West Lifeco to increase its focus on the attractive retirement and personal wealth segments in the U.S. through Empower. As part of this transaction, Great-West Lifeco entered into a strategic partnership with Franklin Templeton to drive value for all stakeholders.

Canada Life’s acquisitions of Investment Planning Counsel and Value Partners marked a significant advancement towards establishing a leading platform for independent advisors across Canada. This move aligns with Canada Life’s goal of becoming a leading Canadian full-service wealth provider. With these acquisitions, Canada Life is positioned to be one of the preeminent wealth providers in the country, enabling it to serve a greater number of Canadians.

Great-West Lifeco has implemented market-leading platforms and tools to empower advisors and improve client experience, thereby helping more people reach their financial goals. Empower’s new personal wealth platform generated meaningful growth, allowing customers to see their full financial picture in a customized dashboard with ready access to personalized financial advice. This innovation simplifies money management, making it more accessible for millions of Americans. In addition, Irish Life launched Unio, a new wealth platform designed to meet the sophisticated financial needs of the affluent segment of Ireland’s population.

IGM has realigned its business for future growth

IGM delivered solid results in 2023 at both IG Wealth Management and Mackenzie, and its realigned business positions it for future growth across all demographic segments and varied geographies. IGM’s lineup of businesses are leaders in their respective industries: a wealth management powerhouse in IG Wealth Management, Rockefeller and Wealthsimple, and a dynamic asset management portfolio in Mackenzie Investments, ChinaAMC and Northleaf Capital Partners.

In 2023, IGM acquired a 20.5% interest in Rockefeller Capital Management, a leading U.S. independent financial services advisory firm, becoming its second-largest shareholder. This acquisition advances IGM’s strategy of expanding its presence in the high-net-worth and ultra-high-net-worth client segments. It also represents a risk‑smart approach to entering the United States, which is the world’s largest and most substantial wealth market. In addition, by increasing its equity stake in ChinaAMC to 27.8%, IGM deepened its participation in the Chinese asset management industry, aligning with one of the country’s leading asset managers. The last year also saw IGM streamline its structure and modernize its systems to reduce costs, thereby unlocking savings and driving sustainable and meaningful growth for the years ahead.

Over the last few years, IG Wealth Management has made substantial investments to modernize its investment management and financial planning platforms and enhance its multi-channel client engagement model. These efforts allow the company to deliver a best-in-class financial planning experience across the full spectrum of client needs. The introduction of nesto’s Mortgage Cloud solution equips IG advisors with the tools to offer clients an easier and faster digital mortgage experience. Moreover, IG Wealth Management introduced IG Private Company Advisory, a team devoted to providing customer support to owners of small- and mid-sized Canadian businesses.

GBL is executing its strategy of focusing on private and alternative assets

GBL pursued its strategy of increasing its focus on private and alternative assets, while streamlining its public portfolio through the exits of GEA, Holcim and MOWI. Separately, GBL facilitated the merger of Webhelp with U.S.-listed Concentrix, creating a prominent global player in the customer experience sector. GBL also prioritized cash returns to shareholders, delivering over €1.2 billion by way of dividends and share buybacks.

Our alternative asset management businesses are building scale

Power’s asset management businesses, Sagard and Power Sustainable, continued to build their platforms despite a difficult fundraising environment. Assets under management[1] increased over the course of the year, with the two platforms managing a combined total of $24.3 billion[2] by year-end, including unfunded commitments.

Sagard entered into strategic partnerships with Lunate (formerly ADQ), an Abu Dhabi-based investment and holding company, and Bank of Montreal, with both acquiring equity interests in Sagard. As part of this transaction, Great-West Lifeco expanded its existing partnership with Sagard. This marks a significant milestone in Sagard’s development, as these strategic partners have agreed to commit additional long-term capital to support Sagard’s current and future investment strategies. This influx of capital bolsters the firm’s fundraising potential and accelerates its ability to launch new products, positioning Sagard for continued growth and value creation.

Power Sustainable continued to generate fundraising momentum. In 2023, it launched its Global Infrastructure Credit strategy and raised total commitments of US$600 million from subsidiaries of Great-West Lifeco. As well, Power Sustainable announced the final close of Vintage II of its Power Sustainable Energy Infrastructure Partnership, increasing the committed capital of the platform to $1.8 billion.

See footnotes, including notes on other measures
  1. The description of assets under management of alternative asset investment platforms can be found under “Other Measures” in the Review of Financial Performance section of this Annual Report.
  2. Includes investments in Wealthsimple, which represents a fair value of $1.1 billion at December 31, 2023, and excludes assets under management of Sagard’s wealth management business.

Our value creation strategy is contributing to strong results

Active execution of Power’s value creation strategy is yielding strong results. Net earnings from continuing operations were $2.28 billion or $3.45 per share in 2023 versus $3.30 per share in 2022, while adjusted net earnings from continuing operations were $2.96 billion or $4.47 per share in 2023 versus $2.99 per share in 2022.

Power’s adjusted net asset value per share[1] increased by 28% during the year to $53.53 as at December 31, 2023.

In 2023, Power returned $2.0 billion of capital to its shareholders, including $1.37 billion in dividends and $583 million in share buybacks. In March of 2024, Power announced a 7.1% increase in the quarterly dividend, marking the tenth consecutive year of increases in dividends paid to its shareholders.

Our shareholders have realized attractive total shareholder returns, including dividends, on both an absolute and relative basis. As at December 31, 2023, shareholders had realized compounded annualized returns of 26.3%, 15.2% and 15.9%, over one-, three- and five‑year periods, respectively, exceeding those of the S&P/TSX and S&P/TSX Financials indices.

See footnotes, including notes on non-ifrs financial measures
  1. Non-IFRS ratios. Please refer to the Non-IFRS Financial Measures section in the Review of Financial Performance section of this Annual Report.

We are advancing our commitment to sustainability

Power has built its business on a strong foundation of integrity, ethical conduct, and responsible management — intrinsic components of the Corporation’s approach to value creation. As part of our active ownership, we engage with our group companies regarding their respective sustainability strategies and initiatives. They made continuous progress throughout the year, working towards their respective sustainability ambitions.

In 2023, Power adopted a Diversity, Equity and Inclusion (DEI) Policy, which formalized our approach to fostering, cultivating, and preserving a culture of DEI that empowers all individuals to reach their full potential. We also enhanced our employee diversity disclosure and earned a score of A- (Leadership level) for our response to the CDP Climate Change questionnaire. Power was also reconfirmed on the FTSE4Good Index and maintained a rating of A (on a scale of AAA-CCC) in the MSCI ESG assessment.

Recognizing the important role of women in contributing to a diversity of perspectives in the boardroom, in 2021, the Corporation set a goal of ensuring that women represent at least 30% of its Board membership by 2025. At the 2024 Annual Meeting of Shareholders, five women are being nominated for election to the Board, representing 36% of its director nominees.

36%

Women nominated
to the 2024 Board

Depth of leadership and strong governance will continue to drive our success

Earlier this year, Power Corporation was pleased to announce the appointment of Jake Lawrence as our Executive Vice-President and Chief Financial Officer, a role he stepped into on March 18, 2024. His impressive track record of leadership and his wealth of experience in the financial services industry will contribute significantly to the growth and success of the Power group.

On behalf of everyone at Power, we extend our heartfelt gratitude to Greg Tretiak, who has been an integral part of the Corporation since 2012 in his role as Executive Vice-President and Chief Financial Officer. His remarkable 40-year tenure, including 28 years at IGM, has made an immense contribution to the Power group. We have benefited tremendously from his energy and wise judgment over many decades and the Directors wish to thank him for his commitment and unwavering service to our group.

Christian Noyer will not be standing for re-election to our Board of Directors. Mr. Noyer has been a Director since 2016 and also serves on the Governance and Sustainability Committee and the Related Party and Conduct Review Committee. The Directors, on behalf of the shareholders, wish to thank Mr. Noyer for his important contribution throughout his years of service.

We wish to welcome Ms. Ségolène Gallienne-Frère as nominee for election to the Board. We are very pleased to propose her candidacy, as she brings a wealth of experience and valuable expertise that will undoubtedly enrich our Board’s discussions.

We are focused on future value creation

Power’s businesses are well positioned for future growth and are diversified across different earnings and value drivers. We benefit from experienced management teams and strong financial positions. We are pleased with the progress that has been made in the execution of our strategy over the past several years and are focused on the opportunities that we see ahead of us, while managing the many risks that exist in a volatile and changing world.

We would like to thank our shareholders for their support. To our clients and business partners, we are grateful for the trust you place in us. We also wish to extend our appreciation to our talented management teams and skilled employees for their dedication and hard work.

On behalf of the Board of Directors,

/s/R. Jeffrey Orr

R. Jeffrey Orr
President and
Chief Executive Officer

/s/Paul Desmarais, Jr.

Paul Desmarais, Jr., O.C., O.Q.
Chairman of the Board

/s/André Desmarais

André Desmarais, O.C., O.Q.
Deputy Chairman of the Board

March 20, 2024