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ATCO LTD.NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

AND MANAGEMENT PROXY CIRCULARFOR THE MEETING TO BE HELD ON

MAY 13, 2010

LETTER TO SHARE OWNERS i

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS ii

MANAGEMENT PROXY CIRCULAR

Section 1: Voting Information 1

Section 2: Business of the MeetingFinancial Statements 3Election of Directors 3 Nominees for Election to the Board of Directors 3 Directors’ Attendance 9 Compensation of Directors 9 Director Equity Ownership Interest 11 Director Retirement 13 Board Committees 14 Directors’ and Offi cers’ Liability Insurance 18Appointment of Auditor 18 Auditor’s Fees 18

Section 3: Compensation Discussion & AnalysisGovernance 19 Corporate Governance - Nomination, Compensation and Succession Committee 19 Committee Process 19 Independent Advice 19 Executive Compensation Advisory Services 19 GOCOM Decision-Making Criteria 20 Philosophy, Objectives and Principles 20Executive Compensation Program Elements 21 Base Salary 22 Short-Term Incentive Plan 22 Mid-Term Incentive Plan 23 Long-Term Incentive Plans - Stock Options and Share Appreciation Rights 23 Equity Compensation Plan Information 24 Performance Charts 25 Overview of Performance 26 Performance Measures 26Total Compensation Summary 28 Employment Agreement for N.C. Southern, President & Chief Executive Offi cer 29 Named Executive Offi cers 30Incentive Plans Summary 36 Outstanding Option-Based Awards 36 Pension Benefi ts 37 Termination and Change of Control Benefi ts 39

Section 4: Other InformationCorporate Governance 40Additional Information 40Schedule A: Corporate Governance Disclosure A-1Schedule B: Board of Directors Mandate B-1Schedule C: Questions and Answers on Voting and Proxies C-1Schedule D: Glossary D-1

TABLE OF CONTENTS

ii

Dear Share Owner:

We are pleased to invite you to attend the annual meeting of share owners of ATCO Ltd. to be held in the Crystal Ballroom, The Fairmont Palliser, 133 - 9th Avenue S.W., Calgary, Alberta, at 10:00 a.m. on Thursday, May 13, 2010.

Your meeting materials are enclosed. If you are an owner of Class II Voting Shares and are unable to attend the meeting, please complete and sign the accompanying form of proxy and return it in the envelope provided for that purpose. Alternatively, registered shareholders may submit a form of proxy by fax, telephone or via the internet. We would also encourage all owners of Class I Non-Voting Shares to attend the meeting.

We hope you will join us after the meeting for some light refreshments.

Sincerely,

[Signed by R.D. Southern] [Signed by N.C. Southern]

R.D. Southern N.C. SouthernChairman of the Board Deputy Chair, President & Chief Executive Offi cer

Calgary, AlbertaMarch 8, 2010

ii

ATCO LTD.NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

The annual meeting of shareholders of ATCO Ltd. will be held in the Crystal Ballroom, The Fairmont Palliser, 133 - 9th Avenue S.W., Calgary, Alberta, at 10:00 a.m. on Thursday, May 13, 2010, for the following purposes:

(a) to receive the consolidated fi nancial statements for the year ended December 31, 2009, accompanied by the report of the auditor;

(b) to elect the directors;

(c) to appoint the auditor;

(d) to transact such other business as may properly come before the meeting or any adjournment thereof.

All holders of Class I Non-Voting Shares or Class II Voting Shares may attend the meeting, but only the holders of Class II Voting Shares are entitled to vote at the meeting or to appoint proxyholders.

Holders of Class II Voting Shares who are unable to attend the meeting in person are requested to complete and sign the accompanying form of proxy and return it in the prepaid envelope provided to be received by ATCO Ltd., c/o CIBC Mellon Trust Company, not later than 5:00 p.m. Eastern Daylight Time on Tuesday, May 11, 2010.

Alternatively, registered shareholders may submit a proxy by fax, telephone or via the internet. Instructions are set out on the reverse of the form of proxy and are contained in the management proxy circular.

By order of the Board of Directors.

[Signed by P. Spruin]

P. SpruinVice President, Administration & Corporate Secretary

Calgary, AlbertaMarch 8, 2010

1

MANAGEMENT PROXY CIRCULAR

SECTION 1 VOTING INFORMATION

Solicitation of Proxies

This management proxy circular is furnished in connection with the solicitation by the management of ATCO LTD. (the Corporation) of proxies to be used at the annual meeting of shareholders of the Corporation, and at any adjournment thereof, for the purposes set forth in the accompanying notice. The cost of solicitation by management will be borne by the Corporation.

Appointment of Proxyholders and Revocation of Proxies

The persons named in the accompanying form of proxy are directors of the Corporation. A shareholder entitled to vote at the meeting has the right to appoint a person or company to represent the shareholder at the meeting other than the persons designated in the accompanying form of proxy. This right may be exercised either by striking out the names of the persons designated in the accompanying form of proxy and inserting in the space provided the name of the person or company appointed or by completing and executing another proper form of proxy. A shareholder desiring to be represented at the meeting by a proxyholder must deposit a proxy with the Corporation at the address set forth in the accompanying notice not later than 5:00 p.m. Eastern Daylight Time on Tuesday, May 11, 2010.

A shareholder may revoke a proxy by depositing an instrument in writing executed by the shareholder or by the shareholder’s attorney authorized in writing with the Secretary of the Corporation, c/o CIBC Mellon Trust Company, Attention: Proxy Department, P.O. Box 721, Agincourt, Ontario, M1S 0A1, or at the registered offi ce of the Corporation at 1400, ATCO Centre, 909 - 11th Avenue S.W., Calgary, Alberta, T2R 1N6, at any time up to and including the last business day preceding the day of the meeting, or any adjournment thereof, at which the proxy is to be used, or with the chairman of the meeting prior to the commencement of the meeting on the day of the meeting or any adjournment thereof.

Exercise of Discretion by Proxyholders

The shares represented by a proxy will be voted or withheld from voting in accordance with the instructions of the shareholder on any ballot that may be called for, and if the shareholder specifi es a choice with respect to any matter to be acted upon, the shares will be voted accordingly. In the absence of such instructions, all of such shares will be voted in favour of the election of the directors and the appointment of the auditor. The accompanying form of proxy confers discretionary authority upon the persons named therein with respect to amendments or variations to matters identifi ed in the notice of the meeting and other matters that may properly come before the meeting. The management of the Corporation is not aware of any amendments, variations or other matters that are to be presented for action at the meeting. If any such amendments, variations or matters should properly come before the meeting, the persons named in the accompanying form of proxy will vote on such matters in accordance with their best judgment.

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Class II Voting Shares and Principal Holders

The Class II Voting Shares of the Corporation are the only shares entitled to be voted at the meeting. As at March 8, 2010, there were 6,859,358 Class II Voting Shares outstanding. Each Class II Voting Share entitles the holder thereof to one vote at the meeting.

The record date for the meeting is March 24, 2010. Holders of Class II Voting Shares whose names are entered in the applicable register at the close of business on that date will be entitled to receive notice of and to attend and vote at the meeting, provided that if a shareholder transfers the ownership of any shares after such date and the transferee of those shares establishes ownership of the shares and demands, not later than 10 days before the meeting, to be included in the list of shareholders eligible to vote at the meeting, then such transferee will be entitled to vote those shares at the meeting.

To the knowledge of the directors and offi cers of the Corporation, the only person who benefi cially owns, or controls or directs, directly or indirectly, shares of the Corporation carrying 10% or more of the voting rights attached to any class of voting securities of the Corporation is R.D. Southern. R.D. Southern owns 2,000 Class II Voting Shares and is the controlling shareholder of Sentgraf Enterprises Ltd., which owns 5,723,760 Class II Voting Shares. These combined shareholdings represent 83.5% of the outstanding Class II Voting Shares.

Each Class II Voting Share may be converted into one Class I Non-Voting Share at the shareholder's option. The holders of the Class I Non-Voting Shares of the Corporation may attend and participate in discussions at shareholder meetings, but are not entitled to vote.

The holders of Class I Non-Voting Shares have no right to participate if a takeover bid is made for the Class II Voting Shares. However, if

(i) an offer to purchase Class II Voting Shares is made to all holders of Class II Voting Shares,

(ii) at the same time an offer to purchase Class I Non-Voting Shares on the same terms and conditions is not made to the holders of Class I Non-Voting Shares, and

(iii) holders of more than 50% of the Class II Voting Shares accept the offer,

then the Class I Non-Voting Shares shall be entitled to the same voting rights as the Class II Voting Shares. The Class I Non-Voting Shares and Class II Voting Shares rank equally in all other respects.

Voting by Non-Registered Shareholders

Voting shareholders who do not hold their shares in their own name on the Corporation’s share register (non-registered shareholders) may have their shares voted at the meeting by providing voting instructions to their nominee, which is usually a trust company, broker or other fi nancial institution, or may attend the meeting and vote their shares as proxyholder. Nominees will typically seek voting instructions by sending with this circular a voting instruction form instead of a form of proxy. A voting instruction form can be used only to provide voting instructions to a non-registered shareholder’s nominee. Every nominee has its own signing and return instructions, which non-registered shareholders must follow to ensure that their shares are voted at the meeting.

Non-registered shareholders who wish to attend the meeting and vote their shares as proxyholder must enter their own name in the space provided on the voting instruction form supplied by their nominee and follow the signing and return instructions. Non-registered shareholders who follow this procedure will be recognized at the meeting as proxyholders and will be permitted to vote their shares in that capacity.

For additional information please refer to Schedule C: Questions and Answers on Voting and Proxies at the back of this circular.

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SECTION 2 BUSINESS OF THE MEETING

FINANCIAL STATEMENTS

The consolidated fi nancial statements of the Corporation for the year ended December 31, 2009, along with the auditor’s report, will be placed before the meeting. Copies of the fi nancial statements may be obtained from the Corporate Secretary upon request and will be available at the meeting. The statements are also available on the Corporation’s website at www.atco.com and on SEDAR at www.sedar.com.

ELECTION OF DIRECTORS

As recommended by the Corporate Governance – Nomination, Compensation and Succession Committee (GOCOM), the management of the Corporation is pleased to propose the nomination of the persons named below for election to the board of directors. The persons named in the accompanying form of proxy intend to vote in favour of the election of these nominees as directors. The term of offi ce for each director will expire at the close of the next annual meeting of shareholders of the Corporation.

All of the nominees are currently directors and have been for the periods indicated. Information regarding each of the nominees is provided in the following tables.

Nominees for Election to the Board of Directors

See footnotes on page 8.

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Robert T. Booth, Q.C.

Age: 57Calgary, AB, CanadaDirector Since: 2008Not Independent (1)

See note (2) on share ownership requirements

Mr. Booth is a partner in the law fi rm Bennett Jones LLP, based in Calgary, Alberta, and has an extensive background in energy and natural resource law. He is a member of the Law Society of Alberta and the Canadian Bar Association. Mr. Booth obtained a B.Eng. degree from the Royal Military College of Canada, Kingston, Ontario in 1974, his LL.B. from Dalhousie University, Halifax, Nova Scotia in 1977, and in 2009 obtained his certifi cation from the Director Education Program at the Institute of Corporate Directors. He is a director of the Canadian Defence & Foreign Affairs Institute and a director of the Conference of Defence Associations Institute. Mr. Booth has served as a director of the Canadian Petroleum Law Foundation and is a Past President of the Royal Military Colleges Club of Canada.

Board/CommitteeMembership Attendance Other Public Board/Committee Memberships

Board of DirectorsRisk ReviewGOCOM (3)

8 of 82 of 22 of 2

100%100%100%

Company Term Committees

Canadian Utilities Limited (6)

Since 1998 N/A

Note: Mr. Booth was appointed to GOCOM (3) on May 14, 2009. His attendance refl ects all meetings held from his date of appointment to December 31, 2009.

Securities Held (4) (5)

ATCO Ltd. Canadian Utilities Limited (6)

Class I Non-VotingSharesOptions

Class II Voting

1,635--

Class A non-votingSharesOptions

Class B common

5,278--

4

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Bertrand P. Collomb, Ph.D.

Age: 67Paris, FranceDirector Since: 1999Independent (1)

Meets share ownership requirements (2)

Dr. Collomb is the Honorary Chairman of Lafarge S.A., headquartered in Paris, France. Lafarge is a world leader in building materials, with 84,000 employees in 79 countries around the world. Dr. Collomb is a graduate of the École Polytechnique and the École des Mines in Paris and holds a French law degree and a Ph.D. in Management. He has held several executive positions in Lafarge since 1975, including his appointment as Chairman and Chief Executive Offi cer in 1989. He became Chairman of the Board in 2003. He is a Trustee of the International Accounting Standards Committee Foundation and Chairman of the French Institute for Studies in Science and Technology and the French Institute of International Relations. He is also a member of the Institut de France.


Board of Directors 6 of 8 75% Company Term Committees

DuPont

Lafarge S.A. (Hon. Chair)TOTAL S.A.

Since 2007

Since 1987

Since 2000

Environmental PolicyCorporate Governance

Nominating and GovernanceCompensation

Note: Mr. Collomb was unable to attend two Board meetings due to schedule confl icts.




Class II Voting

6,367-

400


Class B common

---

Brian P. Drummond

Age: 79Montreal, QC, CanadaDirector Since: 1968Independent (1)


Mr. Drummond is a founding director of the Corporation and is President of Brican Investments Ltd., a privately-held investment holding company. He was Vice Chairman, Richardson Greenshields of Canada Limited and was previously President and Chairman of the Executive Committee of Greenshields Incorporated. He is a past chairman of the Investment Dealers Association of Canada as well as the Montreal Stock Exchange. Mr. Drummond is a director of the McGill University Health Centre Foundation and the Chairman of its Investment Committee. He is also a member of the Investment Committee of the Canadian Medical Protective Association. Mr. Drummond is a past chairman of the Montreal General Hospital Foundation.


Board of DirectorsAuditGOCOM (3)

Special Committee (7)

(Chair)

8 of 84 of 43 of 36 of 6

100%100%100%100%


N/A N/A N/A




Class II Voting

23,258-

7,800


Class B common

27,759--

Nominees for Election to the Board of Directors (continued)


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Rt. Hon. Donald F. Mazankowski, P.C., O.C., A.O.E., D. Eng., LL.D.

Age: 74Sherwood Park, AB, CanadaDirector Since: 1999Independent (1)


Rt. Hon. Don Mazankowski became a business consultant following his retirement from federal politics in 1993. He was fi rst elected to the House of Commons in 1968 and served as a Member of Parliament for Vegreville for 25 years. In 1986, he was appointed Deputy Prime Minister and Government House Leader and President of the Queen’s Privy Council. He served as Deputy Prime Minister until his retirement in 1993. In July 2000, he was appointed an Offi cer of the Order of Canada, and in October 2003, appointed to The Alberta Order of Excellence. Mr. Mazankowski is also a senior advisor to Gowling, Lafl eur, Henderson LLP, Barristers and Solicitors. He is a past member of the board of governors of the University of Alberta and is a past chairman of the Institute of Health Economics.


Board of DirectorsSpecial Committee (7)

7 of 86 of 6

88%100%


Canadian Oil Sands TrustPower Corporation of Canada

Power Financial CorporationGreat-West Lifeco Inc.

The Great West Life Assurance Company

IGM Financial Inc.

Since 2002

Since 1996

Since 1996

Since 1994

Since 1994

Since 1994

Corporate Governance & CompensationExecutiveAuditCompensationRelated Party & Conduct Review

Governance &Nominating

Executive

ExecutiveGovernance &Nominating

ExecutiveGovernance &Nominating

InvestmentExecutiveInvestmentAudit (Chair)

Note: Mr. Mazankowski was unable to attend one Board meeting due to a schedule confl ict.




Class II Voting

19,968-

1,000


Class B common

18,000-

1,300



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Helmut M. Neldner

Age: 71Westerose, AB, CanadaDirector Since: 1997Independent (1)


Mr. Neldner has extensive experience in the telecommunications industry and is the former President & Chief Executive Offi cer of AGT and TELUS Corporation. He started his career with AGT in 1964 and later served as Vice President, Finance and Vice President, Corporate Planning and Engineering before retiring as President & Chief Executive Offi cer of TELUS Corporation in 1994. Mr. Neldner graduated from the University of Alberta in 1964 with a B.Com. specializing in fi nance and in 1984 graduated from the Harvard Advanced Management Program.


Board of DirectorsAuditGOCOM (3)

Risk ReviewSpecial Committee (7)

8 of 84 of 43 of 32 of 26 of 6

100%100%100%100%100%


N/A N/A N/A




Class II Voting

21,889--


Class B common

15,146--

Michael R.P. Rayfi eld

Age: 67Toronto, ON,Canada

Director Since: 2009Independent (1)

See note (2) on share ownership requirements

Mr. Rayfi eld had extensive international banking experience in London, Chicago and New York before joining the Bank of Montreal in 1982. He is currently Vice Chair, Investment and Corporate Banking, BMO Capital Markets and serves on the Canadian Management Committee. He has responsibility for senior corporate relationships in Canada, the U.S. and the U.K., and management of BMO’s Investment Banking business in China and India. Mr. Rayfi eld is a graduate of the Institute of Banking, U.K., the Senior Manager’s Program at Harvard University, and the Advanced Executive Program at J.L. Kellogg Graduate School, Northwestern University. He has studied at Cambridge University and is a graduate of the Director Education Program, Institute of Corporate Directors. Mr. Rayfi eld is a director of ATCO Structures & Logistics Ltd. and is on the Board of Governors of the Duke of Edinburgh Award Programme.


Board of DirectorsRisk Review

5 of 51 of 1

100%100%


N/A N/A N/A

Note: Mr. Rayfi eld was appointed to the Board and the Risk Review Committee effective May 14, 2009. His attendance refl ects all meetings held from his date of appointment to December 31, 2009.




Class II Voting

702--


Class B common

5,4112,000

-



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Nancy C. Southern



Ms. Southern was appointed Deputy Chair of ATCO Ltd. effective May 14, 2008, and Deputy Chair of Canadian Utilities Limited effective May 7, 2008. She has been President & Chief Executive Offi cer of ATCO Ltd. and Canadian Utilities Limited since January 1, 2003. Previously, she was Co-Chairman & Chief Executive Offi cer from 2000 until 2003, Deputy Chief Executive Offi cer from 1998 until 2000, and Deputy Chairman from 1996 until 1998. Ms. Southern has full responsibility for strategic direction and the operations of the Corporation, reporting to the Board of Directors. She is also a director of Bank of Montreal, AKITA Drilling Ltd. and Sentgraf Enterprises Ltd. Ms. Southern is a member of The Business Council, a U.S.-based association of Chief Executive Offi cers representing a broad range of global businesses, and the Canadian Council of Chief Executives, whose membership is comprised of Canadian-based Chief Executive Offi cers, also representing a broad range of industries.


Board of Directors (Deputy Chair)

8 of 8 100% Company Term Committees

AKITA Drilling Ltd.Canadian Utilities Limited (6)

(Deputy Chair)Bank of Montreal

CU Inc. (8) (Chair)

Since 1992Since 1990

Since 1996

Since 1999

Risk ReviewPension Fund Society




Class II Voting

76,741400,00021,300


Class B common

23,850380,000

2,500

Ronald D. Southern, C.B.E., C.C., LL.D.



Mr. Southern is Chairman of the Board of ATCO Ltd. and Canadian Utilities Limited. Together with his late father, S.D. Southern, Mr. Southern founded ATCO Group in 1947 and served as ATCO’s President for 48 years. He is credited with transforming the Corporation to what it is today — a corporation with assets of $10.0 billion and employing more than 7,500 people. Mr. Southern also serves as Chairman of Sentgraf Enterprises Ltd. and Deputy Chairman of AKITA Drilling Ltd. Some of Mr. Southern’s many distinctions include: Commander of the Order of the British Empire, 1995; Offi cer of the Order of Orange-Nassau, 2006; Companion of the Order of Canada, 2007.


Board of Directors (Chair)

8 of 8 100% Company Term Committees

AKITA Drilling Ltd. (Deputy Chair)Canadian Utilities Limited (6) (Chair)

Since 1992

Since 1977


ATCO Ltd. (9) Canadian Utilities Limited (6)


Class II Voting

12,713,31860,000

5,725,760


Class B commonSeries W Second PreferredSeries X Second Preferred

358,10460,000

144,804320,000120,000



8

(1) “Independent” refers to the determination of whether a director is independent as that term is defi ned in National Instrument 52-110 Audit Committees. See Schedule A: Corporate Governance Disclosure, Section 1.

(2) Within fi ve years of being appointed to the Board of the Corporation, directors are required to directly or indirectly own shares of the Corporation having an aggregate fair market value of at least 1.5 times the annual board retainer which equates to $180,000. This ownership is to be maintained for the duration the director remains on the Board. R.T. Booth and M.R.P. Rayfi eld have less than fi ve years tenure on the Board.

(3) Corporate Governance - Nomination, Compensation and Succession Committee.(4) The number of shares benefi cially owned, or controlled or directed, directly or indirectly, by the director, as of March 8, 2010.(5) The information as to shares benefi cially owned, or controlled or directed, directly or indirectly, has been furnished by the nominees. Shares

purchased under the director share purchase plan are included and the fi gures were provided by the Corporation.(6) Canadian Utilities Limited is a public company controlled by ATCO Ltd.(7) In July 2008, a Special Committee of independent directors was established to review a transaction that was fi nalized in July 2009. ATCO

Ltd. and its subsidiary, Canadian Utilities Limited, combined ATCO Structures Inc. and ATCO Noise Management Ltd., both wholly-owned subsidiaries of the Corporation, with ATCO Frontec Corp., a wholly-owned subsidiary of Canadian Utilities Limited. The new company is ATCO Structures & Logistics Ltd.

(8) CU Inc. is controlled by Canadian Utilities Limited.(9) An associate of R.D. Southern, other than Sentgraf Enterprises Ltd., owns 3,296 Class I Non-Voting and 1,648 Class II Voting Shares of the

Corporation. Shares held by this associate are not included in the shareholdings of R.D. Southern.

Board of Directors

The Board generally meets fi ve times a year and additionally during the year as the need arises. The frequency and length of meetings and the nature of agenda items depend upon the circumstances. Meetings are generally lengthy, detailed and well attended, and are conducted in an atmosphere which encourages participation and independence. In addition to regularly scheduled Board and committee meetings, the directors annually attend a comprehensive three to four-day strategy session. Round table discussion sessions and director briefi ngs are also held throughout the year. Each director’s meeting attendance is disclosed on pages 3 through 8. The Board mandate, attached to this proxy circular as Schedule B, outlines the roles and responsibilities of the Board. The mandate is also available on the Corporation’s website at www.atco.com.

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Charles W. Wilson

Age: 70Evergreen, CO, USADirector Since: 2002Independent (1)


Mr. Wilson is Lead Director for the Board of ATCO Ltd. and a director of ATCO Structures & Logistics Ltd. Mr. Wilson was the President and Chief Executive Offi cer of Shell Canada (integrated oil and gas company) from 1993 to 1999, Executive Vice President U.S. Downstream Oil and Chemical of Shell Oil Company from 1988 to 1993, Vice President U.S. Refi ning and Marketing of Shell Oil Company and held various positions in the domestic and international natural resource operations of Shell prior to 1988. Mr. Wilson holds a B.Sc. in Civil Engineering and an M.Sc. in Engineering.


Board of DirectorsAudit (Chair)GOCOM (3) (Chair)Risk Review (Chair)

7 of 84 of 43 of 32 of 2

88%100%100%100%


AKITA Drilling Ltd.Canadian Utilities Limited (6)

Big Rock Brewery Income TrustTalisman Energy Inc.

Since 2002Since 2000

Since 1999

Since 2002

GOCOM (3) (Chair)GOCOM (3) (Chair)

Corporate Governance

AuditHealth, Safety, Environment and Corporate ResponsibilityReserves (Chair)

Note: Mr. Wilson was unable to attend one Board meeting due to a schedule confl ict. The meeting missed was not a regularly scheduled Board meeting.




Class II Voting

10,86812,000

-


Class B common

25,08810,000

-


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Directors’ Attendance

All directors are expected to attend meetings of the Board and the committees on which they serve. However, there may, from time to time, be extenuating circumstances for directors not attending meetings, especially for directors in positions of leadership in other corporations, particularly when they are in the process of assuming new positions or involved in major undertakings. It is also understood that directors may have, on occasion, family bereavement or health issues. The Corporation is supportive and understanding of such circumstances. When a director’s attendance is deemed to be unsatisfactory, interviews are conducted by each of the Chairman and the Lead Director during which a clear understanding of the Corporation’s expectations for attendance is formally communicated to assure signifi cant improvement and optimal attendance in subsequent reporting periods.

Compensation of Directors

The following table sets forth the annual retainers and attendance fees paid to members of the Board.

Note: The retainers for Lead Director, committee chairs and members are paid in addition to the annual director retainer of $120,000. The Chairman of the Board is paid one retainer of $175,000.

From time to time, the Board forms ad hoc committees to undertake special initiatives. The chair and members of ad hoc committees receive fees that are determined when the committees are appointed.

In July 2008, a Special Committee of independent directors was established to review a transaction whereby ATCO Ltd. and its subsidiary, Canadian Utilities Limited, combined ATCO Structures Inc. and ATCO Noise Management Ltd., both wholly-owned subsidiaries of the Corporation, with ATCO Frontec Corp., a wholly-owned subsidiary of Canadian Utilities Limited. The new company is ATCO Structures & Logistics Ltd. B.P. Drummond, D.F. Mazankowski, H.M. Neldner and L.C. van Wachem were members of the committee. The Chair of the Committee was paid a retainer of $20,000, each member received a retainer of $7,500 and attendance fees were $1,500 per meeting. The transaction was fi nalized in July, 2009 and the Special Committee fees for 2009 were pro-rated.

Directors are reimbursed for travel and other expenses incurred for attendance at Board and committee meetings. Directors who are full-time salaried employees of the Corporation receive no remuneration for serving as a director.

Directors’ Remuneration ($)

Annual Retainers

Director 120,000

Chairman of the Board 175,000

Lead Director 30,000

Audit Committee Chair 20,000

Audit Committee Members 7,500

Corporate Governance - Nomination, Compensation and Succession Committee Chair 8,500

Risk Review Committee Chair 8,500

Meeting Fees

Board Meeting, Strategy, Round Table, and Briefi ng Session 2,000

Meeting for routine administrative matters where nature of discussion is brief 800

Committee Meeting 1,500

10

(1) For the directors that are on Boards and committees of ATCO Ltd., Canadian Utilities Limited, CU Inc., or ATCO Structures & Logistics Ltd., the fees are shared proportionately when meetings are held on the same day to consider group projects that require the approval of more than one of these companies.

(2) Includes fees for attendance at the annual strategy conference, round table, operational overview, business plan meetings and designated audit director retainers and meeting fees.

(3) A minimum of $20,000 of an outside director’s annual retainer is paid in Class I Non-Voting Shares of the Corporation. Directors have the option of receiving up to 50% of their annual retainer in Class I Non-Voting Shares. The Chairman of the Board is exempt from this requirement.

(4) The director retainer for B.P. Collomb was paid in Canadian currency equivalent to U.S. $120,000. The director retainer for L.C. van Wachem was pro-rated to May 14, 2009, and paid in Canadian currency equivalent to U.S. $44,505.

(5) Includes retainer for Lead Director.(6) The role of the Special Committee ended in July, 2009. The chair and committee member retainers have been proportionately adjusted.(7) H.M. Neldner ceased to be the Chair of GOCOM and the Risk Review Committee as of May 14, 2009. C.W. Wilson was appointed Chair of

these committees on May 14, 2009. The committee chair retainers have been pro-rated.(8) W.L. Britton, B.K. French and L.C. van Wachem retired from the Board on May 14, 2009. M.R.P. Rayfi eld was elected to the Board on May

14, 2009. Board and committee retainers have been proportionately adjusted.(9) R.T. Booth, R.D. Southern and C.W. Wilson received fees as directors of Canadian Utilities Limited.(10) Includes payment to D.F. Mazankowski from Canadian Utilities Limited of $33,333 for consulting services.

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Name

DirectorRetainer

($)

CommitteeChair

Retainer($)

CommitteeMemberRetainer

($)

BoardAttendance

Fee (1)

($)

CommitteeAttendance

Fee (1)

($)

OtherFees (1) (2)

($)

TotalFees

Earned($)

Portion of Annual

RetainerAppliedto Share

Purchase (3)

(%)

R.T. Booth 120,000 - - 12,800 12,000 162,530 (9) 307,330 17%

B.P. Collomb 136,563 (4) - - 12,800 - 8,000 157,363 15%

B.P. Drummond 120,000 10,000 (6) 7,500 16,800 22,500 9,230 186,030 17%

D.F. Mazankowski 120,000 - 3,750 14,800 9,000 41,333 (10) 188,883 33%

H.M. Neldner 120,000 6,300 (7) 11,250 16,800 25,500 9,230 189,080 17%

M.R.P. Rayfi eld (8) 75,824 - - 12,000 1,500 67,130 156,454 40%

R.D. Southern 175,000 - - 12,800 - 198,800 (9) 386,600 n/a

C.W. Wilson 150,000 (5) 30,700 (7) - 11,800 12,750 180,340 (9) 385,590 50%

Directors who retired during 2009

W.L. Britton (8) 44,505 - - 2,800 1,500 3,230 52,035 17%

B.K. French (8) 44,505 - 2,782 4,800 4,500 25,630 82,217 17%

L.C. van Wachem (8) 54,663 (4) - 3,750 4,000 7,500 - 69,913 41%

Total 1,161,060 47,000 29,032 122,200 96,750 705,453 2,161,495

D.F. Mazankowski, a director of the Corporation, had a consulting arrangement with Canadian Utilities Limited, a subsidiary of the Corporation. The consulting contract expired on August 31, 2009. Mr. Mazankowski received $33,333 in 2009 pursuant to this arrangement. This amount is included under “Other Fees” in the table below.

The following table summarizes the total compensation that was paid to the non-employee directors of the Corporation for the year ended December 31, 2009. The fees have been calculated to take into account those directors that retired or were elected to the Board and committee membership changes effective May 14, 2009. “Other Fees” includes retainers and attendance fees paid to those directors who also serve on the Boards and committees of Canadian Utilities Limited and CU Inc. No other forms of compensation were provided to the directors for the year ended December 31, 2009.

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(1) Equity at risk is shown as at March 8, 2010, and is the market value determined by reference to the closing price of Class I Non-Voting Shares ($50.45) and Class II Voting Shares ($50.00) on the Toronto Stock Exchange. Preferred shares and options are excluded.

(2) M.R.P. Rayfi eld was elected to the Board on May 14, 2009.(3) Mr. Southern owns 2,000 Class II Voting Shares and 97,500 Class I Non-Voting Shares of the Corporation and is the controlling shareholder

of Sentgraf Enterprises Ltd., which owns 5,723,760 Class II Voting Shares and 12,615,818 Class I Non-Voting Shares.

There were no grants of options or share appreciation rights to non-employee directors in 2009. Effective August 1, 2008, non-employee directors were no longer eligible to receive options.

Name

Equity Ownership as atMarch 6, 2009

Equity Ownership as atMarch 8, 2010

Net Change in EquityOwnership

Equityat Risk (1)

($)

Value atRisk as aMultiple

of AnnualBoard

Retainer

Class IIVotingShares

Class INon-

VotingShares


Class INon-

VotingShares


Class INon-

VotingShares

R.T. Booth - 332 - 1,635 - 1,303 82,486 0.7

B.P. Collomb 400 5,833 400 6,367 - 534 341,215 2.8

B.P. Drummond 7,800 18,712 7,800 23,258 - 4,546 1,563,366 13.0

D.F. Mazankowski 1,000 4,903 1,000 19,968 - 15,065 1,057,386 8.8

H.M. Neldner - 17,359 - 21,889 - 4,530 1,104,300 9.2

M.R.P. Rayfi eld (2) - - - 702 - 702 35,416 0.4

R.D. Southern (3) 5,725,760 12,493,318 5,725,760 12,713,318 - 220,000 927,674,893 5,301.0

C.W. Wilson - 9,355 - 10,868 - 1,513 548,291 4.6

Total 5,734,960 12,549,812 5,734,960 12,798,005 - 248,193 932,407,353

Director Equity Ownership Interest

Within fi ve years of being appointed to the Board of the Corporation, directors are required to directly or indirectly own shares of the Corporation having an aggregate fair market value of at least 1.5 times the annual board retainer which equates to $180,000. R.T. Booth and M.R.P. Rayfi eld have been on the Board less than fi ve years.

The following table sets out each non-employee director’s common equity ownership in the Corporation and any changes in the ownership interest since March 6, 2009.

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Name

Number of Securities Underlying

Unexercised Options (1)

(#) Date Granted Expiry DateGrant Price (1)

($)

Vested Optionsat December 31, 2009

Number(#)

Value of Unexercised

in-the-Money

Options (2)

($)

M.R.P. Rayfi eldATCO Ltd.Canadian Utilities Limited

-2,000

-Dec. 1, 2005

-Dec. 1, 2015

-43.49

-1,600

-416

2,000 1,600 416

R.D. Southern (3)

ATCO Ltd.

Canadian Utilities Limited

40,00020,00040,00020,000

Dec. 1, 2000Jan. 1, 2003Dec. 1, 2000Jan. 1, 2003

Dec. 1, 2010Jan. 1, 2013Dec. 1, 2010Jan. 1, 2013

19.3221.6522.3125.905

40,00020,00040,00020,000

1,074,000490,400857,600356,900

120,000 120,000 2,778,900

C.W. WilsonATCO Ltd.Canadian Utilities Limited

12,00010,000

May 15, 2002May 8, 2002

May 15, 2012May 8, 2012

26.7328.645

12,00010,000

233,280151,050

22,000 22,000 384,330

(1) Grant prices and the number of options have been adjusted to refl ect the two-for-one stock split by way of stock dividend on September 15, 2005.

(2) The difference between the market value of the Corporation’s Class I Non-Voting Shares and Canadian Utilities Limited’s Class A non-voting shares on December 31, 2009, of $46.17 and $43.75, respectively, and the grant price of the options, multiplied by the number of vested in-the-money options at December 31, 2009.

(3) Options granted as executive compensation, not director compensation.

The following table lists all outstanding options held by the non-employee directors at December 31, 2009.

The following table lists all outstanding share appreciation rights (SARs) held by the non-employee directors as at December 31, 2009.

Name Date Granted Expiry Date

GrantPrice (1)

($)Granted (1)

(#)

Vested SARsat December 31, 2009

Number(#)

Value (2)

($)

R.D. Southern (3)

ATCO Ltd. Canadian Utilities Limited

Jan. 1, 2003Jan. 1, 2003

Jan. 1, 2013Jan. 1, 2013

21.6525.905

30,00030,000

30,00030,000

735,600535,350

60,000 60,000 1,270,950

(1) Grant prices and the number of SARs have been adjusted to refl ect the two-for-one stock split by way of stock dividend on September 15, 2005.

(2) The difference between the market value of the Corporation’s Class I Non-Voting Shares and Canadian Utilities Limited’s Class A non-voting shares on December 31, 2009, of $46.17 and $43.75, respectively, and the grant price of the SARs, multiplied by the number of vested SARs at December 31, 2009.

(3) SARs granted as executive compensation, not director compensation.

All outstanding ATCO Ltd. incentive plan awards granted to non-employee directors are fully vested.

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(1) Figures have been adjusted to refl ect the two-for-one stock split by way of stock dividend on September 15, 2005.(2) Represents the difference between the grant price and the market price at the time of exercise multiplied by the number of options

exercised.(3) W.L. Britton and B.K. French retired from the Board on May 14, 2009.

Director Retirement

Any director who turns 70 years of age is required to tender a letter of resignation to the Chairman of the Board. The Chairman of the Board, together with the members of GOCOM, will then evaluate whether to accept the resignation depending on the needs of the Board and circumstances of the Corporation at that time. If the resignation is not accepted it will be kept until such time as it is accepted by the Chairman. When the resignation is accepted it will become effective the day before the next annual meeting of shareholders.

NameOptions Exercised (1)

(#)

Aggregate ValueRealized (2)

($)

B.P. Collomb ATCO Ltd. Canadian Utilities Limited

20,0004,000

370,76086,720

24,000 457,480

B.P. Drummond ATCO Ltd. Canadian Utilities Limited

4,00010,000

70,640178,690

14,000 249,330

D.F. Mazankowski ATCO Ltd. Canadian Utilities Limited

14,0004,000

275,37077,040

18,000 352,410

H.M. Neldner ATCO Ltd. Canadian Utilities Limited

4,00010,000

103,440219,750

14,000 323,190

R.D. Southern ATCO Ltd. Canadian Utilities Limited

100,000102,000

2,525,0002,428,410

202,000 4,953,410

C.W. Wilson ATCO Ltd. Canadian Utilities Limited

-12,000

-207,960

12,000 207,960

Directors who retired during 2009

W.L. Britton (3)


12,50018,500

295,125383,295

31,000 678,420

B.K. French (3)


9,00015,000

200,448301,610

24,000 502,058

The following table summarizes the options exercised during 2009 by directors who were not employees of the Corporation. No share appreciation rights were exercised.

14

The Corporation has undertaken to provide certain non-employee directors with a one-time allowance upon retirement as a director of the Corporation calculated in accordance with the following table. This program was discontinued in November 2003 with the grandfathering of the following participants: B.P. Collomb, B.P. Drummond, D.F. Mazankowski, H.M. Neldner, L.C. van Wachem and C.W. Wilson. For purposes of the calculation of the retirement allowance, the annual retainer has been capped at $110,000.

Retiring Allowance Table

During 2009, a retiring allowance in the amount of U.S. $440,000 was paid to L.C. van Wachem.

Board Committees

The Board of the Corporation has three committees: the Audit Committee, the Corporate Governance - Nomination, Compensation and Succession Committee, and the Risk Review Committee. The Board annually appoints committee members and reviews and approves the committee mandates.

All Committee Chairs provide regular reports to the Board. Copies of the committee mandates are available on the Corporation’s website at www.atco.com. The Audit Committee mandate and the other information required to be disclosed by National Instrument 52-110 Audit Committees is also disclosed in Appendix 3 to the Corporation’s annual information form dated February 17, 2010.

In addition, from time to time, ad hoc committees of the Board are appointed to consider matters such as related party transactions and other issues of importance to the Board and the Corporation. In July 2008, a Special Committee of independent directors was established to review a transaction that was fi nalized in July 2009. ATCO Ltd. and its subsidiary, Canadian Utilities Limited, combined ATCO Structures Inc. and ATCO Noise Management Ltd., both wholly-owned subsidiaries of the Corporation, with ATCO Frontec Corp., a wholly-owned subsidiary of Canadian Utilities Limited. The new company is ATCO Structures & Logistics Ltd.

Director

Board Committees

Audit GOCOM Risk Review

R.T. Booth X X

B.P. Drummond X X

H.M. Neldner X X X

M.R.P. Rayfi eld X

C.W. Wilson Chair Chair Chair

Years of Service Multiple of Annual Retainer

0 to 5 1

6 to 10 2

11 to 15 3

16 to 20 4

21 to 25 5

26 to 30 6

31 to 35 7

36 to 40 8

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Audit Committee

Members: C.W. Wilson (Chair), B.P. Drummond, and H.M. Neldner

The Audit Committee is comprised of three members. Each member is independent and fi nancially literate within the meaning of these terms as defi ned in National Instrument 52-110 Audit Committees. The Committee is responsible for overseeing the accounting and fi nancial reporting processes of the Corporation and the audit of the fi nancial statements of the Corporation. A complete copy of the Audit Committee‘s mandate is available on the Corporation’s website – www.atco.com.

During 2009, the Audit Committee held four meetings and, in accordance with its mandate, achieved the following:

Financial Reports

Reviewed and approved, as delegated by the Board of Directors, quarterly consolidated fi nancial • statements, management’s discussion and analysis, and earnings press releases.Reviewed annual consolidated fi nancial statements, management’s discussion and analysis, annual • information form and earnings press release.Reviewed new accounting rules and accounting policies.• Received quarterly reports from the Designated Audit Directors*.• Received quarterly updates on the adoption and implementation of International Financial Reporting • Standards.

* Designated Audit Directors, referred to as DADs, are directors of the Corporation. This oversight program calls on the strengths and experience of directors in various industry sectors. DADs are responsible for meeting on a quarterly basis with management, meeting annually with internal and external auditors, reviewing the fi nancial statements and operating results of their assigned principal operating subsidiaries, and reporting their fi ndings to the Audit Committee. The Committee reviews the mandate of the Designated Audit Directors annually.

Internal Controls

Reviewed reports on the design and effectiveness of disclosure controls and procedures and internal • control over fi nancial reporting.Reviewed the procedures for the review and disclosure of fi nancial information.• Reviewed the mandate of the Disclosure Committee and the Disclosure Policy.• Received confi rmation of Chief Executive Offi cer/Chief Financial Offi cer Certifi cations on a quarterly • basis.

External Auditor

Recommended, for shareholder approval, the appointment of the external auditor.• Reviewed and approved external auditor’s plan for quarterly reviews and the annual audit.• Reviewed external auditor’s compensation and recommended for Board approval.• Reviewed and approved non-audit services by external auditor.• Reviewed external auditor’s report on its internal quality control procedures.•

16

Reviewed and assessed external auditor’s independence.• Received reports from external auditor on quarterly consolidated fi nancial statements and management’s • discussion and analysis.Received reports from external auditor on annual consolidated fi nancial statements, management’s • discussion and analysis, and annual information form.Met quarterly with the external auditor without the presence of management.• Reviewed the External Auditor Services and Recruitment of External Auditor policies.•

Internal Audit

Approved and monitored the execution of the annual internal audit plan, including adequacy of • resources.Reviewed internal audit reports, including management’s responses, and quarterly reports on • management’s action plans to implement audit recommendations.Reviewed the policy concerning the Reporting of Illegal or Unethical Accounting and Auditing Matters, • which contains procedures for the confi dential receipt, handling and retention of anonymous complaints received regarding accounting, purchasing and auditing irregularities, inadequate internal controls, fraud and theft.Reviewed reports on the investigations of complaints received.• Reviewed the mandate for Internal Audit.•

The Committee reviewed its mandate and is satisfi ed that it has appropriately fulfi lled its mandate for the year ended December 31, 2009.

Submitted by the members of the Audit Committee:

C.W. Wilson, ChairB.P. DrummondH.M. Neldner

Corporate Governance - Nomination, Compensation and Succession Committee

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Members: C.W. Wilson (Chair), R.T. Booth, B.P. Drummond, and H.M. Neldner

The Corporate Governance - Nomination, Compensation and Succession Committee has four members. The Committee is responsible for contributing to the effective stewardship of the Corporation by assisting the Board in its oversight of corporate governance, nomination, compensation and succession matters. The Committee reviews the mandates of the Board and its committees on an annual basis and is responsible for the disclosure respecting compensation and the basis on which performance is measured. The Committee reviews and determines the overall compensation program for all offi cers of the Corporation and its subsidiaries including base salary, short-term, medium-term, and long-term incentives. This process is outlined on page 19. The Committee also assesses the effectiveness of the Board and its Committees, reviews the size and composition of the Board, and considers persons as nominees for directors.

The Committee held three meetings in 2009 with two of the meetings more than one day in length. During those meetings the Committee reviewed and made recommendations regarding the following:

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The Chief Executive Offi cer’s performance, related annual bonus and base salary;• Annual bonuses and base salaries of executive offi cers;• Corporate targets and the Chief Executive Offi cer’s objectives;• Succession plans for the Chief Executive Offi cer and senior management;• Amendments to compensation plans;• Offi cer appointments;• Strategies to attract, develop and retain employees;• Corporate governance disclosure;• Grants under the Mid-Term Incentive Plan;• Grants of stock options and share appreciation rights;• Offi cers’ supplemental pension plan;• Board Committee, Board and individual director evaluation processes; and• Directors’ compensation.•

The Committee continues to spend a signifi cant amount of time on Board succession and recruitment. In addition, the Committee receives updates from legal counsel on recent developments in corporate governance and disclosure.

In camera sessions with independent committee members were held at each of the three meetings in 2009.

In February 2010, the Committee reviewed its mandate. The Committee is satisfi ed that it has appropriately fulfi lled its mandate for the year ended December 31, 2009.

Submitted by the members of the Corporate Governance - Nomination, Compensation and Succession Committee:

C.W. Wilson, ChairR.T. BoothB.P. DrummondH.M. Neldner

Risk Review Committee

Members: C.W. Wilson (Chair), R.T. Booth, H.M. Neldner, and M.R.P. Rayfi eld

The Risk Review Committee is comprised of four members. The Committee reviews risks that are identifi ed as being signifi cant to the Corporation as well as signifi cant risks of its subsidiaries that could materially affect the Corporation’s ability to achieve its strategic or operational objectives. The Committee is responsible for ensuring identifi ed risks are appropriately addressed and for ensuring there are adequate processes, policies, procedures and means to manage and mitigate identifi ed risks.

The Committee is also responsible for ensuring that adequate systems are in place in the principal operating subsidiaries to monitor and comply with applicable environmental legislation and conform to industry standards. The Committee may request the internal auditor to review certain areas with respect to risk and may review fi nancial policies with the Chief Financial Offi cer and recommend changes in light of current business conditions.

18

The Committee held two meetings in 2009 during which the following matters were reviewed:

Potential risks including market, operational, funding and liquidity, regulatory and overall business • risk; Reports from subsidiary Risk Management Committee meetings;• Report on Risk Management Committee assessments by the internal auditor;• Update on insurance coverage; and• Risk Management Committee mandate.•

A comprehensive inventory of risks and mitigation plans is tabled at each meeting with discussion following on items of particular interest.

The Risk Review Committee reviewed its mandate in November 2009. The Committee is satisfi ed that it has appropriately fulfi lled its mandate for the year ended December 31, 2009.

Submitted by the members of the Risk Review Committee:

C.W. Wilson, ChairR.T. BoothH.M. NeldnerM.R.P Rayfi eld

Directors’ and Offi cers’ Liability Insurance

The Corporation and its subsidiaries have purchased insurance with an annual aggregate limit of $200,000,000. Coverage for the directors and offi cers is $200,000,000, with coverage for the Corporation and its subsidiaries limited to $175,000,000. The premium paid by the Corporation in the fi nancial year ended December 31, 2009, was $939,472. No part of the premium was paid by a director or offi cer. The Corporation is responsible for the fi rst $1,000,000 of any loss and there is no deductible in respect of claims against any director or offi cer.

APPOINTMENT OF AUDITOR

The persons named in the accompanying form of proxy intend to vote for the appointment of PricewaterhouseCoopers LLP as the auditor of the Corporation to hold offi ce until the next annual meeting of shareholders of the Corporation.

Auditor’s Fees

The aggregate fees incurred by the Corporation and its subsidiaries for professional services provided by PricewaterhouseCoopers LLP in 2009 and 2008 were as follows ($ millions).

Representatives of PricewaterhouseCoopers LLP plan to attend the annual meeting and will be available to respond to appropriate questions.

2009 2008Audit 2.1 2.3

Audit Related 0.3 0.3

Tax 0.6 0.7

Other 0.0 0.2

Total 3.0 3.5

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GOVERNANCE

Corporate Governance - Nomination, Compensation and Succession Committee

The Corporate Governance - Nomination, Compensation and Succession Committee (GOCOM) reviews and determines the overall compensation program for all offi cers of the Corporation and its subsidiaries, including base salary, short-term, medium-term, and long-term incentives.

Committee Process

GOCOM recognizes the importance of maintaining sound governance practices for the administration of executive compensation programs. To ensure GOCOM has the ability to effectively perform its responsibilities, the following procedures have been established:

In camera sessions are held at each meeting to address executive compensation items;•

A tally sheet is reviewed for all executives that includes a three-year history of base salary, incentive • plan payments, discretionary payments, perquisites, share plan ownership and grants, and pension and benefi ts;

The granting of stock options and share appreciation rights generally occurs once per year during • concurrent deliberation of Total Direct Compensation (TDC). TDC is defi ned as base salary plus target bonus and the expected value of long-term incentives;

Management is directed to provide the initial analysis and commentary on its behalf on a range of • compensation matters;

This material is reviewed along with other information received from external advisers in GOCOM’s • deliberations before considering and/or rendering decisions; and

GOCOM has full discretion to adopt management recommendations or to alter them and to consult its • own external advisers.

Independent Advice

GOCOM engages independent compensation consultants to undertake market competitive compensation analysis of executive positions, to provide information on current market practices, and to provide advice in the development of new or revision of existing elements of the executive compensation programs. GOCOM also engages independent legal advice on securities law and matters related to executive compensation.

Executive Compensation Advisory Services

GOCOM engaged the services of Towers Watson to provide executive compensation consulting services during 2009. The mandate of Towers Watson was to undertake market comparisons, to gather information on competitive compensation practices, and to provide advice on developing appropriate compensation programs for the Corporation’s executive offi cers. The fees paid to Towers Watson in 2009 were approximately $584,000 for compensation, administration, benefi ts, and actuarial consulting services as well as published surveys and studies. Approximately $95,000 of the $584,000 was incurred for direct executive compensation services.

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SECTION 3 COMPENSATION DISCUSSION & ANALYSIS

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In 2009, Mercer provided the Corporation with non-executive compensation, benefi t, and pension actuarial consulting services and published surveys and studies. The fees paid for these services were approximately $570,000.

GOCOM annually pre-approves the consulting services of Towers Watson and Mercer.

GOCOM Decision-Making Criteria

GOCOM reviews and approves each individual executive’s TDC annually. Several factors are considered in totality, together with any other considerations that are determined to be relevant, in making compensation decisions. These factors include:

Market data that shows how the executive is paid in relation to the market median (50th percentile) for • base salary, short-term incentives and long-term incentives;

Individual performance measures that indicate the executive’s demonstrated delivery of results and • alignment to the values and direction of the Corporation, and the ability to develop and mentor high-potential employees; and

Business unit and corporate performance against a range of fi nancial, operational excellence, people • leadership, and long-term sustainable growth strategy objectives.

Philosophy, Objectives and Principles

The Corporation’s group-wide compensation philosophy is to provide “competitive pay for competitive performance”. This philosophy is designed to closely align the interests of executives and shareholders, and to support the continued success of the Corporation. GOCOM approves compensation principles and objectives that are designed to ensure the achievement of this approach.

The objectives of the Corporation’s executive compensation plan are as follows:

Attract and retain talented executives in a highly competitive business environment; and•

Compensate executives in a way that creates sustained shareholder value by:•

- Ensuring all executives have an “at risk” component of total compensation that refl ects their ability to infl uence business outcomes and fi nancial performance;

- Linking short-term incentives to corporate performance and paying only in the event that performance critieria and objectives are met or exceeded;

- Aligning the performance of the executive to the strategic plan of the Corporation; and- Linking long-term incentives to sustainable profi table growth.

The Corporation’s compensation principles are as follows:

Establish TDC, pension benefi ts and perquisites at the median of the relevant comparator markets;•

Provide a signifi cant portion of TDC based on corporate and individual performance which is to be paid • only in the event that performance criteria are met or exceeded; and

Utilize relevant global, national or Alberta-based peer industries and companies that may be of a similar • size and scope of operations or for which the data is adjusted to refl ect the appropriate size and scope through linear regression analysis. Comparator company data is obtained from the Towers Watson Compensation Database, the Towers Watson Energy Survey, the Mercer Benchmark Database, and the Mercer Total Compensation Survey for the Petroleum Industry.

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Comparator Groups Used For Market Competitiveness

Industry Oil and gas, utilities, energy, general industry, technology, and capital intensive organizations.

Location Alberta, national and global.

Relevance toATCO Ltd.

Companies are selected based on their comparability to the Corporation’s operations.

For each subsidiary company the appropriate comparator group is established by industry and comparable size of operations using revenue, number of employees and market capitalization.

The companies participating in the Towers Watson 2009 database for benchmarking are:

Companies

Agrium Inc. ENMAX Corporation Nova Scotia Power Inc.

Alberta Electric System Operator EPCOR Utilities Inc. Ontario Power Generation Inc.

Alliance Pipeline Limited Partnership Fort Chicago Energy Partners L.P. Pengrowth Corporation

ARC Resources Ltd. Forzani Group Ltd. Petro-Canada

Atomic Energy of Canada Limited GDF Suez Energy North America SaskEnergy

BC Hydro and Power Authority Husky Energy Inc. SaskPower

Bruce Power Inc. Hydro One Inc. Spectra Energy Transmission

Canadian Natural Resources Ltd. Hydro Ottawa Holdings Inc. Stantec Inc.

Canadian Oil Sands Limited Hydro-Quebec Suncor Energy Inc.

Canadian Pacifi c Railway Limited Imperial Oil Limited Talisman Energy Inc.

Capital Power Corporation Inter Pipeline Fund Terasen Gas

CCS Corporation Manitoba Hydro Toronto Hydro Electric Systems Ltd.

Direct Energy Marketing Ltd. New Brunswick Power Corporation TransAlta Corporation

Enbridge Gas Distribution Inc. Newfoundland and Labrador Hydro TransCanada Pipelines Limited

Enbridge Inc. Nexen Inc. United Farmers of Alberta Cooperative Limited

EnCana Corporation NOVA Chemicals Corp. Vermilion Energy Trust

EXECUTIVE COMPENSATION PROGRAM ELEMENTS

Executive compensation consists of three main elements: base salary, short-term incentives (bonus), and long-term incentives (stock options, share appreciation rights and mid-term incentives). The percentage of TDC for each element is aligned with the executive’s responsibilities and ability to infl uence business results. The target incentive amount for short-term and long-term incentives varies with an executive’s performance and level of responsibility and is considered in conjunction with regular reviews of the executive’s achievements. All compensation requires GOCOM approval. GOCOM may also award discretionary bonuses to reward offi cers for their contribution to especially notable accomplishments.

The following chart provides an overview of the executive compensation program elements and plans, the performance period, and the mix of fi xed versus variable pay for the Chief Executive Offi cer and other senior executive offi cers.

22

Total Compensation Elements

Element PlanPerformance

Period

Pay Mix

Component ofTotal Direct

CompensationType of

Compensation

SeniorExecutives(Average) CEO

Base Salary Base PayProgram 1 year 59% 39% Fixed

AnnualTargetShort-TermIncentive

ExecutiveBonus

Program1 year 29% 23%

Variable

Mid-TermIncentive

Mid-TermIncentive Plan

Fully vested atthe end of

3 year period

12% 38% Long-TermStockOptions

StockOptionPlan

Vesting over 5years with 10

year term

SARsShare

AppreciationRights Plan

Vesting over 5years with 10

year term

Base Salary

The base salary program provides a fi xed level of income based on the market value of the position. All executive roles are matched to similar positions in the comparator group. Base salaries are targeted at the median (50th percentile); however, salaries up to the 75th percentile are provided to reward sustained individual performance which is above the expectations of the role. GOCOM may make adjustments in an individual’s salary during the year based on changes in the executive’s responsibilities. In 2009, executive salaries were frozen except for the salaries of executives that were promoted.

Short-Term Incentive Plan

The Board of Directors determined that all executive bonuses for 2009 would be discretionary, and subject to a number of performance criteria.

The performance criteria were:

1. Consolidated Financial Earnings;2. Capital Expenditure Prioritizations - set for each Operating Subsidiary;3. General & Administrative and Operations & Maintenance Effi ciencies - set for each Operating Subsidiary

and Corporate Offi ce;4. Cash Targets - set for each Operating Subsidiary and Corporate Offi ce;5. Operational Excellence Metrics; and6. Performance by the executive on their predetermined individual objectives.

An individual performance factor was introduced to differentiate the amount of bonus awarded to top performers, solid performers, and developmental performers. The individual performance factor was established as 80% to 120% of bonus; top performers were eligible for up to 120% of bonus, solid performers were eligible for up to 100% of bonus, and developmental performers (or executives new to the role) were eligible for up to 80% of bonus. If the individual performance of an executive was rated below 3 out of 5, and this was not due to a new role assignment requiring a developmental period, then no bonus was awarded.

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ANALYSIS

Executive performance is demonstrated through the achievement of objectives that are determined at the beginning of each calendar year. Financial, operational and individual performance measures are set each year. Operational measures are based on operational metrics at the subsidiary level, which reinforce the importance of operating effi ciency, safety goals, environmental practices, and other metrics that are relevant to the subsidiary. The individual performance of the executive is measured by their contribution to the achievement of the Corporation’s goals.

Performance assessments were completed on all executives that included measurement of their individual goals and contribution to the corporate objectives. Each business unit leader calibrated their executives and provided a recommendation to the Chief Executive Offi cer. The Chief Executive Offi cer reviewed all executive performance assessments and the recommended calibration. The Chief Executive Offi cer then provided GOCOM with a fi nal recommendation on performance rating, individual performance factor, and discretionary bonus for each executive.

The bonus program includes a provision that forfeits bonus payments to the employees and executives with direct accountability if an event causes a material re-statement of the consolidated fi nancial statements or management’s discussion and analysis.

Based on the achievement of 2009 performance criteria, discretionary bonuses were awarded to the Named Executive Offi cers as shown in the tables on pages 30 to 35.

Mid-Term Incentive Plan

The Mid-Term Incentive Plan (MTIP) provides compensation in the form of shares of ATCO Ltd. and/or Canadian Utilities Limited that are vested at the end of three years. The MTIP rewards performance of key individuals and supports the retention of critical senior employees. No MTIP grants were awarded to Named Executive Offi cers in 2009.

Long-Term Incentive Plans – Stock Options and Share Appreciation Rights

The long-term incentive plans are designed to reward sustainable profi table growth. GOCOM awards stock options and share appreciation rights on a discretionary basis in conjunction with an analysis of each executive’s TDC and individual performance.

The Corporation is authorized to grant options to purchase 5,100,000 Class I Non-Voting Shares (8.8% of the number of outstanding Class I Non-Voting and Class II Voting Shares as of December 31, 2009). During 2009, 3,000 options were granted, 440,750 Class I Non-Voting Shares were issued on the exercise of options, and 14,200 options were cancelled.

Stock Option Plan

GOCOM may designate offi cers and key employees of the Corporation and its subsidiaries to be granted options to purchase Class I Non-Voting Shares at an exercise price equal to the weighted average of the trading price of the shares on the TSX for the fi ve trading days immediately preceding the date of grant. The vesting provisions and exercise period are determined at the time of grant. Options are not assignable and cannot be converted into share appreciation rights. Options terminate on the earlier of their expiration or 90 days after a participant ceases to be an offi cer or employee for any reason other than death, disability or retirement, in which case they terminate after two years.

24

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Amendments to the Stock Option Plan

There were no amendments made to the stock option plan during 2009.

Share Appreciation Rights Plan

In addition to the stock option plan, the Corporation has a share appreciation rights plan. GOCOM may designate offi cers and key employees of the Corporation and its subsidiaries to be granted share appreciation rights based on the Class I Non-Voting Shares. The vesting provisions and exercise period, which cannot exceed ten years, are determined at the time of grant. The holder is entitled on exercise to receive a cash payment from the Corporation equal to any increase in the market price of the Class I Non-Voting Shares over the base value of the share appreciation rights exercised. The base value is equal to the weighted average of the trading price of the Class I Non-Voting Shares on the TSX for the fi ve trading days immediately preceding the date of grant. Rights are not assignable and terminate on the earlier of their expiration or 90 days after a participant ceases to be an offi cer or employee for any reason other than death, disability or retirement, in which case they terminate after two years.

Canadian Utilities Limited Stock Option Plan and Share Appreciation Rights Plan

Canadian Utilities Limited has a stock option plan under which 6,400,000 Class A non-voting shares are authorized for grant in respect of options. The terms and conditions of the Canadian Utilities Limited stock option plan are the same as those of the Corporation’s plan. Canadian Utilities Limited also has a share appreciation rights plan similar to the Corporation’s plan.

Equity Compensation Plan Information

Plan Category

Number ofNon-VotingShares to beIssued UponExercise of

OutstandingOptions

WeightedAverageExercisePrice of

OutstandingOptions

Number ofNon-Voting

SharesRemaining

Available forFuture

Issuance UnderEquity

CompensationPlans

(ExcludingOutstanding

Options)

Total Numberof

OutstandingNon-Voting

Shares

Non-VotingShares to beIssued UponExercise of

OutstandingOptions as a% of TotalNumber of


Shares

Non-VotingShares

RemainingAvailable for

FutureIssuance as a

% of TotalNumber of


Shares

Equity compensation plansapproved by shareholders

At December 31, 2009ATCO Ltd.Canadian Utilities Limited

At March 8, 2010ATCO Ltd.Canadian Utilities Limited

716,800871,900

710,400869,500

$31.79$35.63

$31.92$35.67

1,640,0002,989,500

1,640,0002,989,500

51,360,70684,141,280

51,367,10685,696,530

1.4%1.0%

1.4%1.0%

3.2%3.6%

3.2%3.5%

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Performance Charts

The graph below compares the fi ve-year cumulative return on the Class I Non-Voting Shares and Class II Voting Shares of the Corporation (assuming reinvestment of dividends) with the cumulative total return of the S&P/TSX Composite Index.

Shareowners’ Return Outperforms Market

Five-Year Total Return on $100 Investment

Note: Figures have been adjusted to refl ect the two-for-one stock split by way of stock dividend on September 15, 2005.

The graph below compares the increase in total compensation (TC) for the Named Executive Offi cers to the growth in earnings over a fi ve-year period.

Growth in NEO Compensation Relative to Growth in Net Earnings

Note: TC equals annual salary plus target annual bonus.

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Cumulative Base Salary Increase % 0.0% 13.3% 18.7% 25.0% 30.4% 21.2%

Cumulative TC Increase % 0.0% 13.3% 18.7% 28.1% 33.5% 24.3%

Cumulative Net Earnings Increase % 0.0% -6.5% 29.9% 57.3% 70.3% 77.7%

2004 2005 2006 2007 2008 2009

$75

$100

$125

$150

$175

$200

$225

Class I Non-Voting 100 143 179 200 141 175Class II Voting 100 143 181 200 144 176S&P/TSX Composite 100 124 146 160 107 145

2004 2005 2006 2007 2008 2009

26

The following chart provides segmented earnings for the Corporation’s business segments for the past three years.

Business Units All Performing Well

Three-Year Segmented Earnings

Overview of Performance

In 2009, the Corporation achieved record fi nancial earnings. Amidst the year’s record performance were a number of signifi cant achievements realized throughout the organization.

Performance Measures

The following table provides a summary of the performance objectives that were set for the Corporation for 2009 and the performance outcome against each target.

CorporateObjective Target Set Performance Outcome

ConsolidatedFinancial

To achieve net earnings for • the Corporation as set by the Board of DirectorsPrincipal Operating Subsidiary • targets set for capital expenditures, operations and maintenance expenses, general and administrative expenses, and cash

Record earnings of $283.3 million ($4.89 per share) for the year • ended December 31, 2009.

OperationalExcellence

Health and Safety of Employees and Contractors:

Continuous improvement• Performance against targets of • excellence

ATCO Electric, ATCO Gas, ATCO Power and ATCO Midstream • provided support to a much-needed fi re-rescue training centre in High Prairie. The centre provides hands-on and practical training for emergency rescue personnel throughout northwestern Alberta.ATCO Pipelines, ATCO Midstream, ATCO Power and ATCO • Noise Management (now part of ATCO Structures & Logistics) were recognized by the Government of Alberta and the Alberta Occupational Health and Safety Council for their “superior” health and safety records and received the Best Safety Performer Award.It was the fi fth consecutive year that ATCO Power was recognized • by the province for its safety practices and the sixth consecutive year for ATCO Pipelines. Only a small number of Alberta employers have achieved such a milestone.The ATCO Gas campaign to help Albertans dig safely is increasing • awareness and the company has seen a 22% reduction in damages to natural gas lines from 2007 and a 45% reduction since 2003.ATCO Gas launched a province-wide campaign aimed at increasing • meter-reader safety and educating customers in carbon monoxide prevention.

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72.5 78.0102.1

117.6 128.7114.6

41.951.0

61.6

14.517.3

5.0

0.0

50.0

100.0

150.0

200.0

250.0

300.0

2007 2008 2009

($ m

illio

ns)

Utilities Energy Structures & Logistics Corporate & Other and Eliminations

27

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CorporateObjective(continued)

Target Set(continued)

Performance Outcome(continued)

OperationalExcellence(continued)

Service Quality:Service levels• Reliability/Performance• Availability of plant• Customer satisfaction•

ATCO companies utilize:Customer satisfaction surveys.• Reliability through service monitoring.• Customer service level monitoring.• Key performance indicators that relate to the industry and business • of the subsidiary company.All ATCO subsidiary companies set comprehensive operational goals • and metrics which are closely measured to ensure service levels, plant reliability and availability, and customer satisfaction as well as several subsidiary-specifi c operational goals. All variable pay plans are weighted to ensure a signifi cant impact from operational excellence goals.ATCO Electric through Northland Utilities introduced Automatic • Meter Reading (AMR) technology – PowerPlus – to hold the line on rising costs.ATCO Electric through Northland Utilities upgraded the Yellowknife • electrical distribution systems from 5KV to 25KV – the third of three new substations to improve effi ciency. ATCO Energy Theatre and its “Super Power” show visited schools • in 32 communities across central and southern Alberta to educate young children about electricity and natural gas, their hazards and how to avoid fatal situations.

Management Controls:Financial controls reporting • (no signifi cant or reportable weaknesses in internal control over fi nancial reporting)

Testing conducted in 2009 revealed no signifi cant or reportable • weaknesses in internal control over fi nancial reporting.

Environmental Stewardship:Ensuring that ATCO companies • are complying with legislation and regulationsNo major events•

ATCO Group released its fi rst corporate sustainability report for the • year ended December 31, 2008.ATCO Gas showcased environmental leadership with the offi cial • opening of the Viking Operations Centre, the company’s fi rst geothermal facility that draws on heat energy from within the earth’s crust.ATCO Electric introduced the Alberta utility industry’s fi rst hybrid • maintenance vehicle to its fl eet – a bucket truck that operates on electricity and diesel to signifi cantly reduce environmental impact during power line work. ATCO Power with the Government of Western Australia celebrated • the start of construction of a new 86 megawatt power station in Karratha which will be the most effi cient gas-fi red power station in the region.

PeopleLeadership

Succession Management:Ensuring that executive • positions have identifi ed successors

Executives are developed internally by ensuring internal candidates • are prepared and ready for increasingly responsible roles.There were 7 appointments made to executive roles, 5 from internal • candidates, and 2 external candidates.In 2009, the Corporation’s continued commitment to leadership • development was demonstrated by 358 employees attending leadership development courses.

Attraction and Retention:Ensuring that key talent is • recruited and retained in an exceptionally competitive environment

ATCO hired 838 employees.• Total employee turnover, excluding retirements, internal transfers, • and involuntary terminations, was reduced to 6.9%.ATCO and its people, through their company-wide ATCO Employees • Participating in Communities (EPIC) fundraising program, pledged $2.97 million to more than 500 charities and community groups across Canada for 2009.

28

CorporateObjective(continued)

Target Set(continued)

Performance Outcome(continued)

Long-TermSustainableGrowth

The long-term growth strategies of the subsidiaries:

Capital expansion• Market penetration• Overall market positioning•

The strategic planning and integration of long-term growth across the ATCO Group

ATCO Energy Solutions and Praxair Canada Inc. pursued the • development of hydrogen storage and pipeline infrastructure in Alberta, focusing on opportunities northeast of Edmonton.ATCO I-Tek entered into a strategic relationship with Wipro, a large, • multi-national service provider to provide joint delivery of some customer care services and to pursue new opportunities in the utility business process outsourcing market.ATCO Ltd. and Canadian Utilities Limited combined ATCO Structures • Inc. and ATCO Noise Management Ltd. with ATCO Frontec Corp. to form a new company named ATCO Structures & Logistics Ltd.In the third quarter of 2009, the Corporation reorganized its operating • subsidiaries into the following segments: Utilities, Energy, Structures & Logistics and Corporate & Other. The strategic realignment of the business segments is a continuation of a restructuring process that maximizes synergies between companies to ensure each division can improve its competitive position and overall growth potential. ATCO Frontec (now part of ATCO Structures & Logistics) and the • Fort McKay First Nation were honoured for their joint venture partnership in the creation and operation of Creeburn Lake Lodge, north of Fort McMurray. The two are recipients of the Rewarding Partnerships Award, bestowed by the Alberta Government and Alberta Chamber of Resources for excellence in innovation and best practices in Aboriginal programs.ATCO Structures (now part of ATCO Structures & Logistics) • expanded into Manitoba with a new sales and distribution centre. The new facility will offer industrial and construction customers easy access to a wide range of modular building solutions that are known worldwide for their quality.ATCO Electric was authorized by the Alberta Minister of Energy to • prepare a facilities application for approval by the Alberta Utilities Commission to build and operate a new high-voltage transmission line along a corridor on the east side of the province between Edmonton and Calgary. This major high-voltage, direct current transmission project will connect an area northeast of Edmonton to a southern hub in the Brooks/Bow Island area and is a key component of Alberta’s Long-Term Transmission System Plan. ATCO Structures & Logistics identifi ed Alaska as an important area • of growth for its unique products and services and opened a new branch offi ce in Anchorage.ATCO Water was selected by the towns of Three Hills and Trochu • to develop a long-term partnership for the delivery of water and wastewater services. ATCO Structures & Logistics introduced a new line of permanent • energy-effi cient modular buildings called ATCO Urban Space. ATCO Group created the Celebrating Excellence program, a province-• wide campaign to engage young Albertans who are demonstrating a commitment to community and leadership through sport, the arts, culture, education or volunteer work.

TOTAL COMPENSATION SUMMARY

Each Named Executive Offi cer’s total compensation is provided in a table that includes a complete tally of his or her annual TDC, securities, other earnings and total compensation for the last three fi scal years. This table refl ects all compensation received by the Named Executive Offi cers from the Corporation and its subsidiaries, including, without limitation, Canadian Utilities Limited and all of its subsidiaries, for their services as executive offi cers in all capacities.

During 2009, N.C. Southern, K.M. Watson, S.W. Kiefer, S.R. Werth, and B.R. Bale (for the period December 1 to 31, 2009), served in similar senior executive positions with Canadian Utilities Limited, a subsidiary of the Corporation.

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K.M. Watson held the position of Senior Vice President & Chief Financial Offi cer until November 30, 2009. She retired from the Corporation on December 31, 2009. B.R. Bale was appointed Senior Vice President & Chief Financial Offi cer effective December 1, 2009. Mr. Bale was previously Senior Vice President, Finance & Regulatory for ATCO Gas. H.G. Wilmot is President & Chief Operating Offi cer, ATCO Structures & Logistics Ltd.

N.C. Southern, K.M. Watson, S.W. Kiefer, S.R. Werth and B.R. Bale did not receive separate salaries, bonuses or pensions for serving both ATCO Ltd. and Canadian Utilities Limited. The amounts reported in this circular refl ect the total compensation provided to these offi cers for their contribution to both corporations, and the expense is apportioned between ATCO Ltd. and Canadian Utilities Limited. The salary and bonus amounts for these offi cers are determined annually on a consolidated basis. The amounts apportioned to Canadian Utilities Limited are disclosed in its management proxy circular for its annual meeting of shareholders to be held on May 6, 2010.

Formula for Apportionment of Salaries for N.C. Southern, K.M. Watson, S.W. Kiefer, S.R. Werth andB.R. Bale

ATCO Ltd.’s share of the consolidated amount of total compensation is based on a number of considerations, including:

The portion of the Corporation’s consolidated assets that ATCO Ltd.’s assets represent (other than • Canadian Utilities Limited);The estimated portion of each executive offi cer’s time anticipated to be spent performing services • as an executive offi cer of ATCO Ltd. and its subsidiaries other than Canadian Utilities Limited and its subsidiaries; andDecisions of the Alberta Utilities Commission.•

For 2009, 2008 and 2007 ATCO Ltd. paid 10% of the consolidated salary and bonus amounts set out in the following table and Canadian Utilities Limited paid 90% of these amounts.

Employment Agreement for N.C. Southern, President & Chief Executive Offi cer

Term of Agreement

The Corporation has an employment agreement with N.C. Southern extending to February 28, 2013, and continuing from year to year thereafter. The amount of salary and the value of benefi ts paid in 2009 under this agreement have been included in the table on page 30. Termination provisions are disclosed in the Termination and Change of Control table on page 39.

Disability and Life Insurance

N.C. Southern’s employment agreement provides for the payment of certain benefi ts upon her death or disability prior to retirement or termination. The amount of such benefi ts is based on her salary and is determined in accordance with formulas that take into account amounts payable to her under the group life insurance policies and disability income programs of the Corporation.

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Nancy C. Southern

Age: 53

Location: Calgary, AB Canada

Years of Service: 20

Ms. Southern is Deputy Chair, President & Chief Executive Offi cer of ATCO Ltd. and Canadian Utilities Limited. Previously Ms. Southern was Co-Chairman and Chief Executive Offi cer from 2000 to 2003, Deputy Chief Executive Offi cer from 1998 to 2000, and Deputy Chairman from 1996 until 1998. Ms. Southern has full responsibility for strategic direction and the operations of the Corporation, reporting to the Board of Directors. Under Ms. Southern’s guidance as President & Chief Executive Offi cer, earnings have increased from $130.7 million in 2003 to $283.3 million in 2009 (an increase of 117%). In addition, ATCO Group’s total assets have grown from $6.8 billion in 2003 to approximately $10.0 billion in 2009 and the Corporation’s capitalization improved from 51% equity in 2003 to 55% equity in 2009.

Three Year Compensation

Year Salary (1)Share Based

Awards

Option Based

Awards (2) (3)

Non-Equity Incentive Plan Compensation (1)

Pension Value (4)

All OtherCompensation (5)

TotalCompensation

Annual Incentive

Plans

Long Term Incentive

Plans

2009 1,000,000 - - 900,000 - 243,674 15,000 2,158,674

2008 1,000,000 - 1,853,360 1,200,000 - 1,413,269 21,250 (6) 5,487,879

2007 1,000,000 - 1,084,904 1,200,000 - 925,183 15,000 4,225,087

(1) The amounts shown under salary and annual incentive plans are the total consolidated salary and bonus of the Named Executive Offi cer of which 10% was paid by ATCO Ltd. and 90% was paid by Canadian Utilities Limited in 2009, 2008 and 2007. Base salary was not increased in 2009, 2008 or 2007.

(2) Grant values are determined by utilizing the binomial valuation methodology. For accounting purposes the Black-Scholes method is used. Binomial valuation methodology is utilized for executive compensation because all sources of benchmark data are reported on this basis. Binomial values exceed Black-Scholes values for N.C. Southern by $20,360 for 2008 and $15,704 for 2007.

(3) Amounts represent the sum of ATCO Ltd. and Canadian Utilities Limited stock option and share appreciation right values.(4) Pension value is a calculated amount to represent the portion of a future pension that would be assigned to each year as well as other compensatory

related items. It is calculated using a prescribed formula based on numerous assumptions.(5) Represents the employer contribution to the Employee Share Purchase Plan.(6) Represents the employer contribution to the Employee Share Purchase Plan for a 17-month period due to a change from annual to monthly employer

contributions.

Aggregate Holdings and Value of ATCO Ltd. andCanadian Utilities Limited Options and SARs Held on

December 31, 2009

ATCO Ltd. andCanadian Utilities Limited

Options and SARsExercised during 2009

Unexercised Options/SARsat December 31, 2009

Value of Unexercised In-the-MoneyOptions/SARs at December 31, 2009

Securities Acquiredon Exercise

(#)

Aggregate ValueRealized

($)Exercisable

(#)Unexercisable

(#)Exercisable

($)Unexercisable

($)

ATCO Ltd.Class I Non-Voting

Options

SARs

276,000

206,000

124,000

104,000

4,476,600

3,459,950

811,800

695,200

100,000 (7)

-

2,525,000

-

Canadian UtilitiesLimitedClass A non-voting

Options

SARs

268,000

168,000

112,000

92,000

3,381,000

2,099,160

544,000

540,200

22,000 (8)

-

475,210

-

(7) Represents the exercise of 100,000 options to acquire Class I Non-Voting Shares of the Corporation.(8) Represents the exercise of 22,000 options to acquire Class A non-voting shares of Canadian Utilities Limited.

NAMED EXECUTIVE OFFICERS

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NAMED EXECUTIVE OFFICERS (continued)

Brian R. Bale

Age: 55



Mr. Bale was appointed Senior Vice President & Chief Financial Offi cer effective December 1, 2009, responsible for Finance, Internal Audit, Accounting, Treasury, Taxation and Risk Management. Previously Mr. Bale was Senior Vice President, Finance & Regulatory, ATCO Gas. He has held a variety of fi nance and regulatory management positions within the Corporation and was appointed an offi cer of ATCO Electric in 2001 and an offi cer of ATCO Gas in 2005.



Awards

Option Based

Awards (2) (3)


Pension Value (4)


TotalCompensation

Annual Incentive

Plans

Long Term Incentive

Plans

2009 188,333 - - 180,000 - 29,118 2,825 400,276

2008 180,000 - 53,030 151,200 - 38,305 3,645 (6) 426,180

2007 170,000 - 37,315 127,500 - 39,179 2,160 376,154

(1) The amounts shown under salary and annual incentive plans are the total consolidated salary and bonus of Mr. Bale of which 100% was paid by Canadian Utilities Limited in 2007, 2008, and from January 1 to November 30, 2009, during which time Mr. Bale was an Offi cer of ATCO Gas and Pipelines Ltd. Upon Mr. Bale’s appointment as Senior Vice President & Chief Financial Offi cer of ATCO Group, 90% of his salary and bonus for the period of December 1 to December 31, 2009 was paid by Canadian Utilities Limited and 10% was paid by ATCO Ltd.

(2) Grant values are determined by utilizing the binomial valuation methodology. For accounting purposes the Black-Scholes method is used. Binomial valuation methodology is utilized for executive compensation because all sources of benchmark data are reported on this basis. The binomial values exceed the Black-Scholes values for B.R. Bale by $2,950 for 2008. Black-Scholes values exceed binomial values by $6,065 for 2007.



contributions.


December 31, 2009






(#)


($)Exercisable

(#)Unexercisable

(#)Exercisable

($)Unexercisable

($)


Options

SARs

200

200

800

800

58

58

232

232

-

-

-

-


Options

SARs

1,600

1,600

3,400

3,400

-

-

-

-

-

-

-

-

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December 31, 2009






(#)


($)Exercisable

(#)Unexercisable

(#)Exercisable

($)Unexercisable

($)


Options

SARs

19,400

24,400

11,600

9,600

280,470

437,490

24,480

12,820

14,500 (7)

-

387,075

-


Options

SARs

33,600

28,600

20,400

18,400

406,790

290,230

760

380

-

-

-

-

(7) Represents the exercise of 14,500 options to acquire Class I Non-Voting Shares of the Corporation.

Siegfried W. Kiefer

Age: 51



Mr. Kiefer was appointed in 2004 to the position of Managing Director, Utilities, responsible for natural gas and electricity transmission and distribution, which includes the subsidiary companies of ATCO Gas, ATCO Electric, ATCO Pipelines, Northland Utilities, and Yukon Electrical. In 2009, Mr. Kiefer was responsible for overseeing the continued growth in utility investment while the Utilities Group achieved new records in service levels and safety performance.



Awards

Option Based

Awards (2) (3)


Pension Value (4)


TotalCompensation

Annual Incentive

Plans

Long Term Incentive

Plans

2009 500,000 - - 375,000 - (2,559) 7,500 879,941

2008 500,000 - 265,148 500,000 - 247,407 10,038 (6) 1,522,593

2007 465,000 - 299,558 465,000 - 184,507 6,600 1,420,665

(1) The amounts shown under salary and annual incentive plans are the total consolidated salary and bonus of the Named Executive Offi cer of which 10% was paid by ATCO Ltd. and 90% was paid by Canadian Utilities Limited in 2009, 2008 and 2007.

(2) Grant values are determined by utilizing the binomial valuation methodology. For accounting purposes the Black-Scholes method is used. Binomial valuation methodology is utilized for executive compensation because all sources of benchmark data are reported on this basis. The binomial values exceed the Black-Scholes values for S.W. Kiefer by $14,748 for 2008. Black-Scholes values exceed binomial values by $19,882 for 2007.



contributions.


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Susan R. Werth

Age: 53



Ms. Werth is Senior Vice President & Chief Administration Offi cer, responsible for Human Resources, Corporate Secretarial, Marketing and Communications, Security, Real Estate, Aviation and Administration, an appointment she has held since 2000. Previously Ms. Werth was Vice President, Administration, a role she was appointed to in 1995. Ms. Werth directed the successful implementation of many new programs in her areas of responsibility, particularly in Human Resources, where ATCO Ltd. is continuing to invest for the future.



Awards

Option Based

Awards (2) (3)


Pension Value (4)


TotalCompensation

Annual Incentive

Plans

Long Term Incentive

Plans

2009 390,000 - - 250,000 - (11,114) 5,850 634,736

2008 390,000 - 92,668 390,000 - 235,419 7,838 (6) 1,115,925

2007 360,000 - 149,780 360,000 - 287,547 900 1,158,227


(2) Grant values are determined by utilizing the binomial valuation methodology. For accounting purposes the Black-Scholes method is used. Binomial valuation methodology is utilized for executive compensation because all sources of benchmark data are reported on this basis. The binomial values exceed the Black-Scholes values for S.R. Werth by $1,018 for 2008. Black-Scholes values exceed binomial values by $9,941 for 2007.



contributions.


December 31, 2009






(#)


($)Exercisable

(#)Unexercisable

(#)Exercisable

($)Unexercisable

($)


Options

SARs

13,700

13,700

5,800

5,800

249,965

227,490

12,240

12,240

-

-

-

-


Options

SARs

20,300

15,300

8,200

8,200

286,350

145,400

380

380

-

-

-

-


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December 31, 2009






(#)


($)Exercisable

(#)Unexercisable

(#)Exercisable

($)Unexercisable

($)


Options

SARs

3,400

3,400

3,600

3,600

17,606

17,606

12,124

12,124

-

-

-

-


Options

SARs

5,400

5,400

6,600

6,600

570

570

380

380

-

-

-

-

Henry G. Wilmot

Age: 56



Mr. Wilmot is President & Chief Operating Offi cer of ATCO Structures & Logistics Ltd. He was appointed President & Chief Operating Offi cer of ATCO Structures Inc. and ATCO Frontec Corp. in July 2008. Mr. Wilmot joined ATCO Group in 1975 and has held numerous and progressively senior positions with the organization. In 2009 three subsidiary companies, ATCO Structures Inc., ATCO Frontec Corp. and ATCO Noise Management Ltd., combined to form ATCO Structures & Logistics Ltd., and under Mr. Wilmot’s leadership, achieved record earnings.



Awards

Option Based

Awards (2) (3)


Pension Value (4)


TotalCompensation

Annual Incentive

Plans

Long Term Incentive

Plans

2009 300,000 - - 475,000 - 46,393 1,800 823,193

2008 270,000 - 74,134 351,967 - 99,899 2,730 (6) 798,730

2007 225,000 - 62,192 225,000 - 121,382 1,980 635,554

(1) The amounts shown under salary and annual incentive plans are the total consolidated salary and bonus of the Named Executive Offi cer of which 10% was paid by ATCO Ltd. and 90% was paid by Canadian Utilities Limited in 2007 and up to June 30, 2008. From July 1, 2008 to June 30, 2009, Mr. Wilmot’s salary and annual incentive plans were paid 50% by ATCO Ltd. and 50% by Canadian Utilities Limited. From July 1, 2009 to December 31, 2009, Mr. Wilmot’s salary and annual incentive were paid 75% by ATCO Ltd. and 25% by Canadian Utilities Limited.

(2) Grant values are determined by utilizing the binomial valuation methodology. For accounting purposes the Black-Scholes method is used. Binomial valuation methodology is utilized for executive compensation because all sources of benchmark data are reported on this basis. The binomial values exceed the Black-Scholes values for H.G. Wilmot by $814 for 2008. Black-Scholes values exceed the binomial values by $10,108 for 2007.



contributions.

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Karen M. Watson

Age: 58


Retired: December 31, 2009


Ms. Watson held the position of Senior Vice President & Chief Financial Offi cer until November 30, 2009. She retired from the Corporation on December 31, 2009. Ms. Watson was responsible for Finance, Internal Audit, Accounting, Treasury, Taxation and Risk Management. Ms. Watson was also a director and a member of the Audit Committee for CU Inc. In 2009, her oversight contributed to strong earnings growth and the prudent management of capital and costs across the Corporation’s subsidiary companies.



Awards

Option Based

Awards (2) (3)


Pension Value (4)


TotalCompensation

Annual Incentive

Plans

Long Term Incentive

Plans

2009 410,000 - - 325,000 - 71,835 1,845 808,680

2008 410,000 - 92,668 410,000 - 175,526 2,569 (6) 1,090,763

2007 380,000 - 149,780 380,000 - 440,154 1,800 1,351,734


(2) Grant values are determined by utilizing the binomial valuation methodology. For accounting purposes the Black-Scholes method is used. Binomial valuation methodology is utilized for executive compensation because all sources of benchmark data are reported on this basis. The binomial values exceed the Black-Scholes values for K.M. Watson by $1,018 for 2008. Black-Scholes values exceed binomial values by $9,941 for 2007.

(3) Amounts represent the sum of ATCO Ltd. and Canadian Utilities Limited stock option and share appreciation right values. (4) Pension value is a calculated amount to represent the portion of a future pension that would be assigned to each year as well as other compensatory


contributions.


December 31, 2009






(#)


($)Exercisable

(#)Unexercisable

(#)Exercisable

($)Unexercisable

($)


Options

SARs

12,700

13,700

-

-

223,115

227,490

-

-

3,500 (7)

-

89,985

-


Options

SARs

14,300

15,300

-

-

157,710

145,400

-

-

3,500 (8)

-

80,255

-

(7) Represents the exercise of 3,500 options to acquire Class I Non-Voting Shares of the Corporation.(8) Represents the exercise of 3,500 options to acquire Class A non-voting shares of Canadian Utilities Limited.


36

INCENTIVE PLANS SUMMARY

Outstanding Option-Based Awards (1)

Name

YearEndedDec 31

Option-Based Awards (1) (2)

Number of SecuritiesUnderlying

Unexercised Options

OptionExercise

Price

OptionExpiration

Date

Value ofUnexercised

In-The-Money Options (7)

ATCOSOPs (3)

#

ATCOSARs (4)

#

CUSOPs (5)

#

CUSARs (6)

#ATCO

$CU$

ATCO$

CU$

N.C. Southern

2008 50,000 50,000 50,000 50,000 45.88 44.34 Mar. 15, 2018 29,000 -

2007 40,000 40,000 20,000 20,000 49.77 47.84 Jan. 2, 2017 - -

2006 50,000 - 50,000 - 40.34 43.56 Jan. 2, 2016 291,500 9,500

2005 200,000 160,000 200,000 160,000 29.08 30.245 Jan. 1, 2015 6,152,400 4,861,800

2004 - 30,000 - 18,000 23.815 29.06 Jan. 2, 2014 670,650 264,420

2003 20,000 30,000 20,000 12,000 21.65 25.905 Jan. 1, 2013 1,226,000 571,040

2000 40,000 - 40,000 - 19.32 22.31 Dec. 1, 2010 1,074,000 857,600

B.R. Bale2008 1,000 1,000 2,000 2,000 45.88 44.34 Mar. 15, 2018 580 -

2007 - - 3,000 3,000 - 47.84 Jan. 2, 2017 - -

S.W. Kiefer

2008 5,000 5,000 10,000 10,000 45.88 44.34 Mar. 15, 2018 2,900 -

2007 6,000 6,000 14,000 14,000 49.77 47.84 Jan. 2, 2017 - -

2006 10,000 5,000 10,000 5,000 40.34 43.56 Jan. 2, 2016 87,450 2,850

2004 - 10,000 - 10,000 23.815 29.06 Jan. 2, 2014 223,550 146,900

2003 10,000 8,000 10,000 8,000 21.65 25.905 Jan. 1, 2013 441,360 321,210

2000 - - 10,000 - - 21.03 Jul. 1, 2010 - 227,200

S.R. Werth

2008 2,500 2,500 2,500 2,500 45.88 44.34 Mar. 15, 2018 1,450 -

2007 3,000 3,000 7,000 7,000 49.77 47.84 Jan. 2, 2017 - -

2006 5,000 5,000 5,000 5,000 40.34 43.56 Jan. 2, 2016 58,300 1,900

2004 - 5,000 - 5,000 23.815 29.06 Jan. 2, 2014 111,775 73,450

2003 4,000 4,000 4,000 4,000 21.65 25.905 Jan. 1, 2013 196,160 142,760

2000 5,000 - 10,000 - 19.32 22.31 Dec. 1, 2010 134,250 214,400

H.G. Wilmot

2008 2,000 2,000 2,000 2,000 45.88 44.34 Mar. 15, 2018 1,160 -

2007 - - 5,000 5,000 - 47.84 Jan. 2, 2017 - -

2006 5,000 5,000 5,000 5,000 40.34 43.56 Jan. 2, 2016 58,300 1,900

Chief Financial Offi cer for part of 2009

K.M. Watson

2008 500 500 500 500 45.88 44.34 Dec. 31, 2011 290 -

2007 1,200 1,200 2,800 2,800 49.77 47.84 Dec. 31, 2011 - -

2006 3,000 3,000 3,000 3,000 40.34 43.56 Dec. 31, 2011 34,980 1,140

2004 - 5,000 - 5,000 23.815 29.06 Dec. 31, 2011 111,775 73,450

2003 4,000 4,000 4,000 4,000 21.65 25.905 Dec. 31, 2011 196,160 142,760

2000 4,000 - 4,000 - 19.32 22.31 Dec. 1, 2010 107,400 85,760

(1) Share-based awards were not granted to the Named Executive Offi cers in 2009.(2) Figures have been adjusted to refl ect the two-for-one stock split by way of stock dividend on September 15, 2005.(3) Options to acquire Class I Non-Voting Shares of the Corporation.(4) Share appreciation rights based on Class I Non-Voting Shares of the Corporation.(5) Options to acquire Class A non-voting shares of Canadian Utilities Limited.(6) Share appreciation rights based on Class A non-voting shares of Canadian Utilities Limited.(7) The value of unexercised in-the-money options is calculated based on the difference between the market value of the Corporation’s Class

I Non-Voting Shares and Canadian Utilities Limited’s Class A non-voting shares underlying the options as at December 31, 2009, of $46.17 and $43.75, respectively, and the exercise price of the options.

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Value Vested or Earned During the Year

(1) Figures have been adjusted to refl ect the two-for-one stock split by way of stock dividend on September 15, 2005.(2) Options to acquire Class I Non-Voting Shares of the Corporation.(3) Share appreciation rights based on Class I Non-Voting Shares of the Corporation.(4) Options to acquire Class A non-voting shares of Canadian Utilities Limited.(5) Share appreciation rights based on Class A non-voting shares of Canadian Utilities Limited.(6) Share-based awards were not granted to the Named Executive Offi cers in 2009.

Pension Benefi ts

The Named Executive Offi cers participate in the Retirement Plan for Employees of Canadian Utilities Limited and Participating Companies (the CU Plan). The CU Plan comprises two components: defi ned benefi t (DB) and defi ned contribution (DC).

The DB component provides a benefi t of 1.4% of average salary up to the average year’s maximum pensionable earnings under the Canada Pension Plan ($43,620 in 2009) and 2.0% of additional average salary. Average salary is the average of the highest fi ve consecutive years of base salary, excluding bonuses. Members may retire as early as age 55 and are eligible for unreduced benefi ts at age 62 or if age and service total 90 years, otherwise the early retirement reduction is 3% for each year retirement precedes age 62 plus an additional 3% for each year retirement precedes age 60. Benefi ts are paid for the life of the member, with 60% continuing for the life of the member’s spouse following the death of the member. Ad hoc benefi t increases equal to 100% of infl ation to a maximum of 3% per annum have historically been provided annually to retired members’ pensions.

The DC component consists of employee contributions of 4% of base salary and employer-paid contributions of 6% of base salary. A range of investment options is provided to the members. Retirement benefi ts depend upon the member’s account balance at retirement.

Participation in the CU Plan (DB or DC) is non-contributory for the Named Executive Offi cers.

N.C. Southern, B.R. Bale, S.W. Kiefer, S.R. Werth and H.G. Wilmot currently participate in the DB component. H.G. Wilmot also has DB entitlements for service prior to August 1, 1990, in pension plans sponsored by ATCO Structures & Logistics Ltd. (the AS&L Plan; collectively with the CU Plan, the Plans). The benefi ts provided by the DB components of both Plans are substantially the same. K.M. Watson retired on December 31, 2009 under the DB component of the CU Plan.

Pension benefi ts and contributions under the Plans are subject to limits imposed by the Income Tax Act (Canada). Benefi ts in excess of these limits that would otherwise be payable to N.C. Southern, S.W. Kiefer, S.R. Werth and H.G. Wilmot upon retirement are provided by Canadian Utilities Limited (or ATCO Structures & Logistics Ltd. in respect of AS&L Plan benefi ts) under an unfunded supplemental arrangement. Additional supplemental pension benefi ts are provided to N.C. Southern pursuant to her employment agreement,

Name

Option-Based AwardsAmount Vested During the Year

Ended December 31, 2009 (1)

($) Share Based Awards -Value Vested During

the Year (6)

Non-Equity IncentivePlan Compensation -Value Earned During

the YearATCO

SOPs (2)ATCO

SARs (3)CU

SOPs (4)CU

SARs (5)

N.C. Southern 356,800 446,710 410,200 481,840 - -

B.R. Bale - - - - - -

S.W. Kiefer - 29,970 - 23,880 - -

S.R. Werth - 14,985 - 11,940 - -

H.G. Wilmot - - - - - -


K.M. Watson - 14,985 - 11,940 - -

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38

Pursuant to her employment agreement with the Corporation, N.C. Southern is eligible upon retirement to receive a pension calculated as a percentage of the average of the highest fi ve years of income, including salary and bonuses, during the last ten years of employment prior to retirement. The percentage varies by age at retirement as per the following table:

The pension payable upon retirement at age 55 or over is inclusive of the pension payable under the CU Plan. The Corporation’s consent is required for retirement prior to age 55. The pension is payable on the same terms as the CU Plan in respect of post-retirement survivor benefi ts and ad hoc indexing.

The following table outlines pension benefi ts and accrued obligations inclusive of all registered pension plans and supplemental arrangements for the DB Plan. No Named Executive Offi cers participate in the DC Plan.

Defi ned Benefi t Plan

(1) Credited service represents the period of pension plan membership used to calculate an individual’s pension. It does not necessarily include all years of service with the Corporation.

(2) Annual benefi ts payable at year end are based on DB credited service and actual average pensionable earnings at December 31, 2009, and are reduced for early retirement for those currently eligible to retire. Annual benefi ts payable at age 65 are based on actual average pensionable earnings at December 31, 2009, and projected service at age 65 to a maximum of 35 years. K.M. Watson retired prior to age 65.

(3) K.M. Watson retired December 31, 2009.

The accrued pension obligation is calculated following the method prescribed by the Canadian Institute of Chartered Accountants and is based on management’s best estimate of future events that affect the cost of pensions, including assumptions about future salary adjustments. The compensatory change in the accrued obligation includes service cost, differences between actual and estimated earnings, and the impact of plan amendments. The non-compensatory change in the accrued obligation includes interest on the obligation and the impact of assumption changes. Further information on the methods and assumptions

Name

Number of Years Credited

Service (1)

(#)

Annual Benefi ts Payable (2)

($) Accrued Obligation at Start of Year

($)

CompensatoryChange

($)

Non-Compensatory

Change($)

Accrued Obligation at Year End

($)At

Year EndAt

Age 65

N.C. Southern 14.00 955,000 1,528,000 6,659,471 243,674 692,811 7,595,956

B.R. Bale 28.00 68,444 93,500 786,179 29,118 138,798 954,095

S.W. Kiefer 26.00 231,875 312,140 2,808,224 (2,559) 362,112 3,167,777

S.R. Werth 28.67 196,031 239,340 2,604,863 (11,114) 345,007 2,938,756

H.G. Wilmot 33.33 80,505 133,299 1,762,777 46,393 293,667 2,102,837


K.M. Watson (3) 31.75 224,100 n/a 3,178,592 71,835 330,428 3,580,855

Age at Retirement Percentage

50 - 53 50%

54 60%

55 70%

56 72%

57 74%

58 76%

59 78%

60 and older 80%

further details of which are provided below. All supplemental pension benefi ts are provided on a DB basis. For the purpose of supplemental pension benefi t calculations, service is limited to 35 years and any DC service under the Plan is deemed to be DB service. No benefi ts are payable under the supplemental arrangements upon termination or death prior to age 55. The supplemental pension is payable on the same terms as the CU Plan pension in respect of post-retirement survivor benefi ts and ad hoc indexing.

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Termination and Change of Control Benefi ts

There are no employment agreements for executives of the Corporation with the exception of the President & Chief Executive Offi cer as noted on page 29. Termination of employment for an executive would be subject to applicable legislation and common law provisions.

As noted in the table below, the following actions are executed based on the circumstances of a change in status.

Employment Status Change Associated Action Relevant to All ATCO Employees

Change of Control (1)

All vested SOPs/SARs are exercisable within 90 days of change of control date • or on expiry date if earlier.All unvested SOPs/SARs will be accelerated and exercisable within 90 days of • change of control date or on expiry date if earlier.

Termination

All salary, annual incentive and benefi t programs cease.• All vested SOPs/SARs are exercisable within 90 days of termination date or on • expiry date if earlier.All unvested SOPs/SARs will be forfeited on termination date.• Pension paid as a commuted value or deferred benefi t.• If applicable, severance provided to an individual based on employment • standards and common law provisions.

Resignation

All salary and benefi t programs cease.• Current year annual incentive bonus is forfeited.• All vested SOPs/SARs are exercisable within 90 days of resignation date or on • expiry date if earlier.All unvested SOPs/SARs will be forfeited on resignation date.• Pension paid as a commuted value or deferred benefi t.•

Retirement

Salary ceases as of retirement date.• Retiring allowance is provided based on years of service to a maximum of one • month’s salary.Retirement medical and dental benefi t coverage commences at retirement and • continues until 6 months after death of pensioner.Annual incentive bonus paid on a pro rata basis to retirement date.• All vested SOPs/SARs are exercisable within 24 months of retirement date or • on expiry date if earlier.All unvested SOPs/SARs will be forfeited on retirement date.• Pension provisions according to plan membership.•

(1) Change of control shall be deemed to have occurred upon the acceptance by the holders of shares of the Corporation, representing in the aggregate more than 50% of all issued Class II Voting Shares of the Corporation, of any offer, whether by way of a takeover bid or otherwise, for all or any of the shares of the Corporation; provided, however, that a change of control shall not occur as a result of any transaction undertaken in connection with the conversion of the Corporation to a trust if the shareholders of the Corporation immediately prior to the implementation of the initial transaction involved in such conversion will, upon completion of such conversion, own more than 50% of the voting securities of the trust resulting from such conversion. Options may not be exercised to purchase a number of shares that is fewer than a board lot as specifi ed by the Toronto Stock Exchange.

used to calculate accrued obligations may be found in Note 24, Employee Future Benefi ts, of the notes to the Corporation’s 2009 fi nancial statements.

40

CORPORATE GOVERNANCE

The Board of the Corporation views effective corporate governance as an essential element for the ongoing well-being of the Corporation and its shareholders. The Corporation strives to ensure that its corporate governance practices provide for effective stewardship of the Corporation and evaluates its practices on an ongoing basis. The corporate governance disclosure for the Corporation is attached to this management proxy circular as Schedule A.

ADDITIONAL INFORMATION

The Corporation is the successor to a corporation which commenced business in 1947 and was founded by R.D. Southern and his father, Mr. S.D. Southern. As a founder of the Corporation and a signifi cant shareholder, R.D. Southern is closely identifi ed with the Corporation by industry participants, the investment community and the Corporation’s shareholders. Full responsibility for the Corporation’s strategic direction and ongoing operations was successfully transitioned to Ms. N.C. Southern during a well defi ned and executed succession plan which culminated in her appointment as President & Chief Executive Offi cer in 2003. Under Ms. Southern’s leadership, the Corporation continues to build on the strong foundation and principles established by the Corporation’s founders.

Additional information relating to the Corporation is available on SEDAR at www.sedar.com. Information regarding the business of the Corporation is provided in the Corporation’s annual information form dated February 17, 2010. Financial information is provided in the Corporation’s fi nancial statements and the management’s discussion and analysis for the year ended December 31, 2009. Copies of these documents, the Corporation’s interim fi nancial statements and additional copies of this management proxy circular may be obtained upon request from the Corporate Secretary of the Corporation at 1400 ATCO Centre, 909 - 11th Avenue S.W., Calgary, Alberta, T2R 1N6.

Corporate information, including our privacy commitment, is also available on the Corporation’s website: www.atco.com.

DATED at Calgary, Alberta, this 8th day of March, 2010.

[Signed by P. Spruin]

P. SpruinVice President, Administration & Corporate Secretary

SECTION 4 OTHER INFORMATION

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Disclosure Requirement ATCO Corporate Governance Practices1. Board of Directors

(a) Disclose the identity of directors who are independent.

The following directors are independent as that term is defi ned in section 1.4 of National Instrument 52-110 Audit Committees:

B.P. CollombB.P. DrummondRt. Hon. D.F. MazankowskiH.M. NeldnerM.R.P. Rayfi eldC.W. Wilson

(b) Disclose the identity of directors who are not independent, and describe the basis for that determination.

N.C. Southern, R.D. Southern, and R.T. Booth are not independent because they are considered to have a material relationship with the issuer.

N.C. Southern is the Deputy Chair, President & Chief Executive Offi cer of the Corporation.

R.D. Southern is the Chairman of the Board.

R.T. Booth is a partner in the fi rm that is the Corporation’s legal counsel.

(c) Disclose whether or not a majority of directors are independent. If a majority of directors are not independent, describe what the board of directors does to facilitate its exercise of independent judgment in carrying out its responsibilities.

A majority of the directors of the Corporation are independent.

(d) If a director is presently a director of any other issuer that is a reporting issuer (or the equivalent) in a jurisdiction or a foreign jurisdiction, identify both the director and the other issuer.

The following directors are also directors of the issuers set out beneath their respective names below:

R.T. BoothCanadian Utilities Limited (TSX)•

B.P. CollombDuPont (NYSE), member of the Environmental • Policy and Corporate Governance CommitteesLafarge S.A. (Euronext, NYSE), Honorary • ChairmanTOTAL S.A. (Euronext, NYSE), member of • the Nominating and Governance and the Compensation Committees

SCHEDULE A CORPORATE GOVERNANCE DISCLOSURE

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Disclosure Requirement ATCO Corporate Governance PracticesRt. Hon. D.F. Mazankowski

Canadian Oil Sands Trust (TSX), member of • the Corporate Governance & Compensation CommitteePower Corporation of Canada (TSX), member • of the Executive, Audit, Compensation, Related Party & Conduct Review, and Governance and Nominating CommitteesPower Financial Corporation (TSX), member of • the Executive CommitteeGreat-West Lifeco Inc. (TSX), member of the • Executive and Governance & Nominating CommitteesThe Great West Life Assurance Company • (TSX), member of the Executive, Governance & Nominating and Investment CommitteesIGM Financial Inc. (TSX), Chair of the Audit • Committee and member of the Executive and Investment Committees

N.C. SouthernAKITA Drilling Ltd. (TSX)• Canadian Utilities Limited (TSX), Deputy Chair• Bank of Montreal (TSX, NYSE), member of • the Risk Review and Pension Fund Society CommitteesCU Inc. (TSX), Chair•

R.D. SouthernAKITA Drilling Ltd. (TSX), Deputy Chair• Canadian Utilities Limited (TSX), Chairman of • the Board

C.W. WilsonAKITA Drilling Ltd. (TSX), Chair of the Corporate • Governance - Nomination, Compensation and Succession CommitteeCanadian Utilities Limited (TSX), Chair of • the Corporate Governance - Nomination, Compensation and Succession CommitteeBig Rock Brewery Income Trust (TSX), member • of the Corporate Governance CommitteeTalisman Energy Inc. (TSX, NYSE), Chair of the • Reserves Committee and member of the Audit and Health, Safety, Environment, and Corporate Responsibility Committees

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Disclosure Requirement ATCO Corporate Governance Practices(e) Disclose whether or not the independent

directors hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance. If the independent directors hold such meetings, disclose the number of meetings held since the beginning of the issuer’s most recently completed fi nancial year.

At each of the regularly scheduled board meetings, in camera sessions are held at which non-independent directors and members of management are not present. The in camera meetings are chaired by the Lead Director. Additional in camera meetings can be requested through the Lead Director at any time.

If the independent directors do not hold such meetings, describe what the board does to facilitate open and candid discussion among its independent directors.

In addition, in camera sessions are held at each of the regularly scheduled meetings of the Audit Committee and the Corporate Governance - Nomination, Compensation and Succession Committee (GOCOM).

(f) Disclose whether or not the chair of the board is an independent director. If the board has a chair or lead director who is an independent director, disclose the identity of the independent chair or lead director, and describe his or her role and responsibilities. If the board has neither a chair that is independent nor a lead director that is independent, describe what the board does to provide leadership for its independent directors.

R.D. Southern, the Chairman of the Board, is not an independent director. The Corporation’s Lead Director, C.W. Wilson, is independent.

The primary function of the Lead Director is to provide independent leadership to ensure the Board of Directors (the Board) functions independently of management of the Corporation. The position description for the Lead Director is available on the Corporation’s website at www.atco.com.

(g) Disclose the attendance record of each director for all board meetings held since the beginning of the issuer’s most recently completed fi nancial year.

The attendance record of each director at Board and committee meetings is disclosed on pages 3 through 8.

W.L. Britton, B.K. French and L.C. van Wachem retired from the Board on May 14, 2009. Their attendance record from January 1, 2009, until retirement was 83%, 100% and 67%, respectively.

2. Board MandateDisclose the text of the board’s written mandate. If the board does not have a written mandate, describe how the board delineates its role and responsibilities.

The mandate of the Board is attached as Schedule B and is also available on the Corporation’s website at www.atco.com.

GOCOM is responsible for reviewing the mandates of the Board and its committees on an annual basis and recommending to the Board such amendments to those mandates as GOCOM believes are necessary or desirable.

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Disclosure Requirement ATCO Corporate Governance Practices3. Position Descriptions(a) Disclose whether or not the board has

developed written position descriptions for the chair and the chair of each board committee. If the board has not developed written position descriptions for the chair and/or the chair of each board committee, briefl y describe how the board delineates the role and responsibilities of each such position.

The Board has approved written position descriptions for the Chairman of the Board and the chair of each Board committee. The position descriptions are reviewed annually by GOCOM. Copies of these descriptions are available on the Corporation’s website at www.atco.com.

(b) Disclose whether or not the board and CEO have developed a written position description for the CEO. If the board and CEO have not developed such a position description, briefl y describe how the board delineates the role and responsibilities of the CEO.

The Board has approved a written position description for the CEO. The position description is reviewed annually by GOCOM and is available on the Corporation’s website at www.atco.com.

4. Orientation and Continuing Education(a) Briefl y describe what measures the board takes

to orient new directors regarding:New directors attend a briefi ng with the Chairman of the Board and attend comprehensive meetings at which they receive briefi ngs on all aspects of the nature and operation of the Corporation’s business by senior management of the Corporation and its subsidiaries. New directors are also provided with a manual which contains information about each of the business segments, organization structure, by-laws, Board and committee mandates and corporate policies, including the Corporation’s Code of Ethics and Disclosure Policy.

(i) the role of the board, its committees and its directors, and

(ii) the nature and operation of the issuer’s business.

(b) Briefl y describe what measures, if any, the board takes to provide continuing education for its directors. If the board does not provide continuing education, describe how the board ensures that its directors maintain the skill and knowledge necessary to meet their obligations as directors.

Directors, together with senior management, attend an annual three to four-day strategy conference which has been held consecutively since 1968. At these sessions, the Board receives detailed briefi ngs on the business activities of the Corporation and its subsidiaries as well as other pertinent information required for directors to fulfi ll their obligations. Visits to various operating sites are also arranged for directors.

In addition, directors attend and participate in seminars and other continuing education programs. R.T. Booth and M.R.P. Rayfi eld completed the Director Education Program at the Institute of Corporate Directors in 2009.

Outside experts are brought in as required to provide directors with ongoing education on general and/or specifi c subject matters.

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Disclosure Requirement ATCO Corporate Governance Practices5. Ethical Business Conduct(a) Disclose whether or not the board has

adopted a written code for directors, offi cers and employees. If the board has adopted a written code:

The Board has adopted a written Code of Ethics (the Code), which is subject to periodic review and revision to ensure it is in line with best practices.

(i) disclose how a person or company may obtain a copy of the code;

A copy of the Code may be obtained upon request from the Corporate Secretary of the Corporation at 1400 ATCO Centre, 909 – 11th Avenue S.W., Calgary, Alberta T2R 1N6. The Code is also available on the Corporation’s website at www.atco.com and on the SEDAR website at www.sedar.com.

(ii) describe how the board monitors compliance with its code, or if the board does not monitor compliance, explain whether and how the board satisfi es itself regarding compliance with its code; and

A copy of the Code has been provided to each director, offi cer and employee of the Corporation and each such person is required to acknowledge annually that he or she has read the Code and disclosed any transactions or matters of potential confl ict. Similarly, copies of the Code are provided to each new director, offi cer and employee of the Corporation, and each such person shall acknowledge that he or she has read the Code before commencing activities as a director, offi cer or employee, as the case may be.

(iii) provide a cross-reference to any material change report fi led since the beginning of the issuer’s most recently completed fi nancial year that pertains to any conduct of a director or executive offi cer that constitutes a departure from the code.

No material change reports have been fi led by the Corporation during 2009 relating to a director’s or executive offi cer’s departure from the Code. Further, no waivers of the Code have ever been granted to any director, offi cer or other employee of the Corporation.

(b) Describe any steps the board takes to ensure directors exercise independent judgment in considering transactions and agreements in respect of which a director or executive offi cer has a material interest.

Directors who have, or may be reasonably perceived to have, a personal interest in a transaction or agreement being contemplated by the Corporation are required to declare such interest at any directors’ meeting at which the matter is being considered and are requested to leave the meeting during discussion on such matter and abstain from voting.

(c) Describe any other steps the board takes to encourage and promote a culture of ethical business conduct.

The Board encourages and promotes a culture of ethical business conduct by expecting each director, all offi cers and management to act in a manner that exemplifi es ethical business conduct. This expectation sets the tone for all employees of the Corporation. The Corporation strives to ensure that prospective employees are of good character.

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Disclosure Requirement ATCO Corporate Governance Practices6. Nomination of Directors(a) Describe the process by which the board

identifi es new candidates for board nomination.

GOCOM is responsible for, among other things, recommending potential candidates for nomination to the Board. The recommendation of potential Board members is undertaken with a view to ensuring overall diversity of experience, backgrounds, skills and geographic representation of Board members. GOCOM receives advice from the Board respecting individuals best suited to serve as directors, and maintains its own standing list of appropriate candidates for directorships.

(b) Disclose whether or not the board has a nominating committee composed entirely of independent directors. If the board does not have a nominating committee composed entirely of independent directors, describe what steps the board takes to encourage an objective nomination process.

One of the four members of GOCOM is not independent. GOCOM conducts its business on the basis of majority approval which encourages an objective nomination process. Should a confl ict be identifi ed, the non-independent member would excuse himself from the meeting and abstain from voting.

(c) If the board has a nominating committee, describe the responsibilities, powers and operation of the nominating committee.

GOCOM is responsible for reviewing the size and composition of the Board from time to time and considering persons as nominees for directors for the approval of the Board and election by the shareholders. The responsibilities of GOCOM can be found in its mandate described on page 16. The complete mandate is available on the Corporation’s website at www.atco.com.

7. Compensation(a) Describe the process by which the board

determines the compensation for the issuer’s directors and offi cers.

GOCOM is responsible for assessing the compensation of directors and offi cers and making recommendations to the Board. GOCOM reviews director compensation to determine whether such compensation is appropriate for the responsibilities, time commitment and risks assumed by the directors. GOCOM reviews offi cer and director compensation annually utilizing information from other corporations and published data, and from time to time retains independent compensation consultants to undertake market comparisons and provide advice on developing appropriate compensation programs.

Please refer to pages 19 to 39 of the management proxy circular for details of the executive compensation structure and policies.

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Disclosure Requirement ATCO Corporate Governance Practices(b) Disclose whether or not the board has a

compensation committee composed entirely of independent directors. If the board does not have a compensation committee composed entirely of independent directors, describe what steps the board takes to ensure an objective process for determining such compensation.

One of the four members of GOCOM is not independent. GOCOM conducts its business on the basis of majority approval which encourages an objective process for determining compensation. Should a confl ict be identifi ed, the non-independent member would excuse himself from the meeting and abstain from voting.

(c) If the board has a compensation committee, describe the responsibilities, powers and operation of the compensation committee.

GOCOM annually reviews and determines executive compensation packages for the senior offi cers of the Corporation and its wholly-owned subsidiaries, including salary, short-term, medium-term and long-term incentives, stock options or awards, share appreciation rights and other incentives. The performance and development profi le for each high-potential employee and offi cer is reviewed by GOCOM in conjunction with the Corporation’s succession planning process. GOCOM also reviews and recommends directors’ compensation from time to time, as appropriate. In addition, GOCOM prepares and reviews public or regulatory disclosure respecting compensation and the basis on which performance is measured.

GOCOM has the authority to retain and compensate any outside adviser as it determines necessary to permit it to carry out its duties.

(d) If a compensation consultant or advisor has, at any time since the beginning of the issuer’s most recently completed fi nancial year, been retained to assist in determining compensation for any of the issuer’s directors and offi cers, disclose the identity of the consultant or advisor and briefl y summarize the mandate for which they have been retained. If the consultant or advisor has been retained to perform any other work for the issuer, state that fact and briefl y describe the nature of the work.

GOCOM engaged the services of Towers Watson to provide executive compensation consulting services to the Committee during 2009. The mandate of the consultant was to undertake market comparisons, gather information on competitive compensation practices, and provide advice on developing appropriate compensation programs for the Corporation’s executive offi cers.

The fees paid to Towers Watson in 2009 were approximately $584,000 for compensation, administration, benefi ts, and actuarial consulting services as well as published surveys and studies. Approximately $95,000 of the $584,000 was incurred for direct executive compensation services.

In 2009, Mercer provided the Corporation with non-executive compensation, benefi t, and pension actuarial consulting services, and published surveys and studies. The fees paid for these services were approximately $570,000. GOCOM annually pre-approves the consulting services of Towers Watson and Mercer.

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Disclosure Requirement ATCO Corporate Governance Practices8. Other Board Committees

If the board has standing committees other than the audit, compensation and nominating committees, identify the committees and describe their function.

The Board’s other standing committee is the Risk Review Committee. The responsibilities of this committee, together with GOCOM and the Audit Committee, can be found in their mandates which are described on pages 15 to 18. The complete mandates are available on the Corporation’s website at www.atco.com.

9. AssessmentsDisclose whether or not the board, its committees and individual directors are regularly assessed with respect to effectiveness and contribution. If assessments are regularly conducted, describe the process used for the assessments. If assessments are not regularly conducted, describe how the board satisfi es itself that the board, its committees, and its individual directors are performing effectively.

The Board, its committees and its individual directors are assessed at least annually. This function is facilitated by the Lead Director on behalf of the Chairman of the Board. Board and committee performance evaluation questionnaires are distributed to each director and Board committee member. The questionnaires provide the directors with the opportunity to examine their effectiveness and identify areas for improvement. The questions address director skills and experience, preparation, attendance and availability at meetings, communication and interaction, business, company and industry knowledge as well as an overall assessment. The responses are conveyed to GOCOM and each Board member receives a full report from GOCOM on the Board questionnaire. Each committee member receives a complete report on the committee questionnaire.

As required, the Chairman of the Board meets with each director to discuss his/her performance and other issues relating to Board, committee and director performance.

Directors are encouraged not to be limited to responding only to the questions provided, but to comment broadly.

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The Board of Directors (the Board) of ATCO Ltd. (the Corporation) is responsible for the stewardship of the Corporation and for overseeing the conduct of the business of the Corporation and the activities of management, who are responsible for the day-to-day conduct of the business.

Composition and Operation

The Board operates by reserving certain powers to itself and delegating certain of its authorities to management. The Board retains responsibility for managing its own affairs, including selecting its chair, planning its composition and size, nominating candidates for election to the Board, determining independence of Board members, constituting committees of the Board, determining director compensation, periodically discussing matters of interest separate from and independent of any infl uence from management, and assessing the effectiveness of the Board, committees and directors in fulfi lling their responsibilities. Subject to the articles and by-laws of the Corporation and the Alberta Business Corporations Act (the “ABCA”), the Board may constitute, seek the advice of, and delegate powers, duties and responsibilities to, committees of the Board.

Responsibilities

The Board’s primary responsibilities are to preserve and enhance long-term shareholder value and to ensure that the Corporation meets its obligations on an ongoing basis and operates in a reliable and prudent manner. In performing its duties, the Board should also consider the legitimate interests that other interested parties, such as employees, customers and communities, may have in the Corporation. In broad terms, the stewardship of the Corporation involves the Board in strategic planning, risk management and mitigation, senior management determination, communication planning, and internal control integrity. More specifi cally, the Board is responsible for

(a) to the extent feasible, satisfying itself as to the integrity of the Chief Executive Offi cer (CEO) and other executive offi cers and that the CEO and other executive offi cers create a culture of integrity throughout the organization;

(b) adopting a strategic planning process and approving, on at least an annual basis, a strategic plan for the Corporation which takes into account, among other things, the opportunities and risks of the business;

(c) identifying the principal risks of the Corporation’s business and ensuring the implementation of appropriate systems to manage these risks;

(d) succession planning (including appointing, training and monitoring senior management);

(e) adopting a communication policy for the Corporation that includes measures for receiving feedback from interested parties;

(f) the Corporation’s internal control and management information systems;

(g) developing the Corporation’s approach to corporate governance, including developing a set of corporate governance principles and guidelines that are specifi cally applicable to the Corporation; and

(h) on an individual basis, attending Board meetings, reviewing meeting materials in advance of meetings, and complying with the other expectations and responsibilities of directors of the Corporation established by the Board.

SCHEDULE B BOARD OF DIRECTORS MANDATE

Specifi c Duties

The Board’s specifi c duties, obligations and responsibilities fall into the following categories:

1. Legal Requirements

(a) The Board has oversight responsibility for the Corporation’s satisfaction of its legal obligations and for properly preparing, approving and maintaining the Corporation’s documents and records.

(b) The Board has the statutory obligation to

(i) supervise the management of the business and affairs of the Corporation,

(ii) act honestly and in good faith with a view to the best interests of the Corporation,

(iii) exercise the care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances, and

(iv) act in accordance with its obligations contained in the ABCA and the regulations thereunder, the Corporation’s articles and by-laws, and other relevant legislation and regulations.

(c) The Board has the statutory obligation to consider certain matters as a board of directors. The Board may not delegate to management or to a committee of the Board the authority to

(i) submit to the shareholders any question or matter requiring the approval of the shareholders,

(ii) fi ll a vacancy among the directors or in the offi ce of auditor, or appoint additional directors,

(iii) issue securities except in the manner and on the terms authorized by the Board,

(iv) declare dividends,

(v) purchase, redeem or otherwise acquire shares issued by the Corporation, except in the manner and on the terms authorized by the Board,

(vi) pay a commission to any person in consideration of the person’s purchasing or agreeing to purchase shares of the Corporation from the Corporation or from any other person, or procuring or agreeing to procure purchasers for shares of the Corporation,

(vii) approve any management proxy circular relating to a solicitation of proxies by or on behalf of management of the Corporation,

(viii) approve any take-over bid circular or directors’ circular,

(ix) approve any annual fi nancial statements of the Corporation, or

(x) adopt, amend or repeal by-laws.

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2. Independence

The Board is responsible for implementing appropriate structures and procedures to permit the Board to function independently of management.

3. Strategic Planning

The Board is responsible for ensuring that there are long-term goals and a strategic planning process in place for the Corporation and participating with management, at least annually, directly or through it committees in approving the strategic plan by which the Corporation proposes to achieve its goals.

4. Risk Management

The Board is responsible for understanding the principal risks of the business in which the Corporation is engaged, achieving a proper balance between risks incurred and the potential return to shareholders, and confi rming that there are systems in place that effectively monitor and manage those risks with a view to the long-term viability of the Corporation.

5. Appointment, Training and Monitoring of Senior Management

The Board is responsible for

(a) appointing the CEO of the Corporation, monitoring and assessing the CEO’s performance, determining the CEO’s compensation, and providing advice and counsel to the CEO in the execution of the CEO’s duties,

(b) approving the appointment and remuneration of all offi cers of the Corporation, and

(c) confi rming that adequate provision has been made for the training and development of management and for the orderly succession of management.

6. Reporting and Communication


(a) verifying that the Corporation has in place policies and programs to enable the Corporation to communicate effectively with its shareholders, other interested parties and the public generally,

(b) verifying that the fi nancial performance of the Corporation is adequately reported to shareholders, other security holders and regulators on a timely and regular basis,

(c) verifying that the Corporation’s fi nancial results are reported fairly and in accordance with generally accepted accounting principles,

(d) verifying the timely reporting of any other developments that have a signifi cant and material effect on the value of the Corporation, and

(e) reporting annually to shareholders on the Board’s stewardship of the affairs of the Corporation for the preceding year.

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7. Monitoring and Acting


(a) verifying that the Corporation operates at all times within applicable laws and regulations to the highest ethical and moral standards,

(b) approving and monitoring compliance with the signifi cant policies and procedures by which the Corporation is operated,

(c) verifying that the Corporation sets high environmental standards in its operations and is in compliance with environmental laws and legislation,

(d) verifying that the Corporation has in place appropriate programs and policies for the health and safety of its employees in the workplace,

(e) monitoring the Corporation’s progress toward its goals and objectives and revising and altering its direction through management in response to changing circumstances,

(f) taking action when the Corporation’s performance falls short of its goals and objectives or when other special circumstances warrant,

(g) verifying that the Corporation has implemented adequate disclosure controls and procedures and internal control and information systems,

(h) ensuring that the Board receives from senior management on a timely basis the information and input required to enable the Board to effectively perform its duties,

(i) adopting a written code of business conduct and ethics and monitoring compliance with the code, and

(j) conducting and acting upon annual assessments and evaluations of the Board, committees of the Board and individual directors.

8. Other

The foregoing list of duties is not exhaustive. The Board may perform any other activities consistent with this mandate, the Corporation’s articles and by-laws, and any other governing laws, as the Board deems necessary or appropriate.

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The information contained in the following questions and answers is similar to that provided in Section 1 of the management proxy circular. This format is designed as additional guidance to help a shareholder in determining how to vote. A fl ow chart is also included that outlines the differences if you are voting as a registered or non-registered shareholder. Any further questions may be directed to our transfer agent, CIBC Mellon Trust Company, by accessing www.cibcmellon.com, by fax at (416) 643-5501, or by telephone:

Within Canada and the U.S.:1 (800) 387-0825

In the Toronto area, or from any other country: (416) 643-5500

A Glossary is included as Schedule D for your convenience. You may wish to review the Glossary prior to reading the following questions and their answers.

Q. Am I entitled to vote?

A. You are entitled to vote if you were a holder of Class II Voting Shares of ATCO Ltd. at the close of business on March 24, 2010. Each Class II Voting Share entitles its holder to one vote.

Q. How many shareholders are required to constitute a quorum at the meeting?

A. The Corporation’s by-laws provide that a quorum will be two persons present and holding or representing by proxy fi ve percent of the shares entitled to vote at the meeting.

Q. What am I voting on?

A. You are voting on the following business matters that are to be addressed at the annual meeting:

the election of the directors;•

the appointment of the auditor; and •

such other business as may properly come • before the meeting or any adjournment thereof.

Q. What if amendments are made to these matters or if other matters are brought before the meeting?

A. If you are a registered shareholder and attend the annual meeting in person and are eligible to vote, you may vote on such matters as you choose.

If you have properly completed and returned a form of proxy or voting instruction form, the person named therein will have discretionary authority with respect to voting on amendments or variations to matters identifi ed in the notice of the annual meeting, and on other matters which may properly come before the annual meeting.

Q. Who is soliciting my vote?

A. The management of ATCO Ltd. is soliciting your vote.

Q. How do I vote?

A. If you are a registered shareholder, you may vote in one of the following ways:

in person at the annual meeting;•

by properly completing and signing the • enclosed form of proxy appointing the named persons or some other person or company you choose to represent you as proxyholder and vote your shares at the annual meeting, and returning it in the enclosed prepaid envelope;

by faxing • both sides of your properly completed form of proxy to CIBC Mellon Trust Company at 1 (866) 781-3111 (from within Canada and the U.S.) or (416) 368-2502 (from outside North America);

by telephone using the following toll free • number 1 (866) 271-1207 and following the voice prompts. You will need to enter the 13 digit Control Number located in the lower left-hand corner on the reverse of the form of proxy mailed to you in order to enter your voting instructions;

SCHEDULE C QUESTIONS AND ANSWERS ON VOTING AND PROXIES

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via the internet by accessing www.• eproxyvoting.com/atco and following the prompts. You will need to enter your 13 digit Control Number located in the lower left-hand corner on the reverse of the form of proxy mailed to you in order to enter your voting instructions.

If you are a non-registered shareholder your shares are held in the name of a nominee (usually a bank, broker, or trust company). You should have received a request for voting instructions from your nominee. If you wish to vote in person at the annual meeting, insert your own name in the space provided on the voting instruction form and return it by following the instructions provided. Please register with the Corporation’s transfer agent, CIBC Mellon Trust Company, upon arrival at the annual meeting. If you do not intend to attend the annual meeting in person, follow the instructions on your voting instruction form to vote by telephone, internet or fax, or complete, sign and mail the voting instruction form in the postage prepaid envelope provided.

Q. Who votes my shares and how will they be voted if I return a form of proxy?

A. By properly completing and returning a form of proxy, you are authorizing R.D. Southern, Chairman of the Board, or, failing him, N.C. Southern, Deputy Chair, President & Chief Executive Offi cer, to attend the annual meeting and to vote your shares. You can use the enclosed form of proxy, or any other proper form of proxy, to appoint your proxyholder.

The shares represented by your proxy will be voted as you have instructed. If you properly complete and return your form of proxy but do not specify how you wish the votes cast, your shares will be voted as your proxyholder sees fi t.

If neither you nor your proxyholder gives specifi c instructions, your shares will be voted as follows:

FOR the election as directors of those • nominees set out in the management proxy circular; and

FOR the appointment of • PricewaterhouseCoopers LLP as the auditor of the Corporation.

Q. Can I appoint someone other than the individuals named in the enclosed form of proxy or voting instruction form to vote my shares?

A. Yes, as a registered shareholder you have the right to appoint another person or company of your choice, who need not be a shareholder, as your proxyholder to attend and act on your behalf at the annual meeting. If you wish to appoint a person or company other than those named in the enclosed form of proxy, then strike out the printed names appearing on the form of proxy and insert the name of your chosen proxyholder in the space provided. This can also be accomplished via the internet by accessing www.eproxyvoting.com/atco.

If you are a non-registered shareholder, please follow the instructions provided by your nominee.

It is important for you to ensure that any other person you appoint as your proxyholder will attend the annual meeting and is aware that his or her appointment has been made to vote your shares. If your appointed proxyholder does not attend the annual meeting in person, your shares will not be voted. Proxyholders should, on arrival at the annual meeting, present themselves to a representative of CIBC Mellon Trust Company.

Q. Who may sign the form of proxy?

A. For a shareholder who is an individual, the form of proxy may be signed either by the individual or by his or her authorized attorney. In the case of a shareholder which is a body corporate or an association, the form of proxy must be signed by a duly authorized offi cer or by an authorized attorney. Persons signing as executors, administrators or trustees should so indicate and must provide a true copy of the document establishing their authority. An authorized person(s) of a partnership should sign in the partnership name.

Q. What if my shares are registered in more than one name or in the name of a company?

A. If the shares are registered in more than one name, all those persons in whose name the shares are registered must sign the form of proxy. If the shares are registered in the name

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of a company or any name other than your own, you should provide documentation that proves you are authorized to sign the form of proxy on behalf of that company or name. If you have any questions as to what supporting documentation is required, contact CIBC Mellon Trust Company prior to submitting your form of proxy.

Q. Where do I send my form of proxy?

A. If you are a registered shareholder, please return your properly completed form of proxy to our transfer agent in the postage paid envelope provided or mail it to CIBC Mellon Trust Company, Attention: Proxy Department, P.O. Box 721, Agincourt, Ontario, M1S 0A1. Alternatively, you may fax both sides of your properly completed form of proxy to 1 (866) 781-3111 (from within Canada and the U.S.) or (416) 368-2502 (from outside North America).

If you are a non-registered shareholder, please follow the instructions provided by your nominee.

Q. What is the deadline for submitting my form of proxy?

A. To be effective your form of proxy must be received by CIBC Mellon Trust Company before 5:00 p.m. Eastern Daylight Time on May 11, 2010.

Q. Can I change my mind once I have submitted my vote to the Corporation?

A. Yes, if you are a registered shareholder you can complete another form of proxy in the manner and time specifi ed on the form of proxy. The later-dated form of proxy will replace the one submitted earlier. You can also revoke your proxy by stating clearly, in writing, that you want to revoke your proxy. This statement should be delivered to:

• the Corporation’s Corporate Secretary at either c/o CIBC Mellon Trust Company, Attention: Proxy Department, P.O. Box 721, Agincourt, Ontario, M1S 0A1 or the registered offi ce of the Corporation at 1400 ATCO Centre, 909 - 11th Avenue S.W., Calgary, Alberta, T2R 1N6 at any time up to and including the last business day preceding the day of the annual meeting or any adjournment thereof; or

• the chairman of the meeting prior to the commencement of the meeting on the day of the meeting or any adjournment thereof.

If you are a non-registered shareholder, you should contact your nominee for instructions to revoke your voting instructions.

Q. How many shares are entitled to vote?

A. As of the date of the management proxy circular, there were 6,859,358 Class II Voting Shares outstanding. Each registered shareholder has one vote for each Class II Voting Share of ATCO Ltd. held at the close of business on March 24, 2010.

Q. What if ownership of shares has been transferred after March 24, 2010?

A. The person who acquired such shares after March 24, 2010, must produce a properly endorsed share certifi cate(s) or otherwise establish that he or she owns the shares and must ask ATCO Ltd. that his or her name be included in the list of shareholders in order to be entitled to vote such shares at the annual meeting. ATCO Ltd. requires that proof of share ownership be provided to the Corporate Secretary of ATCO Ltd. at 1400 ATCO Centre, 909 - 11th Avenue S.W., Calgary, Alberta, T2R 1N6 no later than 5:00 p.m. (MDT) on May 3, 2010.

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Acronyms

DBDefi ned Benefi t

DCDefi ned Contribution

GOCOMCorporate Governance - Nomination, Compensation and Succession Committee

MTIPMid-Term Incentive Plan

NYSENew York Stock Exchange

SARShare Appreciation Right

SEDARSystem for Electronic Document Analysis and Retrieval

SOPStock Option Plan

TCTotal Compensation

TDCTotal Direct Compensation

TSXToronto Stock Exchange

VIFVoting Instruction Form

At Risk

At risk is the value of the shares of the Corporation held by a person that is exposed to the possibility of loss.

Comparator Markets

Comparator markets are comprised of general industry and utility/Alberta companies of similar size and scope of operations.

Discretionary Authority

If you are not attending the meeting in person, the individual you appoint as your proxyholder to vote your shares will have the authority to vote at his or her discretion on matters that are not specifi cally set out in the notice of meeting as well as on any amendments or variations to the matters that are set out in the notice of meeting.

Exercise Price

The price fi xed by the Board at the time that an option is granted. The price is the weighted average of the trading price of the Class I Non-Voting Shares on the TSX for the fi ve trading days immediately preceding the date of the grant.

Form of Proxy/Voting Instruction Form

If you are a shareholder of the Corporation, either a form of proxy (for registered shareholders) or a voting instruction form (VIF) (for non-registered shareholders) will be included with your management proxy circular. A form of proxy or VIF allows you to vote your shares or appoint another person to vote on your behalf in the event that you are unable to attend the annual meeting. A form of proxy or VIF states the business that is to be acted upon at the annual meeting of shareholders.

Named Executive Offi cer

Named Executive Offi cer means the following individuals: the Chief Executive Offi cer, the Chief Financial Offi cer, each of the Corporation’s three other most highly compensated executive offi cers who were serving as executive offi cers at the end of the most recently completed fi nancial year, and any additional individual for whom disclosure would have been provided except that the individual was not serving as an executive offi cer at the end of the most recently completed fi nancial year.

Nominee

Your shares will be held by a nominee on your behalf if you are a non-registered shareholder. A nominee may be your stockbroker, your bank, or a trust company.

SCHEDULE D GLOSSARY

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Non-Registered Shareholder

You are a non-registered shareholder if your shares are not held in your own name on the Corporation’s share register, but in the name of a nominee such as your bank, broker or trust company.

Option

Through the stock option plan, individuals are awarded options to purchase Class I Non-Voting Shares of the Corporation at a future date at a price set at the time the option was granted.

Proxyholder

A proxyholder is the person you appoint to attend, speak at, vote and otherwise act at the annual meeting on your behalf. If you specify how you want your shares voted on a particular matter, your proxyholder is obligated to vote your shares that way. If you do not specify how you want your shares to be voted, your proxyholder has discretionary authority to vote your shares in any manner he or she wishes.

Record Date

The Corporation is required by the Business Corporations Act (Alberta) to establish a record date that is no fewer than 21 days and no more than 50 days before the annual meeting date. The record date is established for the purpose of determining which shareholders are entitled to receive notice of the annual meeting of shareholders or the shareholders that are entitled to vote at the annual meeting of shareholders. March 24, 2010, is the record date that has been established for the May 13, 2010, annual meeting of shareholders.

Registered Offi ce of the Corporation

The registered offi ce of ATCO Ltd. is 1600 ATCO Centre, 909 - 11th Avenue S.W., Calgary, Alberta, T2R 1N6.

Registered Shareholder

You are a registered shareholder if your shares are held in your name on the Corporation’s share register. You will have a paper share certifi cate denoting your ownership of the shares.

Revocation of Proxy

If you submit your proxy and subsequently change your mind, you must replace your original proxy with a later-dated instruction no later than 5:00 p.m. Eastern Daylight Time on Wednesday, May 12, 2010.

S&P/TSX Composite Index

The S&P/TSX Composite Index is currently a list of the 210 largest companies on the TSX as measured by market capitalization.

SEDAR

SEDAR stands for System for Electronic Document Analysis and Retrieval. The offi cial website that provides access to most public disclosure documents and information fi led by public companies with the Canadian Securities Administrators is www.sedar.com.

Share Appreciation Rights

Through the share appreciation rights plan, individuals are awarded share appreciation rights (SARs) which allow the individual the right to receive a payment in cash equal to the appreciation in the Corporation’s shares over a specifi ed period.

Solicitation of Proxies

Proxy solicitation is the process of acquiring votes and support for the matters to be voted on.

Stock Dividend/Split

A stock dividend by way of a stock split is an increase in the number of outstanding shares of a company, such that the proportionate equity of each shareholder remains the same.

Voting Instruction Form

If you are a non-registered shareholder, you will receive a voting instruction form or VIF rather than a form of proxy. The VIF should be provided by your nominee and included with your management proxy circular. A VIF allows you to appoint another person or company to vote your shares on your behalf in the event that you are unable to attend the annual meeting. A VIF states the business that is to be acted upon at the annual meeting of shareholders.

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ATCO LTD.

1400, 909 - 11th Avenue SWCalgary, Alberta T2R 1N6

Telephone: (403) 292-7500Fax: (403) 292-7623

www.atco.com

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