Company Overview    iv

Proxy Circular Summary    vii

About CAE    ix

Useful Information    xiv

Notice of 2025 Annual and Special Shareholders’ Meeting    xv

Section 1 About Voting Your Shares    1

Section 2 Business of the Meeting    7

Section 3 About the Nominated Directors    13

Section 4 Corporate Governance    31

Section 5 Board Committee Reports    46

Section 6 Director Compensation    51

Section 7 Executive Compensation    56

Compensation Discussion and Analysis    59

Executive Summary    60

Shareholder Engagement    63

Succession Planning    64

Compensation Philosophy    65

Executive Compensation Programs    67

FY2025 Compensation Outcomes    78

Determination of NEOs’ Individual Performance    83

Compensation Governance    88

Alignment of Compensation and Performance    94

Compensation of our Named Executive Officers    97

Summary Compensation Table    97

Outstanding Share-Based Awards and Option-Based Awards    99

Incentive Plan Awards – Value Vested or Earned During the Year    100

Pension Arrangements    101

Termination and Change of Control Benefits    102

Section 8 Other Important Information    107

Appendix A – Board of Directors’ Charter    109

Appendix B – Non-IFRS and Other Financial Measures    113

Appendix C – Summary of the Employee Stock Option Plan    120

Appendix D – Summary of the Omnibus Incentive Plan    124

Appendix E – Amendments to the General By-law    131

June 12, 2025

Dear fellow Shareholders,

It is our pleasure to invite you to CAE’s 2025 Annual and Special Meeting of Shareholders (the “Meeting”).

This year was one of strong performance, driven by disciplined execution and efficient capital management. Leadership executed our strategy with focus and operational rigour. Purposeful actions generated very strong free cash flow*, positioning the Company to meet its year-end leverage target and further strengthening CAE’s balance sheet.

Our Defense & Security (“D&S”) business accelerated its path to greater profitability with solid program execution and near doubling of adjusted backlog. Despite the headwind of constrained aircraft availability and drop in U.S. pilot hiring, our Civil Aviation segment delivered strong results and achieved nearly 40% growth in adjusted backlog*.

The ability to deliver this level of success during a period of formidable geopolitical and economic challenges speaks to the resilience of our business model and the strength of CAE’s global franchise.

Actions taken during the year further maximized our strategic positioning and focus, building momentum for continued success and delivery of shareholder value.

Given the significant opportunities ahead for us in the defence sector, we created D&S Canada as a standalone division and appointed France Hébert Division President and Global Operations Lead. France joined CAE in 2019 and has over 35 years of experience working primarily in defence and aerospace. She brings to this new role extensive leadership experience and a proven track record of winning and executing complex programs.

We also streamlined operations and strengthened leadership by introducing a Chief Operating Officer, and evolving the roles of the Chief Strategy and Performance Officer and Chief People and Sustainability Officer, driving efficiencies and financial savings at the corporate and division levels.

Through our SkyAlyne joint venture, we were awarded a 25-year contract to support Canada’s Future Aircrew Training (FAcT) program, the single largest contract in CAE’s history and an important milestone for us. We are also proud to be identified as a strategic partner to the Government of Canada to work with the Royal Canadian Air Force to design and co-develop the Future Fighter Lead-in Training (FFLIT) program, which will prepare and train pilots to operate Canada’s advanced fighters.

By increasing our ownership stake in SIMCOM Aviation Training, we solidified CAE’s presence in its core business aviation training market. Under this transaction, we secured a five-year extension on our training exclusivity agreement with Flexjet. 

Under our commitment to sustainability, we made important advances in our decarbonization strategy, including receiving approval of our targets from the Science Based Targets initiative and introducing formal plans within our Civil Aviation and D&S businesses. Detailed information on our sustainability efforts can be found at https://www.cae.com/sustainability.

As part of CAE’s capital allocation priorities, we established a Normal Course Issuer Bid (“NCIB”) to be used opportunistically. The Board’s decision to re-establish the NCIB reflects confidence in CAE and the cash-generative nature of our highly recurring revenue business.

Last fall, we announced Marc Parent’s departure from his role as President and CEO as of the upcoming Meeting. Following a rigorous global selection process overseen by the Board, we appointed Matthew Bromberg as our President and CEO, effective immediately after the Meeting. We look forward to having Matthew lead the Company’s growth and drive its continued evolution into the future. Matthew is a proven leader with deep experience in both aerospace and defence, involving large-scale international operations. He comes to CAE with a track record of driving operational excellence, transformation and growth in commercial and military aerospace markets for major global publicly traded companies.

Our Board has absolute confidence that CAE’s future will be bright with Matthew at the helm, working together with the exceptionally talented leadership team that is in place. His strategic vision and deep industry expertise position him to lead CAE into its next phase of growth and innovation.

In fiscal year 2025, CAE also undertook significant governance initiatives centered on Board renewal. Appointments were made to ensure fresh perspectives and representation by independent and qualified directors who will contribute to CAE’s strategic direction and long-term success. These changes reflect constructive and continuous dialogue over an extended period with several CAE Shareholders.

Joining me on the Board over this past year were Patrick Decostre, Ian L. Edwards, Peter Lee, Katherine A. Lehman and Louis Têtu, each of whom brings unique expertise that will benefit the Company and its Shareholders.

In conjunction with the CEO succession, the Board announced the expansion of my Board Chair role to Executive Chairman and the introduction of a Lead Independent Director position, reflecting CAE’s commitment to best-in-class governance. The two appointments take place after the Meeting, subject to our election to the Board.

As Executive Chairman, I look forward to working closely with Matthew on the next chapter of growth and value creation, in addition to continuing to chair the Board of Directors.

On behalf of the Board I want to express our deep appreciation to Marc Parent for his 16 years of devoted service as President and CEO, during which time he led the transformation of CAE from primarily a simulator manufacturer to a world leader in aviation training solutions. Marc has left a lasting impact on CAE and global aerospace and has created a solid foundation for us to continue to build on.

We also thank Alan N. MacGibbon, who served as a director and Board Chair for many years, and outgoing directors Michael E. Roach, Andrew J. Stevens, Margaret S. (Peg) Billson, François Olivier and David G. Perkins for their service and the valuable contributions made during their tenure.

The Board is highly confident in the Company’s strategy and the leadership in place. D&S is exceptionally well positioned for long-term growth and profitability, while the outlook in Civil Aviation reflects a position of strength. CAE is poised for continued growth in fiscal 2026, with a larger base of business supported by higher margins and strong free cash flow*.

In the pursuit of CAE’s noble mission and vision, we will continue leveraging technology to elevate safety to new heights through the lens of sustainability, always with an unwavering commitment to deliver Shareholder value.

To CAE employees — your passion for what we do and steadfast commitment to delighting our customers set us apart. You are the drivers of our One CAE culture.

We will hold the Meeting in a hybrid format — both virtually via live webcast at https://meetings.lumiconnect.com/400-779-914-351 and in person for Shareholders only at Lumi Experience Montréal, 1250 René-Lévesque Boulevard West, Suite 3610, Montréal, Québec, H3B 4W8, on August 13, 2025, at 11:00 a.m. (EDT). As a Shareholder, you have the right to vote your Shares on all items that come before the Meeting. Your vote is important to us, and we encourage you to exercise your right either in person or online at the Meeting, or by proxy.

As in prior years, important matters affecting our Company will be considered at the Meeting. We will, as always, review CAE’s financial position, including business operations and the value delivered to Shareholders. We will also respond to your comments and questions.

This Circular gives you details about all the items for consideration and how to vote. It also contains profiles of the nominated directors, information on the auditors, and sections on the Board committees and CAE corporate governance practices. Whether or not you plan to attend the Meeting, we encourage you to review the enclosed information, consider the resolutions put forth by the Board and vote your Shares.

The Board remains committed to acting in the best interests of the Company and all its Shareholders.

We thank you for your continued confidence in, and support of, CAE and look forward to hearing from you at this year’s Meeting.

This summary highlights some of the important information you will find in this Management Proxy Circular (“Circular”). These highlights do not contain all the information that you should consider, and you should read this entire Circular before voting your Shares.

Below are the different ways in which you can give your voting instructions, details of which are found in the enclosed proxy form or your voting instruction form, as applicable. Please also refer to Section 1 – About Voting Your Shares for more information on the voting methods available to you:

    by appointing another person to attend and vote at the Meeting in person or online on your behalf.

    Attend in person at Lumi Experience Montréal, 1250 René-Lévesque Blvd. W., Suite 3610,
Montréal, Québec and follow the steps listed in the Section “Attending and Participating.”

    Log in online at https://meetings.lumiconnect.com/400-779-914-351 and follow the steps listed in the Section “Attending and Participating.”

CAE’s common shares are listed on the Toronto and New York stock exchanges (TSX / NYSE) under the symbol CAE.

Civil Aviation: We provide comprehensive training solutions for flight, cabin, maintenance, ground personnel and air traffic controllers in commercial, business and helicopter aviation, a complete range of flight simulation training devices, ab initio pilot training and crew sourcing services, as well as airline operations digital solutions. The civil aviation market includes major commercial airlines, regional airlines, business aircraft operators, civil helicopter operators, aircraft manufacturers, third-party training centres, flight training organizations, air navigation service providers, maintenance, repair and overhaul organizations and aircraft finance leasing companies.

Defense & Security: We are a global training and simulation provider delivering scalable, platform-independent solutions that enable and enhance force readiness and security. The defence and security market includes defence forces, OEMs, government agencies and public safety organizations worldwide.

Executive Compensation Highlights

—Executive short-term incentive payout based on a corporate performance factor of 103% reflective of CAE’s performance against its strategic plan and financial objectives in FY2025

—63% payout factor for Performance Share Units that vested in FY2025 (with a performance measurement period from FY2023 to FY2025), aligned with shareholder experience over the period

Governance Highlights

1.    All non-employee Directors are currently independent. However, as previously announced, effective at the conclusion of the Meeting and subject to his election, Mr. Rovinescu will become Executive Chairman of the Board, at which time he will no longer be considered independent.

Our Director Nominees

1.    Mr. Bromberg does not currently serve as a Director on the Board of CAE and will become a Director following his election at the Meeting.

2.    Ms. Lehman and Messrs. Lee, Rovinescu and Têtu were appointed to the Board of CAE on February 14, 2025.

3.    Ms. Lehman was unable to attend the sole Board meeting to which she was invited in FY2025 because of a commitment predating her appointment to the Board and which could not be rescheduled.

4.    As of the date of this Circular, Mr. Rovinescu is considered independent. However, as previously announced, effective at the conclusion of the Meeting and subject to his election, Mr. Rovinescu will become Executive Chairman of the Board, at which time he will no longer be considered independent.

Certain Defined Terms

Information Currency

If your name appears on a Share certificate, you are considered as a “registered Shareholder”. You may request paper copies of the Meeting materials at no cost to you by calling Computershare toll-free, within North America at 1-866-962-0498 or direct, from outside of North America, at 1-514-982-8716 and entering your control number as indicated on your form of proxy.

If your Shares are listed in an account statement provided to you by an intermediary, you are considered as a “non-registered Shareholder”. You may request paper copies of the Meeting materials from Broadridge at no cost to you up to one year from the date the Circular was filed on SEDAR through the Internet by going to www.proxyvote.com or by telephone at 1-877-907-7643 and entering the 16-digit control number provided on the voting instruction form and following the instructions provided.

Please note that you will not receive another form of proxy or voting instruction form; please retain your current one to vote your Shares.

In any case, requests should be received at least five (5) business days prior to the proxy deposit date and time set out in the accompanying proxy or voting instruction form in order to receive the Meeting materials in advance of such date and the Meeting date.

By telephone at 1-866-964-0492 or online at investor.relations@cae.com. A copy of the Meeting materials will be sent to you within ten (10) calendar days of receiving your request.

By order of the Board of Directors,
June 12, 2025
Montréal, Québec

Record Date

June 16, 2025 is the record date for the Meeting.

You may vote your Shares in one of the following ways:

1.    By proxy using all the voting channels that have been available in the past; this has not changed.

by appointing another person to attend and vote at the Meeting online on your behalf.

2.    In person or online by virtual ballot at the Meeting by following the instructions below. The voting process is different for registered or non-registered (beneficial) Shareholders:

(a)    if you are a registered Shareholder, you may vote at the Meeting either in person or by completing a ballot online during the Meeting. Follow the instructions above to access the Meeting and cast your ballot online during the designated time.

(b)    if you are a non-registered Shareholder (including a participant in the employee plan) AND you wish to vote in person or online at the Meeting, you must appoint yourself as Proxyholder in order to vote at the Meeting. You MUST complete and return a voting instruction form no later than 11:00 a.m. (Eastern Time) on August 11, 2025 appointing yourself as Proxyholder. Follow the instructions above to attend and vote in person or to access the Meeting and cast your ballot online during the designated time. You will receive the Control Number for the Meeting from Computershare by e-mail after the proxy voting deadline has passed.

United States Beneficial holders: To vote at the Meeting, you must first obtain a valid legal proxy from your broker, bank or other agent and then register in advance of the Meeting. Follow the instructions from your broker or bank included with this Circular, or contact your broker or bank to request a legal proxy form. To register to attend the Meeting in person or online, you must submit a copy of your legal proxy form to Computershare. Requests for registration should be directed to Computershare at 100 University Avenue, 8th Floor, Toronto, Ontario M5J 2Y1, or by e-mail at uslegalproxy@computershare.com. Requests for registration must be labelled as “Legal Proxy” and be received no later than 11:00 a.m. (EDT) on August 11, 2025. You will receive a confirmation of your registration after Computershare receives your registration materials. Please note that you are required to register your appointment as Proxyholder at https://www.computershare.com/CAE.

If you have any questions or need assistance voting, you may contact Sodali & Co, CAE’s strategic advisor and proxy solicitation agent, by telephone at 1-888-999-2602 (toll-free in North America) or 1-289-695-3075 (outside North America), or by email at assistance@investor.sodali.com.

Voting by Proxy

| 2025 | Management Proxy Circular If you choose to vote by proxy, you are giving the person or people named on your proxy form (referred to as a “Proxyholder”) the authority to vote your Shares on your behalf in person or online at the Meeting or any adjournment or postponement thereof.

Voting of Proxies

1 Receive CAE’s Consolidated Financial Statements

CAE’s consolidated financial statements including the auditors’ report, for the year ended on March 31, 2025 will be presented to Shareholders at the Meeting. They can also be accessed on CAE’s website at www.cae.com, on SEDAR+ at www.sedarplus.ca, or on EDGAR at www.sec.gov. No Shareholder vote is required in connection with the consolidated financial statements.

2 Elect 13 Directors

1.    The only currently non-Independent Director nominee is CAE’s Incoming President and CEO, Mr. Bromberg. However, as previously announced, effective at the conclusion of the Meeting and subject to his election, Mr. Rovinescu will become Executive Chairman of the Board, at which time he will no longer be considered independent. “Independent Directors” refers to the standards of independence established by CAE’s Corporate Governance Guidelines, applicable corporate governance rules of the New York Stock Exchange and SEC, and under the Canadian Securities Administrators’ National Instrument 58-101 – Disclosure of Corporate Governance Practices and National Policy 58-201.

You will be electing a board of directors (“Board”) of 13 members. Each Director is elected annually for a term which expires no later than the next annual meeting of Shareholders.

3 Appoint the Auditors

4 Advisory Vote on Executive Compensation

As detailed in Section 7 – Executive Compensation, CAE’s executive compensation philosophy and programs are based on the fundamental principle of pay-for-performance to align the interests of our executives with those of our Shareholders. This compensation approach allows CAE to attract and retain high-performing executives who are strongly incentivized to create value for CAE’s Shareholders on a sustainable basis.

Section 7 of the Circular describes our overall approach to executive compensation, the objectives of our executive compensation program, how compensation decisions are made and the compensation paid to our named executive officers in the last three years. Section 7 also describes the continued Shareholder outreach conducted in FY2025, seeking input on our compensation programs.

At the Meeting, Shareholders will be asked to consider and to cast an advisory, non-binding vote on CAE’s approach to executive compensation – this is often referred to as “say on pay”.

The text of the “say on pay” resolution reads as follows:

Because your vote is advisory, it will not be binding upon the Board. However, the Human Resources Committee (“HRC”) will review and analyze the results of the vote and take into consideration such results when reviewing executive compensation philosophy and programs.

If a significant proportion of the Shares represented, including by proxy, at the Meeting are voted against the above non-binding advisory resolution, the Board Chair or the HRC Chair will oversee a process to engage with Shareholders to give Shareholders the opportunity to express their specific concerns. The Board of Directors and the HRC will consider the results of this process and, if appropriate, review the Company’s approach to executive compensation in the context of Shareholders’ specific concerns.

Our approach to executive compensation was approved by 94.8% of the votes cast on the resolution during our August 14, 2024 annual meeting of Shareholders. Please refer to Section 7 – Executive Compensation – Compensation Discussion and Analysis – Shareholder Engagement, which describes our significant engagement initiatives with investors in FY2025, including with respect to our executive compensation programs.

5 Approval of the By-law Amendments

CAE’s General By-law (the “By-law”) was last updated in 2015 and certain provisions no longer reflect current governance practices and shareholder expectations. At the Meeting, Shareholders will be asked to consider and vote to approve certain amendments to the By-law, as set forth in Appendix E hereto (the “Amendments”). The full text of the By-law is available upon request from the Chief Legal and Compliance Officer, and Corporate Secretary of CAE at CAE Inc., 8585 Côte-de-Liesse, Saint-Laurent, Québec, H4T 1G6, and may also be accessed on CAE’s website (www.cae.com).

Section 4.1 of the By-law sets out the quorum for meetings of Directors and a requirement that a majority of Directors be resident Canadians. The Amendments propose to align residency and quorum requirements with those of the Canada Business Corporations Act, while requiring that a majority of Directors be Canadian citizens or permanent residents. This change is expected to allow more flexibility for director nominations by expanding the potential talent pool, while maintaining CAE’s status as a Canadian-controlled company.

Section 4.4 of the By-law sets out the possibility for a director to participate in a meeting of directors by technological means. The Amendments aim to clarify that if all Directors consent, meetings of Directors may be held entirely by technological means.

Sections 4.10 and 5.1 of the By-law refer to an executive committee of the Board. As no such committee exists nor is expected to be created given CAE’s governance practices, the Amendments aim to remove these unnecessary references in the By-law.

Section 10.11 of the By-law establishes how votes are to be counted at shareholder meetings. The current language does not contemplate the counting of votes at virtual or hybrid meetings of shareholders. The Amendments aim to set out in writing the Company’s approach to counting votes at such meetings, clarifying that all votes are counted regardless of the method with which a Shareholder attends.

Section 10.13 of the By-law provides for the Corporation’s ability to hold shareholder meetings entirely by technological means. Some governance commentators are concerned that issuers could opt to hold virtual-only meetings without a compelling rationale, to discourage participation. While CAE has always encouraged shareholder participation in past virtual-only meetings and believes it is important to maintain the ability to hold virtual-only meetings if necessary, the Amendments aim to limit the circumstances in which such meetings can be held.

Section 10.14 of the By-law sets out the nomination process for election to the Board. The Amendments aim to align these provisions with shareholder expectations, by (i) removing the requirement that a notice of nomination be received no more than 65 days prior to the meeting, (ii) starting a new notice period in the event of adjournment or postponement, (iii) requiring compliance with all applicable laws, regulations and rules relating to the nomination of directors, (iv) providing the meeting chairman the discretion to accept non-compliant nominations, and (v) detailing the information required to be provided by a nominating shareholder. CAE believes that the information required to be provided is aligned with regulatory standards and best governance practices without overburdening nominating shareholders.

The Amendments will continue in effect only if they are approved by ordinary resolution of the Shareholders at the Meeting. The text of the resolution approving the Amendments (the “By-law Amendment Resolution”) is set out in the attached Appendix E.

6 Other Business

We will also transact any other business that may properly come before the Meeting. At the time of printing of this Circular, the management of CAE knows of no such amendments, variations or other matters to come before the Meeting.

This Section presents a profile of each nominated Director, including an explanation of each nominated Director’s experience, languages, education, skills, qualifications and core competencies, attendance at Board and Committee meetings from April 1, 2024 to March 31, 2025, total value of compensation received in FY2025, Share ownership information, the extent of fulfillment of the Minimum Ownership requirements, previous voting results, as well as participation on the boards of other public companies. A description of the Director Selection and Nomination Process, Board Attributes and Demographics and a tabular summary of our Directors’ Skills and Experiences follows the individual tables. “Market Value” refers to the product of the sum of the Shares and DSUs held by a Director multiplied by the closing price on the TSX of a Share on June 6, 2024 and June 4, 2025.

Non-Canadian resident Directors are paid in U.S. dollars on the basis of a one-for-one exchange rate of Canadian dollars to U.S. dollars, and their share ownership requirements are in U.S. dollars. As such, for these Directors the “Total Value of Compensation Received in FY2025” reflects payments made in U.S. dollars for each quarter of FY2025, which were converted to Canadian dollars using the exchange rate on the last business day of the respective quarter, being, for each U.S. dollar, $1.37 in Q1, $1.35 in Q2, $1.44 in Q3 and 1.44 in Q4. In addition, the “Market Value” of their securities held on June 4, 2025 has been converted to U.S. dollars using the Bank of Canada daily exchange rate on such date, being 0.73 U.S. dollars per Canadian dollar.

Management has been informed that, if elected, each of such nominees would be willing to serve as a Director. However, in the event any proposed nominee advises that he or she is unable or unwilling to act for any reason prior to the Meeting, proxies held by the persons designated as proxyholders on the form of proxy will be voted in favour of the remaining nominees and for such other substitute nominee in their discretion unless the Shareholder has specified in the form of proxy that such Shareholder’s Shares are to be withheld from voting in the election of directors.

Footnotes specific to each nominee are presented immediately below their biography.

1.    The only currently non-Independent Director nominee is CAE’s Incoming President and CEO, Mr. Bromberg. However, as previously announced, effective at the conclusion of the Meeting and subject to his election, Mr. Rovinescu will become Executive Chairman of the Board, at which time he will no longer be considered independent.

2.    For non-executive Directors.

    

Part of the Governance Committee’s responsibility is to identify and recruit suitable potential Board members and recommend to the Board nominees for election at annual Shareholders’ meetings.

Board Attributes

| 2025 | Management Proxy Circular The following matrices identifying the gender, language skills, age, Canadian residency, tenure, professional skills, expertise and qualifications of nominated Directors is reviewed by the Governance Committee annually to ensure CAE benefits from an appropriate combination of skills, experience with CAE’s business matters and corporate governance standards, and fresh perspectives:

—All non-employee Director nominees (12 out of a total number of 13 Directors) are currently independent. However, as previously announced, effective at the conclusion of the Meeting and subject to his election, Mr. Rovinescu will shift to the role of Executive Chairman of the Board, at which time he will no longer be considered independent.

—All Board Committee members are independent.

1.    At a minimum, business proficiency, unless otherwise indicated.

The nature and scope of authority and responsibility delegated to each standing committee is set forth in the Committee Charters presented in Section 5 – Board Committee Reports which can also be found on our website under “Corporate Governance” along with each Committee Chair’s position description.

The appointment of specific Directors to each of the standing Board Committees is generally intended to reflect the relevance of Independent Directors’ skills and experience to the applicable Committee’s Charter (refer to Section 3 – About the Nominated Directors for details about the selection process and criteria).

Some of the Directors serve on the boards of other public companies in Canada or another country or jurisdiction. The following policy applies to all Directors to avoid overboarding:

(a)    No more than two Directors should serve on the same outside public board or outside board committee, unless otherwise agreed by the Board.

(b)    Directors who are employed as chief executive officers, or in other senior executive positions on a full-time basis with a public company, should not serve on the boards of more than two public companies in addition to CAE’s Board.

(c)    Directors who: (i) have full time employment with non-public companies, (ii) have full-time employment with public companies but not as CEO, or (iii) do not have full time employment should not serve on the boards of more than four public companies in addition to CAE’s Board.

(d)    The President and Chief Executive Officer of CAE should not serve on the board of more than one other public company and should not serve on the board of any other public company where the chief executive officer of that other company serves on the CAE Board.

(e)    Prior to accepting any additional public company board of directors’ appointment, a Director must first disclose the proposed appointment for review by the Governance Committee and the Chair of the Board.

None of CAE’s Directors is considered overboarded.

They review the current business plan and past Board meeting materials. New Directors also receive a comprehensive reference manual containing all key corporate and Board policies, including the Code of Business Conduct and other relevant materials and executive briefing sessions. All Directors have regular access to senior management to discuss Board presentations and other matters of interest. CAE management and the Governance Committee update Directors on governance developments, trends and new legal requirements.

Directors are encouraged to attend conferences, seminars or courses, whether industry-specific or relevant to their role as a Director, at CAE’s expense. They have access to an evergreen supply of current research and analysis, news reports, and studies on governance and compensation practices through the Board’s website. Directors regularly attend education sessions organized by management, and participate in CAE site visits, industry events and trade shows. Given the rapidly changing technology and competitive environment, management provides regular in-depth reviews of business segment performance, issues relevant to CAE’s business and industry developments, as well as updates on governance, competition, fiduciary duties, changes in law, technology and other educational material. The Board also receives quarterly updates on health and safety (including aviation safety), sustainability matters (including climate change) and compliance matters like anti-corruption, corporate policies and procedures, foreign representatives, workplace ethics, export controls, sanctions screening, and data protection and privacy. The table below provides an overview of selected education sessions, presentations and reports attended or received in FY2025.

As such, the Board will review with management the Company’s risk appetite and risk tolerance and assess whether the Company’s strategy is consistent with the agreed-upon risk appetite and tolerance for the Company. The Board will also review and discuss with management all key enterprise risk exposures on an aggregate, company-wide basis, and the steps management has taken to monitor and to manage those exposures. This includes the review with management of the Board’s expectations as to each committee’s respective responsibilities for risk oversight and management of specific risks to ensure a shared understanding as to accountabilities and roles. The Board will work with management to promote and actively cultivate a corporate culture that understands and implements enterprise-wide risk management. The Board delegates the oversight of various aspects of risk management to Board Committees to assist in the fulfillment of its responsibilities. Risk-related roles and responsibilities are defined in the Board Charter and Committee Mandates.

—The Audit Committee and senior management provide an appraisal of CAE’s risk management framework, control environment and internal control systems.

—The Chairs of the Governance Committee, Audit Committee and Human Resources Committee each report to the Board after their respective committee meetings.

The table below reflects principal oversight responsibilities for each of the FY2025 enterprise risks listed:

You can find a more comprehensive discussion of risk management in Section 10 – Business Risk and Uncertainty of our Management Discussion and Analysis for the fourth quarter and year ended March 31, 2025, filed with the Canadian securities commissions and provided to the U.S. Securities and Exchange Commission under Form 6-K, and available on our website (www.cae.com), on SEDAR+ (www.sedarplus.ca), and on EDGAR (www.sec.gov).

Sustainability is embedded in our culture and built into our business model, our decisions and actions. Our priority is to ensure the safety and well-being of our employees and customers, as well as creating long-term value for all our stakeholders where we are located.

CAE’s noble purpose, making the world safer, captures how CAE makes a difference in the world and drives its decisions and actions. Making civil aviation safer, and supporting peace and democracy with allied forces readiness, are both rooted in the principles of sustainability impact.

Over FY2025, many of our initiatives had a significant sustainability impact. Amongst those initiatives:

—We received approval from the Science Based Targets initiative (SBTi) of our near-term (10 years) reduction targets. CAE is committed to reduce Scope 1 and 2 emissions by 85.7% against FY2019 baseline and Scope 3 emissions by 32.5% against FY2022 baseline by the end of FY2033. The Scope 3 target is applicable only to the following categories: purchased goods and services, capital goods and fuel and energy related activities. These ambitious targets will guide our decarbonization journey and help us transition from carbon neutrality to net zero emissions. To that extent, we have implemented a comprehensive decarbonization strategy with four value streams: aviation, sourcing, products and services, and buildings. We have made progress in each of these areas, such as working on developing an electric conversion kit for our ab initio training aircraft, applying circular economy principles, optimizing our products for energy efficiency, integrating low-carbon technologies, and applying sustainable building standards. In addition, this year, our Civil Aviation and Defense & Security business units developed tactical decarbonization plans that will help us progress toward scope 1 and 2 FY2033 targets set against our FY2019 baseline.

—We developed a shadow internal carbon price (ICP) process to build carbon considerations into our future capital allocation decision-making. Our shadow ICP complements the business units’ plans as an additional mechanism for them to measure the impact of potential opportunities on CAE’s progressive transition to less carbon-intensive growth. The shadow ICP process will equip business leaders with relevant data on carbon emissions associated with growth projects. They will be able to plan future investments needed to reduce or mitigate carbon emissions of projects at the outset.

—We have also strengthened our engagement with our customers, suppliers, partners and industry peers to collaborate on solutions and best practices that support the decarbonization of the aerospace sector. We have made significant progress on engaging with our suppliers through our Resilient together program. The program focuses on our strategic suppliers, providing them with support and identifying incremental objectives to strengthen our supply network and evolve our suppliers’ business, operations and sustainability practices. In FY2025, 90% of strategic direct suppliers, representing 98% of CAE’s strategic direct spend, were scored or in the process of being scored by our third-party risk monitoring tool, EcoVadis, over a wide range of risks from environment to human rights matters. In addition, as a co-founder of the nonprofit organization Décarbone+, we support suppliers with their own carbon inventory and decarbonization measurement and reduction capabilities. Among the outcomes, these initiatives identify opportunities to leverage decarbonization as a means to strengthen the sector's competitiveness and resilience.

—Our sustainability strategy is also driven by our commitment to create social value and foster a culture where every employee can grow, contribute, and succeed. In FY2025, we received several awards and recognitions for our workplace efforts, which reflect our continuous commitment to attracting, developing and supporting top-talent based on skills and contributions. We progressed on our reconciliation journey to strengthen relations with Indigenous peoples in Canada with closer engagement with our Indigenous Advisory Board and offering training to all Canadian employees on legal frameworks governing practices with regards to private engagement with Indigenous communities.

—We have continued to strengthen our sustainability governance framework, policies and disclosure practices, reporting processes and controls in preparation for external assurance of our extra-financial data and compliance with existing and upcoming frameworks mandating disclosure of sustainability data in financial reporting. We have also expanded our transparency efforts on scope 3 GHG emissions inventory with the disclosure of an additional category, use of sold products, for the first time.

—Our performance and achievements related to sustainability factors are set out in our Global Annual Activity and Sustainability Report. Our objectives, management approach, initiatives and highlights across the Environmental, Social and Governance factors are also outlined in this report, which is available at www.cae.com/sustainability.

Directors

Executive Officers

Representation as of June 12, 2025

1.    The information presented in this table is derived from information provided by our Directors and executive officers. In accordance with privacy legislation, such information was collected on a voluntary basis, and where a particular individual chose not to respond, CAE did not make any assumptions or otherwise assign data to that individual.

The Governance Committee

The Audit Committee

| 2025 | Management Proxy Circular Assists the Board in its oversight of the integrity of our consolidated financial statements, review of public disclosure documents, compliance with applicable legal and regulatory requirements, the independence, qualifications and appointment of the external auditors, the performance of both the external and internal auditors, oversight of related-party transactions, management’s responsibility for assessing and reporting on the effectiveness of internal controls (including review of IT, cybersecurity and artificial intelligence risks and elements impacting controls) and our enterprise risk management processes.

Also see our Annual Information Form for the year ended March 31, 2025 (which you can access on our website at CAE.com, on SEDAR+ at sedarplus.ca and on EDGAR at sec.gov), for information about the Audit Committee, including its mandate and Audit Committee policies and procedures for engaging the external auditors.

All members of the Audit Committee are Independent Directors. Marianne Harrison has been determined by the Board to be the Audit Committee financial expert. In addition, the Board, in its judgment, has determined that each other member of the Audit Committee is financially literate. The Charter of the Audit Committee is available in the governance section of our website at CAE.com and in the Annual Information Form for the year ended March 31, 2025.

The members of the Audit Committee are selected for their experience and knowledge with respect to financial reporting, internal controls and risk management. Descriptions of the Audit Committee members’ credentials and past experience that make them qualified and effective financial decision-makers can be found in Section 3 – About the Nominated Directors.

The Human Resources Committee

Director Compensation

Any Director who is also an employee of the Company or any of its subsidiaries does not receive any compensation as a Director.

Effective January 1, 2024, Directors’ all-inclusive fees were set as follows:

1.    Fees for Canadian resident Directors are earned and paid in Canadian dollars. Fees for non-Canadian resident Directors are earned and paid in U.S. dollars on the basis of a one-for-one exchange rate of Canadian dollars to U.S. dollars.

2.    The Governance Committee Chair compensation is $20,000. Committee Chairs do not receive additional compensation for Committee membership.

1.    Represents the value of DSUs determined based on the grant date fair value of the award in accordance with accounting standards. The value of each unit is set to the volume weighted average price of the Shares on the TSX during the five trading days preceding the dates of each grant.

2.    Non-Canadian resident Directors are paid in U.S. dollars on the basis of a one-for-one exchange rate of Canadian dollars to U.S. dollars. The amounts shown include payments made in U.S. dollars for each quarter of FY2025, which were converted to Canadian dollars using the exchange rate on the last business day of the respective quarter, being, for each U.S. dollar, $1.37 in Q1, $1.35 in Q2, $1.44 in Q3 and $1.44 in Q4.

3.    Mr. Decostre joined the Board on May 16, 2024.

4.    Mr. Roach ceased serving as a Director on May 16, 2024.

5.    Mr. Edwards joined the Board on August 14, 2024.

6.    Mr. Stevens ceased serving as a Director on August 14, 2024.

7.    Ms. Lehman and Messrs. Lee, Rovinescu and Têtu joined the Board on February 14, 2025.

8.    Ms. Billson and Messrs. MacGibbon, Olivier and Perkins ceased serving as Directors on February 14, 2025.

9.    Mr. Lee has waived all compensation as a Director, in accordance with Browning West’s policy requiring its employees sitting on a board of a portfolio company to waive any board compensation.

10.    In Q4 FY2024, the Board established an ad hoc Audit Subcommittee (comprised of Ms. Harrison (Chair), Mr. Antoun, Ms. Billson, Ms. Maher and Mr. Olivier) to meet regularly and oversee specific matters, notably accounting for and presentation of non-routine transactions including impairments, detailed reviews of unfavourable contract adjustments in the Defense and Security business and internal control and risk management practices related thereto. The Subcommittee met 7 times in FY2025 and held its final meeting in December 2024. Subcommittee members received a one-time retainer of $11,000 ($18,000 for the Chair) paid in accordance with the Company’s residency-based compensation practice.

| 2025 | Management Proxy Circular The following table shows for each non-employee Director the number of DSUs outstanding at the beginning of the fiscal year ended March 31, 2025, the number and the value of the DSUs that vested during such year, and the number and the value of all outstanding DSUs as at March 31, 2025. The non-employee Directors are not eligible to receive stock options or other option-based awards.

1.    Represents the number of DSUs each non-employee Director earned during FY2025. The DSUs vest immediately but are redeemable and paid out only after the non-employee Director ceases to be a Director of CAE in accordance with the terms of the Directors DSU Plan. Numbers containing fractions have been rounded up for calculation purposes.

2.    The value was determined by multiplying the number of DSUs, including additional DSUs equivalent in value to the dividends paid on the Shares credited in-year, by the volume weighted average price of the Shares on the TSX during the five trading days preceding the dates of each grant. The DSUs are granted at the end of each quarter.

3.    The market value of the DSUs was determined by multiplying the number of all DSUs vested but not paid out or distributed, including additional DSUs equivalent in value to the dividends paid on the Shares credited in-year, as at March 31, 2025 by the closing price of the Shares on the TSX on March 31, 2025, which was $35.38. Numbers containing fractions have been rounded up for calculation purposes.

4.    Mr. Decostre joined the Board on May 16, 2024.

5.    Mr. Edwards joined the Board on August 14, 2024.

6.    Ms. Lehman and Messrs. Lee, Rovinescu and Têtu joined the Board on February 14, 2025.

7.    Mr. Lee has waived all compensation as a Director, in accordance with Browning West’s policy requiring its employees sitting on a board of a portfolio company to waive any board compensation.

Letter from the Chair of the Human Resources Committee

Dear Shareholders,

On behalf of the board of directors, the Human Resources Committee (the “HRC”), as part of its mandate, oversees both CAE’s CEO succession planning process and the Company’s approach to executive compensation. We believe that our compensation framework directly links compensation to CAE’s long-term performance and value creation for our Shareholders.

CEO succession was the primary task undertaken by the HRC this past year. The task was carried out by a CEO Search Committee that comprised Mary Lou Maher and Peter Lee as Co-Chairs in addition to CAE’s new Chair, Calin Rovinescu, all of whom actively participated in the recruitment process. CAE’s Board members, executive management team, and external consultants all supported the recruitment process and with a steadfast commitment to advancing operational excellence. During the search, CAE evaluated a diverse group of candidates, emphasizing the skills and experiences necessary to guide CAE into the future. The new CEO was selected for, among other qualities, transparency, accountability, and alignment with CAE’s potential for significant financial growth.

For executive compensation, we believe it is important to provide transparent disclosure of CAE’s performance, all aspects of our executive compensation program, the alignment between performance and compensation outcomes and feedback from our ongoing engagement with our Shareholders. In August 2024, the Company’s annual “Say on Pay” advisory vote received strong support, with 94.8% of shareholders’ votes in favour of CAE’s disciplined approach to executive compensation.

In November 2024, after 20 years of dedicated service with CAE, including 15 years as President and Chief Executive Officer, CAE announced Marc Parent’s departure, effective at the Annual General Meeting on August 13, 2025. The HRC and Board are deeply grateful for Marc’s exemplary leadership and commitment to CAE. We extend our heartfelt thanks, congratulations and best wishes to him for a well-deserved next chapter. To ensure strong continuity in leadership, the Board of Directors, on the advice of the CEO Search Committee, unanimously appointed Matthew Bromberg as CAE’s next President and CEO. He will join the company on June 16, 2025, as Incoming President and CEO, working closely with Mr. Parent during the transition period.

During FY2025, our Named Executive Officers’ (NEO) compensation outcomes were closely tied to CAE’s performance. The Short-Term Incentive Plan (“STIP”) pays out based on performance targets on adjusted earnings per share* (“EPS”) and revenue metrics. In assessing the CEO’s compensation outcomes for FY2025, the Board considered the overall performance of the Company and the key strategic achievements during FY2025.

Based on this, the Board assessed the CEO’s 25% individual performance component for FY2025 at 178% of target, reflective of: the CEO’s leadership and the many achievements in the business; and the CEO’s accountability for the overall results of the business. This, combined with the 103% corporate performance factor, resulted in an overall STIP payout for the CEO of 122% of target.

The Long-Term Incentive Plan (“LTIP”) is weighted 60% to Performance Share Units (“PSU”s), 20% to Restricted Share Units (“RSU”s) and 20% to Stock Options to provide a balanced focus on performance, long term Share price appreciation and shareholder aligned retention. Our PSUs granted in FY2025 vest contingent on the achievement of adjusted segment operating income margin*, Cash from operations and adjusted ROCE* targets. Our PSUs granted in FY2023 whose performance period concluded in FY2025 was tied to two financial metrics, adjusted Earnings per Share* (“EPS”) and free cash flow*, weighted 75% and 25% respectively, and paid out with a performance factor of 63%.

The majority of each executive’s compensation continues to be at risk, contingent on performance and a significant proportion of each executive’s compensation is in the form of equity-based compensation which aligns compensation outcomes with our performance and Shareholders experience over the longer term.

We held over 20 director engagement sessions to gather valuable feedback and ensure alignment with shareholder expectations. Our directors and investor relations team actively listened to shareholder input and took thoughtful actions to address them.

Please refer to Section 7 – Executive Compensation – Compensation Discussion and Analysis – Shareholder Engagement.

In FY2025, CAE maintained its focus on four strategic pillars:

—Efficient growth

—Technology and market leadership

—Revolutionizing training and critical operations

—Skills and culture

As we move into FY2026, we will maintain open and frequent dialogue with our shareholders, fostering an exchange of ideas, and ensuring our strategies and governance practices continue to align with our business objectives. This ongoing engagement helps us remain responsive to shareholder feedback and supports our goal of creating substantial value for all stakeholders.

The HRC believes that our compensation programs continue to focus on the alignment between our performance and compensation outcomes as well as the interests of our Shareholders.

Sincerely,

Compensation Discussion and Analysis

Executive Summary

Our Civil business remains the leader in its markets, and our Defense & Security (“D&S”) business recovered from prior-year challenges to deliver consistent operational execution, steady growth, and improved performance, as expected.

The long-term growth prospects in our markets remain strong, supported by sustained demand for air travel and a growing global middle class, heightened defence training requirements and expenditures, especially in Europe and Canada, and an increasing customer interest in market-leading software solutions. Additionally, we see continued prospects for further market share expansion resulting from our organic investments in both technology and capacity. In the face of near-term geopolitical and financial uncertainty, our strong market position, sound financial health, and committed leadership team ensure we are well-prepared for future challenges.

This year, our Defense & Security business demonstrated consistent performance, with improving adjusted segment operating income margin* and revenue growth of over 8%. Refreshed leadership and a new organizational structure have generated recurring cost savings, improved performance, and enhanced synergies across the enterprise. The ongoing recovery of our D&S business, enabled by consistent execution and retirement of Legacy Contracts, serves as a positive development for our company and its multi-year outlook. The growth outlook for D&S continues to be steady and attractive with significant opportunities across the global pipeline. In the near-term, key positions on several generational programs will serve as the backbone of our growth, particularly in Canada. Adjusted order intake* continues to be a positive indicator with four successive years of our book-to-sales ratio* exceeding 1x (1.99x this year). Our Civil Aviation segment had another strong year, with book-to-sales* at 1.35x and double-digit revenue growth despite external market challenges amidst a slower pilot hiring environment in the United States. Our commercial products and training businesses have strong growth prospects, driven by increasing air travel demand and growing customer interest in outsourcing their training operations. In business aviation training, market activity has stabilized after a post-pandemic surge. Nevertheless, our business aviation team has delivered growth in excess of the market. Additionally, the team has further consolidated their position with the increase of our stake in SIMCOM Aviation Training (“SIMCOM”) and the subsequent extension of our exclusivity agreement with Flexjet bringing it to 15 years and has deployed multiple simulators and stood up new training centres around the world. These investments are done in lockstep with customer demand and make us more essential and accessible to our customers. FY2025 was an important year in our airline operations digital solutions business, now called Flightscape, with major pursuits and renewals and the completion of the product development effort of our Unified Task Board, representing a streamlined solution that will redefine the way that airlines digitally manage their Operational Control Centres and limit disruption. We are optimistic about the ongoing benefits of CAE’s scale and synergy across our enterprise, bolstered by the significant strides we’ve made in both market expansion and technology investment. For both our Civil and Defense customers, we believe that CAE is the unquestioned standard for safety, efficiency and mission readiness. In FY2025, we maintained our strategic focus on four main strategic pillars. The key accomplishments for each are as follows:

—Continued expansion of company adjusted segment operating income margin* to 15.5%.

—Progressed ahead of plan with the retirement of contractual risks and Legacy Contracts in D&S. D&S delivered strong top-line growth of ~8% and grew adjusted segment operating income* nearly $150M YoY with operational and financial momentum building throughout the year.

—Continued strong performance in Civil Aviation despite market challenges, including a full year adjusted segment operating income margin* of 21.5%.

—Saw continued strong growth in both revenues and adjusted order intake*. For the full year, consolidated revenue growth of 10% was led by 11% growth in Civil. Adjusted order intake* soared, reaching ~$7.7 billion for a full-year book-to-sales ratio* of 1.64x.

—Generated strong free cash flow for the year, at a cash conversion rate* of ~211%+.

—Enhanced discipline and prioritization around capital expenditures, and research & development spending, to focus on customer requirements and the best risk-adjusted return opportunities.

—Removed significant shared costs from corporate structure and streamlined leadership teams through maturation of the COO organization, driving financial savings and efficiency gains.

—Conducted collaborative and proactive risk management analysis to navigate geopolitical and macroeconomic turmoil in core markets.

—Experienced significant growth in our business aviation business, headlined by our consolidation of SIMCOM and subsequent extension of our long-term training exclusivity agreement with FlexJet and several new training customers.

—Expanded our Civil training centre footprint further in FY2025 with 27 simulators deployed across Commercial and Business Aviation and training centres in Sydney (Qantas), Athens (Aegean), and Savannah (Gulfstream platforms) fully operational.

—Celebrated the opening of our new Air Traffic Services Training Centre in Montreal in partnership with NAV Canada, training air traffic controllers and flight service specialists.

—Secured several long-term airline operations digital solutions deals.

—Named a strategic partner to work with the Royal Canadian Air Force (“RCAF”) to develop and refine the Future Fighter Lead-in Training (FFLIT) program, which will prepare and train pilots for the transition to Canada’s future fighter jets.

—Won work on key Canadian defence programs, including FAcT and RPAS. FAcT is a 25-year $11B+ opportunity for CAE and its SkyAlyne joint venture to work alongside the Royal Canadian Air Force to transform and reimagine training. This program represents a significant step forward to prepare Canadian Military Pilots, Air Combat Systems Officers, and Airborne Electronic Sensor Operators for tomorrow’s challenges. RPAS or Remotely Piloted Aircraft Systems will enable CAE to deliver aircrew and maintenance technician training, supporting training devices and courseware to meet Canada’s RPAS requirements and support the MQ-9B SkyGuardian.

—Strengthened relationships with OEM and regulatory partners, including critical EASA/FAA thought leadership and committee participation.

—Continued to deliver significant improvement with all USA legacy programs , in addition to making continued progress on other strategic programs.

—Maintained sustainability as a core part of our strategy and FY2025 included a strategic transition to science-based targets (SBTi).

—Awarded silver in the Aerospace and Flight Technologies category at the prestigious Edison Awards for our eSeries dome technology.

—Developed and demonstrated CAE’s groundbreaking immersive trainer using the Apple Vision Pro.

—Continued development on CAE Connect, our unified platform and customer portal for over 5,000 business aviation customers, with positive initial user feedback.

—Deployed over 100 simulators with CAE RISE, including the delivery of critical insights to several business aviation customers.

—Launched the Unified Task Board in Flightscape, enabling automated real-time decision making for airline operations in one integrated solution.

—Expanded internal AI use cases focused on efficiency, productivity and customer satisfaction.

—Appointed a Chief People and Sustainability Officer (CPSO), reinforcing CAE’s noble mission, values, employee value proposition, and enhancing our safety culture throughout the organization.

—Remained a highly desirable employer and continued to be recognized as such through prestigious awards: Canada’s Top 100 employer, Top Employers for Young People, World’s best companies by Forbes, and a Top Montreal Employer for the 5th year in a row.

—Successfully rolled out our objective-setting framework (OKRs) to the Director level across the organization, reaching over 600 people-leaders and improving transparency in strategic goals throughout the organization.

—Renewed effort to develop and deliver internal trainings and micro learning, including a special focus on skills of the future and business skills for high-potential employees.

—Enhanced candidate and employee experience through several initiatives like CAEWelcome, our new global onboarding program and CAEAltitude, our development program for High potential employees.

Compensation Decisions

NEW in FY2025

The following changes were included in the STIP as of April 1st of 2024 (FY2025):

—The Corporate Performance Factor is now composed of two financial measures, adjusted EPS* and revenue, respectively weighted 2/3rd and 1/3rd. These two measures strengthen focus on profitable growth.

—The financial component of our STIP (representing 75% of the payout) is now a mix of Business Unit and CAE financial performance (2/3rd weighting to BU performance and 1/3rd weighting to CAE performance) for our Business Unit Leaders. The President and Chief Executive Officer and his direct reports continue to have financial performance measured 100% on CAE consolidated results.

—The STIP performance grid has been adjusted to pay out at 50% of target for the achievement of threshold performance. As before, payout is 0% if performance is below the threshold level.

—Our FY2025 LTIP remained unchanged from FY2024 design.

—The LTIP performance grid has been adjusted to pay out at 50% of target for the achievement of threshold performance. As before, payout is 0% if performance is below the threshold level.

In FY2026

—Our FY2026 STIP will remain unchanged from FY2025 design, with the financial component being a mix of Business Unit and CAE financial performance.

—To assess financial performance under the STIP plan, CAE will continue to focus on two financial measures, adjusted EPS* and revenue, respectively weighted 2/3rd and 1/3rd to promote strong and profitable growth. The STIP performance grid will still pay out at 50% of target for the achievement of threshold performance, and as before, will pay at 0% if performance is below the threshold level.

—Our FY2026 LTIP will remain unchanged from FY2025 design.

—The LTIP performance grid will still pay out at 50% of target for the achievement of threshold performance, and as before, could pay as low as 0% if performance is below the threshold level.

—The Committee decided to revise the peer group to better position CAE among its peers and include more industry competitors (see Section 7 – Executive Compensation – Compensation Discussion and Analysis – Comparator Group).

Shareholder Engagement

Over the past year, the former Chair of the Board, the Chair of the HRC, CAE Directors and executives, and our investor relations team have engaged extensively with our top shareholders through various initiatives. This period was marked by significant transitions, including the appointment of our new CEO and substantial changes to our Board, with the appointment of a new Board Chair and five additional Board members.

Our shareholders called for change, and we answered with decisive action, building on our ongoing initiatives.

We value the perspectives of our shareholders and actively engage to understand their views, concerns, and priorities related to our business operations, succession planning, performance, and executive compensation programs. In FY2025, we conducted over 20 director engagement sessions to gather valuable feedback and ensure alignment with shareholder expectations. These sessions provided insightful perspectives that reinforced our focus on long-term value creation. Our directors and investor relations team actively listened and responded to shareholder input.

—Earnings calls: CAE executives engage with the investment community on a quarterly basis to review CAE’s financial and operating results and outlook;

—Direct outreach to investors: Our investor relations team is dedicated to maintaining regular communication with shareholders, addressing their questions and concerns promptly. Since FY2023, we have initiated proactive engagement processes, which continued through FY2024 and FY2025. These efforts included meetings to discuss key topics such as CEO succession and Board renewal, ensuring that shareholder perspectives are considered in our decision-making;

—Annual meeting of Shareholders: This event, along with quarterly presentations, is webcast and accessible to a broad audience of investors. Presentations, audio recordings, and transcripts of both the presentation and the Q&A section are available on our website for at least 12 months following the events.

In response to the valuable feedback received from our shareholders, we have implemented several key initiatives to address their concerns and drive long-term value creation:

—Board Renewal: Over the past two years, we have refreshed our Board, consulting with shareholders to introduce new members with diverse skills and experiences. In FY2025, we appointed six new Board members, including our new Chair of the Board. The Board brings strategic leadership and global operations expertise, governance skills and strategic oversight, extensive experience in governance and strategic leadership, and technological expertise and innovation.

—Operational Efficiency: We have implemented cost-saving initiatives led by our newly appointed COO, Nick Leontidis, which are expected to decrease recurring costs and optimize revenue.

—Financial Strategy: We have prioritized financial strategies to enhance value creation. Our focus on improving earnings per share, return on capital employed, and free cash flow has strengthened our financial performance, increased shareholder value, and provided a solid foundation for sustainable growth. Optimized capital investment plans and strategic capital allocation have resulted in better investment timing and enhanced execution, particularly in the defence sector, driving overall efficiency and profitability.

As we move into FY2026, we remain committed to maintaining open and frequent dialogue with our shareholders. This ongoing engagement helps us stay responsive to shareholder feedback and supports our goal of creating substantial value for all stakeholders.

| 2025 | Management Proxy Circular The Board, with the assistance of the Human Resources Committee, provides oversight of succession planning, including the review and approval of the succession plans for the President and Chief Executive Officer and other senior employees of the Company. After announcing Marc Parent’s departure and consistent with its ongoing and rigorous succession planning process, the Board of Directors retained a leading executive search firm to conduct a comprehensive global search, evaluating both internal and external candidates to identify a new CEO to lead the Company into the future. Together, the Board and external advisors determined an appropriate transition period, during which Mr. Parent would continue to lead CAE in his role as CEO and as a member of the Board of Directors to advance CAE’s strategic objectives and ensure an effective transition.

In fiscal year 2025, CAE undertook pivotal steps in its leadership transformation by appointing six new directors to its Board of Directors. As part of this renewal, a CEO Search Committee was established in February 2025. The committee, co-chaired by Mary Lou Maher, Chair of the Human Resources Committee, and Peter Lee, with support from Mr. Rovinescu, was tasked with advancing the recruitment process previously overseen by the Board’s Human Resources Committee.

Building on the ongoing succession planning efforts, the CEO Search Committee advanced the robust process, which included evaluating candidates and consulting with the executive search firm. Throughout this phase, the CEO Search Committee dedicated efforts to:

—Focusing on a CEO profile that outlines the leadership qualities and demonstrable history of driving long-term value creation, strong team leadership and followership and superior performance, within a large public company with international operations;

—Identifying pertinent experience within the aerospace and defence sectors;

—Driving operational excellence that resulted in enhanced margins, free cash flow, and return on invested capital, along with effective capital allocation decisions;

—Regularly reviewing and updating the CEO profile to reflect the evolving internal and external environments, including the necessary capabilities and experiences to lead CAE;

—Overseeing an internal and external review of potential CEO talent which includes a slate of candidates with diverse skills and experience;

—Conducting in-depth assessments of internal and external candidates and their experiences against the CEO profile.

At the conclusion of a rigorous global selection process, the Board of Directors, on the advice of the CEO Search Committee, unanimously appointed Matthew Bromberg as President and Chief Executive Officer of CAE, effective August 13, 2025. Mr. Bromberg will join CAE on June 16, 2025, as Incoming President and CEO, working closely with Marc Parent throughout the transition to ensure continuity and a smooth handover of leadership responsibilities.

Mr. Bromberg is a proven leader with deep experience in both aerospace and defence, involving large-scale international operations. He brings decades of leadership at major global public companies and has a strong track record in driving operational excellence, transformation, and growth. His appointment reflects the Board’s confidence in his ability to lead CAE’s continued evolution and strategic growth in the years ahead. We are confident that under Mr. Bromberg’s leadership, CAE will continue to build on its strong foundation and deliver long-term value for its stakeholders in Quebec, Canada, and around the world. We welcome Mr. Bromberg to his new role and look forward to an exciting future under his leadership.

In addition, the CEO, with the approval of the Board of Directors, retained a leading executive search firm to conduct a comprehensive global search for the CFO position, evaluating both internal and external candidates. This search is underway and is expected to be concluded in the next fiscal year.

Compensation Philosophy

The executive compensation programs are based on a pay-for-performance philosophy. Executives receive salaries, annual short-term incentive awards contingent upon attaining consolidated business results and individual achievements, and long-term incentive awards that motivate executives to create increasing and sustainable value for Shareholders. In addition, executives receive perquisites and participate in pension and benefits programs.

The following illustrates the relative weight of each compensation policy element, at target:

Executive Compensation Programs

The table below provides highlights of each component and describes the purpose and CAE’s policy for each component.

CAE’s executives’ salaries are positioned within a competitive range around the market median, based on the individual’s performance and level of experience and the scope and responsibilities of the role.

Base salaries are reviewed by the HRC annually considering individual achievements, general performance, benchmark information and market conditions.

The Short-Term Incentive Plan (STIP) provides for an annual cash incentive for executives and management employees based on CAE’s consolidated performance and individual achievements. The STIP motivates the achievement of specific annual financial and operational results, aligned with the corporate goals and strategy.

The table below outlines FY2025 STIP target ranges by NEO, which range from 0% to 250% of target for each executive:

1.    This percentage of base salary represents Mr. Malatesta's annual STIP target for his interim role as Chief Financial Officer, effective August 12, 2024. This annual STIP target is in line with the pay practices previously adopted for Sonya Branco, former Chief Financial Officer.

2.    STIP target percentage for Mr. Leontidis has been changed following his appointment as Executive Vice President, Chief Operating Officer, effective May 14th, 2024.

3.    Ms. Branco’s departure was on August 31, 2024.

The STIP is based 75% on CAE performance and 25% on the executive’s individual performance. The Company performance factor consists of financial measures of varying weights that total 100%. The year-end result for each measure is assessed against predefined targets that are set and approved by the HRC at the beginning of the year. The individual performance factor is based on the executive’s performance against annual objectives and additional predefined quantitative and qualitative goals that reflect the strategic and operational priorities critical to each executive’s role.

To further strengthen alignment with Shareholders the overall corporate performance factor is capped at 100% if the adjusted EPS* result does not meet the target approved by the Board of Directors.

NEW In FY2025, the financial component of our STIP (representing 75% of the payout) represented a mix of Business Unit and CAE financial performance (2/3rd weighting to BU performance and 1/3rd weighting to CAE performance) for our Business Unit Leaders. The President and CEO and his direct reports continued to be measured 100% on CAE overall financial results. This change aligned our compensation programs with market and reduces compensation risk.

Additionally, adjusted EPS* and revenue were the two financial performance measures to calculate the Corporate Performance Factor, weighed 2/3rd and 1/3rd, respectively and pay out was set at 50% of target for the achievement of threshold performance. As before, payout is 0% if performance is below the threshold level.

Compensation considers each executive’s responsibility to always act in accordance with our values and our ethical, environmental and health and safety objectives, outlined in CAE’s Code of Business Conduct. Following a review at year-end that considers overall business and individual performance as well as the performance of the business from a holistic and strategic perspective, the STIP payments for the President and CEO’s direct reports are approved by the HRC and, for the President and CEO, by the Board upon the HRC’s recommendation. Canadian and US-based executives can elect to defer all or a portion of the STIP payment as Executive Deferred Share Units. The amount deferred is converted into a number of DSUs, (see details under Section 7 – Executive Compensation – Compensation Discussion and Analysis – Executive Compensation Programs – Long Term Incentive Program Design – Executive Deferred Share Units).

For NEOs other than the CEO, the value of the LTIP grants varies by the level of responsibility and scope and is based on each executive’s performance as assessed by the HRC and the Board.

The table below outlines FY2025 LTIP target ranges by NEO:

1.    LTIP target percentage represents Mr. Malatesta’s target for FY2025 as Chief Accounting Officer and Vice-President, Controller Office.

2.    LTIP target percentage for Mr. Copeland has been modified, following his appointment as Chief Strategy and Performance Officer, effective May 14th, 2024

3.    LTIP target percentage for Mr. Leontidis has been modified following his appointment as Chief Operating Officer, effective May 14th, 2024.

CAE’s LTIP is comprised of PSUs, RSUs and Stock Options. All NEOs were eligible for an annual grant under each of these plans, and awards were allocated as follows:

In FY2024, CAE adopted the Omnibus Incentive Plan, pursuant to which the Company may grant PSUs that may be settled in Shares issued from treasury, which was approved by our Shareholders at the annual and special shareholders’ meeting held on August 9, 2023, further encouraging CAE ownership by employees. Please refer to Section 7 – Executive Compensation – Compensation Discussion and Analysis – Executive Compensation Programs – Long Term Incentive Program Design – Omnibus Incentive Plan

Since FY2024, based on feedback received from our Shareholders, the PSU performance measures used by the Company include three equally weighted financial measures: adjusted segment operating income margin*, net cash provided by operating activities and adjusted ROCE*. These measures were used for PSUs granted under the Omnibus Incentive Plan in FY2025 and are further described below:

In FY2024, CAE adopted the Omnibus Incentive Plan, pursuant to which the Company may grant RSUs that may be settled in Shares issued from treasury, which was approved by our Shareholders at the annual and special shareholders’ meeting held on August 9, 2023, further encouraging CAE ownership by employees. Please refer to Section 7 – Executive Compensation – Compensation Discussion and Analysis – Executive Compensation Programs – Long Term Incentive Program Design – Omnibus Incentive Plan.