Compensation

The Compensation and Governance Committee is responsible for determining the compensation of all senior officers of Matrikon and reviewing the adequacy of director compensation to ensure that it realistically reflects the responsibilities and risks involved in being an effective director.

Director Compensation

Director compensation is paid only to directors who are not employees of or consultants to Matrikon, thus, Mr. Somji received compensation as a director only for the portion of the year that he was a non-employee director.

Summary of Director Compensation
Effective January 1, 2006, director compensation was structured as follows:

Directors who do not reside in Canada are paid the annual director retainer and annual board meeting fees in equivalent US dollars.

Matrikon also reimburses directors for related travel and out-of-pocket expenses

Total compensation paid to all directors during the fiscal year ended August 31, 2007 was $257,019 (2006 $220,093).

Non-Employee Director Compensation

Director	Annual Director Retainer	Board Meeting Retainer	Committee Chair Retainer	Other Retainer	Total
Hugh Bolton	12,500	12,500	-	32,647	57,647
Kent Jespersen	12,500	12,500	1,000	-	35,000
David Kramer1	12,500	12,500	-	-	25,000
Robert Moore	12,500	12,500	-	-	25,000
Michael Percy	12,500	12,500	-	-	25,000
Janice Rennie	12,500	12,500	12,500	-	37,500
Nizar Somji2	7,057	7,057	-	37,758	51,872
Amin Rawji3	-	-	-	-	-
Eric Rosenfeld4	-	-	-	-	-

Directors’ Shareholdings Requirements
To ensure that director interests are aligned with shareholders' interests, Matrikon's directors are required to own the dollar value equivalent of three (3) times their annual director retainer in shares after a period of three years on the Board. As of November 1, 2007, all directors owned the equivalent of at least three (3) times their annual director retainer in Matrikon shares based on share value at time of purchase.

Shareholdings of Independent Directors as at October 26, 2006

	Number	Value1
Common Shares	3,474,138	$9,067,500
Options	210,000	$78,800
Univested RSUs	58,500	$152,685

Director Stock Options
Matrikon’s Stock Option plan was discontinued in fiscal 2006. Under the previous plan, newly appointed or elected directors received a grant of 50,000 options to purchase shares. Directors also received annual grants of 10,000 options.

These stock options are only available to non-executive directors.

The exercise price for options was set at the closing market price of Matrikon's common shares on the day they were granted unless a trading blackout was in effect at the time. In this case, the exercise price was set at the closing market price of Matrikon’s common shares on the day following the lifting of the trading blackout.

RSU Plan
In 2006, Matrikon replaced its Stock Option Plan with an RSU plan. Under the RSU plan, Directors receive RSUs at approximately the equivalent value to the options they would have received annually under the Stock Option Plan. The RSUs vest over a period of three years. Once vested, the RSUs are converted to Matrikon common shares.

On July 7 2006, each current director received 13,500 RSUs. These RSUs vest equally over three years.

In 2007, Eric Rosenfeld received 13,500 RSUs when he joined Matrikon's board. These RSUs vest equally over three years on July 12.

Independent Director Equity Ownership Summary

	As at 1-Nov-07		As at 26-Oct-06		Net Change		Market Value1 (1-Nov-07)
Director	Common Shares	RSUs/ Options4	Common Shares	RSUs/ Options3	Common Shares	Options	Total
Hugh Bolton	72,878	4,900	67,923	53,500	+4,955	-4,500	$190,212
Kent Jespersen	76,8082	49,000	72,0582	53,500	+4,750	-4,500	$200,469
Robert Moore	118,031	49,000	113,303	53,500	+4,728	-4,500	$345,151
Michael Percy	28,200	2,900	23,700	35,500	+4,500	-4,500	$97,092
Janice Rennie	25,321	79,000	20,571	83,500	+4,750	-4,500	$127,578
Eric Rosenfeld	3,152,900	13,500	n/a	n/a	n/a	n/a	$8,264,304

Officer Compensation

The Compensation and Governance Committee, composed of three independent directors, reviews and approves Matrikon's compensation program for executive officers.

The primary objectives of Matrikon's compensation program are to enable the company to attract, motivate and retain outstanding individuals and to align their success with that of Matrikon's shareholders through the achievement of strategic corporate objectives and the creation of shareholder value. The level of compensation paid to an executive is based on the executive's overall experience, responsibility and performance.

Compensation of executive officers for 2007 was comprised of three elements, with some variation depending on area of responsibility and individual objectives:

Performance bonuses are calculated based on parameters such as the achievement of target revenue and earnings growth and individual behavioural objectives which could include such metrics as employee retention or office growth. The following table shows the actual compensation breakdown.

The short term company wide performance bonus which was available to all NEOs was not paid out for fiscal 2007 as the target performance was not achieved. Personal objective bonuses range from a percentage of overall revenue and / or operating income to divisional results, depending on the employee's ability to influence results.

Other compensation includes medical and insurance benefits, which are also generally available to all employees.

Refer to the description under the heading Compensation on page 16 (Compensation and Governance Committee Report) for additional information.

Base Salaries
Matrikon's approach to base salaries is to offer amounts which are slightly below par with industry peers, targeting the 25th percentile. Greater emphasis is placed on pay for performance through variable compensation plans. No formal benchmarks or reviews have been performed for fiscal 2007 executive compensation. Actual individual salary levels are based on a number of factors, including the individual's performance, responsibilities, and experience and reflect the contribution of each executive officer.

Short-Term Incentive Compensation – Bonuses
Matrikon believes that incentive pay encourages employees to contribute to overall performance. Thus, in addition to base salaries, Matrikon awards cash bonuses to executives based on achieving individual performance targets including certain revenue and net income goals in relation to the company's annual plan as approved by the Board. The bonus plan is restructured annually to motivate specific behaviours. In some instances, the Committee also awards discretionary bonuses to certain of these executives at the conclusion of the year.

Long-Term Incentive Compensation – Restricted Share Units (RSUs)
In fiscal year 2006, we implemented a long term executive compensation strategy that replaces option grants to key employees with grants of restricted share units. (RSUs).

Matrikon’s RSU plan is intended to encourage key employees and directors to acquire a proprietary interest in Matrikon and thus provide additional incentive to further Matrikon’s growth and development while aligning the interests of these employees with those of our shareholders.

The RSU Plan was approved by shareholders on December 9, 2005. Matrikon’s employees, officers and directors are eligible to participate in the RSU Plan.

Subject to the vesting requirements (continued employment with Matrikon), each RSU will be exchangeable for one common share or one Deferred Share Unit (DSU) at the employee's election. The option to exchange RSUs for DSUs has been removed from the plan and will not apply to future grants of RSUs. The number of RSUs granted are based on the Executive's position, the need for retention incentives, and typically, as part of a multi-year approach to the Executive's compensation.

Long-Term Incentive Compensation - Employee Stock Ownership Program
Eligible employees and directors are entitled to participate in Matrikon's employee stock ownership program (ESOP), which was designed to encourage employees to become shareholders of the company. Employees, including Named Executive Officers, are eligible to receive one common share for every two common shares purchased and held for a period of 16 months, with certain restrictions. Nizar J. Somji is not eligible to participate in the plan. Shares held by employees under the program are eligible for matching only once. To date, Matrikon has issued 336,479 common shares under ESOP.

The final ESOP registration was April 30, 2007. Matrikon intends to replace this program with a different employee share purchase program in fiscal year 2008.

Compensation of Chief Executive Officer
Both Nizar J. Somji & Amin Rawji acted as CEO in the 2007 fiscal year. The compensation philosophy for both was similar and included:

Employment Contracts
Matrikon does not have any written contracts, plans, arrangements or agreements to compensate Named Executive Officers in excess of $100,000 in the event of termination of employment (as a result of resignation, retirement, change of control, etc.) or a change of responsibilities following a change of control.

Indebtedness of any Directors, Executive Officers and Senior Officers
Management is not aware of any indebtedness outstanding by its directors, senior officers or executive officers to the company, or any guarantees, support agreements, letters of credit or other similar arrangements provided by Matrikon to any of its directors, senior officers or executive officers, at any time since the commencement of the last completed fiscal year.