Algonquin Power & Utilities Corp. – Management’s Discussion & Analysis vesting periods while ensuring that the cumulative amount of compensation cost recognized at least equals the  value of the vested portion of the award at that date. In October 2011, APUC issued 21,123 performance share units (“PSUs”) to certain members of management  other than senior executives as part of APUC’s long-term incentive program. The PSUs provide for settlement  in cash or shares at the election of APUC. As APUC does not expect to settle these instruments in cash, these  PSUs are accounted for as equity awards. APUC has a Deferred Share Unit Plan. Under the plan, non-employee directors of APUC may elect annually to  receive all or any portion of their compensation in deferred share units (“DSUs”) in lieu of cash compensation. The DSUs provide for settlement in cash or shares at the election of APUC. As APUC does not expect to settle  the DSU’s in cash, these DSUs are accounted for as equity awards. As at December 31, 2012, 50,172 DSUs had been granted.  APUC has an employee share purchase plan (the “ESPP”) which allows eligible employees to use a portion of  their earnings to purchase common shares of APUC. The aggregate number of shares reserved for issuance  from treasury by APUC under this plan shall not exceed 2,000,000 shares. As at December 31, 2012, a total of  61,403 shares had been issued under the ESPP. APUC views its capital structure in terms of its debt levels, both at a project and an overall company level, in  conjunction with its equity balances. APUC’s objectives when managing capital are:  APUC monitors its cash position on a regular basis to ensure funds are available to meet current normal as well  as capital and other expenditures. In addition, APUC continuously reviews its capital structure to ensure its  individual business units are using a capital structure which is appropriate for their respective industries.  Certain executives of APUC are shareholders of Algonquin Power Management Inc. (“APMI”), the former  manager of the Company. A member of the Board of Directors of APUC is an executive at Emera.  Transactions with APMI and Senior Executives  2012 Annual Report 54 x APUC utilizes chartered aircraft, including the use of an aircraft owned by an affiliate of APMI, Algonquin  Airlink Inc. In 2004, APUC remitted $1,300 to the affiliate as an advance against expense reimbursements  (including engine utilization reserves) for APUC’s business use of the aircraft. During the year ended  December 31, 2012, APUC incurred costs in connection with the use of the aircraft of $598 (2011 - $453)  x APUC has leased its head office facilities since 2001 from an entity owned by the shareholders of APMI on  a triple net basis. Base lease costs for the year ended December 31, 2012 were $333 (2011 - $327).  x To have proper credit facilities available for ongoing investment in growth and investment in  development opportunities.  x To maintain sufficient cash reserves on hand to ensure sustainable dividends made to shareholders;  and  To ensure generation of cash is sufficient to fund sustainable dividends to shareholders as well as meet  current tax and internal capital requirements;  x To ensure capital is available to finance capital expenditures sufficient to maintain existing assets;  x To maintain appropriate debt and equity levels in conjunction with standard industry practices and to  limit financial constraints on the use of capital;  x To maintain its capital structure consistent with investment grade credit metrics appropriate to the  sectors in which APUC operates;  MANAGEMENT OF CAPITAL STRUCTURE  EMPLOYEE SHARE PURCHASE PLAN  DIRECTORS DEFERRED SHARE UNITS  PERFORMANCE SHARE UNITS RELATED PARTY TRANSACTIONS