CP Canadian Pacific Kansas City Limited

CORPORATE GOVERNANCE

CP is committed to high standards of corporate governance. Several of our key governance strengths and actions are noted in the table below.

BOARD AND OTHER GOVERNANCE INFORMATION AS OF MARCH 17, 2015

EXECUTIVE COMPENSATION

Philosophy and Compensation Components

Canadian Pacific is focused on a pay-for-performance approach for all non-union employees including our executives. In order to attract and retain top talent as well as to align the goals of the Company with employees, the Company offers a competitive compensation package.

The mix of options and PSUs awarded under the long-term incentive plan drives multiple objectives. The vesting of performance share units depends on the achievement of targets and the realization of our strategic plan while stock options align the interests of management with the interests of shareholders in the creation of long term shareholder value.

We are sending you this Management Proxy Circular (the “Circular”) to solicit proxies by the management of Canadian Pacific to be used at the annual and special meeting (the “Meeting”) of shareholders of Canadian Pacific to be held on May 14, 2015.

In this document “you” and “your” refer to the shareholders of Canadian Pacific; and “CP”, “Canadian Pacific”, the “Corporation”, the “Company” or “we”, “us” and “our” refer to Canadian Pacific Railway Limited and, where applicable, its subsidiaries; and the “Board of Directors” or the “Board” refer to the board of directors of Canadian Pacific. Unless otherwise noted, the information contained in this Circular is given as of March 17, 2015 and all dollar amounts used in this document are shown in Canadian dollars. Payments made in 2014 in United States dollars (“US$”) were converted into Canadian dollars using the Bank of Canada average exchange rate for 2014 of 1.1045 Canadian dollars per United States dollar.

The Meeting will be held at

The Westin Calgary,

Britannia-Belaire Ballroom,

320 – 4^th Avenue S.W.,

Calgary, Alberta T2P 2S6,

at 9:00 a.m. (Mountain Daylight Time)

on Thursday, May 14, 2015

Forward-Looking Information

This Circular contains certain forward-looking information and forward-looking statements (collectively, “forward-looking information”) within the meaning of applicable securities laws relating, but not limited, to our operations, priorities and plans, anticipated financial performance, business prospects, planned capital expenditures, programs and strategies. This forward looking information also includes, but is not limited to, statements concerning expectations, beliefs, plans, goals, objectives, assumptions, information and statements about possible future events, conditions, and results of operations or performance. Forward-looking information may contain statements with words such as “anticipate”, “believe”, “expect”, “plan” or similar words suggesting future outcomes.

Undue reliance should not be placed on forward-looking information as actual results may differ materially from the forward-looking information. Forward-looking information is not a guarantee of future performance. By its nature, CP’s forward-looking information involves numerous assumptions, inherent risks and uncertainties that could cause actual results to differ materially from the forward-looking information, including but not limited to the following factors: changes in business strategies; general North American and global economic, credit and business conditions; risks in agricultural production such as weather conditions and insect populations; the availability and price of energy commodities; the effects of competition and pricing pressures; industry capacity; shifts in market demand; inflation; changes in laws and regulations, including regulation of rates; changes in taxes and tax rates; potential increases in maintenance and operating costs; uncertainties of investigations, proceedings or other types of claims and litigation; labour disputes; risks and liabilities arising from derailments; transportation of dangerous goods; timing of completion of capital and maintenance projects; currency and interest rate fluctuations; effects of changes in market conditions and discount rates on the financial position of pension plans and investments; and various events that could disrupt operations, including severe weather, droughts, floods, avalanches and earthquakes as well as security threats and governmental response to them, and technological changes. The foregoing list of factors is not exhaustive.

These and other factors are detailed from time to time in reports filed by CP with securities regulators in Canada and the United States. Reference should be made to “Management’s Discussion and Analysis” in CP’s annual and interim reports, Annual Information Form and Form 40-F. Forward-looking information is based on current expectations, estimates and projections and it is possible that predictions, forecasts, projections, and other forms of forward-looking information will not be achieved by CP. Except as required by law, CP undertakes no obligation to update publicly or otherwise revise any forward-looking information, whether as a result of new information, future events or otherwise.

1. FINANCIAL STATEMENTS

The audited consolidated financial statements of Canadian Pacific for the year ended December 31, 2014, and the report of the auditors, will be placed before the shareholders at the Meeting. These audited consolidated financial statements form part of the Annual Report of Canadian Pacific, which was mailed to registered shareholders and to all non-registered shareholders who requested it. Additional copies of the Annual Report may be obtained from the Corporate Secretary of Canadian Pacific upon request. The Annual Report is also available online at www.cpr.ca or www.sedar.com.

2. APPOINTMENT OF AUDITORS

At Canadian Pacific’s annual meeting of shareholders held on May 1, 2014, Deloitte LLP was appointed as Canadian Pacific’s auditors. Deloitte was first appointed on May 12, 2011. For information on fees paid to Deloitte LLP for the year ended December 31, 2014, refer to “Schedule “A” Audit Committee Disclosure – Audit and Non-Audit Fees and Services, 2014 & 2013”. In order to be approved, the appointment of Deloitte LLP as the Corporation’s auditors requires an affirmative vote of the majority of the votes cast at the Meeting.

The Board of Directors recommends that Deloitte LLP be appointed as Canadian Pacific’s auditors until the close of the next annual meeting of shareholders. Unless otherwise instructed, the persons designated in the form of proxy or the voting instruction form, intend to vote FOR the appointment of Deloitte LLP as auditors of Canadian Pacific to hold office until the next annual meeting of shareholders at remuneration to be fixed by the Board of Directors.

3. ADVISORY VOTE ON EXECUTIVE COMPENSATION

Canadian Pacific is committed to providing shareholders with clear, comprehensive and transparent disclosure on executive compensation. For information on Canadian Pacific’s executive compensation, refer to “2014 Executive Compensation – Letter to Shareholders” and “Compensation Discussion and Analysis”. In order

to receive feedback from shareholders on this matter, we are providing shareholders with our fifth annual non-binding advisory vote on our approach to executive compensation, commonly known as “Say on Pay”. The Say on Pay resolution we are proposing to our shareholders is the form recommended by the Canadian Coalition for Good Governance.

The Management Resources and Compensation Committee has spent considerable time and effort recruiting top level talent and developing our executive compensation program to fit extraordinary circumstances. The Board of Directors believes that the executive compensation program which has been implemented achieves the goal of maximizing long-term shareholder value while attracting, motivating and retaining world-class talent. We recognize that the proper structure of executive compensation is critical to both managing risk and appropriately incentivizing management. We have been successful in recruiting individuals with unique and demonstrated abilities to improve railway performance and shareholders have enjoyed extraordinary results. We believe that our approach to executive compensation is fair and balanced, and creates incentives well-aligned with shareholders’ interests over the long term. CP’s management regularly meet and engage with CP’s shareholders and, during 2014, met with shareholders representing approximately 80% of our outstanding shares. None of these shareholders raised executive compensation as a current concern regarding the Company. In addition, the Chairman of the Board of Directors, the Chair of the Management Resources and Compensation Committee and management representatives met with proxy advisory firm Glass Lewis in late 2014 to better understand its pay for performance evaluation methodology.

As this is an advisory vote, the results will again not be binding upon the Board. However, in considering the Corporation’s approach to compensation, the Board will take into account the results of this vote, together with other shareholder feedback and best practices in compensation and governance.

The Board of Directors recommends that shareholders vote FOR the resolution set out below and, unless otherwise instructed, the persons designated in the form of proxy or the voting instruction form intend to vote FOR the following resolution:

“RESOLVED, on an advisory basis and not to diminish the role and responsibilities of the Board of Directors, that the shareholders accept the approach to executive compensation disclosed in the Corporation’s Circular delivered in advance of the 2015 annual meeting of shareholders.”

4. ELECTION OF DIRECTORS

Directors are elected annually by shareholders, each to hold office until the close of the next annual meeting of shareholders or until such person’s successor is elected or appointed. Between shareholder meetings, the Board may appoint additional directors.

Our governing documents provide that our Board of Directors shall consist of a minimum of five and a maximum of 20 directors. The Corporate Governance and Nominating Committee (the “Governance Committee”), with the assistance of an external search consultant if necessary, identifies and recommends to the Board the proposed nominees for appointment or election at each annual meeting of shareholders consistent with criteria approved by the Board.

CP is committed to Board diversity. In determining qualified nominees for election as directors of CP, the Governance Committee takes into account diversity considerations such as gender, age, cultural heritage and regional representation of candidates in order to ensure that the Board reflects the gender, age, cultural and geographic representation of the regions in which CP operates.

Pursuant to a resolution of the Board of Directors, 13 persons are to be elected as directors at the Meeting, each to hold office until the close of the next annual meeting of shareholders or until such person’s successor is elected or appointed.

The appointees named in the proxy are officers of CP who intend to vote at the Meeting FOR the election of the nominees whose names are set out below, unless specifically instructed on the proxy to withhold such vote. If, prior to the Meeting, any of the listed nominees becomes unable or unwilling to

serve, the persons named in the proxy will have the right to use their discretion in voting for such other properly qualified nominees. The persons named in the section “Nominees for Election to the Board” (the “Nominees”) will be presented for election at the Meeting.

The Board recommends that you vote FOR each of the Nominees. Unless otherwise instructed, the persons designated in the form of proxy and the voting instruction form intend to vote FOR the election of the Nominees. If, prior to the Meeting, any of the Nominees becomes unable or unwilling to serve, the persons designated in the form of proxy or voting instruction form will have the right to use their discretion in voting for such other properly qualified nominees.

5. ADVANCE NOTICE BY-LAW

On December 16, 2014, the Board approved the adoption of the Advance Notice By-Law to establish a framework for advance notice of nominations of directors by the shareholders of CP. Among other things, the Advance Notice By-Law fixes deadlines by which shareholders must submit a notice of director nominations to CP prior to any annual or special meeting of shareholders where directors are to be elected and sets out the information that a shareholder must include in the notice.

More specifically, the Advance Notice By-Law requires that advance notice be provided to the Corporation in circumstances where nominations of persons for election as a director of Canadian Pacific are made by shareholders other than pursuant to (i) a shareholder proposal made in accordance with the provisions of the Canada Business Corporation Act (“CBCA”); or (ii) a requisition of the shareholders made in accordance with the provisions of the CBCA.

The purpose of the Advance Notice By-Law is to ensure that an orderly nomination process is observed and that shareholders can make a well-informed voting decision about director nominees. The full text of the Advance Notice By-law is set forth in Schedule “D” to this Circular.

Although the Advance Notice By-Law went into effect on March 13, 2015, shareholders must confirm the Advance Notice By-Law at the Meeting. If shareholders do not approve the ordinary resolution confirming the adoption of the Advance Notice By-Law, it will no longer be valid.

At the Meeting, shareholders will be asked to consider and, if deemed appropriate, to approve, a resolution in the form set out below (the “Advance Notice By-Law Resolution”), subject to such amendments, variations or additions as may be approved at the Meeting, confirming the adoption of the Advance Notice By-Law. In order to be passed, the Advance Notice By-Law Resolution must be passed by an affirmative vote of the majority of the votes cast at the Meeting.

The Board recommends that you vote FOR the adoption of the Advance Notice By-Law Resolution. Unless otherwise instructed, the persons designated in the form of proxy and the voting instruction form intend to vote FOR the adoption of the Advance Notice By-Law Resolution.

The text of the Advance Notice By-Law Resolution to be submitted to shareholders at the Meeting is set forth below:

“RESOLVED THAT By-law No. 2 of the Company, as set forth in the Circular of the Corporation dated March 17, 2015, is hereby confirmed without amendment and any one director or officer of the Corporation be and is hereby authorized and directed to execute and deliver for and in the name of and on behalf of the Corporation all such certificates, instruments, agreements, documents and notices and to do all such other acts and things as in such person’s opinion may be necessary or desirable for the purpose of giving effect to this resolution.”

6. LOCATION OF SHAREHOLDER MEETINGS

Canadian Pacific is a transcontinental railway in Canada and the United States with a large shareholder base in each of these countries. Currently, the provisions of the CBCA limit CP from holding shareholder meetings outside of Canada. In order to reflect the nature of CP’s business and to accommodate the large number of shareholders in the United States, CP is proposing to amend its Articles in order to authorize the holding of meetings of shareholders at such place within Canada or the United States of America as the directors may from time to time determine, including, but not limited to, Chicago, Illinois, Minneapolis, Minnesota, Saint Paul, Minnesota and New York, New York.

Section 132 of the CBCA provides that a meeting of shareholders of a corporation may be held at a place outside Canada if the place is specified in the articles of the corporation. Currently CP’s Articles do not provide for shareholder meetings to be held outside of Canada. Section 173 of the CBCA permits, by special resolution of the shareholders, an addition to the articles of any provision that is permitted by the CBCA to be set out in the articles.

At the Meeting, shareholders will be asked to consider and, if deemed appropriate, to approve, a special resolution in the form set out below (the “Meeting Location Resolution”), subject to such amendments, variations or additions as may be approved at the Meeting, authorizing CP to amend its Articles to authorize shareholder meetings held in Canada or the U.S. In order to be passed, the Meeting Location Resolution must be passed by an affirmative vote of a majority of not less than two-thirds of the votes cast at the Meeting.

The Board recommends that you vote FOR the adoption of the Meeting Location Resolution. Unless otherwise instructed, the persons designated in the form of proxy and the voting instruction form intend to vote FOR the adoption of the Meeting Location Resolution.

The text of the Meeting Location Resolution to be submitted to shareholders at the Meeting is set forth below:

‘‘RESOLVED AS A SPECIAL RESOLUTION:

Articles of Amendment setting out the proposed amendment relating to shareholder meeting locations are attached to this Circular as Schedule “E”.

Please carefully read this section, as it contains important information regarding how to vote your common shares of the Corporation (“Shares”). Canadian Pacific has sent or caused to be sent forms of proxy to the Corporation’s registered shareholders and voting instruction forms and, in some cases, forms of proxy, to the Corporation’s non-registered shareholders.

What is the purpose of the Meeting?

At the Meeting, you will be asked to vote on the following matters:

How does the Board recommend that I vote?

The Board recommends that you vote FOR the appointment of Deloitte LLP as the Corporation’s auditors, FOR the Corporation’s approach to executive compensation, FOR each of the Nominees, FOR the Advance Notice By-Law and FOR the Meeting Location Resolution. For more information on the Nominees, refer to “Nominees for Election to the Board”.

Where and when is the Meeting?

The Meeting will be held at The Westin Calgary, Britannia-Belaire Ballroom, 320 – 4^th Avenue S.W., Calgary, Alberta T2P 2S6 at 9:00 a.m. (Mountain Daylight Time) on Thursday, May 14, 2015. For information regarding voting in person at the Meeting see “How do I vote if I am a REGISTERED shareholder?” or “How do I vote if I am a NON-REGISTERED shareholder?”.

How many Shares are outstanding and who are the Corporation’s Principal Shareholders?

As of March 17, 2015, there were 163,956,169 Shares issued and outstanding. Each Share carries one vote on each matter voted upon at the Meeting.

Based on publicly available information as at March 17, 2015, no person beneficially owned or controlled or directed or indirectly owned 10% or more of the outstanding Shares.

What vote is required to elect directors?

At the Meeting, 13 directors will be elected. The 13 Nominees receiving the highest number of FOR votes cast in person or by proxy at the Meeting will be elected to the Board.

What vote is required for the approval of the Advance Notice By-Law Resolution, and the Meeting Location Resolution?

The Advance Notice By-Law Resolution must be approved by an ordinary resolution of shareholders, consisting of a simple majority of the votes cast by those shareholders who voted on the resolution voting FOR the Advance Notice By-Law Resolution.

The Meeting Location Resolution must be approved by a special resolution of shareholders, consisting of a majority of two-thirds of the votes cast by those shareholders who voted on the resolution FOR the Meeting Location Resolution.

Who is entitled to vote at the Meeting?

The Board has fixed March 17, 2015 as the record date (the “Record Date”) for the purpose of determining shareholders entitled to receive the Notice of Annual Meeting of Shareholders (the “Notice”) and to vote at the Meeting or any adjournment or postponement thereof, either in person or by proxy. Only shareholders of record at the close of business on the Record Date are entitled to vote at the Meeting. Each shareholder is entitled to one vote for each Share held.

Who is soliciting my proxy and how do I appoint a proxyholder?

Management of Canadian Pacific is soliciting your proxies in connection with this Circular and the Meeting. The cost of this solicitation will be borne by the Corporation. Proxies will be solicited by mail, in person, by telephone or by electronic communications. Canadian Pacific has retained Kingsdale Shareholder Services, (“Kingsdale”) located at the Exchange Tower, 130 King Street West, Suite 2950, Toronto, Ontario, M5X 1E2 to assist with our communications with shareholders

and solicitation of proxies. In connection with these services, Kingsdale will receive an initial fee of $60,000. In addition, Kingsdale will be reimbursed for disbursements and out-of-pocket expenses, as well as an additional $8 fee for each telephone call to or from Canadian Pacific shareholders and additional fees as determined by Canadian Pacific and Kingsdale.

Shareholders wishing to be represented by proxy at the Meeting must deposit a properly executed proxy with the Corporation or its agent, Computershare Investor Services Inc. (“Computershare”), or Kingsdale, not less than 24 hours prior to the time fixed for holding the Meeting (or any adjournment thereof). The time limit for the deposit of proxies may be waived or extended by the Chair of the Meeting at his or her discretion without notice. All Shares represented by a properly executed 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 specifies a choice with respect to any matter to be acted upon, the Shares will be voted accordingly.

If I do not provide management with instructions in my proxy, how will my Shares be voted?

Shareholders who have appointed a named appointee of management to act and vote on their behalf, as provided in the enclosed form of proxy or voting instruction form, and who do not provide instructions concerning any matter identified in the Notice, will have the Shares represented by such form of proxy or voting instruction form voted FOR the appointment of Deloitte LLP as the Corporation’s auditors, FOR the Corporation’s approach to executive compensation, FOR the election of the Nominees, FOR the Advance Notice By-Law Resolution, and FOR the Meeting Location Resolution.

The enclosed form of proxy or voting instruction form to be used in connection with the Meeting also confers discretionary authority on the person or persons named to vote on any amendment or variation to the matters identified in the Notice and on any other matter properly coming before the Meeting. As of March 17, 2015, management is not aware of any such amendment, variation or other matter. If, however, any such amendment, variation or other matter properly comes before the Meeting, proxies will be voted at the discretion of the person

or persons named on the enclosed form of proxy or voting instruction form.

How do I vote if I am a REGISTERED shareholder?

You are a registered shareholder if your name appears on your Share certificate. If this is the case, this Circular will be accompanied by a form of proxy. If you are a registered shareholder, there are two ways, listed below, that you can vote your Shares:

1) Voting by Proxy

You may appoint the management appointee or someone else that need not be a shareholder to vote for you as your proxyholder by using the enclosed form of proxy. A shareholder has the right to appoint a person or company other than the named appointee of management to represent such shareholder at the Meeting. To appoint a person or company other than the named appointee, write the name of the person or company you would like to appoint in the space provided.

You may vote using any of the methods outlined on the form of proxy.

2) Voting in Person

As a registered shareholder, you may exercise your right to vote by attending and voting your Shares in person at the Meeting. Upon arriving at the Meeting, report to the desk of our registrar and transfer agent, Computershare, to sign in and revoke any proxy previously given. You do not need to complete or return your form of proxy if you intend to vote at the Meeting.

To be valid, a proxy must be signed by the shareholder or his or her attorney authorized in writing. There are several ways to submit your form of proxy which are indicated on the form of proxy. Carefully review your form of proxy for these instructions.

How do I vote if I am a NON-REGISTERED shareholder?

If your Shares are not registered in your name and are held in the name of a nominee such as a trustee, financial institution or securities broker, you are a non-registered shareholder. If your Shares are listed in an account statement provided to you by your broker, those Shares will, in all likelihood, not be registered in your name.

Such Shares will more likely be registered under the name of your broker or an agent of that broker. Without specific instructions, Canadian brokers and their agents or nominees are prohibited from voting Shares for the broker’s client. Without specific instructions, U.S. brokers and their agents or nominees are prohibited from voting Shares for the broker’s client with respect to the non-binding advisory vote on the Corporation’s approach to executive compensation, the election of directors, confirmation of adoption of advance notice By-Law, and the amendment to Articles authorizing Canadian Pacific to hold shareholder meetings in certain locations outside of Canada, but may vote such Shares with respect to the appointment of Deloitte LLP.

If you are a non-registered shareholder, there are two ways, listed below, that you can vote your Shares:

1) Giving Your Voting Instructions

Your nominee is required to seek voting instructions from you in advance of the Meeting. Accordingly, you will receive, or have already received, from your nominee either (i) a voting instruction form for completion and execution by you, or (ii) a form of proxy for completion by you, executed by the nominee and restricted to the number of Shares owned by you. These procedures are to permit non-registered shareholders to direct the voting of the Shares that they beneficially own.

Each nominee has its own procedures which should be carefully followed by non-registered shareholders to ensure that their Shares are voted at the Meeting. Please contact your nominee for instructions in this regard. You may vote using any of the methods outlined on the voting instruction form or form of proxy.

2) Voting in Person

If you wish to vote in person at the Meeting, insert your own name in the space provided on the voting instruction form or form of proxy to appoint yourself as proxyholder and follow the instructions of your nominee.

Non-registered shareholders who instruct their nominee to appoint themselves as proxyholders should, at the Meeting, present themselves to a representative of Computershare. Do not otherwise

complete the voting instruction form or form of proxy sent to you as your vote will be taken and counted at the Meeting.

How will Shares held in the Corporation’s employee share purchase plan be voted?

Employees of the Corporation are eligible to participate in an employee share purchase plan (“ESPP”) under which they purchase Shares. Shares held by participants under the ESPP (“ESPP Participants”) are held in a custodial account until such time as the Shares held by ESPP Participants are withdrawn from the ESPP pursuant to its terms and conditions.

Voting rights attached to Shares held by ESPP Participants may be exercised through the use of a voting instruction form, which provides instructions regarding the voting of Shares held by ESPP Participants. ESPP Participants will have received this Circular together with the voting instruction form, or advice as to the availability of these documents electronically, from the Corporation’s registrar and transfer agent, Computershare.

Shares held by ESPP Participants will be voted in accordance with the instructions received from the employee.

If I change my mind, can I revoke or change my proxy once I have given it?

Yes. A shareholder may revoke a proxy by depositing an instrument in writing executed by such shareholder or by such shareholder’s attorney authorized in writing (or, in the case of a corporation, by a duly authorized officer or attorney), either at the Office of the Corporate Secretary, Canadian Pacific, 7550 Ogden Dale Road S.E., Calgary, Alberta, T2C 4X9, or with the Chairman of the Meeting on the day of the Meeting, or by an adjournment or postponement of the Meeting, or in any other manner permitted by law.

In addition to any other manner permitted by law, a shareholder may change a previously submitted proxy or voting instruction by submitting a new proxy or conveying new voting instructions by any of the means described under “How do I vote if I am a REGISTERED shareholder?” or “How do I vote if I am a NON-REGISTERED shareholder?”, as applicable. Non-registered shareholders must ensure that any change in voting instructions is

communicated to the applicable nominee sufficiently in advance of the time of voting at the Meeting. Non-registered shareholders who have voted and who wish to change their voting instructions should contact their nominee promptly if assistance is required.

What is the latest time that I can submit my form of proxy or voting instruction form?

To be effective, your proxy must be received not less than 24 hours prior to the time fixed for holding the Meeting (or any adjournment thereof). The time limit for the deposit of proxies may be waived or extended by the Chair of the Meeting at his or her discretion without notice.

The Corporation reminds shareholders that only the most recently dated voting instructions will be counted and any prior dated instructions will be disregarded.

How will votes be tabulated?

Proxies will be counted and tabulated by the Corporation’s registrar and transfer agent, Computershare. Computershare maintains the confidentiality of individual shareholder votes. However, proxies will be submitted to management

where they contain comments clearly intended for management or to meet legal requirements.

Whom should I contact if I have questions?

If you have any questions about the information contained in this document or require assistance in completing your form of proxy or voting instruction form, please contact Kingsdale, located at The Exchange Tower, 130 King Street West, Suite 2950, P.O. Box 361, Toronto, Ontario, M5X 1E2, or by telephone at North American Toll Free: 1-866-879-7649, Outside North America, Banks and Brokers Call Collect: 416-867-2272 or by email at contactus@kingsdaleshareholder.com.

How may I contact the registrar and transfer agent?

You may contact Computershare, Canadian Pacific’s registrar and transfer agent, by telephone, Internet or mail, as follows: by telephone 1-877-4-CP-RAIL / 1-877-427-7245 (within Canada and the United States) between the hours of 8:30 a.m. and 8:00 p.m. Eastern, or 1-514-982-7555 (international direct dial); by internet at www.investorcentre.com/cp, by mail addressed to Computershare, 100 University Ave., 8th Floor, Toronto, Ontario, M5J 2Y1.

DIRECTOR ATTENDANCE

Regularly scheduled Board and committee meeting dates are established approximately two years in advance. Special meetings are also scheduled as needed and these meetings can be called on short notice. In 2014, the Board called one special meeting and the Finance Committee called one special meeting.

Directors are expected to attend all regularly scheduled Board meetings and meetings of committees on which they serve and to exercise best efforts to attend all special meetings. All directors are also invited to attend all of the regularly scheduled meetings of the committees. In 2014, the incumbent Nominees attended 98% of all Board and Committee meetings, as set forth below.

Prior to being elected as Chairman of the Board on May 1, 2014, Mr. Colter had been a member of the Audit and Finance Committees. In 2014, Mr. Colter attended 100% of the 19 committee meetings held subsequent to his election as Chairman. As Chairman he regularly attends committee meetings.

Board and committee meeting materials are typically provided to the directors in advance of meetings. If a director is unable to attend a meeting, the director provides his or her comments to the Chair, Chair of the committee or the Corporate Secretary in advance of the meeting, and the recipient will ensure those comments and views are considered at the meeting.

ADDITIONAL INFORMATION ABOUT CURRENT DIRECTORS NOT STANDING FOR ELECTION

Mr. Paul G. Haggis, an independent director who has served as a director since May 2012, will not be standing for re-election at the Meeting. Mr. Haggis is Chairman of the Alberta Enterprise Corporation, an investor in venture capital funds. Mr. Haggis

served as Chairman of the Board of the Corporation from May 2012 to May 2014. Subsequent to May 2014, he was a member of the Corporation’s Audit Committee and a member of the Finance Committee. In 2014, Mr. Haggis attended 6 of 6 Board meetings, 5 of 5 Audit Committee meetings, and 4 of 5 Finance Committee meetings.

PHILOSOPHY

Canadian Pacific’s directors’ compensation program shares the same objectives as the Corporation’s executive compensation program, namely to: (i) attract and retain skilled director talent; and (ii) create alignment with shareholder interests. The compensation elements used to achieve these objectives consist of annual retainers, share ownership requirements and director deferred share units (“DDSUs”) granted under the Directors’ Deferred Share Unit Plan (the “DDSU Plan”). These elements are described in further detail below.

Messrs. Ackman and Hilal have elected not to receive any retainer or fees, or any initial, annual or quarterly DDSUs, in connection with their service on the Board or any committees.

Directors who are also employees of CP do not receive any compensation for Board or committee service.

DIRECTORS 2014 COMPENSATION

The Corporate Governance and Nominating Committee reviews directors’ compensation on an annual basis after considering the advice of an independent compensation consultant, taking into account such factors as the time commitment, compensation provided by comparable companies, and responsibilities of directors.

The comparator group used to establish competitive pay practices for directors’ compensation is the same peer group as used for executives set out in Schedule “B”.

Starting July 1, 2013, the Board adopted a flat fee structure for director compensation, comprised

entirely of deferred share units with a one-year post-retirement hold period. The flat fee structure is simpler to administer and disclose, and aligns with the ongoing responsibilities of the Board of Directors. Attendance at meetings is an important component of the role of a director; however, CP’s Board provides continual oversight to the Company and a flat fee structure better compensates for this responsibility.

In 2014, the Corporate Governance and Nominating Committee reviewed director compensation relative to the executive compensation comparator group used for executives set out in Schedule “B” with the Class I Railroads being used as a secondary reference. As a result of this review, the Corporate Governance and Nominating Committee made the following changes to director compensation effective October 1, 2014:

The change to allow directors to receive up to 50% of their retainer in cash once they have met their share ownership requirements was made because the Committee determined that deferring 100% of director compensation for directors’ entire tenure

could negatively impact economic diversity on the Board. The policy, as changed, remains aligned with good governance practices.

The Corporate Governance and Nominating Committee has determined that director compensation will be reviewed every 2 to 3 years.

Directors are reimbursed for travel and out-of-pocket expenses related to the Board and committee meetings.

Directors’ Deferred Share Unit Plan

All directors will receive 100% of their annual retainer entirely in the form of DDSUs until they have met the share ownership requirements and at least 50% in DDSUs after that. A DDSU is a bookkeeping entry having the same value as one Share, paid after the director leaves the Board, thereby providing an ongoing equity stake in the Corporation throughout the director’s tenure. DDSUs earn dividends in the form of additional DDSUs at the same rate as dividends on Shares. DDSUs are subject to a one year post-retirement hold period. One year after the director leaves the Board, the director will receive a cash amount equal to the value of the DDSUs held by the director, based on the market value of the Shares at that time, minus applicable withholding taxes.

A director who has met the share ownership requirements may elect annually to receive up to 50% of his or her retainer in DDSUs. To participate in this aspect of the DDSU Plan, the director’s

election must be received prior to the beginning of each calendar year. Only non-employee directors participate in the DDSU Plan.

Director Share Ownership Requirements

To enhance the alignment of directors’ interests with those of shareholders, non-employee directors are required to hold $1,175,000 in Shares/DDSUs within five years of their initial election or appointment to the Board. The Chairman of the Board is required to hold $1,975,000 in Shares/DDSUs within five years of the Chair’s initial appointment. These amounts represent five times their respective annual retainers. This multiple was increased from three to five times by the Board, effective October 26, 2012. The share ownership requirement may alternatively be satisfied through an indirect interest in Shares.

Directors’ Compensation Consultant

In discharging its mandate, the Governance Committee engaged Meridian Compensation Partners to provide expertise and advice on matters relating to director compensation. This included providing market compensation information and advice on appropriate comparator organizations, current market practice and best practices with regard to director compensation. The decisions made by the Governance Committee are its responsibility and may reflect factors and considerations other than the information and recommendations provided by Meridian Compensation Partners.

Composition of the Management Resources and Compensation Committee

CP’s Management Resources and Compensation Committee (the “Committee”) comprises five independent directors: Paul Hilal (Chair), Krystyna Hoeg, Rebecca MacDonald, Andrew Reardon, and Stephen Tobias.

Each member of the Committee has education, skills and experience which are relevant to the performance of their responsibilities as a member of the Committee. The following skills and experience enable the Committee to make decisions on the suitability of CP’s compensation policies and practices:

* Paul Hilal (Chair) is a Partner at Pershing Square Capital Management, L.P., an investment advisor with approximately US$18 billion of assets under management. Mr. Hilal received an A.B. degree in Biochemistry from Harvard College in 1988, a J.D. from Columbia University in 1992, and a Masters of Business Administration from Columbia University School of Business in 1992. The Committee benefits from Mr. Hilal’s extensive experience assessing compensation and related issues from a shareholder’s perspective. His experience as a professional investor enables him to provide strong financial oversight to compensation policies and practices.

* Krystyna Hoeg is the former President and Chief Executive Officer of Corby Distilleries Limited, a marketer and seller of spirits and wine. As Chief Executive Officer, the Vice President of Human Resources reported directly to Ms. Hoeg providing her with direct experience overseeing executive compensation and other human resource matters. She has also served on the human resource committees of various other public companies including currently chairing the Executive Resources Committee at Imperial Oil Limited and the Management Resources Committee at Sun Life Financial Inc.

* Rebecca Macdonald is a founder and current Executive Chair of Just Energy Group Inc., a

Toronto-based independent marketer of deregulated gas and electricity. She served as President and Chief Executive Officer of Just Energy prior to becoming Executive Chair in 2007. As Chief Executive Officer, the head of the human resources department reported directly to her. Ms. Macdonald has strong succession planning experience including her development of candidates in preparation for her succession as Chief Executive Officer of Just Energy.

* Andrew Reardon is a thirty-two year veteran of the railroad industry, and is the former Chairman and Chief Executive Officer of TTX Company, the leading railcar leasing company in North America. Prior to his appointment as Chairman and CEO, Mr. Reardon served as the Vice President, Law and Human Resources of TTX Company from 1992 to 2000. Previously, he was a Presidential Appointee to the US Railroad Retirement Board. His railroad experience includes service as the Sr. Vice President Law and Administration at the Illinois Central Transportation Company. At both TTX and the Illinois Central, Mr. Reardon was responsible for all compensation practices and policies as well as all labour matters including direct involvement in union contract negotiations. Mr. Reardon has extensive experience in compensation policies and practices, discussion of compensation matters with investors, talent development, succession planning, executive recruitment and compensation, pension benefits and human resource management in the rail industry. Mr. Reardon is on the Compensation Committee of Appvion Inc. (formerly Appleton Papers Inc).

* Stephen Tobias is a forty-year veteran of the railroad industry and the former Vice Chairman and Chief Operations Officer of Norfolk Southern Corporation. Mr. Tobias has extensive experience in talent development, succession planning, and human resource and executive compensation policies and practices in the rail industry. He also brings strong oversight in labour matters. Mr. Tobias is a member of the Compensation Committee of Plum Creek Timber Company, Inc.

Overall the Committee members possess human resource and compensation-related experience in the following areas of expertise:

PRINCIPLES AND OBJECTIVES OF EXECUTIVE COMPENSATION PROGRAM

CP’s executive compensation program is closely linked to the crucial metrics which will drive the achievement of the organization’s strategic plan and create shareholder value. We are creating a railroad-focused culture with compensation plans designed to align management compensation with shareholder interests. For executive officers, the majority of their pay is at risk and will be earned only through the successful execution of CP’s strategic plan.

The Committee is committed to a compensation program that drives short and long-term business

performance, is competitive and encourages broad share ownership. Our executive compensation program is weighted towards pay-for-performance components that are integrated into a comprehensive executive compensation program; is aligned with shareholders’ interests; is competitive in attracting and retaining talent; and provides compensation to motivate sustained performance of executives and support the achievement of corporate and individual objectives.

Executive Compensation Consultants

The Committee and management retain separate independent executive compensation advisors.

Committee Advisors

In 2014 the Committee continued to engage Meridian Compensation Partners LLC (“Meridian”) as its independent compensation consultant. Meridian was originally retained by the Committee in 2012. Meridian has agreed not to perform any work for management. During 2014, the services performed by Meridian related to expertise and advice to the Committee on executive compensation and to the Governance Committee on director compensation. The Chair of the Committee approves all fees and work performed by Meridian. In addition, to ensure independence, management must receive pre-approval from the Committee for any executive compensation services provided by the Committee’s compensation consultant. Meridian’s fees were $228,455 for 2014 and $302,951 for 2013.

Management Advisors

In 2014, Management engaged Towers Watson to provide market data and survey results relating to executive compensation. Total fees paid in this regard were $71,407 for 2014 and $78,169 for 2013.

EXECUTIVE SUMMARY

Named Executive Officers

For 2014, the Named Executive Officers (NEOs) are: E. Hunter Harrison, Chief Executive Officer (“CEO”), Keith Creel, President and Chief Operating Officer (“COO”), Bart Demosky, Executive Vice President and Chief Financial Officer (“CFO”), Robert Johnson, Senior Vice President Operations Southern Region and Anthony Marquis, Senior Vice President Operations Eastern Region.

Compensation Framework for Executive Officers

CP maintains a comprehensive executive compensation program including base salary, short-term incentives, long-term incentives, pension benefits and executive perquisites. Decisions on level of pay for NEOs and all other executive officers reporting to the CEO are made by the Compensation Committee and are based on an executive compensation policy designed to position total direct compensation close to the 50th percentile of Class I Railroads with additional reference made to similar positions in a peer group which includes companies from one third to three times the asset size of CP. More information on our comparator group can be found on page 45.

2014 Short-term Incentive Results

The 2014 short-term incentive plan was based on three metrics: operating income, operating ratio and free cash flow. These measures were chosen because they support CP’s strategic plan. Overall, corporate performance for 2014 was exceptional, with financial results exceeding the exceptional performance standards for all three measures. Consequently, the Board of Directors approved a payout of 200% for the corporate component of the Plan. Further information on the 2014 short-term incentive plan can be found on page 48.

Each NEO has a target annual incentive based on corporate performance as well as individual performance. The Committee assessed the individual performance of the CEO and considered the CEO’s assessment of the individual performance

of the NEOs. This individual performance assessment combined with corporate performance forms the basis for the level of annual incentive payouts for each executive provided in the Summary Compensation Table on page 63.

2014 Long-Term Incentive Grants

To support CP’s strategic plan and align the interests of management with the interests of shareholders, long-term incentives are comprised of 50% performance share units (“PSUs”) and 50% stock options (“Options”). To determine the appropriate value of long-term incentive grants provided to NEOs, based on our established comparator group, the Committee considered external market data together with factors including leadership and talent retention.

Summary of Risk Profile and Risk Management

The Compensation Committee oversees risk management related to executive compensation and considers the implications of the risks associated with CP’s compensation policies and practices. Broad-based short-term and long-term incentive plans as well as the executive compensation program are aligned with CP’s strategic plan and enterprise risk management practices. Our compensation programs, policies and practices operate to encourage the right behaviours, to reward performance and to align with long-term shareholder interests. Risks are mitigated through appropriate plan design, implementation of risk mitigating policies, and specific risk mitigation measures discussed on page 52.

Diversity

CP encourages the advancement of women and individuals with diverse back grounds at the Corporation through its employment equity program. CP has put in place an in depth Diversity and Employment Equity program pursuant to the Employment Equity Act (Canada) to remove workplace barriers at all levels that impede or prevent the inclusion of qualified individuals and minority groups, including women, from

consideration for positions. CP believes that the Diversity and Employment Equity Program encourages the advancement and employment of women and that arbitrary targets are not in the best interests of CP in obtaining the highest caliber executives.

COMPENSATION ELEMENTS FOR EXECUTIVE OFFICERS

CP’s executive compensation program and policies are designed to provide a clear link between our long-term strategy, business plans, and executive compensation. We pay for performance and a significant portion of executive compensation is tied to meeting key corporate objectives that drive shareholder return. Plans are also designed to be competitive to attract and retain top talent.

Comparator Group

The Committee reviews the compensation of each NEO and other select senior officers upon appointment and on an annual basis. In determining compensation for the NEOs and other executive officers reporting to the CEO, the Committee considers a comparator group of the following Class I Railroads: BNSF Railway, Canadian National Railway Company, CSX Corporation, Kansas City Southern Railroad, Norfolk

Southern Corporation and Union Pacific Corporation. This comparator group reflects CP’s need to attract and retain experienced railroad executives. We have balanced this North American focus by continuing to use a secondary reference point to verify the alignment with general compensation trends and benchmark pay levels. This secondary reference group, reviewed by the Committee in 2014, is a group of capital intensive Canadian businesses ranging from one-third to three times the size of CP on an asset basis, with CP positioned close to the median of the group. The companies in this secondary reference group are listed on Schedule “B”.

Each element of compensation is targeted at the median of the primary comparator group. Salary and short-term incentives are targeted at the median of the secondary group. LTIP, which has challenging performance goals, is designed to target the 75th percentile of the secondary group, with total compensation targeted between the 50^th and 75^th percentiles. Actual pay received is highly dependent on performance, particularly share price performance. Throughout the annual executive compensation review process, the Committee receives advice from its independent compensation consultant.

2014 Compensation and Performance

Base Salary

The Committee reviews the base salaries of NEOs and officers reporting directly to the CEO at the time of hire and, on an ongoing basis in February each year. The Committee takes into consideration the individual’s leadership abilities, performance, responsibilities and experience as well as median comparator group practices, succession, retention considerations and economic outlook. Employees are required to set performance objectives annually.

Short-term Incentive Plan

Approximately 3,500 non-unionized employees are eligible to participate in CP’s Short Term Incentive Plan (“STIP”). This plan provides an opportunity for employees to earn an annual cash award based on the achievement of corporate targets and specific individual performance objectives. Employees are required to set performance objectives annually. Assessment of performance against objectives is conducted through performance review discussions mid-year and at year-end.

Minimum, target and maximum payouts, expressed as a percentage of base salary are established for the CEO, other NEOs, executives, senior managers and other management participants:

Payouts received under the STIP depend upon the achievement of both corporate and individual objectives. The weighting of the corporate and individual components is dependent upon the employee’s level in the organization, with executives

having a more significant portion of annual incentive based on corporate results. This design reflects CP’s view that short-term incentives should be tied to both overall corporate performance as well as those areas of its business that each employee influences directly. Weightings for the 2014 short-term incentive plan are as follows:

The Committee aligns performance goals directly with CP’s strategic plan, which is reviewed and approved by the Board of Directors. In setting STIP targets for the upcoming year, CP generally excludes items that are outside the normal business of the company and can impact the comparability of CP’s year-over-year financial performance.

The Committee also considers safety as part of its overall assessment of performance in determining incentive payouts. Safety is treated as an integral part of each employee’s responsibility in addition to forming part of the Operations teams’ individual objectives.

The individual component of the STIP is based on goals that reflect the strategic and operational priorities critical to each executive’s function. The executive’s rating for the individual component of the STIP may be zero or range from 50% to 200%. Any award payable under the individual component is subject to a minimum level of corporate performance, which is set annually by the Board. No award under the STIP Plan is paid unless this minimum corporate hurdle is achieved.

The Board has discretion to adjust targets and payouts under the STIP. In 2013, the Committee adopted guidelines for the exercise of this discretion. Adjustments, both positive and negative, will be reviewed on an individual basis, using these guidelines, with the overriding rule being that the

Board assesses the effect that risk management, safety, financial results and other factors may have had on performance. The Committee may also approve in any individual instance, a downward adjustment on the corporate component of the Plan for any executive officer.

Both operating income and operating ratio were set based on an assumed foreign exchange set at the beginning of the year. These rigorous measures were selected because they are appropriate for a capital intensive business and provide quantifiable metrics that focus on achieving growth in a cost efficient manner. Target levels for the 2014 short-term incentive plan were designed to drive significant improvements over actual results achieved in 2013 and align with CP’s strategic plan. In assessing the level of stretch in targets the Committee considered, among other things, the results (amount and pace of improvement) achieved on these metrics by the other Class I Railroads, during similar transformation periods to ensure that

targets not only required significant improvement year over year, but reflect a very high level of improvement relative to the performance that the other Class I Railroads have been able to achieve.

In determining the performance level achieved for the STIP, the Committee may at its discretion, make adjustments to the company’s reported results to reflect unusual items. The Committee considered and approved each adjustment to the performance metrics. Specifically, the Committee approved the exclusion of a cash influx of $165M and net income of $8M relating to the Dakota, Minnesota and Eastern Railroad (DME) sale which was not included in the budget on which the targets were set. The Committee may also decrease payouts if CP

achieves its financial and operational objectives at the expense of safety and minimizing environment impact. Taking these factors into consideration together with the overall financial results against short-term incentive plan targets, the Board of Directors, on the recommendation of the Committee, assessed the corporate performance as above exceptional performance on each metric. The overall corporate performance factor approved by the Board of Directors was 200% for operating income, 200% for operating ratio and 200% for free cash flow. This results in an overall corporate performance factor of 200%.

The following table shows the 2014 corporate performance objective and results achieved in 2014: