EX-99.2 3 d319724dex992.htm EXHIBIT 99.2 Exhibit 99.2

Exhibit 99.2

 

LOGO

 

LOGO

Notice of 2012 Annual Meeting

and Management Proxy Circular


Letter to shareholders

April 4, 2012

Dear Shareholder,

As a shareholder, you are invited to attend our annual meeting of shareholders on Tuesday, May 15, 2012 at Cameco’s head office in Saskatoon. Attending the shareholder meeting gives you an opportunity to learn more about developments at Cameco, vote in person on the items of business, and meet with management, our board of directors and fellow shareholders. If you cannot come to the meeting, you can vote your shares by proxy.

The attached circular contains important information about the meeting, voting, the nominated directors, our governance practices and director and executive compensation. It also describes the board’s role and responsibilities and the key activities the five board committees undertook in 2011.

On behalf of the board, I would like to thank Gerald Grandey, who retired as CEO and a member of our board last June. Mr. Grandey spent 18 years at Cameco. Under Mr. Grandey’s leadership, Cameco achieved considerable growth and developed a solid management team with great abilities and experience, and we wish Jerry much success.

Tim Gitzel became Cameco’s new president and CEO on July 1, 2011. Mr. Gitzel joined Cameco in January 2007 as senior vice-president and chief operating officer, and was appointed president in May 2010. He brings extensive experience in Canadian and international uranium mining activities to the board and his role as president and CEO through 18 years of senior management experience.

The nominating, corporate governance and risk committee and the board are pleased to include Ian Bruce as a new nominated director this year. Mr. Bruce brings experience in investment banking, finance and mergers and acquisitions.

Despite difficult external events in 2011, Cameco has had another strong year of continued success with excellent financial and operational performance. The board and management thank you for your confidence in Cameco. Please remember to vote.

Sincerely,

(signed)

Victor Zaleschuk

Chair of the board

Cameco Corporation

 

What’s inside

  

Letter to shareholders

     IFC   

Notice of our annual meeting of shareholders

     1   

Management proxy circular

     2   

•   About our shareholder meeting

     3   

Business of the meeting

     3   

Who can vote

     4   

How to vote

     5   

About the nominated directors

     8   

About the auditors

     24   

Having a ‘say on pay’

     25   

•   Governance at Cameco

     26   

•   Compensation

     47   

Compensation governance

     48   

Director compensation

     52   

Executive compensation

     58   

•   Other information

     107   

•   Appendixes

     108   


 

LOGO

Notice of our 2012 annual meeting of shareholders

You are invited to our 2012 annual meeting of shareholders

 

When

   Where   

Tuesday, May 15, 2012

   Cameco Corporation   

1:30 p.m.

   2121 - 11th Street West   
   Saskatoon, Saskatchewan   

Your vote is important

If you held common shares in Cameco on March 20, 2012, you are entitled to receive notice of and to vote at this meeting.

The attached management proxy circular describes who can vote, what the meeting will cover and how to vote. Please read it carefully.

By order of the board,

 

(signed)

Gary Chad, Q.C.

Senior Vice-President

Governance, Law and Corporate Secretary

Saskatoon, Saskatchewan

April 4, 2012

 

  

NOTICE OF OUR 2012 ANNUAL MEETING  OF SHAREHOLDERS

  1


LOGO

Management proxy circular

 

You have received this circular because you owned Cameco common shares on March 20, 2012. Management is soliciting your proxy for our 2012 annual meeting of shareholders.

As a shareholder, you have the right to attend our annual meeting of shareholders on May 15, 2012 and to vote your shares in person or by proxy.

To encourage you to vote, you may be contacted directly by Cameco employees or representatives of Laurel Hill Advisory Group (Laurel Hill). If you have any concerns or need any help voting, please contact Laurel Hill at 1.877.304.0211. If you are outside North America, call 416.304.0211 collect, or email assistance@laurelhill.com.

In this document, you and your refer to the shareholder. We, us, our and Cameco mean Cameco Corporation. Shares and Cameco shares mean Cameco’s common shares, unless otherwise indicated.

The information in this management proxy circular is as of March 8, 2012, unless otherwise indicated.

Your vote is important. This circular describes what the meeting will cover and how to vote. Please read it carefully and vote, either by completing the form included with this package or by attending the meeting in person.

 

 

We are paying Laurel Hill approximately $32,500 for their services.

The board of directors has approved the contents of this document and has authorized us to send it to you. We have also sent a copy to each of our directors and to our auditors.

Your package may also include our business overview brochure and 2011 annual financial review (if you requested a copy). This information is also available on our website (cameco.com).

(signed)

Gary Chad, Q.C.

Senior Vice-President

Governance, Law and Corporate Secretary

April 4, 2012

 

2    CAMECO CORPORATION


About our shareholder meeting

Our annual meeting gives you the opportunity to vote on items of Cameco business, receive an update on the company, meet face to face with management and interact with our board of directors.

Business of the meeting

Directors — see page 8

 

You will elect 13 directors to our board. About the nominated directors starting on page 8 tells you about the nominated directors, their background and experience, and any board committees they currently sit on. All of the directors are elected for a term of one year.

Auditors — see page 24

You will vote on reappointing the auditors. The board, on the recommendation of the audit committee, has proposed that KPMG LLP (KPMG) be reappointed as our auditors. See page 24 for information about the services KPMG provided in 2011 and the fees we paid them. The board has invited a representative of KPMG to attend the meeting.

We need a quorum

We can only hold the meeting and transact business if at the beginning of the meeting we have a quorum — where the people currently attending the meeting hold, or represent by proxy, at least 25% of our total common shares issued and outstanding.

 

 

Financial statements — see our 2011 annual financial review or go to cameco.com/investors/financial_reporting

If you have requested a copy, you will receive the consolidated financial statements for the year ended December 31, 2011, and the auditors’ report on the statements. These are included in our 2011 annual financial review, which has been mailed to you if you requested a copy. You can also download a copy from our website.

Having a ‘say on pay’ — see page 25

You will vote on our approach to executive compensation as disclosed in this circular. Your vote is advisory and non-binding, and will provide the board and the human resources and compensation committee with important feedback.

Other business

If other items of business are properly brought before the meeting or after the meeting is adjourned, you (or your proxyholder, if you are voting by proxy) can vote as you see fit. We did not receive any shareholder proposals for this meeting, and are not aware of any other items of business to be considered at the meeting.

 

   2012 MANAGEMENT PROXY CIRCULAR   3


Who can vote

We have common shares and one class B share, but only holders of common shares have full voting rights in Cameco.

If you held common shares at the close of business on March 20, 2012 (we call this the record date), you or the person you appoint as your proxyholder can attend the annual meeting and vote your shares. Each Cameco common share you own represents one vote, except where the ownership and voting restrictions apply.

 

As of March 8, 2012, we had 395,228,668 common shares issued and outstanding.

Ownership and voting restrictions

There are restrictions on issuing, transferring and owning Cameco common shares whether you own the shares as a registered shareholder, hold them beneficially or control your investment interest in Cameco directly or indirectly. These are described in the Eldorado Nuclear Limited Reorganization and Divestiture Act (Canada) (ENL Reorganization Act) and our company articles.

The following is a summary of the limitations listed in our company articles. See Appendix A for the definitions in the ENL Reorganization Act.

Individuals

A Canadian resident, either individually or together with associates, cannot hold, beneficially own or control shares or other Cameco securities, directly or indirectly, representing more than 25% of the votes that can be cast to elect directors.

Non-residents

A non-resident of Canada, either individually or together with associates, cannot hold, beneficially own or control shares or other Cameco securities, directly or indirectly, representing more than 15% of the total votes that can be cast to elect directors.

How Cameco was formed

Cameco Corporation was formed in 1988 by privatizing two crown corporations, combining the uranium mining and milling operations of Saskatchewan Mining Development Corporation and the uranium mining, refining and conversion operations of Eldorado Nuclear Limited.

Cameco received these assets in exchange for:

 

 

assuming substantially all of the current liabilities and certain other liabilities of the two companies

 

 

issuing common shares

 

 

issuing one class B share

 

 

issuing promissory notes.

The company was incorporated under the Canada Business Corporations Act.

Ownership restrictions were put in place so that Cameco would remain Canadian controlled. The uranium mining industry has restrictions on ownership by non-residents.

You can find more information about our history in our 2011 annual information form, which is available on our website (cameco.com/investors).

 

 

Voting restrictions

 

All votes cast at the meeting by non-residents, either beneficially or controlled directly or indirectly, will be counted and pro-rated collectively to limit the proportion of votes cast by non-residents to no more than 25% of the total shareholder votes cast at the meeting.

Enforcement

The company articles allow us to enforce the ownership and voting restrictions by:

 

 

suspending voting rights

 

 

forfeiting dividends

 

 

prohibiting the issue and transfer of Cameco shares

 

 

requiring the sale or disposition of Cameco shares

 

 

suspending all other shareholder rights.

Questions?

If you have questions about completing the proxy form or residency declaration, or about the meeting in general, contact our proxy solicitation agent, Laurel Hill Advisory Group:

Phone:    1.877.304.0211

                (toll free within North America)

                1.416.304.0211

                (collect from outside North America)

                1.416.304.0211

                (institutional investors or brokers)

 

 

To verify compliance with restrictions on ownership and voting of Cameco shares, we require shareholders to declare their residency, ownership of Cameco shares and other things relating to the restrictions. Nominees such as banks, trust companies, securities brokers or other financial institutions who hold the shares on behalf of beneficial shareholders need to make the declaration on their behalf.

If you own the shares in your name, you will need to complete the residency declaration on the enclosed proxy form. Copies will be available at the meeting if you are planning to attend in person. If we do not receive your signed declaration, we may consider you to be a non-resident of Canada.

 

4    CAMECO CORPORATION


The board will use these declarations or other information to decide whether there has been a contravention of our ownership restrictions.

Principal holders of our common shares

As of December 31, 2011, Tradewinds Global Investors, LLC in Los Angeles, California held 56,731,000 shares or approximately 14.4% of our total common shares outstanding. Management, to the best of its knowledge, is not aware of any other shareholder with 5% or more of our common shares.

About class B shares

The province of Saskatchewan holds our one class B share. This entitles the province to receive notices of and attend all meetings of shareholders, for any class or series.

The class B shareholder can only vote at a meeting of class B shareholders, and votes as a separate class if there is a proposal to:

 

 

amend Part 1 of Schedule B of the articles, which states that:

 

   

Cameco’s registered office and head office operations must be in Saskatchewan

 

   

the vice-chairman of the board, chief executive officer (CEO), president, chief financial officer (CFO) and generally all of the senior officers (vice-presidents and above) must live in Saskatchewan

 

   

all annual meetings of shareholders must be held in Saskatchewan

 

 

amalgamate, if it would require an amendment to Part 1 of Schedule B of the articles, or

 

 

amend the articles, in a way that would change the rights of class B shareholders.

How to vote

You can vote by proxy, or you can attend the annual meeting and vote your shares in person.

Voting by proxy

Voting by proxy is the easiest way to vote. It means you are giving someone else the authority to attend the meeting and vote for you (called your proxyholder).

Tim Gitzel, CEO of Cameco, or in his absence Gary Chad, senior vice-president, governance, law and corporate secretary (the Cameco proxyholders), have agreed to act as proxyholders to vote your shares at the meeting according to your instructions. Or, you can appoint someone else to represent you and vote your shares at the meeting.

If you appoint the Cameco proxyholders but do not tell them how you want to vote your shares, your shares will be voted:

 

 

for electing the nominated directors who are listed in the form and management proxy circular

 

 

for appointing KPMG LLP as auditors

 

 

for the advisory resolution on our approach to executive compensation.

If for any reason before or during the meeting a nominated director becomes unable to serve, the Cameco proxyholders have the right to vote for another nominated director at their discretion, unless you have directed that your shares be withheld from voting.

 

If there are amendments or other items of business that are properly brought before the meeting, the proxyholder you have appointed can vote as he or she sees fit.

Proxy voting process

Non-registered shareholders

If you plan to vote by proxy, follow the instructions on the enclosed voting instruction form to vote your shares by mail or on the internet. If you plan to appoint yourself or another person as proxyholder to attend the meeting for you, indicate this on the enclosed voting instruction form (see Voting in person on page 7 for details).

The voting process is different depending on whether you are a registered or non-registered shareholder

You are a registered shareholder if your name appears on your share certificate.

You are a non-registered shareholder if your bank, trust company, securities broker, trustee or other financial institution holds your shares (your nominee). This means the shares are registered in your nominee’s name, and you are the beneficial shareholder.

 

 

If you are voting by proxy, send your completed form right away. Your nominee needs to receive your completed form with enough time to then send your instructions to our transfer agent, CIBC Mellon Trust Company (CIBC Mellon), before the meeting. If you have any questions or need help voting, please contact our proxy

 

   2012 MANAGEMENT PROXY CIRCULAR   5


solicitation agent, Laurel Hill Advisory Group, at 1.877.304.0211. If you are outside North America, call 416.304.0211 collect, or email assistance@laurelhill.com.

 

Registered shareholders

You have four ways to vote by proxy:

 

1. by fax

 

2. by mail

 

3. on the internet

 

4. by appointing someone else to attend the meeting and vote your shares for you

About our transfer agent

Canadian Stock Transfer Company Inc. receives the votes and counts them on our behalf, and acts as the administrative agent for our transfer agent, CIBC Mellon Trust Company.

 

 

By fax

Complete the enclosed proxy form, including the section on declaration of residency, sign and date it and fax both pages of the form to:

 

CIBC Mellon Trust Company    1.866.781.3111 (toll free within North America)

c/o Canadian Stock Transfer Company Inc.

   1.416.368.2502 (from outside North America)

Attention: Proxy department

By mail

Complete your proxy form, including the section on declaration of residency, sign and date it, and send it to our transfer agent in the envelope provided.

If you did not receive a return envelope, please send the completed form to:

CIBC Mellon Trust Company

c/o Canadian Stock Transfer Company Inc.

Attention: Proxy department

P.O. Box 721

Agincourt, Ontario M1S 0A1

On the internet

Go to https://proxypush.ca/cco and follow the instructions on screen. You will need your control number, which appears below your name and address on your proxy form. We need to receive your voting instructions before 1:30 p.m. CST on Friday, May 11, 2012.

By appointing someone else to attend the meeting and vote your shares for you

Print the name of the person you are appointing as your proxyholder in the space provided. This person does not need to be a shareholder. Make sure the person you are appointing is aware and attends the meeting. Your proxyholder will need to check in with a CIBC Mellon representative when they arrive at the meeting.

Signing the proxy

 

If you are an administrator, trustee, attorney or guardian for a person who beneficially holds or controls Cameco shares, or an authorized officer or attorney acting on behalf of a corporation, estate or trust that beneficially holds or controls our common shares, please follow the instructions on the proxy form.

Send us your proxy form right away

Your vote will only be counted if CIBC Mellon receives your voting instructions before 1:30 p.m. CST on Friday, May 11, 2012. This is the same deadline if you are submitting your voting instructions online or sending the completed proxy form by fax or mail.

Make sure the proxy form is completed properly and that you allow enough time for it to reach our transfer agent if you are sending it by mail.

If the meeting is postponed or adjourned, our transfer agent must receive your voting instructions at least 48 hours before the meeting is reconvened.

Voting results

Our transfer agent counts the proxy votes independently to make sure the individual shareholder votes are kept confidential.

Our transfer agent only sends a proxy form to us when:

 

 

it is clear that a shareholder wants to communicate with management

 

 

the law requires it.

Go to cameco.com/investors or sedar.com after the meeting to see the voting results.

 

 

6    CAMECO CORPORATION


Voting in person

If you want to vote in person, your vote will be taken and counted during the meeting. Follow the appropriate instructions below. Please also call Stephanie Oleniuk at Cameco (306.956.6340) to add your name (or your proxyholder’s name) to the attendee list.

Non-registered shareholders

Follow the instructions on the enclosed voting instruction form to appoint yourself as proxyholder, or to appoint someone else to attend the meeting and vote on your behalf. You or the person you are appointing will need to check in with a representative of CIBC Mellon when they arrive at the meeting.

Registered shareholders

Do not complete the enclosed proxy form. Check in with a CIBC Mellon representative when you arrive at the meeting.

Changing your vote

You can revoke your proxy in the following ways:

Non-registered shareholders

Instructions that are provided on a voting instruction form with a later date, or at a later time if you are voting on the internet, will revoke any prior instructions. Any new instructions, however, will only take effect if our transfer agent receives them before 1:30 p.m. CST on Friday, May 11, 2012 or, if the meeting is postponed or adjourned, at least 48 hours before the reconvened meeting. Otherwise, contact your nominee if you want to revoke your proxy or change your voting instructions, or if you change your mind and want to vote in person.

Registered shareholders

Instructions that are provided on a proxy form with a later date, or at a later time if you are voting on the internet, will revoke any prior instructions. Any new instructions, however, will only take effect if our transfer agent receives them before 1:30 p.m. CST on Friday, May 11, 2012 or, if the meeting is postponed or adjourned, at least 48 hours before the reconvened meeting. Otherwise:

 

 

send a notice in writing to the corporate secretary at Cameco, at 2121 - 11th Street West, Saskatoon, Saskatchewan S7M 1J3, so he receives it by 1:30 p.m. CST on Friday, May 11, 2012. If the meeting is postponed or adjourned, the corporate secretary will need to receive the notice at least 48 hours before the meeting is reconvened.

 

 

give a notice in writing to the chair of the meeting at the start of the meeting.

The notice can be from you or your attorney, if he or she has your written authorization. If the shares are owned by a corporation, the written notice must be from its authorized officer or attorney.

 

   2012 MANAGEMENT PROXY CIRCULAR   7


About the nominated directors

Our board of directors is responsible for overseeing management and Cameco’s business affairs. As shareholders, you elect the board as your representatives. This section tells you about the directors who have been nominated to serve on our board.

 

This year the board has decided that 13 directors are to be elected. Twelve of the nominated directors currently serve on the board. This is the first year that Ian Bruce has been nominated as a director.

You can vote for all of these directors, vote for some of them and withhold votes for others, or withhold votes for all of them. Unless otherwise instructed, the named proxyholders will vote for all of the nominated directors listed on pages 9 to 19.

See the following pages for key information about the directors:

 

Director profiles

     9   

Meeting attendance

     20   

Skills and experience

     21   

Continuing education and development

     22   
 

 

Our goal is to assemble a group of directors with the appropriate background, knowledge, skills and diversity that will enable the board to effectively oversee the business of Cameco, to equip board members with tools and education helpful to that oversight work, and to foster a climate at the board that facilitates constructive challenging of management.

 

We expect all members of our board to be financially literate, independent minded and team players. When assessing directors for our board, the nominating, corporate governance and risk committee looks at:

 

 

the overall mix of skills and experience on the board

 

 

how actively they participate in meetings and develop an understanding of our business

 

 

their character, integrity, judgment and record of achievement

 

 

diversity (including gender, aboriginal heritage, age and geographic representation such as Canada, the US, Europe and Asia).

Serving together on other boards

Anne McLellan and Victor Zaleschuk serve together on the boards of Agrium Inc. and Nexen Inc. They are both on Agrium’s audit committee and Nexen’s finance committee and health, safety, environment and social responsibility committee.

John Clappison and Oyvind Hushovd serve together on the board of Inmet Mining Corporation, but they are not members of the same committees.

 

 

Given our stage of development, the committee also recognizes the value of recruiting a new director with capital market and investment banking experience, or experience in mergers and acquisitions. The committee also looked at the director’s ability to contribute to our board, the time he has available and his other directorships because these are important factors that enhance the quality of the board’s decision-making and its oversight of management and our business affairs. See Skills and experience on page 21 and Recruiting new directors on page 36 for more information.

Ian Bruce brings experience in mergers and acquisitions and investment banking, including his experience as chief executive officer of a Canadian, independent investment dealer providing investment services to institutional investors and private clients.

Daniel Camus and Tim Gitzel were elected to the board in 2011. Mr. Camus brings extensive international business experience to the board, including his experience as a senior executive of a major European energy operator with significant transactional experience in China and India.

Tim Gitzel became our CEO on July 1, 2011, succeeding Gerald Grandey who retired from Cameco on June 30, 2011. Mr. Gitzel brings extensive experience in Canadian and international uranium mining activities to the board through 18 years of senior management experience. This includes responsibility for global uranium, gold, exploration and decommissioning operations in 11 countries around the world, prior to joining Cameco in 2007.

All of the nominated directors are independent, except for Tim Gitzel, our president and CEO, and Donald Deranger, president of Points Athabasca Contracting Limited Partnership, which provides construction and other services to Cameco in northern Saskatchewan where our richest assets are located. Mr. Deranger brings a valuable mix of skills and experience to the board, as a business and aboriginal leader in northern Saskatchewan with direct experience in employee training, economic development and uranium mining. See Assessing independence on page 30 for more information.

Each of the nominated directors is eligible to serve as a director and has expressed his or her willingness to do so. Directors who are elected will serve until the end of the next annual meeting, or until a successor is elected or appointed.

 

8    CAMECO CORPORATION


Our policy on majority voting

Directors require a plurality of votes to be elected, however, a director who receives more withheld votes than for votes must offer to resign. Our nominating, corporate governance and risk committee will review the matter and recommend whether the board should accept the resignation. The director will not participate in any board or committee deliberations on the matter.

The board will announce its decision within 90 days of the meeting. If it rejects the offer, it will disclose the reasons why. If the board accepts the offer, it may appoint a new director to fill the vacancy.

The board adopted this majority voting policy in 2006 on the recommendation of the nominating, corporate governance and risk committee, and we believe it reflects good governance.

Director profiles

The table below provides information about each nominated director as of March 8, 2012, including their background and experience, main areas of expertise and other public company and registered investment company boards they are members of. Information about their meeting attendance in 2011 and holdings of Cameco shares and DSUs is as of December 31, 2011.

When reviewing compliance with our share ownership guidelines, we calculated each director’s holdings of Cameco shares and DSUs using the value when they were acquired or the 2011 year-end closing price of Cameco shares on the TSX, whichever is higher, in accordance with our share ownership guidelines.

 

 

LOGO

Ian Bruce

58

 

Calgary, Alberta

Canada

 

Citizenship — Canadian

 

New director

Independent

 

Main areas of experience

• Investment banking

• Finance

• Mergers and acquisitions

  

 

Ian Bruce is the former co-chairman of the board of Peters & Co. Limited, an independent investment dealer providing investment services to energy industry corporations, institutional investors and private clients. Over the course of his career at Peters & Co. Limited from 1998 to May 2011, Mr. Bruce was vice chairman, president and CEO, CEO and co-chairman. He is a fellow of the Canadian Institute of Chartered Accountants of Alberta, a chartered business valuator, a recognized Specialist in Valuation under CICA rules in Canada, and has his Corporate Finance Specialist designation in Canada and the UK. He was a member of the steering committee for the Institute of Chartered Accountants of Alberta CFO leadership program and was a member of certain Alberta Securities Commission committees for several years. Mr. Bruce was also a past member of the Prime Minister’s committee to review social responsibility accounting/reporting for public companies in Canada (NRTEE), and a past member of the Expert Panel on Securities Regulation for the Minister of Finance of Canada. Mr. Bruce was a board member and chair of the Investment Industry Association of Canada. He has spoken on energy sector financial and valuation matters at numerous industry conferences and acted as an expert witness in legal, regulatory and securities matters.

 

In addition to the public company boards listed below, Mr. Bruce is a director of the private companies, TriAxon Oil Corp. and Northern Blizzard Resources Inc. He was a director of the public company, Taylor Gas Liquids Ltd. from 1997 to 2008.

 

        

Overall attendance — n/a

     
  

Cameco board and
committee membership

  

In person

meetings

  

Telephone

meetings

  

Other public company
boards and board
committees

   n/a    —      —     

Hardy Oil & Gas plc (chair of nominating committee, audit committee)

 

Logan International Inc. (audit committee)

 

  

Securities held: nil

Options held: nil

 

   2012 MANAGEMENT PROXY CIRCULAR   9


 

LOGO

Daniel Camus

59

 

Paris, France

 

Citizenship — Canadian and French

 

Director since 2011 Independent

 

Main areas of experience

•  Finance

•  Electricity industry

•  International

•  Mergers and acquisitions

•  Nuclear industry

•  Executive compensation

  

 

Daniel Camus is the former group chief financial officer and head of strategy and international activities of Electricité de France SA (EDF), a France-based integrated energy operator active in the generation, distribution, transmission, supply and trading of electrical energy with subsidiaries in various countries around the world. Mr. Camus brings extensive business experience to Cameco’s board, including eight years with EDF as Group CFO (2002-2010) and also head of international activities (2005-2010). During the previous 25 years, he held various senior roles with Aventis Group and Hoechst AG Group in Germany, the US, Canada and France. He has been chair of several audit committees. He has also gained experience in executive compensation during his extensive business career.

 

Mr. Camus received his PhD in Economics from Sorbonne University, an MBA in finance and economics from the Institute d’Études Politiques de Paris and a masters of economics degree from Nancy University in France.

 

Mr. Camus serves on the public company boards listed below and is the chair of the audit committee of Valeo, SA, France’s largest supplier of car components. He is also a former member of the board of directors of EnBW AG (2003-2010), Constellation Energy Group, Inc. (2010) and Edison SpA (2005-2009).

 

           Overall attendance — 100%      
  

Cameco board and board committees

     In person
meetings
     Telephone
meetings
   Other public company boards and
board committees
  

Board of directors

Audit

Human resources and compensation

Safety, health and environment

  

  

  

  

    

 

 

 

5 of 5

3 of 3

3 of 3

2 of 2

  

  

  

  

  

5 of 5

 

1 of 1

  

Morphosys AG, Munich (audit committee)

Valeo, SA, Paris (chair of audit committee)

Vivendi SA, Paris (audit committee)

SGL Carbon AG, Wiesbaden (nomination committee, strategy/technology committee)

   Securities held:            
   Fiscal year   

Cameco  

shares  

   DSUs      Total Cameco
shares and
DSUs
    

Total value of  

Cameco shares  

and DSUs  

   Meets share ownership guidelines
  

2011

2010

Change

  

    

 

 

4,898

—  

4,898

  

  

  

    

 

 

4,898

—  

4,898

  

  

  

  

$90,181  

—    

$90,181  

   No — has until May 27, 2016 to acquire additional shares and DSUs equal to $420,000.
   Options held: nil

 

 

10    CAMECO CORPORATION


 

LOGO

John Clappison

65

 

Toronto, Ontario Canada

 

Citizenship — Canadian

 

Director since 2006 Independent

 

Main areas of experience

•  Finance

•  Executive compensation

  

 

John Clappison is the former managing partner of the Greater Toronto Area office of PricewaterhouseCoopers LLP (PwC), an accounting firm. He is a fellow of the Canadian Institute of Chartered Accountants and worked with PwC (or its predecessor firm) for 37 years. Mr. Clappison brings extensive financial experience to Cameco’s board with his accounting expertise and as a financial expert and chair of the audit committee. He also brings experience in human resources and executive compensation as a senior member of the executive team while at PwC and a former member of the compensation committee at Canadian Real Estate Investment Trust.

 

In addition to the public company boards listed below, Mr. Clappison serves as a director of the private company, Summitt Energy Holdings GP Inc., and is actively involved with the Canadian Foundation for Facial Plastic and Reconstructive Surgery, Shaw Festival Theatre Endowment Foundation and The Massey Hall and Roy Thomson Hall Endowment Foundation. Mr. Clappison served on the board of trustees of Canadian Real Estate Investment Trust from 2007 until February 2011.

 

         Overall attendance — 93%     
   Cameco board and committee membership     In person  
Meetings  
    Telephone    
Meetings     
  Other public company
boards and board
committees
  

Board of directors

Audit (chair)

Human resources and compensation

  

  

  

   
 
 
6 of 6
5 of 5
4 of 5
  
  
  
  9 of 10

 

2 of 2

 

Inmet Mining Corporation (chair of audit committee)

 

Rogers Communications Inc. (audit committee, pension committee)

 

Sun Life Financial Inc. (chair of audit committee, risk review committee)

   Securities held:
   Fiscal year    Cameco  
shares  
     DSUs       Total Cameco  
shares and  
DSUs  
    Total value of  
Cameco  shares  
and DSUs  
  Meets share ownership
guidelines
  

2011

2010

Change

    
 
 
2,000
2,000
—  
  
  
  
    
 
 
19,279
12,368
6,911
  
  
  
   
 
 
21,279
14,368
6,911
  
  
  
  $    391,743
$    579,016
$   (187,273)
  Yes — based on the value when the DSUs were acquired and the purchase price of Cameco shares
   Options held: nil

 

 

LOGO

Joe Colvin

69

 

Sante Fe,

New Mexico USA

 

Citizenship — American

 

Director since 1999 Independent

 

Main areas of experience

•  Nuclear industry

•  Operational excellence

•  International

•  Executive compensation

  

 

Joe Colvin is a board director and the past president of the American Nuclear Society, a not-for-profit organization that promotes the awareness and understanding of the application of nuclear science and technology. He was elected president emeritus of the Nuclear Energy Institute Inc. (the Washington-based policy organization for the US nuclear energy industry) in February 2005, after serving as the Institute’s president and CEO from 1996 to 2005. Mr. Colvin also held senior management positions with the Nuclear Management and Resources Committee and the Institute for Nuclear Power Operations, and served as a line officer with the US Navy nuclear submarine program for 20 years. Mr. Colvin also serves as a director of the Foundation for Nuclear Studies. Other than the public company board listed below, he has not served on any other public company boards over the past five years.

 

Mr. Colvin has a bachelor of science degree in electrical engineering from the University of New Mexico, has completed advanced studies in nuclear engineering and is a graduate of Harvard University’s advanced management program. Mr. Colvin brings a wealth of knowledge of the nuclear industry to the board and his role as chair of the safety, health and environment committee. Mr. Colvin’s human resources experience includes his position as president and CEO of two corporations and as chair of the compensation committee of US Ecology, Inc.

 

           Overall attendance — 96%     
   Cameco board and committee membership      In person
meetings
     Telephone
Meetings
  Other public company
boards and board
committees
  

Board of directors

Nominating, corporate governance and risk Safety, health and environment (chair)

  

   

    
 
 
6 of 6
4 of 4
4 of 4
  
  
  
   9 of 10   US Ecology, Inc. (chair of compensation committee)
   Securities held:
   Fiscal year    Cameco  
shares  
     DSUs        Total Cameco  
shares and  
DSUs  
     Total value of  
Cameco shares  
and DSUs  
  Meets share ownership
guidelines
  

2011

2010

Change

    
 
 
4,000
4,000
—  
  
  
  
    
 
 
83,459
82,281
1,178
  
  
  
    
 
 
87,459
86,281
1,178
  
  
  
   $  1,610,112
$  3,477,137
$(1,867,025)
  Yes
   Options held: nil

 

  

 

   2012 MANAGEMENT PROXY CIRCULAR   11


 

LOGO

James Curtiss

58

 

Brookeville, Maryland USA

 

Citizenship — American

 

Director since 1994 Independent

 

Main areas of experience

•  Nuclear industry

•  Government relations

•  Legal

•  Executive compensation

  

 

James Curtiss has been the principal of Curtiss Law since April 2008. He was a partner with the law firm of Winston & Strawn LLP in Washington, DC, where he concentrated his practice in energy policy and nuclear regulatory law from 1993 until March 2008. He was also a commissioner with the US Nuclear Regulatory Commission from 1988 to 1993. Other than the public company board listed below, Mr. Curtiss has not served on any other public company boards over the past five years.

 

Mr. Curtiss received a bachelor of arts and a juris doctorate from the University of Nebraska. He is a frequent speaker at nuclear industry conferences and has spoken on topics such as licensing and regulatory reform, advanced reactors and fuel cycle issues. Mr. Curtiss brings legal experience in the nuclear industry to the board, particularly in the area of nuclear regulatory law.

 

Mr. Curtiss has been a member of our human resources and compensation committee since 1999 and chair of the committee since 2002. He has kept abreast of the wide range of issues in executive compensation through various director education seminars.

        Overall attendance — 100%      
   Cameco board and committee membership    In person  
meetings  
     Telephone  
Meetings  
   Other public
company boards and
board committees
  

Board of directors

Human resources and compensation (chair)

Nominating, corporate governance and risk

    

 

 

6 of 6

5 of 5

4 of 4

  

  

  

   10 of 10

    2 of 2

    2 of 2

   Constellation Energy Group (executive committee, chair of committee on nuclear power)
   Securities held:
   Fiscal year    Cameco  
shares  
     DSUs    Total Cameco
shares and
DSUs
     Total value of
Cameco shares
and DSUs
   Meets share
ownership guidelines
  

2011

2010

Change

    
 
 
17,321
7,185
10,136
  
  
  
   94,331   93,001   1,330       
 
 
111,652
100,186
11,466
  
  
  
   $  2,055,519
$  4,037,483
$(1,981,964)
   Yes
   Options held:
  

Date granted

     Expiry date      Exercise
price
     Total
unexercised
   Value of in-the-money
options
  

Sept 21/04

  

   Sept 20/14        15.79         3,300      $8,639

 

 

LOGO

Donald Deranger

56

 

Prince Albert, Saskatchewan Canada

 

Citizenship — Canadian

 

Director since 2009 Not independent

 

Main areas of experience

•  Aboriginal affairs

•  First Nations governance

  

 

Donald Deranger has been the Athabasca Vice Chief of the Prince Albert Grand Council since 2003. He has won a number of awards for his initiatives in employment, training and economic development for members of the Athabasca sector in northern Saskatchewan.

 

Mr. Deranger is an advisor to the Athabasca Basin Development Corporation and president of Points Athabasca Contracting Limited Partnership, which does business with Cameco. He is the president of Learning Together, a non-profit aboriginal organization that works to build relationships with the mining industry. He also serves as a director of the Prince Albert Development Corporation, Northern Resource Trucking Limited Partnership, Mackenzie River Basin Board, Keepers of the Athabasca Watershed Council, and the City of Prince Albert Board of Police Commissioners, and is a member of the Saskatchewan Fisheries Advisory Committee. Mr. Deranger has not served on any other public company boards over the past five years.

 

As a leader in the Saskatchewan aboriginal community, Mr. Deranger brings to the board a deep understanding of the culture and peoples of northern Saskatchewan where Cameco’s richest assets are located. Mr. Deranger also worked as a uranium miner many years ago and brings this personal experience to the board and as a member of the safety, health and environment committee.

 

        Overall attendance — 100%      
   Cameco board and committee membership    In person
meetings
     Telephone  
meetings  
   Other public company boards
and board committees
  

Board of directors

Reserves oversight

Safety, health and environment

    

 

 

6 of 6

3 of 3

4 of 4

  

  

  

   10 of 10    none
   Securities held:
   Fiscal year    Cameco
shares
     DSUs    Total Cameco
shares and
DSUs
     Total value of
Cameco shares
and DSUs
   Meets share ownership
guidelines
  

2011

2010

Change

    

 

 


  

  

  

   10,315   5,257   5,058       
 
 
10,315
5,257
5,058
  
  
  
   $189,905
$211,844
$ (21,939)
   No — has until May 27, 2016 to acquire additional shares and DSUs equal to $420,000.
   Options held: nil

 

 

12    CAMECO CORPORATION


 

 

LOGO

Tim Gitzel

49

 

Saskatoon, Saskatchewan Canada

 

Citizenship — Canadian

 

Director since 2011 Not independent — President and CEO

 

Main areas of experience

• Nuclear industry

• Mining

• Operational excellence

• International

  

 

Tim Gitzel is president and CEO of Cameco Corporation. He joined Cameco in January 2007 as senior vice-president and chief operating officer, and was appointed president in May 2010, and president and CEO on July 1, 2011. Mr. Gitzel has extensive experience in Canadian and international uranium mining activities through 18 years of senior management experience. Prior to joining Cameco, he was executive vice-president, mining business unit for AREVA based in Paris, France with responsibility for global uranium, gold, exploration and decommissioning operations in 11 countries around the world.

 

Mr. Gitzel received his bachelor of arts and law degrees from the University of Saskatchewan. He serves on the board of the Canadian Nuclear Association. He is vice chair of the World Nuclear Association and will become chair in April 2012. He is a director of the Nuclear Energy Institute for 2011-2013. He is also vice-chair of the 2013 Memorial Cup Organizing Committee for the Canadian Junior Hockey Championship.

 

Mr. Gitzel is past president of the Saskatchewan Mining Association, and also served on the boards of SaskEnergy Corporation, the Saskatchewan Chamber of Commerce and Junior Achievement of Saskatchewan. Mr. Gitzel was also co-chair of the Royal Care campaign for Royal University Hospital in Saskatoon, and vice-president, communications for the 2010 World Junior Hockey Championships.

 

        Overall attendance — 100%        
   Cameco board and committee membership    In person
meetings
     Telephone
meetings
    

Other public company boards

and board committees

  

Board of directors

Not a member of any committees because he is president and CEO

     5 of 5         5 of 5       none
   Securities held:
   Fiscal year    Cameco
shares
    

Qualifying  

PSUs  

  

Total Cameco
shares and
qualifying

PSUs

    

Total value of
Cameco shares
and qualifying

PSUs

     Meets share ownership
guidelines
  

2011

2010

Change

    
 
 
22,300
3,100
19,200
  
  
  
   22,300   3,100   19,200       
 
 
31,220
6,200
25,020
  
  
  
    
 
 
$725,429
$249,860
$475,569
  
  
  
   No — has met 20% of the target for the CEO. Has until December 31, 2016 to acquire additional shares and qualifying PSUs equal to $3,600,000.
  

See table on page 68 for the calculation of Mr. Gitzel’s total value of Cameco shares and qualifying PSUs.

Options held: see Incentive plan awards on page 95.

 

   2012 MANAGEMENT PROXY CIRCULAR   13


 

LOGO

James Gowans

60

 

Toronto, Ontario Canada

 

Citizenship — Canadian

 

Director since 2009 Independent

 

Main areas of experience

• CEO experience

• Mining

• Exploration

• Operational excellence

• International

• Executive compensation

  

 

James Gowans is the managing director of the Debswana Diamond Company in Botswana (a diamond mining company). From February 2010 to December 2010 he was chief operating officer and chief technical officer of DeBeers SA and from March 2006 to December 2010, he was CEO of DeBeers Canada Inc. (a diamond exploration and mining company). Prior to that, he was the senior vice-president and COO of PT Inco in Indonesia (a nickel producing company) from 2002 to 2006. Mr. Gowans is the past-chair of The Mining Association of Canada. He served on the board of Bison Gold Resources Inc., a junior exploration public company, from 2006 to 2008, and currently serves on the public company board listed below.

 

Mr. Gowans received a bachelor of applied science in mineral engineering (mining and mineral processing) degree from the University of British Columbia and attended the Banff School of Advanced Management. Mr. Gowans brings to the board experience in exploration and mining and as a CEO of a mining company. His mining knowledge and perspective on the importance of corporate social responsibility are valuable as a member of our reserves oversight and our safety, health and environment committees. His human resources experience includes a previous position as vice-president, human resources for Placer Dome and his current role as chair of the compensation committee of PhosCan Chemical Corp.

 

        Overall attendance — 89%        
   Cameco board and committee membership    In person
meetings
     Telephone
meetings
     Other public company boards
and board committees
  

Board of directors

Nominating, corporate governance and risk

Reserves oversight

Safety, health and environment

    

 

 

 

 

5 of 6

3 of 4

 

3 of 3

3 of 4

  

  

 

  

  

     10 of 10       PhosCan Chemical Corp. (chair of compensation committee, and member of corporate governance & nominating committee and corporate finance committee)
   Securities held:
   Fiscal year    Cameco
shares
     DSUs     

Total Cameco
shares and

DSUs

     Total value of
Cameco shares
and DSUs
     Meets share ownership
guidelines
  

2011

2010

Change

    
 

 

1,000
1,000

—  

  
  

  

   15,180   5,911   9,269       
 
 
16,180
6,911
9,269
  
  
  
    
 
 

$297,875
$278,523
$19,352

  
  
  

   Yes — based on the value when the DSUs were acquired and the purchase price of Cameco shares.
   Options held: nil

 

14    CAMECO CORPORATION


 

LOGO

Nancy Hopkins

57

 

Saskatoon, Saskatchewan

Canada

 

Citizenship — Canadian

 

Director since 1992 Independent

 

Main areas of experience

•  Legal

•  Board governance

  

 

Nancy Hopkins, Q.C. is a partner with the law firm of McDougall Gauley, LLP in Saskatoon, where she concentrates her practice on corporate and commercial law and taxation. In addition to the public company boards listed below, Ms. Hopkins is chair of the board of governors of the University of Saskatchewan, chair of the board of the Saskatoon Airport Authority and serves as a director of the Canada Pension Plan Investment Board. Except for the public companies listed below, she has not served on any other public company boards over the past five years.

 

Ms. Hopkins has a bachelor of commerce degree and a bachelor of laws degree from the University of Saskatchewan. She is an honorary member of the Institute of Chartered Accountants of Saskatchewan.

 

Ms. Hopkins brings to the board extensive experience in the Saskatchewan business community. Her board experience with a wide range of respected organizations has provided her with a strong governance background and a wealth of knowledge for her role as chair of our nominating, corporate governance and risk committee.

 

        Overall attendance — 96%      
   Cameco board and committee membership    In person
meetings
     Telephone
meetings
   Other public company boards
and board committees
  

Board of directors

Audit

Nominating, corporate governance and risk (chair)-

    

 

 

6 of 6

5 of 5

4 of 4

  

  

  

   9 of 10   

Growthworks Canadian Fund Ltd. (chair of audit and valuation committee)

 

Growthworks Commercialization Fund Ltd. (chair of audit and valuation committee)

   Securities held:
   Fiscal year    Cameco
shares
     DSUs     

Total Cameco
shares and

DSUs

    

Total value  

of Cameco  

shares and  

DSUs  

   Meets share ownership
guidelines
  

2011

2010

Change

    
 
 
38,500
20,500
18,500
  
  
  
   17,586   15,130   2,456       
 
 
56,086
35,630
20,456
  
  
  
   $1,032,535  
$1,435,903  
$  (403,368)
  

Yes

   Options held: nil

 

   2012 MANAGEMENT PROXY CIRCULAR   15


 

LOGO

Oyvind Hushovd

62

 

Kristiansand S., Norway

 

Citizenship — Norwegian

 

Director since 2003 Independent

 

Main areas of experience

•  CEO experience

•  Mining

•  Operational excellence

•  International

•  Executive compensation

  

 

Oyvind Hushovd is a corporate director and the former chair and CEO of Gabriel Resources Ltd. (a precious metals exploration and development company), retiring in 2005. Prior to that, he was the president and CEO of Falconbridge Limited (a nickel and copper mining company) from 1996 to 2002. In addition to the public company boards listed below, Mr. Hushovd sits on the boards of Ivanhoe Nickel & Platinum Ltd, Libra and Sorlaminering, privately held corporations. During the last five years, he served on the public company boards of Gabriel Resources Ltd. (2002-2006), Lionore Mining International Limited (2002-2007) and Western Oil Sands Inc. (2003-2007).

 

Mr. Hushovd received a master of economics and business administration degree from the Norwegian School of Business and a master of law degree from the University of Oslo. He brings many years of experience as a mining executive to the board. His mining knowledge is very important as a member of the reserves oversight committee, and his financial experience as chief financial officer of Falconbridge Limited is valuable as a member of the audit committee. Mr. Hushovd has valuable experience as a CEO and has served on many board compensation committees, providing him with knowledge and experience in human resources and compensation.

 

        Overall attendance — 100%       
   Cameco board and committee membership    In person
meetings
     Telephone
meetings
    Other public company boards
and board committees
  

Board of directors

Audit

Human resources and compensation

Reserves oversight

    
 
 
 
6 of 6
5 of 5
5 of 5
3 of 3
  
  
  
  
    

 

 

10 of 10

 

2 of 2

  

 

  

 

Inmet Mining Corporation (corporate governance & nominating committee, human resources & compensation committee, corporate responsibility committee)

 

Nyrstar NV (audit committee, safety, health & environment committee)

   Securities held:
   Fiscal year    Cameco
shares
     DSUs     

Total Cameco
shares and

DSUs

    

Total value of

Cameco shares
and DSUs

    Meets share ownership
guidelines
  

2011

2010

Change

    

 

 


  

  

  

   31,903   26,566   5,337       
 
 
31,903
26,566
5,337
  
  
  
    
 
 
$    587,341
$ 1,070,625
$  (483,284)
  
  
  
 

Yes

   Options held: nil

 

16    CAMECO CORPORATION


 

 

LOGO

Anne McLellan

61

 

Edmonton, Alberta Canada

 

Citizenship — Canadian

 

Director since 2006 Independent

 

Main areas of experience

• Government relations

• Corporate social responsibility

• Executive compensation

  

 

The Honourable Anne McLellan is a former Deputy Prime Minister of Canada and has held several senior cabinet positions, including federal Minister of Natural Resources, Minister of Health, Minister of Justice and Attorney General of Canada, and federal interlocutor of Métis and non-status Indians. Prior to entering politics in 1993, Ms. McLellan was a law professor and administrator at the University of Alberta. Since leaving politics, she has been appointed distinguished scholar in residence at the University of Alberta in the Alberta Institute for American Studies and is counsel in the national law firm of Bennett Jones LLP.

 

Ms. McLellan holds a bachelor of arts degree and a law degree from Dalhousie University, and a master of laws degree from King’s College, University of London. In 2007, Ms. McLellan completed the Directors’ Education Program through the Corporate Governance College. She brings an understanding of government regulatory matters and international affairs to the board. As a member of the human resources and compensation committee, nominating corporate governance and risk committee and the safety, health and environment committee, Ms. McLellan brings diverse management experience gained as a senior Minister and Deputy Prime Minister of the Government of Canada and from her work on other boards and with non-profit organizations. Her human resources experience includes serving on Nexen Inc.’s and Cameco’s compensation committees for a number of years, and attending seminars and workshops on compensation matters.

 

In addition to the public company boards listed below, Ms. McLellan serves as chair of the Royal Alexandra Hospital Foundation and is a director on the boards of Canadian Business for Social Responsibility, the Edmonton Regional Airport Authority, the Edmonton Chapter of Habitat for Humanity and the TELUS Edmonton Community Board. She is also a member of the TD Securities Energy Advisory Board. Except for the public company boards listed below, she has not served on any other public company boards over the past five years.

 

        Overall attendance — 100%       
   Cameco board and committee membership    In person
meetings
     Telephone
meetings
    Other public company boards
and board committees
  

Board of directors

Human resources and compensation

Nominating, corporate governance and risk

Safety, health and environment

    
 
 
 
6 of 6
5 of 5
4 of 4
4 of 4
  
  
  
  
    

 

10 of 10

2 of 2

  

  

 

Agrium Inc. (audit committee, health safety & security committee)

 

Nexen Inc. (finance committee, health, safety, environment & social responsibility committee)

   Securities held:
   Fiscal year    Cameco
shares
     DSUs     

Total Cameco
shares and

DSUs

    

Total value of

Cameco shares
and DSUs

    Meets share ownership
guidelines
  

2011

2010

Change

    
 
 
100
100
—  
  
  
  
   18,691   16,161   2,530       
 
 
18,791
16,261
2,530
  
  
  
    
 
 
$  345,943
$  655,318
$(309,375)
  
  
  
 

Yes — based on the value when the DSUs were acquired and the purchase price of Cameco shares.

   Options held: nil

 

   2012 MANAGEMENT PROXY CIRCULAR   17


 

LOGO

Neil McMillan

60

 

Saskatoon,

Saskatchewan

Canada

 

Citizenship — Canadian

 

Director since 2002 Independent

 

Main areas of experience

•  CEO experience

•  Mining

•  Government relations

•  Executive compensation

  

 

Neil McMillan is the president and CEO of Claude Resources Inc. (a Saskatchewan-based gold mining and oil and gas producing company). He previously served on the board of Atomic Energy Canada Ltd. (a Canadian government nuclear reactor production and services company). Except for the public company boards listed below, Mr. McMillan has not served on any other public company boards over the past five years.

 

Mr. McMillan received a bachelor of arts degree in history and sociology from the University of Saskatchewan, and is a former member of the Saskatchewan legislature. Prior to joining Claude Resources Inc. in 1995, Mr. McMillan worked with RBC Dominion Securities Inc. as a registered representative and the Saskatoon branch manager.

 

Mr. McMillan’s experience as the CEO of a Saskatchewan-based mining company gives the board access to a ground level view of many of the daily mining risks and opportunities faced by Cameco. His background as an investment adviser and legislator are valuable when the board is reviewing investment opportunities. Mr. McMillan’s knowledge and experience of the mining industry assist in the board’s oversight of regulatory matters and are important attributes in his role as chair of our reserves oversight committee. Mr. McMillan’s human resources experience includes his position as president and CEO of Claude Resources Inc. and as a member of the compensation committee of Shore Gold Inc. for more than five years.

 

        Overall attendance — 96%       
   Cameco board and committee membership    In person
meetings
     Telephone
meetings
    Other public company boards
and board committees
  

Board of directors

Audit

Human resources and compensation

Reserves oversight (chair)

    

 

 

 

5 of 6

5 of 5

3 of 3

3 of 3

  

  

  

  

    

 

 

10 of 10

 

1 of 1

  

 

  

 

Claude Resources Inc. (not a member of any board committees because he is CEO)

 

Shore Gold Inc. (audit committee, compensation committee)

   Securities held:
   Fiscal year    Cameco
shares
     DSUs   

Total Cameco
shares and

DSUs

    

Total value of

Cameco shares
and DSUs

    Meets share ownership
guidelines
  

2011

2010

Change

    
 
 
600
600
—  
  
  
  
   26,520   21,561   4,959       
 
 
27,120  
22,161  
4,959  
  
  
  
    
 
 
$  499,283
$  893,085
$(393,802)
  
  
  
 

Yes

   Options held: nil

 

18    CAMECO CORPORATION


 

LOGO

Victor Zaleschuk

68

 

Calgary, Alberta Canada

 

Citizenship — Canadian

 

Director since 2001 Independent

 

Main areas of experience

• CEO experience

• Finance

• International

• Mergers and acquisitions

• Board governance

• Executive compensation

  

 

Victor Zaleschuk is a corporate director and chair of Cameco’s board of directors. He is the former president and CEO of Nexen Inc., a publicly traded independent global energy and chemicals company. Mr. Zaleschuk brings to the board his vast experience in the resource industry as a former CEO of a major Canadian oil and gas resource company with international holdings, a financial background as a former chief financial officer and experience in mergers and acquisitions. He gained human resources experience as CEO at Nexen and participating on the boards of Nexen Inc., Agrium Inc. and Cameco.

 

Mr. Zaleschuk has been a chartered accountant since 1967 and holds a bachelor of commerce degree from the University of Saskatchewan. Except for the public company boards listed below, Mr. Zaleschuk has not served on any other public company boards over the past five years.

 

        Overall attendance* — 95%       
   Cameco board and committee membership    In person
meetings
     Telephone
meetings
    Other public company boards
and board committees
  

Board of directors (chair)

Reserves oversight

    
 
6 of 6
3 of 3
  
  
     9 of 10     

Agrium Inc. (chair of audit committee, human resources & compensation committee)

 

Nexen Inc. (chair of finance committee, health, safety environment & social responsibility committee, reserves committee)

  

*  As board chair, Mr. Zaleschuk also attended 20 board committee meetings in an ex-officio capacity.

Securities held:

   Fiscal year    Cameco
shares
     DSUs   

Total Cameco
shares and

DSUs

    

Total value of

Cameco shares
and DSUs

    Meets share ownership
guidelines
  

2011

2010

Change

    
 
 
28,615
28,615
—  
  
  
  
   58,688   50,087   8,601       
 
 
87,303
78,702
8,601
  
  
  
    
 
 
$  1,607,245
$  3,171,691
$(1,564,446)
  
  
  
 

Yes

   Options held: nil

Notes to the director profiles:

 

 

Each director has provided the information about the Cameco shares they own or exercise control or direction over.

 

 

DSUs refer to deferred share units under our DSU plan for directors. Directors who are Cameco executives do not receive DSUs.

 

 

We calculated the total value of Cameco shares and DSUs using $18.41 for 2011 and $40.30 for 2010, the year-end closing prices of Cameco shares on the Toronto Stock Exchange (TSX).

 

 

Options held refer to options under our stock option plan that have not been exercised. The board stopped granting options to directors on October 28, 2003. In 2004, Mr. Curtiss exercised reload options to receive additional options with a 10-year term. The exercise prices and number of options have been adjusted to reflect stock splits of Cameco shares.

 

 

The value of in-the-money options is calculated as the difference between $18.41 (the 2011 year-end closing price of Cameco shares on the TSX) and the exercise price of the options, multiplied by the number of options held at December 31, 2011. Qualifying PSUs (QPSUs) refer to performance share units (PSUs) that qualify under the executive share ownership guidelines. Their value assumes the PSUs payout at 80% of target, less tax at 50%, and a share price of $18.41, the 2011 year-end closing price of Cameco shares on the TSX, and that the PSUs make up no more than 50% of the executive’s holdings.

 

   2012 MANAGEMENT PROXY CIRCULAR   19


Meeting attendance

We believe that an active board governs more effectively, and we expect our directors to attend all board meetings, all of their respective committee meetings, and the annual meeting of shareholders. Directors can participate by teleconference if they are unable to attend in person. The table below shows the number of board and committee meetings each director attended in 2011. All but John Clappison attended the 2011 annual meeting of shareholders.

The board needs a quorum of at least a majority of directors in attendance for it to hold a meeting and transact business. The board and board committees have an opportunity to meet in camera without management present at all meetings, including those held by teleconference.

See Our expectations for directors on page 31 for more information.

 

Name

   Independent      Board     Audit
committee
    Human
resources and
compensation
committee
    Nominating,
corporate
governance and
risk committee
    Reserves
oversight
committee
    Safety,
health and
environment
committee
 

Daniel Camus

     yes         10 of 10        100     3 of 3         100     4 of 4         100               2 of 2         100

John Clappison

     yes         15 of 16        94     5 of 5         100     6 of 7         86               

Joe Colvin

     yes         15 of 16        94             4 of 4         100          4 of 4         100

James Curtiss

     yes         16 of 16        100          7 of 7         100   4 of 4         100          

Donald Deranger

     no         16 of 16        100                    3 of 3         100     4 of 4         100

Tim Gitzel

     no         10 of 10        100                         

James Gowans

     yes         15 of 16        94             3 of 4        75     3 of 3         100     3 of 4         75

Gerald Grandey

     no         7 of 7        100                         

Nancy Hopkins

     yes         15 of 16        94     5 of 5         100        4 of 4         100          

Oyvind Hushovd

     yes         16 of 16        100     5 of 5         100     7 of 7         100          3 of 3         100     

George Ivany

     Yes         7 of 7        100     2 of 2         100     3 of 3         100               2 of 2         100

Anne McLellan

     yes         16 of 16        100          7 of 7         100   4 of 4         100          4 of 4         100

Neil McMillan

     yes         15 of 16        94     5 of 5         100     4 of 4         100          3 of 3         100     

Victor Zaleschuk

     yes         15 of 16        94     5 of 5         100     7 of 7         100   4 of 4         100     3 of 3         100     4 of 4         100

83% of the current

board are independent

  

  

    
 
Total #
of meetings
  
  
    16        5           7              4           3           4      

Notes:

Mr. Gitzel is president and CEO of Cameco and is not a member of any board committees so they can operate independently of management.

Mr. Grandey retired as CEO of Cameco and resigned as a member of the board on June 30, 2011. He was not a member of any board committees while he was CEO.

Mr. Ivany resigned from the board on May 17, 2011, and did not stand for re-election because he was over 72, our retirement age for directors.

Mr. Zaleschuk attended 20 committee meetings in an ex-officio capacity, as chair of the board.

 

20    CAMECO CORPORATION


Skills and experience

A board that has a broad mix of skills and expertise can more effectively oversee the range of issues that arise with a company of our size and complexity, and make more informed decisions.

In 2009, the nominating, corporate governance and risk committee implemented a number of initiatives to enhance the board’s development, recruitment process for new directors and overall quality of the board as we advance our growth strategy. The committee carried out a comprehensive review of the board skills matrix, introduced a self-assessment for directors to complete against the new skills matrix and conducted a survey about board diversity. The committee used this information to recruit new director candidates over the past three years. You can find information about board diversity on page 22, and assessing the board and director tenure on page 35.

Skills matrix

Our skills matrix has 14 categories of skills and attributes including three that are core and that we expect of all directors — being financially literate, independent minded and a team player.

All directors complete the self-assessment every year. The table below lists the 11 categories of skills and experience that are essential for the board to effectively oversee our affairs and act as a strategic resource for Cameco, and the level of expertise the current directors indicated in their self-assessments in 2011.

 

Self-assessment of skills and experience

   Expert      Strong working
knowledge
     Basic level of
knowledge
 

Board experience

Prior or current experience as a board member for a major organization with a current governance mindset, including a focus on Corporate Social Responsibility

     8         4         0   

Business judgment

Track record of leveraging own experience and wisdom in making sound strategic and operational business decisions; demonstrates business acumen and a mindset for risk oversight

     7         5         0   

Financial expertise

Experience as a professional accountant, CFO or CEO in financial accounting and reporting and corporate finance

     3         6         3   

Government relations

Experience in, or a thorough understanding of, the workings of government and public policy both domestically and internationally

     5         5         2   

Human capital

Experience in executive compensation and the oversight of significant, sustained succession planning and talent development and retention programs.

     7         4         1   

Industry knowledge

Knowledge of the uranium/nuclear industries, market and business imperatives, international regulatory environment and stakeholder management

     4         5         3   

International

Experience working in a major organization that carries on business in one or more international jurisdictions, preferably in countries or regions where we have or are developing operations

     6         4         2   

Investment banking/mergers and acquisitions

Experience in the field of investment banking or in mergers and acquisitions

     2         6         4   

Managing/leading growth

Experience driving strategic direction and leading growth of an organization, preferably including the management of multiple significant projects

     7         4         1   

Mining, exploration and operations

Experience with a leading mining or resource company with reserves, exploration and operations expertise

     4         3         5   

Operational excellence

Experience in a complex chemical or nuclear operating environment creating and maintaining a culture focused on safety, the environment and operational excellence

     5         2         5   

 

   2012 MANAGEMENT PROXY CIRCULAR   21


Board diversity

We are subject to terms of the Investment Canada Act, the Uranium Non-Resident Ownership Policy and the Canada Business Corporations Act. These require at least two-thirds of our directors to be Canadian citizens and half to be Canadian residents.

As part of the skills review process in 2009, the nominating, corporate governance and risk committee surveyed its members, the board chair and our senior executives about board diversity.

The survey focused on ethnicity, non-Canadian residents, gender, political affiliation and age, and confirmed the importance of having:

 

 

at least one aboriginal director from Saskatchewan because many of our operations are based in the province

 

 

two directors who are US residents

 

 

one or two directors from Europe and/or Asia

 

 

at least two or three female directors

 

 

directors of various ages.

None of the respondents felt there was a need to seek directors who have specific political affiliations.

The survey results have given the committee and board important insights for enhancing board composition in the future. The three new non-executive directors who joined the board from 2009 to 2011 bring experience in Canadian aboriginal affairs and international experience in the mining, energy sector and nuclear industry. The new nominated director in 2012 brings experience in investment banking and mergers and acquisitions.

Continuing education and development

We expect our directors to be informed about issues affecting our business, the nuclear industry, governance, compensation disclosure and other related issues. Continuing education helps them keep abreast of industry developments and changing governance issues and requirements, and understand issues we face within the context of our business.

Directors attended a variety of internal and external conferences, seminars, courses and site tours in 2011, as set out in the table below. Highlights include:

 

 

the 2011 National Association of Corporate Directors (NACD) Board Leadership Conference in Washington, DC last October. The conference featured sessions with governance experts and influential political figures and was attended by approximately 800 directors from around the world. Seven of our directors attended the conference.

 

 

a session on compensation risk by Christina Medland of Meridian Compensation Partners (Meridian). Ms. Medland is a well-respected lawyer, frequent speaker and noted author on compensation issues. The human resources and compensation committee has since retained Meridian as its independent consultant beginning in December 2011.

 

2011

  

Topic

  

Presented/hosted by

  

Attended by

February 10

   Uranium Geology   

Alain Mainville

Director, Mineral Resources Management

Greg Leniuk

Senior Resource Evaluation Geologist

  

John Clappison

Joe Colvin

James Curtiss

Donald Deranger

Tim Gitzel

James Gowans

  

Gerald Grandey

Nancy Hopkins

Oyvind Hushovd

George Ivany

Anne McLellan

Victor Zaleschuk

March 23

   Canadian Board Diversity Council Roundtable    Canadian Board Diversity Council    Nancy Hopkins   

May 9-11

   Nuclear Industry Conference and Supplier Expo    Nuclear Energy Institute (NEI)    Joe Colvin    James Curtiss

May 26

  

Meeting of Audit Committee Chairs:

Preparation of Best Practices Guidelines for CAC40 Companies

   Institute of Corporate Directors (ICD)    Daniel Camus   

June 22-23

   Nuclear Industry Seminar    Cameco Corporation    Daniel Camus   

June 27

   Audit Committees and IT    Canadian Audit Committee Network    John Clappison   

August 3

   Mine 2011 — Review of Global Trends in the Mining Industry    John Gravelle PricewaterhouseCoopers   

Daniel Camus

John Clappison

Joe Colvin

James Curtiss

Donald Deranger

Tim Gitzel

  

James Gowans

Nancy Hopkins

Oyvind Hushovd

Anne McLellan

Neil McMillan

Victor Zaleschuk

August 10-11

   Goizueta Directors Institute    Emory/ Goizueta University Business School and the Institute of Nuclear Power Operations (INPO)    James Curtiss   

 

22    CAMECO CORPORATION


2011

  

Topic

  

Presented/hosted by

  

Attended by

September 19

   Strategic Risk Oversight Course    Directors College    Donald Deranger   

September 21

   Compensation Committee Executive Breakfast Briefing    Meridian    James Curtiss   

September 26

   Regulatory Update and Economic Outlook    Canadian Audit Committee Network    John Clappison   

September 26-27

  

Excellence Program for Board Directors:

 

•   Corporate Governance and Legal Requirements in Practice

 

•   Recruiting and Remuneration of Board of Management and Supervisory Board Members

 

•   Validation of Corporate Strategy

   German Aktien Institut    Daniel Camus   

September 27

   Expectations of Audit Committees from Internal Audit and the Changing Roles of the Internal Auditor (presenter)    Institute of Internal Auditors    John Clappison   

October 2

   Board Committee Forum — Audit    NACD    John Clappison   

October 2

   Board Committee Forum — Compensation    NACD   

James Curtiss

Anne McLellan

   Neil McMillan

October 2

   Board Committee Forum — Nominating/Governance    NACD    James Gowans   

October 2

   Board Committee Forum — Risk    NACD   

Daniel Camus

Nancy Hopkins

  

October 3

   Finding Balance in the Executive Compensation Debate — Keeping Shareholders Top of Mind    NACD    Daniel Camus   

October 3

   Performance Metrics — The Right Measures    NACD    Neil McMillan   

October 3

   Say-on-pay: Strategies for Compensation Committees    NACD   

Daniel Camus

Anne McLellan

  

October 3-4

   Board Leadership Conference    NACD   

Daniel Camus

John Clappison

James Curtiss

James Gowans

  

Nancy Hopkins

Anne McLellan

Neil McMillan

October 6-8

   Boardroom Summit    Corporate Board Member Magazine and NYSE Euronext    James Curtiss   

October 20

  

Boards and Tax Risk

(presenter)

   PricewaterhouseCoopers Alumni    John Clappison   

October 23-26

   Uranium Conference    NEI    Joe Colvin   

November 3

   Enrichment in the Nuclear Fuel Cycle   

Ken Seitz

Senior Vice-President, Marketing and Business Development

  

Daniel Camus

John Clappison

Joe Colvin

James Curtiss

Donald Deranger

Tim Gitzel

  

Nancy Hopkins

Oyvind Hushovd

Anne McLellan

Neil McMillan

Victor Zaleschuk

November 10-11

   CEO Conference    INPO    Joe Colvin    James Curtiss

November 24

   Boardroom Financial Essentials    ICD    Donald Deranger   

December 1

   Corporate Social Responsibility Presentation   

Gary Merasty

Vice-President, Corporate Social Responsibility

  

Daniel Camus

John Clappison

Joe Colvin

James Curtiss

Donald Deranger

Tim Gitzel

  

James Gowans

Nancy Hopkins

Oyvind Hushovd

Anne McLellan

Neil McMillan

Victor Zaleschuk

See Director education on page 32 for more information about our education program.

 

   2012 MANAGEMENT PROXY CIRCULAR   23


About the auditors

The auditors fulfill a critical role, reinforcing the importance of a diligent and transparent financial reporting process that strengthens investor confidence.

KPMG LLP (KPMG), or its predecessor firms, have been our auditors since incorporation. You can vote for reappointing KPMG as our auditors until the end of the next annual meeting, or you can withhold your vote. Unless otherwise instructed, the named proxyholders will vote for reappointing KPMG. We need a simple majority of votes cast for KPMG, by person or by proxy, to approve their reappointment.

KPMG provides us with four types of services:

 

 

audit services — generally relate to the audit and review of annual and interim financial statements and notes, conducting the annual audits of affiliates, auditing our internal controls over financial reporting and providing other services that may be required by regulators. These may also include services for registration statements, prospectuses, reports and other documents that are filed with securities regulators, or other documents issued for securities offerings.

 

 

audit-related services — include advising on accounting matters, attest services not directly linked to the financial statements that are required by regulators and conducting audits of employee benefit plans.

 

 

tax services — relate to tax compliance and tax advice that are beyond the scope of the annual audit. These include reviewing transfer-pricing documentation and correspondence with tax authorities, preparing corporate tax returns, and advice on international tax matters, tax implications of capital market transactions and capital tax.

The table below shows the fees we paid to KPMG and its affiliates for services in 2011 and 2010.

 

     2011
($)
     % of  total
fees

(%)
     2010
($)
     % of
total fees

(%)
 

Audit fees

           

Cameco

     1,773,600         61.4         1,697,700         62.6   

Subsidiaries

     400,700         13.9         256,200         9.5   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total audit fees

     2,174,300         75.3         1,953,900         72.1   
  

 

 

    

 

 

    

 

 

    

 

 

 

Audit-related fees

           

Accounting advisory

     195,100         6.8         273,400         10.1   

Translation services

     —           —           44,500         1.7   

Pensions and other

     21,000         0.7         20,000         0.7   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total audit-related fees

     216,100         7.5         337,900         12.5   
  

 

 

    

 

 

    

 

 

    

 

 

 

Tax fees

           

Compliance

     62,500         2.2         199,200         7.3   

Planning and advice

     433,400         15.0         219,500         8.1   
  

 

 

    

 

 

    

 

 

    

 

 

 

Total tax fees

     495,900         17.2         418,700         15.4   
  

 

 

    

 

 

    

 

 

    

 

 

 

All other fees

     —           —           —           —     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total fees

     2,886,300         100.0         2,710,500         100.0   
  

 

 

    

 

 

    

 

 

    

 

 

 

The audit committee is responsible for reviewing and approving KPMG’s audit plan, fees, performance, qualifications and independence.

 

24    CAMECO CORPORATION


Having a ‘say on pay’

You will have an opportunity to vote on our approach to executive compensation at the upcoming meeting. Your vote is advisory and non-binding, and will provide the board and human resources and compensation committee with important feedback.

Please take some time to read about Compensation governance starting on page 48 and Executive compensation starting on page 58. We explain our compensation philosophy, the objectives and elements of the program and the way we measure and assess performance and make compensation decisions. We also explain how and why a large portion of our executives’ compensation is linked to performance and earned over the longer term, and how we manage compensation risk.

As a shareholder you have the opportunity to vote for or against our approach to executive compensation through 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 Cameco’s management proxy circular delivered in advance of the 2012 annual meeting of shareholders.

We recommend that shareholders vote for the advisory resolution on our approach to executive compensation. Unless otherwise instructed, the named proxyholders will vote for the advisory resolution.

Ninety-two percent of shareholders voted for our approach to executive compensation in 2010 and 2011. We will disclose the results of this year’s advisory vote in our report on the 2012 annual meeting voting results.

The board believes it is important to give shareholders an effective way to provide input on our approach to executive compensation. This is the third year that shareholders will have an opportunity to participate in an advisory vote, and it is one means of achieving this objective. Because we are committed to ensuring shareholders have an effective and timely opportunity to provide input on this matter, we continue to evaluate the most effective means of achieving this objective. As a result, following this year’s vote, we will again examine the level of interest and nature of the comments received from shareholders, as well as evolving best practices by other companies, and continue to consider what might be the optimum frequency and approach for shareholders to provide their input on our approach to executive compensation.

Use the survey on our website (cameco.com/investorsurvey) to provide feedback on our executive compensation practices and the frequency of this advisory vote, or see Communicating with the board on page 29. Shareholders can also write directly to the chair of the board or the chair of the human resources and compensation committee with their views on our executive compensation.

 

   2012 MANAGEMENT PROXY CIRCULAR   25


Governance at Cameco

We recognize the importance of sound governance and firmly believe it is the foundation for strong corporate performance.

This section tells you about three key elements of governance at Cameco: our shareholder commitment, our governance principles, and our board and how it operates.

 

Our shareholder commitment      27   
 

Separate chair and CEO positions

     27   
 

Shareholder engagement

     27   
Governance principles      27   
 

Policies

     27   
 

Standards and practices

     29   
 

Communicating with the board

     29   
About the board      30   
 

Independence

     30   
 

Our expectations for directors

     31   
 

Role of the board

     33   
 

Assessment and tenure

     35   
 

Board committees

     37   

 

26    CAMECO CORPORATION


Our shareholder commitment

We believe in strong stewardship, and are committed to delivering strong returns and increasing the value of Cameco to benefit all shareholders.

Separate chair and CEO positions

Maintaining separate chair and CEO positions allows the board to be more effective in overseeing our affairs and holding management accountable for the company’s activities.

A non-executive chair provides the board with stronger leadership, fosters more effective discussion and decision-making and avoids conflicts of interest. It also reflects good governance. We have had an independent, non-executive chair of the board since 2003. In 2011, on the recommendation of our nominating, corporate governance and risk committee, our board adopted a renewed position description for the chair of the board (cameco.com/responsibility/governance/chairs_role) that explains more fully the appointment, term and responsibilities of the position. See Independent chair on page 30 for more information.

The chair and the CEO are appointed by the board.

Shareholder engagement

We are committed to communicating openly with shareholders and other key stakeholders. This includes having open and constructive dialogue on governance and disclosure matters that are in the public domain.

While contact with shareholders is mainly through our corporate office and the investor, corporate and government relations (IR) department, board members meet from time to time with significant shareholders, governance organizations and other shareholder groups on request. The board believes these discussions lead to a better understanding of governance and other issues and the board’s decisions.

The board adopted a shareholder engagement statement in 2010 to establish engagement practices based on shareholders’ needs and evolving governance practices. Shareholders, employees and others can contact the chair of the board, the committee chairs or the independent directors as a group directly (see Communicating with the board on page 29). You can read our shareholder engagement statement in our governance guidelines as well as other governance and company information on our website (cameco.com/responsibility/governance/practices).

Advisory vote

Shareholders had an opportunity to participate in our advisory vote on our approach to executive compensation in 2010 and 2011, and 92% of our shareholders voted for our approach to executive compensation both years. We will have another ‘say on pay’ advisory vote at our 2012 annual meeting of shareholders (see page 25).

Shareholders can also use the survey on our website (cameco.com/investorsurvey) to provide feedback on our executive compensation practices.

Governance principles

Policies

Code of conduct and ethics

Our directors, officers and employees are all held to the same standard of conduct.

The board expects everyone to act with honesty, integrity and impartiality, to earn and maintain the trust of our shareholders, other stakeholders, customers and communities where we operate. This means complying with the code of conduct and ethics in all of our activities. We revised the code in 2010 to reinforce our standards of integrity and ethical conduct and to make the code more user friendly.

The code contains principles and guidelines for ethical behaviour, and describes the governance and corporate culture we expect at Cameco by covering the following key areas:

 

 

financial reporting and accountability

 

 

confidentiality

 

 

conflicts of interest

 

 

complying with the laws, rules and regulations that apply to us (including safety, health, environmental, import, export, securities disclosure and insider trading laws)

 

 

corporate opportunities.

 

 

identifying and preventing fraud

 

 

reporting illegal or unethical behaviour

 

   2012 MANAGEMENT PROXY CIRCULAR   27


 

reporting violations or breaches of the code.

Complying with the code means that:

 

 

employees and directors must report any actual, potential or perceived conflicts of interest to the corporate secretary, who brings all reports involving an employee to the attention of management’s conflicts review committee, and to the nominating, corporate governance and risk committee if it involves a director.

 

 

directors must excuse themselves from any discussions or decisions where their business or personal interests would create a conflict of interest.

We have had an ethics (whistleblower) hotline since 2006 that allows employees to report confidentially and anonymously, online or by phone, any concerns about inappropriate business conduct.

All new employees must read the code when they are hired and sign an acknowledgement confirming that they will follow the code. They must also confirm that they do not have any conflicts of interest or disclose any conflicts they do have. Directors and employees who have supervisory responsibilities or work in the supply chain management, exploration and human resources departments must review the code every year and sign a certificate of compliance. Any issues arising from these reports are brought to the attention of management’s conflict review committee for employees, the audit committee for employees who are insiders, and the nominating, corporate governance and risk committee for directors.

You can find a copy of the code on our website (cameco.com/responsibility/governance/ethics), or by writing to our corporate secretary at Cameco, at 2121 – 11th Street West, Saskatoon, Saskatchewan S7M 1J3.

Disclosure policy

We are committed to communicating openly and in a timely way with shareholders, employees and the public, and providing complete, accurate and balanced disclosure in our documents. We describe this commitment and our policy for disseminating material information in our disclosure policy, which is available on our website (cameco.com/responsibility/governance/policies_initiatives/corporate_disclosure).

Our disclosure committee includes members of senior management and is responsible for:

 

 

reviewing all news releases and public filings containing material information prior to their release

 

 

evaluating the design and effectiveness of our disclosure controls and procedures to make sure they continue to provide reasonable assurance that information is gathered promptly and accurately, so we can make decisions about appropriate public disclosure that complies with legal requirements

 

 

recommending any appropriate changes to our disclosure controls and procedures to the audit committee for approval.

Each board committee reviews the material public disclosure relevant to its mandate before the board considers them for approval. The audit committee is responsible for reviewing the annual and interim financial statements and management’s discussion and analysis (MD&A), and then recommending them to the board for approval. The safety, health and environment committee reviews the sustainable development report before it is published. The human resources and compensation committee and the nominating, corporate governance and risk committee review this management proxy circular and recommend it to the board for approval.

The board also reviews and approves the following documents, which are filed publicly:

 

 

prospectuses

 

 

annual information forms

 

 

US Form 40-F filings

 

 

other disclosure documents that must be approved by the directors according to securities laws, securities regulations or stock exchange rules.

The audit committee receives regular updates from the disclosure committee, and is responsible for reviewing our disclosure controls and procedures once a year and recommending any changes to the board for approval.

Our website (cameco.com) has information for shareholders, investment analysts, the media and the public. The CEO and other officers meet regularly with investment analysts and institutional investors. Our investor, corporate and government relations (IR) department provides information to current and prospective shareholders and responds to any questions or concerns they may have.

You can reach the IR department by:

 

phone:

   306.956.6340

fax:

   306.956.6318

e-mail:

   complete the e-mail form under the Contact section of our website.

 

28    CAMECO CORPORATION


Standards and practices

We are a public company and our shares trade on the Toronto Stock Exchange (TSX) and the New York Stock Exchange (NYSE). We must therefore meet various corporate governance guidelines and requirements in Canada and the United States.

Standards

We are subject to the corporate governance standards that apply to Canadian companies listed on the TSX, the requirements of the Sarbanes-Oxley Act of 2002 (SOx) and the NYSE corporate governance standards that apply to us as a foreign private issuer registered with the Securities and Exchange Commission (SEC) in the US.

Practices

We comply with most of the NYSE corporate governance standards that apply to US issuers. We typically follow the NYSE director independence standards, however in certain cases, we may determine that a director who does not meet those standards is independent as long as the Canadian director independence standards are satisfied. All of our independent directors currently meet the independence criteria under the NYSE governance standards.

NYSE corporate governance standards require shareholders to approve all equity compensation plans and any material revisions to the plans, whether or not the securities issued under the plans are newly issued or purchased on the open market, subject to a few limited exceptions. We adhere to the TSX rules, which require shareholders to approve equity compensation plans only if they involve newly issued securities. In addition, under the TSX rules, shareholders must approve the following:

 

   

if the plan does not set a fixed maximum number of securities that can be issued, shareholders have to approve the plan every three years

 

   

if the plan has an amendment procedure, shareholders only have to approve the following kinds of amendments:

 

   

reducing the exercise price or extending the term of options held by insiders

 

   

removing an insider participation limit or an amendment which results in an insider participation limit being exceeded

 

   

increasing the fixed maximum number of securities to be issued under the plan

 

   

changing the amendment procedure or when the plan requires the amendment to receive shareholder approval.

Communicating with the board

Shareholders, employees or other interested parties can contact the chair of the board, or the independent directors as a group by writing to them at our corporate office. These envelopes will be delivered unopened.

 

Send the sealed envelope to:

Cameco Corporation

2121-11th Street West

Saskatoon, SK S7M 1J3

  

Please mark it:

Private and strictly confidential

Attention — Chair of the board of directors

 

If you want to contact the chair of either the audit committee or the human resources and compensation committee, send your sealed envelope to the same address.   

Please mark it:

Private and strictly confidential

Attention — Chair of the audit committee, or

Chair of the human resources and

compensation committee

 

   2012 MANAGEMENT PROXY CIRCULAR   29


About the board

The board of directors is responsible for overseeing management and Cameco’s business affairs. Its goal is to ensure we continue to operate as a successful business, optimizing financial returns to increase our value over time while effectively managing the risks we face in our business.

Our board works within a climate of respect, trust and candor, fostering a culture of open dialogue. It fulfills its duties by:

 

 

maintaining a governance framework that establishes broad areas of responsibility and includes appropriate checks and balances for effective decision-making and approvals

 

 

making decisions that set the tone, character and strategic direction for Cameco and approving the vision, mission, value statements and enterprise level policies developed by management

 

 

regularly monitoring management’s effectiveness, including its leadership, recommendations, decisions and execution of strategies to ensure that the CEO and senior management carry out their responsibilities.

The board has delegated the day-to-day responsibility for corporate governance to the nominating, corporate governance and risk committee. The committee is responsible for defining our approach to corporate governance issues (including reviewing our corporate governance guidelines every year and recommending any changes to the board).

The board reviews our corporate governance framework and practices and revises them as regulations change, and as industry and shareholder expectations and corporate best practices continue to evolve.

You can find more information about our corporate governance practices on our website (cameco.com/responsibility/governance/practices), or by writing to our corporate secretary.

Independence

We define any director who does not have a direct or indirect material relationship with us as independent. A relationship is material when it could reasonably interfere with a director’s ability to make independent decisions, regardless of any other association he or she may have.

The board believes that at least a substantial majority of our directors must be independent, and that the audit committee, human resources and compensation committee and the nominating, corporate governance and risk committee must be 100% independent.

Directors must give the nominating, corporate governance and risk committee information about their business and other relationships with us (including our affiliates) and with senior management (and their affiliates). They must also advise the committee if there are any material changes to their circumstances or relationships that could affect the board’s assessment of their independence.

The board is responsible for determining whether or not each director is independent. It uses criteria that meet the standards of the Canadian Securities Administrators as set out in Multilateral Instrument 52-110 – Audit Committees, National Policy 58-201 – Corporate Governance Guidelines and the NYSE corporate governance standards.

We last reviewed and updated our criteria for director independence in 2011 (see Appendix B for more information).

Assessing independence

The board has reviewed each nominated director and decided that only Tim Gitzel and Donald Deranger are not independent. Mr. Gitzel is our president and CEO, and Mr. Deranger is president of Points Athabasca Contracting Limited Partnership (Points Athabasca). In 2011, we paid Points Athabasca $63 million for construction and contracting services. Mr. Deranger is a Vice-Chief of the Prince Albert Grand Council representing the Athabasca Basin where our significant Saskatchewan operations are located. Mr. Deranger brings a valuable mix of skills and experience to the board, as a business and aboriginal leader in northern Saskatchewan with direct experience in employee training, economic development and uranium mining.

Independent chair

The board appoints a non-executive, independent director as its chair to help it function independently of management. Victor Zaleschuk has served as the chair of our board since 2003.

The chair is responsible for the following duties and responsibilities, among other things:

 

 

leading, managing and organizing the board consistent with our approach to corporate governance

 

 

encouraging high performance and commitment of all directors

 

 

presiding as the chair at all board meetings and meetings of our shareholders

 

 

ensuring the board has a strategic focus and represents Cameco’s best interests

 

 

helping to set the tone and culture of Cameco

 

30    CAMECO CORPORATION


 

ensuring the board adopts and complies with procedures so it can carry out its work effectively, efficiently and independently of management

 

 

ensuring all board matters receive enough time to be properly addressed and brought to resolution as required

 

 

ensuring that any matters delegated to the board committees are carried out by them

 

 

acting as the liaison between the board and the CEO, and providing advice, counsel and mentorship to the CEO

 

 

meeting with shareholders and other stakeholders as a representative of Cameco if requested by the CEO

 

 

participating in the recruitment and orientation of new directors

 

 

ensuring that the board has timely and relevant information and access to other resources to adequately support its work.

The board reviewed and renewed the position description for the chair in 2011, on the recommendation of the nominating, corporate governance and risk committee. You can access a copy on our website (cameco.com/responsibility/governance/chairs_role) or by writing to our corporate secretary.

Our expectations for directors

We expect each member of the board to act honestly and in good faith, and to exercise business judgment that is in the best interests of Cameco overall.

Each director is expected to:

 

 

comply with our code of conduct and ethics, including conflict of interest disclosure requirements. See Governance principles on page 27 for more information about the code.

 

 

develop an understanding of our strategy, business environment and operations, the markets we operate in and our financial position and performance. See Measuring performance starting on page 70 for a discussion of our corporate performance.

 

 

diligently prepare for each board and committee meeting by reviewing all of the meeting materials

 

 

actively and constructively participate in each meeting, and seek clarification from management and outside advisors when necessary to fully understand the issues

 

 

participate in continuing education programs, as appropriate

 

 

participate in the board, committee and director self-assessment process.

We also expect each director to attend all board meetings and all of their committee meetings and the annual meeting of shareholders. Directors can participate by teleconference if they are unable to attend a board or committee meeting in person.

See Meeting attendance on page 20 for the number of board and committee meetings held in 2011 and the director attendance record.

In camera sessions

The board and board committees meet in camera without management present at all meetings, including those held by teleconference. The board held one in camera session for only independent directors in 2011.

Director experience

Our board represents a cross-section of business and industry experience we believe is critical for effective oversight and to support our future growth. See page 21 for information about the skills and experience we believe are critical for serving on our board, and the skills matrix we use to assess board composition and recruit new directors.

When a director’s principal occupation or business association changes substantially from when he or she was first elected or appointed to the board, the director must approach the chair of the board immediately and offer to resign. The nominating, corporate governance and risk committee will consider the change in circumstance and recommend whether the board should accept or reject the resignation.

Serving on other boards

Our directors do not serve on the boards of competitor firms, nor can they join organizations or groups that may have adverse interests, unless they have our board’s permission.

In 2006, we started limiting the number of boards our directors can serve on because of the increasing demands on directors of public companies. A director who is an active CEO can serve on the boards of up to three other public companies, including the company he or she is a CEO of. Other directors can serve on the boards of up to four other public companies.

A director can temporarily exceed the limit by one public company if he or she has declared an intention to resign from, or not stand for re-election to, at least one other board as of that company’s next annual general meeting. We expect directors to advise the chair of the board and chair of the nominating, corporate governance and risk committee if they are considering accepting a directorship with another public company.

 

   2012 MANAGEMENT PROXY CIRCULAR   31


The Director profiles starting on page 9 list the other public company directorships held by each nominated director.

Director education

Director education is important for helping directors maintain skills, gain insights and increase their understanding of our operations and issues affecting our business and governance practices. We offer an orientation program for new directors, and a continuing education program for all directors.

Orientation for new directors

Our orientation session helps familiarize new directors with the uranium and nuclear industries, Cameco and what we expect of our board and committee members. New directors also receive orientation on the board committees they are assigned to. Directors meet senior management through presentations and informal social gatherings.

All new directors also receive an educational manual that covers a wide range of topics including:

 

 

information on our corporate and organizational structure

 

 

background information on the company and the uranium and nuclear industries

 

 

recent regulatory filings

 

 

financial information

 

 

governance documents

 

 

important policies.

Continuing education

Our continuing education program has three components:

 

 

receiving management presentations at board and committee meetings

 

 

visiting a facility we operate or other nuclear facility each year

 

 

attending external conferences and seminars.

Management makes presentations to the board and committees:

 

 

when they are making key business decisions

 

 

during strategic planning meetings

 

 

on topical issues from time to time

 

 

in response to requests from directors.

Directors visit facilities we operate or other nuclear facilities to enhance their understanding of our operations and the nuclear industry.

Committees also have specific education initiatives. New members receive copies of minutes for the four most recent committee meetings and a copy of the committee’s mandate. The new member also meets with key management representatives for the committee to discuss recent accomplishments, concerns or issues. The audit committee also has an ongoing education program for its members. The other committees receive education on relevant matters that are identified by the committee, committee chair, corporate secretary or management.

Directors also identify educational needs through the board and committee process and the self-assessment surveys. As a result, the corporate secretary may arrange internal presentations for the board after consulting with the board or committee chairs.

We encourage directors to attend external conferences, seminars or courses at our expense. They can be on any subject related to their role on our board or board committees, or deemed important for enhancing their knowledge of an industry relevant to us. Our corporate secretary notifies the directors of pertinent conferences, seminars and other educational opportunities to see if they are interested in attending them.

See Continuing education and development on page 22 for our program in 2011.

 

32    CAMECO CORPORATION


Role of the board

The company articles require our board to have at least three directors and no more than 15. This year the board has decided that 13 directors are to be elected at our upcoming annual meeting.

Mandate and scope

The board has a formal mandate (see Appendix B) that lists its specific duties and responsibilities including, among others:

 

 

selecting, evaluating and, if necessary, terminating the CEO

 

 

assessing the integrity of the executive officers and ensuring there is a culture of integrity throughout Cameco

 

 

succession planning and monitoring the performance and compensation of senior management

 

 

adopting an annual strategic planning process that includes approving the strategic plans and monitoring our performance against those plans

 

 

approving policies and procedures to manage risks for Cameco and overseeing management’s mitigation of the material risks

 

 

overseeing the integrity of our internal control and management information systems

 

 

making decisions about material corporate matters, including those that require director approval by law or regulations.

The board mandate was updated in May 2011 and its Appendix A (Definition of independent director and related definitions) was updated in September 2011.

The board also has five standing committees, and each committee has a mandate that lists the responsibilities and duties of both the committee and the chair. See Board committees on page 37 for more information.

Overseeing the CEO

The CEO is appointed by the board and is responsible for managing Cameco’s affairs. His key responsibilities involve articulating the vision for the company, focusing on creating value for shareholders, and developing and implementing a strategic plan that is consistent with the corporate vision.

Our annual objectives become the CEO’s mandate from year to year, and they include specific, quantifiable goals. The human resources and compensation committee reviews the CEO’s annual objectives and recommends them to the board for approval.

The CEO is accountable to the board and board committees, and the board conducts a formal review of his performance every year. The board has established clear limits of authority for the CEO, which are described in our delegation of financial authority policy (last updated by the board in 2009).

The policy states, among other things, that the board must approve a number of decisions, including any that involve:

 

 

operating expenditures that exceed the total operating budget by more than 10%

 

 

unbudgeted project expenditures over $10 million per transaction, or over $50 million in total per year

 

 

cost overruns on budgeted project expenditures that are more than $15 million per transaction, or over $50 million in total per year

 

 

any acquisition or disposition of assets over $10 million per transaction, or over $50 million in total per year.

The board adopted a position description for the CEO, which is reviewed from time to time. You can find a copy on our website (cameco.com/responsibility/governance/ceos_role) or by writing to our corporate secretary.

Decision-making

The board strives to make all decisions in the best interests of Cameco.

It engages in lively debate on items of business and considers the interests of our shareholders, debt holders, customers, employees, communities where we operate, the environment, governments, regulators and the general public when making decisions.

Strategic planning

The board works with management to develop our strategic direction.

Our strategic planning process has four main elements:

 

 

developing a 10-year strategic plan

 

 

setting annual corporate objectives

 

 

establishing annual budgets and two-year financial plans

 

 

reviewing the strategic plan annually and revising it based on our progress.

Management is responsible for preparing information on these four areas and presenting it to the board for discussion and approval.

 

   2012 MANAGEMENT PROXY CIRCULAR   33


The board is actively involved in the strategic planning process and holds three strategic planning sessions with management every year: a three-day session in August for more in depth discussion and analysis and a follow-up half-day session in December and May. Management and the board discuss the main risks facing our business, strategic issues, competitive developments and corporate opportunities.

While these special meetings focus on strategic planning, management also presents strategic issues to the board throughout the year based on the business climate and other developments. The CEO also updates the board on execution of our corporate strategy at every regularly scheduled board meeting. From time to time, the board also raises various issues and topics for discussion as part of the overall process.

Risk oversight

Management, the board and board committees have been devoting more time over the last several years to the way we identify, manage, report and mitigate risk.

Risk can take different forms, and a new risk management policy and process implemented in 2011 are improving the way we identify and manage risks across the organization.

We use a broad based, systematic approach to identifying, assessing, reporting and managing the significant risks we face in our business and operations. We follow defined principles to help us identify and mitigate uncertainties that can have a negative effect on our business activities and ability to achieve our corporate objectives or strategic plan, and the board works with management to ensure our enterprise risk management system is robust.

We identify risk using six different categories:

 

•  financial

 

•  human capital

 

•  infrastructure and security

 

•  operational

 

•  social, governance and compliance

 

•  strategic

Risks are managed in three tiers based on their severity or level of risk, with risks in the top tier assigned to the board or board committees for ongoing oversight.

Employees “own” the risks as part of our risk management process, and are responsible for developing and implementing controls, including those being planned, and for any risk assessments and work that are under way to mitigate risk.

Risk owners report quarterly to the management committee to review our progress in managing these risks and identify any emerging risks. We incorporate the risks into the strategic planning and budgeting process as part of our management discipline.

Management reports quarterly on our enterprise risk management to the nominating, corporate governance and risk committee, and reports risks to the relevant committees and board quarterly, and provides an annual risk management report to the board.

The table below shows how the board and its standing committees monitor risk across the organization:

 

Board of directors

  

Committee areas of responsibility

Overall responsibility for

risk oversight at Cameco and specific responsibility for strategic business risks

  

Audit committee

Monitors financial risks, like hedging

  
  

Human resources and compensation committee

Oversees compensation risk, talent management risk and succession risk

  
  

Nominating, corporate governance and risk committee

Oversees governance and ensures we have a robust risk management process in place

  
  

Reserves oversight committee

Oversees the estimating of our mineral reserves and business-related operational risks

  
  

Safety, health and environment committee

Reviews the policies and systems related to safety, health and environmental risks and oversees related operational risks

The human resources and compensation committee also engaged an external consultant in 2011 to conduct an independent assessment of how risk is addressed in our compensation program and practices. You can find more information about the assessment and how we manage compensation risk on page 48.

You can read more about the board committees starting on page 37.

 

34    CAMECO CORPORATION


Internal controls

The board and board committees are responsible for monitoring the integrity of our internal controls and management information systems.

The audit committee is responsible for overseeing the internal controls, including controls over accounting and financial reporting systems. The chief internal auditor reports directly to the chair of the audit committee and provides quarterly reports to the committee, while the CFO makes quarterly presentations on our financial results and forecasts to the audit committee and board. You can find more information about the committee’s activities starting on page 38.

Management is responsible for establishing and maintaining an adequate system of internal control over financial reporting to provide reasonable assurance that public reporting of our financial information is reliable and accurate, our transactions are appropriately accounted for, and that Cameco’s assets are adequately safeguarded. Management evaluated the effectiveness of our system of internal control over financial reporting and concluded that the system was effective in providing reasonable assurance as at December 31, 2011.

Succession planning

The board is actively involved in succession planning to ensure we have an orderly succession of senior management and a plan for developing strong leadership, nurturing talent and retaining key people for our long-term success.

Our leadership development program focuses on building leadership competencies throughout Cameco and preparing certain senior level employees to take on executive positions in the future.

Our new senior management team was assembled internally and is the result of an effective development program and orderly succession plan.

The human resources and compensation committee reviews the succession plan for our entire executive team twice a year. The audit committee is responsible for reviewing the succession plan for the CFO and controller, and making recommendations to the human resources and compensation committee.

The board reviews the succession plan annually, and approves any changes to senior management. See Human resources and compensation committee on page 40 for more information.

Assessment and tenure

The nominating, corporate governance and risk committee established a formal process to assess the performance and effectiveness of the board, the committees and the individual directors.

The committee alternates between a shorter survey one year, and a comprehensive set of surveys the following year. The committee uses the results to assess the board overall, composition of the committees and meeting effectiveness, and to make the most of a director’s expertise as well as identify gaps in skills and experience.

 

Year 1

Comprehensive set of surveys

  

Year 2

Shorter survey

Board survey

• completed by all directors

  

•   nominating, corporate governance and risk committee analyses results and prepares a summary report for the board

 

•   corporate secretary tracks the resulting action items

  

Board and committee survey

 

•   completed by all directors

  

•   about the board, committees, board chair, committee chairs and CEO

 

•   chair of nominating, corporate governance and risk committee reviews the results and presents them to the committee

 

•   also prepares a summary report for the board

 

•   corporate secretary tracks the resulting action items

Director self-evaluation

•  completed by all directors

  

•   chair of the nominating, corporate governance and risk committee analyses results and discusses them with individual directors during their personal interviews

  

Director self-evaluation

•   completed by all directors

  

•   chair of the nominating, corporate governance and risk committee analyses results and discusses them with individual directors during their personal interviews

 

Board chair evaluation

•  completed by all directors

  

•   chair of the nominating, corporate governance and risk committee reviews the results and presents the results to the board chair

 

•   also prepares a summary report for the committee and the board

  

Board chair evaluation

•   completed by all directors

  

•   chair of the nominating, corporate governance and risk committee reviews the results and presents the results to the board chair

 

•   also prepares a summary report for the committee and the board

 

   2012 MANAGEMENT PROXY CIRCULAR   35


Committee surveys

• completed by members of each committee

  

•   each committee chair analyses the results and prepares a summary report for the committee and reports to the board

 

•   corporate secretary tracks the resulting action items

  

Audit committee survey

 

•   completed by members of the audit committee

  

•   chair of the audit committee analyses the results and prepares a summary report for the committee and reports to the board

 

•   corporate secretary tracks the resulting action items

Surveys of committee chairs

• completed by members of each committee

  

•   board chair reviews the results and discusses the issues raised with each committee chair

  

Survey of the audit committee chair

•   completed by members of the audit committee

  

•   board chair reviews the results and discusses the issues raised with the audit committee chair

Each director completes a survey of his or her own skills, performance and relevant experience. The committee chair also conducts annual one-on-one interviews so directors can have a candid discussion about their own performance, any matters relating to the performance of their peers, or other aspects of the functioning of the board.

The nominating, corporate governance and risk committee reviews the interview and survey results, and decides whether to recommend any changes to the composition of the board or committees, structure or processes or other changes to enhance board performance, and submits them to the board for approval.

Following the survey in 2010, the nominating, corporate governance and risk committee reviewed in 2011 the succession plan for the board chair, updated the position description and also adopted an approach to succession planning based on a planned retirement or unexpected departure. The board and all of the committees completed the comprehensive set of surveys in 2011 and the results confirmed that the board and committees are performing well overall.

Director tenure

The board does not believe in limiting the time a director can serve. While term limits can help ensure the board gains a fresh perspective, imposing this restriction means the board would lose the increasing contributions of longer serving directors who have developed a deeper knowledge and understanding of the company over time. The board does not believe that long tenure impairs a director’s ability to act independently of management.

The board has adopted a policy requiring directors to retire when they reach 72 years of age to encourage board renewal. It can, however, extend the retirement age for an individual director, and reviews any exceptions once a year.

The CEO typically resigns from the board when he retires from Cameco, as did Mr. Grandey when he retired from Cameco on June 30, 2011.

Recruiting new directors

The nominating, corporate governance and risk committee identifies potential director candidates based on their skills, experience, character, integrity, judgment, record of achievement, diversity and any other qualities or qualifications that would enhance the board’s decision-making process and overall oversight of Cameco’s business and affairs.

This is an ongoing process based on the development of the board and its overall mix of skills and experience, and Cameco’s business needs. The committee examines the list of candidates when it is filling a vacancy on the board, and can also engage an external search firm to supplement the process as it did in 2009 and 2010 (see About the nominated directors starting on page 8 for more information).

 

36    CAMECO CORPORATION


Board committees

The board carries out its responsibilities directly and through its committees, which make recommendations to the board for approval.

The board has five standing committees:

 

 

audit

 

 

human resources and compensation

 

 

nominating, corporate governance and risk

 

 

reserves oversight

 

 

safety, health and environment.

The audit, human resources and compensation, and nominating, corporate governance and risk committees are independent. This means each committee member is independent according to the board’s independence criteria and the terms of the Canadian Securities Administrators’ Multilateral Instrument 52-110 – Audit Committees and National Policy 58-201 – Corporate Governance Guidelines.

The nominating, corporate governance and risk committee recommends the composition of each committee and committee chair to the board for their review and approval.

Each committee has a mandate that outlines the responsibilities and duties of the committee and the chair. Each committee chair is responsible for determining the meeting agenda, how often the committee will meet, the conduct of each meeting, and chairing the meetings of their respective committees. The committees set aside time at each meeting to meet in camera without management present.

The board and committees review their mandates every year and update them as needed. See Appendix B for the board mandate. You can also access the board and committee mandates on our website (cameco.com/responsibility/governance/board_committees) or request copies from our corporate secretary.

The committee reports, which start on the next page, include the membership of each committee and the key activities in 2011. Committee memberships may change once the new board is elected. The board chair is a regular member of the reserves oversight committee and an ex-officio member of the other four committees.

Access to management and outside advisors

The board and board committees can invite any member of management, outside advisor or other person to attend their meetings.

Committees can engage outside advisors to assist in carrying out their duties, as authorized by their mandates. Individual directors can also engage outside advisors, as long as it is approved in advance by the nominating, corporate governance and risk committee.

 

   2012 MANAGEMENT PROXY CIRCULAR   37


Audit committee

The audit committee has five members:

 

• John Clappison (chair, financial expert)

 

• Daniel Camus

 

• Nancy Hopkins

 

• Oyvind Hushovd

 

• Neil McMillan

   Victor Zaleschuk, chair of the board, also attends committee meetings in an ex-officio capacity.

All members of our audit committee meet the regulatory requirements to be independent and financially literate. Mr. Clappison is the audit committee’s financial expert because he has accounting or related financial expertise, and meets the necessary requirements.

According to the committee mandate and the NYSE corporate governance standards, members of the audit committee must receive the board’s approval if they sit on the audit committees of more than three other public companies. Mr. Clappison and Mr. Camus serve on the board and audit committee of four public companies, including Cameco and have received the board’s approval. The board believes it benefits from the experience and knowledge both directors gain from being on the audit committees of other public companies, and has determined that this service does not impair the ability of either of them to serve on our audit committee.

The committee is responsible for assisting the board in overseeing:

 

 

the quality and integrity of our financial reporting

 

 

the quality and integrity and performance of our internal control systems for finance and accounting, our internal audit function and our disclosure controls

 

 

the annual audit plan, fees, quality, performance and independence of our external auditors

 

 

our compliance with certain laws and regulations, our code of conduct and ethics and our international business conduct policy.

Financial reporting

The committee is responsible for reviewing the following items and recommending them to the board for approval:

 

 

annual audited financial statements and MD&A

 

 

quarterly financial statements and MD&A

 

 

accounting and financial reporting process.

It also reviews quarterly press releases.

Internal control systems

The committee receives reports every year on:

 

 

our disclosure controls and procedures

 

 

our internal controls over financial reporting

 

 

the process for the CEO and CFO to certify that our quarterly and annual securities filings are accurate.

It oversees the internal audit function and the chief internal auditor reports directly to the chair of the audit committee.

External auditors

KPMG are our current auditors. From time to time, KPMG and or its affiliates also provide us and our subsidiaries or joint ventures with other professional services. See About the auditors starting on page 24 for more information.

The committee is responsible for reviewing and approving KPMG’s performance, fees, qualifications, independence and audit of our financial statements.

Approving services

The committee must pre-approve all services the external auditors will provide to make sure they remain independent. Any service that is not generally pre-approved must be approved first by the audit committee, or by the committee chair or board chair as long as the approved service is reported to the full audit committee at its next meeting.

 

38    CAMECO CORPORATION


Compliance

The audit committee is responsible for:

 

 

overseeing compliance with the laws and regulations that apply to us other than environment and safety compliance (which are the responsibility of the safety, health and environment committee) and human resources and compensation compliance (which are the responsibility of the human resources and compensation committee)

 

 

monitoring employees’ compliance with the code of conduct and ethics and the international business conduct policy

 

 

overseeing certain financial risks as delegated by the board.

It also makes recommendations to the board on the above matters, and is responsible for reviewing the succession plan for the CFO and controller and making any related recommendations to the human resources and compensation committee.

Key activities in 2011

The committee carried out the following activities as part of its 2011 work plan:

 

 

reviewed and recommended for board approval the 2010 annual audited financial statements and the annual MD&A and reconciliation to US GAAP

 

 

reviewed and recommended for board approval the 2011 interim financial statements and MD&A

 

 

received internal audit reports, and approved the internal auditor mandate and 2012 internal audit plan

 

 

oversaw the implementation of financial reporting in accordance with International Financial Reporting Standards (IFRS) beginning with the 2011 first quarter report

 

 

reviewed the external auditors’ qualifications and independence, and approved the 2012 external audit plan and audit fees

 

 

received regular reports on financial risk

 

 

reviewed 2011 year-end audit issues

 

 

received reports on compliance with laws and regulations and ongoing compliance activities, including the code of ethics and international business conduct policy

 

 

received regular reports by the disclosure committee

 

 

reviewed disclosure controls and procedures and management’s assessment of internal controls

 

 

received the reserves oversight committee’s report on annual reserves and resources

 

 

reviewed related party transactions and political and charitable donations

 

 

reviewed the CEO’s expenses

 

 

reviewed the committee’s self-assessment and its performance against the mandate for the prior year

 

 

recommended the appointment of the external auditors.

The audit committee met five times in 2011. It met in camera without management present at every meeting, and also separately with the internal auditor and external auditors at every meeting.

 

   2012 MANAGEMENT PROXY CIRCULAR   39


Human resources and compensation committee

The human resources and compensation committee has six members:

 

•  James Curtiss (chair)

 

•  Daniel Camus

 

•  John Clappison

 

•  Oyvind Hushovd

 

•  Anne McLellan

 

•  Neil McMillan

   Victor Zaleschuk, chair of the board, also attends committee meetings in an ex-officio capacity.

The committee is responsible for assisting the board in overseeing:

 

 

human resource policies

 

 

executive compensation

 

 

succession planning

 

 

our pension plans

 

 

director compensation.

Executive compensation

The committee is responsible for:

 

 

consulting with management to develop our general philosophy on compensation

 

 

reviewing and recommending to the board for approval all compensation policies and programs for our executives (vice-presidents and above) including:

 

   

the corporate goals and objectives relating to the compensation for the president and CEO and senior vice-presidents

 

   

evaluating the CEO’s performance against those goals and objectives

 

   

the CEO’s compensation based on the committee’s evaluation

 

   

the compensation for our senior vice-presidents based on the CEO’s evaluations

 

   

employment contracts with executive officers

 

 

overseeing the development and implementation of compensation programs, including incentive and equity-based compensation plans.

The committee believes in the fundamental importance of aligning the interests of executives and shareholders and paying for performance, and is responsible for reviewing all executive and director compensation disclosure before we publicly disclose it. Our Compensation discussion and analysis explains our philosophy and objectives, policies and guidelines, the different compensation components, what we base executive compensation on and how we evaluate performance and approve compensation. This report was prepared by management, and reviewed and approved by the human resources and compensation committee.

The committee retained Hugessen Consulting Inc. (Hugessen) as its primary independent compensation consultant in 2011. In December 2011, the committee retained Meridian as its primary independent compensation consultant replacing Hugessen. Neither company performed any services for management in 2011.

See page 48 for information about how we manage compensation risk.

Share ownership

The committee is also responsible for reviewing our director and executive share ownership guidelines so they continue to meet our needs and evolving governance practices. This includes reviewing the levels of ownership, valuing our shares, considering PSUs for meeting the ownership requirements and reviewing the grace period. We discuss share ownership in more detail on page 52 for directors and page 67 for executives.

Succession planning

Succession planning is critical to any organization. The committee is actively involved in succession planning to ensure we have an orderly succession of senior management, and a plan for developing strong leadership, nurturing talent and retaining key people for our long-term success.

The committee is responsible for:

 

 

reviewing our executive talent pool and the succession plan twice a year. The audit committee is also responsible for reviewing the succession plan for the CFO and controller, and making related recommendations to the human resources and compensation committee.

 

 

ensuring the succession plan is presented to the board each year.

 

40    CAMECO CORPORATION


The committee ensures there are opportunities for directors to get to know employees who have been identified as potential executives. Directors meet them through presentations to the board and committees and at company functions where they can interact with them informally.

On June 30, 2011, Gerald Grandey retired as CEO and a member of our board and Kim Goheen retired as senior vice-president and chief financial officer on July 14, 2011.

The following executive appointments were all part of an orderly succession plan that builds on the knowledge and depth of senior talent developed within Cameco:

 

 

Tim Gitzel, who was appointed president in May 2010 after joining Cameco in 2007, became president and CEO on July 1, 2011

 

 

Grant Isaac, who joined Cameco in 2009 as senior vice-president, corporate services, succeeded Mr. Goheen as senior vice-president and CFO on July 15, 2011

 

 

Ken Seitz, who has been with Cameco since 2004, became senior vice-president, marketing and business development on January 1, 2011, replacing George Assie, who retired on December 31, 2010

 

 

on July 15, 2011, Alice Wong became the new senior vice-president, corporate services, succeeding Mr. Isaac. Ms. Wong, who has been with Cameco since 1987, was previously vice-president, safety, health, environment and quality and vice-president, investor, corporate and government relations.

Pension plan governance

While the board has overall responsibility and accountability for our pension plans, it has delegated certain responsibilities to the human resources and compensation committee and management’s pension investment committee.

The human resources and compensation committee is responsible for overseeing management’s supervision of our pension plans as well as:

 

 

making recommendations to the board on plan design and policy after receiving advice from management

 

 

providing a high level review of the performance of the investment options

 

 

making recommendations on the investment managers when necessary, after receiving advice from management

 

 

receiving reports from management’s pension investment committee and the finance, human resources and legal departments from time to time on these matters.

It receives reports from management’s pension investment committee at least twice a year and ensures the board receives a pension plan report at least once a year.

The pension investment committee is responsible for selecting and monitoring the performance of the investment managers, monitoring the performance of the investment options under the plan and providing guidance to management on administrative matters. The committee consists of the CFO, senior vice-president, corporate services, senior vice-president, governance, law and corporate secretary, vice-president, human resources, the vice-president and treasurer, the vice-president, controller and the assistant treasurer.

Director compensation

The committee is also responsible for reviewing the compensation of our directors and recommending it to the board for approval. It conducts a thorough review of director compensation every two to three years to make sure our program continues to meet our objectives and remains competitive. The committee last conducted a review in 2010 with assistance from Hugessen and, based on the findings, recommended changes to the board for approval. See Assessing the program on page 54 for information about the changes approved in 2010.

The committee also recommended in 2010 the board approve a change to the directors’ share ownership guidelines to allow our shares and deferred share units to be valued at the purchase/issue price or market value, whichever is greater, to determine whether the directors meet the share ownership guidelines.

See Compensation discussion and analysis starting on page 52 for more information about our director compensation practices.

 

   2012 MANAGEMENT PROXY CIRCULAR   41


Key activities in 2011

The committee carried out the following activities as part of its 2011 work plan:

 

 

conducted its annual executive compensation review, including a discussion of market trends and the comparator group to ensure that our compensation levels remain competitive

 

 

determined the allocation and recommended grant of stock options and PSUs for senior management

 

 

retained an independent compensation consultant and approved its work plan and fees for 2011

 

 

reviewed the corporate results

 

 

reviewed the corporate and individual objectives for the president and CEO and senior vice-presidents and metrics for the short term incentive (STI) and performance share unit (PSU) plans

 

 

reviewed the CEO’s performance and the CEO’s annual performance assessments of the senior vice-presidents

 

 

reviewed and recommended changes to base salary and the short and long-term incentive plan awards for the CEO, president and senior vice-presidents

 

 

assessed compensation risk

 

 

reviewed and recommended payouts of the PSUs granted in 2008

 

 

reviewed the director and executive compensation disclosure in the management proxy circular

 

 

discussed talent management and reviewed the succession plan for the entire executive team, and consulted with the audit committee about the succession plan for the CFO and senior finance employees

 

 

recommended the appointment of the president and CEO

 

 

recommended the appointments of the senior vice-president and CFO and senior vice-president, corporate services

 

 

reviewed the terms of employment for the new senior management team

 

 

received semi-annual reporting on the pension plan

 

 

reviewed governance issues relating to executive compensation

 

 

reviewed the results of the ‘say on pay’ vote in 2011

 

 

discussed compensation trends and emerging issues

 

 

reviewed the committee’s self-assessment and its performance against the mandate for the prior year

 

 

reviewed director compensation

 

 

retained a new independent compensation consultant beginning in December 2011

 

 

initiated a third-party compensation risk assessment

 

 

had preliminary discussions on 2012 compensation, and decided to conduct its periodic review of Cameco’s executive compensation programs in 2012.

The committee met seven times in 2011. It met in camera without management present at every meeting.

 

42    CAMECO CORPORATION


Nominating, corporate governance and risk committee

The nominating, corporate governance and risk committee has five members:

 

• Nancy Hopkins (chair)

 

• Joe Colvin

 

• James Curtiss

 

• James Gowans

 

• Anne McLellan

   Victor Zaleschuk, chair of the board, also attends committee meetings in an ex-officio capacity.

The committee is responsible for assisting the board in overseeing:

 

 

our approach to corporate governance, including establishing corporate governance principles and a code of conduct and ethics

 

 

identifying and recommending qualified individuals as potential members of our board and board committees

 

 

risk management.

Corporate governance principles

The committee is responsible for:

 

 

assessing the size and composition of the board

 

 

assessing the number of board committees and their composition and mandates

 

 

evaluating our approach to corporate governance

 

 

recommending the board adopt a code of conduct and ethics for the organization

 

 

overseeing directors’ compliance with our code of conduct and ethics.

The committee is responsible for defining our approach to corporate governance issues (including reviewing our corporate governance guidelines once a year and recommending any appropriate changes to the board), and managing the board’s relationship with management.

As a publicly listed company on the TSX and NYSE, we must meet various corporate governance guidelines and requirements in Canada and the US. The board has adopted guidelines for meeting these responsibilities and ensuring that our corporate governance practices comply with the governance rules and legislation in Canada and those that apply to foreign private issuers in the US.

Board evaluation

The committee assesses the overall effectiveness of the board and its committees by:

 

 

developing and implementing an evaluation process

 

 

maintaining a skills matrix for the board and identifying additional skills we should recruit when we are making changes to the board

 

 

maintaining a succession plan for the board that meets our corporate needs and the interests of shareholders.

Evaluating performance

See page 35 for a description of the committee’s evaluation process for assessing the effectiveness of the board, its chair, board committees, committee chairs and individual directors.

Evaluating the composition of the board

The committee is responsible for establishing the competencies and skills necessary for the board and any new candidates being considered for nomination to the board.

We have developed a skills matrix for the board, identifying 11 areas that are important to our business and the directors who have expert knowledge, strong working knowledge or basic knowledge in these key areas. The committee uses this information to identify possible gaps in the skills of the board. We updated the skills matrix in 2009 to reflect our growing needs as we embark on our growth plans and canvassed the board and senior management on different elements of diversity desired for the board.

The committee assesses board size and composition every year to determine whether we have the necessary elements in place for effective decision-making.

The committee identifies potential candidates based on their skills, experience, character, integrity, judgement, record of achievement, diversity and any other qualities or qualifications that would enhance the board’s decision-making process and overall management of Cameco’s business and affairs. A candidate must disclose any potential conflicts of interest before he or she can be nominated to the board.

See About the board starting on page 30 for more information.

 

   2012 MANAGEMENT PROXY CIRCULAR   43


Risk management

The committee is also responsible for overseeing Cameco’s risk management process, which includes:

 

 

overseeing our program and procedures to identify significant risks and the systems to mitigate risk

 

 

receiving regular reports from management on our significant risks, and the steps taken to monitor and manage these risks

 

 

recommending risk management policies to the board as appropriate

 

 

reviewing management’s reports on our insurance program and the directors’ and officers’ liability insurance and indemnity agreements.

The other committees also have risk management responsibilities:

 

 

the audit committee monitors certain financial risks

 

 

the human resources and compensation committee oversees compensation risk, talent management risk and succession risk

 

 

the reserves oversight committee oversees the estimating of our mineral reserves and business-related operational risks

 

 

the safety, health and environment committee reviews the policies and systems related to safety, health and environmental risk and oversees related operational risks.

Key activities in 2011

The committee carried out the following activities as part of its 2011 work plan:

 

 

received quarterly enterprise risk management reports and reviewed and recommended the risk policy for board approval

 

 

recruited a new director

 

 

reviewed board composition and directors’ independence and conflicts

 

 

reviewed the composition of the board committees and proposed new members

 

 

reviewed and updated our corporate governance practices, reviewed third-party governance rankings and comments, and monitored corporate governance developments

 

 

reviewed the board assessment report and the chair’s report on director interviews, director self-assessment and the skills matrix

 

 

reviewed director orientation and continuing education needs

 

 

reviewed the governance disclosure in our management proxy circular

 

 

received management’s report on our insurance program

 

 

received reports on proxy voting recommendations and voting results

 

 

discussed the succession process for the board chair and best practices

 

 

reviewed and recommended for board approval a new position description for the board chair

 

 

received reports on governance issues and trends

 

 

reviewed the board’s mandate and the mandate for this committee, and the committee’s performance against its mandate for the prior year.

The committee met four times in 2011. It met in camera without management present at every meeting.

 

44    CAMECO CORPORATION


Reserves oversight committee

The reserves oversight committee is made up of five members:

 

   

Neil McMillan (chair)

 

   

Donald Deranger

 

   

James Gowans

 

   

Oyvind Hushovd

 

   

Victor Zaleschuk

The committee is responsible for assisting the board in overseeing:

 

 

management’s estimating of our mineral reserves and resources

 

 

the review of our mineral reserves and resources before they are disclosed to the public.

Estimating our mineral reserves and resources

The committee is responsible for:

 

 

confirming the appointment of our designated qualified persons for estimating our mineral reserves and resources

 

 

reviewing management’s annual reserve and resource report and annual reconciliation of reserves to mine production

 

 

receiving management reports on our internal controls and procedures for estimating our mineral reserves and resources

 

 

keeping abreast of industry standards and regulations on estimating and publishing mineral reserve and resource information and any related issues and developments through reports from management.

Disclosing our mineral reserves and resources

Before we disclose our mineral reserves and resources, the committee:

 

 

receives a report on the reserve and resource estimates by the qualified persons from the leading qualified person

 

 

ensures the qualified persons have not been restricted or unduly influenced in any way

 

 

has the leading qualified person and the chief operating officer (COO) confirm that:

 

   

the information is reliable

 

   

mineral reserves and resources have been estimated and will be published according to the securities laws and regulations that apply

 

   

disclosure controls and procedures for disclosing mineral reserve and resource estimates comply with industry standards.

Key activities in 2011

The committee carried out the following activities as part of its 2011 work plan:

 

 

reviewed and recommended to the board the 2010 year-end annual estimation of reserves and resources

 

 

reviewed our internal controls over reserves reporting and disclosure controls and procedures

 

 

confirmed the appointments of the qualified persons

 

 

reported annual reserves to the audit committee

 

 

reviewed the committee’s self-assessment and its performance against its mandate for the prior year.

The committee met three times in 2011. It met in camera without management present and separately with the leading qualified person at every meeting.

 

   2012 MANAGEMENT PROXY CIRCULAR   45


Safety, health and environment committee

The safety, health and environment committee is made up of five members:

 

•   Joe Colvin (chair)

 

•   Daniel Camus

 

•   Donald Deranger

 

•   James Gowans

 

•   Anne McLellan

   Victor Zaleschuk, chair of the board, also attends committee meetings in an ex-officio capacity.

The committee is responsible for assisting the board in overseeing safety, health and environmental matters by:

 

 

assessing our policies and management systems for these areas and making any appropriate recommendations to the board

 

 

monitoring our safety, health and environmental performance.

Assessing policies and management systems

The committee is responsible for overseeing management in the following areas:

 

 

reviewing our safety, health and environmental policies

 

 

overseeing the implementation of related systems to make sure we comply with the policies and all safety, health and environmental legislation

 

 

bringing any material issues of non-compliance to the attention of the board in a timely fashion

 

 

monitoring the effectiveness of our policies, systems and monitoring processes to protect the safety and health of our employees, contractors, visitors and the general public and manage any environmental impacts

 

 

reviewing the benchmarking results of our policies, systems and monitoring processes against best practices in the industry

 

 

reporting any related recommendations to the board.

Monitoring our performance

The committee is responsible for overseeing management in the following areas:

 

 

keeping abreast of significant safety, health and environmental issues (and monitoring trends and significant events) through reports from management

 

 

monitoring our corporate performance in safety, health and the environment and receiving regular updates from management

 

 

reviewing the findings of our health, safety and environmental audits, action plans and results of investigations into significant events

 

 

reviewing our sustainable development report

 

 

receiving regular compliance updates from management

 

 

reviewing the annual budget for our safety, health and environmental operations to ensure there is sufficient funding for compliance.

Key activities in 2011

The committee carried out the following activities as part of its 2011 work plan:

 

 

received regular reports on safety, radiation, environment, quality, environmental leadership (including waste, air emissions, greenhouse gas emissions and water usage) and any significant new issues

 

 

received reports on the safety, health environment and quality (SHEQ) audits and status of the 2011 audit plan

 

 

reviewed the annual SHEQ report

 

 

determined the impact of SHEQ objectives on executive compensation

 

 

received reports on regulatory and legislative reform initiatives

 

 

reviewed the management system report and management compliance report

 

 

reviewed the SHEQ, sustainable development and legal regulatory 2012 objectives and budgets

 

 

reviewed the committee’s self-assessment and performance against its mandate for the prior year.

The committee met four times in 2011. It met in camera without management present at every meeting.

 

46    CAMECO CORPORATION


Compensation

We compensate our directors and executives in a way that is fair, competitive and linked to performance.

This section is a report by the board of directors on the recommendation of the human resources and compensation committee. It gives you insight into our compensation process and discusses the different components of our program. We have provided additional information than what is required by regulators, to give you a more complete understanding of our decisions.

 

Compensation governance

     48   

•       Qualified and experienced directors

     48   

•       Compensation risk

     48   

•       Independent advice

     50   

Director compensation

     52   

•       Compensation discussion and analysis

     52   

—   Approach

     52   

—   Share ownership

     52   

—   Fees and retainers

     53   

—   Assessing the program

     54   

•       2011 details

     55   

—   Director compensation table

     55   

—   Incentive plan awards

     56   

—   Loans to directors

     57   

Executive compensation

     58   

•       Message to shareholders

     58   

•       Compensation timeline

     62   

•       Share performance and executive compensation

     63   

•       Compensation discussion and analysis

     65   

—   Approach

     65   

—   Annual decision-making process

     69   

—   Measuring performance

     70   

—   Compensation components

     75   

—   CEO compensation summary

     90   

•       2011 details

     91   

—   Summary compensation table

     91   

—   Incentive plan awards

     95   

—   Equity compensation plan information

     97   

—   Retirement benefits

     98   

—   Loans to executives

     100   

—   Termination and change of control

     101   

•       Developments in 2012

     106   

 

   2012 MANAGEMENT PROXY CIRCULAR   47


Compensation governance

Our board of directors has ultimate responsibility for compensation governance. The human resources and compensation committee assists the board in overseeing human resource policies, executive compensation, succession planning, our pension plans and director compensation.

The committee is 100% independent and is made up of six qualified directors to fulfill its duties and responsibilities:

 

•  James Curtiss (chair)

 

•  Daniel Camus

 

•  John Clappison

 

•  Oyvind Hushovd

 

•  Anne McLellan

 

•  Neil McMillan

   Victor Zaleschuk, chair of the board, also attends committee meetings in an ex-officio capacity.

Qualified and experienced directors

All of the committee members bring a strong combination of business and industry experience to the committee. The committee is led by James Curtiss, a lawyer with a strong background in executive compensation with nine years of experience chairing our human resources and compensation committee.

Compensation experience

All of the committee members have executive compensation experience, either as a senior executive, managing partner or as a member of Cameco’s and other public companies’ compensation committees. Daniel Camus, John Clappison, Oyvind Hushovd, Anne McLellan and Neil McMillan have previously served or currently serve on the compensation committees of other public companies.

Financial experience

Daniel Camus and John Clappison have a strong financial background and both serve as the audit committee chair of other public company boards.

Governance experience

All six committee members have a strong governance background through their extensive careers and service on other public company boards and committees.

CEO or senior executive experience in energy or mining

Mr. Hushovd, Mr. McMillan and Mr. Camus have experience as a CEO or senior executive in the energy or mining sectors and therefore bring additional insights to the oversight of human resources and executive compensation, especially as it relates to the CEO role.

You can find more information about the background and experience of each committee member in the director profiles starting on page 9.

Our 2011 continuing education program for directors included sessions on governance and compensation to help directors keep abreast of industry developments, changing governance requirements and executive compensation issues, and better understand these issues within the context of our business. Program highlights included directors attending the 2011 NACD Board Leadership Conference in Washington, DC, the 2011 Boardroom Summit in New York, NY hosted by Corporate Board Member Magazine and NYSE Euronext, and a committee session on compensation risk by Christina Medland of Meridian Compensation Partners (Meridian). Ms. Medland is a compensation consultant, lawyer, frequent speaker and noted author on compensation issues. The human resources and compensation committee has since retained Meridian as its independent consultant beginning in December 2011.

Compensation risk

We have a very conservative approach to risk management because of the complex nature of our business.

Compensation risk is embedded in our enterprise risk management framework with the view that our compensation program must be appropriately structured by:

 

 

encouraging the right management behaviours

 

 

using a balanced scorecard to assess performance

 

 

motivating appropriate risk-taking

 

 

avoiding excessive payouts to our executives and employees.

 

48    CAMECO CORPORATION


Our compensation program meets these criteria by focusing on six key principles:

Comprehensive and disciplined compensation framework

 

 

We have a formal disciplined process for risk oversight that involves the board and all five board committees.

 

 

We have a multi-year strategic plan to balance risk and reward. The plan contemplates the risks we face and the risks inherent in the industry overall, so we are proactive in our planning, risk management and decision-making.

 

 

We embed our corporate objectives into how we assess the performance of our executives and make decisions. The human resources and compensation committee assesses each objective before they are submitted to the board for their review and approval, including assessing whether the objectives can be manipulated. The objectives are assigned to executives with individual or joint accountability.

 

 

We award compensation based on performance and not length of service.

 

 

A significant portion of executive compensation is variable or at risk, and is therefore not guaranteed.

 

 

Our compensation program is designed not to encourage excessive risk-taking by employees.

 

 

Our enterprise risk management system is a management tool that identifies risks, assigns accountability, monitors controls, and enables us to develop performance expectations that are appropriate and risk-adjusted. We introduced enhancements to the risk assessment process in 2011, reinforcing our discipline in managing and mitigating risk.

Balanced decision-making

 

 

We use absolute and relative measures to assess performance.

 

 

We introduced an expanded balanced scorecard for our short-term incentive (STI) plan and performance share unit (PSU) plan in 2009 to broaden the way we assess performance, and provide a more direct and representative link between pay and performance. These plans continue in 2011.

Threshold performance

 

 

We set threshold performance levels in all categories under our incentive plans. We must deliver threshold performance to receive a payout under our STI and PSU plans, otherwise the payout is zero for measures that do not meet the threshold.

 

 

Payouts under our PSU plan are based on our performance against three-year objectives and the value of our shares when the units vest at the end of the three-year performance period.

Limits on incentive pay

 

 

The STI and PSU plans are designed to pay out at a maximum of 150% of target. The plans can pay out at 200%, but only for exceptional performance in extraordinary circumstances. The board also has the ability to exercise its discretion to pay higher than the program design.

 

 

We use typical and modified payout curves for each objective in the STI and PSU plans to cap performance incentives, so there is no incentive for an executive to take extreme risk for the potential of an extremely high payout.

Clawback policy

 

 

If our financial statements have to be restated because of misconduct, the CEO and CFO have to reimburse part of their incentive compensation as required by US law. This policy has been in place since 2003.

Hedging prohibited

 

 

We revised our securities trading and reporting policy in 2010 to reinforce that directors, executives and other employees are permitted only to purchase our securities for investment purposes, and to prohibit them from hedging any shares they own and any equity-based compensation.

We believe in full and open disclosure, and acknowledge the board’s role in overseeing our compensation policies and practices and its use of discretion to adjust payouts up or down, as it deems appropriate.

We have also developed a culture that encourages management to be objective in recognizing its level of performance and make recommendations to the board to lower its compensation when appropriate. At management’s suggestion, the board has used its discretion in the past to reduce executive compensation, like the STI bonuses awarded to executives for 2006 and 2008 that were lower than target. At management’s request, the 2006 STI bonus was reduced by 100% for the CEO, 47% for the COO and 20% for the other executives because of the water inflow incidents at the Cigar Lake mine in April and October 2006. In 2008, again at management’s request, the bonus was reduced by 23% for the CEO and 18% for the other executives because production targets were not met and costs were higher than budgeted.

 

   2012 MANAGEMENT PROXY CIRCULAR   49


Assessing compensation risk

The human resources and compensation committee conducted compensation risk assessments in 2010 and 2011, and asked management to retain an external consultant to carry out an assessment in late 2011.

Mercer Canada Limited (Mercer) conducted the compensation risk assessment and reviewed our compensation program, policies and practices in eight key areas as discussed below. Meridian, the committee’s compensation consultant, reviewed Mercer’s process and confirmed that it was satisfied with Mercer’s process and their findings.

Mercer’s recent assessment, as well as the committee’s assessments in 2010 and 2011, confirmed that our compensation philosophy, program design and plans do not expose the company to any material adverse risks.

Mercer’s report included the following key findings:

 

 

Pay mix — We have an appropriate balance between short and long-term compensation for the named executives, including time and performance-based vesting, and equity-based compensation made up of stock options and share-based awards. More than half of the total compensation awarded to our named executives is in long-term incentives, balancing the motivation to achieve strong short and long-term performance.

 

 

Incentive plan funding, leverage and caps — Potential payouts across all plans are insignificant as a percentage of revenue and income. We use payout curves under the STI and PSU plans and cap the potential payouts to discourage excessive risk taking.

 

 

Performance periods — Our variable incentive plans have different timelines with annual grants and overlapping vesting periods, ranging from one year for our STI plan to eight years for stock options. PSU and stock option awards vest at the end of three years. Each named executive participates in these variable incentive plans.

 

 

Performance measures — Our STI is based on corporate objectives approved by the board, which aligns compensation with our strategies and goals. In addition, we use a combination of performance measures and weightings under the different incentive plans to balance incentives and avoid undue focus on any particular measure and to discourage excessive risk taking. STI awards are based on individual and corporate performance measured against pre-established objectives.

 

 

Pay for performance — Compensation design is based on pay for performance.

 

 

Plan governance and risk mitigation — The human resources and compensation committee works with management and the safety, health and environment committee to set corporate goals for all incentive plans that measure corporate results. Through this process compensation-related risks are considered when the goals are set and compensation is based in part on managing specific operational risks.

The human resources and compensation committee also has the discretion to reduce or increase plan payouts. The committee used its discretion to reduce the STI bonus to the named executives in two of the last five years, and to increase the payout for 2010 because of the excellent corporate results sustained over a two-year period.

Our share ownership guidelines align the interests of executives and shareholders, mitigate risk-taking behaviour and are competitive with the market.

While Mercer did not identify any material risks in our compensation policies and practices, it did identify a few opportunities for enhancing our ability to mitigate risk which will be considered as part of the committee’s comprehensive review of our compensation program in 2012.

Independent advice

The board and board committees can retain independent consultants as needed to assist them in carrying out their duties and responsibilities.

The human resources and compensation committee retained Hugessen Consulting Inc. (Hugessen) as its independent compensation consultant from November 2008 to November 2011. The committee reviews all fees and the terms of consulting services provided by the compensation consultant. The committee is ultimately responsible for its own decisions, which may take into consideration more than the information and recommendations provided by its compensation consultant or management.

 

50    CAMECO CORPORATION


Hugessen’s mandate in 2011 included:

 

 

assisting the committee in developing compensation recommendations for the CEO

 

 

reviewing management’s compensation recommendations for the other executives

 

 

reviewing the management proxy circular

 

 

researching and summarizing current governance issues and emerging topics.

In December 2011, the committee retained Meridian as its independent consultant. The committee’s consultant reviews the executive compensation plans and peer group every few years as a good compensation practice. Meridian’s mandate in 2012 includes a thorough review of our compensation plans and peer group. They will report their findings and recommendations to the committee later in the year.

Meridian’s mandate in 2011 and 2012 includes:

 

 

a presentation to the committee on managing compensation-related risk

 

 

reviewing and assessing Mercer’s compensation-related risk assessment (completed in January 2012)

 

 

assisting the committee in developing compensation recommendations for the CEO in February 2012

 

 

assisting the committee in reviewing management’s compensation recommendations for the other named executives in February 2012.

Management has retained Mercer as its external consultant on human resource matters to operate independently from the committee’s consultant and avoid any conflicts of interest.

Management generally does not retain the committee’s consultant, however if it does, it must receive prior approval from the committee.

The table below lists the fees the committee paid Hugessen and Meridian in 2010 and 2011. Neither company provided services to management in 2010 or 2011.

 

     2011     2010  

Hugessen Consulting Inc.

    

Executive compensation-related fees

   $ 62,671      $ 104,417   

All other fees

     —          —     

Percent of work provided to the committee

     100     100

Meridian Compensation Partners

    

Executive compensation-related fees

   $ 8,044        —     

All other fees

     —          —     

Percent of work provided to the committee

     100     100

 

   2012 MANAGEMENT PROXY CIRCULAR   51


Director compensation

Compensation discussion and analysis

Four elements make up our director compensation framework:

 

 

Approach

 

 

Share ownership

 

 

Fees and retainers

 

 

Assessing the program.

1 Approach

 

Our director compensation is designed to:

 

 

recruit and retain qualified individuals to serve as members of our board of directors and contribute to our overall success

 

 

align the interests of our board members with those of our shareholders by requiring directors to hold a multiple of their annual retainer in shares or share equivalents, and receive at least 60% of their annual retainer in deferred share units (DSUs) until they meet the share ownership guidelines

 

 

offer competitive compensation by positioning director compensation at the median of director compensation paid by companies that are comparable in size and in a similar business.

About DSUs

A deferred share unit (DSU) is a notional share that has the same value as one Cameco common share. DSUs earn additional units as dividend equivalents, at the same rate as dividends paid on our common shares.

DSUs are paid out to directors in cash when they retire from the board. A retiring director can defer the payment and decide to receive all or a portion of the cash payout the following year.

 

 

2 Share ownership

We introduced share ownership guidelines for our directors in 2003 to more closely align their interests with those of our shareholders.

Directors must hold three times their annual retainer in Cameco shares or DSUs. If a director joined the board before July 1, 2010, he or she has seven years from the date they joined to meet the minimum requirement, while any director joining the board after this date has five years to meet the guidelines. To determine whether a director meets the share ownership guidelines, we value shares and DSUs at the price they were acquired or the year-end closing price of Cameco’s shares on the TSX, whichever is higher.

As of December 31, 2011, all of the nominated directors are in compliance with the guidelines. They either hold the minimum requirement, or have additional time to acquire the necessary holdings. Only Mr. Camus (who joined the board in 2011) and Mr. Deranger (who joined the board in 2009) must continue to acquire DSUs or Cameco shares, and they have until 2016 to meet the target. As president and CEO, Mr. Gitzel complies with the share ownership guidelines for executives, which are described in detail starting on page 67.

If a director does not meet the target by the required date, or does not maintain the minimum required, the human resources and compensation committee will review the situation and recommend a course of action to the board. The board has the discretion to decide what action, if any, should be taken.

As of December 31, 2011, directors held $7,011,460 worth of DSUs based on the year-end closing price on the TSX of $18.41 per common share.

 

52    CAMECO CORPORATION


3 Fees and retainers

Our director compensation includes:

 

 

an annual retainer (higher retainer for the non-executive chair of the board)

 

 

an annual fee for serving as a committee chair or committee member

 

 

an attendance fee for each set of board and committee meetings they attend

 

 

a travel fee to cover the necessary travel time to attend board and committee meetings.

Directors who are employees of Cameco or any of our affiliates (such as Mr. Gitzel, our president and CEO) do not receive any compensation for serving as a director.

As of July 1, 2010, the non-executive chair receives a flat fee retainer, so Mr. Zaleschuk no longer receives any committee retainers, or attendance fees for the board or committee meetings he attends.

We pay for any reasonable travel and other out-of-pocket expenses relating to their duties as directors.

The table below shows our director fee schedule, which went into effect on July 1, 2010. All amounts are in Canadian dollars, unless otherwise indicated.

 

Annual retainer    ($)  

Non-executive chair of the board

     340,000   

Other directors

     140,000   

Committee members (per committee)

     5,000   

Committee chairs

  

Audit committee and Human resources and compensation committee

     20,000   

Other committees

     11,000   

Attendance fees (per meeting)

  

Board meetings

     1,500   

Audit committee meetings

     2,000   

Other committee meetings

     1,500   

Travel fees (per trip)

  

Greater than 1,000 km within Canada

     1,700   

From the US

     1,700  (US) 

From outside North America

     2,700  (US) 

We pay directors their annual retainer 60% in DSUs and the balance in cash. They have the option of receiving the balance and any additional fees in DSUs, as long as it is in increments of 25%, and they make this decision before the beginning of the fiscal year.

As of 2010, any director who has met the share ownership target can decide whether to receive all of their retainer and fees in cash, or a portion (0%, 25%, 50% or 75%) in cash and the balance in DSUs, as long as they make this decision before the beginning of the fiscal year. Previously, all directors had to receive at least 60% of their annual retainer in DSUs.

We revised this policy because we have several long-standing directors who hold more DSUs or Cameco shares than the minimum requirement. Directors who elect to receive all of their compensation in cash, continue to increase their share ownership through dividend equivalents paid in DSUs.

 

   2012 MANAGEMENT PROXY CIRCULAR   53


4 Assessing the program

The human resources and compensation committee reviews director compensation every few years and makes recommendations to the board. There were no changes in 2011.

The committee conducted a review in 2009. Working with Hugessen, its independent consultant, the committee assessed director compensation against:

 

 

the compensation peer group of 21 companies we use to assess executive compensation

 

 

broader market trends using five different third party sources

 

 

research with various Canadian institutional shareholders.

The review indicated that our director compensation was approximately at the median, while the compensation for the non-executive board chair was below the median.

Both the committee and Hugessen recommended that the board not make any changes to the compensation program in 2009 and that a further review be carried out in 2010.

Hugessen conducted a further review in 2010, examining our compensation peer group and the broader market using the most current market data available. The committee reviewed the report and recommended the following changes to the board, to maintain the directors’ compensation approximately at the median of our compensation peer group:

Fees and retainers

 

 

changing the annual retainer for the non-executive chair of the board to a flat fee of $340,000, covering his retainer and all meeting fees

 

 

increasing the annual retainer for directors from $120,000 to $140,000

 

 

increasing the retainer for the chairs of the audit committee and human resources and compensation committee from $15,000 to $20,000, and from $10,000 to $11,000 for the other committee chairs

 

 

increasing the retainer for committee members from $3,500 to $5,000

 

 

increasing the travel fees per trip from $1,500/$1,500(US)/$2,500(US) to $1,700/$1,700(US)/$2,700(US)

Share ownership guidelines

 

 

increasing the period for meeting the guidelines from five to seven years if a director joined the board before July 1, 2010, and requiring any director joining after this date to meet the guidelines in five years.

These changes were approved by the board and went into effect on July 1, 2010.

The board approved a further change to the directors’ share ownership guidelines in December 2010 on the recommendation of the human resources and compensation committee. Directors must maintain their level of share ownership once they meet the guidelines, however we value their holdings on an ongoing basis using the closing price of our shares on the TSX or the book value, whichever is higher.

See pages 52 and 53 for more information about the share ownership guidelines and the director fee schedule.

 

54    CAMECO CORPORATION


2011 details

Mr. Camus, Mr. Colvin, Mr. Curtiss, Mr. Gowans and Mr. Hushovd received their compensation in US dollars because they live outside of Canada. The amounts relating to their compensation were converted from US dollars to Canadian dollars at the following exchange rates:

 

     March 31, 2011     June 30, 2011     September 30, 2011     December 23, 2011  

$1 (US)

   $ 0.9713  (Cdn)    $ 0.9706  (Cdn)    $ 1.0366  (Cdn)    $ 1.0211  (Cdn) 

Director compensation table

The table below shows what we paid to each non-executive director in 2011.

 

     Retainer      Attendance fees                   

% of total

retainer and

 

Name

   Board
($)
     Committee
member
($)
     Committee
chair
($)
     Board
($)
     Committee
meetings
($)
     Travel fee
($)
     Total paid
($)
     fees paid in
DSUs
(%)
 

Daniel Camus

     88,818         9,516         —           15,357         13,862         10,934         138,487         69   

John Clappison

     140,000         5,000         20,000         22,500         17,500         6,800         211,800         70   

Joe Colvin

     139,986         5,000         10,999         22,639         11,999         8,535         199,158         0   

James Curtiss

     139,986         5,000         19,998         24,097         14,987         8,535         212,603         0   

Donald Deranger

     140,000         10,000         —           24,000         10,500         1,700         186,200         59   

James Gowans

     139,986         14,998         —           22,542         13,334         10,799         201,659         100   

Nancy Hopkins

     140,000         5,000         11,000         22,500         16,000         1,700         196,200         25   

Oyvind Hushovd

     139,986         14,998         —           24,097         23,474         13,556         216,111         50   

George Ivany

     53,077         5,687         —           9,000         11,500         5,100         84,364         0   

Anne McLellan

     140,000         15,000         —           24,000         21,000         1,700         201,700         25   

Neil McMillan

     140,000         8,118         11,000         22,500         19,000         1,700         202,318         50   

Victor Zaleschuk

     340,000         —           —           —           —           1,700         341,700         50   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Total

     1,741,839         98,317         72,997         233,232         173,156         72,759         2,392,300      
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

Notes:

Mr. Gitzel does not receive any compensation as a director because he is compensated in his role as president and CEO. See the Summary compensation table on page 91 for his compensation.

Mr. Zaleschuk is the non-executive chair of the board, and his board retainer reflects the fees paid to him in this capacity.

 

   2012 MANAGEMENT PROXY CIRCULAR   55


Incentive plan awards DSUs

The next table shows what each non-executive director earned in DSUs in 2011. It includes information for two mandatory tables Incentive plan awards — Value vested or earned during the year and Outstanding share-based and option-based awards. As only one director has options, that information has been set out separately.

Directors received a portion of their retainer and fees in cash, and a portion in DSUs.

 

 

Share-based awards — Value vested during the year is the amount that directors received in DSUs in 2011, valued as of their grant dates. It includes all of the DSUs that vested as of the grant date, including DSUs granted as dividend equivalents in 2011.

 

 

Share-based awards — Market or payout value of vested share-based awards not paid out or distributed are all of the directors’ DSUs which have vested but do not pay out until after the director resigns or retires from the board. These DSUs were valued at $18.41 per DSU, the closing price of a Cameco share on the TSX on December 31, 2011.

 

Name

   Share-based awards  
   Value vested
during  the year
($)
     Market or payout
value of vested
share-based awards
not paid out
or distributed
($)
 

Daniel Camus

     96,169         90,181   

John Clappison

     151,851         354,923   

Joe Colvin

     21,673         1,536,472   

James Curtiss

     24,497         1,736,639   

Donald Deranger

     111,450         189,905   

James Gowans

     204,154         279,465   

Nancy Hopkins

     53,262         323,750   

Oyvind Hushovd

     115,543         587,341   

George Ivany

     141         0   

Anne McLellan

     54,917         344,102   

Neil McMillan

     107,294         488,237   

Victor Zaleschuk

     187,358         1,080,443   
  

 

 

    

 

 

 

Total

     1,128,309         7,011,458   
  

 

 

    

 

 

 

George Ivany retired from the board in May 2011 and was paid all of his outstanding DSUs in 2011.

See Director profiles starting on page 9 for the number of DSUs and Cameco shares held by each director.

 

56    CAMECO CORPORATION


Incentive plan awards — options

We stopped granting options to directors on October 28, 2003.

The table below lists the non-executive directors who had unexercised option awards as at December 31, 2011. All of the directors’ options have vested, and we stopped awarding reload options in 1999. In 2004 Mr. Curtiss exercised his reload options to acquire additional options with a 10-year term. The additional options are exercisable at the closing market price of Cameco shares on the day before the reload options were exercised.

 

     Option-based awards  

Name

   Grant
date
(mm/dd/yyyy)
     Number of
securities
underlying
unexercised
options
(#)
     Option  exercise
price
($)
     Option expiry
date
(mm/dd/yyyy)
     Value of
unexercised
in-the-money
options
($)
 

James Curtiss

     09/21/2004         3,300         15.79         09/20/2014         8,639.40   

Loans to directors

As of March 8, 2012, we and our subsidiaries had no loans outstanding to any current or former directors, except routine indebtedness as defined under Canadian securities laws.

 

   2012 MANAGEMENT PROXY CIRCULAR   57


Executive compensation

Message to shareholders

Dear Shareholder,

Cameco’s executive compensation program has developed over the years with strong principles, a disciplined process and thorough research and analysis to ensure our compensation decisions are grounded and competitive with the market we compete with for leadership talent.

The human resources and compensation committee upholds these values in the best interests of Cameco and its shareholders. I’ve had the privilege of serving as chair of this committee for the past nine years and as a member of the Cameco board since 1994.

 

The committee has made several recommendations to the board over the years, from establishing threshold performance and limiting incentive pay to increasing share ownership requirements and holding a ‘say on pay’ advisory vote. This year’s work plan included an external compensation-related risk assessment with a view to carrying out a thorough review of Cameco’s executive compensation program in 2012. You can find more information about the committee’s activities on page 40 and compensation governance on page 48.

The committee recommends executive compensation that is fair and linked to performance, and seeks independent, third party advice on compensation matters as appropriate. The ongoing challenge in compensation decision-making is balancing risk and reward — our compensation must attract, retain and motivate our executives to deliver strong performance without encouraging them to take excessive risks to the detriment of the company.

Cameco’s vision is to be a dominant nuclear energy company producing uranium fuel and generating clean electricity. Our strategy is to increase annual uranium production to 40 million pounds by 2018 and to invest in opportunities across the nuclear fuel cycle that we expect will complement and enhance our business.

We believe this strategy will advance our growth, strongly position us for the future and enhance our value over time.

 

 

Cameco’s executive compensation program today includes base salary, short and long-term incentives, pension and other benefits. Incentive awards are variable or at-risk compensation, based on both corporate and individual performance. Long-term incentive awards are equity-based so there is added risk, a sharper focus on share value and a close alignment of the executives’ interests with those of our shareholders. Their ultimate value depends on future events, so the realized value can be significantly different than the grant value. Our most senior people have the highest amount of at-risk compensation.

2011 was a challenging year for the nuclear industry. The effects of the earthquake and tsunami in Japan last March caused massive destruction along the Pacific coastline of Japan and damage to the Fukushima Daiichi I and II Nuclear Power Plants and their cooling systems. This had an immediate negative effect on uranium prices and the share price of companies involved in uranium exploration and development. Cameco’s share price declined 30% in the three months following this event, however between March 11 and December 31, 2011, Cameco shares outperformed the common shares of other publicly traded pure play uranium producers.

The events in Japan also caused uncertainty in outlook for the nuclear industry over the near to medium term, but the long-term fundamentals for nuclear energy remain strong and Cameco is well positioned to take advantage of those fundamentals. In 2011, Cameco achieved strong performance against the mix of targets that are designed to position the company for future success and deliver shareholder value. Our safety and environmental performance, though not as strong as our record-setting performance in 2010, remained strong. Our production and unit costs were on track and our financial results outstanding.

Some of the key performance highlights are noted below.

2011 performance highlights

Financial

 

 

adjusted net earnings of $509 million compared to $497 million in 2010

 

 

$850 million in cash from operations (before working capital changes) compared to $740 million in 2010

 

 

record annual revenue and gross profit from our nuclear business

 

 

record annual revenue and realized prices in our uranium segment

Operating

 

 

achieved uranium production that was 3% higher than third quarter guidance

 

 

matched our 2010 production record at McArthur River/Key Lake

 

 

continued progress at Cigar Lake — broke through on the 480 metre level putting it on the path to becoming another source of high-grade, low-cost production

 

 

reached agreement with the Cigar Lake joint venture partners to enhance the mine’s economics by milling 100% of the ore at AREVA’s McClean Lake mill

 

58    CAMECO CORPORATION


 

realized benefits of improved efficiency and reliability of equipment at Key Lake

 

 

completed construction of the acid, steam and oxygen plants at Key Lake

 

 

signed a memorandum of agreement to increase production at Inkai from 3.9 million pounds (100% basis) to 5.2 million pounds (100% basis)

Health and safety

 

 

year-end combined LTI frequency for Cameco employees and long-term contractors was 0.3 versus a target of 0.4

 

 

year-end severity measure was exceptional, at 8.9 versus a target of 25

Despite these positive results, we continue to strive for improvement by examining incidents such as near misses to apply lessons learned and avoid injuries in the future.

Awards and recognition

 

 

named a Top 100 Employer in Canada and among the 10 Best Companies to Work For in Canada (third year in a row) and also received awards as one of Saskatchewan’s Top Employers, Canada’s Best Diversity Employers and a Top Employer of Canadians over 40

Environment

 

 

31 level III or lower environmental incidents occurred in 2011, in line with our long-term average of 29, but up significantly from the 22 incidents recorded in 2010. The rise was partly associated with increased revitalization and construction activity, reminding us that we must maintain a strong focus on the environment as we continue to advance our growth strategy.

Supportive communities

 

 

sustained a high corporate trust rating in Saskatchewan and the US while achieving a 5% increase in corporate trust at Port Hope

 

 

achieved a record level of local support for Cameco’s Port Hope operation and a very high level of support for our mining activities in the US

 

 

completed a memorandum of understanding for a mine development agreement with the Martu, the local indigenous people at our Kintyre project

Cameco accomplished these achievements during a year that saw significant changes to its senior management team:

 

 

Tim Gitzel, formerly president, succeeded Gerald Grandey as CEO upon his retirement in June 2011

 

 

Ken Seitz assumed the position of senior vice-president, marketing and business development on January 1, 2011, when George Assie retired in December 2010. Mr. Seitz was formerly vice-president, marketing strategy and administration.

 

 

Grant Isaac was appointed senior vice-president and CFO upon Kim Goheen’s retirement in July 2011. Mr. Isaac was formerly senior vice-president, corporate services

 

 

Alice Wong was appointed senior vice-president, corporate services in July 2011. Ms. Wong was formerly vice-president, safety, health, environment, quality and regulatory relations (SHEQ).

In summary, we continue to make good progress towards our goal of increasing annual uranium production to 40 million pounds by 2018. In addition, we have positioned the company to withstand near to mid-term uncertainty with long-term uranium sales contracts that provide upside with improving uranium prices and downside protection in the event of a decline in prices. These long-term sales contracts total about 290 million pounds of uranium and many extend beyond 2016. As a result we expect to have a solid revenue stream for years to come, even if uranium market prices decline.

Despite these accomplishments, our share price performance continues to be negatively affected by the near to mid-term uncertainties in the world nuclear industry specifically, and economic uncertainty generally. As such, our total shareholder return underperformed in 2011 (both one-year and three-year averages).

We continue to stay focused on our growth strategy which we expect will deliver increased value to shareholders over time. Given the long-term nature of the nuclear business, we recognize this poses challenges in the near term as our shares will likely continue to react to events unrelated to actual company performance. We will continue to look for near-term opportunities to increase shareholder value, while maintaining our focus on delivering our long-term strategy.

 

   2012 MANAGEMENT PROXY CIRCULAR   59


Strong leadership

The board believes that strong leadership, a clear strategic direction and a pay for performance philosophy are key to driving solid, long-term results.

Confident in the strength and ability of the new leadership team to continue Cameco’s growth, Mr. Grandey announced in February 2011 his plans to retire as CEO and as a member of the board of directors at the end of last June. On the same day as his announcement, the board, on the committee’s recommendation, appointed Mr. Gitzel as Cameco’s next CEO as of July 1, 2011, signaling the strength of the company’s succession planning process and executive talent.

Compensation decisions

This next section discusses our executive compensation program and the pay decisions affecting our CEO, CFO and the three next highest compensated officers (named executives) as of December 31, 2011:

 

 

Tim Gitzel, President and Chief Executive Officer (CEO)

 

 

Grant Isaac, Senior Vice-President and Chief Financial Officer (CFO)

 

 

Robert Steane, Senior Vice-President and Chief Operating Officer (COO)

 

 

Ken Seitz, Senior Vice-President, Marketing and Business Development

 

 

Gary Chad, Senior Vice-President, Governance, Law and Corporate Secretary.

It also includes the compensation for Gerald Grandey, former CEO who retired from Cameco on June 30, 2011, and Kim Goheen, former Senior Vice-President and CFO who retired on July 14, 2011.

See the following sections for key information about executive compensation:

 

Compensation timeline

     62   

Share performance

     63   

Approach

     65   

Annual decision-making process

     69   

Measuring performance

     70   

Compensation components

     75   

CEO compensation summary

     90   

2011 results

     91   
 

 

Corporate performance remains the single biggest factor affecting the board’s decisions on executive pay and the compensation of Cameco’s most senior people. In making our compensation decisions, we are also sensitive to the retention and recruitment challenges we currently face in Saskatoon. The board of directors reviewed Cameco’s 2011 performance and the analysis and recommendations by this committee, and approved the following decisions on executive pay:

 

 

modest base salary increases for 2012 of 2% for each named executive, other than Ken Seitz, to recognize strong corporate performance yet weak share performance. Mr. Seitz received a 5% increase to recognize his growth in the position and scope of his responsibilities.

 

 

annual bonuses at approximately 109% of target for the named executives to recognize corporate performance which exceeded the short-term incentive plan targets, which already contain a significant “stretch” component.

When Mr. Gitzel became president and CEO on July 1, 2011, he received a retention incentive consisting of 50,000 stock options of which one-third vest in each of the next three years (the first one-third vests June 30, 2012), and 70,000 restricted share units that do not vest until July 1, 2014, with a total grant date fair value of $2,322,800. As disclosed in last year’s management proxy circular, the board approved this retention bonus in February 2011 with Mr. Gitzel’s appointment as CEO, signaling the value of his leadership and importance of the succession plan. You can find more information about the CEO’s compensation on page 90.

The timeline of the compensation components on page 62 gives more context to the 2011 compensation decisions above. See also Share performance and executive compensation on page 63 for the trend in our share performance and total compensation awarded to the named executives over the past five years.

 

60    CAMECO CORPORATION


Changes in 2012

In addition to its regular duties and responsibilities in 2011, the committee decided to conduct a thorough review of Cameco’s executive compensation programs and peer groups in 2012. While the committee reviews our compensation programs every year, this periodic thorough review allows for a more comprehensive analysis of our programs against the market, our peers, best practices, the regulatory landscape and emerging trends in compensation. The review will help ensure Cameco’s compensation programs and approach are fair, competitive and achieve an appropriate balance between risk and reward.

The committee values the importance of receiving independent advice on compensation matters, and has worked closely with an external consultant for many years. For the past three years, it has worked with Hugessen Consulting Inc. to receive independent third party advice, research and analysis, external expertise on compensation and human resource matters particularly related to executive compensation and access to a knowledgeable sounding board.

The committee retained Meridian Compensation Partners as its independent consultant beginning in December 2011. The committee will work closely with them on the compensation review.

The committee is committed to overseeing all compensation matters in the best interests of Cameco and its shareholders.

Sincerely,

(signed)

James Curtiss

Chair, Human resources and compensation committee

 

   2012 MANAGEMENT PROXY CIRCULAR   61


Compensation timeline

The chart below shows the different components that make up total compensation for our executives and the timeline for each component.

 

LOGO

Our short-term incentive plan (STI) offers the potential for our executives to earn a cash bonus based on their success in achieving pre-established corporate and individual performance objectives for the year.

Our long-term incentives (LTI) include a stock option plan and performance share unit (PSU) plan, which have different terms for vesting and payouts. We offer these incentive plans to drive longer-term corporate performance.

 

62    CAMECO CORPORATION


Share performance and executive compensation

The graph below shows total shareholder return, comparing the performance of Cameco shares (including reinvestment of dividends) to the performance of the S&P/TSX Composite Total Return Index from 2006 to 2011. It shows what $100 invested in Cameco shares and the index at the end of 2006 would be worth at the end of each of the last five years.

The bar chart shows the trend in total compensation paid to our named executives over the same period. Total compensation paid to the named executives tracks closely with our share performance except for in 2008 and 2011:

 

 

Our share performance declined in 2008, but total compensation was higher than 2007 because of strong financial results. We reduced the short-term incentive bonus because we did not meet two key operational objectives. Since we grant long-term incentives early in the year, the 2008 LTI awards were paid before the significant downturn in the market and had a higher grant date value than the previous year.

 

 

Total compensation increased in 2010 because of our solid performance, delivering strong results in virtually all aspects of our business.

 

 

In 2011, our total compensation declined proportionately less than the decline in share performance. We had excellent financial and operating results, however the effects of the earthquake and tsunami to the Fukushima nuclear power plants in Japan in March 2011 had an immediate negative effect on uranium prices and the share price of companies involved in uranium exploration and development. Our share price declined 30% in the three months following this event.

 

 

The base salaries for the five equivalent executive positions decreased from $3.1 million in 2010 to $2.6 million in 2011, the STI awards decreased from $3.9 million in 2010 to $2.0 million in 2011, and the LTI grants decreased from $7.7 million in 2010 to $5.9 million in 2011. These reductions were partly offset by a retention incentive consisting of restricted share units (RSUs) and options that were awarded to Mr. Gitzel when he was appointed president and CEO and valued at $2.3 million. The RSUs do not vest until July 2014 (see page 92 for details).Three of our named executives in 2011 are relatively new in their positions and are therefore compensated lower in their range even though we target compensation at the median of our compensation comparator group. Three previous named executives had been in their positions longer and were compensated at higher levels to recognize their progression and experience in the role.

 

LOGO

 

     2006      2007      2008      2009      2010      2011  

Cameco

   $ 100       $ 84       $ 45       $ 74       $ 88       $ 41   

S&P/TSX Composite Total Return Index

     100         110         74         99         117         107   

Grant date value of total compensation for the named executives (in $ millions)

     11.5         10.3         11.7         10.7         15.8         15.0   

The grant date value of total compensation for the named executives includes the total compensation disclosed in the summary compensation table in our previous management proxy circulars and does not reflect the decrease in value of share based compensation caused by the decline in our share price (illustrated by the realizable compensation information for our CEO on page 90), which aligns executive compensation with our share price.

 

   2012 MANAGEMENT PROXY CIRCULAR   63


The grant date value of total compensation in each year only includes five named executives, which means for 2011 it includes the named executives who were employed at the end of the year. The grant date value above includes the following named executives:

 

 

Tim Gitzel, Grant Isaac, Robert Steane, Ken Seitz and Gary Chad for 2011

 

 

Gerald Grandey, Kim Goheen, Tim Gitzel, George Assie and Gary Chad for 2007 to 2010

 

 

Gerald Grandey, Kim Goheen, Terry Rogers, George Assie and Gary Chad for 2006.

 

64    CAMECO CORPORATION


Executive compensation

Compensation discussion and analysis

 

1 Approach

Our executive compensation program is designed to accomplish four goals:

1. attract, retain and motivate executives operating in a highly demanding, complex and competitive business environment

2. link executive compensation to corporate performance

3. motivate executives to create shareholder value by:

 

   

using total shareholder return as one of our performance measures

 

   

rewarding them when they successfully achieve corporate and individual performance objectives over the short and long term

 

   

ensuring their total compensation includes a significant portion that is at risk and tied to share value, reinforcing the importance of strong leadership and its ability to influence business outcomes and financial performance

 

4. position our total direct executive compensation at the median of our compensation peer group, meaning half of the companies in our peer group pay more than we do and half pay less.

The program covers the entire executive team:

 

 

our president and CEO

 

 

five senior vice-presidents (including four who are named executives).

Compensation targets

We target total compensation at the median of our compensation peer group, and benchmark base salaries at the median.

The charts below show the 2011 target mix for direct compensation for our CEO and other senior executives, and the amount of variable or at-risk compensation. The board has discretion to grant higher compensation for exceptional performance.

 

LOGO

In February 2011, the board, on the recommendation of the human resources and compensation committee, approved an increase in the 2011 STI target percentages for each executive position to align total direct compensation for our executives with our compensation peer group and market compensation levels.

The board also approved the committee’s recommendation to assign fixed LTI target percentages for each executive position, aligning with the practice of the majority of our compensation peer group. These target percentages are set near the median of the market data based on a review of the current market data available.

The table below shows the STI and LTI target percentages for the named executives. When Mr. Gitzel became president and CEO on July 1, 2011, his STI target percentage further increased from 70% to 95% for the second half of the year and his LTI target percentage for the second half of the year remained at 300%.

The table also shows the actual short and long-term incentives for 2011, expressed as a percentage of base salary. The STI and LTI target percentages are comparable to those of our compensation peer group.

The board has the discretion to modify or reduce incentive awards calculated under the plans, and has done so in the past. In previous years, the board decided, on management’s recommendation, to make significant cuts to incentive awards in 2006 and 2008. In 2006, the CEO’s STI award was reduced 100% and the other executives’ awards were reduced by 20% to 47%. In 2008, the CEO’s STI award was reduced 23% and the other executives’ awards by 18%. In 2010 the board exercised its discretion and increased STI plan payouts by 20% for the senior vice-presidents and the president, and by 85% for the CEO.

 

   2012 MANAGEMENT PROXY CIRCULAR   65


Position

  

Target at-risk compensation

  

Actual at-risk compensation

   STI target (% of base salary)    Actual 2011 STI award (% of 2011 base salary)

CEO/President

   95% / 70%    90%

Senior vice-presidents

   50 to 70%    57 to 81%
   LTI target (% of base salary)    Actual 2011 LTI award granted in 2011 (% of 2011 base salary)

CEO (Grandey)

   300%    258%

President (Gitzel)

   300%    280%

Senior vice-presidents

   150 to 250%    160 to 262%

The senior vice-presidents in the above table include Mr. Isaac, Mr. Steane, Mr. Seitz, Mr. Chad and Mr. Goheen. In calculating the percentages, Mr. Grandey’s salary was annualized, and Mr. Gitzel’s base salary was an average of his salary as president for the first half of the year and president and CEO for the second half. Mr. Isaac’s base salary is a blend of his salary as senior vice-president, corporate services until July 14, 2011, and senior vice-president and CFO for the balance of 2011. Mr. Grandey and Mr. Goheen did not receive an STI bonus for 2011 because they retired mid-year.

Research and benchmarking

We consider the national, provincial and industry compensation forecasts and benchmark our executive compensation against our compensation peer group in making compensation decisions to ensure our compensation is fair and competitive. This includes benchmarking individual compensation components and total compensation by level of executive. We also consider internal equity so we are balanced in our decision-making.

In 2008, the human resources and compensation committee, with the support of its external consultant, reviewed the list of companies we use to assess our corporate performance and executive pay. As a publicly traded, global nuclear energy company based in Canada, we have no peers that are directly comparable, so the committee established a performance peer group of companies with a subset of Canadian companies to assess compensation levels. The compensation peer group excludes 13 companies in the performance peer group because they are larger size companies, income trusts or US companies, and the committee felt their compensation was not comparable.

Peer groups

The performance peer group consists of 34 companies, including 21 companies in the compensation peer group and 13 global companies with a larger revenue base and representing the energy, gold and coal mining industries. The committee uses the performance peer group to calculate the relative total shareholder return (TSR), a performance measure under our PSU plan, and to compare Cameco’s growth, return and market performance against our peers.

The compensation peer group consists of 21 Canadian companies, representing a cross-section of capital-intensive companies from different sectors that are similar to us in terms of size of assets and revenue. We typically target the median of this peer group for total direct compensation although the committee has the discretion to adjust the target up or down, depending on our corporate performance and other factors like market conditions. We compare the compensation of our executives against comparable executive positions from the compensation peer group when we determine the compensation for our executive officers. Total direct compensation for our named executive positions was generally at the median of our compensation peer group for 2011.

 

66    CAMECO CORPORATION


The table below lists the companies in the two peer groups (there was no change to either group in 2011):

 

Company name

   Performance peer group    Compensation peer group

Agnico-Eagle Mines Ltd.

     

Agrium Inc.

     

Alpha Natural Resources Inc.

     

Arch Coal Inc.

     

Barrick Gold Corporation

     

Canadian Natural Resources Ltd.

     

Canadian Oil Sands Trust

     

CONSOL Energy Inc.

     

Emera Inc.

     

Enbridge Inc.

     

EnCana Corp.

     

Enerplus Resources Fund

     

First Quantum Minerals Ltd.

     

Fortis Inc.

     

Goldcorp Inc.

     

Husky Energy Inc.

     

Imperial Oil Ltd.

     

Inmet Mining Corporation

     

Kinross Gold Corp.

     

Lundin Mining Corp.

     

Massey Energy Co.

     

Methanex Corp.

     

Nexen Inc.

     

Peabody Energy Corp.

     

Penn West Energy Trust

     

Potash Corp. of Saskatchewan

     

Sherritt International Corporation

     

SNC Lavalin Group Inc.

     

Suncor Energy Inc.

     

Talisman Energy Inc.

     

Teck Cominco Ltd.

     

TransAlta Corp.

     

TransCanada Corp.

     

Yamana Gold, Inc.

     

Share ownership

One of the key ways we align the interests of management and shareholders is by requiring our executives to own Cameco shares. We introduced share ownership guidelines for our executives on January 1, 2005 as a multiple of base salary as follows:

 

 

CEO – 4 x base salary

 

 

President – 3 x base salary

 

 

senior vice-presidents – 2 x base salary

 

 

vice-presidents – 1 x base salary

Executives were required to meet the share ownership targets by January 1, 2010 or within five years of being appointed to the executive position, whichever is later.

The table below shows the number of shares held by our named executives at December 31, 2011. We calculate the target value of share ownership by using the 2011 base salary and the multiplier for the position of the named executive.

Share value is based on $18.41, the closing price of Cameco common shares on the TSX on December 31, 2011, or the executive’s purchase price, whichever is higher.

The board also approved the recommendation by the human resources and compensation committee in 2010 to allow executives to use unvested PSUs towards meeting their share ownership guidelines, as long as:

 

 

at least 50% of their holdings are in Cameco common shares

 

 

they use a PSU estimate of 80% of target, net of taxes of approximately 50%.

 

   2012 MANAGEMENT PROXY CIRCULAR   67


The table below shows the ownership guidelines for each current named executive and their qualifying holdings as of December 31, 2011.

 

Name

   2011  base
salary

($)
     Multiple

 

     Target value
of  ownership

($)
     Value of
shares held

($)
     Value of
qualifying
PSUs

($)
     Total value of
shares and
qualifying PSUs
($)
    

Meets share

ownership guidelines

 

Tim Gitzel

     900,000         4 x         3,600,000         561,212         164,217         725,429       No — has met 20% of the target for the CEO. Has until 2016 to meet the requirement.

Grant Isaac

     450,000         2 x         900,000         49,715         19,146         68,861       No — has met 8% of the target for the CFO. Has until 2016 to meet the requirement.

Robert Steane

     550,000         2 x         1,100,000         602,036         157,884         759,920       No — has met 69% of the target for the COO. Has until 2015 to meet the requirement.

Ken Seitz

     400,000         2 x         800,000         57,749         11,407         69,156       No — has met 9% of the target for the Senior VP, Marketing and Business Development. Has until 2016 to meet the requirement.

Gary Chad

     463,000         2 x         926,000         1,120,318         147,280         1,267,598       Yes — by 137%

Notes:

Mr. Gitzel and Mr. Isaac were promoted to new executive positions in mid-2011, however their 2011 base salary and target value of ownership are based on their salaries in their new positions at the end of 2011.

Value of shares held is based on $18.41 per share, the closing price of our common shares on the TSX on December 31, 2011, or the purchase price of the shares, whichever is higher.

Value of qualifying PSUs assumes the PSUs pay out at 80% of target, less tax at 50%, and a share price of $18.41, the closing price of our common shares on the TSX on December 31, 2011, and limits the PSUs to 50% of the execu