Blueprint
Exhibit
99.3
Denison
Mines Corp.
Annual
General and Special Meeting of Shareholders
Thursday, May 3,
2018
Notice
of Meeting &
Management
Information Circular
Dated
March 22, 2018
Dear
Denison Shareholder,
On
behalf of the Board of Directors, I would like to invite you to
attend Denison’s annual general and special meeting of
shareholders on Thursday, May 3, 2018 at the offices of Blake,
Cassels & Graydon LLP, 199 Bay Street, Suite 4000, Commerce
Court West, Toronto, Ontario, Canada. In addition to the business
of the meeting set out in the attached Management Information
Circular, we will report on Denison’s performance in 2017 and
our plans for the future of Denison. You will also have an
opportunity to meet with and ask questions of management and
members of the Board of Directors.
It is important to vote your shares. The
attached Management Information Circular contains important
information about the meeting, how you can vote, the nominated
directors, governance of the Company and the compensation of
Denison’s executives and directors.
The Company’s
flagship asset, Wheeler River (63.3% owned), is the largest
undeveloped high-grade uranium project located in the
infrastructure rich eastern portion of the Athabasca Basin. In
2017, we completed another highly successful exploration drilling
program, resulting in an updated estimate of mineral resources in
early 2018. This program was designed to maximize the number of
indicated resources that could be brought forward for the
completion of a Pre-Feasibility Study planned for 2018. After
raising $63.5 million gross proceeds during the first part of 2017,
the Company is well funded to be able to advance Wheeler River
towards a production decision in the future. While the uranium
market continues to be volatile, testing historically low spot and
contract price levels, we have seen the largest producers in the
market exercise supply side discipline by curtailing production in
2017 and into 2018 (and possibly beyond). This is an important step
in rebalancing the uranium market and reminds us that the current
price environment is not sustainable and that higher prices will be
required to bring new or existing sources of production into the
market to meet rising demand.
The
management team, led by our President & CEO, David Cates,
continues to demonstrate that they are amongst the best in the
sector – focusing our activities on our core assets and
strategically positioning Denison as a high leverage Canadian
focused uranium development company, poised to become
Canada’s next uranium producer.
The
Board of Directors and I thank you for your continued support and
interest in Denison.
Sincerely,
Lukas
Lundin Executive Chairman
Denison
Mines Corp.
March
22, 2018
|
|
NOTICE
OF ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS
You are
invited to Denison Mine Corp.’s Annual General and Special
Meeting of Shareholders.
|
When
|
Where
|
|
Thursday, May 3,
2018
9:00
a.m. Reception
9:30
a.m. Meeting
|
The
offices of Blake, Cassels & Graydon LLP
199 Bay
Street Suite 4000
Commerce Court
West
Toronto, Ontario
M5L 1A9
|
The
purpose of the Meeting is:
(a) to receive
the consolidated financial statements of Denison Mines Corp. for
the year ended December 31, 2017, along with the auditor’s
report on the statements;
(b) to elect
seven directors to the Board for the upcoming year;
(c) to
reappoint the auditor for the upcoming year and to authorize the
directors to fix the remuneration of the auditor;
(d) to
consider an ordinary resolution ratifying and confirming the
Company’s new Share Unit Plan;
(e) to
consider an ordinary resolution ratifying and confirming the
previous grant of share units under the Company’s new Share
Unit Plan;
(f) to
consider a non-binding advisory resolution on the Company’s
approach to executive compensation; and
(g) to
transact such other business as may properly come before the
Meeting.
Your
vote is important. If you held shares in Denison Mines Corp. on
March 14, 2018, you are entitled to receive notice of and vote at
this Meeting or any postponement or adjournment of it.
This
notice is accompanied by the Management Information Circular which
describes who can vote, how to vote, and what the Meeting will
cover.
The
2017 Annual Report, including the audited consolidated financial
statements and related management’s discussion and analysis
for the year ended December 31, 2017, has been mailed to those
shareholders who requested a copy. This information is also
available on Denison’s website at www.denisonmines.com, on SEDAR
at www.sedar.com,
on EDGAR at www.sec.gov or by request to
the Corporate Secretary of the Company at 1100 - 40 University
Avenue, Toronto, Ontario M5J 1T1.
As
described in the “notice and access” notification
mailed to shareholders of the Company, Denison has opted to deliver
its Meeting materials to shareholders by posting them on its
website at www.denisonmines.com. The use
of this alternative means of delivery is more environmentally
friendly and more economical as it reduces the Company’s
paper and printing use and the Company’s printing and mailing
costs.
2018 DENISON NOTICE OF MEETING
The
Meeting materials will be available on the Company’s website
on March 27, 2018 and will remain on the website for one full year.
The Meeting materials will also be available on SEDAR at
www.sedar.com and
on the United States Securities and Exchange Commission website at
www.sec.gov on
March 27, 2018.
Shareholders who
wish to receive paper copies of the Meeting materials prior to the
meeting may request copies from the Company by calling
1-888-689-7842 or by sending an email to info@denisonmines.com no
later than April 24,
2018.
If you
are not able to attend the Meeting, please vote by using the proxy
form or voting instruction form included with the “notice and
access” notification and return it according to the
instructions provided before 9:30 a.m. (Eastern Time) on May 1,
2018.
Yours
truly,
Lukas
Lundin
Executive
Chairman
Dated
March 22, 2018
2018 DENISON NOTICE OF MEETING
MANAGEMENT
INFORMATION CIRCULAR
ABOUT
THIS CIRCULAR
You
have received this Circular because you owned shares of Denison
Mines Corp. on March 14, 2018, the record date. As a Shareholder,
you have the right to attend and vote, in person or by proxy, at
the Annual General and Special Meeting of Shareholders on May 3,
2018 (the “Meeting”).
Management is soliciting your proxy for the
Meeting. Management’s solicitation is being made by
mail and electronic means, at Denison’s expense. Proxies may
also be solicited personally or by telephone by directors,
officers, employees and agents of the Company.
The
Board of Directors has approved the contents of this document and
has directed management to make it available to you. The
information in the Circular is given as of March 22, 2018 unless
otherwise noted.
|
In this
Circular, Denison or
the Company
means
Denison
Mines Corp.,
Shareholders means holders of Denison’s common shares
and Shares means
Denison’s common shares.
|
This
Circular provides the information that you need to vote at the
Meeting.
●
If you are a
registered holder of Shares, you have been sent a proxy form that
you can use if you choose not to vote at the Meeting.
●
If your Shares are
held by a nominee, you may receive either a proxy form or voting
instruction form and should follow the instructions provided by the
nominee.
All amounts stated in this Circular are in Canadian dollars, unless
otherwise indicated. References to “USD$” mean United
States dollars.
VOTING
YOUR DENISON SHARES
Registered Shareholders
If you
were a registered Shareholder on the record date, you may vote in
person at the Meeting or give another person authority to represent
you and vote your Shares at the Meeting, as described below under
“Voting by Proxy”.
Non-Registered Shareholders
Your
Shares may not be registered in your name but in the name of a
nominee, which is usually a trust company, securities broker or
other financial institution. If your Shares are registered in the
name of a nominee, you are a non-registered Shareholder. Your
nominee is entitled to vote the Shares held by it on the record
date. Your nominee is required to seek your instructions as to how
to vote your Shares. You may vote your Shares through your nominee
or in person.
To vote
your Shares through your nominee, you should follow the
instructions of your nominee with respect to the procedures to be
followed for voting. Generally, nominees will provide
non-registered Shareholders with either: (a) a voting instruction
form for completion and execution by you, or (b) a proxy form,
executed by the nominee and restricted to the number of Shares
owned by you, but otherwise uncompleted. These procedures are to
permit non-registered Shareholders to direct the voting of the
Shares that they beneficially own.
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2018 DENISON MANAGEMENT INFORMATION
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If you
are a non-registered Shareholder and would like to vote your Shares
in person at the Meeting, you should take the following
steps:
1.
appoint yourself as the proxyholder by writing your own name
in the space provided on the voting instruction form or proxy form,
and
2. follow the
nominee’s instructions for return of the executed form or
other method of response.
Do not otherwise complete the form. Your vote, or your
designate’s vote, will be taken at the Meeting.
There
are two kinds of non-registered Shareholders (i) those who object
to their name being made known to the issuers of securities which
they own, known as objecting beneficial owners or
“OBOs” and (ii)
those who do not object to their name being made known to the
issuers of securities they own, known as non-objecting beneficial
owners or “NOBOs”.
In
accordance with the requirements of National Instrument 54-101 of
the Canadian Securities Administrators, Denison has elected to send
the notice of meeting, this Circular and proxy form (collectively,
the “Meeting
Materials”) indirectly to the NOBOs.
Denison
intends to pay for intermediaries such as stockbrokers, securities
dealers, banks, trust companies, trustees and their agents and
nominees (“Intermediaries”) to forward the
Meeting Materials to OBOs.
Voting by Proxy
If you
will not be at the Meeting or do not wish to vote in person, we
still encourage you to vote by using the proxy form or voting
instruction form provided. A proxy must be in writing and must be
executed by you or by your attorney authorized in writing, unless
you have chosen to complete your proxy by telephone or the
Internet, as described on the proxy form or voting instruction form
provided.
Your Proxy Vote and Appointing a Proxyholder
On the
proxy form, you can indicate how you want to vote your Shares or
you can let your proxyholder decide for you.
All
Shares represented by properly completed proxies received at the
Toronto office of Computershare Investor Services Inc. by 9:30 a.m. (Eastern time) on May 1,
2018 or not less than 48 hours (excluding Saturdays, Sundays
and holidays) before any adjourned or postponed Meeting will be
voted or withheld from voting at the Meeting. Proxies should be
delivered to:
Computershare
Investor Services Inc. Toronto Office, Proxy
Department
100
University Avenue
8th
Floor
Toronto, Ontario,
Canada M5J 2Y1
For
more information on how to vote, Shareholders may contact
Computershare by telephone at 1-800-564-6253 or by e-mail to
service@computershare.com.
If you
give directions on how to vote your Shares, your proxyholder must
vote (or withhold from voting) your Shares according to your
instructions, including on any ballot votes that take place at the
Meeting. If you have not specified how to vote on a particular
matter, then your proxyholder can vote your Shares as he or she
sees fit. Your proxy authorizes the proxyholder to vote and act for
you at the Meeting, including any continuation after an adjournment
of the Meeting.
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2018 DENISON MANAGEMENT INFORMATION
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A
proxyholder is the person you appoint to act on your behalf at the
Meeting and to vote your Shares. You may choose anyone to be your proxyholder,
including someone who is not a Shareholder of Denison.
Simply fill in the name in the blank space provided on the enclosed
proxy form. If you leave the space in the proxy form blank, the
persons designated in the form, who are officers of Denison, are
appointed to act as your proxyholder. If you have not specified whether or how to
vote on a particular matter and the persons designated in the form
are appointed as your proxyholder, your Shares will be voted as
follows:
●
FOR the election as directors of all
nominees listed in this Circular;
●
FOR the reappointment of
PricewaterhouseCoopers LLP as independent auditor until the next
Annual Meeting of Shareholders and the authorization of the Board
of Directors to fix its remuneration;
●
FOR the ratification and confirmation of
the Company’s new Share Unit Plan;
●
FOR the ratification and confirmation of
the share units previously granted under the Company’s new
Share Unit Plan; and
●
FOR the non-binding advisory vote on
executive compensation.
Revoking Your Proxy
If you
are a registered Shareholder who has given a proxy, you may revoke
it by delivering a written notice, stating that you want to revoke
your proxy to: The Corporate Secretary, Denison Mines Corp., 1100 -
40 University Avenue, Toronto, Ontario, Canada M5J 1T1 not less
than 48 hours (excluding Saturdays, Sundays and holidays) before
the time of the Meeting, or by attending the Meeting and notifying
the Chair of the Meeting prior to the commencement of the Meeting
that you have revoked your proxy. A registered Shareholder may also
revoke its proxy by completing and signing a proxy bearing a later
date and depositing it with Computershare, provided it is received
not less than 48 hours (excluding Saturdays, Sundays and holidays)
before the time 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.
Additional Matters Presented at the Meeting
The
proxy form or voting instruction form provided confers
discretionary authority upon the persons named as proxies with
respect to any amendments or variations to the matters identified
in the Notice of Meeting and with respect to other matters which
may properly come before the Meeting.
If you
sign and return the proxy form and any matter is presented at the
Meeting in addition, as an amendment or a variation to the matters
described in the Notice of Meeting, the Denison officers named as
proxies will vote in their best judgment. When this Circular went
to press, Denison’s management was not aware of any matters
to be considered at the Meeting other than the matters described in
the Notice of Meeting or any amendments or variations to the
matters described in the Notice. No director or executive officer
has any material interest, direct or indirect, by way of beneficial
ownership of securities or otherwise, in matters to be acted upon
at the Meeting other than their election pursuant to the election
of directors.
ELECTRONIC DELIVERY OF DOCUMENTS
Every
year, as required by laws governing public companies, the Company
delivers documentation to shareholders. In order to make this
process more convenient, Shareholders may choose to be notified by
email when the Company’s documentation, including the Meeting
materials, is posted on the Company’s website (www.denisonmines.com) and,
accordingly, such documentation will not be sent in paper form by
mail other than as required by applicable laws.
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2018 DENISON MANAGEMENT INFORMATION
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Delivery
in an electronic format, rather than paper, reduces costs to the
Company and benefits the environment. Shareholders who do not
consent to receive documentation through email notification will
continue to receive such documentation by mail or otherwise, in
accordance with securities laws. By consenting to electronic
delivery, Shareholders: (i) agree to receive all documents to which
they are entitled electronically, rather than by mail; and (ii)
understand that access to the Internet is required to receive a
document electronically and certain system requirements must be
installed (currently Adobe Acrobat Reader to view Adobe’s
portable document format (“PDF”)). Such documents may include
the interim consolidated financial reports, the annual report
(including audited annual consolidated financial statements and
management’s discussion and analysis (“MD&A”)), the notice of annual
and/or special meeting and related management information circular
and materials, and other corporate information about the
Company.
At
any time, Denison may elect to not send a document electronically,
or a document may not be available electronically. In either case,
a paper copy will be mailed to Shareholders.
Registered
Shareholders can consent to electronic delivery by completing and
returning the form of consent included with the form of proxy.
Non-registered Shareholders can consent to electronic delivery by
completing and returning the appropriate form received from the
applicable intermediary.
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Shareholders may request copies of the Meeting materials by mail at
no cost for up to one year from the date the Information Circular
was filed on SEDAR by email to info@denisonmines.com or
by calling 1-888-689-7842. For Shareholders who wish to receive
copies of the Circular in advance of the voting deadline, requests
must be received no later than
April 24, 2018.
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Shareholders
are not required to consent to electronic delivery. The Company
will notify consenting Shareholders at the email address provided
by the Shareholder on the form of proxy when the documents that the
Shareholder is entitled to receive are posted on the
Company’s website, with a link to the specific pages of the
website containing the PDF document.
NOTICE
AND ACCESS
In
2012, the Canadian Securities Administrators announced the adoption
of regulatory amendments to securities laws governing the delivery
of proxy-related materials by public companies. As a result, public
companies are now permitted to advise their shareholders of the
availability of all proxy-related materials on an easily accessible
website, rather than mailing physical copies of the
materials.
The
Company has decided to deliver its Meeting materials to
Shareholders by posting them on its website at www.denisonmines.com. The
Circular will be available on the Company’s website on March
27, 2018 and will remain on the website for one full
year.
The
Circular will also be available on the System for Electronic
Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and on the United
States Securities and Exchange Commission (“SEC”) website at www.sec.gov/edgar on March 27,
2018.
The
Company has decided to mail paper copies of the Circular to those
registered and non-registered Shareholders who had previously
elected to receive paper copies of the Company’s Meeting
materials. All other Shareholders will receive a “notice and
access” notification which will contain information on how to
obtain electronic and paper copies of the Circular in advance of
the Meeting and for a full year following the Meeting.
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2018 DENISON MANAGEMENT INFORMATION
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VOTING
SECURITIES
Denison’s
Shares are the only shares issued by the Company. On March 14,
2018, the record date for the Meeting, the Company had 559,183,209
Shares issued and outstanding, and all of these Shares are entitled
to be voted at the meeting. Each Share entitles the holder to one
vote on all matters at the Meeting.
In
accordance with the provisions of the Business Corporations Act (Ontario)
(the “OBCA”),
the Company prepared a list of Shareholders on the record date of
March 14, 2018. Each Shareholder named on the list will be entitled
to vote at the Meeting the Shares shown on the list opposite his or
her name.
Principal Holders of Shares
To the
knowledge of Denison’s directors and executive officers, the
only person or company who beneficially owns or exercises control
or direction over, directly or indirectly, more than 10% of
Denison’s Shares on March 14, 2018 was:
|
Name
|
Number
of
Shares
|
Percentage
of Outstanding Shares
on the Record Date
|
|
Korea
Electric Power Corporation
(“KEPCO”),
indirectly and in large part through KHNP Canada Energy Limited
(“KHNP Canada”),
a subsidiary of Korea Hydro & Nuclear Power
(“KHNP”)
|
58,284,000
|
10.42%
|
This
information was obtained from publicly disclosed information and
has not been independently verified by the Company.
Interest of Certain Persons or Companies in Matters to be Acted
Upon
Except
as may be disclosed herein, no director or executive officer of the
Company, or any person who has held such a position since January
1, 2017, nor any nominee for election as a director of the Company,
nor any associate or affiliate of the foregoing persons, has any
substantial or material interest, direct or indirect, by way of
beneficial ownership of securities or otherwise, in any matter to
be acted upon at the Meeting other than the ratification and
confirmation of the Corporation’s new Share Unit Plan and the
previous grant of share units thereunder. See “Equity
Compensation Plans”.
BUSINESS
OF THE MEETING
The
purpose of the Meeting is:
(a) to receive
the consolidated financial statements of Denison Mines Corp. for
the year ended December 31, 2017, along with the auditor’s
report on the statements;
(b) to elect
seven directors to the Board for the upcoming year;
(c) to
reappoint the auditor for the upcoming year and to authorize the
directors to fix the remuneration of the auditor;
(d) to
consider an ordinary resolution ratifying and confirming the
Company’s new Share Unit Plan;
(e) to
consider an ordinary resolution ratifying and confirming the
previous grant of share units under the Company’s new Share
Unit Plan;
(e) to
consider a non-binding advisory resolution on the Company’s
approach to executive compensation; and
(f) to
transact such other business as may properly come before the
Meeting.
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2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Receiving
the Consolidated Financial Statements
The
consolidated financial statements of the Company for the fiscal
year ended December 31, 2017 are included in Denison’s 2017
Annual Report, which has been mailed to the Company’s
registered Shareholders and to non-registered Shareholders who
requested it and is available on the Company’s website at
www.denisonmines.com.
Management
will discuss Denison’s consolidated financial results at the
Meeting, and Shareholders and proxyholders in attendance will be
given an opportunity to discuss these results with management. No
vote of Shareholders is required with respect to this item of
business.
The
2017 Annual Report is available on Denison’s website at
www.denisonmines.com, on SEDAR
at www.sedar.com
and on the SEC website at www.sec.gov/edgar.shtml.
The
Election of Directors
At its
meeting on March 8, 2018, the Board approved the nomination of
seven directors to be elected at the Meeting. Denison’s
articles provide for a minimum of three and a maximum of ten
directors on the Board.
All of
the proposed nominees are currently directors of Denison and have
been directors since the dates indicated below. 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.
Unless otherwise instructed, proxies and voting instructions given
pursuant to this solicitation by Denison’s management will be
voted FOR the election of the proposed nominees. If any
proposed nominee is unable to serve as a director or withdraws his
or her name, the named proxyholders reserve the right to nominate
and vote for another individual in their discretion.
Denison’s
Board recognizes that the quality of its directors is an important
factor in the overall success of the Company. Denison is committed
to ensuring that its Board is composed of members who have the
competencies, capabilities and diversity required to understand
Denison’s business, along with the integrity and motivation
required to properly discharge their fiduciary duties in the long
term best interests of the Company and all of its
Shareholders.
The
Board adopted a Diversity Policy on November 6, 2014 which includes
provisions relating to the identification and nomination of women
to the Board. See “Denison’s Corporate Governance Practices
– Diversity within Denison” on page 18 for a
summary.
When
considering the Board as a whole and assessing directors’
candidacy for the Board, the Corporate Governance and Nominating
Committee follows its established guidelines for the Board’s
composition, including its Diversity Policy and its
“Guidelines for the
Composition of Denison’s Board”, and seeks
directors that have some or all of the following
attributes:
●
Financial
accreditation and/or financial literacy
●
Sound business
experience and expertise
●
Corporate
governance experience
●
Industry specific
experience and knowledge, including mining and metallurgy and
occupational health and safety
●
Sustainability
knowledge, including stakeholder engagement and environmental
management
●
Experience in
government relations, operations and regulatory issues
●
Financing and
merger/acquisition experience
●
Strong reputation
within the financial and business communities
●
Candidacy
consistent with the Diversity Policy and the targets set
thereunder
●
Strong board
skills, such as integrity, networking abilities, interpersonal
skills, ability to think strategically and act
independently
●
Independence, as
such term is defined by the Canadian Securities
Administrators
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2018
DENISON MANAGEMENT INFORMATION CIRCULAR
When
determining nominees for election, the Board also considers the
strategic relationship agreement with KHNP Canada (the
“KHNP SRA”).
Under the KHNP SRA, the Board must nominate one person designated
by KHNP Canada for election as a director at any Shareholder
meeting where directors are to be elected, so long as KHNP Canada
or an affiliate holds over 5% of the outstanding Shares. KHNP
Canada has designated Mr. Kwang-Hee Jeong as its
nominee.
According
to the Company’s by-laws, the Company must receive advance
notice of nominations of directors by Shareholders. The Company did
not receive notice of any director nominations in connection with
this year’s Meeting within the time periods prescribed by the
by-laws. Accordingly, at the Meeting the only persons eligible to
be nominated for election to the Board are the below
nominees.
Profiles of the Nominated Directors
The
tables below set forth information about each nominated director as
of March 22, 2018, including his or her background and experience,
main areas of expertise, other exchange listed company boards of
which he or she is a member and his or her equity holdings in the
Company. Each director has provided the information about the
securities that he or she owns or over which he or she exercises
control or direction.
|
W.
Robert Dengler, 77
Aurora,
ON Canada
Shares:
310,000
Options:
200,000
|
Robert
Dengler is currently engaged as a Corporate Director. In 2006, Mr.
Dengler retired from his position as Non-Executive Vice-Chairman of
Dynatec Corporation. Until January 2005, Mr. Dengler served as
President and Chief Executive Officer of Dynatec Corporation, a
position which he held for 25 years. Before founding Dynatec, Mr.
Dengler was a partner and Vice-President & General Manager of
J.S. Redpath Limited. Mr. Dengler has more than 40 years of
management experience. Mr. Dengler obtained his B.Sc. from
Queen’s University in 1964.
Areas of Expertise: Finance,
International Business, the Mining and Exploration Industry,
Compensation, Operations
Denison
Board Details:
● Director since
December 1, 2006. Served as a director of a predecessor of Denison
since 2004
● Independent
● Complies
with Share ownership requirement
● Chair
of the Compensation Committee
● Chair
of the Environment, Health and Safety Committee
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2018 DENISON MANAGEMENT INFORMATION
CIRCULAR
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Brian
D. Edgar, 68
Vancouver, BC
Canada
Shares:
70,000
Options:
200,000
|
Brian
Edgar is the Chairman of Silver Bull Resources Inc. (“Silver
Bull”), a mineral exploration company listed on the TSX and
the OTCMKTS. He also serves as President and Chief Executive
Officer of Dome Ventures Corporation, a wholly-owned subsidiary of
Silver Bull. Prior to joining Silver Bull in 2012, Mr. Edgar worked
as a director at Rand Edgar Capital Corp. (now Rand Edgar
Investment Corp.), a private investment company established in 1992
by Messrs. Rand and Edgar. Mr. Edgar practiced corporate and
securities law for 16 years.
Mr.
Edgar is also a director
of Silver Bull (TSX and OTCMKTS), BlackPearl Resources Inc. (TSX,
Nasdaq Stockholm), Lucara Diamond Corp. (TSX, Nasdaq Stockholm),
and ShaMaran Petroleum Corp. (TSX-V, Nasdaq
Stockholm).
Areas of Expertise: Finance,
International Business, the Mining and Exploration Industry,
Corporate Governance, Compensation
Denison
Board Details:
● Director
since March 22, 2005
● Independent
● Complies
with Share ownership requirement
● Chair
of the Corporate Governance and Nominating Committee
● Member
of the Audit Committee
|
|
|
|
|
Ron
F. Hochstein, 56
Coquitlam, BC
Canada
Shares:
979,000
Options:
550,000
|
Ron
Hochstein is currently the President and Chief Executive Officer of
Lundin Gold Inc. Mr. Hochstein served as Executive Chairman of the
Company in 2015 and as President and Chief Executive Officer from
2009 to 2015. Prior to that, Mr. Hochstein served as President and
Chief Operating Officer starting in 2006 when International Uranium
Corporation (“IUC”) and Denison Mines Inc.
(“DMI”) combined to form the Company. Before then, Mr.
Hochstein served as President and Chief Executive Officer of IUC.
Mr. Hochstein joined the Company in October 1999 as Vice-President,
Corporate Development and later served as Vice-President and Chief
Operating Officer, prior to his appointment as President and Chief
Executive Officer in April 2000. Prior to joining the Company, Mr.
Hochstein was a Project Manager with Simons Mining Group and was
with Noranda Minerals as a metallurgical engineer. Mr. Hochstein is
a Professional Engineer and holds an M.B.A. from the University of
British Columbia and a B.Sc. from the University of
Alberta.
Mr.
Hochstein1
is also a director of Lundin Gold Inc. (TSX, Nasdaq Stockholm) and
Sprott Resources Holdings Inc. (TSX).
Areas of Expertise: Finance, Management,
International Business, Mining and
Exploration,
Operations, Compensation
Denison
Board Details:
● Director
since April 6, 2000
● Not
independent
● Complies
with Share ownership requirement
● Member
of the Environment, Health and Safety Committee
|
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
|
Kwang-Hee
Jeong, 46
Gyeongju,
Korea
Shares:
Nil
Options:
50,000
|
Based
in Korea, Mr. Jeong is currently General Manager of the Global
Business Planning and Administration Team at KHNP, a subsidiary of
the Korea Electric Power Corporation (KEPCO). Previous roles at
KHNP from 2007 to 2017 include General Manager of the Global
Business Division, General Manager of the Global Business Strategy
Office, General Manager of the Hanul Nuclear Power Site and Senior
Manager of the Power Generation Division. Mr. Jeong has a Master of
Chemical Engineering from the Korea Advanced Institute of Science
and Technology.
Areas of Expertise: Management,
Operations, Energy, International Business
Denison
Board Details:
● Director
since February 10, 2017
● Not
independent
● Share
ownership requirement does not apply.
|
|
Lukas
H. Lundin, 59
Vaud,
Switzerland
Shares:
1,048,883
Options:
300,000
|
Lukas
Lundin is a Mining Executive and is Chairman of the Board, a
position he has held since 1998, other than Mr. Hochstein's term as
Executive Chairman for a period in 2015. Mr. Lundin was educated at
the International School of Geneva in Switzerland and in 1981,
graduated from the New Mexico Institute of Mining and Technology
(engineering). Throughout his career Mr. Lundin has been
responsible for various resource discoveries, including the
multi-million ounce Veladero gold deposit in Argentina that was the
subject of a $300 million takeover by Homestake in 1999. Mr. Lundin
has also led numerous companies through very profitable business
acquisitions and mergers, including the USD$7.1 billion sale of Red
Back Mining Inc. in 2010.
Mr.
Lundin1 is
also a director of Filo Mining Corp. (TSXV, Nasdaq First North),
International Petroleum Corporation (Chairman) (TSX, Nasdaq First
North), Lundin Gold Inc. (Chairman) (TSX, Nasdaq Stockholm), Lucara
Diamond Corp. (Chairman) (TSX, Nasdaq Stockholm), Lundin Mining
Corporation (Chairman) (TSX, Nasdaq Stockholm), Lundin Petroleum AB
(Nasdaq Stockholm) and NGEx Resources Inc. (Chairman) (TSX, Nasdaq
Stockholm).
Areas of Expertise: Finance, Management,
Operations, the Mining and Exploration Industry, International
Business, Compensation
Denison
Board Details:
● Director
since May 9, 1997
● Executive
Chairman
● Not
independent
● Complies
with Share ownership requirement
|
2018 DENISON MANAGEMENT INFORMATION
CIRCULAR
|
William
A. Rand, 75
Vancouver, BC
Canada
Shares:
165,000
Options:
200,000
|
William
Rand is the President and a director of Rand Investments Ltd., a
private investment company. Previously, Mr. Rand practiced
corporate/securities law for nearly 25 years before retiring from
the practice of law in 1992 to establish his investment company.
Mr. Rand received a Bachelor of Commerce degree (Honours Economics)
from McGill University, a law degree from Dalhousie University, a
Master of Laws degree in international law from the London School
of Economics and a Doctor of Laws honoris causa from Dalhousie
University.
Mr.
Rand is also a director
of Lundin Mining Corporation (TSX, Nasdaq Stockholm), New West
Energy Services Inc. (TSX-V) and NGEx Resources Inc. (TSX, Nasdaq
Stockholm).
Areas of Expertise: Finance, Management,
International Business, Compensation, Law
Denison
Board Details:
● Director
since May 9, 1997
● Independent
● Complies
with Share ownership requirement
● Member
of the Audit Committee
● Member
of the Compensation Committee
|
|
Catherine
Stefan, 65
Toronto, ON
Canada
Shares:
110,000
Options:
200,000
|
Catherine Stefan,
Lead Director of the Denison Board, is currently engaged as a
Corporate Director. Until 2016, she was President of Stefan &
Associates, a consulting firm. Ms. Stefan served as Chief Operating
Officer of O&Y Properties Inc. from 1996 to 1998. From 1999
until 2008, Ms. Stefan was Managing Partner of Tivona Capital
Corporation, a private investment firm. Ms. Stefan obtained her
Bachelor of Commerce degree from the University of Toronto in 1973.
Ms. Stefan is a Chartered Professional Accountant (CPA, CA) and a
member of the Institute of Corporate Directors and Women in Mining,
with over 30 years of business experience, primarily in senior
management of public companies in the real estate sector. Ms.
Stefan’s mining experience includes her involvement with
Denison and as a Director of Lundin Mining Corporation since
2015.
Ms.
Stefan is also a director of Lundin Mining Corporation (TSX, Nasdaq
Stockholm).
Areas of Expertise: Management, Finance,
International Business, Compensation, Law
Denison
Board Details:
● Director since
December 1, 2006. Served as a director of a predecessor of Denison
since 2004
● Lead
Director since November, 2015
● Independent
● Complies
with Share ownership requirement
● Chair
of the Audit Committee
● Member
of the Corporate Governance and Nominating Committee
● Sole
director on the Company’s SOX Steering Committee
|
Notes
to Profiles of the Nominated Directors:
1.
Ron Hochstein and
Lukas Lundin were directors of Sirocco Mining Inc.
(“Sirocco”). Pursuant to a plan of arrangement
completed on January 31, 2014, Canadian Lithium Corp. amalgamated
with Sirocco to form RB Energy Inc. (“RBI”). In October
2014, RBI commenced proceedings under the Companies' Creditors
Arrangement Act (the “CCAA”). CCAA proceedings
continued in 2015 and a receiver was appointed in May 2015. The TSX
de-listed RBI’s common shares in November 24, 2014 for
failure to meet the continued listing requirements of the TSX.
Although Lukas Lundin was never a director, officer or insider of
RBI, he was a director of Sirocco within the 12-month period prior
to RBI filing under the CCAA. Ron Hochstein was a director of RBI
from the time of the plan of arrangement with Canadian Lithium
Corp. to October 3, 2014.
2.
The Board has not
adopted a term limit or a retirement policy for directors. The
Corporate Governance and Nominating Committee of the Board reviews
directors' performance annually.
10
2018 DENISON MANAGEMENT INFORMATION
CIRCULAR
Majority Voting Policy
The
Board has adopted a Majority Voting Policy which provides that
shareholders are entitled to vote for, or withhold from voting for, each
individual director nominee at a Shareholders’ meeting. If
the number of Shares withheld
from any nominee exceeds the number of Shares voted
for the nominee, then he or
she must immediately tender his or her resignation to the Board.
Denison’s Corporate Governance and Nominating Committee will
review the matter and recommend to the Board whether to accept the
resignation or not. The Board shall accept the resignation absent
exceptional circumstances, and such resignation will be effective
when accepted by the Board. The director involved does not
participate in any Board or committee deliberations on the matter.
The Board must announce its decision within 90 days of the
applicable Shareholder Meeting.
The
Majority Voting Policy applies only in circumstances involving an
uncontested election of directors, meaning an election in which the
number of nominees is equal to the number of directors to be
elected.
2017 Attendance Record
At
Denison, we believe that attendance at meetings is a critical
ingredient to an engaged and effective Board. Personal attendance
at Board and committee meetings is expected of all directors.
Directors can participate by teleconference if they cannot attend
in person. The table below shows the number of Board and committee
meetings each director attended in 2017.
At
every Board and committee meeting including those held by
teleconference, directors have an opportunity to meet in camera
without management present and the independent directors also have
an opportunity to meet without the non-independent directors. The
independent directors also have an in-person session annually. In
2017, all four independent directors attended in person the annual
meeting of independent directors.
|
Name
|
Board
|
Audit
Committee
|
Compensation
Committee
|
Environment, Health & Safety Committee
|
Corporate Governance & Nominating Committee
|
|
W.
Robert Dengler
|
7 of
7
|
100%
|
|
|
3 of
3
|
100%
|
4 of
4
|
100%
|
|
|
|
Brian
D. Edgar
|
7 of
7
|
100%
|
4 of
4
|
100%
|
|
|
|
|
3 of
3
|
100%
|
|
Ron F.
Hochstein
|
5 of
7
|
71%
|
|
|
|
|
4 of
4
|
100%
|
|
|
|
Kwang
Hee Jeong1
|
6 of
6
|
100%
|
|
|
|
|
|
|
|
|
|
Lukas
H. Lundin
|
6 of
7
|
86%
|
|
|
|
|
|
|
|
|
|
William
A. Rand
|
6 of
7
|
86%
|
4 of
4
|
100%
|
3 of
3
|
100%
|
|
|
|
|
|
Catherine J.G.
Stefan
|
7 of
7
|
100%
|
4 of
4
|
100%
|
|
|
|
|
3 of
3
|
100%
|
Notes:
1.
Mr. Jeong was
appointed as KHNP’s representative on the Board on February
10, 2017. There was one meeting of the Board in 2017 prior to his
appointment.
Information about Denison’s Relationship with
KEPCO
One of
the nominees for election, Mr. Kwang-Hee Jeong, is employed by
KHNP, a wholly-owned subsidiary of KEPCO and the parent company of
KHNP Canada. KEPCO is the primary electric utility in South Korea.
KHNP operates large nuclear and hydroelectric plants in South
Korea, which are responsible for over 30% of the country's electric
power supply. Through its indirect corporate holdings, KEPCO is a
significant Shareholder of the Company. As part of a general
restructuring at KEPCO completed in December 2016, the Shares of
Denison held by a KEPCO affiliate were transferred to KHNP Canada.
Denison and KHNP Canada entered into an amended and restated
strategic relationship agreement in 2017 (replacing the 2009
strategic relationship agreement with KEPCO), which continues to
provide for a long-term collaborative business relationship. Under
the KHNP SRA, so long as KHNP Canada or an affiliate holds more
than 5% of the outstanding Shares, the Board must nominate one
person designated by KHNP Canada or its affiliate for election as a
director at any Shareholder meeting where directors are to be
elected.
11
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
The
KHNP SRA also provides KHNP Canada (a) a right of first offer if
Denison intends to sell any of its substantial assets and a right
to participate in certain purchases of substantial assets which
Denison proposes to acquire; and (b) the right to participate in
future offerings of Shares of a certain size in order to preserve
its interest in the Company. To date, neither KEPCO nor KHNP have
exercised such rights under the prior strategic relationship
agreement or the KHNP SRA, respectively.
The Reappointment of the Auditor
PricewaterhouseCoopers
LLP (“PwC”) has
been the Company’s independent auditor since 1996. You may
either vote for
reappointing PwC as Denison’s auditor to hold office until
the end of the next annual meeting of shareholders and authorizing
the directors to fix its remuneration, or you can withhold your vote. Unless otherwise instructed, the named
proxyholders will vote FOR reappointing PwC and authorizing the
directors to fix PwC’s remuneration.
As part
of the Company’s corporate governance practices, the Audit
Committee pre-approves all of the services performed by PwC to
ensure that the independence of the Company’s auditor is not
compromised through engaging it for other services. All other
services provided by the Company’s auditor are pre-approved
by the Audit Committee as they arise or through an annual
pre-approval of amounts for specific types of services. All
services performed by Denison’s auditor comply with
professional standards and securities regulations governing auditor
independence.
The
following table discloses the fees billed to the Company by PwC
during the last two fiscal years.
|
Financial
Year
|
|
Audit-Related
|
|
|
Ending
|
Audit Fees(1)
|
Fees (2)
|
Tax Fees (3)
|
All Other Fees(4)
|
|
December 31,
2017
|
$173,526
|
$115,212
|
Nil
|
Nil
|
|
December 31,
2016
|
$175,988
|
$128,978
|
Nil
|
Nil
|
Notes:
1.
The aggregate fees
billed for audit services of the Company’s consolidated
financial statements.
2.
The aggregate fees
billed for assurance and related services that are reasonably
related to the performance of the audit or review of the
Company’s financial statements that are not disclosed in the
Audit Fees column. Fees relate to reviews of interim consolidated
financial statements and specified audit procedures not included as
part of the audit of the consolidated financial
statements.
3.
The aggregate fees
billed for tax compliance, tax advice, and tax planning services,
such as transfer pricing and tax return preparation.
4.
The aggregate fees
billed for professional services other than those listed in the
other three columns.
12
2018 DENISON MANAGEMENT INFORMATION CIRCULAR
Ratification and Confirmation of Share Unit Plan
Upon
the recommendation of the Compensation Committee, the Board
approved the adoption of the fixed number share unit plan (the
“Share Unit Plan”) on March 8, 2018, providing for the
issuance from treasury of up to 15,000,000 Shares on settlement of
share units granted thereunder during the life of the Share Unit
Plan. The Share Unit Plan currently contemplates the granting of
restricted share units (“RSUs”) and performance share
units (“PSUs”) to eligible participants of the
Company.
For
more information concerning the Share Unit Plan and the previous
grants thereunder, see “Equity Compensation Plans” and
“Equity Compensation Plans – Share Unit Plan”
starting on page 44.
Adoption
of the Share Unit Plan, and the issuance of any securities
thereunder, must be ratified and confirmed by a simple majority of
the votes cast at the Meeting in respect of the Share Unit Plan by
Shareholders, present in person or represented by proxy at the
Meeting. The Share Unit Plan and the issuance of Shares pursuant to
the PSUs and RSUs granted thereunder are also subject to the
approval of the Toronto Stock Exchange and the NYSE American. The
Toronto Stock Exchange conditionally approved the Share Unit Plan
and the PSUs and RSUs, subject to receipt from the Company of,
among other things, evidence of Shareholder approval. If all
necessary approvals are not obtained, the PSUs and RSUs
conditionally granted under the Share Unit Plan will be cancelled.
For more information concerning the awards previously made under
the Share Unit Plan, see “Ratification and Confirmation of
Share Units Granted Under the Share Unit Plan”
below.
The
Board has determined that the Share Unit Plan is in the best
interests of the Company and is fair to the Company and the
Shareholders. Without limitation, the Board adopted the Share Unit
Plan for the following reasons:
●
Incentivize. The Share
Unit Plan will be an important tool the Company can use to help
motivate directors, officers, employees and consultants to
contribute to the sustainable, long‐term growth of the
Company.
●
Reward. The Share Unit
Plan will reward directors, officers, employees and consultants for
their performance and for their demonstrated leadership, while, at
the same time, aligning the interests of such individuals with the
success of the Company, through direct share ownership upon vesting
of the individual awards along with the option to grant performance
share unit awards with vesting subject to the achievement of
performance conditions.
●
Attract & Retain.
The Share Unit Plan is expected to contribute to the successful
recruitment and retention of qualified directors, executive
officers and other personnel.
●
Modernize. The adoption
of the Share Unit Plan will update the Company’s
equity-compensation program to bring it in-line with current market
practices, and to create more flexibility in the types of incentive
awards that may be made.
Accordingly, the
Board recommends that Shareholders vote FOR the following
resolution with respect to the Share Unit Plan and the share units
conditionally issued thereunder.
At the
Meeting, Shareholders will be asked to approve the following by
ordinary resolution:
BE IT
RESOLVED THAT:
1.
the adoption of the
Company’s Share Unit Plan, substantially in the form attached
to, and as further described in, the management information
circular of the Company dated March 22, 2018 (the
“Circular”), including the grant of up to 15,000,000
share units thereunder, is hereby ratified and
confirmed;
2.
the Share Unit Plan
may be amended in order to satisfy the requirements or request of
any regulatory authority, or as may be approved by the Toronto
Stock Exchange, as applicable, in each case without requiring
further approval from Shareholders; and
13
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
3.
any one director or
officer of the Company be and is hereby authorized and directed to
execute and deliver for and in name of and on behalf of the
Company, whether under its corporate seal or not, all such
certificates, instruments, agreements, documents and notices and to
do all such other acts and things as in such person’s opinion
as may be necessary or desirable for the purpose of giving effect
to these resolutions.
Shareholders may
either vote for or
against the foregoing
resolutions. The Board recommends that Shareholders vote FOR the
resolutions to ratify and confirm the adoption of the Share Unit
Plan. Unless otherwise instructed,
proxies and voting instructions given pursuant to this solicitation
by Denison’s management will be voted FOR the ratification
and confirmation of the Share Unit Plan in accordance with the
foregoing resolution.
Ratification and Confirmation of Share Units Granted Under the
Share Unit Plan
On
March 8, 2018 the Board approved the grant of an aggregate of
2,200,000 PSUs and 1,299,432 RSUs to certain directors, officers
and other eligible participants under the Share Unit Plan, such
grant to be processed and completed on a date to be determined by
the CEO as soon as reasonably practicable after March 8, 2018. As
at the date of the Circular, the issuance of the PSUs and RSUs had
not yet been completed.
The
PSUs were approved for grant to certain executive officers of the
Company, with the PSUs to vest in equal tranches over 5 years from
the date of grant, provided the recipient, as a performance
condition, satisfies an overall base level of achievement in their
Performance Measure or similar assessment (as discussed further in
“Executive Compensation” below). The RSUs were approved
for grant to each of the directors, executive officers and certain
other employees of and consultants to the Company. The RSUs will
vest in equal tranches over 3 years from the date of
grant.
The
issuance of any securities under the Share Unit Plan must be
ratified and confirmed by a simple majority of the votes cast at
the Meeting in respect thereof by Shareholders, present in person
or represented by proxy at the Meeting. As discussed above, the
Share Unit Plan and the issuance of Shares pursuant to the PSUs and
RSUs granted thereunder are also subject to the approval of the
Toronto Stock Exchange and the NYSE American. The Toronto Stock
Exchange conditionally approved the Share Unit Plan and the PSUs
and RSUs, subject to receipt from the Company of, among other
things, evidence of Shareholder approval. If all necessary
approvals are not obtained, the PSUs and RSUs conditionally granted
under the Share Unit Plan will be cancelled.
At the
Meeting, Shareholders will be asked to approve the following by
ordinary resolution:
BE IT
RESOLVED THAT:
1.
the grant of an
aggregate of 2,200,000 PSUs and 1,299,432 RSUs to eligible
participants under the Share Unit Plan is hereby ratified and
confirmed; and
2.
any one director or
officer of the Company be and is hereby authorized and directed to
execute and deliver for and in name of and on behalf of the
Company, whether under its corporate seal or not, all such
certificates, instruments, agreements, documents and notices and to
do all such other acts and things as in such person’s opinion
as may be necessary or desirable for the purpose of giving effect
to these resolutions.
Shareholders may
either vote for or
against the foregoing
resolutions. The Board recommends that Shareholders vote FOR the
resolutions to ratify and confirm the grant of PSUs and RSUs under
the Share Unit Plan. Unless
otherwise instructed, proxies and voting instructions given
pursuant to this solicitation by Denison’s management will be
voted FOR the ratification and confirmation of the share units
granted under the Share Unit Plan in accordance with the foregoing
resolution.
14
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Advisory Vote on the Company’s Approach to Executive
Compensation
The
Board has adopted a non-binding shareholder advisory vote on the
Company’s approach to executive compensation. As a formal
opportunity to provide their views on the disclosed objectives of
the Company’s pay for performance compensation model,
shareholders are asked to review and vote, in a non-binding,
advisory manner, on the following resolution:
BE IT
RESOLVED THAT, on an advisory basis and not to diminish the role
and responsibilities of the Board of Directors, the shareholders
accept the approach to executive compensation as disclosed in the
management information circular of the Company dated March 22,
2018.
The
Compensation Committee, and the Board, will take the results of the
vote into account, as appropriate, when considering future
compensation policies, procedures and decisions (see Executive
Compensation for details regarding the compensation philosophy and
guidelines of the Board and the performance metrics and process
used to assess performance). Shareholders who may vote against the
resolution are encouraged to contact the Board, to enable the Board
to better understand their concerns.
Shareholders
may either vote for the
non-binding advisory resolution on the Company’s approach to
executive compensation, or vote against. The Board recommends that
Shareholders vote FOR the resolution to accept the
Corporation’s approach to executive compensation.
Unless otherwise instructed,
proxies and voting instructions given pursuant to this solicitation
by Denison’s management will be voted FOR the approval of the
resolution.
15
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
DENISON’S CORPORATE GOVERNANCE PRACTICES
This
section of the Circular describes Denison’s corporate
governance practices with reference to the framework provided in
National Policy 58-201 - Corporate
Governance Guidelines and National Instrument 58-101 -
Disclosure of Corporate Governance
Practices (collectively, the “Governance Guidelines”) of the
Canadian Securities Administrators.
Denison
is a reporting issuer in all of the provinces of Canada and is
classified as a foreign private issuer by the SEC. The Shares trade
on the Toronto Stock Exchange (DML: TSX) and on NYSE American LLC
(DNN: NYSE American). As such, Denison adheres to Canadian
corporate governance requirements and also complies with the
requirements of NYSE American. The Corporate Governance and
Nominating Committee closely monitors this regulatory environment
and, where applicable, makes recommendations to the Board to modify
the Company’s governance practices as needed.
Denison’s Code of Ethics
The
Company is committed to conducting its business in compliance with
the law and the highest ethical standards. The Company has adopted
a written Code of Ethics which applies to directors, officers and
all employees of the Company. The Code of Ethics sets out
principles and standards for honest and ethical behavior at Denison
and covers the following key areas:
●
compliance with
applicable laws
●
quality of
disclosure and accountability
●
compliance with
anti-bribery and corruption laws in Canada and other
jurisdictions
●
confidentiality and
corporate opportunity
●
reporting illegal
or unethical behavior
Directors,
officers or employees who have concerns about violations of laws,
rules or regulations, or of the Code of Ethics are to report them
to the Corporate Secretary or to the Chair of the Audit Committee.
Following receipt of any complaints, the Corporate Secretary of the
Company or Chair of the Audit Committee, as the case may be, will
investigate each matter so reported and report to the Audit
Committee. The Audit Committee has primary authority and
responsibility for monitoring compliance with and enforcing the
Code of Ethics, subject to the supervision of the
Board.
The
Code of Ethics is available on the Company’s website at
www.denisonmines.com or on
SEDAR under the Company’s profile at www.sedar.com.
Whistleblower
Policy
|
The Audit Committee
has established a policy and procedures for the receipt, retention
and treatment of complaints regarding accounting, internal
accounting controls or auditing matters (the “Whistleblower Policy”) to encourage
employees, officers and directors to raise concerns regarding
accounting, internal controls or auditing matters on a confidential
basis free from discrimination, retaliation or harassment. The
Whistleblower Policy is available on the Company’s website at
www.denisonmines.com.
|
In support of the
Whistleblower Policy, Denison has established a third party
web-based reporting service so that any employee can report any
issue or instance of misconduct easily and
confidentially.
|
Anti-bribery
Policy
Denison
has adopted an Anti-bribery Policy, effective August 2015 as
amended in October 2017, the purpose of which is to reiterate
Denison’s commitment to compliance with Canada’s
Corruption of Foreign Public Officials Act (“CFPOA”),
the U.S. Foreign Corrupt Practices Act (“FCPA”) and any
local anti-bribery or anti-corruption laws that may be applicable.
This policy applies to all officers, directors, employees and
agents of the Company, and supplements the Code of Ethics and all
applicable laws. The policy provides guidelines for compliance with
the CFPOA, the FCPA and Company policies applicable to
Denison’s operations world-wide. Denison’s CEO is
responsible for administering and interpreting the policy under the
oversight of the Audit Committee. Denison’s Anti-bribery
Policy is available on the Company’s website at www.denisonmines.com.
16
2018 DENISON MANAGEMENT INFORMATION
CIRCULAR
The
Disclosure Policy
Denison
has developed a Disclosure Policy as part of its ongoing commitment
to full and fair financial disclosure and best practices in
corporate reporting and governance. This policy outlines the
internal control structures that Denison has established to
effectively manage the dissemination of material information to the
public and remain compliant with all applicable legal and business
requirements. The Disclosure Policy is available on the
Company’s website at www.denisonmines.com or on
SEDAR under the Company’s profile at www.sedar.com.
Shareholder Communications
The
Board has put structures in place to ensure effective communication
between the Company, its Shareholders and the public. The Company
has established an investor relations procedure whereby most
Shareholder concerns are dealt with on an individual basis, usually
by providing requested information. Significant Shareholder
concerns are brought to the attention of management or the Board.
Shareholders are informed of developments in the Company by the
issuance of timely press releases which are concurrently posted to
the Company’s website and filed on SEDAR.
The
Board monitors the policies and procedures that are in place to
provide for effective communication by the Company with its
Shareholders and with the public generally, including effective
means to enable Shareholders to communicate with senior management
and the Board. The Board also monitors the policies and procedures
that are in place to ensure a strong, cohesive, sustained and
positive image of the Company with Shareholders, governments and
the public generally.
Shareholders,
employees or other interested parties may communicate directly with
the Chairman of the Board, the Lead Director and other independent
directors by writing to them at Denison’s Toronto office, at
the following address: Denison Mines Corp., 1100 – 40
University Avenue, Toronto, Ontario, M5J 1T1. Envelopes should be
marked “Confidential” and to the attention of the
appropriate party.
Executive Officer Succession Policy
The
Board acknowledges that a change in executive leadership can be a
critical time in a company’s history and that a smooth
transition is essential to maintain the confidence of investors,
business partners, customers and employees and to provide the
incoming Chief Executive Officer with a solid platform from which
to move the company forward. In connection therewith, the Board has
adopted an Executive Officer Succession Policy to help Denison be
prepared for a change in leadership – either planned or
unplanned – to ensure the stability and accountability of
Denison. The policy is periodically reviewed by the Board and
certain matters regarding its administration are delegated to the
Corporate Governance & Nominating Committee.
Board Composition
Denison’s
Board is currently comprised of seven directors. The size and
composition of the Board reflects a breadth of backgrounds and
experience that the Board believes is important for effective
governance and oversight of a diversified and active mining
company. It is proposed that seven directors be elected at the
Meeting, a majority of whom are independent.
The
Board has not adopted policies imposing a director term limit or
retirement age in connection with individuals nominated for
election as it does not believe that such policies would be in the
best interests of the Company at this time. The Company operates in
a unique industry which leads to difficulty in finding qualified
directors with the appropriate background and experience and to
introduce a director term limit or retirement policy would impose
further difficulty. Notwithstanding the foregoing, the Corporate
Governance and Nominating Committee annually reviews the
composition of the Board, including the age and tenure of
individual directors. All directors participate in an annual
performance review, including a peer review. The Board strives to
achieve a balance between the desirability of a depth of experience
from its members and the need for renewal and new
perspectives.
17
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DENISON MANAGEMENT INFORMATION CIRCULAR
Diversity within Denison
Denison’s
Board recognizes that diversity enriches the decision making
process and is important to the Company’s good governance.
The Board formally adopted a Diversity Policy in November 2014,
which clarifies the Company’s commitment to identifying and
considering women for its Board and in senior officer positions.
Along with the adoption of the Diversity Policy and to further the
Board’s goals of achieving greater gender diversity, the
Board also amended the guidelines by which the Corporate Governance
and Nominating Committee considers the composition of the Board and
evaluates candidates to include a commitment for the committee to
consider qualified female candidates for nomination to the Board.
Similarly, as part of the hiring process of executive officers,
management of the Company seeks inclusion for evaluation as
potential candidates women having the necessary skills, knowledge
and experience.
Upon
adoption of the Diversity Policy, Denison set targets of at least
maintaining its current level of female representation among
directors and senior officers. Each year, the Corporate Governance
and Nominating Committee reviews and recommends the targets set
under the Diversity Policy, and measures and reports to the Board
as to the Company’s annual and cumulative progress in
achieving targets for representation of women within Denison. The
Committee reported Denison’s female representation as at the
end of 2017 as follows:
●
One female director
on the Board, who is also the Lead Director, Chair of the Audit
Committee and a member of the Corporate Governance and Nominating
Committee, out of seven directors, representing 14.3% of the
Board;
●
One female senior
officer out of six senior officers, representing 16.7% of the
senior officers.
●
One female out of
three senior officers at the Company’s major subsidiary, DMI,
representing 33.3% of the senior officers of DMI.
Denison
believes that the current composition of the Board is highly
effective and that the Board is well-composed. As turnover occurs,
the Corporate Governance and Nominating Committee will consider
gender diversity as a key factor in its nomination process.
Similarly, the Company will strive to maintain its current level of
gender diversity among its senior officers and among the senior
officers of DMI and will consider gender diversity as a part of the
hiring decision as turnover occurs. The Corporate Governance and
Nominating Committee has also recommended the adoption of an
evergreen list of potential female candidates, to be contributed to
by members of the Board and referred to in the event of board
turnover.
Independence
The
Board is responsible for determining whether or not each director
is independent. This assessment is made in accordance with
standards of the Canadian Securities Administrators in National
Instrument 52-110 – Audit
Committees (“NI
52-110”) and the Governance Guidelines. With the
assistance of the Corporate Governance and Nominating Committee,
the Board reviews each director’s independence annually and
upon the appointment or election of a new director. The Board last
considered this matter at its meeting on March 8, 2018. The
following table sets out the Board’s determination and
reasoning with respect to each nominee for election at the
Meeting:
|
Name
|
Independent
|
Not Independent
|
Commentary on Independence
|
|
W.
Robert Dengler
|
X
|
|
|
|
Brian
D. Edgar
|
X
|
|
|
|
Ron F.
Hochstein
|
|
X
|
As
former Executive Chair, President and Chief Executive Officer of
the Corporation during the course of 2015, Mr. Hochstein is not, at
this time, regarded as independent.
|
18
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
|
Name
|
Independent
|
Not
Independent
|
Commentary
on Independence
|
|
Kwang-Hee
Jeong
|
|
X
|
Mr.
Jeong is regarded as having an indirect material relationship which
could reasonably be expected to interfere with his exercise of
independent judgment, considering the Company’s strategic
relationship with KHNP Canada, KHNP Canada’s significant
shareholding in Denison and Mr. Jeong’s position with
KHNP.
|
|
Lukas
H. Lundin
|
|
X
|
Mr.
Lundin cannot be regarded as independent due to his active
involvement with the Company on capital raising and corporate
development opportunities, as well as his role in management of the
Company as Executive Chair.
|
|
William
A. Rand
|
X
|
|
|
|
Catherine
J.G. Stefan
|
X
|
|
|
In
addition to being comprised of a majority of independent Directors,
the Board believes that adequate structures and processes are in
place to facilitate the functioning of the Board independently of
management for several reasons:
|
● The
Board has a Lead Director
|
Ms.
Stefan has been appointed as the Lead Director by the Board, upon
the recommendation of the Corporate Governance and Nominating
Committee, to preside at the independent sessions and to perform
such other duties as the Board may determine, like being
responsible for leading all Board meetings. The Lead Director
facilitates the functioning of the Board independently of
management, serves as an independent leadership contact for
directors and assists in maintaining and enhancing the quality of
the Company’s corporate governance. With her extensive
experience in corporate governance matters, Ms. Stefan is leading
and managing the Board in a manner that ensures it functions
independently of management, in an effective and efficient
manner.
|
|
● The
Audit, Compensation and Corporate Governance and Nominating
Committees are entirely independent.
|
Aside
from the Environment, Health and Safety Committee, all of the
Board’s standing committees are composed entirely of
independent directors. The Board has considered the membership of
Mr. Hochstein on the Environment, Health and Safety Committee and
determined that his operational experience is a benefit to the
committee and that his lack of independence does not interfere with
that committee’s responsibilities or interfere with his
judgment.
|
|
● The
Board regularly meets without management.
|
The
Board has an opportunity to meet in camera without management at
every Board and committee meeting. In 2017, the independent
directors met formally each quarter and met in person once in
November. Only independent directors attend the in camera sessions
of the Audit Committee, Compensation Committee and Corporate
Governance and Nominating Committee, as all of the members of these
committees are independent.
|
|
● The
Board, a committee or an individual director may engage an
independent advisor.
|
Individual
directors may, in appropriate circumstances and with the
authorization of the applicable committee or the Chairman, engage
independent advisors at the expense of the Company.
|
Separate
from and in addition to the formal assessment and determination of
independence described above, the Board takes steps to ensure
directors exercise independent judgment in considering transactions
and agreements in respect of which a director or executive officer
has a material interest. Such steps have included the adoption of
the Code of Ethics, which provides examples of conflicts of
interests and outlines the procedure to be followed in situations
that present an actual or potential conflict of interest (including
reporting such conflict or potential conflict to the Chair of
Denison’s Audit Committee).
19
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DENISON MANAGEMENT INFORMATION CIRCULAR
The Role of the Board
The Board is responsible for overseeing the management of the
business and affairs of Denison, with a view to the long-term best
interests of the Company. The
Board has adopted a formal mandate setting out the role and
responsibilities of the Board (see Appendix B). In order to
delineate the roles and responsibilities of the Chairman of the
Board, the Lead Director and the President and Chief Executive
Officer, the Board has also adopted written position descriptions
for each of these positions.
In
discharging its stewardship over the Company, the Board has
undertaken the following specific duties and
responsibilities:
●
satisfying itself
as to the integrity of the Chief Executive Officer and other
executive officers and as to a culture of integrity throughout the
Company;
●
approving,
supervising and providing guidance to management on the
Company’s strategic planning process;
●
identifying the
principal risks of the Company’s business and ensuring
management’s implementation and assessment of appropriate
risk management systems;
●
ensuring that the
Company has highly qualified management and adequate and effective
succession plans for senior management;
●
overseeing the
Company’s communications policy with its Shareholders and
with the public generally; and
●
assessing directly
and through its Audit Committee, the integrity of the
Company’s internal control and management information
systems.
Generally,
operations in the ordinary course or that are not in the ordinary
course and do not exceed material levels of expenditures or
commitment on the part of the Company have been delegated to
management. Decisions relating to matters that are not in the
ordinary course and that involve material expenditures or
commitments on the part of the Company generally require prior
approval of the Board. As the Board has plenary power, any
responsibility which is not delegated to management or a Board
committee remains with the Board.
The
responsibilities of the Lead Director include presiding over Board
meetings, assuming principal responsibility for the Board’s
operation and functioning independent of management and ensuring
that Board functions are effectively carried out.
The
responsibilities and authorities of the Chair of each committee of
the Board are set out in the mandate for each committee and in the
Board’s mandate. Generally, the Chair of a committee leads
and oversees the activities of the committee to ensure that it
fulfills its mandate and operates independently of
management.
The Role of the CEO
Denison’s
Chief Executive Officer ("CEO") is appointed by the Board and,
subject to the oversight of the Board, is responsible for the
management of the Company’s business, providing leadership
and vision, developing and recommending significant corporate
strategies and objectives for approval by the Board, and developing
and recommending to the Board annual operating budgets. Each year,
the CEO develops annual objectives which are reviewed by the
Compensation Committee and then recommended to the Board for
approval. The CEO is accountable to the Board and its committees,
and the Compensation Committee conducts a formal review of his
performance each year. The Board has also established limits of
authority for the CEO. These are described in the Company’s
delegation of authority policy, which was originally approved by
the Board in 2008 and last updated effective January 1, 2018. The
Board has also adopted a position description for the
CEO.
20
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Board
Committees
To
assist the Board with its responsibilities, in 2017 the Board had
four standing committees: the Audit Committee, the Compensation
Committee, the Corporate Governance and Nominating Committee and
the Environment, Health and Safety Committee (the
“EHS Committee”). Each committee has
a written mandate and reviews its mandate annually. Copies of the
committee mandates are available on the Company’s
website.
|
Each of the standing committees has
responsibility in its area of expertise for identifying the
principal risks in Denison's business and monitoring management's
implementation and assessment of appropriate risk management
systems.
|
The Audit Committee
The
Audit Committee has three members:
●
Catherine Stefan
(Chair)
The
Board has satisfied itself that all members of the Audit Committee
are independent and financially literate for the purposes of NI
52-110 and the requirements of NYSE American. All three members are
also considered by the Company to have financial expertise within
the meaning of the Sarbanes Oxley
Act of 2002. Mr. Edgar has a law degree and practiced for 16
years in corporate finance law. In addition, he has served as
President and Chief Executive Officer of a public company since
2005 and served on public company boards and audit committees for
over 30 years. Mr. Rand has a Bachelor of Commerce degree with a
major in accounting and two law degrees, with extensive experience
in corporate finance. Moreover, Mr. Rand has been actively involved
as an audit committee member for many years on a number of public
companies. Ms. Stefan is a Chartered Accountant and a Chartered
Professional Accountant with a Bachelor of Commerce degree. In
addition, she has held the position of Senior Vice President of a
public company.
The
Audit Committee oversees the accounting and financial reporting
processes of the Company and its subsidiaries and all audits and
external reviews of the financial statements of the Company, on
behalf of the Board. The Audit Committee is also responsible for
examining all financial information, including annual and quarterly
financial statements, prepared for securities commissions and
similar regulatory bodies prior to filing or delivery of the
same.
All
auditing services and non-audit services to be provided to the
Company by the Company’s auditor are pre-approved by the
Audit Committee, and the Audit Committee reviews the independence
of PwC, the Company’s external auditor. The Audit Committee
recommends to the Board the firm of independent auditors to be
nominated for appointment by the Shareholders. The Audit Committee
reviews, on a continuous basis, any reports prepared by the
Company’s auditor relating to the Company’s accounting
policies and procedures, as well as internal control procedures and
systems.
The
Audit Committee also oversees the Company’s internal audit
function and oversees the Code of Ethics, the Whistleblower Policy
and the Anti-bribery Policy and reviews each such policy annually.
The Audit Committee has the responsibility for oversight of
internal controls, including the Company’s Internal Audit
Charter, and the Company’s senior internal auditor reports
directly to the Chair of the Audit Committee on matters related to
internal accounting controls.
The
Audit Committee is required to meet a minimum of four times each
year, and it met four times in 2017. It met in camera without
management present at every meeting with the external
auditor.
For
additional information regarding the audit committee required by NI
52-110, please refer to the Company’s Annual Information Form
under the heading “Standing Committees – Audit
Committee”.
21
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
The Compensation Committee
The
Compensation Committee has two members, each of whom is independent
for the purposes of section 1.4 of NI 52-110:
In
accordance with its mandate, members of the Compensation Committee
must be independent and have experience and skills relevant to
executive compensation. Mr. Dengler brings over 25 years of
first-hand experience working with executive compensation in the
mining industry, serving as Chief Executive Officer of Dynatec
Corporation. Mr. Dengler has been the Chair of Denison’s
Compensation Committee since 2006 and was a compensation committee
member of the Board of Directors of IAMGOLD Corporation. Mr. Rand
has extensive experience in executive compensation, and is
currently a compensation committee member on the boards of three
public companies. Additionally, Mr. Rand draws on the skills and
knowledge of executive compensation and disclosure issues which he
acquired during his long career as a corporate securities
lawyer.
The
Compensation Committee is responsible for the Company’s
executive compensation policy. The Compensation Committee evaluates
the Chief Executive Officer’s performance and establishes
both the elements and amounts of the Chief Executive
Officer’s compensation. The Compensation Committee, in
conjunction with the Board, also reviews management’s
recommendations for, and approves the compensation of, the other
officers of the Company and determines the general compensation
structure, policies and programs of the Company, including the
extent and level of participation in incentive programs. The
Compensation Committee reviews and approves the executive
compensation disclosure included in the Company’s Circular
each year.
The
Compensation Committee is also responsible for overseeing
compensation risk and talent and succession risk. In particular,
the Compensation Committee has been delegated certain
responsibilities under the Company's Executive Officer Succession
Policy, which include reviewing the current state of succession
planning matters and reporting to the Board on its findings and
recommendations; assuring that Denison has in place appropriate
planning to address emergency CEO succession planning in the event
of extraordinary circumstances; and reviewing the policy and
Denison’s CEO succession plans at least
annually.
The
Compensation Committee has also been mandated to review the
adequacy and form of the compensation of directors and to ensure
that such compensation realistically reflects the responsibilities
and risks involved in being an effective director.
The
Compensation Committee met three times during 2017 to address
matters pertaining to its mandate.
The Corporate Governance and Nominating Committee
The
Corporate Governance and Nominating Committee has two members, each
of whom is independent for the purposes of section 1.4 of NI
52-110:
This
Committee is responsible for Denison’s approach to corporate
governance, monitors the regulatory environment and recommends
changes to the Company’s practices when appropriate. The
Corporate Governance and Nominating Committee oversees the
effective functioning of the Board and the relationship between the
Board and management. The Corporate Governance and Nominating
Committee ensures that the Board can function independently of
management as required, makes recommendations with respect to the
appointment of a Lead Director, identifies individuals qualified to
become new Board members and recommends to the Board the director
nominees at each annual meeting of Shareholders and, with the
assistance of the Board and where necessary, develops an
orientation and education program for new recruits to the
Board.
22
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
In
identifying possible nominees to the Board, the Corporate
Governance and Nominating Committee considers the competencies and
skills necessary for the Board as a whole, the skills of existing
directors and the competencies and skills each new nominee will
bring to the Board, as well as whether or not each nominee will
devote sufficient time and resources to the Board and whether he or
she is independent within the meaning of the Governance
Guidelines.
The
Corporate Governance and Nominating Committee also annually reviews
and makes recommendations to the Board with respect to: (i) the
size and composition of the Board; (ii) the independence of Board
members; (iii) the composition of the committees of the Board; (iv)
the effectiveness and contribution of the Board, its committees and
individual directors, having reference to their respective
mandates, charters and position descriptions; and (v) compliance
with and amendments to the Board mandates, policies and
guidelines.
Early
in each year the Corporate Governance and Nominating Committee
distributes, receives and reviews the results of written board
effectiveness assessments. The assessments question members of the
Board as to their level of satisfaction with the functioning of the
Board, its interaction with management and the performance of the
standing committees of the Board. The Board members also conduct
peer reviews and a self-assessment as to their effectiveness as a
Board member. After the assessments are reviewed, the Corporate
Governance and Nominating Committee reports to the Board as to the
results and makes recommendations to the Board to improve the
Company’s corporate governance practices. This process occurs
prior to the consideration by the Corporate Governance and
Nominating Committee of nominations for Board member elections at
the annual meeting of Shareholders each year.
In
addition, the Corporate Governance and Nominating Committee reviews
the Company’s disclosure of its corporate governance
practices in the Company’s Circular each year. The Corporate
Governance and Nominating Committee met three times during
2017.
The Environment, Health and Safety Committee
The EHS
Committee currently has two members:
The
mining industry, by its very nature, can have an impact on the
natural environment and can involve certain risks to employees. As
a result, environmental planning and compliance and safety programs
must play a very important part in the operations of any company
engaged in these activities. The Company takes these issues very
seriously and has established the EHS Committee to oversee the
Company’s efforts to act in a responsible and concerned
manner with respect to matters affecting the environment, health
and safety and its stakeholders. The EHS Committee met four times
during 2017.
Director Education
The
Board encourages directors and senior management to participate in
appropriate professional and personal development activities,
courses and programs, and supports management’s commitment to
the training and development of all permanent
employees.
Director
education is implemented in the following ways at
Denison:
23
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
|
● An
on-line board portal dedicated exclusively to the
Board
|
In
addition to storing meeting materials, Denison’s board portal
houses a reference manual, which includes corporate information,
industry information, regulatory and governance updates and
corporate policies. As a hosted website dedicated to our Board, the
portal is current and available to directors wherever they
are.
|
|
● Management
Presentations to the Board and to Committees
|
When
appropriate, management prepares and presents relevant information
to Board members. For instance, at each regular Board meeting, the
Chief Executive Officer provides an industry and market update.
Similarly, the Company’s legal counsel also provides
directors and senior officers of the Company with summary updates
of any developments relating to the duties and responsibilities of
directors and officers and to any other corporate governance
matters. Denison’s Chief Financial Officer ensures that the
Audit Committee is apprised of relevant developments and
issues.
|
|
● Third-Party
Presentations for the Board
|
From
time to time, a leading Toronto law firm provides topical
presentations via webinar or other presentation to Denison’s
Board. In addition, the Company’s external auditor provides
education when requested and warranted.
|
|
● External
Conferences
|
Directors are
encouraged to attend external conferences, seminars and courses at
Denison’s expense. The Corporate Secretary notifies Board
members of relevant educational opportunities from time to
time.
|
|
● Updates
and Subscriptions
|
Management
distributes updates, newsletters and articles on industry and
regulatory information to the Board on a regular basis via email.
Additionally, the Company maintains subscriptions to regular
newsletters on topics of interest for circulation to the
Board.
|
The
Corporate Governance and Nominating Committee also coordinates an
orientation session for new Board members, covering a range of
topics from the role of the Board, its committees and directors to
Denison’s business and the uranium business
generally.
Directors’
and Officers’ Liability Insurance
The
Company maintains liability insurance for its directors and
officers acting in their respective capacities in an aggregate
amount of $50,000,000, subject to a deductible of $250,000 per
occurrence for insured claims including claims under securities
laws for which the Company has provided an indemnity. There is no
deductible for non-indemnified claims. The current policy is for
the period from November 1, 2017 to November 1, 2018. The premium
paid by the Company in 2017 for its directors’ and
officer’s liability insurance was $310,628. No amounts were
paid by individual directors and officers for this
coverage.
24
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
DIRECTOR COMPENSATION
Denison
recognizes the contribution that its directors make to the Company
and seeks to compensate them accordingly. The Compensation
Committee is responsible for making recommendations as to director
compensation for the Board’s consideration and approval. When
annually reviewing the Board’s compensation arrangements, the
Compensation Committee considers the following
objectives:
|
● Board
compensation should be competitive to attract talent.
|
Compensation
is set at a level that will attract desirable candidates and retain
current directors. Denison recognizes that there is considerable
competition for qualified directors in the mining
sector.
|
|
● Board
compensation should reward directors appropriately.
|
Denison
recognizes that directors need to be compensated fairly for their
time and efforts and the risks and responsibilities which they
assume as directors in an increasingly complex regulatory
environment.
|
|
● Board
compensation should align the interests of directors with those of
the Shareholders.
|
Denison’s
compensation package, including fees and options, coupled with the
Share ownership requirement imposed on directors aligns
directors’ interests with those of its
Shareholders.
|
|
● Board
compensation should be fair.
|
Denison
seeks to reward its directors reasonably and on par with directors
of comparable companies.
|
In
2010, the Compensation Committee engaged Towers Watson & Co. to
evaluate the Board's compensation. The Compensation Committee
adopted a number of key principles for Denison’s
directors’ compensation from the Towers Watson report which
the Committee still applies when making compensation
decisions:
●
Director
compensation must appropriately reward directors for their time
commitment and compensate them for the risks and responsibilities
they assume in their roles for the Company.
●
Competitive
director compensation is critical to the Company’s ability to
attract and retain qualified and desirable directors.
●
Approximately half
of directors’ compensation at Denison should be provided in
cash and the balance should be by way of equity to provide further
incentive to directors.
To
achieve these objectives, Denison’s directors receive cash
and equity compensation.
In
2015, the Compensation Committee engaged Global Governance Advisors
("GGA") to assist in the
evaluation of the Board's compensation in comparison to the
Company's peer group, with reference to the "2014 Report on
Executive & Board Remuneration" produced by GGA. Having
considered the report by GGA and the Company's current operations,
the Compensation Committee concluded that a revision to the Board
compensation would be appropriate. The compensation was adjusted to
remove compensation for attendance at individual meetings and to
reflect the appointment of an executive chairman. No further
changes to director compensation were made in 2016 or
2017.
In
2018, as part of the Compensation Committee’s ongoing review
of Board compensation, and its broader commitment to enhance
governance practices and to be cognizant of current market trends
in directors’ compensation, the Board did not grant stock
options to the directors. Instead, the Board approved the grant of
66,000 RSUs to the Executive Chairman and 33,000 RSUs to each other
Denison director. See “Equity Compensation Plans”
starting on page 44 for more details on the RSUs.
Cash
Compensation
In
2017, Denison’s director cash compensation included an annual
retainer which varied depending on a director’s role on the
Board, an annual chair fee for serving as a committee chair and an
annual committee membership fee for serving on a committee of the
Board. The table below sets out directors’ retainers and fees
in 2017.
25
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
|
Annual Retainer1
|
CAD$
|
|
Executive
Chairman
|
45,000
|
|
Other
directors
|
30,000
|
|
Committee / Chair Fees
|
CAD$
|
|
Lead
Director
|
10,000
|
|
Audit
Committee Chair
|
15,000
|
|
Other
Committee Chairs
|
8,500
|
|
Committee
membership2
|
3,000
|
Note
to Cash Compensation:
1.
No retainer is
payable to any director who attends less than 50% of Board
meetings.
2.
The EHS Committee
chair and members have waived receipt of fees for their services on
such committee.
Denison
also reimburses directors for any reasonable travel and
out-of-pocket expenses relating to their duties as directors. In
March 2016, the Company entered into a services agreement with
Lundin S.A. to provide certain office and boardroom access and
administrative support to directors and officers of Denison that
use the Lundin S.A. offices in Geneva, Switzerland, which access
and services are most often used by the Company's Executive
Chairman.
Equity
Compensation
In
addition to cash compensation, Denison compensates its directors
through the grant of stock options under Denison’s Share
Option Plan (the “Option Plan”). The Option Plan is
described starting on page 45 of this Circular. The Board believes
that option grants help to align directors’ interests with
those of Shareholders and also provide additional incentive to
directors for corporate performance.
In
2017, the Board approved a grant of 50,000 options pursuant to the
Option Plan to each non-employee director, which is consistent with
the grant to each director in 2016 and 2015, and a grant of 100,000
options pursuant to the Option Plan to the Company's Executive
Chairman.
2017
Director Compensation
The
table below sets out what Denison paid to directors in retainers
and fees in 2017.
|
Name
|
Retainer and Fees Earned
|
Option-based Awards
|
All Other Compensation
|
Total
|
|
|
(CAD$)
|
(CAD$)1
|
(CAD$)
|
(CAD$)
|
|
W.
Robert Dengler
|
38,500
|
14,500
|
Nil
|
53,000
|
|
Brian
D. Edgar
|
41,500
|
14,500
|
Nil
|
56,000
|
|
Ron F.
Hochstein
|
30,000
|
14,500
|
Nil
|
44,500
|
|
Kwang
Hee Jeong2
|
26,696
|
14,500
|
Nil
|
41,196
|
|
Lukas
H. Lundin
|
45,000
|
29,000
|
Nil
|
74,000
|
|
William
A. Rand
|
36,000
|
14,500
|
Nil
|
50,500
|
|
Catherine J. G.
Stefan3
|
61,200
|
14,500
|
Nil
|
75,700
|
Notes
to 2017 Director Compensation:
1.
This amount
represents the fair value, on the date of grant, of awards made
under the Option Plan for the applicable financial year. The grant
date fair value has been calculated using the Black Scholes
option-pricing model according to IFRS 2 Share-based payment.
2.
Directors fees for
Mr. Jeong were paid to KHNP Canada Energy Ltd.
3.
Ms. Stefan received
$3,200 for attendance at SOX meetings in 2017 in addition to her
annual retainer.
26
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Directors’
Outstanding Option-Based Awards
The
table below sets out for each director all option-based awards
outstanding at the end of 2017.
|
Name
|
Number
of Shares underlying unexercised options (#)
|
Option
exercise price (CAD$)
|
Option
expiration date
|
Value
of unexercised in-the- money options (CAD$)1
|
|
W.
Robert Dengler
|
50,000
|
1.30
|
March
10, 2018
|
Nil
|
|
|
50,000
|
1.82
|
March
5, 2019
|
Nil
|
|
|
50,000
|
1.10
|
March
6, 2020
|
Nil
|
|
|
50,000
|
0.64
|
March
10, 2021
|
2,500
|
|
|
50,000
|
0.85
|
March
8, 2022
|
Nil
|
|
Total
|
250,000
|
|
|
|
|
Brian
D. Edgar
|
50,000
|
1.30
|
March
10, 2018
|
Nil
|
|
|
50,000
|
1.82
|
March
5, 2019
|
Nil
|
|
|
50,000
|
1.10
|
March
6, 2020
|
Nil
|
|
|
50,000
|
0.64
|
March
10, 2021
|
2,500
|
|
|
50,000
|
0.85
|
March
10, 2022
|
Nil
|
|
Total
|
250,000
|
|
|
|
|
Ron F.
Hochstein
|
200,000
|
1.30
|
March
10, 2018
|
Nil
|
|
|
200,000
|
1.82
|
March
5, 2019
|
Nil
|
|
|
250,0002
|
1.10
|
March
6, 2020
|
Nil
|
|
|
50,000
|
0.64
|
March
10, 2021
|
2,500
|
|
|
50,000
|
0.85
|
March
10, 2022
|
Nil
|
|
Total
|
750,000
|
|
|
|
|
Kwang
Hee Jeong
|
50,000
|
0.85
|
March
10, 2022
|
Nil
|
|
Total
|
50,000
|
|
|
|
|
Lukas
H. Lundin
|
50,000
|
1.30
|
March
10, 2018
|
Nil
|
|
|
50,000
|
1.82
|
March
5, 2019
|
Nil
|
|
|
50,000
|
1.10
|
March
6, 2020
|
Nil
|
|
|
100,000
|
0.64
|
March
10, 2021
|
5,000
|
|
|
100,000
|
0.85
|
March
10, 2022
|
Nil
|
|
Total
|
350,000
|
|
|
|
|
William
A. Rand
|
50,000
|
1.30
|
March
10, 2018
|
Nil
|
|
|
50,000
|
1.82
|
March
5, 2019
|
Nil
|
|
|
50,000
|
1.10
|
March
6, 2020
|
Nil
|
|
|
50,000
|
0.64
|
March
10, 2021
|
2,500
|
|
|
50,000
|
0.85
|
March
10, 2022
|
Nil
|
|
Total
|
250,000
|
|
|
|
|
Catherine J.G.
Stefan
|
50,000
|
1.30
|
March
10, 2018
|
Nil
|
|
|
50,000
|
1.82
|
March
5, 2019
|
Nil
|
|
|
50,000
|
1.10
|
March
6, 2020
|
Nil
|
|
|
50,000
|
0.64
|
March
10, 2021
|
2,500
|
|
|
50,000
|
0.85
|
March
10, 2022
|
Nil
|
|
Total
|
250,000
|
|
|
|
Notes
to Directors’ Outstanding Option-Based Awards:
1.
Option values have
been calculated using the closing price of the Shares on the TSX on
December 29, 2017 (last trading date of 2017) of $0.69 per share,
less the applicable exercise price of the outstanding options. As
at December 31, 2017, some of the above options had not fully
vested. The above value of unexercised in-the-money options has
been computed assuming that all of the options have
vested.
2.
Mr. Hochstein
received a grant of options in recognition of his services as
President and CEO prior to resigning those roles in January 6, 2015
and March 23, 2015, respectively, in addition to the options
received for his role as Executive Chairman of Denison at the time
of this grant.
27
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Value Vested or Earned in 2017
The
following table sets out for each non-employee director the value
of the Company’s option- based equity plan compensation
vested or earned during the financial year ended December 31, 2017.
The Company had no non-equity incentive plan compensation for
directors at December 31, 2017.
|
Name
|
Option-based
awards
Value
vested during the year1
(CAD$)
|
|
W.
Robert Dengler
|
(250)
|
|
Brian
D. Edgar
|
(250)
|
|
Ron F.
Hochstein
|
(22,125)
|
|
Kwang
Hee Jeong
|
Nil
|
|
Lukas
H. Lundin
|
5,750
|
|
William
A. Rand
|
(250)
|
|
Catherine J.G.
Stefan
|
(250)
|
Note
to Value Vested or Earned in 2017:
1.
The value vested
during the year reflects the aggregate dollar value that would have
been realized if the options that vested in 2017 were exercised on
their vesting date. Options that had a negative value on their
vesting date are included in this calculation. A negative value
indicates that the exercise price of the option exceeds the market
value of Denison’s shares on the vesting date.
Share Ownership Requirement
The
Board has adopted a Share ownership requirement for its members. It
provides that all non- employee directors must own a requisite
number of Shares by the later of five years from becoming a
non-employee director or March 7, 2013, being the date on which the
Share ownership requirement was increased. In 2017, directors were
required to own Shares with a cost equal to three times the value
of their annual director retainers. Stock options do not count
toward directors’ Share ownership requirements. The Board has
exempted nominees of KHNP, the Company’s largest shareholder,
from this requirement. In 2017, all directors to whom the Share
ownership requirement applied held a sufficient number of
Shares.
Loans
to Directors
As at
the date of this Circular, Denison and its subsidiaries had no
loans outstanding to any current or former directors, except
routine indebtedness as defined under Canadian securities
laws.
28
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
EXECUTIVE COMPENSATION
This
section of the Circular discusses Denison’s executive
compensation program and the pay decisions affecting its Named
Executive Officers (“NEOs”). The table below sets out
Denison’s NEOs for the 2017 financial year.
|
NEO
|
Position(s)
during 2017
|
Basis
|
|
David
D. Cates
|
President
& Chief Executive Officer
|
The
Chief Executive Officer qualifies as an NEO under Canadian
securities laws.
|
|
Mac
McDonald
|
Vice
President Finance & Chief Financial Officer
|
The
Chief Financial Officer qualifies as an NEO under Canadian
securities laws.
|
|
Peter
Longo
|
Vice
President, Project Development
|
Mr.
Longo was one of the three most highly compensated officers,
excluding the CEO and the CFO, at the end of the year
|
|
Michael
Schoonderwoerd
|
Vice
President, Controller
|
Mr.
Schoonderwoerd was one of the three most highly compensated
executive officers, excluding the CEO and the CFO, at the end of
the year.
|
|
Dale
Verran
|
Vice
President, Exploration
|
Mr.
Verran was one of the three most highly compensated executive
officers, excluding the CEO and the CFO, at the end of the
year.
|
The Objectives of the Company’s Compensation
Program
Denison
strives to improve Shareholder value through sustainable corporate
performance. The Company recognizes that its employees and, in
particular, the leaders within the organization have a significant
impact on Denison’s success in the uranium
market.
In
support of its goal, Denison’s executive compensation program
has three objectives:
1.
Align the interests of its executive officers with the long-term
interests of the Company and its Shareholders.
2. Link
compensation to the performance of both the Company and the
executive.
3.
Compensate executive officers at a level and in a manner that
ensures that Denison is capable of attracting and retaining
talented executives.
Managing Risk
When
determining an executive’s compensation package, the
Compensation Committee seeks to balance annual performance
incentives, which are awarded based on success against pre-
established short-term corporate and individual goals, with
long-term incentive payments, including stock option grants under
Denison’s Option Plan, to drive longer term performance. In
doing so, the Compensation Committee considers the implications of
each of the various components of the Company’s compensation
policies and practices to ensure that executive officers are not
inappropriately motivated towards shorter-term results or excessive
risk taking or illegal behaviour.
The
Compensation Committee uses a number of strategies to reduce the
risk associated with compensation, including:
●
Reviewing and
approving annual individual objectives of executives and then
assessing performance against these objectives when awarding the
individual performance component of the annual bonus;
●
Considering the
Company’s performance relative to its peers when reviewing
the corporate performance component of the NEO’s annual
bonus;
●
Making the annual
bonus payment of the CEO and the CFO conditional upon a claw back
agreement, whereby each of them personally agrees to reimburse any
portion of their bonus payment which is awarded for achievements
that are found to involve their fraud, theft or other illegal
conduct;
29
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
●
Considering
individual performance against set objectives when determining the
quantum of any stock option grants to executives;
●
Setting standard
vesting terms on stock option grants which align optionees’
interests with longer term growth of the Company, using 12-month
and 24-month vesting provisions and five year option
terms;
●
Acknowledging the
Board’s role in overseeing compensation policies and
practices and exercising discretion to adjust payouts up or down;
and
●
Prohibiting
Denison’s directors and officers from purchasing financial
instruments that are designed to hedge or offset a decrease in
market value of the Shares.
Compensation
Decision-Making
The
Compensation Committee reviews all of Denison’s policies and
programs relating to executive compensation and makes
recommendations to the Board. This process involves:
|
● Benchmarking
and Executive Incentive Bonus Plan review
|
The
Compensation Committee periodically reviews Denison’s
compensation practices against a peer group of companies to ensure
that the Company’s compensation is in line with industry. At
the same time, the Compensation Committee reviews the Executive
Incentive Bonus Plan (the “Bonus Plan”) annually and
considers if any modifications are required.
|
|
● Establishing
objectives to measure performance
|
The
objectives of the CEO are reviewed by the Compensation Committee
and recommended to the Board for ultimate approval. The
Compensation Committee reviews and approves the annual objectives
of the other NEOs.
|
|
● Evaluating
performance
|
The
performance of the CEO is reviewed by the Compensation Committee.
The performance of the other NEOs is reviewed by the CEO and
reported to the Compensation Committee.
|
|
● Determining
compensation packages
|
The
CEO’s base salary and bonus grants are calculated, reviewed
by the Compensation Committee and recommended to the Board for
ultimate approval. The base salaries and bonuses of the other NEOs
are reviewed and approved by the Compensation Committee. The Board
approves all stock option grants.
|
Compensation
Consultant Advice
In
connection with the appointment of a new President and CEO in 2015,
with the appointment of Mr. Cates, Denison retained the services of
Global Governance Advisors ("GGA") to review the compensation of the
President and CEO and to provide insight regarding market best
practices for CEO severance provisions and one-time equity awards
upon promotion.
Denison
further retained the services of GGA to review and report on the
competitiveness of the Company’s long-term incentive plan,
after the Company received feedback from certain investors,
suggesting the Company’s management could hold more equity in
the Company.
Benchmarking
Denison
seeks to provide competitive total compensation packages to its
executive officers to ensure that it attracts and retains the most
talented individuals. Accordingly, the Compensation Committee
relies on input from independent compensation advisors from time to
time and other outside information, including the insight of Board
members. Denison’s target compensation position is the median
against a peer group of similar type and size of Canadian mining
companies.
In
early 2017, Denison retained the services of GGA to review the
Company’s peer group, assess the Company’s long term
incentive plan and to provide insight regarding the typical pay mix
for CEOs within the peer group. Included in the report was a digest
of the mix of CEO pay amongst salary, short and long term
incentive, as well as share ownership levels of the CEOs included
in the peer group.
30
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
The
following criteria were used in creating the Company’s peer
group: North American-based companies, with a preference for
Canadian headquartered companies listed on the TSX, at the
pre-production stage of development, focused on exploration and
development of precious metals or other minerals with three or more
current expansion projects and generally of a similar size (0.5x to
2.0x) in terms of total assets and market capitalization. Based on
these factors, it was determined that the following companies were
suitable peer comparators for consideration in determining levels
of senior executive compensation: Alexco Resources Corp., Energy
Fuels Inc., UR-Energy Inc., Largo Resources Inc., NexGen Energy
Ltd., Roxgold Inc., Fission Uranium Corp., Seabridge Gold Inc.,
Continental Gold Inc., Sabina Gold & Silver Corp., Lundin Gold
Inc., Altius Minerals Corporation, Polymet Mining Corp., Premier
Gold Mines Limited, Mountain Province Diamonds Inc. and Platinum
Group Metals Ltd.
The
results of the benchmarking review by GGA illustrated that the
Company’s current pay mix was disproportionately weighted to
base pay, as compared to its peers, and that the long term
incentive portion of the pay mix was lacking. Accordingly, the
Compensation Committee has made modifications to its approach for
the issuance of long term incentive awards: (a) with a focus on the
issuance of stock options in 2017 and 2018, and (b) the adoption of
the Share Unit Plan (for consideration by Shareholders at the
Meeting) in 2018. The Compensation Committee intends to continue to
evaluate the overall appropriateness of the Company’s NEO
compensation mix in subsequent periods.
Executive
Compensation-Related Fees
Fees of
(a) $16,800 were paid to GGA for services rendered to the Company
in 2015 and, (b) $13,808 were paid to GGA for services rendered to
the Company in 2017.
Compensation Framework
The
Company uses three key compensation components to achieve the
executive compensation program’s objectives: base salary,
annual performance incentive and long-term incentive.
Base Salary
Base
salary is a fixed component of pay that compensates executives for
fulfilling their roles and responsibilities and aids in attracting
and retaining the qualified executives. Base salaries are reviewed
annually to ensure that they reflect how an individual fulfills his
responsibilities and to ensure that Denison’s compensation
stays competitive.
Annual Performance Incentives
Denison’s
annual performance incentive is a short-term variable element of
compensation in the form of a cash bonus. Based on a recommendation
of the Compensation Committee, Denison’s Board has approved
the Bonus Plan for Denison’s CEO, CFO and Vice-Presidents.
Depending on an executive’s position within the Company, his
or her bonus represents a varying percentage of his or her target
total compensation. Denison’s most senior executives have the
highest amount and proportion of annual incentive compensation as
follows:
CEO
– up to 80%
of base salary
CFO
– up to 50%
of base salary
VP
– up to 40%
of base salary
|
The stated goal of
Denison’s compensation program is to improve Shareholder
value through sustainable corporate performance. Linking corporate
and personal performance to support this goal, Denison has
incorporated two performance measures into its bonus
calculations:
|
Corporate performance is based on
quantitative performance measures, while the individual component
is both qualitative and quantitative.
|
1.
Corporate performance
2.
Individual performance
31
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Corporate Performance Measures: Denison has chosen to measure
corporate performance using recognized and objective measurements
for Shareholders:
Shareholder Return (SR)
measures, on the last day of the year, how well management has
enhanced Denison’s Share price.
Shareholder Return Relative to
Industry (SRI) measures the
return of Denison’s Shareholders relative to the uranium
industry’s return to shareholders. For the purposes of this
assessment, industry return is assessed with reference to the
Global X Uranium ETF, an investment fund listed on NYSE
Arca.
The
annual target for SR is set at the beginning of the year and
determined by the CEO in consultation with the Compensation
Committee. The actual Corporate Performance Measures will be
determined at the end of the fiscal year and measure performance
for that year. To eliminate the impact of a single trade at the
close of the trading day, the share price used to evaluate SR and
SRI will generally be the single day volume weighted average on the
last trading day of the year. The allocation of the Corporate
Performance measure is 50% to the SR measure and 50% to the SRI
measure.
Individual Performance Measures: Denison’s qualitative
performance measurements reflect the performance of individuals and
their teams in meeting Denison's annual business objectives. They
include health, safety and environment metrics, budget cost control
and resource growth. For example, if in any year the Company
suffers a fatality at any of its operations worldwide, the
performance measurement of health, safety and environment component
of the individual performance measure will be assessed at 0% for
all executives under the plan.
Individual
performance measures may also include personal development goals,
such as team building, human resources, personal development, and
long-term objective achievement.
Each
year, the CEO meets with the executives to develop a set of
Individual Performance Measures and to set objectives for the year,
which are then presented to and approved by the Compensation
Committee. The CEO also presents his Individual Performance
Measures to the Compensation Committee for recommendation to the
Board for approval.
Bonus Weighting and Proportions
The
following table below provides information about the performance
measure categories and their weight for each
executive.
|
|
Corporate
(%)
|
Individual
(%)
|
|
CEO
|
70
|
30
|
|
CFO
|
60
|
40
|
|
VP
|
50
|
50
|
Finally,
for each Performance Measure, there are three levels of
achievement:
|
|
Base
Target
|
Stretch
Target
|
Breakthrough
Target
|
|
CEO
|
Up to
50%
|
60%
|
80%
|
|
CFO
|
Up to
30%
|
40%
|
50%
|
|
VP
|
Up to
20%
|
30%
|
40%
|
32
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Long-Term Incentives
Stock
option grants to executives play an important role in helping
Denison meet the objectives of its compensation program. Stock
options reward long-term growth and an appreciation in Share price
thus creating Shareholder value. Additionally, stock option grants
are commonplace in the Canadian mining industry and are an
important part of keeping Denison’s compensation competitive
with that of its peers.
Denison’s
Option Plan is described in detail starting on page 45 of this
Circular. The Compensation Committee has a “Stock Based Compensation Grant
Policy”, as amended by approval of the Board on March
8, 2018, which provides for a uniform granting practice for
eligible employees at Denison.
Under
Denison’s policy, stock option grants are made annually
following the release of year end results. Stock options continue
to be priced in accordance with the Option Plan and the
Company’s Disclosure Policy. Half of the options granted vest
on the first anniversary of the grant, with the remainder vesting
on the second anniversary of the grant. All options granted under
the policy have a five year term.
The
magnitude of a grant for an employee is based on:
(a)
Scope of
Role & Responsibility: an employee’s level of
responsibility and ability to impact the Company’s results;
and
(b)
Individual
and Corporate Performance: the assessment of individual and
corporate performance (as detailed above) is a factor in
determining the quantity of equity compensation to be granted to
Denison’s executive officers, linking the magnitude of equity
based compensation to the objectives and achievements of each
executive officer.
Provided
shareholder support is received, and the Share Unit Plan is
approved by the Shareholders, it is the intention of the Company to
factor in the issuance of Restricted Share Units and/or Performance
Share Units to its executives as part of its long-term incentive
program. Any such grants would be in keeping with the policies of
the Compensation Committee, largely in line with those set forth in
the Stock Based Compensation Grant Policy described
above.
NEO Compensation Results 2017
The
Board reviews the Company’s performance and the analysis and
recommendations of the Compensation Committee in respect of NEO
compensation throughout the year, including the Compensation
Committee's assessment of the competitiveness of salaries within
Denison's peer group, and approved the following decisions
regarding base salaries, long term incentive awards, and annual
performance incentives as it relates to Denison’s fiscal 2017
period.
Base Salaries
Mr.
Cates became President and Chief Financial Officer on January 13,
2015. Effective March 23, 2015 and concurrently with the
appointment of Mr. McDonald as Chief Financial Officer, Mr. Cates
became President and Chief Executive Officer. As a result of the
appointments, his salary was set at $250,000, subject to review
after 6 months, after which his salary was set at $270,000 for
2016. Mr. Cates’ salary for 2017 was $300,000.
Mr.
McDonald was appointed Vice President Finance and Chief Financial
Officer effective March 23, 2015 and his salary was set at $205,000
for 2015, $220,000 for 2016 and $248,000 for 2017.
Mr.
Schoonderwoerd was appointed Vice President Controller on January
1, 2013. In 2015, Mr. Schoonderwoerd's salary was set at $187,000,
increased to $189,610 for 2016 and $193,610 for 2017.
Mr.
Longo joined the Company as Vice President Project Development in
November 2014, with a salary of $235,000, which was increased to
$240,000 for 2016 and $245,000 for 2017.
33
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Mr.
Verran was promoted from the position of Technical Director to Vice
President Exploration effective January 1, 2016. His annual salary
was $184,000 in 2016 and $210,000 in 2017.
Compensation upon
termination for the NEOs is discussed in detail on page 42 of this
Circular.
Long Term Incentives
Denison’s
NEOs received an annual stock option grant in March 2017 in
accordance with Denison’s Stock Option Grant Policy. These
option grants are detailed in the Outstanding Option-Based Awards
table on page 41 of this Circular.
In
addition, in March 2018 the Board granted to NEO’s certain
stock options and Restricted Share Units in lieu of cash payments
with respect to a portion of their bonus for services performed in
fiscal 2017. These grants are detailed on page 37 of this Circular.
For more information on PSU and RSU equity compensation grants as
at the date of this Circular, see “Ratification and
Confirmation of Share Units Granted Under the Share Unit Plan
granted in 2018” on page 14 of this Circular.
There
were no options or other equity compensation held by the NEOs that
were re-priced downward during the most recently completed
financial year of the Company.
Annual Performance Incentives
Denison's NEOs were
eligible to receive a bonus for the year ended December 31, 2017,
in accordance with the Company’s Bonus Plan. As previously
discussed, computation of bonuses is based on assessments of
corporate and individual performance.
2017 Corporate Performance
As
explained earlier in this Circular, Corporate Performance Measures
are assessed by looking at Shareholder Return (SR)1 and Shareholder
Return Relative to Industry (SRI)2. The Compensation
Committee had set a target of 10% SR for 2017. For SRI under the
Company’s Bonus Plan, the performance of Global X Uranium ETF
is used as the bench mark for measuring industry
performance.
When
the Compensation Committee assessed the Company’s performance
in 2017, it determined that Denison’s SR for the year was
-2.14% (below the 10% target) and its SRI was 4.92% (with the
Global X ETF benchmark quoted at 16.84%). As the Company’s
performance did not meet either target, no bonus was paid on
account of SR or SRI.
2017 Individual Performance
In May
2017, the Board of Directors approved individual objectives for Mr.
Cates upon the recommendation of the Compensation Committee. In
March 2018, the Compensation Committee assessed Mr. Cates'
performance against these objectives to determine his entitlement
under the Bonus Plan.
The
Committee determined that Mr. Cates had substantially completed his
objectives with the following analysis:
_________________________________________________________________
1 SR is computed based on the share price of
Denison on the TSX in Canadian dollars.
2 SRI is computed based on the share price of
Denison on the NYSE American. This measure is used for SRI, as the
bench mark (Global X Uranium ETF) is quoted in US dollars. By using
Denison’s share price on the NYSE American, there is no risk
of unintended foreign exchange volatility impacting the assessment
of the Company’s performance against the SRI bench
mark.
34
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
|
Objective
|
|
Assessment
|
|
1.
Drive the development of the Wheeler River project consistent with
the Company’s objective of becoming the next uranium producer
in the Athabasca Basin.
|
√
|
● On January 31,
2018, the Company announced an updated NI 43-101 resource estimate
for the Gryphon deposit, reporting an 88% increase from the
previous mineral resource estimate for the Wheeler River property,
representing an important step in the Pre Feasibility Study process
for the project.
● The Company
continued with PFS related project work in 2017, including the
study of alternative mining methods at Phoenix in the attempt to
reduce upfront CAPEX.
● Work continued with
engineering and environmental studies and
consultations.
● MOU agreements were
discussed, with two executed, with the four prioritized northern
communities, as stakeholders in the development of the
project.
|
|
2.
Develop a comprehensive five-year strategic plan (including
financial plan) for the Company, for discussion with the Board of
Directors.
|
√
|
● Presented a
preliminary draft of the 5 year plan as part of the
President’s report for Q3-2017 Board meeting.
● Comprehensive
5-year strategic plan was presented during the Board’s 2018
Budget meeting, outlining management’s strategy for funding
its various projects and expenditures.
|
|
3.
Obtain financing to fund continued exploration and evaluation
activities at Wheeler River and other high priority properties to
the end of 2018 and beyond.
|
√
|
● Obtained financing
for 2018 exploration program with closing of $14,500,000 bought
deal private placement of flow-through Shares in February
2017.
|
|
4.
Continue to dynamically manage the Company’s strategic
resource base and continue to upgrade the Company’s
exploration portfolio for exposure to a new discovery on a project
outside of Wheeler River.
|
√
|
● Carried out
significant evaluations of potential transactions, and discovered
new mineralization at Waterbury Lake – leading to the Huskie
zone.
|
|
5. Meet
or surpass operating plan / budget objectives by maintaining or
increasing the sources of internally generated cash flows, and
reducing non-exploration expenditures by a target of
5%
|
√
|
● Focused DES on
pursuing new business opportunities, and successfully entering into
a two year services agreement with Rio Algom Ltd., a subsidiary of
BHP Billiton LTd., in relation to the management and operation of
Rio Algom’s the Elliot Lake and Selbaie sites.
● Achieved Corporate
G&A (excluding project costs, legal suits or stock compensation
expense) for 2017, 3.2% under budget.
|
|
6. Given
challenging market conditions, enhance the scope of the
Company’s investor relation and stakeholder relation
activities
|
√
|
● Significant
progress was made to enhance the Company’s marketing
materials and shareholder communications efforts – namely a
modernized slide deck was created and deployed, an email marketing
database and template was created to directly communicate with
interested investors, and an investor database was created –
with contact information and meeting notes from all one-to-one
meetings.
● Successfully
recruited Shae Frosst, as Manager of Investor Relations &
Corporate Development, as an additional point of contact for
investors and analysts.
|
|
7.
Continue to work towards the collection of contingent payments
owing from Uranium Industry a.s. (“UI”) related to the
prior sale of the Gurvan Saihan Joint Venture.
|
1/2
|
● Negotiations with
UI continued, with an extension agreement with UI in early 2017,
calling for an installment by Jan. 31, 2017, the payment of regular
interest at 5%, and an extended due date of July 2017. To date, no
payments have been received under the extension.
● On December 12,
2017, the Company filed a Request for Arbitration under the
Arbitration Rules of the London Court of International Arbitration,
to which UI submitted its response and counterclaim on February 14,
2018. The parties have been working to appoint the arbitration
panel and its chair.
|
|
8.
Continue to instill a culture of 100% regulatory EH&S
compliance
|
√
|
● Consistently
positive Environment, Health and Safety reports continue to speak
to Denison’s overall commitment to a culture of 100%
regulatory and environmental compliance.
|
|
9.
Continue to instill a culture of 100% ethical business
conduct and zero tolerance
|
√
|
● Denison continues
to be committed to maintaining a culture of 100% ethical business
conduct and a reputation amongst industry participants and
regulators as being highly reputable and ethical.
|
Each of
the other NEO's eligible for a bonus for 2017 set individual
performance objectives for 2017, and the Compensation Committee
assessed their performance against these objectives for determining
entitlement under the Bonus Plan.
In
looking at Mr. McDonald's performance over 2017, the Compensation
Committee determined that Mr. McDonald exceeded his bonus targets
on all of his objectives. Among targets which he surpassed, Mr.
McDonald (a) made significant contributions to the development of
the Company’s comprehensive 5-year strategic plan, which was
presented and approved during the Board’s 2018 Budget
meeting, outlining management’s strategy for funding its
various projects and expenditures; (b) led the management of DES in
the scoping and assessment of different reporting systems, and the
optimization of current systems; (c) guided the financial
management of corporate development, capital raising, investor
relations, and other strategic activities entered into during the
year; (d) oversaw critical finance projects identified for 2017,
and (e) identified areas for budget cost control.
The
Compensation Committee concluded that Mr. Longo outperformed
against the majority of his objectives in 2017. Mr. Longo was
determined to have exceeded his objectives relating to the
advancement of engineering field programs, optimization studies,
environmental baseline studies, community consultations, and other
preparation for a Pre-Feasibility Study and Environmental
Assessment process for the Wheeler River project.
The
Compensation Committee considered Mr. Schoonderwoerd’s
performance in 2017 against his objectives. Mr. Schoonderwoerd
exceeded expectations during the year in respect of several of his
objectives, most notably (a) becoming the operational compliance
leader within the finance team; (b) improving team workflows to
improve frequency and timeliness of internal financial reports; and
(c) taking ownership of the Company’s tax reporting and
compliance responsibilities.
The
Compensation Committee also considered Mr. Verran’s
performance in 2017 against his objectives and concluded that Mr.
Verran had outperformed against most of his objectives in 2017. Mr.
Verran and the exploration team were successful in (a) completing
the work for an updated mineral resource estimate for the Wheeler
River Project announced in January 2018, (b) discovering new
mineralization at the Company’s Waterbury Lake property and
identifying the Huskie zone of mineralization; and (c) meeting and
exceeding exploration cost targets on an “all-in”
dollars per metre basis.
All
NEOs were recognized as exceeding their objectives in 2017 relating
to health and safety, as the Company had no lost time accidents and
was 100% compliant with applicable environmental and health and
safety laws and regulations.
36
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Based
on the foregoing, the assessment of the following NEOs’ bonus
entitlement was:
|
Name
|
Corporate
Calc/Max
(CAD$)
|
Individual
Calc/Max
(CAD$)
|
Total
Calc/Max
(CAD$)
|
|
David
Cates
|
0.0% /
56.0%
|
18.5% /
24.0%
|
18.5% /
80.0%
|
|
|
$0
|
$55,500
|
$55,500
|
|
|
|
|
|
|
Mac
McDonald
|
0.0% /
30.0%
|
17.6% /
20.0%
|
17.6% /
50.0%
|
|
|
$0
|
$43,650
|
$43,650
|
|
|
|
|
|
|
Peter
Longo
|
0.0% /
20.0%
|
14.8% /
20.0%
|
14.8% /
40.0%
|
|
|
$0
|
$36,260
|
$36,260
|
|
|
|
|
|
|
Michael
Schoonderwoerd
|
0.0% /
20.0%
|
13.9% /
20.0%
|
13.9% /
40.0%
|
|
|
$0
|
$26,810
|
$26,810
|
|
|
|
|
|
|
Dale
Verran
|
0.0% /
20.0%
|
15.2% /
20.0%
|
15.2% /
40.0%
|
|
|
$0
|
$32,130
|
$32,130
|
It was
determined by the Board, on a recommendation from management and
the Compensation Committee, that the bonus entitlements be paid to
the NEOs by way of a combination of cash (25%) and an additional
grant of stock option or RSU equity compensation (75%), as outlined
below:
|
Name
|
Total Bonus(CAD$)
|
Cash Portion(CAD$)
|
Equity Portion(CAD$)
|
Bonus Options Granted (1)(#)
|
Bonus RSUs to be Granted (2)(#)
|
|
David
Cates
|
$55,500
|
$13,875
|
$41,625
|
198,214
|
-
|
|
Mac
McDonald
|
$43,650
|
$11,272
|
$32,378
|
154,181
|
-
|
|
Peter
Longo
|
$36,260
|
$9,065
|
$27,195
|
129,500
|
-
|
|
Michael
Schoonderwoerd
|
$26,810
|
$6,703
|
$20,107
|
95,748
|
-
|
|
Dale
Verran
|
$32,130
|
$8,032
|
$24,098
|
45,900
|
31,432
|
|
Total
|
$194,350
|
$48,947
|
$145,403
|
623,543
|
31,432
|
Note:
1.
The options were
valued at $0.21 per underlying Share, calculated using the Black
Scholes option-pricing model, according to IFRS 2 Share-based payment, and applying a 30%
discount factor.
2.
The RSUs were
valued at $0.46 per Share Unit, based on a $0.60 Share price (at
the time of Compensation Committee approval) and an estimated
present value of the Shares to vest under the RSUs over the three
year vesting period at an annual discount rate of 15%.
Performance Graph
The
following graph compares the cumulative total shareholder return
for CAD$100 invested in the Shares on the Toronto Stock Exchange
for the Company’s five most recently completed financial
years with the cumulative total shareholder return of the TSX
S&P/TSX Composite Index for the same period.
The
Share performance as set out in the graph does not necessarily
indicate future price performance. The Shares trade on the TSX
under the symbol “DML”.
37
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Cumulative Value of CAD$100 Investment
Data
supplied by the TSX.
Five-Year Trend in NEO Total Compensation
Compared to Denison Cumulative Value of CAD$100
Investment
To
evaluate the trend in Denison compensation levels in relation to
Share performance as measured in the graph above, Denison relied on
the total annual compensation awarded for fiscal years 2014 through
2017 on the same basis as is currently disclosed in the
“Summary Compensation Table” below, using the fiscal
year 2013 as a base amount for comparing changes in compensation
over time.
Denison
Share data supplied by the TSX.
Five-Year Trend Discussion
The
annual compensation in the table above reflects total compensation
for the CEO and the four other NEOs disclosed each year, rather
than compensation from 2013 to 2017 for the current NEOs who may
not have been NEOs in prior years.
38
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
The
total compensation for Ron Hochstein, Mr. Cates' predecessor, is
included in the above table. In 2012, Mr. Hochstein volunteered to
reduce his base salary by 13.9% as part of the Company’s
transition from a uranium producer to an exploration and
development company (with the sale of its U.S. Mining Division).
His salary remained at the same level through 2013 and 2014, while
his total compensation in those years decreased largely due to the
decrease in the overall size of Mr. Hochstein's bonus.
The
total compensation of Mr. Cates in his former role of Chief
Financial Officer of the Company, is included in “Other NEO
Pay” in 2013 and 2014. Mr. Cates became CFO on January 1,
2013, and the Compensation Committee did not make any adjustment to
Mr. Cates’s base compensation in 2014 and early 2015 in his
role as CFO, except for minor cost of living increases. In
connection with his promotion to President and CEO in 2015, the
Compensation Committee approved a 33.9% increase in Mr. Cates'
salary, increasing it to $250,000. Mr. Cates’ salary was
later increased to $270,000 for 2016 and $300,000 for
2017.
Total
compensation in “Other NEO Pay” trended slightly
downward in 2014 and 2015 compared to 2013. NEO salary increases in
2014 and 2015 were limited to cost of living increases, with the
decline in total compensation reflecting reduced bonus pay due to
Denison’s disappointing SR and SRI performance in 2014 and
2015.
After
consultation with GGA on NEO Compensation in 2015, the Compensation
Committee approved moderate increases in salary compensation for
the NEOs for 2016. In 2017, the Compensation Committee deemed a
further modest increase in salary compensation appropriate, in
consideration of the team’s achievements. When Mr. McDonald
was appointed CFO on March 23, 2015 his salary was set at $205,000
and he received increases to $220,000 in 2016 and $248,000 in 2017
to bring his salary closer to market benchmarks. Mr. Longo joined
the Company in 2014, and his compensation was set at $235,000. No
adjustment was made to his salary until an increase to $240,000 for
2016 and then $245,000 for 2017. Mr. Verran was appointed VP
Exploration and became an NEO effective January 1, 2016, with a
salary of $184,000, which was increased to $210,000 in
2017.
In part
due to investor feedback suggesting that the Company’s
relatively young roster of NEOs could hold more equity in the
Company, GGA was engaged in March 2017 to provide a report, in
part, on the competitiveness of the Company’s long-term
incentive plan. After consideration, the Compensation Committee
approved both an “ordinary” grant of options (with the
grant of 2,065,000 options to NEO’s in accordance with the
Company’s Stock Option Grant Policy) and a
“special” grant of options (with the additional grant
of 1,735,000 stock options) in 2017, thereby increasing the
NEOs’ stake in the Company’s equity. As a result,
equity compensation saw a larger than typical increase in 2017. The
“special” grant of options was also intended to
compensate NEOs for what was assessed as under-optioning the
previous year, based on the most recent benchmarking provided by
GGA.
In
addition, the Compensation Committee considered the form of equity
being issued pursuant to the Company’s long-term incentive
plan with reference to the March 2017 GGA report, which noted that
the grant of share units under a share unit plan would assist
management in increasing their respective share ownership levels in
response to investor feedback. As a result, the Company’s
Share Unit Plan, providing for the issuance of Restricted Share
Units and Performance Share Units was adopted in March, 2018. See
“Equity Compensation Plans” on page 44 for more
details.
39
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Compensation of Named Executive Officers
The
table below is a summary of base salary, incentive-based awards and
other compensation awarded to the NEOs in the last three financial
years. None of the NEOs received any share-based awards or any
non-equity awards under a long-term incentive plan. The Company
does not have any defined benefit or actuarial plans for active
employees.
Summary Compensation Table
|
Name
and Principal
Position
|
Year
|
Salary
(CAD$)
|
Option-based
awards1
(CAD$)
|
Non-equity
Annual
Incentive Plans2
(CAD$)
|
All other
compensation3
(CAD$)
|
Total compensation
(CAD$)
|
|
David
D. Cates
President and
CEO
|
2017
2016
2015
|
300,000
270,000
250,000
|
457,042
34,246
96,495
|
55,500
135,950
39,750
|
25,427
24,293
21,936
|
837,969
464,489
408,181
|
|
Mac
McDonald4
Vice
President, Finance & CFO
|
2017
2016
2015
|
248,000
220,000
158,555
|
345,871
27,082
54,562
|
43,650
80,520
27,060
|
22,668
19,954
16,099
|
660,189
347,556
256,276
|
|
Peter
Longo
Vice
President, Project Development
|
2017
2016
2015
|
245,000
240,000
235,000
|
161,222
21,661
46,378
|
36,260
66,840
37,130
|
14,686
14,303
14,093
|
457,168
342,804
332,601
|
|
Michael
Schoonderwoerd
Vice
President, Controller
|
2017
2016
2015
|
193,610
189,620
186,088
|
119,791
15,012
43,266
|
26,810
46,450
11,310
|
24,671
23,542
22,091
|
364,882
274,624
262,755
|
|
Dale
Verran5
Vice
President, Exploration
|
2017
2016
2015
|
210,000
184,000
155,857
|
119,104
13,104
25,761
|
32,130
46,090
5,100
|
13,287
12,063
5,286
|
374,521
255,257
192,004
|
Notes
to Summary Compensation Table:
1.
This amount
represents the fair value, on the date of grant, of awards made
under the Option Plan for the applicable financial year. See
“Equity Compensation Plans” beginning on page 44 of
this Circular. The grant date fair value has been calculated using
the Black Scholes option-pricing model according to IFRS 2
Share-based payments since it is used consistently by comparable
companies. The key assumptions and estimates used for the
calculation of the grant date fair value under this model include
the risk-free interest rate, expected stock price volatility,
expected life and expected dividend yield. Reference is made to the
disclosure regarding the Company’s Option Plan in Note 20 in
the Consolidated Financial Statements for the Year Ended December
31, 2017 available on SEDAR at www.sedar.com.
2.
These amounts were
earned in the fiscal year noted and were paid in the following
fiscal year. For 2015, in lieu of cash payments, the Company
provided an additional special stock option grant on account of NEO
2015 bonuses. For each of 2016 and 2017, 25% of the NEO bonuses
were paid in cash, with 75% of the NEO bonuses paid by an
additional special stock option grant (see page 37 of this Circular
for more details of the options granted).
3.
These amounts
consist of car allowance, travel-to-work or parking benefits, life
insurance premiums and retirement savings benefits. The retirement
savings benefits component exceeds 25% of the benefits included
under the heading “All Other Compensation”, in 2017,
2016 and 2015, respectively as applicable, as follows (i) for Mr.
Cates: $12,000, $10,800, $10,000; (ii) for Mr. McDonald: $9,920,
$8,800, $6,342; (iii) for Mr. Longo: $9,800, $9,600, $9,400; (iv)
for Mr. Schoonderwoerd: $12,343, $11,377, $10,938; and (v) for Mr.
Verran: $8,400, $7,360, $3,100.
4.
Mr. McDonald joined
Denison effective March 23, 2015.
5.
Mr. Verran joined
Denison in December, 2013 as an independent consultant, became an
employee in July 2015 as Denison’s Director of Exploration
and was promoted to Vice President Exploration effective January 1,
2016.
40
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Incentive Plan Awards
In
prior years, the Company employed two forms of incentive plans to
award its employees for individual and Company performance, namely
option-based awards and non-equity based awards in the form of cash
bonuses. In March 2018, the Board granted share-based incentives,
subject to ratification and confirmation by Shareholders at the
Meeting. See “Equity Compensation Plans” below, for
more information.
Outstanding Option-Based Awards
The
following table sets out for each NEO the number and value of
options outstanding on December 31, 2017.
|
Name
|
Number
of Shares
underlying
unexercised
options
(#)
|
Option
exercise
price
(CAD$)
|
Option
expiration
date
|
Value
of unexercised
in-the-
money options
(CAD$)1
|
|
David
D. Cates
|
80,000
|
1.30
|
March
10, 2018
|
Nil
|
|
|
91,000
|
1.82
|
March
5, 2019
|
Nil
|
|
|
155,000
|
1.10
|
March
6, 2020
|
Nil
|
|
|
200,000
|
0.55
|
November 6,
2020
|
28,000
|
|
|
355,7502
|
0.64
|
March
10, 2021
|
17,788
|
|
|
1,927,6003
|
0.85
|
March
10, 2022
|
Nil
|
|
Total
|
2,809,350
|
|
|
|
|
Mac
McDonald
|
103,000
|
1.01
|
March
20, 2020
|
Nil
|
|
|
100,000
|
0.55
|
November 6,
2020
|
14,000
|
|
|
260,3002
|
0.64
|
March
10, 2021
|
13,015
|
|
|
1,400,9003
|
0.85
|
March
10, 2022
|
Nil
|
|
Total
|
1,864,200
|
|
|
|
|
Peter
Longo
|
82,000
|
1.10
|
March
6, 2020
|
Nil
|
|
|
80,000
|
0.55
|
November 6,
2020
|
11,200
|
|
|
282,6502
|
0.64
|
March
10, 2021
|
14,133
|
|
|
728,8003
|
0.85
|
March
10, 2022
|
Nil
|
|
Total
|
1,173,450
|
|
|
|
|
Michael
Schoonderwoerd
|
55,000
|
1.30
|
March
10, 2018
|
Nil
|
|
|
62,000
|
1.82
|
March
5, 2019
|
Nil
|
|
|
74,000
|
1.10
|
March
6, 2020
|
Nil
|
|
|
80,000
|
0.55
|
November 6,
2020
|
11,200
|
|
|
126,5502
|
0.64
|
March
10, 2021
|
6,327
|
|
|
533,2003
|
0.85
|
March
10, 2022
|
Nil
|
|
Total
|
930,750
|
|
|
|
|
Dale
Verran
|
29,000
|
1.82
|
March
5, 2019
|
Nil
|
|
|
29,000
|
1.10
|
March
6, 2020
|
Nil
|
|
|
80,000
|
0.55
|
November 6,
2020
|
11,200
|
|
|
63,000
|
0.64
|
March
10, 2021
|
3,150
|
|
|
529,9003
|
0.85
|
March
10, 2022
|
Nil
|
|
Total
|
730,900
|
|
|
|
Notes
for Outstanding Option-Based Awards:
1.
Option values have
been calculated using the closing price of the Shares on the TSX on
December 29, 2017 (last trading date of 2017) of $0.69 per share,
less the applicable exercise price of the outstanding options. As
at December 31, 2017, some of the above options had not fully
vested. The above value of unexercised in-the-money options has
been computed assuming that all of the options have
vested.
2.
Comprised in part
of a special stock option grant to each NEO in lieu of cash
payments, on account of NEO 2015 bonuses: Cates, 198,750; McDonald,
135,300; Longo, 185,650; and Schoonderwoerd, 56,550.
3.
Comprised in part
of special stock option grants to each NEO (a) in lieu of cash
payments, on account of NEO 2016 bonuses: Cates, 477,600; McDonald,
282,900; Longo, 234,800; Schoonderwoerd, 163,200; and Verran,
161,900; and (b) to address investor feedback and increase
NEOs’ equity stake in the Company: Cates, 653,000; McDonald,
520,000; Longo, 237,000; Schoonderwoerd, 172,000; and Verran,
153,000.
41
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Value Vested or Earned during 2017
The
table below sets out information concerning the value of incentive
plan awards, including option-based and non-equity incentive plan
compensation, vested or earned during the financial year ended
December 31, 2017 for each NEO.
|
Name
|
Option-based awards Value vested during the year1
(CAD$)
|
Non-equity incentive plan compensation – Value earned during
the year
(CAD$)
|
|
David
D. Cates
|
33,315
|
55,500
|
|
Mac
McDonald
|
26,451
|
43,650
|
|
Peter
Longo
|
27,668
|
36,260
|
|
Michael
Schoonderwoerd
|
9,936
|
26,810
|
|
Dale
Verran
|
7,935
|
32,130
|
Notes
for Value Vested or Earned During 2017:
1.
The value vested
during the year reflects the aggregate dollar value that would have
been realized if the options that vested in 2017 were exercised on
their vesting date. Options that had a negative value on their
vesting date are included in this calculation. A negative value
indicates that the exercise price of the options exceeds the market
value of Denison’s shares on the vesting date.
Loans to Executives
As of
the date of this Circular, Denison and its subsidiaries had no
loans outstanding to any current or former NEOs, except routine
indebtedness as defined under Canadian securities
laws.
Compensation on Termination
Messrs.
McDonald, Longo, Schoonderwoerd and Verran all had similar written
executive employment agreements with the Company at the end of the
financial year, which set out their rights in the event of
termination, including termination without cause or termination by
the executive for "Good Reason" (as defined below).
Upon
termination of the employment agreement by either party for any
reason, the NEO shall be paid all compensation earned by him
(regardless of whether yet paid) as of the effective date of
termination. In the event that the NEO's employment is terminated
(a) by the Company for a reason other than just cause or (b) by the
NEO in the event of a Good Reason, the NEO will be entitled to a
payment equal to 18 months’ salary and a bonus payment in an
amount equal to the bonus payment earned by such NEO for the fiscal
year ending immediately prior to the effective date of
termination.
Pursuant to Mr.
Cates' executive employment agreement with the Company, upon
termination of the employment agreement by either party for any
reason, Mr. Cates shall be paid all compensation earned by him
(regardless of whether yet paid) as of the effective date of
termination. In the event that Mr. Cates's employment is terminated
(a) by the Company for a reason other than just cause or (b) by Mr.
Cates in the event of a Good Reason, Mr. Cates will be entitled to
(i) a payment equal to 24 months’ salary, (ii) a bonus
payment in an amount equal to the bonus payment earned by Mr. Cates
for the fiscal year ending immediately prior to the effective date
of termination, and (iii) a payment equivalent to 19% of the amount
determined pursuant to (i) as compensation for discontinued
benefits.
42
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
In each
contract, a Good Reason means:
●
the assignment of
any duties inconsistent with the status of the executive's assigned
office or a material alteration in the executive’s duties,
responsibilities, status or reporting relationship;
●
a reduction in the
executive’s annual base salary;
●
requiring the
executive to be based in a different location;
●
any other events or
circumstances which would constitute a constructive dismissal at
common law; or
●
a “change of
control” of the Company. A “change of control”
means (a) the acquisition of control or direction by any holder of
the voting rights of 50% or more of the Shares, (b) a cessation of
the incumbent directors constituting a majority of the Board when
the incumbent directors do not recommend or approve of the
replacement directors, or (c) the approval by the Shareholders of
(i) a business arrangement (such as an amalgamation, arrangement or
merger) not approved by the Board which results in the current
Shareholders immediately thereafter not holding more than 50% of
the Shares; (ii) the liquidation, dissolution or winding up of the
Company; or (iii) the sale, lease or other disposition of all or
substantially all of the assets of the Company.
Pursuant to the
Company's Option Plan, subject to a specific provision in an NEO
employment agreement, all options held by directors and employees
of the Company vest immediately following a change of control,
which is defined in the Option Plan as the acquisition of 30% or
more of the then outstanding Shares or a sale by the Company of
substantially all of its assets. All options are then exercisable
for a period of 60 days following the close of any such
transaction.
Pursuant to the
employment agreements for each of Messrs. Cates, McDonald, Longo,
Schoonderwoerd and Verran, if the NEO's employment agreement is
terminated by the Company without cause or by the NEO for Good
Reason, any of such NEO's unvested stock options will automatically
vest and all stock options held by the NEO will be exercisable for
a 90-day period.
The
table below is a summary of the compensation that would have been
paid to the NEOs if any of them had been terminated on December 31,
2017, which includes situations of termination without cause and
termination without cause in the event of a change of
control.
|
Name
|
Separation Pay
(CAD$)
|
Bonus Payment
(CAD$)
|
Value of Options1,2
(CAD$)
|
Payment in lieu of Benefits
(CAD$)
|
Total
(CAD$)
|
|
David
D. Cates
|
600,000
|
135,950
|
45,788
|
57,000
|
838,738
|
|
Mac
McDonald
|
372,000
|
80,520
|
27,015
|
Nil
|
479,535
|
|
Peter
Longo
|
367,500
|
66,840
|
25,333
|
Nil
|
459,673
|
|
Michael
Schoonderwoerd
|
290,415
|
46,450
|
17,528
|
Nil
|
354,393
|
|
Dale
Verran
|
315,000
|
46,090
|
14,350
|
Nil
|
375,440
|
Notes
to Termination Payouts:
1.
Option values have
been calculated using the closing price of the Shares on the TSX on
December 29, 2017 (last trading date of 2017) of $0.69 per share,
less the exercise prices of the outstanding options.
2.
All options vest
immediately if employment is terminated for a reason other than
just cause or a Good Reason and are exercisable for a 90-day
period. The amount shown represents the incremental value of the
NEOs’ unexercised in-the-money options as at December 31,
2017, assuming all of the options have vested. The Company would
not be required to make this payment amount upon termination of the
NEO.
43
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
EQUITY COMPENSATION PLANS
Denison’s
Option Plan is a fixed number share option plan under which a
maximum of 39,670,000 Shares have been authorized for issuance,
representing 7.1% of the Company’s issued and outstanding
shares as at December 31, 2017. The Option Plan was first
implemented in 1997, and was amended and updated (with shareholder
and regulatory approval) in 2006 and then again in
2013.
On
March 14, 2018, the record date, there were an aggregate of
14,122,193 options outstanding under the Option Plan. The annual
burn rate for the Option Plan for the fiscal years ended December
31, 2015, 2016 and 2017 is 0.43%, 0.40% and 1.16%,
respectively.
As at
December 31, 2017, the number and price of Shares to be issued
under the Option Plan, and the percentage relative to the number of
issued and outstanding Shares of the Company, was as
follows:
|
Plan
Category
|
Number
of Shares to be Issued upon Exercise of Outstanding Equity
Compensation
(a)
|
The number in (a) as Percentage of Issued and Outstanding
Shares
|
Weighted – Average Exercise Price of Outstanding Equity
Compensation
(b)
|
Number of Shares Remaining Available for Future Issuance Under
Equity Plan
(excluding
Shares reflected in (a))
|
Percentage of Issued and Outstanding Shares
|
|
Equity
Compensation Plans Approved by Shareholders1
|
11,799,650
|
2.11%
|
$0.94
|
20,460,6502
|
3.66%
|
|
Equity
Compensation Plans Not Approved by Shareholders3
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Notes:
1.
The Company’s
only Shareholder approved equity plan is the Option Plan. Reference
is made to the disclosure regarding the Option Plan in Note 20 in
the Consolidated Financial Statements for the Year Ended December
31, 2017 which are available in the Company's filings with the
securities regulatory authorities in Canada at www.sedar.com and the United
States at www.sec.gov/edgar.shtml.
2.
The aggregate
number of Shares that may be issued pursuant to the Option Plan, as
amended, may not exceed 39,670,000. As at December 31, 2017,
19,209,350 options had
been granted (less cancellations) since the Option Plan’s
inception in 1997.
3.
The Board adopted
the Share Unit Plan effective March 8, 2018 and authorized
management to grant 2,200,000 PSUs and 1,299,432 RSUs thereunder,
subject to ratification and confirmation by Shareholders at the
Meeting. As at the date hereof, no PSUs or RSUs had been granted by
management.
On
March 8, 2018, the Board approved the adoption of a fixed number
share unit plan (the “Share Unit Plan”), which is being
presented to the Shareholders at the Meeting for ratification and
confirmation. A maximum of 15,000,000 Shares are contemplated to be
authorized for issuance under the Share Unit Plan, representing
2.7% of the issued and outstanding Shares of the Company as at the
date of this Circular.
As at
the date of this Circular, there were an aggregate of 2,200,000
PSUs and 1,299,432 RSUs authorized by the Board for management to
grant to certain eligible persons under the Share Unit Plan,
representing 0.6% of the issued and outstanding securities of the
Company.
44
2018 DENISON MANAGEMENT INFORMATION
CIRCULAR
Option Plan
The
purpose of the Option Plan is to attract, retain and motivate the
Company’s directors, officers, key employees and consultants
and to align their interests with those of the Company and its
Shareholders. The Compensation Committee administers grants under
the Option Plan. All grants are subject to the approval of the
Board.
Below
are the key provisions of Denison’s Option Plan:
●
A maximum of
39,670,000 Shares are currently authorized for issuance under the
Option Plan.
●
Denison’s
directors, officers, employees and consultants of the Company or a
subsidiary of the Company or any employee of a management company
providing services to the Company or a subsidiary of the Company
are eligible to participate under the Option Plan.
●
Options cannot have
a term of over ten years; however, since 2011, the Board has
adopted a practice of granting options with five year terms, with
vesting in two equal parts on the first anniversary and the second
anniversary from the grant date. The Compensation Committee takes
into account previous grants when it considers new grants of
options.
●
Grants are
typically done annually. The Board fixes the exercise price of an
option at the time of the grant at the TSX closing price of Shares
on the trading day immediately before the date of the grant, and
the exercise price cannot be lower than this price.
●
If a director,
officer or an employee leaves the Company, all of their options
will expire 30 days after they cease to be a director or an
employee, except the expiry period is extended if the options would
otherwise expire during a period of time when trading Shares is
restricted. In certain cases, individual employment agreements may
vary vesting rights and expiry periods upon termination or upon a
change of control. See “Compensation on Termination”
starting on page 42 for more information. The Option Plan provides
that options granted to a consultant will terminate 30 days after
the consultant agreement terminates.
●
The Option Plan
does not provide for a restriction on the maximum number of
securities issuable to any one person or company. However, no more
than 10% of total Shares issued and outstanding can be reserved for
issuance to insiders in a one-year period under the Option Plan and
any other security based compensation arrangement, and no more than
10% of total Shares issued and outstanding can be issued to all
insiders in a one-year period under the Option Plan and any other
share compensation arrangement. Options cannot be transferred to
another person.
●
The following kinds
of changes require Shareholder approval under the terms of the
Option Plan:
✓
any
change to the number of Shares that can be issued under the plan,
including increasing the fixed maximum number of Shares, or
changing from a fixed maximum number to a fixed maximum percentage
of Shares
✓
any change
that increases the number of categories of people who are eligible
to receive options, if it could increase the participation of
insiders
✓
the addition
of any form of financial assistance or any amendment to a financial
assistance provision which is more favourable to
participants
✓
the addition
of a cashless exercise feature which does not provide for a full
deduction of the number of underlying Shares from the plan
reserve
✓
the addition
of a deferred or restricted share unit or any other provision which
results in Shares being received while no consideration is received
by Denison
✓
discontinuance of
the Option Plan
✓
any other
amendments that could lead to a significant dilution of the
Company’s outstanding Shares or may provide additional
benefits to participants under the Option Plan, especially
insiders, at the expense of the Company and its existing
Shareholders
45
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
●
No change to the
Option Plan can alter or affect the rights of an option holder in a
negative way without his or her consent, except as described in the
Option Plan.
●
The Board has the
power, subject to regulatory approval where required, to make a
limited number of changes to the Option Plan, including amendments
of a house keeping nature, changes to the vesting provisions of an
option, a change to the termination provisions of an option,
provided that the extension does not go beyond the original expiry
date of the option and add a cashless exercise feature that
provides for a full deduction of Shares from the plan
reserve.
●
The Company
prohibits the giving of financial assistance to facilitate the
purchase of Shares to directors, officers or employees who hold
options granted under the Option Plan.
●
Option grants to
the CEO and the CFO are conditional upon a claw back agreement,
whereby each of them personally agrees to reimburse any portion of
their bonus payment (including options granted pursuant thereto)
which is awarded for achievements that are found to involve their
fraud, theft or other illegal conduct.
Share Unit Plan
The
Company’s goal with equity compensation in general is for it
to act as an important tool to help motivate directors, officers,
key employees and consultants, attract and retain the best people,
and to align the participant’s interests with those of the
Company and its Shareholders. The purpose of the Share Unit Plan is
to update the Company’s equity compensation program, bringing
it in line with current market practices, and to create more
flexibility in the types of incentive awards that may be made to
eligible participants.
The
Share Unit Plan was adopted in March, 2018, after the Company
received feedback from certain investors, suggesting the
Company’s management could hold more equity in the Company.
As a result of that feedback, GGA was requested to provide a
report, in part, on the competitiveness of the Company’s
long-term incentive plan. The Compensation Committee considered the
report from GGA, which noted that the grant of share units under a
share unit plan would assist management in increasing their
respective share ownership levels.
Below
are the key provisions of Denison’s Share Unit Plan. This
summary is qualified in its entirety by the full text of the Share
Unit Plan incorporated into this Circular as Appendix A.
Capitalized terms used in the following summary that are not
otherwise defined herein shall have the meanings given to such
terms in the Share Unit Plan.
●
A maximum of
15,000,000 Shares are currently authorized for issuance under the
Share Unit Plan. This represents 2.7% of the Corporation’s
issued and outstanding Shares.
●
Participants may be
granted restricted share units (“RSUs”) or performance
share units (“PSUs”) or any combination of the
foregoing.
●
Eligible
participants in the Share Unit Plan are Denison’s directors,
officers, employees and consultants of the Company or an affiliate
of the Company or any employee of a management company providing
services to the Company or an affiliate of the
Company.
●
Grants are
anticipated to be done annually.
●
The Committee will
approve the vesting of the RSUs and PSUs, as applicable, at the
time of grant of the applicable Share Units, and each Grant Letter
will describe the vesting and settlement provisions. The PSUs to be
conditionally granted under the Share Unit Plan will vest over five
years, based upon the achievement of the performance vesting
conditions. The RSUs conditionally granted under the Share Unit
Plan will have a ratable vesting over three years.
46
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
●
Share Units will be
settled on the first business day following the applicable vesting
date, unless the holder of the Share Unit has elected to defer
settlement.
●
Participants shall
be entitled to elect, by written notice to the Company, to defer
the settlement of their Share Units until the date which is the
earlier of (i) the date to which the participant has elected to
defer receipt of Shares in accordance with Section 3.4 of the Share
Unit Plan; and (ii) the date of the Participant’s Retirement,
Resignation, Termination with Cause or Termination Without Cause or
Termination after Change of Control of the Company.
●
The Committee will
have the option, at the time of the grant of the Share Units, to
allow a participant to elect to settle their Share Units in cash
instead of Shares issued from treasury. If, at the time of
settlement, the participant elects to settle in cash, the cash
payment will be determined by the number of Shares the participant
would be eligible to receive multiplied by the Market Value. The
Company has the right to override the participant’s election
and settle such RSUs or PSUs in shares issued from treasury. If a
participant has elected to defer settlement, they will no longer be
entitled to elect to receive cash on settlement of their Share
Units.
●
Subject to the
terms of the Grant Letter or a participant’s employment
agreement:
●
in the event of
Termination Without Cause: (a) if the participant has been
continuously employed for at least two years, (i) any unvested RSUs
will automatically vest and become available for settlement, and
(i) the unvested PSUs will vest using an Adjustment Factor as
determined by the Board, and (b) if the participant has been
continuously employed for less than two years, all of the unvested
RSUs and PSUs shall become void and the participant shall have no
entitlement to the issuance of Shares under such Share
Units.
●
in the event of the
Retirement of a participant, their unvested Share Units will
automatically vest on the date of Retirement and the Shares
underlying such Share Units will be issued to the participant as
soon as reasonably practical thereafter.
●
in the event of the
death of a participant, their unvested Share Units will
automatically vest on the date of death and the Shares underlying
all Share Units will be issued to the participant’s estate as
soon as reasonably practical thereafter.
●
in the event of the
disability of a participant (as may be determined in accordance
with the policies, if any, or general practices of the Company or
any subsidiary), any of their unvested Share Units will
automatically vest on the date on which the participant is
determined to be totally disabled and the Shares underlying the
Share Units held will be issued to the Participant as soon as
reasonably practical thereafter.
●
in the event of a
Termination on Change of Control, (a) all unvested RSUs outstanding
shall immediately vest on the date of such termination; and (b) all
unvested PSUs (with performance criteria outstanding) shall vest on
the date of such termination using an Adjustment Factor as
determined by the Committee.
●
Except pursuant to
(a) a will or by the laws of descent and distribution, or (b) any
registered retirement savings plans or registered retirement income
funds of which the participant is and remains the annuitant, no
Share Unit and no other right or interest of a participant is
assignable or transferable.
●
Unless the Company
has received requisite shareholder approval, under no circumstances
shall the Share Unit Plan, together with all other security based
compensation arrangements of the Company (including the Option
Plan), result, at any time, in: (i) the aggregate number of Shares
reserved for issuance to insiders (as a group) at any point in time
exceeding 10% of the Company’s issued and outstanding Shares;
(ii) the issuance to insiders (as a group), within a
one‐year
period, of an aggregate number of Shares exceeding 10% of the
Company’s issued and outstanding Shares; (iii) the aggregate
number of Shares reserved for issuance to all non‐employee directors of
the Company exceeding 1% of the Corporation’s issued and
outstanding Shares; or (iv) the grant to any individual
non‐employee director of
the Company of more than $150,000 worth of Shares annually. Subject
to compliance with the foregoing, the Share Unit Plan does not
provide for a restriction on the maximum number of securities
issuable to any one person or company.
47
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
●
Shareholder and
applicable stock exchange approvals will be required for any
amendment, modification or change to the provisions of the Share
Unit Plan which would:
✓
materially increase
the benefits to the holder of the Share Units who is an Insider to
the material detriment of the Company and its
shareholders;
✓
increase the
maximum number of Shares which may be issued from treasury pursuant
to Share Units granted pursuant to the Share Unit Plan (other than
by virtue of adjustments pursuant to the Share Unit
Plan);
✓
extend the expiry
date for Share Units granted to Insiders under the Share Unit
Plan;
✓
permit Share Units
to be transferred, other than for normal estate settlement purposes
or transfers to any registered retirement savings plans or
registered retirement income funds of which the participant is and
remains the annuitant;
✓
remove or exceed
the Insider participation limits set forth in the Share Unit
Plan;
✓
amend the
definition of “Participant” to allow for additional
categories of Participants or otherwise materially modify the
eligibility requirements for participation in the Share Unit Plan;
or
✓
modify the amending
provisions in section 4.5 of the Share Unit Plan.
●
The Board has the
power, subject to regulatory approval where required, to make a
limited number of changes to the Share Unit Plan, including
amendments of a house keeping nature, changes to the vesting or
settlement provisions of an Share Unit, a change to the termination
provisions of a Share Unit or the Share Unit Plan, any amendment
respecting the administration of the Share Unit Plan, and any
amendments to reflect changes to applicable securities or tax laws
or that are otherwise necessary to comply with applicable law or
the requirements of the applicable stock exchanges or other
regulatory body having authority over the Company, the Share Unit
Plan, the participants, or the Shareholders.
●
In the event of a
Takeover Bid, if a bona fide Offer for Shares is made, the Board
will have the sole discretion to amend, abridge or otherwise
eliminate any vesting schedule related to each participant’s
Share Units so that notwithstanding the other terms of this Plan,
the underlying Shares may be conditionally issued to each
participant holding Share Units so (and only so) as to permit the
participant to tender the Shares pursuant to the
Offer.
●
In the event of a
Change of Control, the Committee has the right to provide for the
conversion or exchange of any outstanding Share Units into or for
units, rights or other securities in any entity participating in or
resulting from a Change of Control, provided that the value of
previously granted Share Units and the rights of participants are
not materially adversely affected by any such changes. If the
successor entity does not assume or provide valuable substitute
security for the outstanding Share Units, (a) the Plan will be
terminated effective immediately prior to the Change of Control,
(b) all RSUs will vest and a specified number of outstanding PSUs
will vest, as determined in the Board’s discretion using an
Adjustment Factor, and (c) the Share Units will automatically
convert into the entitlement to receive a cash payment, to be paid
by the Company in the same manner and timing as the underlying
Share Unit would have been in accordance with the Plan, provided
however, that such cash payment will not be paid later than
December 31 of the third calendar year following the year in which
the services giving rise to the award were rendered.
48
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
●
If a dividend
becomes payable by the Company on its Shares, at the Board’s
discretion participants may be entitled to be credited with
dividend equivalent payments in the form of additional RSUs and/or
PSUs, as applicable, which additional units will be settled at the
same time that the underlying RSUs and/or PSUs, as applicable, are
settled.
●
Pursuant to the
Share Unit Plan and the applicable policies and procedures of the
Company, any Share Unit Awards granted to the CEO and CFO are
conditional upon a claw back agreement, whereby each of them
personally agrees to forfeit or reimburse any portion of their
bonus payment, including PSUs, RSUs or Shares issued thereunder,
which were awarded for achievements that are found to involve their
fraud, theft or other illegal conduct.
.
The Compensation
Committee administers grants under the Share Unit Plan, and subject
to the terms of the Share Unit Plan, certain Grant Letters may
alter the terms of the Share Unit Plan as it applies to any
particular participant’s grant of Share Units. In addition,
in certain cases, individual employment agreements may vary the
rights of participants. All grants are subject to the approval of
the Board, unless the Board delegates such approval to the
Committee.
On
March 8, 2018, the Board approved the adoption by the Company of
the Share Unit Plan, subject to ratification by Shareholders at the
Meeting. In connection therewith, the Board has authorized
management to process the grant of up to 264,000 RSUs to the
directors of the Company and up to 2,200,000 PSUs and 1,035,432
RSUs to NEOs and other senior executive officers. As at the date of
this Circular, these grants had not yet been effected.
The PSUs will vest
in equal instalments over five years, provided the satisfaction of
the performance vesting conditions as set forth in their Grant
Letters. The RSUs will vest in equal installments over three years
from the date of the grant. Shares cannot be issued in connection
with the settlement or redemption of these awards until such time
that Shareholders have approved and ratified the Share Unit Plan
and the grants thereunder.
Legacy Option Plans
In
connection with some of the transactions involving the Company,
Denison has assumed the stock option plans of the entity
acquired.
On
April 26, 2013, Denison acquired Fission Energy Corp. by way of a
plan of arrangement. Pursuant to the plan of arrangement, holders
of Fission options to acquire Fission shares exchanged their
Fission options for replacement options to acquire Shares which
automatically vested upon issuance. On April 26, 2013, an aggregate
of 1,985,035 Fission replacement options were issued. No further
grants of Fission replacement options can be made. On December 31,
2016, an aggregate 657,929 Fission replacement options were
outstanding. During the financial year ended December 31, 2017,
115,373 Shares were issued on account of the exercise of Fission
replacement options and the remaining 542,556 Fission replacement
options expired unexercised.
Interest of Informed Persons in Material Transactions
No
informed person, including any director, proposed director or
executive officer of the Company, had any material interest, direct
or indirect, in any transaction since the commencement of the
Company's most recently completed financial year or in any proposed
transaction which has materially affected or would materially
affect the Company or any of its subsidiaries.
49
2018
DENISON MANAGEMENT INFORMATION CIRCULAR
Additional Information
Additional
information relating to the Company is available on Denison’s
website at www.denisonmines.com, on SEDAR
under the Company’s profile at www.sedar.com and on EDGAR at
www.sec.gov/edgar.shtml.
Financial information related to the Company is contained in the
Company’s financial statements and related management’s
discussion and analysis for its most recently completed financial
year.
You may
request a printed copy of the following documents free of charge by
writing to the Corporate Secretary of the Company at 1100 - 40
University Avenue, Toronto, Ontario M5J 1T1:
●
The Company’s
2017 Annual Report, containing the Company’s consolidated
financial statements and related MD&A for its year ended
December 31, 2017;
●
Any subsequently
filed quarterly report; or
●
The Company’s
most recent Annual Information Form or Form 40-F.
Approval
The
contents and the sending of this Circular to Shareholders, the
directors and the auditor of the Company have been approved by the
Board.
By
Order of the Board of Directors,
Lukas
Lundin
Chairman
2018 DENISON MANAGEMENT INFORMATION
CIRCULAR
APPENDIX A
DENISON MINES CORP.
SHARE UNIT PLAN
ARTICLE I
INTRODUCTION
This
Plan provides for the granting of Share Unit Awards and payment in
respect thereof through the issuance of one Share from treasury of
the Company per Share Unit (subject to adjustments), subject to
obtaining the approval of the Stock Exchanges and the Required
Shareholder Approval, for services rendered, for the purpose of
advancing the interests of the Participants through payment of
compensation related to appreciation of the Shares.
(a)
“Adjustment Factor” means the
factor by which the number of PSUs to be vested in the event of
Termination on Change of Control is determined to be adjusted, with
reference to the performance of the Company and the Participant
during the Performance Period, as determined by the Committee in
its sole discretion.
(b)
“Affiliate” means any Company that
is an affiliate of the Company as defined in National Instrument
45-106 – Prospectus and
Registration Exemptions, as may be amended from time to
time.
(c)
“Associate” with any person or
company, is as defined in the Securities Act (Ontario), as may be
amended from time to time.
(d)
“Board” means the Board of
Directors of the Company.
(e)
“Business Day” means any day other
than a Saturday, Sunday or statutory or civic holiday in the City
of Toronto, Ontario.
(f)
“Cash Equivalent” means the amount
of money expressed in Canadian dollars equal to the product of the
Market Price multiplied by the number of vested Share Units in the
Participant’s notional account, net of any applicable
withholding taxes, on the date that the Share Units are settled, as
applicable.
(g)
“Change of Control” means the
occurrence of any one or more of the following events:
(i)
a consolidation,
merger, amalgamation, arrangement or other reorganization or
acquisition involving the Company or any of its Affiliates and
another corporation or other entity, as a result of which the
holders of Shares immediately prior to the completion of the
transaction hold less than 50% of the outstanding shares of the
successor corporation immediately after completion of the
transaction;
(ii)
the sale, lease,
exchange or other disposition, in a single transaction or a series
of related transactions, of all or substantially all of the assets,
rights or properties of the Company and its Subsidiaries on a
consolidated basis to any other person or entity, other than
transactions among the Company and its Subsidiaries;
(iii)
a resolution is
adopted to wind-up, dissolve or liquidate the Company;
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(iv)
any person, entity
or group of persons or entities acting jointly or in concert (the
“Acquiror”)
acquires, or acquires control (including, without limitation, the
power to vote or direct the voting) of, voting securities of the
Company which, when added to the voting securities owned of record
or beneficially by the Acquiror or which the Acquiror has the right
to vote or in respect of which the Acquiror has the right to direct
the voting, would entitle the Acquiror and/or Associates and/or
affiliates of the Acquiror to cast or direct the casting of 50% or
more of the votes attached to all of the Company's outstanding
voting securities which may be cast to elect directors of the
Company or the successor corporation (regardless of whether a
meeting has been called to elect directors);
(v)
as a result of or
in connection with: (A) a contested election of directors; or (B) a
consolidation, merger, amalgamation, arrangement or other
reorganization or acquisition involving the Company or any of its
Affiliates and another corporation or other entity (a
“Transaction”),
fewer than 50% of the directors of the Company are persons who were
directors of the Company immediately prior to such Transaction;
or
(vi)
the Board adopts a
resolution to the effect that a Change of Control as defined herein
has occurred or is imminent.
For the
purposes of the foregoing definition of Change of Control,
“voting
securities” means Shares and any other shares entitled
to vote for the election of directors and shall include any
security, whether or not issued by the Company, which are not
shares entitled to vote for the election of directors but are
convertible into or exchangeable for shares which are entitled to
vote for the election of directors, including any options or rights
to purchase such shares or securities.
(h)
“Committee” means the Board or the
Compensation Committee or, if the Board so determines in accordance
with Section 2.2 of the Plan, any other committee of directors of
the Company authorized to administer the Plan from time to
time.
(i)
“Company” means Denison Mines Corp.
and includes any successor corporation thereof.
(j)
“Compensation Arrangements” means
all security-based compensation arrangements, as such term is
defined in the TSX Company Manual, as such may be amended or
revised.
(k)
“Deferred Entitlement” for a
Participant means the deferral of the payment of Shares under a
Share Unit to a date after the Entitlement Date;
(l)
“Deferred Payment Date” for a Participant means the date
after the Entitlement Date which is the earlier of (i) the date to
which the Participant has elected to defer receipt of Shares in
accordance with Section 3.4 of this Plan; and (ii) the date of the
Participant’s Retirement, Resignation, Termination with Cause
or Termination Without Cause or Termination after Change of Control
of the Company.
(m)
“Eligible Person”
means any officer, director, employee
or consultant of the Company or its Affiliates or any employee of
any management company providing services to the Company or its
Affiliates, and any such person’s personal holding company,
as designated by the Board in its sole and absolute
discretion.
(n)
“Entitlement Date” means the date
that a Share Unit is eligible for payment on or after the Vesting
Date, as determined by the Committee in its sole discretion in
accordance with the Plan and as outlined in the Grant Letter issued
to the Participant.
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(o)
“Grant Date” means the effective
date that a Share Unit is awarded to a Participant under this Plan,
as evidenced by the Grant Letter.
(p)
“Grant Letter” means the grant
letter issued to a Participant evidencing, and setting forth the
terms of, a Share Unit awarded to a Participant under this
Plan.
(q)
“Insider” has the meaning ascribed
to such term in the TSX Company Manual.
(r)
“Market Price” as at any date in
respect of the Shares shall be the closing price of the Shares on
the TSX or, if the Shares are not listed on the TSX, on the
principal stock exchange on which such Shares are traded, on the
trading day immediately prior to the relevant date. In the event
that the Shares are not then listed and posted for trading on a
stock exchange, the Market Price shall be the fair market value of
such Shares as determined by the Committee in its sole
discretion.
(s)
“NYSE” means NYSE American
LLC.
(t)
“Participant” means a PSU
Participant or a RSU Participant, as applicable.
(u)
“Performance Criteria” means shall
mean criteria, if any, established by the Committee which, without
limitation, may include criteria based on the financial performance
and operational performance, including significant milestones of
the Company and/or an Affiliate.
(v)
“Performance Period” means the
period within which Performance Criteria must be
satisfied..
(w)
“Plan” means this Share Unit Plan,
as may be amended from time to time.
(x)
“PSU” or “Performance Share Unit” means a
unit credited by means of an entry on the books of the Company to a
PSU Participant, representing the right to receive one Share
(subject to adjustments) issued from treasury.
(y)
“PSU Participant” means an Eligible
Person who has been designated by the Company for participation in
the Plan and to whom a Performance Share Unit has been granted or
will be granted hereunder.
(z)
“Required Shareholder Approval”
means the approval of this Plan by the shareholders of the Company,
in accordance with the requirements of the Stock Exchanges, as
applicable.
(aa)
“Resignation” means the cessation
of employment (as an officer or employee) or service as a director
of the Participant with the Company or an Affiliate as a result of
a resignation by the Participant, other than as a result of
Retirement.
(bb)
“Retirement” means the Participant
ceasing to be an employee or officer of the Company or an Affiliate
as a result of a resignation by the Participant where the
Participant is at least 55 years of age; has completed 5 years of
service with Company or an Affiliate and the Participant has
indicated that the Participant intends to cease active full-time
employment from any employer.
(cc)
“RSU” or “Restricted Share Unit” means a
unit credited by means of an entry on the books of the Company to
an RSU Participant, representing the right to receive one Share
(subject to adjustments) issued from treasury.
(dd)
“RSU Participant” means an Eligible
Person who has been designated by the Company for participation in
the Plan and to whom a Restricted Share Unit has been granted or
will be granted hereunder.
(ee)
“Share Unit” means a Performance
Share Unit and/or a Restricted Share Unit.
(ff)
“Share Unit Award” means an award
of Share Units under this Plan to a Participant.
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(gg)
“Shares” means the common shares in
the capital of the Company.
(hh)
“Stock Exchanges” means, as the
context requires, the TSX, NYSE or any other stock exchange on
which the Shares are listed for trading at the relevant
time.
(ii)
“Termination on Change of Control”
means Termination Without Cause within 6 months of a Change of
Control.
(jj)
“Termination With
Cause” means
the termination of employment (as an officer or employee) of the
Participant with cause by the Company or an Affiliate for any of
the following acts or omissions:
(I)
The willful failure
of the Participant to follow the reasonable and lawful instructions
of the Company or an Affiliate;
(II)
The willful failure
of the Participant to perform the reasonable duties assigned to the
Participant by the Company or an Affiliate;
(III)
Willful misconduct
by a Participant;
(IV)
A material breach
or non-observance of any of the provisions any employment contract
between the Participant and the Company or any
Affiliate;
(V)
Any conduct of the
Participant that tends to bring him or the Company (or an
Affiliate) into disrepute and which is not corrected within a
reasonable time after the Participant receives written notice from
the Company or an Affiliate; or
(VI)
Any other act or
omission constituting cause at common law.
(kk)
“Termination Without Cause” means
the termination of employment (as an officer or employee) of the
Participant without cause by the Company or an Affiliate and, in
the case of an officer, includes the removal of or failure to
reappoint the Participant as an officer of the Company or an
Affiliate.
(ll)
“TSX” means the Toronto Stock
Exchange.
(mm)
“United States” means the United
States of America, its territories and possessions, any State of
the United States and the District of Columbia.
(nn)
“U.S. Securities Act” means the
United States Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
(oo)
“U.S. Taxpayer” means a Participant
who is a U.S. citizen, U.S. permanent resident or U.S. tax resident
or a Participant for whom a benefit under this Plan would otherwise
be subject to U.S. taxation under the U.S. Internal Revenue Code of
1986, as amended, and the rulings and regulations in effect
thereunder.
(pp)
“Vesting Date” means the date or
dates determined in accordance with the terms of the Grant Letter
in respect of a PSU or RSU, on and after which a particular PSU or
RSU, as applicable, can be settled, subject to amendment or
acceleration from time to time in accordance with the terms of the
Plan.
1.3
The headings of all
articles, sections and paragraphs in this Plan are inserted for
convenience of reference only and shall not affect the construction
or interpretation of this Plan.
1.4
Whenever the
singular or masculine are used in this Plan, the same shall be
construed as being the plural or feminine or neuter or vice versa
where the context so requires.
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1.5
The words
"herein”, "hereby”, "hereunder”, "hereof”
and similar expressions mean or refer to this Plan as a whole and
not to any particular article, section, paragraph or other part
hereof.
1.6
Unless otherwise
specifically provided, all references to dollar amounts in this
Plan are references to lawful money of Canada.
ARTICLE II
ADMINISTRATION OF
THE PLAN
This
Plan shall be administered by the Committee and the Committee shall
have full authority to:
(a)
determine the
Eligible Persons who may participate in this Plan;
(b)
grant Share Unit
Awards;
(c)
determine the
terms, including the limitations, restrictions, vesting period,
Performance Criteria, Performance Period, Adjustment Factor,
availability for cash settlement, and conditions, if any, of such
grants; and
(d)
administer this
Plan, including the authority to interpret and construe any
provision of this Plan and to adopt, amend and rescind such rules
and regulations for administering this Plan as the Committee may
deem necessary in order to comply with the requirements of this
Plan.
All
actions taken and all interpretations and determinations made by
the Committee in good faith shall be final and conclusive and shall
be binding on the Participants and the Company. The appropriate
officers of the Company are hereby authorized and empowered to do
all things and execute and deliver all instruments, undertakings
and applications and writings as they, in their absolute
discretion, consider necessary for the implementation of this Plan
and of the rules and regulations established for administering this
Plan.
No
member of the Board or any person acting pursuant to authority
delegated to it hereunder shall be personally liable for any action
taken or determination or interpretation made in good faith in
connection with this Plan and each member of the Board and each
such person shall, in addition to their rights as directors or
officers of the Company, as applicable, be fully protected,
indemnified and held harmless by the Company with respect to any
such action taken or determination or interpretation made in good
faith. All costs incurred in connection with this Plan shall be for
the account of the Company.
Nothing
contained herein shall prevent the Board from adopting other or
additional Compensation Arrangements or other compensation or
incentive mechanism of the Company. This Plan shall not in any way
fetter, limit, obligate, restrict or constrain the Committee with
regard to the allotment or issue of any Shares or any other
securities in the capital of the Company other than as specifically
provided in this Plan.
Subject
to Section 4.5, the Board may adopt such rules or regulations and
vary the terms of this Plan and any grant hereunder as it considers
necessary to address tax or other requirements of any applicable
non-Canadian jurisdiction. Without limiting the foregoing,
notwithstanding anything to the contrary in the Plan, the
provisions of Schedule “A” shall apply to Share Unit
Awards to a Participant who is a U.S. Taxpayer.
All of
the powers exercisable hereunder by the Board may, to the extent
permitted by applicable law and as determined by resolution of the
Board, be exercised by a committee of the Board, including the
Committee.
The
Company shall maintain a register in which it shall record the name
and address of each Participant and the number of Share Units (and
their corresponding key conditions and Entitlement Date) awarded to
each Participant.
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ARTICLE III
SHARE UNIT
AWARDS
A Share
Unit Award may be made to an Eligible Person as determined in the
sole and absolute discretion of the Committee.
At the
time of the grant, the Committee shall determine:
(a)
whether to grant a
Performance Share Unit, and if so, the Performance Criteria, the
Performance Period, the Vesting Date and the Adjustment Factor, if
any, established by the Committee;
(b)
whether to grant a
Restricted Share Unit, and if so, the Vesting Date;
(c)
whether the
Participant shall be granted the right to elect to receive from the
Company the Cash Equivalent of all or a portion of the Share Units
that are the subject of a Share Unit Award in accordance with
Section 3.3 of the Plan; and
(d)
any other terms,
conditions and limitations permitted by and not inconsistent with
this Plan as the Committee may determine.
The
Share Units awarded will be credited to the Participant’s
account, effective as of the Grant Date.
The
Share Units will be settled as soon as practicable following the
first Business Day following the Entitlement Date or, if
applicable, the Deferred Payment Date, unless otherwise provided
under this Plan.
Each
Participant will be entitled to settlement by way of issuance of
Shares from treasury. Settlement in Shares will be completed by
delivery to the Participant of a share certificate or the entry of
the Participant’s name on the share register for the Shares.
Shares issued from treasury will be issued in consideration for the
past services of the Participant to the Company.
Alternatively,
certain Participants may be entitled, pursuant to the terms of
their Grant Letter or as otherwise may be determined by the
Committee, to elect to receive the Cash Equivalent of all or a
portion of their Shares in accordance with Section
3.3.
For the
avoidance of doubt, a Participant will have no right or entitlement
whatsoever to receive any Shares or, if applicable, the Cash
Equivalent until the Entitlement Date or, if applicable, the
Deferred Payment Date.
If the
Grant Letter provides that a Participant is eligible to elect to
receive the Cash Equivalent for the Shares that are the subject of
a particular Share Unit Award, the Participant may deliver written
notice to the Company, 30 days before the Entitlement Date,
notifying the Company of its election to receive the Cash
Equivalent in respect of any or all vested Share Units held by such
Participant. Notwithstanding any election by the Participant, the
Committee may, in its sole discretion, choose to settle the Share
Units with Shares issued from treasury in the manner set forth in
Section 3.2.
For
purposes of determining the Cash Equivalent of a Share Unit, such
calculation will be made on the Entitlement Date based on the
Market Price, provided that if the Entitlement Date falls on a date
upon which a Participant is subject to a black-out period or
trading restriction imposed by the Company (but, for greater
certainty, not a cease trade order or other restriction imposed by
any person other than the Company), then the Cash Equivalent shall
be calculated based on the Market Price on the date that is seven
(7) days following the date the relevant black-out period or other
trading restriction imposed by the Company is lifted, terminated or
removed.
Settlement
in cash will be completed by delivery to the Participant of a
cheque to the Participant representing the applicable Cash
Equivalent.
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For the
avoidance of doubt, any Participant who elects to have a Deferred
Entitlement in accordance with Section 3.4 of this Plan will not be
eligible to receive the Cash Equivalent for such
Shares.
3.4
Deferred Entitlement and Deferred
Payment Date
A
Participant may elect to defer to receive a Deferred Entitlement,
being the deferral of receipt of all or any part of their Shares
following the Entitlement Date until a Deferred Payment Date. Any
Participant who elects to have a Deferred Entitlement will not be
eligible to receive the Cash Equivalent for such Shares in
accordance with Section 3.3.
Participants
who elect to have a Deferred Entitlement must give the Company
written notice of such election not later than thirty (30) days
prior to the Entitlement Date. For certainty, Participants shall
not be permitted to give any such notice after the day which is
thirty (30) days prior to the Entitlement Date and a notice once
given may not be changed or revoked. A Participant who has elected
to have a Deferred Entitlement must then give the Company written
notice of the Deferred Payment Date not later than ten (10)
business days prior to the chosen Deferred Payment Date, which date
must be a Business Day.
In the
event of the Retirement, Resignation, Termination with Cause,
Termination Without Cause or Termination on Change of Control of
the Participant following the Entitlement Date and prior to the
Deferred Payment Date, the Participant shall be entitled to receive
and the Company shall issue forthwith the applicable Shares in
satisfaction of the Share Units then held by the Participant that
have vested in accordance with the applicable provisions of this
Plan.
In the
event a dividend is paid in cash or Shares to shareholders of the
Company on the Shares while a Share Unit is outstanding no payment
in cash or Shares shall be made to each Participant in respect of
Share Units; however, the Committee may, in its sole discretion,
elect to credit each Participant with additional Share Units
reflective of the cash or Share dividends to such Participant. In
such case, the number of additional Share Units will be equal to
the aggregate amount of dividends that would have been paid to the
Participant if the Share Units in the Participant’s account
on the record date had been Shares divided by the Market Price of a
Share on the date on which dividends were paid by the Company. If
the foregoing shall result in a fractional Share Unit, the fraction
shall be disregarded.
The
additional Share Units will vest and be settled on the
Participant’s Entitlement Date or, if applicable, the
Deferred Payment Date of the particular Share Unit Award to which
the additional Share Units relate.
3.6
Termination on Change of
Control
In the
event of a Termination on Change of Control:
(a)
all unvested
Restricted Share Units outstanding pursuant to a Share Unit Award
shall automatically immediately vest on the date of such
Termination on Change of Control and the date of termination will
be the Entitlement Date for all such RSUs; and
(b)
If there are any
Performance Criteria of a Performance Share Unit that have not yet
been met, other than the passage of time, all PSUs shall vest on
the date of such Termination on Change of Control using an
Adjustment Factor as determined by the Committee, and the date of
termination will be the Entitlement Date for all such
PSUs.
Upon a
Change of Control, Participants shall not be treated any more
favourably than shareholders of the Company with respect to the
consideration the Participants would be entitled to receive for
their Shares.
3.7
Death or Disability of
Participant
In the
event of:
(a)
the death of a
Participant, any unvested Share Units held by such Participant will
automatically vest on the date of death of such Participant and the
Shares underlying all Share Units held by such Participant will be
issued to the Participant’s estate as soon as reasonably
practical thereafter; or
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(b)
the disability of a
Participant (as may be determined in accordance with the policies,
if any, or general practices of the Company or applicable
affiliate), any unvested Share Units held by such Participant will
automatically vest on the date on which the Participant is
determined to be totally disabled and the Shares underlying the
Share Units held will be issued to the Participant as soon as
reasonably practical thereafter.
In the
event of Retirement of a Participant, any unvested Share Units held
by such Participant will automatically vest on the date of
Retirement and the Shares underlying such Share Units will be
issued to the Participant as soon as reasonably practical
thereafter.
3.9
Termination Without
Cause
(a)
In the event of
Termination Without Cause of a Participant that has been
continuously employed by the Company or any Affiliate for at least
two (2) years prior to the date of such Termination Without Cause
inclusive of any notice period, if applicable, any unvested Share
Units held by such Participant, that are not subject to Section
3.9(b) as a result of not being subject to Performance Criteria,
will automatically vest on the date of Termination Without Cause
and the Shares underlying such Share Units will be issued to the
Participant as soon as reasonably practical
thereafter.
(b)
In the event of
Termination Without Cause of a Participant that has been
continuously employed by the Company or any Affiliate for at least
two (2) years prior to the date of such Termination Without Cause
inclusive of any notice period, if applicable, any unvested PSUs
with Performance Criteria that have not been satisfied held by such
Participant will vest on the date of such Termination Without Cause
using an Adjustment Factor as determined by the Committee, and the
date of termination will be the Entitlement Date for all such PSUs,
unless otherwise stipulated in the Participant’s Grant Letter
or as may otherwise be determined by the Committee in its sole and
absolute discretion.
(c)
In the event of
Termination Without Cause of a Participant that has been
continuously employed by the Company or any Affiliate for less than
two (2) years prior to the date of such Termination Without Cause
inclusive of any notice period, if applicable, all of the
Participant’s Share Units shall become void and the
Participant shall have no entitlement and will forfeit any rights
to any issuance of Shares under this Plan unless otherwise
stipulated in the Participant’s Grant Letter.
3.10
Termination With Cause or
Resignation
In the
event of Termination With Cause or the Resignation of a
Participant, all of the Participant’s Share Units shall
become void and the Participant shall have no entitlement and will
forfeit any rights to any issuance of Shares under this Plan,
except as may otherwise be stipulated in the Participant’s
Grant Letter or as may otherwise be determined by the Committee in
its sole and absolute discretion. Share Units that have vested but
that are subject to a Participant’s election to set a
Deferred Payment Date shall be issued forthwith following the
Termination with Cause or the Resignation of the
Participant.
3.11
Share Unit Grant Letter
Each
grant of a Share Unit under this Plan shall be evidenced by a Grant
Letter issued to the Participant by or on behalf of the Company.
Such Grant Letter shall be subject to all applicable terms and
conditions of this Plan and may include any other terms and
conditions which are not inconsistent with this Plan and which the
Committee deems appropriate for inclusion in a Grant Letter. Grant
Letters may be issued in electronic format or made available
through other electronic means and the provisions of the various
Grant Letters issued under this Plan need not be
identical.
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3.12
Subject to Employment/Severance Agreements
Sections
3.6, 3.7, 3.8, 3.9, 3.10, 4.10 and 4.11 shall be subject to any
employment/severance agreement between the Participant and the
Company or its Affiliates and in the event of any conflict between
Sections 3.6, 3.7, 3.8, 3.9, 3.10, 4.10 and 4.11 hereof and any
such employment/severance agreement, the provisions of such
employment/severance agreement will prevail.
3.13
Participation Limits
The
maximum number of Shares made available for issuance from treasury
under this Plan, subject to adjustments pursuant to this Plan,
shall not exceed 15,000,000 Shares. Any Shares subject to a Share
Unit which has been cancelled or terminated in accordance with the
terms of the Plan without settlement will again be available under
the Plan.
This
Plan, together with all other Compensation Arrangements, shall not
result in:
(a)
the aggregate
number of Shares reserved for issuance to Insiders of the Company
(as a group), at any point in time, exceeding 10% of the
Company’s total issued and outstanding Shares;
(b)
within any one (1)
year period, the issuance to Insiders of the Company (as a group),
of an aggregate number of Shares exceeding 10% of the
Company’s total issued and outstanding Shares;
(c)
the aggregate
number of Shares reserved for issuance to all non-employee
directors of the Company exceeding 1% of the Company’s total
issued and outstanding Shares; or
(d)
the grant to any
individual non-employee director of the Company of more than
$150,000 worth of Shares annually.
For
greater certainty the number of Shares outstanding shall mean the
number of Shares outstanding on a non-diluted basis on the date
immediately prior to the proposed Grant Date.
ARTICLE IV
GENERAL
This
Plan shall become effective upon Board approval, subject to the
acceptance and approval of the Plan by the Stock Exchanges and the
Required Shareholder Approval.
Subject
to and following the receipt of the approval of the Stock Exchanges
and the Required Shareholder Approval, the Company shall have the
power to satisfy any Share Unit obligation of the Company
(including those granted prior to and conditional on such
approvals) by the issuance of Shares from treasury at a rate of one
Share for each Share Unit, subject to adjustment. For greater
certainty, if the Required Shareholder Approval is not obtained,
such conditional grants will be void and no Shares may be issued
from treasury in respect of such Share Units.
4.2
Discontinuance of Plan
The
Committee or the Board, as the case may be, may discontinue this
Plan at any time in its sole discretion, and without shareholder
approval, provided that such discontinuance may not, without the
consent of the Participant, in any manner adversely affect the
Participant’s rights under any Share Unit granted under this
Plan. In the event this Plan is discontinued by the Committee or
the Board the balance of outstanding Share Units shall be
maintained until the earlier of the Entitlement Date for, or the
termination, resignation, retirement, death or disability of, each
Participant as provided for under this Plan.
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Except
pursuant to (a) a will or by the laws of descent and distribution,
or (b) any registered retirement savings plans or registered
retirement income funds of which the Participant is and remains the
annuitant; no Share Unit and no other right or interest of a
Participant is assignable or transferable.
In the
event that a Participant receives Shares from the Company in
satisfaction of a grant of Share Units during a black-out period,
the Participant shall not be entitled to sell or otherwise dispose
of such Shares until such black-out period has
expired.
In the
event that a Participant in the United States receives Shares from
the Company in satisfaction of a grant of Share Units pursuant to
an exemption from the registration requirements of the U.S.
Securities Act and applicable state securities laws, such Shares
will be “restricted securities”, as such term is
defined in Rule 144(a)(3) under the U.S. Securities Act, and may
not be offered, sold, pledged or otherwise transferred unless such
Shares are registered under the U.S. Securities Act and all
applicable state securities laws or in compliance with an exemption
or exclusion therefrom, and such Shares will bear a restrictive
legend to such effect.
The
Company or its Affiliates may take such steps as are considered
necessary or appropriate for the withholding of any taxes or other
source deduction which the Company or its Affiliate is required by
any law or regulation of any governmental authority whatsoever to
withhold in connection with the grant, vesting or settlement of
Share Units pursuant to this Plan, including a sale on behalf of a
Participant of a sufficient number of Shares to fund such
withholding obligation. For greater certainty, should it be deemed
necessary or appropriate by the Company or its Affiliate, no cash
payment will be made or Shares issued until an amount sufficient to
cover the applicable withholding taxes payable on settlement of the
Share Units has been received by the Company or its Affiliate, as
the case may be, or other arrangements have been made for payment
of the withholding taxes to the satisfaction of the Company or its
Affiliate, as the case may be. Without limiting the generality of
the foregoing, the Company or its Affiliate will have the right to
deduct from payments of any kind otherwise due to a Participant any
taxes of any kind required to be withheld by the Company or its
Affiliate, as the case may be, pursuant to this Plan.
Until
such time as the Company receives the Required Shareholder
Approval, the Plan may be amended, suspended or terminated at any
time by the Committee in whole or in part. No amendment of the Plan
shall, without the consent of the Participants affected by the
amendment, or unless required by applicable law, adversely affect
the rights accrued to such Participants with respect to Share Units
granted prior to the date of the amendment.
Following
receipt of the Required Shareholder Approval, the Committee may
from time to time in its sole discretion, and without shareholder
or Participant approval, amend, modify and change the provisions of
this Plan, and Share Unit Award and/or any Grant Letter, in
connection with (without limitation):
(a)
amendments of a
housekeeping nature, including, without limitation, those made to
clarify the meaning of an existing provision, correct or supplement
any provision that is inconsistent with any other provision,
correct any grammatical or typographical errors or amend the
definitions in the Plan regarding administration of the
Plan;
(b)
the addition or a
change to any vesting or settlement provisions of a Share
Unit;
(c)
changes to the
termination provisions of a Share Unit or the Plan;
(d)
any amendment to
the Plan respecting administration of the Plan; and
(e)
amendments to
reflect changes to applicable securities or tax laws or that are
otherwise necessary to comply with applicable law or the
requirements of the TSX or any other regulatory body having
authority over the Company, the Plan, the Participants or the
shareholders.
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However, any
amendment, modification or change to the provisions of this Plan
which would:
(f)
materially increase
the benefits to the holder of the Share Units who is an Insider to
the material detriment of the Company and its
shareholders;
(g)
increase the
maximum number of Shares which may be issued from treasury pursuant
to Share Units granted pursuant to this Plan (other than by virtue
of adjustments pursuant to this Plan);
(h)
extend the expiry
date for Share Units granted to Insiders under the
Plan;
(i)
permit Share Units
to be transferred other than for normal estate settlement purposes
or to any registered retirement savings plans or registered
retirement income funds of which the participant is and remains the
annuitant;
(j)
remove or exceed
the Insider participation limits set forth in (a) to (d) of Section
3.13 of this Plan;
(k)
amend the
definition of “Participant” to allow for additional
categories of Participants or otherwise materially modify the
eligibility requirements for participation in this
Plan; or
(l)
modify the amending
provisions of the Plan set forth in this Section 4.5,
shall
only be effective on such amendment, modification or change being
approved by the shareholders of the Company. In addition, any such
amendment, modification or change of any provision of this Plan
shall be subject to the approval, if required, by any Stock
Exchange having jurisdiction over the securities of the
Company.
No
holder of any Share Units shall have any rights as a shareholder of
the Company. Except as otherwise specified herein, no holder of any
Share Units shall be entitled to receive, and no adjustment is
required to be made for, any dividends, distributions or any other
rights declared for shareholders of the Company.
4.7
No Right to Continued Employment or Service
Nothing
in this Plan shall confer on any Participant the right to continue
as an employee or officer of the Company or any Affiliate, as the
case may be, or interfere with the right of the Company or
Affiliate, as applicable, to remove such officer and/or
employee.
Notwithstanding
any other provision in the Plan, if the Participant is the CEO
and/or the CFO of the Company, the Participant’s Share Unit
Awards will be subject to clawback in accordance with the policies
and procedures of the Company as adopted and amended by the Board,
from time to time.
In the
event there is any change in the Shares, whether by reason of a
stock dividend, consolidation, subdivision, reclassification or
otherwise, an appropriate adjustment may be made to outstanding
Share Units by the Committee, in its sole discretion, to reflect
such changes. If the foregoing adjustment shall result in a
fractional Share, the fraction shall be disregarded. All such adjustments shall be
conclusive, final and binding for all purposes of this
Plan.
4.10
Effect of Take-Over Bid
If a
bona fide offer (the "Offer") for Shares is made to
shareholders generally (or to a class of shareholders that would
include the Participant), which Offer, if accepted in whole or in
part, would result in the offeror (the "Offeror") exercising control over the
Company within the meaning of the Securities Act (Ontario), then the Company shall,
as soon as practicable following receipt of the Offer, notify each
Participant of the full particulars of the Offer. The Board will
have the sole discretion to amend, abridge or otherwise eliminate
any vesting schedule related to each Participant’s Share
Units so that notwithstanding the other terms of this Plan, the
underlying Shares may be conditionally issued to each Participant
holding Share Units so (and only so) as to permit the Participant
to tender the Shares received in connection with the Share Units
pursuant to the Offer. If:
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(a)
the Offer is not
complied with within the time specified therein;
(b)
the Participant
does not tender the Shares underlying the Share Units pursuant to
the Offer; or
(c)
all of the Shares
tendered by the Participant pursuant to the Offer are not taken up
and paid for by the Offeror,
then at
the discretion of the Committee or the Board, the Share Units shall
be deemed not to have been settled and the Shares or, in the case
of clause (c) above, the Shares that are not taken up and paid for,
shall be deemed not to have been issued and will be reinstated as
authorized but unissued Shares and the terms of the Share Units as
set forth in this Plan and the applicable Grant Letter shall again
apply to the Share Units.
4.11
Effect of Change of Control.
Upon
the Company entering into an agreement relating to a transaction
which, if completed, would result in a Change of Control, or
otherwise becoming aware of a pending Change of Control, the
Company shall give written notice of the proposed Change of Control
to Participants, together with a description of the effect of such
Change of Control on outstanding Share Units, not less than seven
(7) days prior to the closing of the transaction resulting in the
Change of Control.
Notwithstanding
anything else in this Plan or any Grant Letter, the Committee has
the right to provide for the conversion or exchange of any
outstanding Share Units into or for units, rights or other
securities in any entity participating in or resulting from a
Change of Control, provided that the value of previously granted
Share Units and the rights of Participants are not materially
adversely affected by any such changes.
If the
surviving, successor or acquiring entity does not assume the
outstanding Share Units or substitute similar share units for the
outstanding Units:
(a)
the Plan will be
terminated effective immediately prior to the Change of Control and
all Restricted Share Units will be deemed to be vested Restricted
Share Units and a specified number of outstanding Performance Share
Units will be deemed to be vested Performance Share Units and will
be redeemed as of the termination date of the Plan. The number of
Performance Share Units that are deemed to be vested Performance
Share Units will be determined in Board’s discretion using an
Adjustment Factor.
(b)
the Market Price of
the Share underlying a Share Unit will be determined and
crystallized using the Market Price of the Share on the date of the
Change of Control and, at such time, such Share Unit will
automatically convert into the entitlement of such Participant to
receive a cash payment, to be paid by the Company in the same
manner and timing as the underlying Share Unit would have been in
accordance with the Plan, provided however, that such cash payment
will not be paid later than December 31 of the third calendar year
following the year in which the services giving rise to the award
were rendered.
4.12
Unfunded Status of Plan
This
Plan shall be unfunded.
No
interest or other amounts shall accrue to a Participant in respect
of any amount payable by the Company to the Participant under this
Plan or a Share Unit.
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4.14
Compliance with Laws
If any
provision of this Plan or any Share Unit contravenes any law or any
order, policy, by-law or regulation of any regulatory body having
jurisdiction, then such provision shall be deemed to be amended to
the extent necessary to bring such provision into compliance
therewith. The Company shall not be obliged by any provision of the
Plan or the grant of any Share Unit hereunder to issue Shares or
deliver a Cash Equivalent in violation of such laws, rules and
regulations or any condition of such approvals.
No
Units shall be granted, and no Shares shall be issued hereunder,
where such grant or issuance would require registration of the Plan
or the Shares under the securities laws of any foreign jurisdiction
(other than Canada or the United States) and any purported grant of
any Unit or issuance of any Shares hereunder in violation of this
provision shall be void.
This
Plan shall be governed by and construed in accordance with the laws
of the Province of Ontario and the federal laws of Canada
applicable therein.
4.16
Effective Dates and Amendments
Approved
by the Board on March 8, 2018.
Approved
by the Shareholders on [May 3,
2018].
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SCHEDULE “A”
DENISON
MINES CORP.
SHARE
UNIT PLAN
Notwithstanding
anything to the contrary in the Plan, the provisions of this
Schedule “A” shall apply to the Share Unit Awards made
to a Participant during the period that he or she is a U.S.
Taxpayer.
Notwithstanding
Section 3.8 of the Plan, any unvested Share Units held by a
Participant that is a U.S. Taxpayer will automatically vest on the
date such Participant attains the age of 65 and the Shares
underlying such Share Units will be issued to the Participant
forthwith and in any event no later than March 15 of the following
calendar year.
2.
Election of a Deferred Payment Date
Notwithstanding
Section 3.4 of the Plan, a Participant who is a U.S. Taxpayer shall
only be allowed to elect a Deferred Entitlement if such election is
delivered by written notice to the Company not less than twelve
(12) months before the Entitlement Date and only if such election
designates a Deferred Payment Date that is not less than five (5)
years after the original Entitlement Date. Notwithstanding the last
paragraph of Section 3.4 of the Plan, for any Participant who is a
U.S. Taxpayer, settlement of any Share Units shall not be
accelerated upon a Retirement, Resignation, Termination with Cause,
Termination Without Cause or Termination on Change of Control
unless such event also qualifies as a “separation from
service” under U.S. Treasury Regulation 1.409A-1(h) from the
Company or an Affiliate which is a “service recipient”
(as defined under U.S. Treasury Regulation 1.409A-1(h)(3)) in
relation to the Participant and shall also be subject to further
delay in settlement by six months and one day if the Participant
qualifies a “specified employee” as defined in Section
409A, except if the qualifying termination of service is on account
of the Participant’s death. The determination of whether any
U.S. Taxpayer is a “specified employee” shall be
determined by the Board in accordance with U.S. Treasury Regulation
1.409A-1(i).
3.
Modification
of Plan Terms by Employment/Severance Agreements
Notwithstanding
Section 3.12 of the Plan, no employment or severance agreement term
shall be applied to modify Sections 3.6, 3.7, 3.8, 3.9 or 3.10 if
such application shall cause a violation of Section 409A (as
defined below).
Share
Unit Awards will be designed and operated in such a manner that
they are either exempt from the application of, or comply with, the
requirements of Section 409A of the U.S. Internal Revenue Code
and the U.S. Treasury Regulations and other U.S. Internal Revenue
Service guidance promulgated thereunder as in effect from time to
time (“Section
409A”) and will be construed and interpreted in
accordance with such intent. To the extent that a Share Unit Award
or payment, or the settlement or deferral thereof, is subject to
Section 409A, the Share Unit Award will be granted, paid,
settled or deferred in a manner that will meet the requirements of
Section 409A, such that the grant, payment, settlement or
deferral will not be subject to the additional tax or interest
applicable under Section 409A.
Each
Participant is solely responsible and liable for the satisfaction
of all taxes and penalties that may be imposed on or for the
account of such Participant in connection with this Plan (including
any taxes and penalties under Section 409A), and neither the
Company nor any Affiliate shall have any obligation to indemnify or
otherwise hold such Participant or beneficiary or the
Participant’s estate harmless from any or all such taxes or
penalties.
5.
No
Modification of Other Plan Terms
All
provisions of the Plan shall continue to apply to a U.S. Taxpayer,
except to the extent that they have not been specifically modified
by this Schedule "A".
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APPENDIX
B
MANDATE OF THE BOARD, POSITION DESCRIPTIONS
AND LIMITS TO MANAGEMENT’S RESPONSIBILITIES
The
Board of Directors of Denison Mines Corp. recognizes the importance
of adopting a written mandate and for developing position
descriptions for the Board, the Chair of the Board, the Chair of
each Committee of the Board and the Chief Executive Officer
(“CEO”), involving the definition of the limits to
management’s responsibilities, and has adopted the following
amended terms of reference effective March 9, 2016. On at least an
annual basis, the Corporate Governance and Nominating Committee
shall review and assess the adequacy of this mandate and make a
recommendation to the Board regarding updating or amending the
same.
1.
MANDATE AND
POSITION DESCRIPTION FOR THE BOARD
(a)
The Board has
adopted the following mandate in which it explicitly acknowledges
responsibility for the stewardship of the Company and, as part of
the overall stewardship responsibility, responsibility for the
following matters:
(i)
to the extent
feasible, satisfying itself as to the integrity of the CEO and
other executive officers and that
the CEO
and other executive officers create a culture of integrity
throughout the organization;
(ii)
adoption of a
strategic planning process and approving, on at least an annual
basis, a strategic plan which takes into account, among other
things, the opportunities and risks of the business;
(iii)
the identification of the principal risks of the Company’s
business and ensuring the implementation of appropriate systems to
manage these risks;
(iv)
succession
planning, including appointing, training and monitoring senior
management; (v)adopting a communications policy for the Company;
and
(vi)
the Company’s
internal control and management information systems.
(b)
The Board takes its
responsibilities very seriously and expects that all directors will
participate in Board and Committee meetings on a regular basis, to
the extent reasonably practicable, and will review all meeting
materials in advance of each meeting. Attendance of directors shall
be taken at each Board meeting by the Corporate Secretary or
Assistant Corporate Secretary.
(c)
At all times, a
majority of the Board will satisfy the independence requirements
set out by the Canadian Securities Administrators in National
Policy 58-201 and any other applicable laws and regulations as the
same may be amended from time to time. The independent directors
shall meet once per year to discuss the Company’s
matters.
(d)
The Company,
together with its subsidiaries, is committed to conducting its
business in compliance with the law and the highest ethical
standards, and to the highest standards of openness, honesty and
accountability that its various stakeholders are entitled to
expect. The Audit Committee of the Board has established a Policy
and Procedures for the Receipt, Retention and Treatment of
Complaints Regarding Accounting or Auditing Matters, and the
Company has established a Code of Ethics for Directors, Officers
and Employees, which establishes procedures for directors, officers
and employees to report any concerns or questions they may have
about violations of the Code or any laws, rules or regulations. In
addition, the Board will consider adopting other measures for
receiving feedback from stakeholders if at any time the Board or
its independent directors consider the foregoing to be
inadequate.
(e)
All new directors
will receive a comprehensive orientation. This orientation may vary
from director to director, depending on his or her expertise and
past experience, but in each case will be sufficient to ensure that
each director fully understands the role of the Board and its
committees, the contribution individual directors are expected to
make (including the commitment of time and resources that is
expected) and an understanding of the nature and operation of the
Company’s business.
(f)
The Board will
provide continuing education opportunities for all directors, where
required, so that individual directors may maintain or enhance
their skills and abilities as directors, as well as to ensure that
their knowledge and understanding of the Company’s business
remains current.
(g)
Prior to nominating
or appointing individuals as directors, the Board will consider the
advice and input of the Corporate
Governance and Nominating Committee on all relevant matters,
including:
(i)
the appropriate size of the Board, with a view to facilitating
effective decision making; (ii)what competencies and skills the
Board, as a whole, should possess; and
(iii)
what
competencies and skills each existing director
possesses.
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2.
POSITION
DESCRIPTIONS FOR THE CHAIR OF THE BOARD, THE LEAD DIRECTOR, AND THE
CHAIR OF BOARD COMMITTEES AND THE CEO
(a)
Where the Chair of
the Board is not an independent director, in accordance with
paragraph 1(c) of this Mandate and upon recommendation of the
Corporate Governance and Nominating Committee, the Board will
appoint from among the independent directors, a Lead Director to
serve as such until the next meeting of shareholders where
directors are elected, unless otherwise removed by resolution of
the Board of Directors.
(b)
The Chair of the
Board, if independent, or the Lead Director will:
(i)
act as the
effective leader of the Board and ensure that the Board’s
agenda will enable it to successfully carry out its
duties;
(ii)
provide leadership
for the Board’s independent directors;
(iii)
organize the Board
to function independently of management, and ensure that the
responsibilities of the Board are well understood by both the Board
and management and that the boundaries between the Board and
management responsibilities are clearly understood and
respected;
(iv)
ensure that the
Board has an opportunity to meet without members of management,
regularly, and without non-independent directors at least once per
year;
(v)
determine, in
consultation with the Board and management, the time and places of
the meetings of the Board;
(vi)
manage the affairs
of the Board, including ensuring that the Board is organized
properly, functions effectively and meets its obligations and
responsibilities and mandates, where appropriate, through its duly
appointed committees, including:
o
ensuring that the
Board works as a cohesive team and providing the leadership
essential for this purpose;
o
ensuring that the
resources available to the Board (in particular timely and relevant
information) are adequate to support its work;
o
ensuring that a
process is in place by which the effectiveness of the Board and its
committees is assessed on a regular basis;
o
ensuring that a
process is in place by which the contribution of individual
directors to the effectiveness of the board and committees is
assessed on a regular basis: and
o
ensuring that,
where functions are delegated to appropriate committees, the
functions are carried out and results are reported to the
Board.
(vii)
ensure that the
Board has a succession planning process is in place to appoint the
Chief Executive Officer and other members of management when
necessary;
(viii)
co-ordinate with
management and the Corporate Secretary or Assistant Corporate
Secretary to ensure that matters to be considered by the Board are
properly presented and given the appropriate opportunity for
discussion;
(ix)
preside as chair of
each meeting of the Board;
(x)
communicate with
all members of the Board to co-ordinate their input, ensure their
accountability and provide for the effectiveness of the Board;
and
(xi)
act as liaison
between the Board and management to ensure that relationships
between the Board and management are conducted in a professional
and constructive manner, which will involve working with the Chief
Executive Officer to ensure that the conduct of Board meetings
provides adequate time for serious discussion of relevant issues
and that the Company is building a healthy governance
culture.
The
Chair of the Board or the Lead Director may, as the case may be,
delegate or share, where appropriate, certain of these
responsibilities with any committee of the Board.
(c)
Any special
responsibilities and authorities of the Chair of any committee of
the Board will be set out in the Terms of Reference/Mandate for the
Committee. In general, the Chair of a Committee shall lead and
oversee the Committee to ensure that it fulfills its mandate as set
out in the Committee’s Terms of Reference/Mandate. In
particular, the Chair shall:
(i)
organize the
Committee to function independently of management, unless
specifically provided otherwise in the Committee’s
Mandate;
(ii)
ensure that the
Committee has an opportunity to meet without members of management
as necessary;
(iii)
determine, in
consultation with the Committee and management, the time and places
of the meetings of the Committee;
(iv)
manage the affairs
of the Committee, including ensuring that the Committee is
organized properly, functions effectively and meets its obligations
and responsibilities;
(v)
co-ordinate with
management and the Secretary to the Committee to ensure that
matters to be considered by the Committee are properly presented
and given the appropriate opportunity for discussion;
(vi)
provide advice and
counsel to the CEO and other senior members of management in the
areas covered by the Committee’s mandate;
(vii)
preside as chair of
each meeting of the Committee; and
(viii)
communicate with
all members of the Committee to co-ordinate their input, ensure
their accountability and provide for the effectiveness of the
Committee.
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(d)
The CEO, subject to
the authority of the Board, shall have general supervision of the
business and affairs of the Company and such other powers and
duties as the Board may specify, from time to time. These
responsibilities shall include making recommendations to the Board
regarding the implementation, performance and monitoring, as the
case may be, of each of the items referred to in paragraphs 2(b)(i)
to (b)(viii) of this mandate and ensuring that procedures are in
place and followed by the Company so that each of those items and
any other requirement of the Board is implemented, performed and
monitored in a prudent and responsible manner in accordance with
the determinations of the Board. The Board will develop and approve
periodically, as the Board considers necessary, the corporate goals
and objectives that the CEO is responsible for
meeting.
3.
LIMITS ON THE
CEO’S AUTHORITY
(a)
Unless specifically
instructed otherwise by the Board, and except as set out in Section
127(3) of the Ontario Business
Corporations Act (the “OBCA”), the CEO of the
Company has the responsibility and authority to transact any
business or approve any matter:
(i)
in the ordinary
course of business of the Company; and
(ii)
that is not in the
ordinary course of business of the Company, but that is not likely
to result in a material change, within the meaning of the Ontario
Securities Act, with
respect to the Company; and
(b)
In addition to
those matters referred to in Section 127(3) of the OBCA, Board
approval is required with respect to any business or matter that is
not in the ordinary course of business of the Company and that is
likely to result in a material change, within the meaning of the
Ontario Securities Act,
with respect to the Company.
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|
|
Denison
Mines Corp.
1100 -
40 University Avenue
Toronto, ON M5J
1T1
T 416
979 1991 F 416 979 5893 www.denisonmines.com
TSX:
DML
NYSE
American: DNN
|
