EXHIBIT
99.2
MANAGEMENT
INFORMATION CIRCULAR
(All
information set out in this Information Circular is as at March 26, 2020 unless otherwise noted)
This
Management Information Circular (the “Information Circular”) is furnished in connection with the solicitation
of proxies being made by the management of Pretium Resources Inc. (the “Company”, “Pretivm”,
“we”, “us” or “our”) for use at our Annual General Meeting of Shareholders
(the “Meeting”).
The
Meeting is being held at our offices at Suite 2300, 1055 Dunsmuir Street, Four Bentall Centre, Vancouver, British Columbia, V7X
1L4, on Thursday, April 30, 2020, at 2:00 p.m. (Vancouver time) for the purposes set forth in the accompanying Notice of Annual
General Meeting (the “Notice of Meeting”).
All
dollar amounts are expressed in Canadian dollars unless otherwise indicated. The use of the symbol “$” refers to Canadian
dollars while the use of the symbol “US$” refers to United States dollars. See “Currency”.
information
about voting
Solicitation
of Proxies
While
it is expected that the solicitation will be made primarily by mail, proxies may be solicited personally or by telephone by our
directors, officers and employees. All costs of this solicitation will be borne by the Company.
Completion
and Voting of Proxies
Voting
Voting
at the Meeting will be by a show of hands unless a poll is required or requested. Each shareholder and proxyholder is entitled
to one vote for each common share in the capital of the Company (each, a “Share”) held or represented, respectively.
To approve a motion proposed at the Meeting, a majority of greater than 50% of the votes cast will be required (an “ordinary
resolution”) unless the motion requires a “special resolution”, in which case a majority of 66⅔% of the votes
cast will be required. An ordinary resolution is required to pass the resolutions for the matters scheduled to be acted upon at
the Meeting.
Appointment
of Proxyholders
A
shareholder has the right to appoint a person (who need not be a shareholder) to represent the shareholder at the Meeting other
than the persons named in the accompanying Proxy as proxyholders. To exercise this right, the shareholder must insert the name
of the shareholder’s nominee in the space provided in the accompanying Proxy or complete another appropriate form of proxy
permitted by law, and in either case send or deliver the completed proxy to our transfer agent, Computershare Investor Services
Inc. (“Computershare”) by mail, hand delivery or fax.
The
persons named in the accompanying Proxy as proxyholders are our directors or officers.
A
shareholder completing the enclosed Proxy may indicate the manner in which the persons named in the Proxy are to vote with respect
to any matter by marking an “X” in the appropriate space. On any poll required or requested, those persons will vote
or withhold from voting the Shares in respect of which they are appointed in accordance with the directions, if any, given in
the Proxy, provided such directions are certain.
If
a shareholder wishes to confer a discretionary authority with respect to any matter, then the space should be left blank. In
such instance, the proxyholder, if nominated by management, intends to vote the Shares represented by the Proxy in favour of the
motion.
The
enclosed Proxy, when properly signed, confers discretionary authority with respect to amendments or variations to the matters
identified in the Notice of Meeting and with respect to other matters which may be properly brought before the Meeting. At
the time of printing this Information Circular, our management is not aware that any such amendments, variations or other matters
are to be presented for action at the Meeting. If, however, other matters which are not now known to the management should properly
come before the Meeting, the Proxies hereby solicited will be exercised on such matters in accordance with the best judgment of
the nominees.
Registered
Shareholder Voting Information
You
are a registered shareholder (a “Registered Shareholder”) if your name appears on your Share certificate.
Registered
Shareholders who are eligible to vote can vote their Shares either in person at the Meeting or by Proxy.
For
your Shares to be voted by Proxy, you must complete, date and sign the enclosed form of Proxy and return it by mail, hand delivery
or fax to Computershare, in accordance with the instructions set out in the form of Proxy and the Notice of Meeting. Registered
Shareholders are also entitled to vote their Shares through the internet at www.investorvote.com or by telephone at 1-866-732-8683
(toll free). For internet and telephone voting, you will require your 15-digit control number found on your Proxy.
In
order to be valid and acted upon at the Meeting, the forms of Proxy as well as votes by internet and telephone must be received
in each case not less than 48 hours (excluding weekends and holidays) before the time set for the holding of the Meeting or any
adjournment or postponement thereof.
Beneficial
Shareholder Voting Information
Most
shareholders of the Company are “beneficial shareholders” who are non-Registered Shareholders. You are a beneficial
shareholder (a “Beneficial Shareholder”) if you beneficially own Shares that are held in the name of an intermediary
such as a bank, a trust company, a securities broker, a trustee or other nominee, and therefore do not have the Shares registered
in your own name. The following information is of significant importance to shareholders who do not hold Shares in their own
name.
Beneficial
Shareholders should note that the only Proxies that can be recognized and acted upon at the Meeting are those deposited by Registered
Shareholders or as set out in the following disclosure. If Shares are listed in an account statement provided to a shareholder
by a broker, then in almost all cases those Shares will not be registered in the shareholder’s name on the records of the
Company.
Such
Shares will more likely be registered under the names of intermediaries. In Canada, the vast majority of such Shares are registered
under the name of CDS & Co. (the registration name for The Canadian Depository for Securities Limited, which acts as nominee
for many Canadian brokerage firms). Intermediaries are required to seek voting instructions from Beneficial Shareholders in advance
of meetings of shareholders. Every intermediary has its own mailing procedures and provides its own return instructions to clients.
There
are two kinds of Beneficial Shareholders - those who object to their name being made known to the issuers of securities which
they own (called “OBOs” for Objecting Beneficial Owners) and those who do not object to the issuers of the securities
they own knowing who they are (called “NOBOs” for Non Objecting Beneficial Owners).
In
accordance with the provisions of National Instrument 54-101 – Communication with Beneficial Owners of Securities of
a Reporting Issuer (“NI 54-101”), the Company has elected to deliver proxy-related materials, including a
Voting Instruction Form (“VIF”) indirectly through intermediaries for onward distribution to NOBOs and OBOs (unless
such shareholder has waived the right to receive such materials). The Company does not intend to pay for intermediaries to forward
to OBOs, under NI 54-101, the proxy related materials and Form 54-101F7 – Request for Voting Instructions Made by Intermediary,
and in the case of an OBO, the OBO will not receive these materials unless the OBO’s intermediary assumes the cost of delivery.
Generally,
Beneficial Shareholders who have not waived the right to receive proxy-related materials will be given a VIF which must be completed
and signed by the Beneficial Shareholder in accordance with the directions in the VIF. Beneficial Shareholders should follow the
instructions of their intermediary carefully to ensure that their Shares are voted at the Meeting. The Proxy supplied to you by
your broker will be similar to the Proxy provided to Registered Shareholders by the Company however, its purpose is limited to
instructing the intermediary on how to vote your Shares on your behalf.
Most
brokers delegate responsibility for obtaining instructions from clients to Broadridge Financial Solutions, Inc. (“Broadridge”)
in the United States and in Canada. Broadridge mails a VIF in lieu of a proxy provided by the Company. The VIF will name the same
persons as the Company’s Proxy to represent your Shares at the Meeting. You have the right to appoint a person (who need
not be a Beneficial Shareholder of the Company), other than any of the persons designated in the VIF, to represent your Shares
at the Meeting and that person may be you. To exercise this right, insert the name of the desired representative (which may be
you) in the blank space provided in the VIF. The completed VIF must then be returned to Broadridge by mail or facsimile or given
to Broadridge by phone or over the internet, in accordance with Broadridge’s instructions. Broadridge then tabulates the
results of all instructions received and provides appropriate instructions respecting the voting of Shares to be represented at
the Meeting and the appointment of any shareholder’s representative.
If
you receive a VIF from Broadridge, the VIF must be completed and returned to Broadridge, in accordance with its instructions,
well in advance of the Meeting in order to have your Shares voted or to have an alternate representative duly appointed to attend
the Meeting and vote your Shares at the Meeting.
Revocation
of Proxies
A
Registered Shareholder who has submitted a Proxy may revoke it at any time prior to the exercise thereof at the Meeting or any
adjournment or postponement thereof.
If
a Registered Shareholder who has given a Proxy attends the Meeting in person at which such Proxy is to be voted, such person may
revoke the Proxy and vote in person. In addition to revocation in any other manner permitted by law, a Proxy may be revoked by
instrument in writing executed by the Registered Shareholder or his attorney authorized in writing or, if the Registered Shareholder
is a corporation, under its corporate seal or by an officer or attorney thereof duly authorized and deposited either at our head
office at any time up to and including the last business day preceding the day of the Meeting, or any adjournment or postponement
thereof, at which the Proxy is to be used, or with the Chairman of the Meeting on the day of the Meeting, or any adjournment or
postponement thereof. Upon either of such deposits, the Proxy is revoked.
If
you are a Beneficial Shareholder, please contact your intermediary for instructions on how to revoke your voting instructions.
Exercise
of Discretion
If
the instructions in a Proxy are certain, the Shares represented thereby will be voted on any poll by the persons named in the
Proxy, and, where a choice with respect to any matter to be acted upon has been specified in the Proxy, the Shares represented
thereby will, on a poll, be voted or withheld from voting in accordance with the specifications so made.
Where
no choice has been specified by the shareholder, and the management proxyholders have been appointed, such Shares will, on a poll,
be voted in accordance with the notes to the form of Proxy.
The
enclosed Proxy, when properly completed and delivered and not revoked, confers discretionary authority upon the persons appointed
proxyholder thereunder to vote with respect to any amendments or variations of matters identified in the Notice of Meeting and
with respect to other matters which may properly come before the Meeting.
Voting
Securities and Principal Holders of Voting Securities
Our
authorized share capital consists of an unlimited number of Shares without par value.
Any
shareholder of record at the close of business on March 20, 2020 is entitled to vote in person or by proxy at the Meeting. As
at the date hereof, we have issued and outstanding 185,522,800 fully paid and non-assessable Shares, each share carrying the right
to one vote. We have no other classes of voting securities.
The
quorum for the transaction of business at a meeting of shareholders is two persons who are, or who represent by proxy, shareholders
who, in the aggregate, hold at least 25% of the issued shares entitled to be voted at the Meeting.
To
the best of the knowledge of our directors and senior officers, no person or corporation beneficially owns, or controls or directs,
directly or indirectly, Shares carrying 10% or more of the voting rights attached to all of our outstanding Shares other than:
| Name
of Shareholder |
Amount
of Shares Held |
Percentage |
| BlackRock,
Inc. |
25,849,091
Shares |
13.93% |
| Van
Eck Associates Corporation |
21,268,419
Shares |
11.46% |
Interest
of Certain Persons in Matters to be Acted Upon
Except
as disclosed herein, no person 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 the election of directors or the appointment of auditors. For
the purpose of this paragraph, “person” shall include each person or company: (a) who has been a director or executive
officer of the Company at any time since the commencement of the Company’s last financial year; (b) who is a proposed nominee
for election as a director of the Company; and (c) who is an associate or affiliate of a person or company included in subparagraphs
(a) or (b).
Indebtedness
of Directors and Executive Officers
As
at the date of this Information Circular, no executive officer, director, employee or former executive officer, director or employee
of the Company or any of its subsidiaries is indebted to the Company, or any of its subsidiaries, nor are any of these individuals
indebted to another entity which indebtedness is the subject of a guarantee, support agreement, letter of credit or other similar
arrangement or understanding provided by the Company, or any of its subsidiaries.
Interest
of Certain Persons in Material Transactions
Except
as disclosed herein or in our Annual Information Form for the fiscal year ended December 31, 2019, dated February 21, 2020 (our
“AIF”), since the commencement of the Company’s most recently completed financial year, no informed person
of the Company, nominee for director or any associate or affiliate of an informed person or nominee, had any material interest,
direct or indirect, in any transaction or any proposed transaction which has materially affected or would materially affect the
Company or any of its subsidiaries.
An
“informed person” means:
| (a) | a
director or executive officer of the Company; |
| (b) | a
director or executive officer of a person or company that is itself an informed person
or subsidiary of the Company; |
| (c) | any
person or company who beneficially owns, directly or indirectly, voting securities of
the Company or who exercises control or direction over voting securities of the Company
or a combination of both carrying more than 10% of the voting rights other than voting
securities held by the person or company as underwriter in the course of a distribution;
and |
| (d) | the
Company itself, if and for so long as it has purchased, redeemed or otherwise acquired
any of its Shares. |
PARTICULARS
OF MATTERS TO BE ACTED UPON
Financial
Statements
Our
audited consolidated financial statements and management’s discussion and analysis (“MD&A”)
for the years ended December 31, 2019 and 2018, are available upon request from the Company. They can also be found on our website
at www.pretivm.com or under our profile on SEDAR at www.sedar.com
and on EDGAR at www.sec.gov.
The
audited consolidated financial statements of the Company for the years ended December 31, 2019 and 2018 and the report of the
auditor thereon will be placed before the shareholders at the Meeting, but no shareholder vote is required in connection with
these documents.
Number
of Directors
Management
proposes that the number of directors on the Company’s Board of Directors (the “Board”) be set at seven
(7) for the ensuing year.
Shareholders
will be asked at the Meeting to approve an ordinary resolution to set the number of directors elected for the ensuing year at
seven (7), subject to such increases as may be permitted by the Articles of the Company and the provisions of the Business
Corporations Act (British Columbia) (“BCBCA”).
We
recommend a vote “FOR” the approval of the resolution setting the number of directors for the ensuing year at seven
(7).
In
the absence of a contrary instruction, the persons designated by management of the Company in the enclosed form of Proxy intend
to vote FOR the approval of the resolution setting the number of directors for the ensuing year at seven (7).
Election
of Directors
Each
director elected holds office until our next annual general meeting or until his or her successor is elected or appointed, unless
his or her office is earlier vacated in accordance with our Articles or with the provisions of the BCBCA.
At
the Meeting, we will ask shareholders to vote for the election of the seven (7) director nominees proposed by management. Each
shareholder will be entitled to cast their votes for or withhold their votes from the election of each director nominee.
Director
Nominees
The
following disclosure sets out information on the nominees proposed for election as directors, the province or state and
country in which each is ordinarily resident and the period during which each has served as a director. The below disclosure
also describes the principal occupation of each nominee during the last five years, and each nominee’s current equity
ownership for the purposes of determining compliance with our Share Ownership Policy, which consists of Shares beneficially
owned, directly or indirectly, or controlled or directed as well as RSUs and/or DSUs (each as defined below) credited to each
nominee as at December 31, 2019.
Further
information regarding RSUs, DSUs and our Share Ownership Policy can be found under the headings “Compensation Discussion
& Analysis”, “Named Executive Officer Compensation”, “Director Compensation” and
“Securities Authorized for Issuance Under Equity Compensation Plans”, as applicable.
Also
included below is information regarding each nominee’s membership on committees of the Board and Board and committee meeting
attendance for the year ended December 31, 2019.
During
2019, our Board held six regularly scheduled meetings and 13ad-hoc meetings. Ad-hoc meetings may be called on shorter notice than
regularly scheduled meetings, which are scheduled over a year or more in advance. In addition to the attendance listed below,
directors from time to time attend other Board committee meetings by invitation.
Management
contemplates that each of the following seven (7) nominees will be able to serve as a director.
We
recommend a vote “FOR” the election of each of the director nominees.
In
the absence of a contrary instruction, the persons designated by management of the Company in the enclosed form of Proxy intend
to vote FOR the election of the seven (7) director nominees.
 |
RICHARD
O’BRIEN
JD
Independent Director since November 13, 2019
Chair of the Board since January 1, 2020
Colorado, USA
Age: 66 |
| |
|
| Background
and Experience |
| |
Mr.
O’Brien is the independent Chair of our Board and has served in such role since
January 1, 2020.
Mr.
O’Brien brings more than 30 years of operational and financial experience in the natural resources, energy and power
sectors. Mr. O’Brien has served as President and Chief Executive Officer of Boart Longyear Ltd. from 2013 to 2016.
Prior thereto, Mr. O’Brien was the President and Chief Executive Officer of Newmont Mining Corp. (now Newmont Corporation,
“Newmont”) from 2007 to 2013. Mr. O’Brien has also served as a Chief Financial Officer at Newmont,
prior to which his executive roles included Executive Vice President and Chief Financial Officer of U.S. energy services
company AGL Resources (now Southern Company Gas), and Chief Operating Officer and Chief Financial Officer at PacifiCorp,
a western U.S. utilities company.
Mr.
O’Brien currently serves on the boards of Xcel Energy Inc., Vulcan Materials Company and Ma’aden, the Saudi
Arabian Mining Company. |
| |
| Education
& Accreditations: |
| |
| Mr.
O’Brien holds a Bachelor of Arts degree in economics from the University of Chicago and a Juris Doctorate degree from
Lewis and Clark Law School. |
| |
| Areas
of Expertise: |
| |
| Mining
Industry Experience; Construction/Operations; Environment, Safety & Sustainability; Audit/Finance; Capital Markets &
Corporate Finance; Legal/Governance; Human Resources & Executive Compensation; Risk Management; Public Reporting &
Investor Communication. |
| |
| Board/Committee
Membership |
Attendance |
Securities
Ownership as at March 26, 2020 |
| Board |
1
of 1(1) |
100% |
Shares
DSUs(2)
Target Requirement
Meets Requirement |
Nil
19,619
$600,000
No(3) |
| |
|
|
|
|
|
| (1) | Mr.
O’Brien was appointed to the Board on November 13, 2019. |
| (2) | Pursuant
to the terms of the Company’s DSU Plan (as defined herein), DSUs may only be settled
in cash. |
| (3) | Mr.
O’Brien has until November 13, 2022 to satisfy the securities ownership requirements
set out in our Share Ownership Policy. |
 |
GEORGE
PASPALAS
Independent Director since May 10, 2013
British Columbia, Canada
Age: 57 |
| |
|
| Background
and Experience: |
| |
Mr.
Paspalas is the Chair of our Sustainability and Technical Committee. Mr. Paspalas also
acted as our Lead Director throughout 2019 and as the Chair of our Compensation Committee
until February 14, 2019.
Mr.
Paspalas has been the President and Chief Executive Officer of MAG Silver Corp. (“MAG Silver”) since
2013. Prior to joining MAG Silver, Mr. Paspalas was the President and Chief Executive Officer of Aurizon Mines Ltd. from
August 2011 to June 2013. From 2007 to 2011, Mr. Paspalas was the Chief Operating Officer of Silver Standard Resources
Inc. (now SSR Mining Inc.).
Mr.
Paspalas is currently a director of MAG Silver. |
| |
| Education
& Accreditations: |
| |
| Mr.
Paspalas earned a Bachelor of Engineering (Chemical) degree with Honours from the University of New South Wales in 1984. |
| |
| Areas
of Expertise: |
| |
| Mining
Industry Experience; Exploration/Geology; Construction/Operations; Environment, Safety & Sustainability; Audit/Finance;
Capital Markets & Corporate Finance; Human Resources & Executive Compensation; Risk Management; Public Reporting &
Investor Communication. |
| |
| Board/Committee
Membership |
Attendance |
Securities
Ownership as at March 26, 2020 |
Board
(Lead)
Compensation Committee
Sustainability and Technical
Committee (Chair) |
19
of 19
10 of 10
5 of 5 |
100%
100%
100% |
Shares
RSUs
DSUs(1)
Target Requirement
Meets Requirement |
37,646
12,634
14,315
$255,000
Yes |
| |
|
|
|
|
|
| (1) | Pursuant
to the terms of the Company’s DSU Plan, DSUs may only be settled in cash. |
 |
PETER
BIRKEY
CFA
Independent Director since May 14, 2014
Minnesota, USA
Age: 50 |
| |
|
| Background
and Experience: |
| |
Mr.
Birkey is the Chair of our Corporate Governance and Nominating Committee.
Mr.
Birkey is an Investment Executive who has over 20 years of experience investing in the financial markets and advising
both public and private companies. Mr. Birkey was an Executive Vice President for Liberty Mutual Asset Management responsible
for all Strategy, Public Markets, Risk Management, Real Estate and Special Situations from June 2004 to October 2013.
Prior to 2004, he was a Senior Vice President for AmerUs Capital Management (now Aviva USA) responsible for their Investment
Department and a Portfolio Manager for AEGON USA. |
| |
| Education
& Accreditations: |
| |
| Mr.
Birkey is a graduate with highest honors from the University of Chicago with an MBA in Finance and Marketing. He earned his
Bachelor’s degree at Coe College in Economics and Business Administration and is also a Chartered Financial Analyst. |
| |
| Areas
of Expertise: |
| |
| Mining
Industry Experience; Audit/Finance; Capital Markets & Corporate Finance; Legal/Governance; Human Resources & Executive
Compensation; Risk Management; Public Reporting & Investor Communication. |
| |
| Board/Committee
Membership |
Attendance |
Securities
Ownership as at March 26, 2020 |
Board
Audit Committee
Corporate Governance and
Nominating Committee (Chair) |
19
of 19
5 of 5
7 of 8(1) |
100%
100%
88% |
Shares
RSUs
DSUs(2)
Target Requirement
Meets Requirement |
94,978
12,634
14,315
$255,000
Yes |
| |
|
|
|
|
|
| (1) | Mr.
Birkey did not attend one meeting of the Corporate Governance and Nominating Committee
due his personal interest in the matters discussed. |
| (2) | Pursuant
to the terms of the Company’s DSU Plan, DSUs may only be settled in cash. |
 |
DAVID
SMITH
CPA, ICD.D
Independent Director since May 12, 2017
British Columbia, Canada
Age: 61 |
| |
|
| Background
and Experience: |
| |
Mr.
Smith is the Chair of our Audit Committee.
Mr.
Smith served as the Chief Financial Officer and Executive Vice President of Finning International Inc. (“Finning”)
from 2009 to 2014. Prior to joining Finning, Mr. Smith served as Chief Financial Officer and a Vice President of Ballard
Power Systems, Inc. from 2002 to 2009. Previously, he spent 16 years with Placer Dome Inc. in various senior positions
and four years with PriceWaterhouseCoopers LLP.
Mr.
Smith currently serves as a director of Hudbay Minerals Inc. (“Hudbay”), a Toronto Stock Exchange (“TSX”)
and New York Stock Exchange-listed base metals mining company, and has previously served on other public mining company
boards of directors, specifically Nevsun Resources Ltd. (“Nevsun”, acquired by Zijin Mining Group Company
Limited) and Dominion Diamond Corporation (“DDC”, acquired by The Washington Companies). Mr. Smith has
experience chairing Audit Committees of both Nevsun and DDC.In addition, Mr. Smith has experience as a member of the Human
Resources and Compensation Committees of Hudbay and DDC. Mr. Smith is also a member of the Board of Governors of Collingwood
School. |
| |
| Education
& Accreditations: |
| |
| Mr.
Smith is a Certified Public Accountant (California) and holds a Bachelor’s degree in Business Administration from California
State University, Sacramento. He has also completed the Institute of Corporate Directors course, Directors Education Program
(ICD.D). |
| |
| Areas
of Expertise: |
| |
| Mining
Industry Experience; Audit/Finance; Capital Markets & Corporate Finance; Human Resources & Executive Compensation;
Legal/Governance; Risk Management; Information Technology; Public Reporting & Investor Communication. |
| |
| Board/Committee
Membership |
Attendance |
Securities
Ownership as at March 26, 2020 |
Board
Audit Committee (Chair)
Compensation Committee |
19
of 19
5 of 5
10 of 10 |
100%
100%
100% |
Shares
RSUs
DSUs(2)
Target Requirement
Meets Requirement |
28,547
7,645
14,315
$255,000
Yes |
| |
|
|
|
|
|
| (1) | Pursuant
to the terms of the Company’s DSU Plan, DSUs may only be settled in cash. |
 |
FAHEEM
TEJANI
CPA, CA
Independent Director since May 10, 2018
Ontario, Canada
Age: 46 |
| |
|
| Background
and Experience: |
| |
Mr.
Tejani is currently the President of the Mortgage Company of Canada since March 2018,
a privately-owned investment company that primarily invests in single family residential
mortgages in the Greater Toronto Area, currently with assets under management of approximately
$300 million.
Prior
to joining Mortgage Company of Canada, Mr. Tejani spent 17 years at BMO Capital Markets, most recently as Managing Director,
Equity Capital Markets. During his time at BMO Capital Markets,Mr. Tejani primarily focused on the Metals and Mining industry.
Before joining BMO Capital Markets, Mr. Tejani worked for one of the largest global accounting firms. |
| |
| Education
& Accreditations: |
| |
| Mr.
Tejani is a Chartered Professional Accountant and holds a Bachelor of Arts degree from the University of Western Ontario. |
| |
| Areas
of Expertise: |
| |
| Mining
Industry Experience; Audit/Finance; Capital Markets & Corporate Finance; Legal/Governance; Human Resources & Executive
Compensation; Risk Management; Public Reporting & Investor Communication. |
| |
| Board/Committee
Membership |
Attendance |
Securities
Ownership as at March 26, 2020 |
Board
Audit Committee
Corporate Governance and
Nominating Committee
Sustainability and Technical
Committee |
18
of 19
5 of 5
8 of 8
5 of 5 |
95%
100%
100%
100% |
Shares
DSUs(1)
Target Requirement
Meets Requirement |
Nil
37,321
$255,000
Yes |
| |
|
|
|
|
|
| (1) | Pursuant
to the terms of the Company’s DSU Plan, DSUs may only be settled in cash. |
 |
ROBIN
BIENENSTOCK
Independent Director since November 8, 2018
Ontario, Canada
Age: 51 |
| Background
and Experience: |
Ms.
Bienenstock is the Chair of our Compensation Committee.
Ms.
Bienenstock is a founder and investment partner of RBMP Capital LLP, founded in London, United Kingdom in 2017. Prior
thereto, Ms. Bienenstock was a partner at Marlin Sams Fund LP from 2014 until 2016. She was a senior research analyst
at Sanford C. Bernstein & Co., LLC, Research Division from 2007 until 2014.
Ms.
Bienenstock is currently a non-executive director, and a member of the Audit Committee of Sunrise Communications Group
AG, a Swiss telecommunications provider. Previously, she served as a member of the Supervisory Board of Tele Columbus
AG, a German cable provider, and a director and chair of the committee responsible for audit, risks and contingencies
of Oi S.A. (“Oi”), a large telecommunications company in Brazil and South America.
|
| Education
& Accreditations: |
| Ms.
Bienenstock obtained a Master of Arts degree in International Economics and Management from SDA Bocconi in Milan, Italy and
a Bachelor of Arts degree in Politics, Philosophy and Economics from the University of Oxford. |
| Areas
of Expertise: |
| Mining
Industry Experience; Audit/Finance; Capital Markets & Corporate Finance; Legal/Governance; Human Resources & Executive
Compensation; Risk Management; Public Reporting & Investor Communication. |
| Board/Committee
Membership |
Attendance |
Securities
Ownership as at March 26, 2020 |
Board
Corporate Governance and
Nominating Committee
Compensation Committee (Chair) |
18
of 19
8 of 8
10 of 10 |
95%
100%
100% |
Shares
DSUs(2)
Target Requirement
Meets Requirement |
158,520(1)
37,321
$255,000
Yes(3) |
| |
|
|
|
|
| (1) | Includes
154,232 Shares held by RBMP Master Fund Limited, over which Ms. Bienenstock has direction
or control. |
| (2) | Pursuant
to the terms of the Company’s DSU Plan, DSUs may only be settled in cash. |
| (3) | 154,232
Shares held by RBMP Master Fund Limited have not been included in the determination of
Ms. Bienenstock’s compliance with our Share Ownership Policy. |
 |
JEANE
HULL
Independent Director since November 13, 2019
Arizona, USA
Age: 65 |
| |
|
| Background
and Experience: |
| |
| Ms.
Hull has over 35 years of operational leadership and engineering experience. Ms. Hull served as the Executive Vice President
and Chief Technical Officer of Peabody Energy Corporation (“Peabody”) from 2011 to 2015. Ms. Hull also held
the position of Chief Operating Officer for Rio Tinto plc (“Rio Tinto”) at the Kennecott Utah Copper Mine
and numerous management engineering and operations positions with Rio Tinto and affiliates. Prior to joining Rio Tinto, she
held positions with Mobil Mining and Minerals, and has additional engineering, environmental and regulatory affairs experience
in the public and private sector. Currently Ms. Hull serves on the Boards of Epiroc AB (Sweden) and Interfor Corporation. |
| |
| Education
& Accreditations: |
| |
| A
Registered Professional Engineer, Ms. Hull holds a Bachelor of Science degree in civil engineering from South Dakota School
of Mines and Technology and a Master of Business Administration degree from Nova Southeastern University in Florida. She is
a member of the University of Wyoming School Of Energy Resources Council. She serves on the University Advisory Board for
South Dakota School of Mines and Technology, and formerly served on the Industry Advisory Board for Missouri University of
Science and Technology Mining Department and the Washington University Olin Business School Women’s Leadership Forum
Steering Committee. |
| |
| Areas
of Expertise: |
| |
| Mining
Industry Experience; Construction/Operations; Environment, Safety & Sustainability; Audit/Finance; Capital Markets &
Corporate Finance; Human Resources & Executive Compensation; Risk Management; Public Reporting & Investor Communication. |
| Board/Committee
Membership |
Attendance |
Securities
Ownership as at March 26, 2020 |
Board
Corporate Governance and
Nominating Committee
Sustainability and Technical
Committee |
1
of 1(1)
0 of 0(1)
0 of 0(1) |
100%
n/a
n/a |
Shares
DSUs(3)
Target Requirement
Meets Requirement |
500(2)
19,619
$255,000
No(4) |
| |
|
|
|
|
| (1) | Ms.
Hull was appointed to the Board on November 13, 2019 and to the Corporate Governance
and Nominating Committee and the Sustainability and Technical Committee on December 4,
2019. The Corporate Governance and Nominating Committee and the Sustainability and Technical
Committee did not hold meetings in 2019 subsequent to Ms. Hull’s appointments. |
| (2) | Ms.
Hull has direction or control over these shares. |
| (3) | Pursuant
to the terms of the Company’s DSU Plan, DSUs may only be settled in cash. |
| (4) | Ms.
Hull has until November 13, 2022 to satisfy the securities ownership requirements set
out in our Share Ownership Policy. |
Cease
Trade Orders, Bankruptcies, Penalties or Sanctions
To
the best of management’s knowledge, other than described herein, no proposed director is, or has been within the last ten
years, a director or executive officer of any company (including the Company) that:
| (a) | while
that person was acting in that capacity was the subject of a cease trade or similar order
or an order that denied the relevant company access to any exemption under securities
legislation, for a period of more than 30 consecutive days (hereinafter referred to as
an “Order”); |
| (b) | after
that person ceased to be a director or executive officer, was subject to an Order which
resulted from an event that occurred while that person was acting in the capacity as
a director or executive officer; or |
| (c) | while
that person was acting in that capacity or within a year of that person ceasing to act
in that capacity, became bankrupt, made a proposal under any legislation relating to
bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement
or compromise with creditors or had a receiver, receiver manager or trustee appointed
to hold its assets. |
Robin
Bienenstock was a member of the Board of Directors of Oi, a Brazilian telecommunications company, from September 1, 2015 to June
13, 2016. Oi filed for bankruptcy protection in Brazil on June 20, 2016 and in the United States on June 22, 2016.
Jeane
Hull was the Executive Vice President and Chief Technical Officer of Peabody, a private-sector coal company, from April 2011 to
July 31, 2015. Peabody filed for Chapter 11 bankruptcy protection on April 13, 2016 and emerged from Chapter 11 protection on
April 3, 2017. In addition, from July 6, 2016 to October 24, 2019, Ms. Hull was a director of Cloud Peak Energy Inc. (“Cloud
Peak”). Cloud Peak filed for Chapter 11 bankruptcy protection on May 10, 2019 and received court approval for its plan
to exit bankruptcy on December 5, 2019.
To
the best of management’s knowledge, no proposed director has, within the ten years before the date of this Information Circular,
become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted
any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the
assets of the proposed director.
None
of our directors has been subject to (a) any penalties or sanctions imposed by a court relating to securities legislation or by
a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or (b) any
other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder
in deciding whether to vote for a proposed director.
Majority
Vote Policy
As
part of our corporate governance practices, the Board has adopted a Majority Vote Policy that requires, in an uncontested election
of directors, any nominee for election as a director who receives a greater number of votes “withheld” than votes “for”
to tender his or her resignation to the independent Chair or Lead Director of our Board, as applicable, promptly following the
shareholders’ meeting.
The
Corporate Governance and Nominating Committee will then consider the offer of resignation and make a recommendation to the Board
on whether to accept it. In considering whether or not to recommend acceptance of the resignation, the Corporate Governance and
Nominating Committee will consider all factors deemed relevant by its members. The Corporate Governance and Nominating Committee
will be expected to recommend acceptance of the resignation except in exceptional circumstances where the consideration would
warrant the applicable director continuing to serve on the Board.
The
Board will make its final decision and announce it in a news release within 90 days following the shareholders’ meeting.
A director who tenders his or her resignation pursuant to this policy will not participate in any meeting of the Board or the
Corporate Governance and Nominating Committee at which the resignation is considered.
Appointment
and Remuneration of Auditor
Shareholders
will be asked to approve the re-appointment of PricewaterhouseCoopers LLP, Chartered Professional Accountants, as our auditor
to hold office until the next annual general meeting of shareholders at remuneration to be fixed by the directors.
PricewaterhouseCoopers
LLP, Chartered Professional Accountants, have served as our auditor since October 24, 2010.
We
recommend a vote “FOR” the re-appointment of PricewaterhouseCoopers LLP, Chartered Professional Accountants, of Vancouver,
British Columbia, as our auditor to hold office until the next annual general meeting of shareholders, at remuneration to be fixed
by the directors.
In
the absence of a contrary instruction, the persons designated by management of the Company in the enclosed form of Proxy intend
to vote FOR the re-appointment of PricewaterhouseCoopers LLP at remuneration to be fixed by the directors.
Advisory
Vote on Executive Compensation
The
Board believes that the Company’s compensation program must be competitive to attract and retain top quality directors and
officers, provide a strong incentive to its management to achieve the Company’s goals and align the interests of management
with the interests of the Company’s shareholders.
A
detailed discussion of the Company’s compensation philosophy and executive compensation program can be found in the “Compensation
Discussion & Analysis” section of this Information Circular. Information pertaining to the compensation of our NEOs
(as defined herein) and independent directors can be found under the headings “Named Executive Officer Compensation”
and “Director Compensation”, respectively, in this Information Circular. Shareholders are asked to consider such
disclosure as they have a formal opportunity at the Meeting to provide their views on the Company’s approach to executive
compensation through the following “Say on Pay” advisory vote:
RESOLVED
THAT, on an advisory basis and not to diminish the role and responsibilities of the Board of Directors of Pretium Resources
Inc. (the “Company”), the shareholders of the Company accept the approach to executive compensation disclosed in the
Management Information Circular with respect to the Company’s Annual General Meeting of shareholders on April 30, 2020.
As
this is an advisory vote, it is not binding on the Board. The Board remains fully responsible for its compensation decisions and
is not relieved of this responsibility. The Board and the Compensation Committee will consider the outcome of the vote, as appropriate,
when considering future compensation policies, procedures and decisions, all of which are to be consistent with our pay for performance
compensation model.
We
recommend a vote “FOR” the approval of the non-binding resolution on executive compensation.
In
the absence of a contrary instruction, the persons designated by management of the Company in the enclosed form of Proxy intend
to vote FOR the approval of the non-binding resolution on executive compensation.
Other
Business
If
other matters are properly brought up at the Meeting, you (or your proxyholder, if you are voting by proxy) can vote as you see
fit. As at the date hereof, we are not aware of any other items of business to be considered at the Meeting.
FROM
THE CHAIR OF THE COMPENSATION COMMITTEE
Dear
Shareholders,
Our
second full year of operation, 2019, was mixed with significant accomplishments and challenges. As the Chair of the Compensation
Committee in 2019, I am pleased to discuss with you our compensation philosophy and how Pretivm’s accomplishments and challenges
informed the Corporate Objectives (as defined in the Information Circular) for management and their 2019 compensation outcomes.
In
2019, we continued Brucejack’s consistent track-record of profitability and strong cash generation since commencement of
operations in 2017. Operational highlights included successfully ramping up our production rate to 3,800 tonnes-per-day, reducing
our debt by more than US$180 million from operating cash flow (exceeding our target of US$140 million) and repurchasing 100% of
our offtake obligation. These achievements were, however,partially offset by our continued challenges in predicting the mined
grade (grams/tonne) from the Brucejack Mine. Consequently, our 2019 results fell short of our initial production guidance, highlighting
the importance of achieving several important grade control projects we are undertaking in 2020.
Safety
is a fundamental component of our business, and the well-being and safety of our people is a value we hold close to our hearts.
During 2019, the Company continued its rigorous efforts to keep our employees and contractors safe by bolstering our occupational
health and safety programs, policies and practices, and achieved a target of no lost time incidents (“LTIs”)
in the year. For 2020, we will continue to bolster our safety programs, policies and practices and have introduced new Corporate
Objectives that focus on the frequency rate of all injuries and reduction of risks, in furtherance of these efforts.
As
further discussed in the “Compensation Discussion & Analysis” section in the Information Circular, Pretivm’s
compensation philosophy is premised on the fact that employees are a key asset of its business. As a result, the Company has established
a compensation structure that rewards short term objective achievements, and provides long term compensation that aligns with
shareholder interests in improving on our business outcomes and creating long term value. In furtherance of this, the Board has
established the Compensation Committee to assist it in discharging its responsibilities relating to compensation and benefits
of Pretivm’s executive officers and directors.
The
Compensation Committee is proactive throughout the year with respect to compensation, reviewing industry compensation trends with
our consultants. During 2019, the Compensation Committee appointed Meridian Compensation Partners, LLC (“Meridian”)
as its independent compensation advisor. With assistance from Meridian, the Compensation Committee has made some key changes to
our compensation programs, policies and practices:
| ● | to
align our practice with market practices, we implemented a return on invested capital
performance metric that will apply to 25% of PSUs issued in 2020 and beyond, with the
remaining 75% of PSUs being subject to a relative total shareholder return (“TSR”)
metric; |
| ● | to
increase the ratio of performance- to time-based awards and overall mix of performance-based
awards, we will transition from granting stock options to purchase Shares (“Options”)
to a long-term incentive plan vehicle mix comprised of 60% performance-based share units
(“PSUs”) and 40% time-based share units (“RSUs”); |
| ● | to
align our practice with market trends, we increased securities ownership requirements
for the Chief Executive Officer (“CEO”) from three to five times salary,
and for the Chief Financial Officer (“CFO”) and executive or senior
vice presidents (including non-CEO NEOs (as defined herein)), from two to three times
salary; |
| ● | to
improve our positioning and alignment relative to our peer group, and to ensure size
and stability of the group, we revised our group of peer companies for 2020 compensation
benchmarking, adding several companies to the group; |
| ● | to
align our practices with market standards and ensure that short-term incentive payments
are commensurate with achievement of targets in the full year of production, we will
transition to paying short-term incentive plan awards for 2020 and beyond after year-end
operational reconciliations of key performance indicators against the applicable Corporate
Objectives; and |
| ● | to
align our practices with market standards, we will transition to granting long-term incentive
plan awards for 2020 and beyond in the first quarter of the relevant year (as opposed
to December of the relevant year). |
For
further details regarding the above changes, please refer to “Compensation Discussion & Analysis” in the
Information Circular.
Pretivm’s
Corporate Objectives for 2019 are set out under the heading “Compensation Discussion & Analysis – Executive
Compensation – 2. Short Term Incentive Awards (STIP) – 2019 Corporate Objectives” in the Information Circular.
The seven identified categories for 2019 were relevant priorities for the growth of Pretivm’s business. Each category has
a weighting between 10% and 20% based on the Board’s assessment of its importance to the Company’s business, and a multiplier
of 1.0 for the objective level that the Compensation Committee and Board felt required concerted effort for the management team
to achieve. Values of 1.5 and 2.0 were provided to targets that the Compensation Committee and the Board ascribed as a “stretch”
for the management team to achieve. This letter has the benefit of hindsight in now reviewing the 2019 Corporate Objective outcomes.
Our
short-term incentive plan for 2019 was a balanced scorecard with 20% weighted to each of production and all-in sustaining cost
(“AISC”), 10% weighted to EBITDA, 12.5% weighted to achieving a 3,800 tpd production rate, 27.5% weighted to
safety, environment and sustainability and 10% weighted to relative TSR.
With
respect to operational results, which are key to Pretivm’s business, a production target of 410,000 ounces at an AISC of
US$815 per ounce of gold was initially set for the Company’s second full year of operation. The Company was unable to achieve
its initial gold production guidance for 2019, producing 354,405 ounces compared to its initial forecasted range of 390,000 to
420,000 ounces. Gold production also impacted AISC, which was US$888 per ounce of gold. As a result, 0% multiplier was applied
for gold production, and a multiplier of 13% was applied for AISC.
With
increased focus on earnings in 2019, we introduced an EBITDA per Share metric, with a target of US$1.15. EBITDA per Share for
2019 was US$1.17, which resulted in an objective multiplier of 117% being applied.
Successfully
ramping up the production rate at Brucejack to 3,800 tonnes-per-day was a key operational goal for 2019. Our team worked strenuously
to complete the necessary modifications and upgrades to the Brucejack Mill required to sustainably process ore at the upgraded
production rate, and to accelerate underground development to ensure steady mining rates of 3,800 tonnes-per-day. In August and
September, we operated at an average production rate for the two-month period of 95% of 3,800 tonnes-per-day, with average gold
recovery for the period in excess of the recovery threshold of 96.7%. Accordingly, the 3,800 tonnes-per-day production date measure
was realized on October 1, 2019, resulting in a “stretch” multiplier of 150%.
The
Company continued to significantly improve its occupational health and safety programs, policies and practices throughout the
organization. As a result, we achieved our “stretch” target of no LTIs for the year resulting in a 200% multiplier.
With
respect to social and project sustainability matters, approximately 30% of the Company’s mine site employees are indigenous
people associated with First Nations and the Company has established excellent relations with local communities and its stakeholders.
The Company focuses its extensive and experienced environmental staff on mitigating the Brucejack’ impacts from its already
small surface footprint on the local environment. Based on these factors, the Compensation Committee assessed a “stretch”
multiplier of 150%.
We
also directed greater focus to shareholder returns in 2019, introducing a relative TSR metric, with a target TSR in the 50th or
greater percentile among our peers. Although we achieved an absolute TSR of 24% in 2019, we were below the 35th percentile of
our peer group, resulting in a 0% multiplier.
Accounting
for significant milestones achieved as well as challenges faced, the overall Corporate Objective multiplier was 81.87% for
the short-term incentive bonuses for 2019, which is well below the 123.6% multiplier applied in 2018 and 125% applied in
2017.
The
Compensation Committee has the prerogative in an exceptional year to award management up to an additional 20% with respect to
Corporate Objectives achieved. As discussed further in the Information Circular accompanying this letter, the Company achieved
a number of key milestones in 2019, returning value to its shareholders. However, as the Company did not achieve its production
target for the second year in a row and its relative TSR target, no additional discretionary award was made for 2019.
We
rely on the advice of our independent compensation consultant to set directors’ compensation that reflects the median of
our peer group. With respect to total director compensation for 2020, aside from setting an annual retainer for the independent
Board Chair, the Compensation Committee has not made material changes to the annual retainers for directors and committee chairs,
as further described in the Information Circular under the heading “Director Compensation”. The equity ownership
held by all directors positions directors as ‘principals’ of the Company and aligns their interest with those of the
shareholders of the Company.
On
behalf of the Compensation Committee,
(signed)
“Robin Bienenstock”
Robin
Bienenstock
Chair of the Compensation Committee
COMPENSATION
DISCUSSION & ANALYSIS
Our
compensation philosophy is premised on the fact that our employees are key assets of the Company and, in the resource
industry, which requires a long-term view, maintaining continuity and motivating qualified and skilled executives and
employees is of strategic importance.
Based
on industry standards, we have evolved in a short time from an exploration company to a mid-tier gold producer. Our compensation
philosophy in the past was focused on budget, schedule and milestones as we developed the Brucejack Project within the permitting
regime in British Columbia, from an advanced exploration project to the 3,800 tonnes-per-day high-grade gold underground mine
(“Brucejack”). This focus on milestones has allowed short-term compensation to be aligned with the annual priorities
leading to our successful commencement of commercial production in 2017.
As
we have now completed two and a half years of commercial production and have successfully increased our production rate at Brucejack
to 3,800 tonnes-per-day, we have evolved into a mid-tier gold producer. Our compensation philosophy for 2020 will be focused on
delivering on our gold production guidance and balance sheet management, all within the safe working environment at Brucejack.
Our strategic focus is on the long-term value proposition of our business, with our interests aligned with those of our fellow
shareholders.
Compensation
Governance
Pursuant
to its charter, our Compensation Committee is comprised of at least three independent directors within the meaning of National
Instrument 52-110 - Audit Committees (“NI 52-110”). Throughout 2019, the members of our Compensation Committee
were Robin Bienenstock, George Paspalas and David Smith. On February 14, 2019, Mr. Paspalas relinquished his role as the Chair
of our Compensation Committee to Ms. Bienenstock.
Each
member of the Compensation Committee has the necessary experience to enable him or her to make decisions on the suitability of
our compensation policies or practices. Their relevant experience is set out in their respective biographies under the heading
“Election of Directors”.
In
the support of the fulfillment of their role, the Compensation Committee engages and receives input from an independent compensation
advisor, Meridian. Meridian was retained on July 30, 2019 to assess the Company’s approach to Named Executive Officer (“NEO”)
and independent director compensation and provide a review of the compensation arrangements for the Company’s NEOs and independent
directors and recommend changes (if any) to various pay elements and/or strategies to ensure alignment with current market practices.
During 2019, Meridian directed particular focus to re-designing the Company’s long-term incentive plan (“LTIP”)
compensation policies and practices. Prior to July 30, 2019, the Compensation Committee engaged Lane Caputo Compensation Inc.
(“Lane Caputo”) as its independent compensation advisor in a similar role to Meridian’s.
Further
information regarding the Compensation Committee, including its roles and responsibilities, powers and operation can be found
under the heading “Corporate Governance Disclosure – Committees – Compensation Committee” in this
Information Circular.
Executive
Compensation Related Fees
During
2019, total fees of $66,539 ($nil in 2018) related to the determination of compensation for the Company’s NEOs and
directors were billed by Meridian. There were no other fees billed for other services provided by Meridian that are not
reported under executive compensation-related fees. Further, during 2019, total fees of $29,961 ($40,467 in 2018) related to
the determination of compensation for the Company’s NEOs and directors were billed by Lane Caputo. There were no other
fees billed for other services provided by Lane Caputo that are not reported under executive compensation-related
fees.
The
Compensation Committee considers its independent compensation consultant’s recommendations and advice in making
recommendations to the Board for approval with respect to compensation-related matters. At the Compensation Committee’s
meetings held in September, October and December 2019 and January 2020, Meridian prepared extensive reviews of: compensation
market data for NEOs for 2020 compensation based on a new peer group of companies; compensation structure and quantum for
non-executive board of directors chair role based on a new peer group of companies; the Company’s performance versus the
Global Gold Index and potential custom peer groups for measuring TSR performance in connection with LTIP compensation; the
Company’s executive compensation philosophy, programs and policies, and related governance practices; and relative TSR
vesting modifiers for PSU awards. At the Compensation Committee’s meetings held in November and December 2018, the
committee reviewed compensation practices of the Company’s peer group with its compensation consultant, so that salaries
for 2019 were informed by then-current data.
Risks
Associated with Compensation Practices
Incentive
compensation is generally paid in relation to milestones regarding the advancement of our strategic objectives and projects which
are subject to considerable external review and assessment. As such, the Compensation Committee considers that its compensation
practices are unlikely to encourage any NEO from taking inappropriate risks.
The
Board’s oversight of our strategic direction, budgetary process and expenditure limits are used to mitigate compensation
policy risks. As short-term incentive plan (“STIP”) awards are ultimately subject to the discretion of the Board,
the ability of an individual to target specific performance parameters to the detriment of our overall performance is limited,
while our LTIP awards serve to align our executives with our shareholders’ interest in our growth.
Our
Compensation Committee reviews our compensation policies to identify any practice that might encourage an employee to expose us
to unacceptable risk and has not identified any risks arising from our compensation policies and practices that could encourage
a NEO or other employee to take inappropriate or excessive risks. Key risk-mitigating features in our compensation structure include
those set out below.
| a) | An
independent compensation advisor |
The
Compensation Committee is satisfied that Meridian (and previously, Lane Caputo) is independent and possesses the appropriate expertise
to advise the Compensation Committee on matters within its mandate. The Compensation Committee must pre-approve other services
Meridian may provide to the Company at the request of management.
| b) | An
annual review of compensation programs |
We
conduct an annual review of our compensation strategy, including our compensation philosophy and program design in consideration
of current business requirements, market practice, and best practices in pay governance.
| c) | Corporate
and individual performance objectives |
The
corporate and individual performance objectives established each year are aligned with the Company’s priorities for that
year and are stress-tested to ensure payouts will be reasonable within the context of performance outcomes. Production, cost and
other financial objectives are linked to further align management’s interests with shareholders and prevent inappropriate
risk-taking.
| d) | Fixed
and variable compensation |
A
significant portion of total direct compensation is delivered through variable compensation, providing a strong pay-for-performance
link with a competitive “base” level of compensation through salary. See “-Executive Compensation”
below.
| e) | Short-term
and long-term incentives |
Executive
compensation is balanced between short-term cash incentives and long-term incentive awards (RSUs and PSUs, and prior to 2019,
Options) to mitigate the risk of overemphasis on short-term goals at the expense of long-term, sustainable performance.
| f) | Capped
short-term incentive payments |
The
performance measures contained within the annual short-term incentive award have a maximum payout cap of 200% of target in
2019, thereby mitigating excessive risk taking or unsustainable operational or financial performance to achieve windfall
annual incentive awards.
| g) | The
application of discretion |
The
Compensation Committee and the Board retain discretion to adjust individual performance objectives during the year to ensure they
remain aligned with the evolving priorities of the Company and to increase or decrease payout levels based on an overall assessment
of the Company’s performance, ensuring appropriate pay-for-performance alignment and flexibility to make reasonable exceptions
when necessary.
| h) | Share
ownership requirements |
We
have a Share Ownership Policy to ensure that our NEOs and non-executive directors experience similar impact on the value of their
personal holdings of our Shares to that of our shareholders. The Share Ownership Policy was most recently updated on February
11, 2020 to increase securities ownership requirements for the CEO from three to five times salary, and for the CFO and executive
or senior vice presidents (including non-CEO NEOs), from two to three times salary. Pursuant to the Share Ownership Policy, if
the minimum-security ownership level for an individual is increased, the individual will have three years from the effective date
of the increase to achieve his or her new minimum-security ownership level.
The
table below reflects the shareholding requirements imposed on each NEO and the extent to which each has achieved such shareholding
requirement:
| NEO |
Salary |
Ownership
Multiple |
Ownership
Requirement |
Current
Ownership(2) |
Compliance |
| Executive
Chairman(1) |
n/a |
n/a |
n/a |
n/a |
n/a |
| President
and CEO |
$670,800 |
5x |
$3,354,000 |
$3,048,067 |
No(3) |
Vice
President, Operations
Executive Vice President and CFO |
$488,800
$442,000 |
3x
3x |
$1,466,400
$1,326,000 |
$1,150,666
$1,285,896 |
No(4)
No(5) |
| Vice
President and Chief Exploration Officer |
$384,800 |
3x |
$1,154,400 |
$1,057,187 |
No(6) |
|
(1) | Robert
Quartermain retired as the Company’s Executive Chairman effective as at the end
of December 31, 2019. Throughout 2019, Dr. Quartermain was in compliance with then-applicable
securities ownership requirements. |
| (2) | Current
ownership includes Shares, RSUs and PSUs. |
| (3) | Mr.
Ovsenek has until February 11, 2023 to satisfy his new securities ownership requirements
under the Share Ownership Policy. On February 12, 2020, the Company announced that it
has initiated an external search for a new President and CEO and that Mr. Ovsenek has
agreed to continue to serve in that role while the search is underway. |
| (4) | Mr.
Prins has until February 11, 2023 to satisfy his new securities ownership requirements
under the Share Ownership Policy. |
| (5) | Mr.
Yip has until February 11, 2023 to satisfy his new securities ownership requirements
under the Share Ownership Policy. |
| (6) | Mr.
McNaughton has until February 11, 2023 to satisfy his new securities ownership requirements
under the Share Ownership Policy. |
Ownership
values for the purposes of our Share Ownership Policy are calculated as of the effective date of the policy (April 7, 2017) for
securities held prior to the implementation of the policy or, for securities acquired after April 7, 2017, the acquisition cost
of such securities. The value of the RSUs and PSUs is based on their grant date value.
Each
of our NEOs has until February 11, 2023 to meet their ownership requirements. Each NEO is required to maintain their minimum ownership
level throughout their term as a NEO.
We
have an Anti-Hedging Policy that prevents our executive officers, including NEOs, and non-executive directors from purchasing
financial instruments designed to hedge or offset any decrease in market value of our Shares or any of our other securities. As
such, no NEO or independent director has purchased any financial instruments (such as prepaid variable forward contracts, equity
swaps, collars, or units of exchange funds) designed to hedge or offset a decrease in the market value of the equity-based securities
granted as compensation or held, directly or indirectly, by the NEO or independent director.
| j) | An
Executive Compensation Recovery Policy (‘Clawback’ Policy) |
We
have an Executive Compensation Recovery Policy to ensure that if an officer of the Company has engaged in fraud, theft, embezzlement,
serious misconduct or negligence, irrespective of whether there was a material restatement of previously issued financial statements,
the Board may:
| (a) | seek
recovery from such officer of the portion of the performance-based compensation awarded
to the officer during the 24 months preceding the date on which the Company is required
to prepare the accounting restatement (the “Restatement Date”) that
is greater than the compensation that would have been awarded had the compensation been
based on the restated financial results; and |
| (b) | cancel
any unvested equity compensation or claw-back any vested equity compensation or other
incentive awards awarded to the officer during the 24 months preceding the Restatement
Date and require the officer to repay the after tax amount of any gain on the exercise
of options or settlement of other equity compensation which were exercised or settled
within the 12 months from the end of the financial period that was the subject of financial
restatement. |
Strategy
and Approach to Compensation
Our
employees are a key asset and should be a principal source of our competitive advantage. Our success depends upon attracting and
retaining a group of highly qualified and motivated executives and employees dedicated to our success and strong long-term performance.
The mining industry is a competitive labour market and achieving the appropriate compensation arrangements across all levels of
our employee structure is critical to our success.
The
main objective of the Compensation Committee is to assist the Board in discharging its responsibilities relating to the compensation
and benefits of our executive officers and directors. In doing so, the Compensation Committee ensures that we have an executive
compensation plan that is motivational and competitive and that will attract and inspire the performance of executive officers
of a caliber that will ensure and enhance our sustainability, profitability and growth. The objective of our executive compensation
package is:
| (a) | to
attract and retain high quality employees with the requisite skill set; |
| (b) | encourage
and motivate outstanding performance and contributions; |
| (c) | link
compensation with short and long-term performance results; and |
| (d) | align
our executive team with shareholder interests. |
Benchmarking
A
core tenet of our compensation philosophy is to provide comparative compensation to attract and motivate high caliber executives.
Our objective is to establish compensation levels that are fair and reasonable, based on peer-company benchmarking, but offering
significant incentive for above average performance.
With
respect to benchmarking and targeting of compensation for our NEOs, salary is targeted at the median salary paid to the corresponding
NEO of our peer companies and overall compensation will be above the median if performance is exceptional.
Comparative
data for the following 15 peer companies was evaluated and used for the purposes of considering the competitiveness of the 2019
base salaries of our executive officers. The same group is used to benchmark our independent director compensation in 2019.
| Alamos
Gold Inc. |
Eldorado
Gold Corp. |
OceanaGold
Corp. |
| B2Gold
Corp. |
Hecla
Mining Co. |
Pan
American Silver Corp. |
| Centerra
Gold Inc. |
Kirkland
Lake Gold Ltd. |
SSR
Mining Inc. |
| Coeur
Mining Inc. |
New
Gold Inc. |
Tahoe
Resources Inc. |
| Detour
Gold Corp. |
Northern
Star Resources Ltd. |
Torex
Gold Resources Inc. |
In
determining the appropriate group of peer companies, the Compensation Committee, in consultation with its compensation consultant,
considered various factors, including but not limited to the following: gold/silver development companies that are the direct
competitors for the individuals we require to build our Company into a significant precious metals producer; companies with production
of 200,000 to 700,000 gold equivalent ounces of annual production; and companies with a comparative market capitalization of approximately
$500 million to $5 billion.
We
review our peer companies annually to ensure the peer group is comparative. To improve our positioning and alignment relative
to our peer group, and to increase the sample size to ensure size and stability of the group, we revised our group of peer companies
for 2020 compensation benchmarking to include the following 19 companies:
| Alacer
Gold Corp. |
First
Majestic Silver Corp. |
OceanaGold
Corp. |
| Alamos
Gold Inc. |
Golden
Star Resources Ltd. |
Pan
American Silver Corp. |
| B2Gold
Corp. |
Hecla
Mining Co. |
SEMAFO
Inc. |
| Centerra
Gold Inc. |
IAMGOLD
Corporation |
SSR
Mining Inc. |
| Coeur
Mining Inc. |
Kirkland
Lake Gold Ltd. |
Torex
Gold Resources Inc. |
| Detour
Gold Corp. |
New
Gold Inc. |
|
| Dundee
Precious Metals Inc. |
Northern
Star Resources Ltd. |
|
In
determining the above peer group for 2020 compensation benchmarking, the Compensation Committee, in consultation with Meridian,
considered various factors, including but not limited to the following: existing peer companies, to the extent appropriate; publicly-traded
Canadian and United States precious metals companies engaged in the acquisition, exploration, development and operation of properties;
direct business competitors in metals and mining; direct competitors for talent, particularly in industry-specific roles; an asset
scope between 1/3x to 3x of our assets, with revenue used as a secondary lens; and companies whose recent history has demonstrated
good financial results and governance.
Executive
Compensation
There
are three basic components to our executive compensation arrangement: base salary, STIP and LTIP. In some cases, there may be
additional incremental non-cash compensation.
The
three compensation components focus on specific areas that acknowledge both the short-term objectives of the Company and the longer-term
risk so that incentives align with shareholders through TSR. In this way, the compensation metrics are separate and do not provide
for any duplication of compensation awards.
1.
Base Salary
Our
executive salaries are targeted at the median (50th percentile) of our peer companies. Base salaries are reviewed annually and
are considered in the context of total compensation, to be managed within a prescribed range for each executive position. This
allows salaries to reflect employee qualifications, competencies and performance and allows flexibility in recruitment and retention
and ensures our market competitiveness. Base salaries of our current NEOs for 2019 and 2020 have not increased from their amounts
in 2018.
To
inform its decision on 2020 executive base salary amounts, the Compensation Committee reviewed our executive base salaries for
the year ended December 31, 2019 in the context of a market analysis of our revised peer group of companies undertaken by Meridian.
Based on this review, and because the Company did not achieve its gold production target for 2019, the Compensation Committee
decided not to increase 2020 base salaries of our current NEOs.
2.
Short Term Incentive Plan Awards (STIP)
The
objective of our STIP is to reward our executives for the achievement of our annual Corporate Objectives as well as their personal
objectives, if applicable. In 2018 and 2019, subject to the achievement of Corporate Objectives and the review and approval of
the Compensation Committee and the Board, 70% of a projected STIP for the year was paid prior to year-end. The remaining 30% was
evaluated during the first quarter of the following year, upon final year-end operational reconciliations of key performance indicators.
These final performance objectives were then reconciled against the Corporate Objectives and a determination was made with respect
to the residual STIP to be paid. STIP awards for 2020 and beyond will be paid entirely in the first quarter of the subsequent
year, upon year-end operational reconciliations of key performance indicators against the applicable Corporate Objectives. In
this manner, officers and employees who previously received a large portion of their short-term bonus in the same calendar year,
will receive such bonus in the subsequent calendar year, ensuring that short-term incentive payments are commensurate with achievement
of targets in the full year of production.
Our
executives earn an annual award based on an STIP target amount (target percentage of base salary) and corporate and individual
performance factors. The ratio of these factors may be adjusted by the Compensation Committee depending on the level of corporate
or individual focus. The below table sets out the STIP target amount as well as the ratio of corporate and individual performance
factors for our NEOs for 2019 and 2020.
| Position |
STIP
Target
(% of Base
Salary) |
Executive
Performance Factors |
| 2019 |
2020 |
| Corporate |
Individual |
Corporate |
Individual |
| Executive
Chairman(1) |
125% |
100% |
0% |
n/a |
n/a |
| President
and CEO |
125% |
100% |
0% |
100% |
0% |
| EVP
(defined below) and CFO |
85% |
70% |
30% |
70% |
30% |
| Vice
President, Operations |
85% |
70% |
30% |
70% |
30% |
| Vice
President and Chief Exploration Officer |
85% |
60% |
40% |
70% |
30% |
| (1) | Robert
Quartermain retired as our Executive Chairman at the end of December 31, 2019. Effective
January 1, 2020, the Company’s Chair of the Board is independent and not an officer. |
Annual
incentives are then calculated as follows:
| Corporate
Incentive Pay: |
| STIP
Target Amount |
x |
Corporate
Performance Weighting |
x
|
Achieved
Corporate Performance Multiplier |
| |
|
|
|
|
| Individual
Incentive Pay: |
| STIP
Target Amount |
x |
Individual
Performance Weighting |
x |
Achieved
Individual Performance Multiplier |
Total
Incentive Pay = Corporate Incentive Pay + Individual Incentive Pay
2019
Corporate Objectives
We
have a pay for performance executive compensation philosophy, and have established corporate objective targets for our executives
(our “Corporate Objectives”).
Our
2019 Corporate Objectives were informed by, among other things, our focus on achieving our gold production guidance for the year
while maintaining a low all-in sustaining cost profile, ramping up our operations at Brucejack to a production rate of 3,800 tonnes
per day, and relative TSR for the year, all with a continuous focus on site safety, environment and social issues. The following
table sets out our 2019 Corporate Objectives and details our achievements in respect of these objectives.
| Multiplier |
% |
0.0 |
0.5 |
1.0 |
1.5 |
2.0 |
Actual |
Multiplier |
MxW
(%) |
| Corporate/Operational
(62.5%) |
| Production
(ounces) |
20 |
-40,000 |
-20,000 |
410,000 |
+20,000 |
+40,000 |
354,405 |
0 |
0 |
| AISC
(US$/ounce) |
20 |
900 |
855 |
815 |
775 |
740 |
888 |
0.133 |
2.67 |
| EBITDA
(US$)/ Share(1) |
10 |
1.03 |
1.09 |
1.15 |
1.21 |
1.27 |
1.17 |
1.17 |
11.70 |
| 3,800
tpd Production Date(2) |
12.5 |
January
31,
2020 |
December
31,
2019 |
November
30,
2019 |
October
31,
2019 |
August
31,
2019 |
October
1,
2019 |
1.50 |
18.75 |
| Safety,
Environmental and Social (27.5%) |
| Safety
LTIs/ 200,000 man-hours |
15 |
1.0 |
0.8 |
0.7 |
0.6 |
0 |
0 |
2.00 |
30.00 |
| Sustainability
and Social |
12.5 |
|
One
material
non-compliance(3) |
Material
compliance |
No
environmental
citations |
|
No
environmental
citations |
1.50 |
18.75 |
| Total
Shareholder Return (10%) |
| TSR(4) |
10 |
TSR
< 35P |
35P
≤ TSR <
50P |
50P
≤ TSR <
75P |
75P
≤ TSR <
100P |
TSR
= 100P |
TSR
< 35P |
0 |
0 |
| Total
Defined |
100 |
|
|
|
|
|
|
|
81.87 |
| Discretionary
|
20 |
|
|
|
|
|
0 |
0 |
0 |
| Total |
120 |
|
|
|
|
|
|
|
81.87 |
| (1) | EBITDA
excludes gain/loss on Fair Value of Financial Instruments. |
| (2) | 3,800
tpd Production Date means the first day of the calendar month immediately following the
first period of two consecutive calendar months during which the Brucejack Mill processes
ore at any average rate of 90% of 3,800 tpd with average gold recovery of not less than
96.7%. |
| (3) | A
material non-compliant event is a cease work order. |
| (4) | Total
shareholder return over the period from January 1, 2019 to December 31, 2019 relative
to peer companies. |
We
produced 354,405 ounces of gold in our second full year of production, missing our initial 2019 guidance range of 390,000 to 420,000
ounces of gold and exceeding our revised 2019 guidance range of 340,000 to 350,000 ounces of gold. Gold production impacted our
AISC, which amounted to US$888 per ounce of gold. These achievements resulted in objective multipliers of 0% and 13%, respectively,
being awarded. EBITDA per Share for 2019 was US$1.17, which resulted in an objective multiplier of 117% being awarded. In August
and September, we operated at an average production rate for the two-month period of 95% of 3,800 tpd, with average gold recovery
for the period in excess of the recovery threshold of 96.7%. Accordingly, the 3,800 tpd production date measure was realized on
October 1, 2019, resulting in a multiplier of 150% being awarded. We continued our focus on safety in 2019 and finished the year
with no LTIs, resulting in a multiplier of 200% being awarded. In addition, we continued with our focus on environmental stewardship
and community engagement. No complaints or citations were received and, as a result, a multiplier of 150% was awarded. In terms
of relative TSR, despite a 24% return in 2019, we were below the 35th percentile of our peer group, resulting in a 0% multiplier
being awarded.
The
Compensation Committee may, at its discretion, award up to an additional 20% for exceptional accomplishment by the management
and the operations team. In 2019, several achievements and accomplishments fell outside the scope of the 2019 Corporate Objectives
framework, but contributed significantly to our operating efficiency, cost savings and positioning for growth, including: (1)
reduced debt by more than US$180 million from operating cash flow, exceeding our target of US$140 million, including the repurchase
of 100% of our offtake obligation; (2) completed or renegotiated concentrate offtake agreements with improved terms, reducing
our treatment and refining charges; and (3) switched from a concentrate bagging system to a concentrate bulk handling system in
the Brucejack Mill, reducing costs and improving morale. However, we fell short of our initial 2019 production guidance and relative
TSR goals. For these reasons, the Compensation Committee determined not to award NEOs with a discretionary component.
As
a result, the Achieved Corporate Performance Multiplier was 81.87%, which is less than the multipliers awarded in 2017 (125%)
and 2018 (123.6%).
2019
Personal Objectives
For
2019, annual personal incentive payout levels ranged from 40% to 45% of the following NEOs’ targeted STIP amounts:
| Position |
Individual
Performance
Weighting |
| EVP
and CFO |
40% |
| Vice
President, Operations |
45% |
| EVP,
Corporate Affairs and Sustainability |
40% |
The
respective corporate and individual objectives weighting for each of our NEOs and their achieved multipliers are set out below.
Achieved
Salary Multipliers for STIP for Individual NEOs
| |
Corporate |
Individual |
|
| NEO |
Weight |
Multiplier |
W
x M |
Weight |
Multiplier |
W
x M |
Total
Achieved |
| Executive
Chairman |
100% |
0.8187 |
81.87 |
- |
- |
- |
81.87% |
| President
and CEO |
100% |
0.8187 |
81.87 |
- |
- |
- |
81.87% |
| EVP
and CFO |
70% |
0.8187 |
57.31 |
30% |
1.33 |
40.00 |
97.30% |
| VP,
Operations |
70% |
0.8187 |
57.31 |
30% |
1.50 |
45.00 |
102.31% |
| VP
and Chief Exploration Officer |
60% |
0.8187 |
49.12 |
40% |
1.00 |
40.00 |
89.12% |
3.
Long-term incentive Awards (LTIP)
Since
2017, our LTIP awards program consisted of the grant of Options to purchase Shares under our Incentive Stock Option Plan (“Stock
Option Plan”) and the grants of RSUs and PSUs under our Restricted Share Unit Plan (the “RSU Plan”).
In 2017, we began a three-year transition period from RSUs to PSUs, with the intention that at the end of this phase-in period,
our NEOs would receive a minimum of 50% of the value of their annual LTIP in PSUs. However, in 2019, to further align our LTIP
with shareholders’ interests and standard market practice, we: (1) eliminated Options from our LTIP awards program and adjusted
the vehicle mix such that NEOs will receive 60% of the value of their annual LTIP in PSUs and 40% in RSUs; (2) implemented a return
on invested capital (“ROIC”) performance measure for vesting of PSUs, which will apply to 25% of the PSUs awarded
to each NEO (with the remaining 75% of PSUs being subject to a TSR-based performance metric); and (3) decided to transition from
issuing LTIP awards in December of a particular year to issuing LTIP awards in February. As part of the transition in the timing
of LTIP award issuances, no LTIP awards were issued for 2019. We believe through these incentive components, our executives and
employees will be able to participate in our success as a company while their interests remain aligned with those of our shareholders.
Our
LTIP program provides a framework for the Board regarding the granting of RSUs, PSUs and, historically, Options. PSUs are limited
to the key management positions that have the responsibility for influencing our policy, strategy, long-term performance and associated
outcomes. While previous grants may be taken into account when considering new grants, our granting of RSUs, PSUs and, historically,
Options has been based on review of peer performance data by our Compensation Committee in consultation with its independent compensation
consultant. The Compensation Committee makes recommendations to the Board with respect to grants to be given to each participant.
RSUs
and PSUs: The RSU Plan provides for awards of both RSUs and PSUs. Pursuant to the RSU Plan, each vested RSU and PSU represents
the right to receive a cash payment or its equivalent in fully paid Shares equal to the fair market value of the Shares as at
the vesting date.
| ● | RSUs
vest over three years (one-third each year). |
| ● | PSUs
issued in 2017 and 2018 cliff-vest at the end of a three-year period. Vesting is based
on the performance of our TSR (measured over vesting years) against the S&P/TSX Global
Gold Index and can range from 0% to 200%: |
| ○ | if
our relative performance is at or below the 25th percentile of the relative TSR, no PSUs
vest; |
| ○ | if
our relative performance is above the 25th percentile and at or below the 50th percentile
of the relative TSR, 50% of the PSUs vest; |
| ○ | if
our relative performance is above the 50th percentile and at or below the 75th percentile
of the relative TSR, 100% of the PSUs vest; and |
| ○ | if
our relative performance is in the upper quartile of our relative TSR, 200% of the PSUs
vest. |
In
addition, if TSR is negative, a maximum of 100% of the PSUs may vest.
| ● | PSUs
to be issued subsequent to 2019 will cliff-vest at the end of the three-year period.
Vesting for 75% of the PSUs will be based on the performance of our TSR (measured over
applicable calendar years) against a custom peer group determined by the Compensation
Committee in consultation with Meridian, and can range from 0% to 200% based on an “interpolated
curve” criteria. In addition, if TSR is negative, a maximum of 100% of the PSUs
may vest. Vesting for the remaining 25% of PSUs will be based on an ROIC performance
measure at the end of the three-year period, with the calculation equal to 10% for each
individual year plus 70% allocated to the three-year average ROIC. |
Options
(historic): Options were historically used to align our executive and other key employee interests with those of our shareholders
by providing an incentive to achieve our long-term superior performance objectives. Options granted prior to 2017 vest over an
18-month period, while Options granted in 2017 and thereafter vest over a three-year period, with one-third vesting on each of
the first, second and third anniversaries of the grant date.
Further
information on our RSUs, PSUs and Options can be found under the heading “Securities Authorized for Issuance Under Equity
Compensation Plans” in this Information Circular. Both the Stock Option Plan and the RSU Plan are administered by the
Compensation Committee, which has the authority to determine the eligible participants to whom Options, RSUs and/or PSUs may be
granted, as applicable, and the amount of the awards under each grant.
Further
details regarding compensation paid to our NEOs, including LTIP awards is set out under the heading “Named Executive Officer
Compensation – Summary Compensation Table”.
4.
Incremental Non-cash Compensation
In
addition to the executive compensation arrangement outlined above, all of our employees are eligible to participate in our provided
health and wellness benefits, paid vacation and other perquisites. We review these benefits for competitiveness as we continue
to grow.
Performance
Graph
Based
on an initial investment of $100 in our Shares on December 31, and a $100 investment in the S&P/TSX Composite Index (with
dividend reinvestment), the following charts and tables provide a comparison of total returns for the three- and five-year periods
ended December 31, 2019:
Three-year
Comparison
December 2016 – December 2019
| |
12/31/2016 |
12/31/2017 |
12/31/2018 |
12/31/2019 |
| Pretivm
Shares |
$100.00 |
$128.96 |
$104.05 |
$129.95 |
| S&P/TSX
Composite Total Return Index |
$100.00 |
$109.08 |
$99.39 |
$122.09 |
| S&P/TSX
Global Gold Index |
$100.00 |
$101.35 |
$97.86 |
$138.28 |
Five-year
Comparison
December 2014 – December 2019
| |
12/31/14 |
12/31/15 |
12/31/16 |
12/31/17 |
12/31/18 |
12/31/19 |
| Pretivm
Shares |
$100.00 |
$103.73 |
$165.72 |
$213.71 |
$172.43 |
$215.35 |
| S&P/TSX
Composite Total Return Index |
$100.00 |
$91.67 |
$111.00 |
$121.08 |
$110.32 |
$135.52 |
| S&P/TSX
Global Gold Index |
$100.00 |
$89.87 |
$135.67 |
$137.50 |
$132.76 |
$187.60 |
Our
approach to compensation is closely tied to our goal of creating long-term shareholder value through consistent performance relative
to our peers, with the specific goal of advancing our Brucejack Mine to be a low-cost intermediate gold mine. Since our initial
public offering, over a period of nine years, we have advanced Brucejack from exploration through engineering, permitting, and
two full years of commercial production and significant free cash flow generation; a significant achievement compared to the industry
norms.
Though
2014 was a challenging year for gold and gold equities, the cumulative total shareholder return on our Shares increased, but remained
below that of the S&P/TSX Composite Total Return Index (the “Index”). During 2014, our NEOs were granted
their first increases in base salary since our initial public offering, with other compensation remaining substantially constant.
In 2015, we, like other companies, continued to be influenced in part by low metal prices that had been in decline for four years
and the lowest in six years. In 2016, with the continued de-risking of Brucejack and an increase in gold price, we outperformed
the Index with our Share price increasing 60% over the year. In 2017, achieving commercial production, we further outperformed
the S Index with our share price increasing 29% over the year. In 2018, our first year of production, our Share price decreased
as our gold production did not meet market expectations. In 2019, we again failed to meet market expectations around gold production;
however, our share price increased 25% over the year, in part due to rising gold prices.
Our
Compensation Committee has historically not set ‘Share price targets’, given numerous uncontrollable factors that can
affect Share price during exploration and development; however, the Compensation Committee and the other Board members review
our Share price performance against peer performance and against various market indices in approving compensation recommendations.
For 2019, we implemented a relative TSR metric in our Corporate Objectives for STIP, with a target TSR in the 50th or greater
percentile among our peers. In addition, our outstanding PSUs vest based on the performance of our TSR (measured over vesting
years) against the S&P/TSX Global Gold Index. Other factors considered in determining annual bonuses are the success of the
NEOs in achieving their individual objectives and their respective contributions to the Company in reaching its overall goals.
During
2014, our approach to executive compensation transitioned from that of an exploration company to a pre-development company and
that continued in 2015. While our focus was on the exploration of Brucejack, our executive compensation was primarily salary and
Option-based. As part of our strategy in 2015, we re-evaluated our approach to executive compensation and performance-based incentives
were added, such as the RSU Plan. The ultimate value that is received with respect to RSUs is directly related to Share price
performance. In 2016, our compensation awards further evolved to become more performance-based and Corporate Objective targets
were established for our NEOs, with a focus on the construction timeline, budget, safety and the environment at Brucejack. These
target objectives contributed to the STIP compensation component for the NEOs, as discussed above. In 2017 and 2018, our compensation
structure was enhanced based on industry best practices and advice from our independent compensation consultant. LTIP was made
up of 50% Options, 25% RSUs and 25% PSUs which have a performance component and will be awarded based on our relative TSR over
a three-year period and benchmarked against performance of the S&P/TSX Global Gold Index. In 2019, we implemented a relative
TSR metric in our Corporate Objectives for STIP, with a target TSR in the 50th or greater percentile among our peers. For 2020,
to increase the ratio of performance- to time-based awards and overall mix of performance-based awards, we will transition away
from granting Options to a long-term incentive plan vehicle mix comprised 60% of PSUs and 40% of RSUs. In addition, we will apply
a return on invested capital performance measure to 25% of PSUs issued in 2020 and beyond, with the remaining 75% being subject
to a relative TSR metric. We feel that our executive compensation policy is effective and supports the relationship between the
compensation earned by our NEOs and the return to shareholders.
Named
Executive Officer Compensation
Statement
of Executive Compensation
For
the year ended December 31, 2019, our five NEOs were:
| (a) | Robert
Quartermain, our former Executive Chairman; |
| (b) | Joseph
Ovsenek, our President and CEO; |
| (c) | Tom
Yip, our Executive Vice President (“EVP”) and CFO; |
| (d) | David
Prins, our Vice President, Operations; and |
| (e) | Kenneth
McNaughton, our Vice President and Chief Exploration Officer. |
Dr.
Quartermain retired as our Executive Chairman and director effective as at the end of December 31, 2019. Mr. Ovsenek will depart
the Company in 2020 as part of the leadership transition plan announced on February 12, 2020.
Summary
Compensation Table
The
following table is a summary of compensation paid to our NEOs for the last three fiscal years
Name and
principal position |
Year |
Salary
($) |
Share-based awards
($)(1)(2) |
Option-based awards
($)(3) |
Non-equity
incentive plan
compensation
($) |
All other compensation
($)(5) |
Total compensation
($) |
| Annual
incentive plans(4) |
Robert
Quartermain(6)(7)
former Executive Chairman |
2019
2018
2017 |
500,000
500,000
500,000 |
Nil
1,022,039(8)
1,149,470(8) |
Nil
Nil
Nil |
655,844
790,625
781,250 |
20,378
19,561
20,041 |
1,176,222
2,332,225
2,450,761 |
Joseph
Ovsenek(7)
President and CEO |
2019
2018
2017 |
670,800
670,800
645,000 |
Nil
657,294(9)
741,584(9) |
Nil
711,027(10)
741,596(11) |
686,480
1,048,125
1,007,800 |
22,392
21,501
22,387 |
1,379,672
3,108,748
3,158,367 |
Tom
Yip
EVP and CFO |
2019
2018
2017 |
442,000
442,000
425,000 |
Nil
281,704(9)
377,148(9) |
Nil
304,725(10)
377,146(11) |
365,200
497,800
490,700 |
83,691
68,931
69,786 |
890,891
1,595,159
1,739,781 |
David
Prins(12)
Vice President, Operations |
2019
2018
2017 |
488,800
488,017
n/a |
Nil
328,648(9)
n/a |
Nil
355,514(10)
n/a |
425,100
550,500
n/a |
88,070
12,725
n/a |
1,001,970
1,735,403
n/a |
Kenneth
McNaughton
Vice President and Chief
Exploration Officer |
2019
2018
2017 |
384,800
384,800
370,000 |
Nil
167,942(9)
167,948(9) |
Nil
167,120 (10)
167,943 (11) |
291,500
414,100
414,100 |
28,074
23,876
24,590 |
704,374
1,157,839
1,144,580 |
| (1) | For
Share-based awards, the fair value is based on the average of the market price of our
Shares for the five days preceding the grant date. The grant date fair value of Share-based
awards as presented will differ from the compensation expense included for these grants
in the Company’s financial statements, as in accordance with IFRS accounting requirements
the compensation expense reflects only the fair value amortized in the period based on
each grant’s vesting terms. |
| (2) | In
connection with the transition from issuing LTIP awards in December to issuing LTIP awards
in February, no LTIP awards were issued for 2019. |
| (3) | For
Option-based awards, the fair value is calculated using the Black-Scholes model. This
value is the same as the fair value established in accordance with IFRS accounting requirements
and was determined using various assumptions including share price volatility on the
grant date taking into account the expected life of the option, an assumption that no
dividends are to be paid and a risk-free interest rate determined by the Bank of Canada
for the grant date. In 2019, the Compensation Committee decided to remove Options awards
from the LTIP vehicle mix. |
| (4) | Annual
cash bonus earned by each NEO in the respective year. In 2017, 100% of STIP was paid
in December of that year. In 2018 and 2019, subject to the achievement of Corporate Objectives
and the review and approval of the Compensation Committee and the Board, 70% of a projected
STIP for the year was paid prior to year-end. The remaining 30% was evaluated during
the first quarter of the following year, upon final year-end operational reconciliations
of key performance indicators. These final performance objectives were then reconciled
against the Corporate Objectives and a determination was made with respect to the residual
STIP to be paid. |
| (5) | This
amount includes the Company’s contribution to a registered retirement savings plan
made on behalf of the NEO in which the NEO’s contribution may be matched up to a
maximum of 4% of their annual salary, as well as additional perquisites such as housing
(if applicable), medical services plan, medical reimbursement plan, health care spending
account, fitness allowance, guaranteed supplemental income, life insurance and accidental
death and dismemberment. |
| (6) | Dr.
Quartermain retired as our Executive Chairman and director effective as at the end of
December 31, 2019. In connection with his retirement and in addition to the amounts set
out in this table, Dr. Quartermain was paid $8,451,067 in January 2020. Please see “-
Employment, Termination and Change of Control Benefits” below. |
| (7) | Dr.
Quartermain and Mr. Ovsenek did not receive compensation for their services as directors
of the Company. |
| (8) | Comprised
of 100% RSUs. |
| (9) | Comprised
of 50% RSUs and 50% PSUs. |
| (10) | On
December 11, 2018, the Company awarded Options to the NEOs at a per Share exercise price
of $9.78, expiring on December 11, 2023. These Options have a grant date fair value of
$4.87 each, calculated using the Black-Sholes option pricing model with a per Share exercise
price of $9.78, expected life of five years and volatility of 55.9%. |
| (11) | On
December 12, 2017, the Company awarded Options to the NEOs at a per Share exercise price
of $12.97, expiring on December 12, 2022. These Options have a grant date fair value
of $7.05 each, calculated using the Black-Sholes option pricing model with a per Share
exercise price of $12.97, expected life of five years and volatility of 63.8%. |
| (12) | Mr.
Prins joined the Company as Vice President, Operations effective May 1, 2018. |
Pension
Plan Benefits
We
do not have a defined benefit, defined contribution or deferred compensation pension plan.
Incentive
Plan Awards - Outstanding Option Based and Share-Based Awards
The
following table sets out all Option-based and Share-based awards outstanding for each NEO as at December 31, 2019.
Name |
Option-based
Awards |
Share-based
Awards |
Number
of securities
underlying
unexercised
Options
(#) |
Option
exercise
price
($) |
Option
expiration
date |
Value
of
unexercised
in-the-money
Options(1)
($) |
Number
of
shares or units
of shares that
have not vested
(#) |
Market
or
payout value
of share-based
awards that
have not
vested ($)(2) |
Market
or
payout value of
vested share-
based awards
not paid out or
distributed ($) |
| Robert
Quartermain |
128,143 |
9.73 |
03/24/20 |
604,835 |
29,294(4)(9)
69,669(6)(9) |
423,005
1,006,020 |
Nil |
| Joseph
Ovsenek |
100,000
150,000
91,392
105,254
146,128 |
8.72
7.29
9.73
12.97
9.78 |
01/20/20(3)
12/08/20
12/14/21
12/12/22
12/11/23 |
573,000
1,074,000
431,370
155,776
682,418 |
9,450(4)
28,348(5)
22,403(6)
33,604(7) |
136,458
409,345(8)
323,499
485,242(8) |
Nil |
| Tom
Yip |
310,000
75,000
62,475
53,528
62,626 |
6.96
7.29
9.73
12.97
9.78 |
03/03/20(3)
12/08/20
12/14/21
12/12/22
12/11/23 |
2,321,900
537,000
294,882
79,221
292,463 |
4,806(4)
14,417(5)
9,602(6)
14,402(7)
|
69,399
208,181(8)
138,653
207,965(8) |
Nil |
| David
Prins |
300,000
30,000
100,000
56,771
73,064 |
6.75
9.73
13.17
12.97
9.78 |
03/10/21
12/14/21
05/15/22
12/12/22
12/11/23 |
2,310,000
141,600
128,000
84,021
341,209 |
5,097(4)
15,290(5)
11,202(6)
16,802(7) |
73,601
220,788(8)
161,757
242,621(8) |
Nil |
| Kenneth
McNaughton |
100,000
60,000
38,878
23,836
34,346 |
8.72
7.29
9.73
12.97
9.78 |
01/20/20(3)
12/08/20
12/14/21
12/12/22
12/11/23 |
573,000
429,600
183,504
35,277
160,396 |
2,140(4)
6,420(5)
5,724(6)
8,586(7) |
30,902
92,705(8)
82,655
123,982(8) |
Nil |
| (1) | Calculated
based on the difference between the market price of our shares on the TSX on December
31, 2019 ($14.45) and the exercise price of the Option. |
| (2) | The
market or payout value of RSUs and PSUs that have not vested as at December 31, 2019
is $14.44 per RSU and PSU. |
| (3) | The
expiry date of these Options has been extended while the Company remains in blackout. |
| (4) | RSUs
granted under our RSU Plan in December 2017. |
| (5) | PSUs
granted under our RSU Plan in December 2017. |
| (6) | RSUs
granted under our RSU Plan in December 2018. |
| (7) | PSUs
granted under our RSU Plan in December 2018. |
| (8) | Vesting
of these PSUs is based on the performance of our TSR against the S&P/TSX Global Gold
Index and can range from 0% to 200%. The amount disclosed assumes 100% vesting of PSUs. |
| (9) | In
connection with Dr. Quartermain’s retirement, RSUs held by Dr. Quartermain vested
at the end of December 31, 2019 and were settled by cash payment in January 2020. Please
see “- Employment, Termination and Change of Control Benefits” below. |
Incentive
Plan Awards – Value Vested or Earned During the Year
The
following table sets out the value of incentive plan awards vested or earned by our NEOs during the year ended December 31, 2019.
| Name |
Option-based
awards
value vested
during the year ($)(1) |
Share-based
awards
value vested
during the year ($) |
Non-equity
incentive plan
compensation – value earned
during the year ($)(2) |
| Robert
Quartermain |
Nil |
2,577,169(3) |
655,844 |
| Joseph
Ovsenek |
210,985 |
479,064 |
686,480 |
| Tom
Yip |
91,838 |
266,401 |
365,200 |
| David
Prins |
10,160 |
144,893 |
425,100 |
| Kenneth
McNaughton |
49,439 |
152,562 |
291,500 |
| (1) | This
is the aggregate dollar value that would have been realized if the Options had been exercised
on their vesting date and assuming the NEO had the entire vested amount available for
exercise. |
| (2) | Annual
cash bonus earned by each NEO in 2019. |
| (3) | Includes
98,963 RSUs (valued at $1,429,025 as at the end of December 31, 2019) held by Dr. Quartermain
that vested upon his retirement at the end of December 31, 2019 and that were settled
by cash payment on January 2020. Please see “- Employment, Termination and Change
of Control Benefits” below. |
Employment,
Termination and Change of Control Benefits
Employment
Agreements
We
have entered into employment agreements with each of our NEOs. In 2019, each of our NEOs compensation was comprised of a base
salary, benefits, and an annual performance bonus based on our annual Corporate Objectives (STIP) and, if applicable, personal
objectives. In connection with the transition from issuing LTIP awards in December to issuing LTIP awards in February, no LTIP
awards were issued for 2019. Our NEOs’ employment agreements contain confidentiality provisions of indefinite application
and non-solicitation of employment provisions that are valid for 12 months following termination of employment and subject to
certain exceptions. As well, each of the NEOs has agreed to give us at least three months’ notice in writing and to provide
transition assistance as may be required if he or she wishes to terminate his or her employment, subject to certain limited exceptions.
Robert
Quartermain, former Executive Chairman: We entered into an employment agreement on January 1, 2017 with Dr. Quartermain pursuant
to which Dr. Quartermain served as our Executive Chairman until the end of December 31, 2019 (the “Executive Term”).
Following the Executive Term, Dr. Quartermain’s employment would cease and he was to serve as Chairman of the Board until
at least December 31, 2022, subject to his continued election as a director by the shareholders of the Company. Under the terms
of Dr. Quartermain’s employment agreement, he was entitled to receive a base salary, benefits, an annual performance bonus
based on the annual Corporate Objectives set by the Compensation Committee and a long-term incentive award. Dr. Quartermain was
also entitled to a retirement allowance of $6,000,000, paid over three years commencing January 1, 2020. The terms of Dr. Quartermain’s
employment agreement were determined through negotiation between Dr. Quartermain and the then-Compensation Committee, with advice
from legal counsel and based on industry standards. In connection with Dr. Quartermain’s retirement as a director and Executive
Chairman, we entered into a retirement confirmation agreement with Dr. Quartermain (the “Chairman Retirement Agreement”).
The Chairman Retirement Agreement confirms the benefits and payments owing to Dr. Quartermain upon his retirement, as set out
in his employment agreement, and provides for certain additional payments in exchange for a release in favour of the Company.
The terms of the Chairman Retirement Agreement were determined through negotiation between Dr. Quartermain and the Company and
discussed with and approved by the Compensation Committee and the Board, with advice from legal counsel. Please see “–
Termination and Change of Control Benefits – Executive Chairman Retirement”.
Joseph
Ovsenek, President and CEO: We entered into an employment agreement with Mr. Ovsenek in January 2011, as amended and restated
in September 2012, which was determined through negotiation between Mr. Ovsenek and Dr. Quartermain and discussed with and approved
by the former Compensation and Corporate Governance Committee, with advice from legal counsel and based on industry standards.
Tom
Yip, EVP and CFO: We entered into an employment agreement with Mr. Yip in January 2015 whereby Mr. Yip agreed to serve as
Vice President and our CFO. The terms of Mr. Yip’s employment agreement were determined through negotiation between Mr. Yip
and Mr. Ovsenek and discussed with and approved by the former Compensation and Corporate Governance Committee and the Board, with
advice from legal counsel and based on industry standards.
David
Prins, Vice President, Operations: We entered into an employment agreement with Mr. Prins in May 2018. The terms of Mr. Prins’
employment agreement were determined through negotiation between Mr. Prins and Mr. Ovsenek and discussed with and approved by
the Compensation Committee and the Board, with advice from legal counsel and based on industry standards.
Kenneth
McNaughton, Vice President and Chief Exploration Officer: We entered into an employment agreement with Mr. McNaughton in January
2011, as amended and restated in September 2012, the terms of which were determined through negotiation between Mr. McNaughton
and Dr. Quartermain and discussed with and approved by the former Compensation and Corporate Governance Committee, with advice
from legal counsel and based on industry standards.
Termination
and Change of Control Benefits
Termination
without Cause
Upon
termination without cause, each of Messrs. Yip, Prins, and McNaughton would be entitled to receive twenty-four months of his base
salary and twice the average annual performance bonus calculated in accordance with his employment agreement in the three years
immediately preceding termination (the “Separation Package”). Any such Separation Package payable to these NEOs
is required to be paid to him within five days of the termination of employment. As part of the Separation Package, the individual
will be provided with a continuation of certain employment-related benefits, such as medical service plan, for the duration of
the Separation Package period (unless terminated earlier due to re-employment). In addition, upon termination without cause, the
individual may exercise any Option granted to the extent such Option was exercisable and had vested on the date of termination
no later than 30 days after such termination. RSUs and PSUs granted under the RSU Plan would terminate unvested.
The
following table below sets out the estimated incremental payments, payables and benefits that would be due to each of Messrs.
Yip, Prins and McNaughton, assuming termination on December 31, 2019 without cause:
Name |
Base
Salary
($)(1) |
Bonus
($)(2) |
Option-Based
Awards ($) |
All
Other
Compensation ($) |
Total
($) |
| Tom
Yip |
884,000 |
902,467 |
- |
- |
1,786,467 |
| David
Prins |
977,600 |
1,246,258(3) |
- |
- |
2,223,858 |
| Kenneth
McNaughton |
769,600 |
746,467 |
- |
- |
1,516,067 |
| (1) | 24
months’ base salary. |
| (2) | Twice
the average annual performance bonus over the past three years. |
| (3) | Pursuant
to terms of Mr. Prins’ employment agreement, the calculation of this amount includes
the performance bonuses earned by Mr. Prins as a consultant to the Company in 2017. |
Termination
on Change of Control
In
the event of a take-over bid, tender or exchange offer, proxy contest or any similar event or occurrence or series of events or
occurrences, or the execution of an agreement which, if consummated, would constitute a change of control (as defined in each
respective employment agreement), Messrs. Yip, Prins and McNaughton will not voluntarily leave the employ of the Company until
the change of control occurs or, if earlier, such take-over bid, tender or exchange offer, proxy contest or similar event or occurrence
or series of events or occurrences, or agreement is terminated or abandoned.
In
the event that within 12 months following a change of control: (i) Mr. Yip’s or Mr. McNaughton’s employment is terminated
without just cause; or (ii) such individual terminates his employment for good reason (as defined in each respective employment
agreement), then such individual will be entitled to receive twenty-four months of his base salary and twice the average annual
performance bonus calculated in accordance with their employment agreement in the three years immediately preceding termination
(the “Change of Control Package”). In case of Mr. Prins, (i) In the event that within 12 months following a change
of control his employment is terminated without just cause, or (ii) he terminates his employment for good reason (as defined in
his employment agreement, and whether or not a change of control has occurred) within a specified period of time from the occurrence
of the event giving rise to “good reason”, he will be entitled to receive the Change of Control Package. Any such Change
of Control Package payable to these NEOs is required to be paid to him within five days of the termination of employment. As part
of the Change of Control Package, the individual will be provided with a continuation of certain employment-related benefits,
such as medical service plan, for the duration of the Change of Control Package period (unless terminated earlier due to re-employment).
In addition, in the event that: (i) a change of control occurs and the acquiring company does not exchange the Options for its
stock options without a material financial loss to the individual; or (ii) in the case of Mr. Prins, he terminates his employment
for good reason, any outstanding unvested Options shall become fully vested and exercisable on the individual’s final day
of employment. Under the RSU Plan, our Board has the authority to take necessary steps (subject to certain restrictions) to ensure
the preservation of the economic interests of the participants in, and to prevent the dilution or enlargement of any RSUs or PSUs.
Pursuant
to each of Messrs. Yip’s, McNaughton’s and Prins’ respective employment agreement, “good reason” includes,
a reduction in base salary or aggregate level of benefits, a material adverse change in reporting relationship that is inconsistent
with title or position, a materially adverse change in position, duties or responsibilities (subject to certain exceptions), and
the relocation of principal office outside of Vancouver, British Columbia. In addition, “good reason” in Mr. Prins’
employment agreement includes the departure of Joseph Ovsenek as President and CEO of the Company.
The
following table sets out the estimated incremental payments, payables and benefits that would be due to Mr. Yip, Mr. Prins and
Mr. McNaughton in the event of a change of control and subsequent termination without cause or for good reason (and in the case
of Mr. Prins, termination for good reason irrespective of a change of control), assuming termination on December 31, 2019 and
vesting of all unvested RSUs and PSUs (at 100% vesting) pursuant to the terms of the RSU Plan and Board approval.
Name |
Base
Salary
($)(1) |
Bonus
($)(2) |
Option-Based
Awards(3) ($) |
Share-Based
Awards(4) ($) |
Total
($) |
| Tom
Yip |
884,000 |
902,467 |
3,525,467 |
624,198 |
5,936,132 |
| David
Prins |
977,600 |
1,246,258(5) |
3,004,830 |
698,766 |
5,927,454 |
| Kenneth
McNaughton |
769,600 |
746,467 |
1,381,777 |
330,243 |
3,228,087 |
| (1) | 24
months’ base salary. |
| (2) | Twice
the average annual performance bonus over the past three years, however if such termination
occurs within the first three years of the employment agreement, the average annual performance
bonus calculation will use the performance bonus earned for the completed years. |
| (3) | Assumes
the vesting of all outstanding Options and is calculated based on the difference between
the market price of our Shares on the TSX on December 31, 2019 ($14.45) and the exercise
price of each Option. |
| (4) | Assumes
the vesting of all RSUs and PSUs (at 100% vesting) and is calculated based on the fair
market value (as defined in the RSU Plan) on December 31, 2019 ($14.44). |
| (5) | Pursuant
to terms of Mr. Prins’ employment agreement, the calculation of this amount includes
the performance bonuses earned by Mr. Prins as a consultant to the Company in 2017. |
Executive
Chairman Retirement
Dr.
Quartermain retired as Executive Chairman and director at the end of December 31, 2019. In addition to the compensation paid to
Dr. Quartermain for his services as the Executive Chairman in 2019 (see “- Statement of Executive Compensation –
Summary Compensation Table” above), Dr. Quartermain received a cash payment in the amount of $8,451,067 (the “Chairman
Retirement Payment”) in January 2020, pursuant to his employment agreement and the Chairman Retirement Agreement. The
Chairman Retirement Payment was comprised of the following:
| (1) | $6,000,000
retirement allowance; |
| (2) | $1,429,026
in settlement of 98,963 RSUs at a price of $14.44 per RSU, that were held by Dr. Quartermain
and that vested upon Dr. Quartermain’s retirement; and |
| (3) | $1,022,041
in lieu of foregone LTIP awards. |
CEO
Departure
On
February 12, 2020, the Company announced a leadership transition plan pursuant to which Mr. Ovsenek will depart as the Company’s
director, President and CEO upon the appointment of his successor. Pursuant to his employment agreement, Mr. Ovsenek will continue
to be paid his base salary, pro-rated monthly up to his termination date and, upon his termination, will receive twenty-four months
of his base salary and twice the average annual performance bonus for the three years immediately preceding the year of termination.
In addition, Mr. Ovsenek will be provided with continuation of certain employment-related benefits, such as medical service plan,
for 24 months following his termination date (unless terminated earlier due to re-employment).
The
following table below sets out the estimated incremental payments, payables and benefits that would be due to Mr. Ovsenek under
his employment agreement, assuming termination date of March 26, 2020:
Name |
Base
Salary
($)(1) |
Bonus
($)(2) |
Option-Based
Awards ($) |
All
Other
Compensation ($) |
Total
($) |
| Joseph
Ovsenek |
1,341,600 |
1,828,270 |
- |
- |
3,169,870 |
| (1) | 24
months’ base salary. The amount does not include base salary for months served as
President and CEO in 2020, which is paid in regular course. |
| (2) | Twice
the average annual performance bonus over the past three years. |
Director
Compensation
Our
independent director compensation is designed to attract and retain high caliber Board members and our approach to Board compensation
is to be competitive with our peers, reflect best practice and take into account corporate governance trends. Comparative director
compensation data from our peer companies was accumulated and reviewed in the fourth quarter of 2018.
The
Compensation Committee reviews our Board compensation on an annual basis and recommends revisions to the compensation paid to
our directors when warranted in the circumstances. In addition, the Board may award special remuneration to any director undertaking
any special services on our behalf other than services ordinarily required of a director.
In
2018, we implemented a Deferred Share Unit Plan (the “DSU Plan”) to promote a greater alignment of long-term
interests between non-employee directors and our shareholders, and to provide a compensation system for non-employee directors
that, together with our other compensation mechanisms, is reflective of the responsibility, commitment and risks that accompany
Board membership and the performance of the duties required of our directors. Since the implementation of the DSU Plan, equity
grants to non-employee directors are in the form of deferred share units (“DSUs”). Further information regarding
the DSU Plan and DSUs granted thereunder is provided under the subheading “- Deferred Share Unit Plan” below.
Independent
directors are not compensated based on performance. Our non-independent directors are not compensated for their services as directors.
Accordingly, Robert Quartermain, who retired effective as at the end of December 31, 2019, and Joseph Ovsenek were not paid for
their services as directors in 2019.
Annual
Retainer
In
2019, our independent directors were compensated for their services as directors through an annual retainer fee. Our Compensation
Committee and the Board determined to reduce the cash component of our independent director compensation from that in 2018, to
ensure that our independent director compensation is competitive with market median. The 2019 annual retainers were as follows:
| Lead
Director | |
$ | 75,000 | |
| Director | |
$ | 85,000 | |
| Audit
Committee Chair | |
$ | 25,000 | |
| Compensation
Committee Chair | |
$ | 20,000 | |
| Corporate
Governance and Nominating Committee Chair | |
$ | 20,000 | |
| Sustainability
and Technical Committee Chair | |
$ | 15,000 | |
Minor
changes were made to the annual retainers for 2020 to reflect the appointment of an independent Chair of the Board and the corresponding
termination of the Lead Director position, and to bring the Sustainability and Technical Committee Chair retainer in line with
those of other committees. The 2020 annual retainers are as follows:
| Board
Chair | |
$ | 200,000 | |
| Director
(other than Board Chair) | |
$ | 85,000 | |
| Audit
Committee Chair | |
$ | 25,000 | |
| Compensation
Committee Chair | |
$ | 20,000 | |
| Corporate
Governance and Nominating Committee Chair | |
$ | 20,000 | |
| Sustainability
and Technical Committee Chair | |
$ | 20,000 | |
Deferred
Share Units
In
2019, our Compensation Committee and the Board decided that, going forward, grants of DSUs to non-employee directors (which were
historically granted during the fourth quarter) will take place during the first quarter of the following year. Accordingly, other
than the grants of DSUs to Mr. O’Brien and Ms. Hull in connection with their appointments to the Board in November 2019,
no DSUs were granted in 2019.
Other
Remuneration
Our
directors were and are also reimbursed for reasonable travel and other out-of-pocket expenses incurred in connection with attending
meetings and otherwise carrying out their duties as directors of the Company.
The
following table sets out the total compensation each director received during 2019.
| Name
and Position |
Director
Retainer |
Committee
Chair
Retainer(s) |
Total
Cash
Retainer Fees
Earned ($) |
George
Paspalas(1)
Lead Director
Sustainability and Technical Committee Chair
Compensation Committee Member |
$160,000 |
$20,000
|
$180,000 |
David
Smith
Director
Audit Committee Chair
Compensation Committee Member |
$85,000 |
$25,000 |
$110,000 |
Peter
Birkey
Director
Corporate Governance and Nominating Committee Chair
Audit Committee Member |
$85,000 |
$20,000 |
$105,000 |
Faheem
Tejani
Director
Audit Committee Member
Corporate Governance and Nominating Committee Member
Sustainability and Technical Committee Member |
$85,000 |
Nil |
$85,000 |
Robin
Bienenstock(2)
Director
Compensation Committee Chair
Corporate Governance and Nominating Committee Member |
$85,000 |
$17,521 |
$102,521 |
Richard
O’Brien(3)
Director
Chair of the Board |
$10,625 |
Nil |
$10,625 |
Jeane
Hull(4)
Director
Corporate Governance and Nominating Committee Member
Sustainability and Technical Committee Member |
$10,625 |
Nil |
$10,625 |
| (1) | Mr.
Paspalas served as the Lead Director throughout 2019 and relinquished such role effective
January 1, 2020, upon Mr. O’Brien’s appointment as the independent Chair of
the Board. Mr. Paspalas served as the Chair of the Compensation Committee until February
14, 2019. |
| (2) | Ms.
Bienenstock was appointed as the Chair of the Compensation Committee on February 14,
2019. |
| (3) | Mr.
O’Brien was appointed to the Board on November 13, 2019 and as the independent Chair
of the Board on January 1, 2020. Mr. O’Brien earned a retainer fee of $10,625 in
2019, which was paid in the first quarter of 2020. |
| (4) | Ms.
Hull was appointed to the Board on November 13, 2019 and to the Corporate Governance
and Nominating Committee and the Sustainability and Technical Committee on December 4,
2019. Ms. Hull earned a retainer fee of $10,625 in 2019, which was paid in the first
quarter of 2020. |
The
following table sets out all amounts of compensation provided to our non-executive directors for the year ended December 31, 2019:
Name |
Fees
earned
($) |
Share-based
awards ($) |
Option-based
awards ($) |
Non-equity
incentive plan
compensation ($) |
All
other
compensation ($) |
Total
($) |
| George
Paspalas |
180,000 |
Nil |
Nil |
Nil |
Nil |
180,000 |
| David
Smith |
110,000 |
Nil |
Nil |
Nil |
Nil |
110,000 |
| Peter
Birkey |
105,000 |
Nil |
Nil |
Nil |
Nil |
105,000 |
| Faheem
Tejani |
85,000 |
Nil |
Nil |
Nil |
Nil |
85,000 |
| Robin
Bienenstock |
102,521 |
Nil |
Nil |
Nil |
Nil |
102,521 |
| Richard
O’Brien(1) |
10,625 |
Nil |
Nil |
242,491 |
Nil
|
253,116 |
| Jeane
Hull(2) |
10,625 |
Nil |
Nil |
242,491 |
Nil |
253,116 |
| (1) | Mr.
O’Brien was appointed to the Board on November 13, 2019. Mr. O’Brien earned
a retainer fee of $10,625 in 2019, which was paid in the first quarter of 2020. In addition,
Mr. O’Brien received an initial grant of DSUs valued at $225,000 in 2019, in connection
with his appointment to the Board, as well as a grant of DSUs valued at $17,491 for his
services as a director of the Company for a portion of 2019. |
| (2) | Ms.
Hull was appointed to the Board on November 13, 2019. Ms. Hull earned a retainer fee
of $10,625 in 2019, which was paid in the first quarter of 2020. In addition, Ms. Hull
received an initial grant of DSUs valued at $225,000 in 2019, in connection with her
appointment to the Board, as well as a grant of DSUs valued at $17,491 for her services
as a director of the Company for a portion of 2019. |
Outstanding
Option-based and Share-based Awards
The
following table sets out all Option-based and Share-based awards outstanding for each of our non-executive directors as at December
31, 2019.
Option-based
awards that were granted have an exercise price per Share based on the closing price of our Shares on the TSX on the day prior
to the date of grant. Options that were awarded prior to 2017 vest one-quarter every six months, commencing on the grant date
and have a five-year term. Options that were granted in 2017 and thereafter vest one-third every year on the anniversary date
of the grant and have a five-year term. Share-based awards that were granted in the form of RSUs vest one third every year, commencing
on the first anniversary of the grant date and have a three-year term. No Options or RSUs were granted to our independent directors
in 2019.
Name |
Option-based
Awards |
Share-based
Awards |
Number
of securities
underlying
unexercised
Options (#) |
Option
exercise
price
($) |
Option
expiration
date |
Value
of
unexercised
in-the-money
Options(1)
($) |
Number
of
Shares or
units of
Shares that
have not
vested (#) |
Market
or
Payout value of
Share-based
awards that
have not vested
($)(2) |
Market
of
payout value of
vested Share-
based awards
not paid out or
distributed ($) |
| George
Paspalas |
Nil |
Nil |
Nil |
Nil |
4,989(3)
7,645(4)
14,315(5) |
72,041
110,394
206,852 |
Nil |
| David
Smith |
100,000 |
13.17 |
05/15/22 |
128,000 |
7,645(4)
14,315(5) |
110,394
206,852 |
Nil |
| Peter
Birkey |
40,000 |
8.72 |
01/20/20(6) |
229,200 |
4,989(3)
7,645(4)
14,315(5) |
72,041
110,394
206,852 |
Nil |
| Faheem
Tejani |
Nil |
Nil |
Nil |
Nil |
37,321(5) |
539,288 |
Nil |
| Robin
Bienenstock |
Nil |
Nil |
Nil |
Nil |
37,321(5) |
539,288 |
Nil |
| Richard
O’Brien |
Nil |
Nil |
Nil |
Nil |
19,619(5) |
283,495 |
Nil |
| Jeane
Hull |
Nil |
Nil |
Nil |
Nil |
19,619(5) |
283,495 |
Nil |
| (1) | Calculated
based on the difference of the market price of our Shares on the TSX on December 31,
2019 ($14.45) and the exercise price of each Option. |
| (2) | The
market or payout value of RSUs that have not vested as at December 31, 2019 is $14.44
per RSU. |
| (3) | RSUs
granted in December 2016. Pursuant to a resolution of our Board, the vesting date of
these RSUs held by independent directors that would otherwise vest in December 2019,
has been extended to the business day immediately following the date on which an applicable
blackout period is lifted. |
| (4) | RSUs
granted in December 2017. Pursuant to a resolution of our Board, the vesting date of
these RSUs held by independent directors that would otherwise vest in December 2019,
has been extended to the business day immediately following the date on which an applicable
blackout period is lifted. |
| (5) | DSUs
granted under our DSU Plan in December 2018. Pursuant to the DSU Plan, the DSUs may only
be settled by cash payment. |
| (6) | The
expiry date of these Options has been extended while the Company remains in blackout. |
Incentive
Plan Awards - Value Vested or Earned During the Year
The
following table sets out the value of incentive plan awards for each of our non-executive directors, vested or earned during the
year ended December 31, 2019.
Name |
Option-based
awards –
Value vested during the
year ($)(1) |
Share-based
awards –
Value vested during the
year ($)(2) |
Non-equity
incentive plan
compensation – Value earned
during the year ($) |
| George
Paspalas |
Nil |
Nil |
Nil |
| David
Smith |
(96,030) |
Nil |
Nil |
| Peter
Birkey |
Nil |
Nil |
Nil |
| Faheem
Tejani |
Nil |
Nil |
Nil |
| Robin
Bienenstock |
Nil |
Nil |
Nil |
| Richard
O’Brien |
Nil |
Nil |
Nil |
| Jeane
Hull |
Nil |
Nil |
Nil |
| (1) | This
is the aggregate dollar value that would have been realized if the Options had been exercised
on the vesting date and assuming the director had the entire vested amount available
for exercise. |
| (2) | Pursuant
to a resolution of our Board, the vesting date of all RSUs held by independent directors
that would otherwise vest in December 2019, has been extended to the business day immediately
following the date on which an applicable blackout period is lifted. Such applicable
blackout period was not lifted prior to December 31, 2019. |
Deferred
Share Unit Plan
In
2018, we implemented the DSU Plan as a component of our compensation for non-employee directors. Only non-employee directors are
eligible to participate and to receive DSUs under the DSU Plan, which DSUs may be awarded by the Board from time to time. In addition,
non-employee directors may elect to receive a portion or all of their respective annual cash remuneration in the form of DSUs.
The number of DSUs to be awarded to a participant under the DSU Plan is determined by dividing the portion of that participant’s
annual cash remuneration (or other applicable amount) by the closing price of our Shares on the last trading day immediately preceding
the last day of the quarter in which such portion of the annual cash remuneration (or other applicable amount) was earned. DSUs
granted to a participant will be fully vested upon such grant; however, the participant is not entitled to payment in respect
of the DSUs until his or her death, retirement or removal from the Board. Pursuant to the DSU Plan, DSUs may only be settled by
way of cash payment. The settlement amount of each DSU is based on the closing price of our Shares on the last trading day immediately
preceding the DSU redemption date multiplied by the number of DSUs being redeemed. In case of payment of dividends on our Shares,
participants under the DSU Plan will receive the value of the dividend in the form of DSUs.
The
DSU Plan also provides that, at the discretion of the Board, a participant may receive a grant of DSUs upon his or her first election
or appointment to the Board, provided that the equity award value, based on grant date fair value, of such grant of DSUs, in combination
with the equity award value, based on grant date fair value, of any grant made to such a participant in respect of his or her
first election or appointment to the Board under any equity compensation plan shall not exceed $225,000.
Director
Security Ownership Requirements
We
have a Share Ownership Policy in place in order to align the interests of our non-executive directors with those of our shareholders.
Each non-executive director is required to own a minimum of three times their annual director retainer of our Shares within three
years of becoming a director. Each non-executive director is required to maintain their minimum ownership level throughout his
or her tenure as a director of the Company.
Our
non-executive directors’ current shareholdings are detailed in their individual director biographies found under the heading
“Particulars of Matters to be Acted Upon – Election of Directors” in this Information Circular. Majority
our non-executive directors meet their shareholding requirements.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
We
have two equity compensation plans in place: the Stock Option Plan under which Options are issued and the RSU Plan under which
RSUs and PSUs are issued (together, the “Plans”). The Plans each require shareholder approval every three years
and were last approved at our annual meeting of shareholders in May 2019. The intent of the Plans is to allow us to provide a
flexible mix of compensation components to attract, retain and motivate the performance of the plan participants in alignment
with our success and that of our shareholders. The following is a description of the specific information pertaining to each of
the Stock Option Plan and the RSU Plan.
Options
Eligibility:
Options may be granted to any of our directors, senior officers, employees, or permitted consultants or those of our subsidiaries.
Limits:
The maximum number of Shares that may be reserved for issuance pursuant to Options granted under the Stock Option Plan shall
not at any time exceed 5.5% of the total issued and outstanding Shares on a non-diluted basis on the date of the grant of Options.
We currently have 185,522,800 Shares issued and outstanding and as such, we can issue up to a total of 10,203,754 Shares under
the Stock Option Plan.
The
total number of Shares that may be reserved for issuance to any one person pursuant to Options granted under the Stock Option
Plan in any one year shall not exceed 5% of our issued and outstanding Shares on a non-diluted basis on the date of the grant
of the Options (9,276,140 Shares as of March 26, 2020).
The
maximum number of Shares that may be reserved for issuance pursuant to Options granted to our insiders, and the maximum number
of Shares that may be issued upon the exercise of Options granted to our insiders in any one-year period, in each case together
with the number of Shares reserved for issuance or issued to such insiders, as the case may be, under our other previously established
or proposed equity compensation plans, shall not exceed 5.5% of our issued and outstanding Shares on a non-diluted basis (185,522,800
Shares as of March 26, 2020). In addition, no more than 2% of our issued and outstanding Shares may be issuable to any individual
insider or consultant within a one-year period when taken together with the number of Shares issuable to such insider or consultant
under our other previously established or proposed equity compensation plans (3,710,456 Shares as of March 26, 2020).
No
more than 1% of our issued and outstanding Shares may be issuable to our non-employee directors, as a group, within a one-year
period, when taken together with the number of Shares issued to such non-employee directors under our other previously established
or proposed equity compensation plans (1,855,228 Shares as of March 26, 2020). In addition to the foregoing limits, the Stock
Option Plan also provides that the aggregate equity award value of Options that may be granted to a non-employee director within
any one-year period shall not exceed $100,000, and that the aggregate equity award value of all grants under all of our established
or proposed equity compensation plans (including the Stock Option Plan) that may be granted to a non-employee director within
any one-year period shall not exceed $150,000.
Grants:
The Board shall determine the number of Options to be granted, the price applicable to each Option, vesting conditions and
any other terms and conditions at the time of grant of each Option. Options granted prior to 2017 vest over an 18-month period,
while Options granted in 2017 and thereafter vest over a three-year period, with one-third vesting on each of the first, second
and third anniversary of the grant date.
Term:
The Option period of an Option commences on the date of grant and expires on the fifth anniversary of such date. If an Option
expires during a period in which we have imposed a trading blackout to restrict trades in our securities, the Option will expire
ten business days after the blackout period is lifted.
Exercise
Price: The exercise price of any Option shall not be less than the last daily closing price per Share on the TSX on the trading
day immediately preceding the grant date of such Option. Vested Options may be exercised at any time during the applicable Option
period.
Assignability:
Options are non-transferable and non-assignable, except by will or by laws governing the devolution of property, to an Option
holder’s (“Optionee”) executor, administrator or other personal representative in the event of death of
the Optionee, or to a holding entity, an RRSP or an RRIF of the Optionee.
Tax
Treatment: The Company will be responsible for withholding source deductions in respect of income taxable to the Optionee
arising on the exercise of Options.
Termination:
If an Optionee is terminated due to retirement, disability, redundancy, or because the company by which such Optionee is employed
ceases to be a “related entity” (as defined in the Stock Option Plan) of ours, such Optionee shall have 60 days from
the termination date to exercise all Options that were exercisable and have vested as of the termination date.
In
the event of an Optionee’s death, such Optionee’s executor, administrator or other personal representative who acquired
the right to exercise the Options by will or the laws of devolution shall have 365 days from the date of the Optionee’s death
to exercise all Options that were exercisable and have vested as of the date of death.
In
the event of a change of control (as defined in the Stock Option Plan) and termination of an Optionee other than for cause within
six months thereof, all time-based Options held by such Optionee shall vest immediately on the date of termination while the vesting
of performance-based Options shall be subject to the Board’s determination of the extent of satisfaction of related performance
criteria, and in each case the vested Options shall be exercisable for 90 days from the date of termination.
If
an Optionee is terminated for cause, all Options held by such Optionee that have not been exercised prior to the termination date
shall become null and void immediately upon such termination.
If
an Optionee’s employment, engagement or directorship is terminated for reasons other than any of the above, such Optionee
shall have 30 days from the termination date to exercise all Options that were exercisable and have vested as of the termination
date.
The
Board has the discretion to increase the periods permitted to exercise all or any of the Options following a termination, subject
to applicable law.
Notwithstanding
any of the foregoing, no Option shall be exercisable following the expiration of the applicable original Option period however,
if an Option expires during a period in which we have imposed a trading blackout to restrict trades in our securities, the Option
will expire ten business days after the blackout period is lifted.
Adjustments:
In the event of a subdivision, consolidation or reclassification of outstanding Shares or other capital adjustment, or the
payment of a stock dividend thereon, the number of Shares reserved or authorized to be reserved under the Plan, the number of
Shares receivable on the exercise of an Option and the exercise price shall be increased or reduced proportionately and such other
adjustments shall be made as may be deemed necessary or fair and equitable by the Board.
If
we amalgamate, consolidate or combine with or merge with or into another body corporate, whether by way of amalgamation, statutory
arrangement or otherwise (a “Business Combination”), any Share receivable on the exercise of an Option shall
be converted into the securities, property or cash which the Optionee would have received upon such Business Combination if the
Optionee had exercised his or her Option immediately prior to the effective date of such Business Combination and the exercise
price shall be adjusted as may be deemed necessary or fair and equitable by the Board. If (a) because of a proposed Business Combination
the exchange or replacement of the Shares or those in another company is imminent, or (b) a take-over bid to purchase all of our
Shares is made by a third party, the Board may, in a fair and equitable manner, determine the manner in which all unexercised
Option rights granted under the Stock Option Plan shall be treated to ensure the preservation of the economic interests of Optionees
in, and to prevent the dilution or enlargement of, any Options, including, for example, requiring the acceleration of the time
for the exercise of such rights by the Optionees and the time for the fulfilment of any conditions or restrictions on such exercises;
except that any such acceleration of vesting shall require the termination of an Optionee’s employment, engagement or directorship
unless an Optionee’s economic interest in any Option would not be preserved or dilution or enlargement of any Option would
not be prevented, in which case the Board shall have the authority to determine the acceleration of the time for the exercise
of the Options irrespective of whether the Optionee’s employment, engagement or directorship is terminated.
In
the event of a change in the designation of our currently authorized Shares, the shares resulting from any such change will be
deemed to be the “Shares” within the meaning of the Stock Option Plan.
In
the event of an adjustment affecting the Shares other than the above, such adjustment shall be made as deemed equitable by the
Board in its sole discretion to properly reflect such event.
Amendments:
In the following circumstances, the Board may, subject to regulatory approval, amend or revise the terms of the Stock Option
Plan or any Option without obtaining shareholder approval, provided that, in the case of any Option, no such amendment or revision
may, without the consent of the Optionee, materially decrease the rights or benefits accruing to such Optionee or materially increase
the obligations of such Optionee, as follows:
| (a) | amendments
of a “housekeeping” nature including, but not limited to, of a clerical, grammatical
or typographical nature; |
| (b) | to
correct any defect, supply any information or reconcile any inconsistency in the Stock
Option Plan in such manner and to such extent as shall be deemed necessary or advisable
to carry out the purposes of the Stock Option Plan; |
| (c) | a
change to the vesting provisions of any Option or the Stock Option Plan; |
| (d) | amendments
to reflect any changes in requirements of any regulator or stock exchange to which we
are subject; |
| (e) | a
change to the termination provisions of an Option which does not result in an extension
beyond the original Option period; |
| (f) | in
the case of any Option, the substitution of another award of the same or different type; |
| (g) | in
the case of any Option, such amendments or revisions to the adjustment provisions of
the Stock Option Plan; |
| (h) | amendments
to the definition of change of control; and |
| (i) | the
addition of a cashless exercise feature, payable in cash or our securities. |
Notwithstanding
the foregoing, the Board shall not make any amendments with respect to the following, prior to obtaining requisite shareholder
approval, and if applicable, approval of the TSX or any other applicable regulatory body:
| (a) | the
limitations of grants of Options to insiders and the number of Shares that may be reserved
for issuance to insiders; |
| (b) | an
increase in the maximum percentage of Shares issuable under the Stock Option Plan; |
| (c) | a
reduction in the exercise price of any previously granted Option or a cancellation and
reissuance of Options so as to in effect reduce the exercise price thereof, other than
pursuant to certain adjustments as further set out in the Stock Option Plan, including
in the event of a subdivision, consolidation or reclassification of outstanding Shares
or other capital adjustment, the payment of a stock dividend thereon, or a business combination; |
| (d) | any
extension of the term of an Option beyond its original expiry date, except in the case
of expiry during a blackout period; |
| (e) | the
limitations on grants of Options to non-employee directors and the number of Shares that
may be reserved for issuance to non-employee directors; |
| (f) | any
amendment to the class of eligible persons under the Stock Option Plan, including any
such changes which may broaden or increase the participation of non-employee directors
under the Stock Option Plan; |
| (g) | any
amendment that would permit the Options granted under the Stock Option Plan to be assignable
or transferable, other than by will or by the laws governing the devolution of property,
to an Optionee’s executor, administrator or other personal representative in the
event of death of the Optionee, or to a holding entity of the Optionee; |
| (h) | any
amendment that provides for financial assistance to Optionees for the exercise of Options;
and |
| (i) | any
amendments to such amendment provision. |
Our
Board may, from time to time, subject to approval, if required, of the TSX or any other applicable regulatory body, suspend or
terminate the Stock Option Plan.
Administration:
Pursuant to its terms, the Stock Option Plan is administered by the Board with the assistance of the Compensation Committee
and the Chief Executive Officer. The Board may delegate (and revoke such delegation) to a committee of the Board, among other
things, the interpretation, administration and implementation of the Stock Option Plan. In such case, the Board will take such
steps that in its opinion are required to ensure that the committee has the necessary authority to fulfill its functions under
the Stock Option Plan.
Recent
Amendments: The Stock Option Plan described herein reflects the following amendments thereto, which were approved by our shareholders
at our Annual General and Special Meeting held on May 2, 2019:
| ● | reduction
in the maximum number of Shares that may be reserved for issuance pursuant to Options
granted under the Stock Option Plan, the maximum number of Shares that may be reserved
for issuance pursuant to Options granted to insiders, and the maximum number of Shares
which may be issued to insiders within any one-year period pursuant to Options granted
under the Stock Option Plan, in each case when combined with the Company’s other
equity compensation plans, from 10% to 5.5%; |
| ● | introduction
of a maximum limit of no more than $100,000 in Option awards (and an aggregate limit
of no more than $150,000 in equity awards across all of the Company’s equity compensation
plans) to any one non-employee director in any one-year period; |
| ● | introduction
of a provision explicitly setting out amendments or revisions to the terms of the Stock
Option Plan and any Option that require shareholder approval and, as applicable, approval
of regulators including the TSX; |
| ● | addition
of language setting out that, in the event of a change of control and subsequent termination
other than for cause of an Optionee within six months, all time-based Options shall vest
immediately on the date of termination while the vesting of performance-based Options
shall be subject to the Board’s determination of the extent of satisfaction of applicable
performance criteria; |
| ● | new
limits on the Board’s discretion to accelerate vesting of Options in the event of
a Business Combination (as defined in the Stock Option Plan) or an offer to purchase
all of the Company’s Shares by a third-party, providing that any accelerated vesting
in such cases shall require the termination of an Optionee’s employment, engagement
or directorship with the Company unless an Optionee’s economic interest in any Option
would not be preserved or dilution or enlargement of any Option would not be prevented,
in which case the Board shall have the authority to determine the acceleration of the
time for the exercise of the Options irrespective of whether the Optionee’s employment,
engagement or directorship with the Company is terminated; |
| ● | amendment
to the definition of “change of control” to conform with that in the RSU Plan; |
| ● | amendment
to the administration provisions to clarify that the Board may delegate (and revoke such
delegation) to a committee of the Board for the interpretation, administration and implementation
of the Stock Option Plan; and |
| ● | amendments
of a housekeeping nature. |
RSUs
and PSUs
Eligibility:
RSUs and PSUs may be granted to any of our directors, officers, employees, or permitted consultants or those of our subsidiaries.
Limits:
The maximum number of Shares issuable from treasury pursuant to the RSU Plan, together with any other of our equity compensation
plans, shall not exceed 5.5% of issued and outstanding Shares on a non-diluted basis. We currently have 185,522,800 Shares issued
and outstanding and as such, we can issue up to a total of 10,203,754 Shares under the RSU Plan.
The
maximum number of Shares issuable from treasury to our insiders pursuant to RSUs and PSUs, together with any other of our equity
compensation plans, shall not at any time exceed 5.5% of issued and outstanding Shares on a non-diluted basis (10,203,754 Shares
as of March 26, 2020). In addition, the maximum number of Shares that may be issued from treasury to our insiders within any one-year
period pursuant to RSUs and PSUs, together with any other of our equity compensation plans, shall not exceed 5.5% of issued and
outstanding Shares on a non-diluted basis (10,203,754 Shares as of March 26, 2020).
The
maximum number of Shares issuable from treasury to our non-employee directors, together with any other of our equity compensation
plans shall not exceed 1% of issued and outstanding Shares on a non-diluted basis plans (1,855,228 Shares as of March 26, 2020).
In addition, the aggregate equity award value of RSUs and/or PSUs that are eligible to be settled in Shares that may be awarded
to any individual non-employee director in any one-year period, in combination with the aggregate equity award value of all grants
under all of our other equity compensation plans, shall not exceed $150,000.
Grants:
We may, from time to time, grant RSUs and/or PSUs to a participant in such numbers, at such times (each such time, the “Grant
Date”) and on such terms and conditions, consistent with the RSU Plan, as the Board may in its sole discretion determine;
provided, however, that no RSUs and/or PSUs will be granted after December 15 of a given calendar year.
Term:
RSUs and PSUs shall expire on such date as determined by the Board, but not later than December 31 of the third calendar year
following the year (the “Service Year”) in which the participant performed the services to which the grant of
the respective RSUs and/or PSUs relates.
Vesting:
The Board shall, in its sole discretion, determine any and all conditions to the vesting of any RSUs and/or PSUs granted to a
participant, which vesting conditions may be based on either or both of: (a) the participant’s continued employment with
us or a subsidiary, or provision of consulting services to us or a subsidiary; or (b) such other terms and conditions including,
without limitation, certain performance criteria, as the Board may determine, provided that no such vesting condition for a RSU
or PSU granted to an officer, director or employee shall extend beyond December 15 of the third calendar year following the Service
Year.
RSUs,
unless otherwise determined by the Board and as specifically set out in the applicable grant agreement, vest as to one third on
each of the first and second anniversaries of the Grant Date and the remaining one third shall vest on the earlier of the third
anniversary of the Grant Date and December 15 of the third calendar year following the Service Year (such vested RSUs being hereinafter
referred to as the “Vested RSUs”).
PSUs
issued to date cliff-vest at the end of a three-year period and vesting is based on the performance of our TSR against the S&P/TSX
Global Gold Index (such vested PSUs being hereinafter referred to as the “Vested PSUs”). If our relative performance
is in the upper quartile of the relative TSR, 200% of the PSUs vest. If our relative performance is at or below the 25th percentile
of the relative TSR, no PSUs vest. In addition, if TSR is negative, a maximum of 100% of the PSUs may vest. PSUs to be issued
subsequent to 2019 will cliff-vest at the end of the three-year period. 75% of vesting will be based on the performance of our
TSR (measured over applicable calendar years) against a custom peer group determined by the Compensation Committee in consultation
with Meridian, and can range from 0% to 200% based on an “interpolated curve” criteria. In addition, if TSR is negative,
a maximum of 100% of the PSUs may vest. The remaining 25% of vesting will be based on an ROIC performance measure at the end of
the three-year period, with the calculation equal to 10% for each individual year plus 70% allocated to the three-year average
ROIC. Vesting of these PSUs will range from 0% (at 8.5% ROIC) to 200% (at 15% ROIC).
Payment:
We shall, within 15 days of the vesting date of RSUs and/or PSUs (the “Payment Date”) make a cash payment to
each participant (other than a non-employee director) equal to the number of Vested RSUs and/or Vested PSUs, as applicable, held
by such participant multiplied by the Fair Market Value (as defined in the RSU Plan and described below) of our Shares, less applicable
withholding taxes. Subject to receipt of any required shareholder, regulatory and/or stock exchange approval, we may, in lieu
of the cash payment to a participant, on the Payment Date, elect to: (a) issue to the participant that number of whole Shares
from treasury that is equal to the number of whole Vested RSUs and/or Vested PSUs held by such participant, less any applicable
withholding taxes; or (b) purchase on behalf of the participant such number of whole Shares through an independent broker on the
open market.
Any
participant that is a non-employee director (other than a US taxpayer as defined under the RSU Plan) shall on the Payment Date
be issued from treasury and receive that number of whole Shares that is equal to the number of whole Vested RSUs and/or Vested
PSUs held by such participant, less any applicable withholding taxes. The non-employee director is responsible for any applicable
withholding taxes.
Fair
Market Value: For the purposes of settlement of RSUs and PSUs, the “Fair Market Value” of our Shares is defined
as the arithmetic average of the closing price of the Shares on the TSX for five trading days on which a board lot was traded
immediately preceding the relevant date. If the Shares are not listed on any stock exchange, the Fair Market Value shall be determined
by the Board in good faith.
Assignability:
RSUs and PSUs are not assignable or transferable. However, subject to law, a participant may designate in writing an individual
who is a dependent or relation of the participant as a beneficiary to receive any benefits that are payable under the RSU Plan
upon the death of such participant.
Tax
Treatment: The cash amounts received on vesting by a participant will be taken into income when vested. The Company will be
entitled to a deduction for cash amounts paid out under the RSU Plan (i.e., when RSUs and/or PSUs vest) and will be responsible
for withholding source deductions.
Termination:
Pursuant to the RSU Plan, the “Termination Date” is the date on which a participant ceases, for any reason including
resignation, termination, death or disability, to be an active employee, director or consultant, as the case may be, and, in the
case of a participant who is an employee, where the employment is terminated by the employer, whether wrongful or for cause or
otherwise, such date shall be the date notice of termination is provided and, in the case of a participant who is a consultant,
the date the written contract between the consultant and us or any subsidiary is terminated or expires and the consultant no longer
provides services thereunder.
Subject
to certain exceptions, including those described herein, on a participant’s Termination Date, any RSUs and PSUs granted to
such participant which have not become Vested RSUs and Vested PSUs, as applicable, prior to the Termination Date shall terminate
and become null and void.
Where
a participant’s Termination Date occurs as a result of disability, retirement or redundancy: (a) any unvested RSUs and PSUs
held by such participant that would otherwise have vested within 60 days of the participant’s Termination Date shall immediately
become Vested RSUs and Vested PSUs, as applicable, and shall be settled within 60 days after the Termination Date; and (b) if
no RSUs held by such participant would otherwise have vested within 60 days of the Termination Date, then a pro rata portion of
the RSUs that are scheduled to vest on the next vesting date set forth in the applicable grant agreement shall vest based on (a)
the number of days since the Grant Date of such RSUs and the Termination Date, in relation to (b) the total number of days since
the Grant Date to such vesting date, and such RSUs shall be settled in the ordinary course. All other RSUs and PSUs that remain
unvested as of the Termination Date shall terminate and become null and void.
If
a participant’s Termination Date occurs as a result of the participant’s death, any RSUs and PSUs standing to the credit
of such Participant shall continue to vest (and be paid out) in the normal course for a period of 12 months after the participant’s
Termination Date. Any RSUs and PSUs granted to such participant which have not become Vested RSUs and Vested PSUs, respectively
on or before the date that is the first anniversary of the participant’s Termination Date shall terminate and become null
and void as of such date.
In
the event of a change of control (as defined in the RSU Plan) or a determination by the Board that a change of control is expected
to occur, the Board shall have the authority to take all necessary steps so as to ensure the preservation of the economic interests
of the participants in, and to prevent the dilution or enlargement of, any RSUs and PSUs, including, without limitation: (a) ensuring
that the Company or any entity which is or would be the successor to the Company or which may issue securities in exchange for
Shares upon the change of control becoming effective will provide each participant with new or replacement or amended RSUs and/or
PSUs, as applicable, which will continue to vest and be exercisable following the change of control on similar terms and conditions
as provided in the RSU Plan; (b) causing all or a portion of the outstanding RSUs and PSUs to become Vested RSUs and Vested PSUs
(irrespective of vesting conditions), respectively, prior to the change of control, except that any such accelerated vesting shall
require the termination of the applicable participant’s employment unless such participant’s economic interest in any
RSU and/or PSU, as applicable, would not be preserved or dilution or enlargement would not be prevented, in which case the Board
shall have the authority to cause all or a portion of the outstanding RSUs and/or PSUs, as applicable, to become vested irrespective
of whether the participant is terminated; or (c) any combination of the above.
If
a participant is terminated as a result of constructive dismissal within six months following a change of control, subject to
the provisions of any applicable grant agreement, all RSUs and PSUs held by such participant shall, whether otherwise vested or
not, become Vested RSUs and Vested PSUs, respectively, at the time of such termination and shall be settled in the normal course;
provided that, in the case of PSUs, the Board shall consider the extent of satisfaction of the applicable performance criteria
in determining the number of PSUs that shall become Vested PSUs at the time of such termination.
Adjustments:
In the event of any subdivision, consolidation, stock dividend, capital reorganization, reclassification, exchange, or other
change with respect to the Shares, or a consolidation, amalgamation, merger, spin-off, sale, lease or exchange of all or substantially
all of the property of the Company or other distribution of the Company’s assets to shareholders of the Company (other than
the payment of ordinary course cash or stock dividends), the number of Shares subject to the RSU Plan and the RSUs and PSUs then
outstanding shall be adjusted in such manner, if any, as the Company may in its discretion deem appropriate to preserve, proportionally,
the interests of participants.
Amendments:
Subject to applicable rules, policies and regulations of any lawful authority having jurisdiction, the Board may at any time,
without further action by, or approval of, shareholders, amend the RSU Plan or any RSUs and PSUs granted in order to:
| (a) | ensure
that RSUs and PSUs granted under the RSU Plan will comply with any provisions respecting
restricted share units or other security-based compensation arrangements in the Income
Tax Act (Canada) or other laws in force in any country or jurisdiction of which a
participant to whom a RSU or PSU has been granted; |
| (b) | make
amendments of a procedural or “housekeeping” nature; |
| (c) | change
the termination and/or vesting provisions of an RSU or PSU granted under the RSU Plan
provided that the change does not entail an extension of the expiry date of the RSU or
PSU, as applicable, beyond the original expiry date; or |
| (d) | suspend
or terminate the RSU Plan. |
Shareholder
approval is required in order to:
| (a) | increase
the maximum number of Shares reserved for issuance under the RSU Plan; |
| (b) | amend
the determination of Fair Market Value or a cancellation and reissuance of RSUs and PSUs
so as to in effect amend the determination of Fair Market Value thereof; |
| (c) | extend
the expiry date of any RSU or PSU beyond the original expiry date; |
| (d) | increase
any limit on grants of RSUs and PSUs to insiders; |
| (e) | expand
the circumstances under which RSUs and PSUs may be assigned or transferred; |
| (f) | amend
the class of eligible participants under the RSU Plan; |
| (g) | amend
the limits on grants of RSUs and PSUs to non-employee directors; |
| (h) | add
any provision providing for financial assistance to participants for the settlement of
RSUs; |
| (i) | amend
the amendment provision; or |
| (j) | grant
additional powers to the Board to amend the RSU Plan or any RSU or PSU without the approval
of the shareholders of the Company. |
Administration:
Pursuant to its terms, the RSU Plan is administered by the Board with the assistance of the Compensation Committee and the
Chief Executive Officer. The Board may delegate (and revoke such delegation) to a committee of the Board for the interpretation,
administration and implementation of the RSU Plan.
Recent
Amendments: The RSU Plan described herein reflects the following amendments thereto, which were approved by our shareholders
at our Annual General and Special Meeting held on May 2, 2019:
| ● | reduction
in limits on Shares issuable from treasury pursuant to the RSU Plan, Shares issued to
insiders from treasury pursuant to the RSU Plan within a one-year period, and Shares
issuable to insiders from treasury pursuant to units granted under the RSU Plan, in each
case when taken together with any other equity compensation plan of the Company, from
10% to 5.5%; |
| ● | addition
of the following to the list of amendments and revisions that require shareholder approval
prior to being implemented: (i) amendments to the limits on grants of units to non-employee
directors; (ii) additions of any provisions providing for financial assistance to participants
under the RSU Plan for the settlement of units granted thereunder; and (iii) a cancellation
and reissuance of units so as to in effect amend the determination of Fair Market Value
of units, and clarifies that, subject to certain restrictions, acceleration of vesting
terms of units is at the discretion of the Board and does not require prior shareholder
approval; |
| ● | addition
of language setting out that if a participant is terminated due to disability, retirement
or redundancy and no units held by such participant would vest within 60 days of the
termination date, then such participant’s units that are scheduled to vest on the
next scheduled vesting date (as set out in such participant’s RSU grant agreement)
shall vest and be settled on a pro rata basis; |
| ● | amendments
to the definition of “change of control” to conform with that in the Stock
Option Plan; |
| ● | addresses
the acceleration of performance-vested units in the event of a “change of control”
and subsequent termination of a participant’s employment by providing that in such
case, the Board shall consider the extent of satisfaction of the performance criteria
in determining the number of units that shall vest at the time of termination; |
| ● | new
limits on the Board’s discretion to accelerate vesting of units in the event of
a change of control, by providing that any accelerated vesting in such cases shall require
the termination of a participant’s employment unless the participant’s economic
interest in any unit would not be preserved or dilution or enlargement of any unit would
not be prevented, in which case the Board shall have the authority to cause all or a
portion of the outstanding units to become vested irrespective of whether the participant’s
employment is terminated; |
| ● | amendments
to the administration provisions to clarify that the Board may delegate (and revoke such
delegation) to a committee of the Board for the interpretation, administration and implementation
of the RSU Plan; and |
| ● | amendments
of a housekeeping nature. |
Authorized
for Issuance
The
following table sets out information as at December 31, 2019 with respect to the compensation plans under which our equity securities
are authorized for issuance.
| Plan
Category |
No.
of securities
to be issued
upon exercise
of outstanding
options,
warrants
and rights
(a) |
Percentage
of
Shares
Outstanding |
Weighted-average
exercise price
of outstanding
options,
warrants
and rights
($)
(b) |
No.
of securities
remaining available
for future issuances
under equity
compensation plans
(excluding securities
reflected in (a)
(c) (1) |
Percentage
of
Shares
Outstanding |
Equity
compensation
plans approved by
securityholders |
3,468,310
Options
404,523 RSUs
166,085 PSUs(2) |
1.87%
0.22%
0% - 0.18%(2) |
$9.35
n/a
n/a |
5,990,501
- 6,322,671 (2) |
3.23%
- 3.41% |
Equity
compensation
plans not approved by
securityholders |
n/a |
n/a |
n/a |
n/a |
n/a |
| (1) | We
can issue up to a combined total of 5.5% of our issued and outstanding Shares (185,372,800
Shares as at December 31, 2019) under our Plans which is equal to 10,195,504 Shares as
at December 31, 2019. |
| (2) | Depending
on the achievement of performance criteria, we may settle PSUs in cash or Shares on the
basis of zero to two Shares for each one PSU. |
As
at December 31, 2019, if all of the outstanding Options, RSUs and PSUs (assuming 200% vesting) were exercised or converted into
Shares, the Shares which would be issued upon such exercise or conversion would total approximately 2.27% of our issued and outstanding
Shares. Approximately 3.23% Shares would remain available for issuance under our Plans.
Awards
Granted and Burn Rate
In
accordance with the requirements of the TSX, the following table summarizes the number of security-based compensation awards granted
to all of our directors, officers and employees during the periods noted below and the annual burn rate of each security-based
compensation arrangement:
| |
Weighted
Average
Shares Outstanding(1) |
Stock
Option Plan |
RSU
Plan
(RSUs and PSUs) |
| Granted |
Burn
Rate(2) |
Granted |
Burn
Rate(2) |
| December
31, 2019 |
184,731,109 |
140,000 |
0.08% |
nil |
0% |
| December
31, 2018 |
182,905,004 |
615,592 |
0.34% |
570,111(3) |
0.31%(3) |
| December
31, 2017 |
181,208,295 |
1,067,875 |
0.59% |
444,612(4) |
0.25%(4) |
| (1) | Pursuant
to the requirements of the TSX, the weighted average number of Shares outstanding during
the period is the number of Shares outstanding at the beginning of the period, adjusted
by the number of Shares bought back or issued during the period, multiplied by a time-weighting
factor. The time-weighting factor is the number of days that the Shares are outstanding
as a proportion of the total number of days in the period. |
| (2) | The
burn rate for a given period is calculated by dividing the number of awards granted during
such period by the weighted average number of Shares outstanding during such period. |
| (3) | Comprised
of 478,166 RSUs and 91,945 PSUs. Vesting of these PSUs is based on the performance of
our TSR against the S&P/ TSX Global Gold Index and can range from 0% to 200%, which
results in a Burn Rate range of 0.26% to 0.36%. The Burn Rate set out in the table assumes
100% vesting of PSUs. |
| (4) | Comprised
of 370,472 RSUs and 74,140 PSUs. Vesting of these PSUs is based on the performance of
our TSR against the S&P/ TSX Global Gold Index and can range from 0% to 200%, which
results in a Burn Rate range of 0.20% to 0.29%. The Burn Rate set out in the table assumes
100% vesting of PSUs. |
CORPORATE
GOVERNANCE DISCLOSURE
Our
Corporate Governance and Nominating Committee is responsible for reviewing our overall governance principles and governance issues
that arose during the course of 2019.
As
required by National Instrument 58-101 - Disclosure of Corporate Governance Practices, the following describes our corporate
governance practices.
Board
of Directors
Under
NI 52-110, a director is independent if he or she has no direct or indirect material relationship with us. A material relationship
is a relationship which could, in the view of the Board, be reasonably expected to interfere with the exercise of a director’s
independent judgment. NI 52-110 also sets out certain situations where a director will automatically be considered to have a material
relationship with us.
The
majority of our current directors are independent, such being: Richard O’Brien, George Paspalas, David Smith, Peter Birkey,
Faheem Tejani, Robin Bienenstock and Jeane Hull. Mr. Ovsenek is not independent as he is our President and CEO. In connection
with the leadership transition plan announced on February 12, 2020, Mr. Ovsenek will not stand for re-election as a director at
the Meeting. The Board intends to appoint Mr. Ovsenek’s successor as a director in conjunction with his or her appointment
as President and CEO of the Company, and such appointee will not be independent.
Throughout
2019, Dr. Quartermain was our Executive Chairman and not independent. Accordingly, Mr. Paspalas was appointed as our Lead Director
and in that capacity, acted as the chair of the meetings of the independent directors and as the liaison between management and
the Board. The roles and responsibilities of the Lead Director are further described below under the heading “–
Position Descriptions”. Following Dr. Quartermain’s retirement as a director and Executive Chairman effective as
at the end of December 31, 2019, Mr. O’Brien was appointed as an independent Chair of the Board and Mr. Paspalas relinquished
his role as Lead Director. The roles and responsibilities of the independent Chair are further described below under the heading
“– Position Descriptions”.
Our
Board encourages open and candid discussion amongst its independent directors and as such, holds regularly scheduled and ad-hoc
meetings at which non-independent directors and members of management are not in attendance. In-camera sessions were held by our
independent directors at each of our regularly scheduled committee meetings and a number of our ad-hoc committee meetings, as
well as at each of our six regularly scheduled Board meetings and at five out of our thirteen ad-hoc Board meetings held in 2019.
In
addition to their positions on our Board, the following directors also serve as directors of other reporting issuers or reporting
issuer equivalent(s):
| Name
of Director |
Reporting
Issuer(s) or Equivalent(s) |
| Richard
O’Brien |
Xcel
Energy Inc.
Vulcan Materials Company
Ma’aden,
Saudi Arabian Mining Company |
| |
|
| George
Paspalas |
MAG
Silver Corp. |
| |
|
| David
Smith |
Hudbay
Minerals Inc. |
| |
|
| Robin
Bienenstock |
Sunrise
Communications Group AG (Switzerland)
|
| Jeane
Hull |
Epiroc
AB (Sweden)
Interfor Corporation |
Interlocking
Boards
None
of our directors currently serve together on the board of directors of any other company.
Attendance
of our Directors at Board and Committee Meetings
During
the year ended December 31, 2019, the Board held a total of 19 meetings, of which six were regularly scheduled and 13 were ad-hoc.
The attendance record of the directors at such meetings is as follows:
Directors |
Board of
Directors
(19 Meetings) |
Independent
Directors
(11 Meetings) |
Audit
Committee
(5 Meetings) |
Compensation
Committee
(10 Meetings) |
Corporate
Governance and
Nominating
Committee
(8 Meetings) |
Sustainability
and Technical
Committee
(5 Meetings) |
| Robert
Quartermain(1)(2) |
19
of 19
100% |
- |
- |
- |
- |
5
of 5
100% |
| Joseph
Ovsenek(1) |
18
of 19
95% |
- |
- |
- |
- |
- |
| George
Paspalas |
19
of 19
100% |
11
of 11
100% |
- |
10
of 10
100% |
- |
5
of 5
100% |
| David
Smith |
19
of 19
100% |
11
of 11
100% |
5
of 5
100% |
10
of 10
100% |
- |
- |
| Peter
Birkey |
19
of 19
100% |
11
of 11
100% |
5
of 5
100% |
- |
7
of 8(5)
88% |
- |
| Faheem
Tejani |
18
of 19
95% |
11
of 11
100% |
5
of 5
100% |
- |
8
of 8
100% |
5
of 5
100% |
| Robin
Bienenstock |
18
of 19
95% |
11
of 11
100% |
- |
10
of 10
100% |
8
of 8
100% |
- |
| Richard
O’Brien(3) |
1
of 1
100% |
1
of 1
100% |
- |
- |
- |
- |
| Jeane
Hull(3)(4) |
1
of 1
100% |
1
of 1
100% |
- |
- |
- |
- |
| (1) | Dr.
Quartermain and Mr. Ovsenek attend meetings of all the committees, to provide support
to each committee as may be required. |
| (2) | Dr.
Quartermain retired as a director and Executive Chairman effective as at the end of December
31, 2019. |
| (3) | Mr.
O’Brien and Ms. Hull were appointed to the Board on November 13, 2019 and attended
all Board meetings subsequent to their appointment. |
| (4) | Ms.
Hull was appointed to the Corporate Governance and Nominating Committee and the Sustainability
and Technical Committee on December 4, 2019. These committees did not hold meetings in
2019 subsequent to Ms. Hull’s appointments. |
| (5) | Mr.
Birkey did not attend one meeting of the Corporate Governance and Nominating Committee
due his personal interest in the matters discussed. |
Board
Mandate
The
mandate of our Board (the “Board Mandate”) is to supervise the management of our business and affairs and in
doing so to act honestly and in good faith with a view to our best interests and to exercise the care, diligence and skill that
a reasonably prudent individual would exercise in comparable circumstances. In accordance with its mandate, our Board will, among
other things:
| ● | review
and approve, on an annual basis, our strategic business plan, including the statement
of our vision, mission and values, prepared by management; |
| ● | review
and measure corporate performance against strategic plans, management objectives, financial
plans and quarterly budgets; |
| ● | assist
management in identifying principal risks of our business and oversee the implementation
of appropriate systems to manage those risks; |
| ● | review
and approve programs and budgets for each fiscal year and monitor progress of programs
and budgets against approved objectives; |
| ● | monitor
the integrity of our internal controls and management information systems; |
| ● | monitor
and evaluate the performance of management, establish compensation programs and succession
planning and determine compensation of the CEO and senior management; |
| ● | oversee
management’s implementation of environmental, community and health and safety policies
and programs; and |
| ● | oversee
management in implementing the required systems and policies to manage our business in
accordance with all legal and regulatory requirements and in the best interests of our
shareholders. |
Our
Board Mandate is attached hereto as Appendix A.
Oversight
and Counsel of Management
Although
the CEO and senior management are responsible for the day-to-day management of the business and affairs of the Company, the Board
takes an active and engaged role in working with senior management and overseeing the strategies, risks, governance and affairs
of the Company. Regular access to senior management and employees and timely reports and updates on our business, affairs, strategy
and risks assist the Board in effectively overseeing and counselling management. The Board of Directors and its committees engage
with senior management and employees on a regular basis in both formal and informal settings. Mr. Ovsenek, the President and CEO,
is a director and attends substantially all meetings of the Board and its committees, along with other executive officers and
employees who are invited to attend such meetings. Our Board holds an annual strategy session to review and approve our strategic
plan, including our vision, values and objectives. In addition, our Board holds meetings with management on topics including short,
medium and long-term corporate objectives, strategic risks and mitigation strategies and strategic planning. The Board is provided
with a report on our development and operations at least monthly, and at each Board meeting, the directors are provided with an
update on strategic issues or challenges, risks, our performance, budget, schedule and any trends which may influence or change
our planned development and operations.
Position
Descriptions
The
Board had developed written position descriptions for the Executive Chairman and Lead Director, which applied throughout 2019.
In connection with the appointment of Mr. O’Brien as the independent Chair of the Board effective January 1, 2020, the Board
combined these two position descriptions into a written position description for the independent Chair. The roles and responsibilities
of the chair of each Board committee are set out in each committee’s charter. In addition, the Board has developed a written
position description for the CEO. The position description for the independent Chair of the Board and the Board committee charters
can be found on our website at www.pretivm.com.
Executive
Chairman and Lead Director (2019)
Robert
Quartermain served as our Executive Chairman of the Board throughout 2019 and was responsible for providing overall leadership
to enhance the effectiveness and performance of the Board, the committees of the Board and the individual directors of the Board.
Dr. Quartermain was responsible for ensuring that the Board was provided with timely and relevant information as necessary to
effectively discharge its statutory duties and responsibilities. Dr. Quartermain set the Board’s agenda and presided at meetings
of the Board and at meetings of the Company’s shareholders, provided oversight of the chairs of the Board’s committees
and assisted the committees of the Boards in bringing their recommendations forward for consideration by the Board.
George
Paspalas served as our Lead Director throughout 2019 and was responsible for ensuring the Board’s agenda enabled it to successfully
carry out its duties. Mr. Paspalas facilitated the functioning of the Board independently of our senior executives and provided
independent leadership to the Board and to the individual directors. Mr. Paspalas worked collaboratively with the Executive Chairman
and the CEO with respect to Board governance and Board processes and provided independent leadership to enable the Board to effectively
carry out its duties and responsibilities independently from the senior executives of the Company. Mr. Paspalas provided advice,
counsel and mentorship to the senior executives of the Company and fellow directors and with the Executive Chairman, worked to
facilitate an effective relationship between senior executives of the Company and the directors. Mr. Paspalas ensured that the
independent directors had the opportunity to meet separately without non-independent directors and senior executives of the Company
present, as required.
Independent
Chair of the Board
Mr.
O’Brien is the independent Chair of our Board, since January 1, 2020. In this role, Mr. O’Brien is responsible for facilitating
effective performance by the Board by, among other things: providing overall leadership to enhance Board and Board committee effectiveness
and performance; ensuring that the Board is provided with timely and relevant information as is necessary to discharge its duties
and responsibilities; fostering ethical and responsible decision making; providing advice, counsel and mentorship to other directors
and senior executives; ensuring that the Board meets according to its regular schedule and as otherwise required; ensuring that
the independent directors have the opportunity to meet separately without non-independent directors and senior executives of the
Company present, as required; providing oversight of the chairs of Board committee and assisting committees in bringing their
recommendations forward to the Board for consideration; working to facilitate an effective and productive relationship between
directors and senior executives of the Company; and carrying out such other duties and responsibilities as the Board may request
from time to time.
Chairs
of Board Committees
The
chair of each Board committee is responsible for overseeing the committee in its responsibilities. The Board requires that each
committee chair, among other things, leads the committee in discharging each of the tasks assigned to it under its charter, ensures
effective functioning of the committee, and reports regularly to the Board on the activities of the committee.
Chief
Executive Officer
The
CEO is the highest management authority, responsible for both developing our vision and strategy in consultation with executive
management and for the day-to-day operating activities of our company. Amongst other things, the CEO supervises our senior executives,
interacts and engages with shareholders and other major corporate stakeholders and oversees our financial management. The CEO
works with the Vice Presidents to ensure proper policies are in place, creating short and long-term action plans, establishing
budgets for these plans, monitoring their progress against milestones and goals and associated operating budget. The CEO provides
leadership and direction to all employees and contractors. Throughout 2019, the CEO provided regular reports to the Executive
Chairman and Lead Director on our activities and progress and following the appointment of Mr. O’Brien as the independent
Chair of the Board, provides such reports to the independent Chair of the Board. Further, the CEO provides the Board with updates
as may be required on any material aspects that might influence execution on our strategy and vision.
Orientation
and Continuing Education
We
recognize the importance of ongoing education for directors and as such, directors are encouraged to attend seminars, conferences
and other continuing education programs to help ensure that they stay current on relevant issues such as environmental, social
and governance matters, financial and accounting practices and corporate ethics. Written materials published in periodicals, newspapers
or by experts or professional organizations (including legal and accounting firms) that are likely to be of interest to directors
are routinely forwarded to directors or included as supplemental reading material in Board and Board committee meeting materials.
During
2019, we held continuing education sessions for our directors which focused on providing more in-depth information about the key
aspects of our business. The Board and its committees received a number of presentations in 2019 on topics which included evolving
equity investor landscape trends, mergers and acquisitions, dividend payment policies and share repurchase programs, mine plan
geology, mining, milling, mine site safety, IFRS 16 – Leases, critical audit matter reporting, and audit quality
indicators. All of our directors visited our Brucejack Mine in 2019.
Our
Board holds an annual strategy session to review and approve our strategic plan, including our vision, values and objectives.
In addition, our Board holds meetings with management on topics including short, medium and long-term corporate objectives, strategic
risks and mitigation strategies and strategic planning.
The
Board is provided with a report on our development and operations at least monthly, and at each Board meeting, the directors are
provided with an update on strategic issues or challenges, risks, our performance, budget, schedule and any trends which may influence
or change our planned development and operations.
We
use a secure online Board portal to provide and assist in the flow of information to our Board. All of our charters, mandates
and policies are contained in the Board portal, together with other resources and reports, to enable our directors to perform
more effectively. New directors are able to meet independently with fellow Board members as well as management and are given an
orientation session on the portal system if required.
Board
members and management have access to corporate director education programs which offer courses on topics such as strategic direction
and risks, financial strategy, financial essentials, audit committee effectiveness, risks and disclosure, human resources and
compensation committee performance and enterprise risk oversight.
If
and when a new director is added to our Board, he or she is given the opportunity to become familiar with us through an orientation
session that covers our strategy, business and operations and by meeting with multiple layers of our management, other directors,
officers and employees. New directors are also provided with access to outside legal counsel. Our Board portal contains our Board
Mandate and Board committee charters, all of our policies, reports and historical public disclosure for reference by a new director.
Ethical
Business Conduct
Our
Board advocates a high standard of ethics and integrity for our entire Company. As part of its responsibility for our stewardship,
our Board seeks to foster a culture of ethical conduct by requiring us to carry out our business in line with high business and
moral standards and applicable legal, regulatory and financial requirements.
We
have adopted a Code of Business Conduct and Ethics (the “Code of Conduct”), which applies to our directors, officers,
employees, contractors and consultants, and which can be found under our profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov,
and on our website at www.pretivm.com. The Code of Conduct was most recently updated on October 30, 2019 to make minor clarifications
to existing provisions. The Code of Conduct addresses general business ethical principles, conflicts of interests, special ethical
obligations for employees with financial reporting responsibilities, disclosure commitments and practices, confidentiality of
corporate information, protection and proper use of corporate assets, compliance with laws, rules and regulations, reporting of
any illegal or unethical behavior and other relevant issues. Under our Code of Conduct, members of the Board and executive officers
are required to disclose any conflict of interest or potential conflict of interest to the entire Board, and in respect of Board
members, to any committee on which they serve. Directors are to recuse themselves from participation in any decision of the Board
or a committee thereof in any matter in which there is a conflict of interest or potential conflict of interest. If the Board
determines that a potential conflict of interest cannot be cured, the individual will be asked to resign from their position with
us.
The
Corporate Governance and Nominating Committee is responsible for assisting the Board in dealing with conflict of interest issues
as contemplated by the Code of Conduct, reviewing and updating the Code of Conduct periodically, reviewing the system that management
has established to enforce the Code of Conduct and reviewing management’s monitoring of our compliance with the Code of Conduct.
In
addition to our Code of Conduct, we have adopted and implemented a number of other policies to encourage and promote a culture
of ethical business conduct. Each of our directors, officers and employees are required annually to acknowledge his or her respective
obligations under our Code of Conduct as well as other policies, including the Complaint Reporting Whistle Blower Policy, Corrupt
Practices Policy, Corporate Disclosure and Trading Policy, Workplace Discrimination, Bullying and Harassment Policy and Information
Technology Systems Use Policy (“IT Usage Policy”), all of which are described below.
Complaint
Reporting and Whistle Blower Policy: We have procedures in place for receiving, handling and retaining of complaints regarding
improper activities including complaints relating to accounting, internal controls, auditing or other matters. As well, the Complaint
Reporting and Whistle Blower Policy sets out the procedures we have in place for employees and others to submit confidential anonymous
concerns regarding improper activities, including questionable accounting, auditing or other matters. The Complaint Reporting
and Whistle Blower Policy was most recently updated on October 30, 2019, to, among other things: expand reporting procedures by
including a phone and web-based complaint and whistle blower reporting system that is managed by an independent third party; broaden
the scope of reportable complaints; and reiterate our assurance that those who raise complaints in good faith will be protected
from retaliation.
Corrupt
Practices Policy: We have a policy in place to ensure that the Company, our directors, officers, employees and contractors
do not participate in the corruption of foreign public officials and to ensure compliance with the Corruption of Foreign Public
Officials Act (Canada), Foreign Corrupt Practices Act (United States) and other laws prohibiting improper payments
to domestic and foreign officials.
Corporate
Disclosure and Trading Policy: We have a policy and procedures in place to ensure that the Company and our directors, officers,
employees, contractors and consultants satisfy the legal and ethical obligations related to the proper, effective and timely disclosure
of corporate information and the trading of securities with respect to such information.
Workplace
Discrimination, Bullying and Harassment Policy: We promote a work environment characterized by professionalism, collegiality
and cooperation. Our Workplace Discrimination, Bullying and Harassment Policy has been developed to ensure that all individuals
are treated with respect and dignity, by prohibiting conduct or comment that constitutes discrimination, bullying or harassment.
We do not tolerate discrimination, bullying or harassment in any interactions connected to work with the Company, and any retaliation.
The Workplace Discrimination, Bullying and Harassment Policy serves to assist all of our directors, officer, employees, contractors
and consultants in identifying and preventing workplace discrimination, bullying and harassment and provides procedures for reporting,
investigating and resolving incidents and complaints. Our Workplace Discrimination, Bullying and Harassment Policy was most recently
updated on October 30, 2019 (previously the Workplace Bullying and Harassment Policy) to, among other things, broaden its scope
to cover discrimination.
IT
Usage Policy: Our IT Usage Policy covers all use of computers, servers, laptops, tablets, mobile phones, networking equipment,
printers, Wi-Fi, Internet, USB drives, radios, telephones, satellite systems and similar technology (“IT Systems”)
we own or that are located at our workplace sites and applies to all employees, contractors, visitors and other individuals who
have access to or use of any of our IT Systems. The IT Usage Policy covers appropriate use, social media, care and reporting,
licensing of software and services, privacy, backups, encryption and data security with respect our IT Systems.
Nomination
of Directors
The
Corporate Governance and Nominating Committee has the responsibility of, among other things, recommending to the Board, on an
annual basis, nominees for election as directors for the next annual meeting of shareholders as well as nominees for appointment
to committees of the Board. The Corporate Governance and Nominating Committee is composed entirely of independent directors. Additional
information regarding our Corporate Governance and Nominating Committee is set out under the heading “- Committees –
Corporate Governance and Nominating Committee” in this Information Circular.
The
needs of the Board are analyzed when vacancies arise and from time to time as deemed appropriate, and the Corporate Governance
and Nominating Committee is responsible for recommending nominees who meet such needs. The Corporate Governance and Nominating
Committee retains outside advisors from time to time as deemed necessary, to assist in identifying new candidates for Board nomination
or appointment. In reviewing potential candidates, the Corporate Governance and Nominating Committee reviews the competencies,
skills and experience of potential candidates against those that the Board and the committee consider the Board as a whole should
possess. This assessment involves the exercise of the Corporate Governance and Nominating Committee’s independent judgment
regarding potential candidate qualifications, skills and experience, with a view to the effective functioning of the Board. In
addition, the Corporate Governance and Nominating Committee considers other relevant criteria, including independence, diversity,
culture fit and applicable legal and regulatory requirements.
Each
of our directors was nominated or appointed to our Board for his or her respective area of expertise. By using a Board composed
of experienced professionals with a wide range of financial, exploration, operational and business expertise, we ensure that the
Board operates effectively and efficiently for our business.
The
following skills matrix table demonstrates the skills of our current Board:
| |
O’Brien |
Paspalas |
Ovsenek* |
Smith |
Birkey |
Tejani |
Bienenstock |
Hull |
| Relevant
Industry Skills |
|
| Mining
Industry Experience |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
| Exploration/Geology |
|
Y |
|
|
|
|
|
|
| Construction/Operations |
Y |
Y |
Y |
|
|
|
|
Y |
| Environment,
Safety & Sustainability |
Y |
Y |
Y |
|
|
|
|
Y |
| General
Business Skills |
|
| Audit/Finance |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
| Capital
Markets & Corporate Finance |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
| Legal/Governance |
Y |
|
Y |
Y |
Y |
Y |
Y |
|
| Human
Resources & Executive Compensation |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
| Risk
Management |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
| Information
Technology |
|
|
Y |
Y |
|
|
|
|
| Public
Reporting & Investor Communication |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
Y |
| * | In
connection with the leadership transition plan announced on February 12, 2020, Mr. Ovsenek
will not stand for re-election as a director at the Meeting. |
All
of our directors are actively involved in their respective areas of expertise and have full access to our management.
We
have a Majority Vote Policy, which applies to all of our directors. Information with respect to the Majority Vote Policy is set
out in this Information Circular under the heading “Particulars of Matters to be Acted Upon - Election of Directors -
Majority Vote for Directors”.
Director
Term Limits and Other Mechanisms of Board Renewal
We
do not impose term limits for our directors as we feel that term limits inherently discount the value of experience and continuity
on our Board and of directors with deep knowledge of the Company and our business.
Compensation
of Directors
Our
approach to Board compensation is competitive at the median of our peers, reflects best practice and takes into account governance
trends. Comparative director compensation data for our peer companies is accumulated and reviewed annually by the Compensation
Committee. For additional information regarding the practices, policies and procedures with respect to the compensation of our
directors and officers, please see “Compensation Discussion & Analysis”, “Named Executive Officer
Compensation” and “Director Compensation” in this Information Circular.
The
Compensation Committee, which is composed entirely of independent directors, is responsible for discharging the Board’s duties
and responsibilities relating to compensation and benefits of our directors and executive officers. Additional information regarding
our Compensation Committee is set out under the heading “- Committees – Compensation Committee” in this
Information Circular.
Assessments
Annual
evaluations are conducted by the Corporate Governance and Nominating Committee. Questionnaires are completed by all directors
to assess the effectiveness of the Board as a whole, of each committee, of each individual director as well as a self-evaluation.
The
results are assembled by our Corporate Secretary on an anonymous basis and then reviewed by both the Corporate Governance and
Nominating Committee and the Chair of the Board. The Chair of the Board then meets with each director to review and discuss the
questionnaire results and then reports on the meetings to the Corporate Governance and Nominating Committee.
The
Corporate Governance and Nominating Committee then makes a final report to the Board regarding the effectiveness of the Board
and recommends improvements to be adopted and implemented.
Representation
of Women on the Board and in Executive Officer Positions
Our
workforce is made up of individuals of varied gender, background, skills, values and experiences. Our Diversity Policy, adopted
in 2015, recognizes that a diverse and inclusive environment that values the varied perspectives of its workforce facilitates
a broader exchange of ideas and leads to greater organizational strength. In order to attract and retain a diverse workforce,
we are committed to providing an environment which embraces diversity and in which all employees are treated with fairness and
respect and have equal opportunities available to them. Our commitment to diversity is a commitment to equality and to treating
all individuals with fairness and respect.
We
believe that diversity makes good sense for business and a diversified workforce and inclusive work culture enhances innovation,
increases productivity and, ultimately, contributes to the achievement of our Corporate Objectives. We believe that our commitment
to diversity will enable us to attract individuals with the best skills and attributes and to develop a workforce whose diversity
reflects the communities in which we operate.
Diversity,
including gender diversity, is considered when evaluating candidates for director and executive positions. Specific targets have
not been set at this time as potential nominees are evaluated based on their individual merits and experience while taking into
account the needs of the Company.
As
at the date of this Information Circular, 2 of 8 (25%) of our directors are female and 1 of 5 (20%) of our NEOs is female.
Committees
The
following details our Board committees and their current members:
| Audit |
Compensation |
Corporate
Governance
and Nominating |
Sustainability
and Technical |
| David
Smith (Chair) |
Robin
Bienenstock (Chair) |
Peter
Birkey (Chair) |
George
Paspalas (Chair) |
| Peter
Birkey |
George
Paspalas |
Faheem
Tejani |
Jeane
Hull |
| Faheem
Tejani |
David
Smith |
Robin
Bienenstock Jeane Hull |
Faheem
Tejani |
Our
Board recognizes that the Company has evolved from that of an exploration company to an operating company and as such, continually
evaluates the need for appropriate committees and/or sub-committees.
At
each regularly scheduled committee meeting, the committee members hold an in-camera session at which non-independent directors
and members of management are not in attendance.
All
committee charters are re-assessed annually by each respective committee and the full text of each of our committee charters can
be found on our website at www.pretivm.com.
Audit
Committee
Pursuant
to its charter, our Audit Committee shall be comprised of at least three independent directors, each of whom is “financially
literate”, as such term is defined in NI 52-110. The current members of the Audit Committee are David Smith (Chair), Peter
Birkey and Faheem Tejani.
The
purpose of our Audit Committee is to:
| (a) | Assist
the Board in fulfilling its oversight responsibilities relating to (i) the quality and
integrity of our financial statements, financial reporting process and systems of financial
controls and disclosure controls regarding risk management, finance, accounting, and
legal and regulatory compliance, (ii) the independence and qualifications of our independent
accountants and review of their audit efforts and (iii) the development and implementation
of policies and processes regarding corporate governance matters. |
| (b) | Provide
an open avenue of communication between the independent accountants, our financial and
senior management and the Board. |
| (c) | Prepare
any reports required to be prepared pursuant to the rules of any stock exchange on which
our Shares are listed and any securities commission or other regulatory authority having
jurisdiction. |
In
fulfilling its purpose, the Audit Committee is responsible for, among other things:
| (a) | meeting
with our CEO and CFO and our independent auditors to review and inquire into matters
affecting financial reporting, the system of internal accounting and financial controls
and procedures and the audit procedures and audit plans; |
| (b) | the
appointment (subject to shareholder approval), review, compensation, and retention, and
oversight of the work, of the independent accountants engaged for the purpose of preparing
and issuing an audit report or performing other audit, review or attest services for
the Company; |
| (c) | periodically
reviewing and discussing with the independent accountants all significant relationships
the independent accountants have with the Company to determine the independence of the
independent accountants, including a review of service fees for audit and non-audit services; |
| (d) | evaluating
the effectiveness of our process for assessing significant risks or exposures over financial
reporting and disclosure and the steps our management has taken to monitor, control and
minimize such risks; |
| (e) | considering
the audit scope and plan of the independent accountants and reviewing the coordination
of the audit effort; |
| (f) | reviewing
with the independent accountants, out of the presence of management, (i) the adequacy
of our internal controls and disclosure controls including our computerized information
systems and security, (ii) the truthfulness and accuracy of our financial statements,
and (iii) any related significant findings and recommendations of the independent accountants
and management’s responses thereto; |
| (g) | reviewing,
prior to publication, all filings with regulatory authorities and any other publicly
disclosed information containing the Company’s financial statements, including Management’s
Discussion and Analysis, any certification, report, opinion or review rendered by the
independent accountants, any press releases announcing earnings and all financial information
and earnings guidance (including any forecast of all-in sustaining or other costs, but
excluding any forward looking metal(s) production guidance) intended to be provided to
analysts and the public or to rating agencies, and considering whether the information
contained in these documents is consistent with the information contained in the financial
statements; |
| (h) | maintaining,
reviewing and updating procedures for (i) the receipt, retention and treatment of complaints
received by the Company regarding accounting, internal accounting controls, or auditing
matters and (ii) the confidential, anonymous submissions by employees of the Company
regarding questionable accounting or auditing matters; and |
| (i) | reviewing
with management the adequacy of the insurance and fidelity bond coverages, reported contingent
liabilities, and management’s assessment of contingency planning, management’s
plans regarding any changes in accounting practices or policies and the financial impact
of such changes, any major areas in management’s judgment that have a significant
effect upon the financial statements of the Company, and any litigation or claim, including
tax assessments, that could have a material effect upon the financial position or operating
results of the Company. |
The
Chair of the Audit Committee is generally responsible for overseeing the Audit Committee in its responsibilities as outlined in
the Audit Committee Charter. The Chair’s duties and responsibilities include presiding at each meeting of the Audit Committee,
referring specific matters to the Board in the case of a deadlock on any matter or vote, receiving and responding to all requests
for information from independent auditors, leading the Audit Committee in discharging its tasks and reporting to the Board on
the activities of the Audit Committee.
The
Audit Committee is required to meet at least quarterly or more frequently as circumstances dictate. The Audit Committee has the
authority to retain, at the Company’s expense, its own legal counsel, accountants and other advisors that it believes, in
its sole discretion, are needed to carry out its duties and responsibilities. Further, the committee has the authority to conduct
investigations that it believes, in its sole discretion, are necessary to carry out its responsibilities, to take whatever actions
it deems appropriate to foster an internal culture that is committed to maintaining quality financial reporting, sound business
risk practices and ethical behavior within the Company, and to request any officer, director, employee or consultant, outside
legal counsel and independent accountants to meet with the committee and any of its advisors and to respond to their inquiries.
NI
52-110 requires our Audit Committee to meet certain requirements as well as requires us to disclose certain information regarding
the Audit Committee. The required information has been disclosed in our AIF under the headings “Audit Committee Information”
and “Appendix 1 - Audit Committee Charter” (see “Additional Information” at the end of this
Information Circular). Our AIF is available under our profile on SEDAR at www.sedar.com and is available on our website at www.pretivm.com.
Compensation
Committee
Pursuant
to its charter, our Compensation Committee shall be comprised of at least three independent directors. The current members of
the Compensation Committee are Robin Bienenstock (Chair), George Paspalas and David Smith.
The
main objective of the Compensation Committee is to discharge the responsibilities of the Board relating to the compensation and
benefits of our executive officers and directors. In doing so, the Compensation Committee ensures that we have an executive compensation
plan that is motivational and competitive and that will attract and inspire the performance of executive officers of a caliber
that will ensure and enhance our sustainability, profitability and growth.
In
fulfilling its objective, the Compensation Committee is responsible for, among other things:
| (a) | reviewing
and approving on an annual basis our Corporate Objectives relevant to our NEO’s
compensation, evaluating the performance of the CEO and executive officers in light of
those goals and objectives and setting, or recommending to the Board, the compensation
level for the CEO and executive officers based on this evaluation. In determining the
long-term incentive component of CEO and executive compensation, the Compensation Committee
considers, along with such other factors as it may deem relevant, the Company’s
performance, shareholder returns, the value of similar incentive awards to executive
officers at comparable companies and the awards given to the executive officers in past
years; |
| (b) | reviewing
and approving on an annual basis the adequacy and form of compensation and benefits of
the directors, and making recommendations to the Board in that regard; |
| (c) | making
recommendations to the Board with respect to our Stock Option Plan, RSU Plan and any
other incentive compensation plans and equity-based plans, including recommendations
as to grants pursuant to such plans and the adoption or amendment of such plans; |
| (d) | determining
the recipients of, and the nature and size of, share compensation awards and bonuses
granted from time to time, in compliance with applicable securities law, stock exchange
and other regulatory requirements; and |
| (e) | reviewing
all executive compensation disclosure before the Company publicly discloses this information. |
The
Compensation Committee is required to meet as many times as it deems necessary to carry out its duties effectively, but not less
frequently than four times per year. The committee has the authority to retain outside advisors, including to assist in the evaluation
of compensation of senior management and directors and to determine the terms of engagement and the extent of funding necessary
for payment of compensation to any such advisor.
Corporate
Governance and Nominating Committee
Pursuant
to its charter, our Corporate Governance and Nominating Committee shall be comprised of at least three independent directors and
serves to assist the Board in fulfilling its corporate governance oversight responsibilities. The current members of the Corporate
Governance and Nominating Committee are Peter Birkey (Chair), Faheem Tejani, Robin Bienenstock and Jeane Hull.
In
fulfilling its objective, the Corporate Governance and Nominating Committee is responsible for, among other things:
| (a) | developing
and recommending to the Board corporate governance policies and procedures for the Company,
reviewing and assessing the adequacy of the Company’s corporate governance policies,
practices and procedures annually, and making recommendations to the Board with respect
to any changes deemed appropriate; |
| (b) | reviewing
the practices and procedures of the Board in light of ongoing developments in securities
law, stock exchange and regulatory requirements and industry best practices relating
to corporate governance; |
| (c) | reviewing
the adequacy of our systems in place to verify compliance with regulatory, corporate
governance and disclosure requirements; |
| (d) | examining
the size and composition of the Board and its committees and recommending adjustments
from time to time with a view to enabling the Board’s size and composition to facilitate
effective decision making; |
| (e) | identifying
and assessing the necessary and desirable competencies and characteristics for Board
membership and regularly assessing those competencies and characteristics, seeking and
identifying individuals qualified to become members of the Board and recommending such
nominees to the Board for appointment or election, and making recommendations with respect
to membership on committees of the Board; |
| (f) | reviewing
the adequacy of the Board’s structures and procedures with a view to facilitating
the Board to function with the proper degree of independence from management; |
| (g) | identifying
and assessing the necessary and desirable competencies and characteristics for Board
membership, regularly assessing the extent to which those competencies and characteristics
are represented on the Board, identifying individuals qualified to become members of
the Board, and making recommendations to the Board for appointment or nomination of director
candidates and with respect to membership on Board committees; |
| (h) | facilitating
the Board’s independence from management and providing a forum without management
present to receive expressions of concern; |
| (i) | encouraging
and facilitating continuing education programs for directors; |
| (j) | receiving
comments from all directors as to the Board’s performance, overseeing the process
assessing the effectiveness of the Board and Board committees as a whole, assessing annual
the contribution and effectiveness of each individual director as well as the competencies
and characteristics each individual director is expected to bring to the Board; and |
| (k) | assisting
the Board in dealing with conflict of interest issues. |
The
Corporate Governance and Nominating Committee is required to meet as many times as it deems necessary to carry out its duties
effectively, but not less frequently than twice per year. The committee has the authority to retain outside advisors to assist
it in carrying out its duties and to determine the terms of engagement and the extent of funding necessary for payment of compensation
to any such advisor.
Sustainability
and Technical Committee
Pursuant
to its charter, our Sustainability and Technical Committee shall be comprised of a majority of independent directors. The current
members of the Sustainability and Technical Committee are George Paspalas (Chair), Jeane Hull and Faheem Tejani.
The
purpose of the Sustainability and Technical Committee is to assist the Board in carrying out its responsibilities with respect
to: reviewing the Company’s sustainability and technical matters, including environmental, health and safety and social matters,
policies and programs and overseeing the Company’s performance in such areas; reviewing mining operations and production;
overseeing performance of mining operations and production, and of development, expansion and exploration programs; and advising
on business development opportunities.
In
fulfilling its objective, the Sustainability and Technical Committee is responsible for, among other things:
| (a) | reviewing
and monitoring the sustainability (including environmental, health and safety) policies,
systems and activities of the Company on behalf of the Board and ensuring that the principle
areas of sustainability risk and potential impacts are identified and that the Company
is in compliance with applicable laws, regulations and the conditions of applicable permits
and licenses; |
| (b) | reviewing
quarterly and special environmental, health and safety reports prepared by management
and reviewing the results of environment, health and safety audits conducted by management
and outside advisors; |
| (c) | reviewing
the assumptions and methodology underpinning of the Company’s mineral reserve and
mineral resource estimates and satisfying itself that the judgement exercised in preparing
such estimates was reasonable, and, if satisfactory, recommending to the Board approval
of technical reports and annual mineral reserve and mineral resource estimates; |
| (d) | reviewing
technical and operational matters on behalf of the Board, which include (i) all production
guidance (i.e. any forward-looking metal(s) production guidance) intended to be provided
to analysts and the public, (ii) the annual budget and the life of mine plan for each
operating mine, (iii) significant technical risks, mitigation strategies and opportunities
associated with the Company’s mines and projects, (iv) exploration, geological,
mining, metallurgical and other technical issues of significant concern, and (v) technical
merits associated with potential new projects or acquisitions; |
| (e) | reviewing
the scope of potential liabilities in the areas of focus of the committee and the adequacy
of the systems that are in place to manage those liabilities; and |
| (f) | making
visits, as the committee or individually, to our Brucejack Mine in order to become familiar
with the nature of the operations, and reviewing relevant objectives, procedures and
performances with respect to sustainability matters, and technical and operational matters. |
The
Sustainability and Technical Committee is required to meet as often as it deems necessary to carry out its duties effectively,
but not less frequently than once per year. The committee has the authority to retain outside advisors to assist it in carrying
out its duties and to determine the terms of engagement and the extent of funding necessary for payment of compensation to any
such advisor.
Shareholder
Outreach
The
Board and management of Pretivm believe in the importance of communicating with its shareholders, as open and constructive dialogue
can improve Board and management effectiveness and improve corporate performance. Pretivm communicates with shareholders and other
stakeholders through a variety of channels, including through its annual and quarterly reports, press releases, annual information
form and other public disclosure, website and industry conferences. Pretivm also holds a quarterly earnings call.
The
Board communicates with our shareholders on an annual basis through the management information circular, which provides information
about the Board, individual directors, Pretivm’s governance policies and practices and executive officer and independent
director compensation policies and practices, and through the annual shareholders meeting. The Board is also exploring various
options to engage our shareholders on a more formal basis, including through direct shareholder engagement meetings to discuss
shareholder views on key areas and to update shareholders on the Board’s focus and work related to governance, compensation
and other relevant matters.
ADDITIONAL
INFORMATION
Additional
information relating to the Company can be found under our profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
Financial
information is provided in our comparative financial statements and MD&A for our most recently completed financial year, copies
of which have been mailed to those shareholders who requested them, and which are filed and available on our website at www.pretivm.com
and under our profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
Shareholders
may request copies of our financial statements and MD&A by contacting Investor Relations via telephone at 604-558-1784 or
via email at invest@pretivm.com.
CURRENCY
All
dollar amounts in this Information Circular are expressed in Canadian dollars unless otherwise indicated. The Company’s functional
and financial statement presentation currency is the United States dollar. The following table sets forth, for each period indicated,
the high and low exchange rates for Canadian dollars expressed in United States dollars, the average of such exchange rate during
such period, and the exchange rate at the end of such period. These rates are based on the indicative rate of exchange reported
by the Bank of Canada.
| | |
Fiscal
Year Ended December 31, | |
| | |
2017 | | |
2018 | | |
2019 | |
| Rate
at the end of period | |
$ | 0.7971 | | |
$ | 0.7330 | | |
$ | 0.7699 | |
| Average rate during period | |
$ | 0.7708 | | |
$ | 0.7721 | | |
$ | 0.7537 | |
| Highest rate during
period | |
$ | 0.8245 | | |
$ | 0.8138 | | |
$ | 0.7699 | |
| Lowest rate during
period | |
$ | 0.7276 | | |
$ | 0.7330 | | |
$ | 0.7353 | |
APPENDIX
A
PRETIUM
RESOURCES INC.
MANDATE OF THE BOARD OF DIRECTORS
Adopted
by the Board of Directors on December 19, 2010 and as amended on April 7, 2017
| I. | ROLE
AND RESPONSIBILITIES |
| 1. | The
Board of Directors (the “Board”) is responsible for the stewardship of Pretium
Resources Inc. (the “Company”). This requires the Board to oversee the conduct
of the business and supervise management, which is responsible for the day-to-day conduct
of the business. |
| 2. | The
Board is responsible for the adoption of a strategic planning process and the approval
and review, at least annually, in an all-day in person strategy session to review the
Company’s strategic business plan proposed by management, including a statement
of the vision, mission and values, and to adopt such a plan with such changes as the
Board deems appropriate. The plan and discussion which takes into account, among other
things, the opportunities and risks of the business must be presented to the Board so
as to provide enough time for management to resubmit and review the plan and incorporate
a budget that takes into account the strategic objectives of the Company. |
| 3. | The
Board shall hold meetings on at least a quarterly basis. |
| 4. | The
Board shall review and measure corporate performance against strategic plans, senior
management objectives, financial plans and quarterly budgets. |
| 5. | The
Board is responsible for the identification of the principal risks of the Company’s
business and overseeing the implementation of appropriate systems to manage these risks. |
| 6. | The
Board is responsible for succession planning, including appointing, training and monitoring
senior management and, in particular, the CEO. |
| 7. | The
Board is responsible for satisfying itself as to the integrity of the CEO and other senior
officers and that the CEO and the other senior officers create a culture of integrity
throughout the Company. |
| 8. | The
Board is responsible for the Company’s communication policies, which: |
| (a) | address
how the Company interacts with analysts, investors, other key stakeholders and the public; |
| (b) | contain
measures for the Company to comply with its continuous and timely disclosure obligations
and to avoid selective disclosure; and |
| (c) | are
reviewed at least annually. |
| 9. | The
Board is responsible for the integrity of the Company’s internal control and management
information systems. |
| 10. | The
Board is responsible for acting in accordance with all applicable laws, the Company’s
Articles and the Company’s Code of Business Conduct and Ethics. |
| 11. | The
Board and each individual director is responsible for acting in accordance with the obligations
imposed by the BCBCA. In exercising their powers and discharging their duties,
each director shall: |
| (a) | act
honestly and in good faith with a view to the best interests of the Company; |
| (b) | exercise
the care, diligence and skill that a reasonably prudent person would exercise in comparable
circumstances; |
| (c) | exercise
independent judgment regardless of the existence of relationships or interests which
could interfere with the exercise of independent judgment; and |
| (d)
(i) | disclose
to the Company, in writing or by having it entered in the minutes of meetings of directors,
the nature and extent of any interest that the director has in a material contract or
material transaction, whether made or proposed, with the Company if the director is a
party to the contract or transaction, is a director or officer, or an individual acting
in a similar capacity, of a party to the contract or transaction, or, has a material
interest in a party to the contract or transaction; and |
| (ii) | such
director shall refrain from voting on any resolution to approve such contract or transaction
unless it relates to the directors’ remuneration in that capacity, is for the directors’
indemnity or insurance or is a contract or transaction with an affiliate. |
| (e) | Demonstrate
a willingness to listen as well as to communicate their opinions, openly and in a respectful
manner. |
| 12. | The
Board and each individual director is responsible for making all reasonable efforts to
attend meetings of the Board as required, and to review in advance all meeting materials
distributed in connection therewith. |
| 13. | The
Board has the authority to appoint a managing director or to establish committees and
appoint directors to act as managing director or to be members of these committees. The
Board may not delegate to such managing director or committees the power to: |
| (a) | submit
to the shareholders any question or matter requiring the approval of the shareholders; |
| (b) | fill
a vacancy among the directors or in the office of auditor, or appoint additional directors; |
| (c) | issue
securities, except as authorized by the directors; |
| (d) | issue
shares of a series, except as authorized by the directors; |
| (f) | purchase,
redeem or otherwise acquire shares issued by the Company; |
| (g) | pay
a commission to any person in consideration of his purchasing or agreeing to purchase
shares of the Company from the Company or from any other person, or procuring or agreeing
to procure purchasers for any such shares; |
| (h) | approve
a management proxy circular, take-over bid circular or directors’ circular; |
| (i) | approve
financial statements to be put before an annual meeting of shareholders; and |
| (j) | adopt,
amend or repeal bylaws. |
| 14. | The
matters to be delegated to committees of the Board and the constitution of such committees
are to be assessed annually or more frequently, as circumstances require. From time to
time the Board may create an ad hoc committee to examine specific issues on behalf of
the Board. There are currently four committees of the Board: Audit Committee, Compensation
Committee, Corporate Governance and Nominating Committee and Sustainability and Technical
Committee. Each committee has a charter approved by the Board. |
| 1. | From
time to time the Board or an appropriate committee of the Board shall review the size
of the Board to ensure that the size facilitates effective decision-making. |
| 2. | The
Board shall be composed of a majority of directors who qualify as “unrelated”
or “independent” directors under applicable securities laws and applicable
stock exchange rules. The determination of whether an individual director is “unrelated”
or “independent” is the responsibility of the Board. |
| 3. | If
at any time the Company has a shareholder with the ability to exercise a majority of
the votes for the election of the Board (a “Significant Shareholder”), the
Board will include a number of directors who do not have interests in or relationships
with either the Company or such Significant Shareholder and who fairly reflects the investment
in the Company by shareholders other than such Significant Shareholder. |
| 4. | The
Board should, as a whole, have the following competencies and skills: |
| (a) | knowledge
of the mining industry; |
| (b) | knowledge
of current corporate governance standards; |
| (c) | technical
and market knowledge sufficient to understand the challenges and risks associated with
the development of the Company; and |
| (d) | financial
and accounting expertise. |
| III. | PROCEDURES
TO ENSURE EFFECTIVE OPERATION |
| 1. | The
Board recognizes the importance of having procedures in place to ensure the effective
and independent operation of the Board. |
| 2. | If
the Chair of the Board is not a member of management, the Chair shall be responsible
for overseeing that the Board discharges its responsibilities. If the Chair is a member
of management, responsibility for overseeing that the Board discharges its responsibility
shall be assigned to a non-management director. |
| 3. | The
Board has complete access to the Company’s management. The Board shall require timely
and accurate reporting from management and shall regularly review the quality of management’s
reports. |
| 4. | An
individual director may engage an external adviser at the expense of the Company in appropriate
circumstances. Such engagement is subject to the approval of the Corporate Governance
and Nominating Committee. |
| 5. | The
Board shall provide an orientation and education program for new recruits to the Board
as well as continuing education on topics relevant to all directors. |
| 6. | The
Board shall institute procedures for receiving shareholder feedback. |
| 7. | The
Board requires management to run the day-to-day operations of the Company, including
internal controls and disclosure controls and procedures. |
| 8. | The
non-management directors shall meet at least twice yearly without any member of management
being present. |
| 9. | The
Board sets appropriate limits on management’s authority. Accordingly, the following
decisions require the approval of the Board: |
| (a) | the
approval of the annual and quarterly (unless delegated to the Audit Committee) financial
statements; |
| (b) | the
approval of the annual budget; |
| (c) | any
equity or debt financing, other than debt incurred in the ordinary course of business
such as trade payables; |
| (d) | entering
into any license, strategic alliance, partnership or other agreement outside the ordinary
course of business; |
| (e) | the
acquisition and assignment of material assets (including intellectual property and fixed
assets) outside of the ordinary course of business; |
| (f) | the
creation of subsidiaries; |
| (g) | the
creation of new Company bank accounts; |
| (i) | proxy
solicitation material; |
| (j) | projected
issuances of securities from treasury by the Company as well as any projected redemption
of such securities; |
| (k) | any
material change to the business of the Company; |
| (l) | the
appointment of members on any committee of the Board; |
| (m) | capital
expenditures in excess of CAD$1,000,000 outside of the annual budget; |
| (n) | entering
into any professional engagements where the fee is likely to exceed CAD$1,000,000 outside
of the annual budget. |
| (o) | entering
into any arrangements with banks or other financial institutions relative to borrowing
(either on a term or revolving basis) of amounts in excess of CAD$1,000,000 outside the
annual budget; |
| (p) | entering
into any guarantee or other arrangement such that the Company is contingently bound financially
or otherwise in excess of CAD$250,000 other than product guarantees outside the annual
budget; |
| (q) | the
appointment or discharge of any senior officer of the Company; |
| (r) | entering
into employment contracts with any senior officers; and |
| (s) | initiating
or defending any lawsuits or other legal actions. |
| 10. | The
Board, together with the CEO and with the assistance of the Corporate Governance and
Compensation Committees, shall develop position description for the CEO. The Board, together
with the CEO, shall also approve or develop the corporate objectives that the CEO is
responsible for meeting and the Board shall assess the CEO against these objectives. |
