SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of March, 2017
Commission File Number: 001-13382
KINROSS GOLD CORPORATION
(Translation of registrants name into English)
17 th Floor, 25 York Street,
Toronto, Ontario M5J 2V5
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40F:
Form 20-F o |
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Form 40-F x |
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o
Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o
Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrants home country), or under the rules of the home country exchange on which the registrants securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrants security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.
Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes o |
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If Yes is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2b:
This Current Report on Form 6-K, dated March 31, 2017 is specifically incorporated by reference into Kinross Gold Corporations Registration Statements on Form S-8 (Registration Nos. 333-180824, 333-180823 and 333-180822), filed on April 19, 2012.
This report on Form 6-K is being furnished for the sole purpose of providing a copy of the materials mailed to shareholders in connection with the annual meeting of shareholders to be held on May 3, 2017.
INDEX
Table of Contents
SIGNATURES
EXHIBIT INDEX
99.1 Form of Proxy
99.2 Notice and Access
99.3 Management Information Circular
SIGNATURES
Pursuant to the requirements of Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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KINROSS GOLD CORPORATION |
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Signed: |
//Kathleen M. Grandy// |
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Vice President, Assistant General Counsel and Corporate Secretary |
March 31, 2017
Exhibit 99.1
Security Class Holder Account Number -------Fold Form of Proxy - Annual General Meeting to be held on May 3, 2017 This Form of Proxy is solicited by and on behalf of Management. Notes to proxy 1. Every holder has the right to appoint some other person or company of their choice, who need not be a holder, to attend and act on their behalf at the meeting or any adjournment or postponement thereof. If you wish to appoint a person or company other than the persons whose names are printed herein, please insert the name of your chosen proxyholder in the space provided (see reverse). If the securities are registered in the name of more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered should sign this proxy. If you are voting on behalf of a corporation or another individual you must sign this proxy with signing capacity stated, and you may be required to provide documentation evidencing your power to sign this proxy. This proxy should be signed in the exact manner as the name(s) appear(s) on the proxy. If this proxy is not dated, it will be deemed to bear the date on which it is mailed by Management to the holder. The securities represented by this proxy will be voted as directed by the holder, however, if such a direction is not made in respect of any matter, this proxy will be voted as recommended by Management. The securities represented by this proxy will be voted in favour or withheld from voting or voted against each of the matters described herein, as applicable, in accordance with the instructions of the holder, on any ballot that may be called for and, if the holder has specified a choice with respect to any matter to be acted on, the securities will be voted accordingly. This proxy confers discretionary authority in respect of amendments or variations to matters identified in the Notice of Meeting or other matters that may properly come before the meeting or any adjournment or postponement thereof. This proxy should be read in conjunction with the accompanying documentation provided by Management. 2. 3. 4. 5. 6. 7. -------Fold 8. Proxies submitted must be received by 10:00 a.m., Eastern Time, on May 1, 2017. VOTE USING THE TELEPHONE OR INTERNET 24 HOURS A DAY 7 DAYS A WEEK! To Vote Using the Telephone To Vote Using the Internet To Receive Documents Electronically Call the number listed BELOW from a touch tone telephone. 1-866-732-VOTE (8683) Toll Free Go to the following web site: www.investorvote.com Smartphone? Scan the QR code to vote now. You can enroll to receive future securityholder communications electronically by visiting www.investorcentre.com and clicking at the bottom of the page. If you vote by telephone or the Internet, DO NOT mail back this proxy. Voting by mail may be the only method for securities held in the name of a corporation or securities being voted on behalf of another individual. Voting by mail or by Internet are the only methods by which a holder may appoint a person as proxyholder other than the Management nominees named on the reverse of this proxy. Instead of mailing this proxy, you may choose one of the two voting methods outlined above to vote this proxy. To vote by telephone or the Internet, you will need to provide your CONTROL NUMBER listed below. CONTROL NUMBER 8th Floor, 100 University Avenue Toronto, Ontario M5J 2Y1 www.computershare.com
Appointment of Proxyholder I/We, being holder(s) of Kinross Gold Corporation hereby appoint: John E. Oliver, or failing him, Kathleen M. Grandy Print the name of the person you are appointing if this person is someone other than the Management Nominees listed herein. OR as my/our proxyholder with full power of substitution and to attend, act and to vote for and on behalf of the shareholder in accordance with the following direction (or if no directions have been given, as the proxyholder sees fit) and all other matters that may properly come before the Annual General Meeting of Shareholders of Kinross Gold Corporation (the "Company") to be held at Glenn Gould Studio, 250 Front Street West, Toronto, Ontario M5V 3G5 on May 3, 2017 at 10:00 a.m. (Toronto time) and at any adjournment or postponement thereof. VOTING RECOMMENDATIONS ARE INDICATED BY HIGHLIGHTED TEXT OVER THE BOXES. 1. Election of Directors For Withhold For Withhold For Withhold 01. Ian Atkinson 02. John A. Brough 03. John M. H. Huxley -------Fold 04. Ave G. Lethbridge 05. Catherine McLeod-Seltzer 06. John E. Oliver 07. Kelly J. Osborne 08. Una M. Power 09. J. Paul Rollinson Withhold 2. Appointment of Auditors To approve the appointment of KPMG LLP, Chartered Accountants, as auditors of the Company for the ensuing year and to authorize the directors to fix their remuneration. Against 3. Executive Compensation To consider, and, if deemed appropriate, to pass, an advisory resolution on Kinross approach to executive compensation. -------Fold Authorized Signature(s) - This section must be completed for your instructions to be executed. Signature(s) Date I/We authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy previously given with respect to the Meeting. If no voting instructions are indicated above, this Proxy will be voted as recommended by Management. Interim Financial Statements - Mark this box if you would like to receive Interim Financial Statements and accompanying Managements Discussion and Analysis by mail. Annual Financial Statements - Mark this box if you would like to receive the Annual Financial Statements and accompanying Managements Discussion and Analysis by mail. If you are not mailing back your proxy, you may register online to receive the above financial report(s) by mail at www.computershare.com/mailinglist. K N R Q 2 4 5 5 2 6 A R 1 For For
Exhibit 99.2
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting to be Held on May 3, 2017
Kinross Gold Corporation
Notice of 2017 annual meeting of shareholders
and availability of Proxy Materials
You are receiving this notification since Kinross Gold Corporation (Kinross or the company) uses the notice and access model for the delivery of its management information circular (the circular) in respect of its annual meeting of shareholders (the meeting) to be held on Wednesday, May 3, 2017. Kinross is also providing you with electronic access to its 2016 Annual Report (annual report).
Under notice and access, as permitted by the Canadian securities regulator, instead of receiving paper copies, shareholders receive this notice with information on how they may access the circular and annual report electronically. This means of delivery is more environmentally friendly as it will help reduce paper use and will also reduce the cost of printing and mailing materials to shareholders.
All shareholders are reminded to review the circular before voting.
This notice provides details of the date, time and place of the meeting, including the matters to be voted on at the meeting. Accompanying this notice is a form of proxy or other voting document that you will need to vote by proxy.
Notice is hereby given that the annual shareholders' meeting of Kinross will be held:
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WHEN: |
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Wednesday, May 3, 2017
10:00 a.m.(Toronto time) |
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Glenn Gould Studio
CBC Building 250 Front Street West Toronto, Ontario M5V 3G5 |
for the following purposes and to transact any other business that may properly come before the meeting and at any postponement or adjournment thereof:
At the meeting, shareholders will:
Financial Statements receive the company's 2016 audited consolidated financial statements together with the report of the auditors on those statements
Election of Directors elect directors of the company for the ensuing year
Appointment of Auditors appoint KPMG LLP as auditors for the ensuing year and authorize the directors to fix their remuneration
Say on Pay vote on an advisory resolution on the company's approach to executive compensation
Other Business transact such other business as may properly come before the meeting or at any adjournment thereof
HOW DO I GET AN ELECTRONIC COPY OF THE CIRCULAR AND ANNUAL REPORT?
Electronic copies of the circular and annual report (the meeting materials ) may be accessed online on Kinross' website http://www.kinross.com/news-and-investors/default.aspx?section=meeting, or under the Company's profile on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com and on the U.S. Securities and Exchange Commission's website at www.sec.gov.
HOW DO I GET A PAPER COPY OF THE CIRCULAR AND ANNUAL REPORT?
You can request a paper copy of the meeting materials to be sent to you by regular postal delivery free of charge. Requests may be made up to one year from the date the meeting materials were filed on SEDAR.
If you would like paper copies of the meeting materials, you should first determine whether you are (i) a registered shareholder or (ii) a beneficial shareholder (non-registered shareholder) of common shares, as are most of the company's shareholders.
You are a registered shareholder if your name appears on your share certificate or, if registered electronically, the shares are registered with Kinross' transfer agent in your name and not in the name of an intermediary such as a bank, trust company, securities broker, trustee or other nominee.
You are a beneficial (non-registered) shareholder if your shares are held on your behalf by an intermediary. This means the shares are registered with Kinross' transfer agent in your intermediary's name, and you are the beneficial owner.
Requests for paper copies by registered shareholders (with a 15 digit control number) may be made by calling toll free, within North America at 1-866-962-0498 or direct, from outside North America at 514-982-8716. Registered shareholders with questions about notice and access can call Computershare Investor Services Inc. ( the transfer agent ) toll-free at 1-866-964-0492.
Requests for paper copies by beneficial shareholders may be made through the internet by going to www.proxyvote.com and entering the 16 digit control number located on the accompanying form of proxy and following the instructions provided. Alternatively, for shareholders in North America, requests may be made by telephone at any time prior to the meeting by calling toll-free at 1-877-907-7643. Beneficial shareholders with questions may call toll-free at 1-855-887-2244.
A paper copy will be sent to you within 2 business days of receiving your request. Therefore, to receive the meeting materials in advance of the deadline to submit your vote as described below, you should make your request before 5:00 p.m. (EDT) on April 18, 2017. For requests made on or after the date of the meeting, please call toll-free at 1-866-561-3636 within North America (shareholders outside of North America may e-mail info@kinross.com), and a paper copy will be sent to you within 10 calendar days after receiving your request.
HOW DO I VOTE MY SHARES?
If you cannot attend the meeting, you may vote by proxy in any of the following ways. You will need the control number contained in the accompanying form of proxy in order to vote.
To be valid, proxies must be received by Kinross' transfer agent no later than 10:00 a.m. (Toronto time) on May 1, 2017 or if the meeting is adjourned, at least 48 hours (not including Saturdays, Sundays or statutory holidays in Ontario) prior to the reconvened meeting. Kinross reserves the right to accept late proxies and to waive the proxy cut-off, with or without notice, but is under no obligation to accept or reject any particular late proxy.
This notice is not a ballot or proxy card. You cannot use this notice to vote your shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at http://www.kinross.com/news-and-investors/default.aspx?section=meeting or easily request a paper copy (see "How Do I Get a Paper Copy of the Circular and Annual Report" above).
If you have any questions relating to voting your common shares, please contact the company's proxy solicitors, Kingsdale Advisors, by telephone at 1-866-851-3217 toll-free in North America or 416-867-2272 outside of North America or by email at contactus@kingsdaleadvisors.com.
The contents of the circular and its delivery to the shareholders of the company have been approved by the board of directors.
DATED
at Toronto, Ontario this 16
th
day of March, 2017.
By order of the board of directors
Kathleen M. Grandy
Corporate Secretary
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Shareholders who are unable to attend the meeting are requested to vote by proxy so that as large a representation as possible may be had at the meeting. You may vote by proxy in any of the following ways. You will need the control number contained in the accompanying form of proxy in order to vote. | | |
Internet voting |
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For non-registered (beneficial) shareholders, follow the instructions on the voting instruction form. For registered shareholders, go to www.investorvote.com |
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Telephone voting |
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Call the toll-free number shown on the form of proxy or voting instruction form |
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Voting by mail or delivery |
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Complete the form of proxy or voting instruction form and return it in the envelope provided |
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PLEASE VIEW THE INFORMATION CIRCULAR PRIOR TO VOTING
Exhibit 99.3
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2017 | | |
Notice of 2017 Annual Meeting of Shareholders |
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Management
Information Circular |
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Kinross Gold Corporation
Notice of 2017 annual meeting of shareholders
2017 annual meeting information
Date: May 3, 2017
Time: 10:00 a.m. (Toronto time)
Location: Glenn Gould Studio, CBC Building,
250 Front Street West, Toronto, Ontario
M5V 3G5
Dear Kinross Shareholders,
We invite you to attend Kinross' 2017 annual meeting of shareholders.
At the meeting, shareholders will:
This notice is accompanied by our 2017 management information circular ( or circular) which provides additional information relating to the above items for consideration at the annual meeting and forms part of this notice of meeting. The board of directors has approved the contents of the 2017 circular and the distribution of the circular to shareholders.
If you are unable to attend the meeting in person, we encourage you to vote by proxy. Our goal is to secure the largest representation of Kinross shareholders as possible at the meeting. You may vote by proxy in any of the following ways. You will need the control number contained in the form of proxy or voting instruction form in order to vote.
Your vote is important to us. Holders of common shares at the close of business on March 14, 2017 are eligible to vote at the meeting. For more information on voting your shares and the proxy process, see Voting on pages 5 to 9 in this circular.
By order of the board of directors
Kathleen M. Grandy
Corporate Secretary
March 16, 2017
Toronto, Canada
If you have any questions relating to the meeting, please contact Kingsdale Advisors by telephone at 1-866-851-3217 toll free in North America or 416-867-2272 outside of North America or by email at contactus@kingsdaleadvisors.com.
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Shareholders who are unable to attend the meeting are requested to vote by proxy so that as large a representation as possible may be had at the meeting. You may vote by proxy in any of the following ways. You will need the control number contained in the accompanying form of proxy in order to vote. | | |
Internet voting |
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For non-registered (beneficial) shareholders, follow the instructions on the voting instruction form. For registered shareholders, go to www.investorvote.com |
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Telephone voting |
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Call the toll-free number shown on the form of proxy or voting instruction form |
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Voting by mail or delivery |
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Complete the form of proxy or voting instruction form and return it in the envelope provided |
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KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
Table of Contents
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Executive Summary |
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Voting |
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Who can vote | | 5 |
How to vote | | 6 |
Changing your vote | | 7 |
Questions | | 9 |
Business of the meeting |
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Items of business | | 10 |
Other business | | 12 |
2018 shareholder proposals | | 12 |
Directors |
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· Highlights: board attributes, 2016 board activity highlights | | 13 |
· About the nominated directors | | 13 |
· Skills and experience | | 24 |
· Director compensation | | 25 |
· Board committee reports | | 29 |
Executive Compensation |
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· Letter to shareholders | | 37 |
· Executive compensation discussion and analysis | | 41 |
· Compensation philosophy and approach | | 41 |
· Compensation governance | | 41 |
· Components of executive compensation | | 55 |
· 2016 results | | 68 |
· Key summary tables | | 82 |
Governance |
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· Highlights | | 94 |
· Regulatory Compliance | | 95 |
· Code of Business Conduct and Ethics | | 96 |
· Role of the board of directors | | 97 |
· Position Descriptions | | 98 |
· Assessing the Board | | 98 |
· Nominating and method of voting for directors | | 99 |
· Diversity | | 99 |
· New Director Orientation and continuing education | | 100 |
· Board term and renewal | | 102 |
· Additional governance information | | 103 |
Appendices |
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Charter of the Board of Directors | | 106 |
Schedule A to the Charter of the Board of Directors | | 109 |
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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EXECUTIVE SUMMARY |
Executive Summary
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Business of the Meeting | ||
We are asking you to vote in support of the following key items: |
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Election of the proposed nominees to our board of directors |
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| Appointment of KPMG as auditors to Kinross |
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| Advisory resolution on our approach to executive compensation |
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2016 Performance Highlights
Kinross achieved strong results in 2016, as we met or outperformed our production and cost guidance for the fifth straight year. We maintained our strong balance sheet, advanced the high-quality organic development projects that will shape our future, and delivered value to our shareholders as a top performing senior gold equity.
KINROSS GOLD CORPORATION 2017 EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY |
2016 Corporate Governance Highlights
Kinross is committed to the highest standards of corporate governance and ethical conduct. We actively monitor developments in best practices and applicable laws to ensure that the company meets that commitment.
Corporate Governance at a Glance
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2016
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Size of board (1) | | 9 | | | kinross.com | | |
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Average age of board (2) | | 61 | | | | ||
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Average tenure of board (3) | | 9 | | | | ||
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Separate CEO/Chairman | | Yes | | | | ||
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Independent Chairman | | Yes | | | kinross.com | Page 95 | | |
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Number of independent directors | | 8 | | | kinross.com | | |
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Board committee members all independent: | | | | kinross.com | | ||
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audit and risk |
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human resources and compensation |
| Yes | | | kinross.com | | |
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governance and nominating |
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corporate responsibility and technical |
| Yes | | | kinross.com | | |
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Number of financial experts on audit & risk committee | | 2 | | | | ||
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Charters for board committees | | Yes | | | kinross.com | | |
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Retirement policy for directors (2) | | Yes | | | Page 102 | | |
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Term limit for directors (3) | | Yes | | | Page 102 | | |
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Diversity policy for directors and executive officers | | Yes | | | kinross.com | Page 99 | | |
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Annual director elections | | Yes | | | kinross.com | | |
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Majority voting for directors | | Yes | | | kinross.com | Page 10 | | |
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Annual vote on executive compensation | | Yes | | | kinross.com | Page 12 | | |
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Board orientation & director education | | Yes | | | kinross.com | Page 100 | | |
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Annual review of director independence | | Yes | | | kinross.com | Page 107 | | |
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Annual board and committee evaluations | | Yes | | | Page 98 | | |
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Annual individual director evaluations | | Yes | | | Page 98 | | |
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Annual equity grant to non-employee directors | | No | | | | ||
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Director stock ownership requirements | | Yes | | | Page 26 | | |
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Corporate governance guidelines | | Yes | | | kinross.com | | |
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Code of business conduct and ethics | | Yes | | | kinross.com | Page 96 | | |
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KINROSS GOLD CORPORATION 2017 EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY |
Board Nominees Overview
As Kinross shareholders you are being asked to cast your vote for nine directors. The following table provides an overview of the 2017 nominees. Detailed biographical information can be found on pages 14 to 23.
Compensation Highlights
You are being asked to vote in favour of an advisory resolution regarding Kinross' approach to executive compensation. A summary of our approach and philosophy is
outlined below. We encourage you to read about Kinross' executive compensation program on pages 41 to 67 in this document.
KINROSS GOLD CORPORATION 2017 EXECUTIVE SUMMARY
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EXECUTIVE SUMMARY |
2016 Executive Compensation:
2016 Performance Overview
Kinross' annual operating performance objectives are laid out in its Four Point Plan, with a short-list of strategic measures to align to the Four Point Plan being used to measure company performance for the senior leadership team. The human resource and compensation committee assigned the positive ratings against the performance measures below to reflect the strong performance for 2016. Overall, the committee felt that a company multiplier of 107% approximately reflected the year.
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Measure
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Weighting
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Actual performance
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Rating |
Corporate responsibility performance metric | | 20% | | 91 out of 100 points | | 100% |
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Delivering against guidance | | 15% | | Within initial guidance range on production and cost, and well under on sustaining capital | | 100% |
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Total cost | | 15% | | 2.7% under budget | | 110% |
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Maintain balance sheet strength | | 10% | | Net debt / EBITDA 0.81 | | 115% |
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Relative total shareholder returns | | 25% | | Ranked fourth out of 13 | | 115% |
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| | Achieved 75%, Included: | | |||
| | On target performance in adding ounces at Bald Mountain and through exploration | | |||
| | Maximum performance on Tasiast expansion project, and in achieving additional ounces through Round Mountain PSM, and Paracatu TSF | | |||
Delivered targeted growth initiatives | | 15% | | Tasiast two-phase expansion plan; acquisition of Bald Mountain and Round Mountain | | 105% |
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Total | | 100% | | | 107% | |
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For more information, see " Assessing 2016 Company Performance " on pages 68 to 75.
KINROSS GOLD CORPORATION 2017 EXECUTIVE SUMMARY
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VOTING |
Delivery of proxy materials
This year, Kinross Gold Corporation ( Kinross or the company ) is providing shareholders with access to its management information circular (the circular ) for the 2017 annual meeting of its shareholders (the meeting ) electronically via notice and access, instead of mailing out paper copies, as permitted by Canadian securities regulators. Kinross is also providing shareholders with access to its 2016 Annual Report electronically, instead of mailing out paper copies. This means of delivery is more environmentally friendly as it will help reduce paper use and will also reduce the cost of printing and mailing materials to shareholders.
Shareholders have received a notice of availability of proxy materials ( notice ) together with a form of proxy or voting instruction form. The notice provided instructions on how to access and review an electronic copy of the circular or how to request a paper copy. The notice also provided instructions on voting at the meeting. To receive a paper copy of the circular or the 2016 Annual Report, please follow the instructions in the notice.
All shareholders are reminded to review the circular before voting. Shareholders with questions about notice and access can call Computershare Investor Services Inc. (the transfer agent ) toll free at 1-866-964-0492.
Proxy materials are being sent to registered shareholders directly and will be sent to intermediaries to be forwarded to all non-registered (beneficial) shareholders. Kinross pays the cost of delivery of proxy materials for all registered and non-registered shareholders.
Voting
This document is the management information circular made available to shareholders in advance of the meeting as set out in the notice.
The circular provides additional information respecting the business of the meeting, Kinross and its directors and senior executive officers. This circular is dated March 16, 2017 and, unless otherwise stated, the information in this circular is as of March 16, 2017.
Unless indicated otherwise, all dollar amounts referenced in this circular are expressed in U.S. dollars. Where necessary, Canadian dollars are referenced as CAD$.
All references to financial results are based on the Kinross financial statements, prepared in accordance with International Financial Reporting Standards ( IFRS ).
References in this circular to the meeting include any adjournment(s) or postponement(s) that may occur.
Who can vote
Holders of common shares of Kinross ( common shares or shares ) at the close of business on March 14, 2017 (the record date ) and their duly appointed representatives are eligible to vote.
Shares outstanding
As of March 16, 2017, there were 1,246,749,579 common shares outstanding, each carrying the right to one vote per common share.
To the knowledge of the directors and executive officers of the company, as of the date of this circular, there is no person or company that beneficially owns, directly or indirectly, or exercises control or direction over, directly or indirectly, voting securities of Kinross carrying 10% or more of the voting rights attached to any class of voting securities of Kinross.
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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VOTING |
How to vote
The voting process is different depending on whether you are a registered or non-registered (beneficial) shareholder.
You are a registered shareholder if your name appears on your share certificate or, if registered electronically, the shares are registered with Kinross' transfer agent in your name and not held on your behalf by an intermediary such as a bank, trust company, securities broker, trustee or other nominee (each an intermediary ).
You are a non-registered (beneficial) shareholder if your shares are held on your behalf by an intermediary. This means the shares are registered with Kinross' transfer agent in your intermediary's name, and you are the beneficial owner. Most shareholders are non-registered shareholders.
Non-registered (beneficial) shareholders
If you are a non-registered shareholder, your intermediary would have sent you a voting instruction form or proxy form with the notice. This form will instruct the intermediary how to vote your common shares at the meeting on your behalf.
You must follow the instructions from your intermediary in order to vote.
If you do not intend to attend the meeting and vote in person, mark your voting instructions on the voting instruction form or proxy form, sign it, and return it as instructed by your intermediary. Your intermediary may have also provided you with the option of voting by telephone or fax or through the internet.
If you are a Canadian resident and wish to vote in person at the meeting, insert your name in the space provided for the proxyholder appointment in the voting instruction form or proxy form, and return it as instructed by your intermediary. Do not complete the voting section of the proxy form or voting information form, since you will vote in person at the meeting.
If you are a U.S. resident and wish to vote in person at the meeting, mark the appropriate box on the other side of the voting instruction form and a legal proxy will be issued and mailed to you. The legal proxy will grant you or your designate the right to attend the meeting and vote in person, subject to any rules described in the proxy statement applicable to the delivery of a proxy.
The legal proxy will be mailed to the name and address noted on the other side of the voting instruction form. You need to submit and deliver the legal proxy in accordance with the proxy deposit date and any instructions or disclosures noted in the proxy statement. You or your designate must attend the meeting for your vote to be counted. Allow sufficient time to the company or its transfer agent for the mailing and return of the legal proxy by the proxy deposit date.
Please be advised that if you, the beneficial holder, ask for a legal proxy to be issued, you have to take additional steps in order for the proxy to be fully effective. You must deposit the legal proxy with the company or its transfer agent in advance of the meeting. Further, if a legal proxy is issued, all other voting instructions given on the voting instruction form will not be effective. If you have any questions, please contact the person who services your account.
Your intermediary may have also provided you with the option of appointing yourself or someone else to attend and vote on your behalf at the meeting through the internet. When you arrive at the meeting, please register with our transfer agent, Computershare Investor Services Inc.
Your intermediary must receive your voting instructions in sufficient time for your intermediary to act on them. The transfer agent must receive proxy vote instructions from your intermediary no later than 10:00 a.m. (Toronto time) on Monday, May 1, 2017, or if the meeting is adjourned, at least 48 hours (not including Saturdays, Sundays or statutory holidays in Ontario) prior to the reconvened meeting.
Kinross may utilize the Broadridge QuickVote service to assist beneficial shareholders with voting their Kinross shares over the telephone. Alternatively, Kingsdale Advisors may contact such beneficial shareholders to assist them with conveniently voting their shares directly over the phone. Broadridge then tabulates the results of all the instructions received and then provides the appropriate instructions respecting the shares to be represented at the meeting. If you have any questions relating to the meeting or how to vote, please contact Kingsdale Advisors by telephone at 1-866-851-3217 toll free in North America or 416-867-2272 outside of North America or by email at contactus@kingsdaleadvisors.com .
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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VOTING |
Registered shareholders
If you are a registered shareholder, a form of proxy would have been sent to you along with the notice to enable you to appoint a proxyholder to vote on your behalf at the meeting.
If you do not intend to attend the meeting and vote in person, you can
In each case, you will need to complete the form of proxy and return it to the transfer agent.
Telephone or online
If you wish to vote in person at the meeting, you may still provide voting instructions using the form of proxy, or by telephone or internet. When you arrive at the meeting, please register with our transfer agent.
If you vote in person at the meeting, any proxy you have previously given will be revoked.
To be valid, proxies must be received by Kinross' transfer agent no later than 10:00 a.m. (Toronto time) on May 1, 2017 or if the meeting is adjourned, at least 48 hours (not including Saturdays, Sundays or statutory holidays in Ontario) prior to the reconvened meeting. Your proxyholder may then vote on your behalf at the meeting.
Changing your vote
Non-registered (beneficial) shareholders
You can revoke your prior voting instructions by providing new instructions on a voting instruction form or proxy form with a later date, or at a later time in the case of voting by telephone or through the internet, provided that your new instructions are received by your intermediary in sufficient time for your intermediary to act on them before 10:00 a.m. (Toronto time) on May 1, 2017, or if the meeting is adjourned, at least 48 hours (not including Saturdays, Sundays or statutory holidays in Ontario) prior to the reconvened meeting.
Otherwise, contact your intermediary if you want to revoke your proxy or change your voting instructions, or if you change your mind and want to vote in person.
Registered shareholders
You may revoke any prior proxy by providing a new proxy with a later date or providing voting instructions at a later time in the case of voting through the internet. However, for your new voting instructions to be effective they must be received by the transfer agent no later than 10:00 a.m. (Toronto time) on May 1, 2017 , or if the meeting is adjourned, at least 48 hours (not including Saturdays, Sundays or statutory holidays in Ontario) prior to the reconvened meeting.
You may also revoke any prior proxy without providing new voting instructions by delivering written notice clearly indicating you wish to revoke your proxy to the registered office of Kinross (25 York Street, Suite 1700, Toronto, Ontario, M5J 2V5, Fax (416) 363-6622, Attention: Corporate Secretary) or at the offices of the transfer agent, Computershare Investor Services Inc. (100 University Avenue, 8 th floor, Toronto, Ontario, M5J 2Y1) at any time up to 10:00 a.m. (Toronto time) on the last business day before the meeting or any adjournment of the meeting.
A proxy may also be revoked on the day of the meeting or any adjournment of the meeting by a registered shareholder by delivering written notice to the chair of the meeting. If you are an individual and register with the transfer agent at the meeting and vote in person at the meeting, any proxy you have previously given will be revoked.
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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VOTING |
In addition, the proxy may be revoked prior to its use by any other method permitted by applicable law. The written notice of revocation may be executed by the registered shareholder or by an attorney who has the shareholder's written authorization. If the shareholder is a corporation, the written notice must be executed by its duly authorized officer or attorney.
Kinross reserves the right to accept late proxies and to waive the proxy cut-off with or without notice, but is under no obligation to accept or reject any particular late proxy.
How your shares will be voted
If you appoint the named proxyholders as your proxyholders, the common shares represented by the form of proxy will be voted or withheld from voting, in accordance with your instructions as indicated on the form, on any ballot that may be called for.
In the absence of instructions from you, such common shares will be voted:
The form of proxy gives discretionary authority to the persons named in it as proxies to vote as they see fit with respect to any amendments or variations to the matters identified in the notice of meeting or other matters that may properly come before the meeting or any adjournment thereof, whether or not the amendment or other matter that comes before the meeting is or is not routine and whether or not the amendment, variation or other matter that comes before the meeting is contested.
About proxy solicitation
Proxies are being solicited in connection with this circular by the management of the company. The solicitation will be made primarily by mail, but proxies may also be solicited personally by regular employees of Kinross to whom no additional compensation will be paid.
In addition, Kinross has retained Kingsdale Advisors to provide the following services in connection with the meeting:
The cost of these services is approximately $80,325 and reimbursement of disbursements. Costs associated with the solicitation will be borne by the company.
Appointing a proxyholder
Your proxyholder is the person that you appoint to cast your votes and act on your behalf at the meeting including any continuation of the meeting that may occur in the event that the meeting is adjourned.
Signing and returning the enclosed proxy form authorizes John E. Oliver or Kathleen M. Grandy (the named proxyholders ) to vote your shares at the meeting in accordance with your instructions.
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VOTING |
A shareholder who wishes to appoint another person (who need not be a shareholder) to represent the shareholder at the meeting may do so, either by internet or by mail by:
Required quorum for the meeting
A quorum for the meeting shall be two persons present and holding or representing by proxy not less than 25% of the total number of issued and outstanding common shares having voting rights at the meeting.
No business shall be transacted at the meeting unless the requisite quorum is present at the commencement of the meeting. If a quorum is present at the commencement of the meeting, a quorum shall be deemed to be present during the remainder of the meeting.
Questions
If you have questions, you may contact the company's strategic shareholder advisor and proxy solicitation agent, Kingsdale Advisors.
North
America (toll-free phone): 1-866-851-3217
outside North America: (416) 867-2272
fax: (416) 867-2271
toll-free fax (North America): 1 (866) 545-5580
mail: The Exchange Tower, 130 King Street West, Suite 2950, P.O. Box 361, Toronto, Ontario M5X 1E2
e-mail:
contactus@kingsdaleadvisors.com
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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BUSINESS OF THE MEETING |
Business of the meeting
Items of business
As set out in the notice of meeting, at the meeting, shareholders of Kinross will be asked to consider the following four matters and vote on them as required:
1. Financial statements
The audited consolidated financial statements of Kinross for the fiscal year ended December 31, 2016 and the report of the auditors on the financial statements will be received.
2. Election of directors
The company's board of directors (the board ) is currently comprised of nine directors and it is proposed to appoint nine individuals effective as of May 3, 2017. At the meeting, the shareholders will be asked to elect nine directors, subject to Kinross' majority voting policy outlined below. All directors so elected will hold office until the next annual meeting of shareholders or until their successors are elected or appointed.
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The board of directors of Kinross recommends that the shareholders of the company vote FOR the election as directors, the nominees whose names are set forth in this management information circular. |
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The named proxyholders, if named as proxy, intend to vote the common shares represented by any such proxy for the election of the nominees whose names are set forth starting on page 14, unless the shareholder who has given such proxy has directed that the shares be withheld from voting in the election of directors.
Management of Kinross does not contemplate that any of the nominees will be unable to serve as a director, but if that should occur for any reason at or prior to the meeting, the named proxyholders, if named as proxy, reserve the right to vote for another nominee in their discretion.
Majority voting policy
In 2008, the board adopted a majority voting policy for the election of directors at the meeting. Revisions to this policy were approved by the board in November 2014. This policy is now part of the consolidated Corporate Governance Guidelines adopted by the board in November 2015 and amended in 2017 and is available for review on the company's website at www.kinross.com . The policy provides that in an uncontested election, any nominee for director who receives more withheld votes than for votes will immediately tender his or her resignation for consideration by the corporate governance and nominating committee. The corporate governance and nominating committee (excluding those who received a majority withheld vote in the election) will review the matter and make a recommendation to the board whether to accept the director's resignation. The resignation will be effective when accepted by the board. The board expects that the resignations will be accepted absent exceptional circumstances. The director who has tendered his or her resignation pursuant to this policy will not participate in any deliberations of the corporate governance and nominating committee or the board regarding the resignation. The board shall make its decision within 90 days of the date of the applicable shareholders' meeting and shall promptly issue a news release with the board's decision. If the board determines not to accept a resignation, the news release must fully state the reasons for that decision.
Other details respecting the nominees for election as directors are set out under " About the nominated directors" starting on page 14.
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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BUSINESS OF THE MEETING |
3. Appointment of auditors
Shareholders will be asked to consider and, if thought fit, to pass, an ordinary resolution approving the appointment of KPMG LLP of Toronto, Ontario as auditors of Kinross, to hold office until the close of the next annual meeting of the company. It is also proposed that the remuneration to be paid to the auditors of Kinross be fixed by the board.
For the fiscal years ended December 31, 2016 and December 31, 2015, KPMG LLP and its affiliates were paid the following fees by Kinross:
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Auditor's Fees |
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2016 CAD$ (1) |
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% of Total Fees (2) |
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2015 CAD$ (1) |
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% of Total Fees (2) | |
Audit Fees: | | | | | | ||||
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Kinross general |
| 3,751,000 | | 90 | | 3,914,000 | | 91 | |
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Kinross securities matters |
| 190,000 | | 4 | | | | | |
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Total Audit Fees |
| 3,941,000 | | 94 | | 3,914,000 | | 91 | |
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Audit-Related Fees: | | | | | | ||||
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Translation services |
| 135,000 | | 3 | | 135,000 | | 3 | |
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Due Diligence |
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Other |
| 25,000 | | 1 | | 25,000 | | 1 | |
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Total Audit-Related Fees | | 160,000 | | 4 | | 160,000 | | 4 | |
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Tax Fees: | | | | | | ||||
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Compliance |
| 25,000 | | 1 | | 50,000 | | 1 | |
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Planning and advice |
| 43,000 | | 1 | | 79,000 | | 2 | |
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Total Tax Fees | | 68,000 | | 2 | | 129,000 | | 3 | |
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All Other Fees: | | 18,000 | | | | 80,000 | | 2 | |
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Total Fees | | 4,187,000 | | 100 | | 4,283,000 | | 100 | |
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The board of directors of Kinross recommends that the shareholders of the company vote FOR the appointment of KPMG LLP of Toronto, Ontario as auditors of the company. |
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The named proxyholders, if named as proxy, intend to vote the common shares represented by any such proxy for the approval of the appointment of KPMG LLP of Toronto, Ontario as auditors of Kinross at a remuneration to be fixed by the board, unless the shareholder who has given such proxy has directed in the proxy that the shares be withheld from voting in the appointment of auditors.
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BUSINESS OF THE MEETING |
4. Advisory vote on approach to executive compensation
Our compensation program seeks to attract, retain, motivate and reward executives through competitive pay practices which reinforce Kinross' pay-for-performance philosophy and focus executive interests on developing and implementing strategies that create and deliver value for shareholders. Kinross believes that its compensation programs are consistent with those objectives, and are in the best interest of shareholders. Detailed disclosure of our executive compensation program is provided under "Executive Compensation" starting on page 37.
In 2011, the board adopted a policy to hold a non-binding advisory vote on the approach to executive compensation as disclosed in the management information circular at each annual meeting. This policy is now part of the consolidated Corporate Governance Guidelines adopted by the board in November 2015. This shareholder vote forms an important part of the ongoing process of engagement between shareholders and the board on executive compensation. Voting results since inception of the policy are provided on page 42 under the heading " Say on pay and shareholder engagement ".
At the meeting, shareholders will have an opportunity to vote on our approach to executive compensation through consideration of the following advisory resolution:
"Resolved, on an advisory basis and not to diminish the role and responsibilities of the board of directors, that the shareholders accept the approach to executive compensation disclosed in the management information circular delivered in advance of the 2017 annual meeting of shareholders of the company."
Approval of this resolution will require that it be passed by a majority of the votes cast by shareholders in person and by proxy. Because your vote is advisory, it will not be binding upon the board. However, the human resource and compensation committee will take into account the results of the vote when considering future executive compensation arrangements.
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The board of directors of the company recommends that the shareholders of the company vote FOR the advisory resolution on the approach to executive compensation disclosed in this management information circular. |
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The named proxyholders, if named as proxy, intend to vote the common shares represented by such proxy for approval of the advisory resolution on Kinross' approach to executive compensation, unless the shareholder has directed in the proxy that such common shares be voted against it.
Other business
Management does not intend to introduce any other business at the meeting and is not aware of any amendments to the matters to be considered at the meeting. If other business or amendments to the matters to be considered at the meeting are properly brought before the meeting, proxies appointing the named proxyholders as proxyholders will be voted in accordance with their best judgement.
2018 shareholder proposals
The OBCA permits certain eligible shareholders to submit shareholder proposals to the company, which may be included in a management proxy circular relating to an annual meeting of shareholders. The final date by which the company must receive shareholder proposals for the annual meeting of shareholders in 2018 is March 5, 2018.
Shareholders who wish to nominate candidates for election as directors must provide timely notice in writing to the Corporate Secretary of the company and include the information set out in the company's by-laws ( by-laws ). The notice must be made not less than 30 days nor more than 65 days prior to the date of the meeting. A copy of the by-laws of the company is available upon request to the Corporate Secretary of the company.
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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DIRECTORS |
Directors
Board attributes:
2016 board activity highlights:
About the nominated directors
The following tables sets forth certain information with respect to all persons proposed to be nominated by management for election as directors. Shareholders can vote for or withhold from voting on the election of each nominee on an individual basis. Unless authority is withheld, the named proxyholders, if named as proxy, intend to vote for these nominees. All of the nominees have established their eligibility and willingness to serve as directors. Unless stated otherwise, the information set out below is as of December 31, 2016. (Footnotes pertaining to the director nominees are on page 23.)
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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DIRECTORS |
Continuing directors:
The following nominees were elected as directors at Kinross' 2016 annual meeting of shareholders and are being proposed for re-election at the meeting.
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Ian Atkinson (67) | Independent |
Mr. Atkinson was most recently the President & CEO and a Director of Centerra Gold Inc., a gold mining company, a position he held from May 2012 until his retirement at the end of 2015. Prior to that, he was Senior Vice President, Global Exploration from July 2010 to April 2012 and Vice President, Exploration from October 2005 to June 2010 of Centerra Gold Inc. From September 2004 to October 2005, he was Vice President, Exploration & Strategy of Hecla Mining Company, an international gold and silver mining company in Idaho, USA. During the years 2001-2004, he was an independent management consultant based out of Houston, Texas, USA. From July 1996 to June 1999 he was Senior Vice President, Exploration and from June 1999 to January 2001 he held the position of Senior Vice President, Operations & Exploration with Battle Mountain Gold Company in Houston, Texas, USA. He was Senior Vice President with Hemlo Gold Mines, Inc., Toronto, from September 1991 to July 1996.
From May 1979 to August 1991, he held various progressive leadership positions with Noranda Exploration Company Limited. From June 1978 to May 1979 he was Senior Geologist with Resource Associates of Alaska, Inc. and was Regional Geologist with McIntyre Mines Limited from April 1974 to May 1978. He was Field Geologist with Yvanex Developments Limited from May 1973 to March 1974.
Mr. Atkinson served on the board of the Prospectors and Developers Association of Canada and the World Gold Council. He was President of the Porcupine Prospectors and Developers Association. Mr. Atkinson holds a Bachelor of Science in Geology and a Master of Science in Geophysics from the University of London, England and a Diploma in surveying from the Imperial College, London, England.
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2016 board and committee membership | | Attendance |
Board of directors | | 8 of 8 (100%) |
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Corporate Responsibility and Technical (8) | | 4 of 4 (100%) |
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Corporate Governance and Nominating (8) | | 3 of 3 (100%) |
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Public board memberships | | Board committee memberships |
Argonaut Gold Inc. | |
Audit
Safety, Health, Environment, Sustainability and Technical |
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Globex Mining Enterprises Inc. | | Audit, Governance, Compensation (Chair) |
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The Woodlands, Texas USA
Director since
February 10, 2016
Skill/area of experience (6)
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DIRECTORS |
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John A. Brough (70) | Independent |
Mr. Brough retired as President of both Torwest Inc. and Wittington Properties Limited, real estate companies, on December 31, 2007, a position he had held since 1998. From 1996 to 1998, Mr. Brough was the Executive Vice President and Chief Financial Officer of iSTAR Internet, Inc. Between 1974 and 1996, he held a number of positions with Markborough Properties, Inc., his final position being Senior Vice President and Chief Financial Officer, which position he held from 1986 to 1996. Mr. Brough is an executive with over 30 years of experience in the real estate industry. Mr. Brough holds a Bachelor of Arts (Economics) from the University of Toronto and he is a Chartered Professional Accountant, Chartered Accountant. Mr. Brough has graduated from the Director's Education Program at the University of Toronto, Rotman School of Management. Mr. Brough is a member of the Institute of Corporate Directors and the Institute of Chartered Professional Accountants of Ontario.
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2016 board and committee membership | | Attendance |
Board of directors | | 8 of 8 (100%) |
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Audit and risk | | 4 of 4 (100%) |
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Human resource and compensation | | 6 of 6 (100%) |
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Public board memberships | | Board committee memberships |
Silver Wheaton Corp. | | Audit (Chair), Governance and nominating |
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First National Financial Corp | | Lead Director, Audit (Chair) |
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Canadian Real Estate Investment Trust (CREIT) | | Audit (Chair), Investment |
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Planned retirement (5) 2019
Toronto, Ontario, Canada
Director since
January 19, 1994
Skill/area of experience (6)
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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DIRECTORS |
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John M. H. Huxley (71) | Independent |
Mr. Huxley was most recently a Principal of Algonquin Management Inc., and the manager of the Algonquin Power Income Fund, since 1997 until his retirement in 2006. Prior to that, he was the President of Algonquin Power Corporation, a builder, developer and operator of hydroelectric generating facilities in Canada and the United States. He holds a Bachelor of Laws degree from Osgoode Hall Law School. He is also a member of the Institute of Corporate Directors.
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2016 board and committee membership | | Attendance |
Board of directors | | 7 of 8 (88%) |
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Audit and risk | | 4 of 4 (100%) |
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Human resource and compensation | | 5 of 6 (83%) |
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Corporate governance and nominating | | 4 of 4 (100%) |
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Public board memberships | | Board committee memberships |
Transeastern Power Trust | | Audit (Chair), Compensation, Governance |
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Planned retirement (5) 2017
Toronto, Ontario, Canada
Director since
May 31, 1993
Skill/area of experience (6)
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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DIRECTORS |
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Ave G. Lethbridge (55) | Independent |
Ms. Lethbridge is currently EVP and Chief Human Resources and Safety Officer of Toronto Hydro Corporation, an electric company, a position that she has held since November 2013. During her career spanning 18 years, from 1998 to present, with Toronto Hydro, she has held various progressive senior leadership positions in areas encompassing environment, health and safety, corporate social responsibility, labour relations, workforce planning, talent management, succession planning and leadership development. From 1998 to 2002, she was Director, Organizational Development and Leader of Business Transformation Change; from 2002 2004 as Vice President, Organizational Development and Performance & Corporate Ethics Officer; from 2004 2007 as Vice President, Human Resources and Organizational Effectiveness; from 2008 2013 as Vice President, Organizational Effectiveness and Environment Health and Safety. Prior to joining Toronto Hydro, Ms. Lethbridge was Senior Manager with Scarborough Public Utilities from 1987 to 1997 and was a Human Resources Consultant with Great West Gas from 1981 to 1987.
Ms. Lethbridge holds a Master of Science degree in Organizational Development from the Pepperdine University, CA. She has completed the Directors' Education Program from the Rotman School of Management of the University of Toronto in 2011 and holds a designation from the Institute of Corporate Directors, (ICD) effective 2015. She completed the Strategic Organizational Change Program in 1998 and the Advanced Human Resources Management Program in 1996 from the University of Toronto, Rotman School of Business. She is a Certified Human Resources Executive (CHRE) since 2014 and Certified in Human Resources Management (CHRM) since 1994. She has also completed several financial literacy programs for executives and directors including courses from the Rotman School of Management of the University of Toronto and the Harvard Business School. Ms. Lethbridge also served on the board of governors for the Georgian College.
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2016 board and committee membership | | Attendance |
Board of directors | | 8 of 8 (100%) |
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Audit and Risk | | 4 of 4 (100%) |
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Human resource and compensation | | 6 of 6 (100%) |
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Public board and committee memberships: none
Toronto, Ontario, Canada
Director since
May 6, 2015
Skill/area of experience (6)
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DIRECTORS |
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Catherine McLeod-Seltzer (56) | Independent |
Ms. McLeod-Seltzer has been the Non-Executive Chairman and a director of Bear Creek Mining, a silver mining company, since 2003 and was the Non-Executive/Independent Chairman and a director of Pacific Rim Mining Corp until November, 2013. She had been an officer and director of Pacific Rim Mining Corp. since 1997. From 1994 to 1996, she was the President, Chief Executive Officer and a director of Arequipa Resources Ltd., a publicly traded company which she co-founded in 1992. From 1985 to 1993, she was employed by Yorkton Securities Inc. as an institutional trader and broker, and also as Operations Manager in Santiago, Chile (1991-92). She has a Bachelor's degree in Business Administration from Trinity Western University.
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2016 board and committee membership | | Attendance |
Board of directors | | 8 of 8 (100%) |
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Corporate Responsibility and Technical | | 6 of 6 (100%) |
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Corporate Governance and Nominating | | 4 of 4 (100%) |
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Public board memberships (11) | | Board committee memberships |
Bear Creek Mining Corporation | | none |
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JDL Gold Corp. (11) | | none |
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Major Drilling Group International Inc. | | Compensation and Safety |
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Grenville Strategic Royalty Corp. | | Compensation (Chair), Corporate Governance |
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Ms. McLeod-Seltzer will reduce the number of her board memberships to four (including Kinross) in 2017. See footnote 11.
Vancouver, British Columbia, Canada
Director since
October 26, 2005
Skill/area of experience (6)
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DIRECTORS |
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John E. Oliver (67) | Independent |
Mr. Oliver retired after 41 years of working in retail corporate and investment banking at the Bank of Nova Scotia. He was Executive Managing Director and Co-Head of Scotia Capital U.S., Bank of Nova Scotia leading specialist groups in oil and gas, technology, real estate, diversified industries and leisure and gaming. Mr. Oliver is the former Chair of the Canadian Museum of Immigration, a Federal Crown Corporation and the former Vice Chair, Autism Nova Scotia. He was appointed the Independent Chairman of the company in August 2002.
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2016 board and committee membership | | Attendance |
Board of directors, chair | | 8 of 8 (100%) |
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Human resource and compensation | | 6 of 6 (100%) |
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Public board and committee memberships: none
Planned retirement (5) 2018
Halifax, Nova Scotia, Canada
Director since
March 7, 1995
Skill/area of experience (6)
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Kelly J. Osborne (60) | Independent |
Mr. Osborne was most recently the President and CEO and a Director of Duluth Metals where he also held the position of Chief Operating Officer from July 2012 to April 2014 and the position of Chief Executive Officer of Twin Metal Minnesota, a wholly owned subsidiary of Duluth Metals, from July 2014 to January 2015. From 2004 to 2012, he held various progressive leadership positions with Freeport McMoRan Copper & Gold, Indonesia, starting as Manager, Underground Development, from 2004 to 2006; Vice President, Underground Operations, from 2006 to 2010 and finally as Senior Vice President, Underground Mines, from 2010 to 2012. From October 2002 to August 2004, he served as the area manager for Vulcan Materials Company, a leading producer of construction materials in the United States.
From 1998 to 2002, he was a Mine Superintendent with Stillwater Mining Company and as Plant Manager from 1992 to 1998 with J.M. Huber Corporation, a Texas based multinational supplier of engineered materials. From 1984 to 1992, he was with Homestake Mining Company which later merged into Barrick Gold Corporation in 2002. Starting as Corporate Management Trainee, a position he held from 1984 to 1986, he progressed to the position of a Mine Planning Engineer, a position he held from 1986 to 1988 and as a Mine Captain from 1988 to 1992.
Mr. Osborne holds a Bachelor of Science Degree in Mine Engineering from the University of Arizona, Tucson, Arizona.
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2016 general meeting election voting results | ||||||
Vote Type | |
Number of
shares voted |
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% on total
number of shares voted |
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% on total
outstanding shares of the company |
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For | | 725,810,463 | | 98.39 | | 58.93 |
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Withheld | | 11,873,221 | | 1.61 | | 0.96 |
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|
2016 board and committee membership | | Attendance |
Board of directors | | 8 of 8 (100%) |
| ||
Corporate Responsibility and Technical | | 6 of 6 (100%) |
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Corporate Governance and Nominating | | 4 of 4 (100%) |
| | |
Public board and committee memberships: none
Horseshoe Bay, Texas, USA
Director since
May 6, 2015
Skill/area of experience (6)
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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21 |
DIRECTORS |
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Una M. Power (52) | Independent |
Ms. Power is the former CFO and Senior Vice President of Nexen Energy ULC., a former publicly-traded oil and gas company that is a wholly-owned subsidiary of CNOOC Limited. During her career with Nexen spanning 24 years, she held various positions in areas covering financial reporting, financial management, investor relations, business development, strategic planning and investment. From 2009 to 2011, she was SVP, Corporate Planning and Business Development; from 2002 2009, Treasurer; from 1998 2002, Controller; and, from 1997 1998, Manager, Investor Relations. Prior to joining Nexen, Ms. Power was Senior Auditor with Deloitte & Touche from 1989 to 1992, and was staff auditor with Peat Marwick from 1987 to 1989.
Ms. Power is a Chartered Professional Accountant, Chartered Accountant and a Chartered Financial Analyst. She has completed the Advanced Management Program at the Wharton Business School, United States and INSEAD, France.
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2016 board and committee membership | | Attendance |
Board of directors | | 8 of 8 (100%) |
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Audit and risk | | 4 of 4 (100%) |
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Corporate responsibility and technical | | 5 of 6 (83%) |
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|
Public board memberships | | Board committee memberships |
Bank of Nova Scotia | | Audit, Human Resources |
| | |
Calgary, Alberta, Canada
Director since
April 3, 2013
Skill/area of experience (6)
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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22 |
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DIRECTORS |
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J. Paul Rollinson (55) | Chief Executive Officer |
Paul Rollinson was appointed to the Kinross board and as Chief Executive Officer on August 1, 2012. He was appointed Executive Vice-President, Corporate Development in September 2009 after having joined Kinross as Executive Vice-President, New Investments, in September 2008.
Prior to joining Kinross, Mr. Rollinson had a long career in investment banking spanning 17 years. From June 2001 to September 2008, he worked at Scotia Capital where his final position was Deputy Head of Investment Banking. During his time with Scotia, he was responsible for the mining, power/utilities, forestry and industrial sectors. From April 1998 to June 2001 he worked for Deutsche Bank AG, where his final position was Managing Director/Head of Americas for the mining group, and before that, from 1994 to April 1998 he was a senior member of the mining team at BMO Nesbitt Burns. Mr. Rollinson has an Honours Bachelor of Science Degree in Geology from Laurentian University and a Master of Engineering in Mining from McGill University.
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2016 board and committee membership (4) | | Attendance |
Board of directors | | 8 of 8 (100%) |
| | |
Public board and committee memberships: none
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Options held | | | | | ||||||
Date granted | | Expiry date | |
Exercise
price ($) |
|
Options granted
and vested (#) |
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Total
unexercised (#) |
|
At-risk value
of options unexercised (CAD$) (9) |
| | | | | | | | | | |
22/02/11 | | 22/02/18 | | 16.25 | | 152,966 | | 152,966 | | |
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21/02/12 | | 21/02/19 | | 10.87 | | 196,769 | | 196,769 | | |
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17/09/12 | | 17/09/19 | | 9.98 | | 146,384 | | 146,384 | | |
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19/02/13 | | 19/02/20 | | 8.03 | | 455,318 | | 455,318 | | |
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24/02/14 | | 24/02/21 | | 5.82 | | 359,045 | | 538,567 | | |
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13/02/15 | | 13/02/22 | | 3.73 | | 246,313 | | 738,940 | | 339,912 |
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15/02/16 | | 15/02/23 | | 3.11 | | | | 404,577 | | 8,092 |
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Total | | | | 1,556,795 | | 2,633,521 | | 348,004 | ||
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Toronto, Ontario, Canada
Director since
August 1, 2012
Skill/area of experience (6)
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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23 |
DIRECTORS |
For a discussion regarding directors' compensation, please refer to page 25.
The skills and experience of the directors, in areas that are important to the company, are identified and tracked in a matrix. The skills matrix, which is updated annually, can be found on page 24.
Kinross encourages continuing education for its current directors. Details regarding various continuing education events held for, or attended by, Kinross' directors during the financial year 2016 can be found on page 101.
Cease trade orders, bankruptcies, penalties or sanctions
No director is, or within the ten years prior to the date hereof has:
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
Committee membership and independence
The table below shows the 2016 board committee membership of each independent director standing for re-election at the meeting.
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| Committees | |||||||
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Audit and risk
committee |
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Corporate governance
and nominating committee |
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Corporate
responsibility and technical committee |
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Human resource and
compensation committee |
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Ian Atkinson | | | ü | | ü | | ||
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John Brough | | chair | | | | ü | ||
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John Huxley | | ü | | chair | | | ü | |
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Ave Lethbridge | | ü | | | | ü | ||
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Catherine McLeod-Seltzer | | | ü | | chair | | ||
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John Oliver | | | | | chair | |||
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Kelly Osborne | | | ü | | ü | | ||
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Una Power | | ü | | | ü | | ||
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Skills and experience
The matrix below shows the mix of skills and experience of the board as at December 31, 2016 in areas that are important to the company's business. The skills and experience matrix is also used to identify those skills for which the company should recruit when making changes to its board.
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Skill / area of experience |
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Directors with
significant skills or experience |
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Managing or leading growth experience driving strategic direction and leading growth of an organization | | 9 | |
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International experience working in a major organization that has business in one or more international jurisdictions | | 8 | |
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Senior officer experience as a CEO/COO/CFO of a publicly listed company or major organization | | 8 | |
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Operations experience as a senior operational officer of a publicly listed company or major organization or production or exploration experience with a leading mining or resource company | | 9 | |
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Mining or global resource industry experience in the mining industry, combined with a strong knowledge of market participants | | 5 | |
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Information technology experience in information technology with major implementations of management systems | | 3 | |
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Human resources strong understanding of compensation, benefit and pension programs, with specific expertise in executive compensation programs, organizational/personal development and training | | 2 | |
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Investment banking/mergers & acquisitions experience in investment banking, finance or in major mergers and acquisitions | | 8 | |
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Financial literacy senior financial officer of a publicly listed company or major organization or experience in financial accounting and reporting, and corporate finance (familiarity with internal financial controls, Canadian or US GAAP, and/or IFRS) | | 6 | |
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Communications, investor relations, public relations and media experience in or a strong understanding of communications, public media and investor relations | | 7 | |
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Corporate responsibility and sustainable development understanding and experience with corporate responsibility practices and the constituents involved in sustainable development practices | | 7 | |
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Government relations experience in, or a strong understanding of, the workings of government and public policy in Canada and internationally. | | 6 | |
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Governance/board experience as a board member of a major organization | | 6 | |
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Legal experience as a lawyer either in private practice or in-house with a publicly listed company or major organization | | 1 | |
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KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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25 |
DIRECTORS |
Director compensation
Approach
The board retains the services of Mercer to complete a market review of the competitiveness of Kinross' director compensation program. In completing this review, Mercer reviews and analyzes the proxy circulars of companies included in the pre-approved Kinross comparator group (as described under "Market and peer reviews" on page 48) and develops a standardized methodology to compare the total value of programs across these companies and contrast this market view with the current arrangements for the Kinross board. In completing their analysis, Mercer also reviews market trends in director compensation and detailed market data. The board decided not to change the directors' compensation for 2016.
Retainers and fees
The board has established a flat fee structure for all independent directors. The annual board membership retainer payable to independent directors is CAD $210,000. Since April 1, 2012, at least 50% of the board membership retainer is required to be paid in DSUs. On an annual basis, an independent director can also elect to receive a greater percentage of his or her board membership retainer in DSUs.
In addition to the board membership retainer, the chairs of each of the corporate governance and nominating and corporate responsibility and technical committees receive CAD $30,000 and the chair of the audit and risk committee receives an additional CAD $70,000. Other members of the corporate governance and nominating and corporate responsibility and technical committees receive an additional CAD $15,000 per committee and members of the audit and risk committee receive an additional CAD $20,000. The committee chairs do not receive additional member fees for being part of the committee.
The independent chair receives an additional CAD $235,000 but does not receive any fees for being a member of, and acting as chair of the human resource and compensation committee. Other members of the human resource and compensation committee receive an additional CAD $15,000. In addition, independent directors (other than the independent chair) receive a travel fee of CAD $2,000 per trip for travel from outside of Toronto to the board/committee meetings. The independent chair does not receive any travel fee.
Independent directors are also entitled to reimbursement of their reasonable board-related expenses.
The following table sets out details of the flat fee structure for independent directors for 2016:
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| 2016 fees (CAD $) | | |
Board chair (1) | | $235,000 | |
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Board member | | $210,000 | |
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Chair Audit and risk committee | | $70,000 | |
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Chair Corporate responsibility and technical and Corporate governance (2) | | $30,000 | |
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Member (excluding the Chair) Audit and risk committee | | $20,000 | |
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Member (excluding the Chair) Corporate responsibility and technical, Corporate governance and nominating or Human resource and compensation | | $15,000 | |
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KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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26 |
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DIRECTORS |
Deferred share units
The main purpose of the deferred share unit ( DSU ) plan is to strengthen the alignment of interests between the independent directors and the shareholders, by linking a portion of annual independent director compensation to the future value of the common shares.
A DSU is an amount owed by Kinross to the director holding it having the same value as one common share, but which is not paid out until such time as the director terminates service on the board, thereby providing an ongoing equity stake in Kinross throughout the director's period of service.
DSUs are vested at the time of grant. Only independent directors of Kinross and its affiliates can receive DSUs. Dividends paid by Kinross prior to payment of the DSUs, if any, are credited to each holder of DSUs in the form of additional DSUs. The number of DSUs held by that holder multiplied by the amount of the per share dividend, divided by the closing share price on the date of the payment of the dividend, determines the additional DSUs to be credited for dividends.
The number of DSUs granted to an independent director on the last day of each quarter in respect of his or her current quarter compensation is determined by dividing the value of the portion of the director's flat fee to be paid in DSUs by the closing price of the common shares on the TSX on the business day immediately preceding the date of grant.
At such time as an independent director ceases to be a director, Kinross will make a cash payment to the director, equal to the market value of a common share on the date of departure, multiplied by the number of DSUs held on that date.
As CEO of the company, Mr. Rollinson is a non-independent director. As such, he does not receive any DSUs and is compensated solely as an officer of Kinross (see " Compensation discussion and analysis" for executives starting on page 41). A summary of the compensation earned by Mr. Rollinson for 2016 is provided in the " Summary compensation table" on page 82.
Share ownership
In 2007, the board established a policy requiring each independent director to hold a minimum value of common shares and/or DSUs, determined as a multiple of his/her annual board membership retainer, which as of December 31, 2013 is 3 times. However, new directors have five years from the date of their appointment to reach the share ownership requirement. This policy was reviewed in 2016 by Mercer and was found to be aligned to the market. These guidelines are now part of the consolidated Corporate Governance Guidelines adopted by the board in November 2015.
In the event an independent director's holdings fall below the minimum requirement at or after the applicable due date, the director will be required to top-up his or her holdings by fiscal year-end to meet the requirement. Since April 1, 2012, all directors have been required to receive a minimum of 50% of their board membership retainer in DSUs irrespective of when the director joined the board and whether or not their minimum shareholding requirement has been met. Kinross' Disclosure, Confidentiality and Insider Trading Policy ("Policy") prohibits directors from engaging in transactions that could reduce or limit his/her economic risk with respect to equity securities granted as compensation or held, directly or indirectly, by the director. Prohibited transactions include hedging strategies, equity monetization transactions, transactions using short sales, puts, calls, exchange contracts, derivatives and other types of financial instruments. A copy of the Policy may be accessed on the company's website at www.kinross.com .
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
The following table outlines the aggregate value of the common shares and DSUs held by each independent director who was on the board as of December 31, 2016 and whether he or she met Kinross' independent director share ownership requirement as of that date.
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Name |
|
Eligible share
holdings CAD ($) (1) |
|
Exceeds share
ownership requirement by CAD ($) |
|
Multiple of
board retainer |
|
Met current
requirement |
I. Atkinson (3) | | 110,000 | | (520,000) | | 0.6 | | N/A |
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J. Brough | | 1,340,043 | | 710,043 | | 6.4 | | Yes |
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J. Huxley | | 1,923,552 | | 1,293,552 | | 9.2 | | Yes |
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A. Lethbridge (2)(3) | | 341,900 | | (288,100) | | 1.6 | | N/A |
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C. McLeod-Seltzer | | 1,163,499 | | 533,499 | | 5.5 | | Yes |
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J. Oliver | | 2,290,318 | | 1,660,318 | | 10.9 | | Yes |
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K. Osborne (2),(3) | | 233,990 | | (396,010) | | 1.1 | | N/A |
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U. Power (2) | | 989,096 | | 359,096 | | 4.7 | | Yes |
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As CEO of the company, Mr. Rollinson's share ownership requirements are described under "Share ownership" on page 51.
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
Director compensation table
The following table sets out the fees earned by independent directors who served as directors during 2016 and the proportion of fees taken in the form of DSUs. (6)
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Name |
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Board
Membership Retainer in US$ |
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Independent
Chair Retainer in US$ |
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Committee
Chair Retainer in US$ |
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Committee
Member Fees in US$ |
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Travel
Fee in US$ (1) |
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Total Fees
Earned in US$ (3) |
|
2016 Total
DSUs value vested or earned in US$ (2)(5) |
|
Value of all
outstanding DSUs as at Dec 31, 2016 in US$ (4) |
I. Atkinson | | 143,374 | | N/A | | N/A | | 20,482 | | 8,938 | | 172,794 | | 68,129 | | 68,129 |
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J. Brough | | 156,408 | | N/A | | 52,136 | | 11,172 | | 4,469 | | 224,185 | | 184,803 | | 668,780 |
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J. Carrington (5) | | 65,170 | | N/A | | N/A | | 9,310 | | N/A | | 74,480 | | 21,133 | | 688,457 |
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J. Huxley | | 156,408 | | N/A | | 22,344 | | 26,068 | | 5,958 | | 210,778 | | 86,137 | | 630,692 |
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A. Lethbridge | | 156,408 | | N/A | | N/A | | 26,068 | | N/A | | 182,476 | | 153,480 | | 254,647 |
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C. McLeod-Seltzer | | 156,408 | | N/A | | 22,344 | | 11,172 | | 7,448 | | 197,372 | | 79,872 | | 521,850 |
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J. Oliver | | 156,408 | | 175,028 | | N/A | | N/A | | N/A | | 331,436 | | 139,385 | | 1,068,816 |
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K. Osborne | | 156,408 | | N/A | | N/A | | 22,344 | | 8,938 | | 187,690 | | 75,174 | | 174,276 |
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U. Power | | 156,408 | | N/A | | N/A | | 26,068 | | 7,448 | | 189,924 | | 153,480 | | 736,679 |
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TOTAL | | 1,303,400 | | 175,028 | | 96,824 | | 152,684 | | 43,198 | | 1,771,135 | | 961,595 | | 4,812,327 |
| | | | | | | | | | | | | | | | |
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
Board committee reports
Audit and risk committee
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Members | | | | |||
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John A. Brough (Chair) |
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John M. H. Huxley |
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Ave Lethbridge |
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Una M. Power |
The audit and risk committee is composed entirely of independent directors who are financially literate (as such term is defined in National Instrument 52-110 ) and at least two members, Mr. Brough the chair, and Ms. Power are audit committee financial experts in accordance with the NYSE standards and U.S. Securities and Exchange Commission (SEC) requirements. The audit and risk committee has a written charter setting out its responsibilities.
Generally, the audit and risk committee is responsible for overseeing:
The committee monitors Kinross' financial reporting process and internal control systems and provides open lines of communication among the independent auditors, financial and senior management and the full board on financial reporting and controls matters. The committee
In carrying out its mandate, the audit and risk committee met four times in 2016, on each occasion also meeting independent of management. The committee fulfilled its mandate by doing the following, among other things:
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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30 |
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DIRECTORS |
Additional information regarding the company's audit and risk committee is contained in the company's annual information form ( AIF ) under the heading audit and risk committee and a copy of the audit and risk committee charter is attached to the AIF as Schedule A. The AIF is filed annually, on or about March 31, under the company's profile on SEDAR at www.sedar.com . A copy of the charter is also available upon request to the Corporate Secretary and on the company's website at www.kinross.com .
"John A. Brough"
Chair, audit and risk committee
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
Corporate governance and nominating committee
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Members | | | | |||
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Ian Atkinson |
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John M. H. Huxley (Chair) |
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Catherine McLeod-Seltzer |
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Kelly J. Osborne |
The corporate governance and nominating committee is composed entirely of independent directors. The mandate of the corporate governance and nominating committee has been formalized in its written charter. The committee's mandate continues to include responsibility for developing the company's approach to matters of corporate governance, responsibility for identifying and proposing new qualified nominees to the full board, for assessing directors on an on-going basis and to review and make recommendations to the board as to all such matters.
Generally, the corporate governance and nominating committee's mandate includes:
The corporate governance and nominating committee maintains an evergreen list of potential candidates for appointment to the board and a skills matrix to identify skills for recruitment when making changes to the board (see "Skills and experience" on page 24).
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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32 |
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DIRECTORS |
In carrying out its mandate, the corporate governance and nominating committee met four times in 2016, and met independent of management on all of those occasions. The committee fulfilled its responsibilities by doing the following, among other things:
The Corporate Governance Guidelines and the charter of the corporate governance and nominating committee are available on the company's website at www.kinross.com or upon request to the Corporate Secretary.
"John M. H. Huxley"
Chair, corporate governance and nominating committee
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
Corporate responsibility and technical committee
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Members | | | | |||
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Ian Atkinson |
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Catherine McLeod-Seltzer (Chair) |
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Kelly J. Osborne |
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Una M. Power |
The corporate responsibility and technical committee is composed entirely of independent directors. The mandate of the corporate responsibility and technical committee, which has been formalized in its written charter, is to review the development and implementation of strategies, policies and management systems relating to safety, health, environmental stewardship, project permitting, local communities and corporate responsibility generally.
This includes:
In carrying out its mandate, the corporate responsibility and technical committee met six times during 2016, on each occasion also meeting independent of management. The committee fulfilled its responsibilities by doing the following, among other things:
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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34 |
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DIRECTORS |
The committee also provided feedback and advice to management regarding the above matters and reported to the full board on environmental, health, safety, project permitting and corporate responsibility matters related to the company's operations and activities.
A copy of the corporate responsibility and technical committee charter is available upon request to the Corporate Secretary and on the company's website at www.kinross.com .
"Catherine McLeod-Seltzer"
Chair, corporate responsibility and technical committee
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
Human resource and compensation committee
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Members | | | | |||
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John A. Brough |
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John M. H. Huxley |
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Ave Lethbridge |
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John E. Oliver (Chair) |
The human resource and compensation committee, which is composed entirely of independent directors, is responsible for making recommendations to the board on all matters relating to the compensation of the officers (including NEOs), directors and employees of the company.
For the purpose of its mandate, the human resource and compensation committee reviews all aspects of compensation paid to management, directors and employees of other mining companies to ensure the company's compensation programs are competitive so that the company will be in a position to attract, motivate and retain high calibre individuals.
In 2016, the human resource and compensation committee engaged Mercer to provide it support in determining compensation for the company's senior executive officers and directors during the most recently completed financial year (see "Independent advice" , page 46). Determinations made by the committee, however, also reflect factors and considerations other than the information provided by Mercer. For further discussion of the committee and its activities in this area see " Executive Compensation " starting on page 41 and " Compensation governance " on page 41.
The human resource and compensation committee annually reviews succession plans for the CEO and senior leadership team. Internal and external candidates are identified and the development plans of internal successors are reviewed by the committee. Development plans and progress of internal candidates are reviewed by the CEO and senior management regularly. The board becomes familiar with candidates for CEO and senior executive positions through presentations and annual joint management and board planning sessions. The mandate of the human resource and compensation committee has been formalized in a written charter.
In carrying out its mandate, the human resource and compensation committee met six times in 2016, on each occasion also meeting independent of management.
In fulfilling its mandate in 2016 with respect to total compensation, the human resource and compensation committee:
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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36 |
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DIRECTORS |
A copy of the human resource and compensation committee charter is available upon request to the Corporate Secretary and on the company's website at www.kinross.com .
"John E. Oliver"
Chair, Board of Directors
Chair, human resource and compensation committee
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
Executive Compensation
Letter to shareholders
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John E. Oliver (Chair of the board) |
Launching the Tasiast Phase One construction and the Phase Two feasibility study
Advancing Bald Mountain expansion opportunities and doubling the site's proven and probable mineral reserve estimate
Commencing the Round Mountain Phase W feasibility study
Developing the high-grade September Northeast and Moroshka deposits in Russia
To achieve these results, management successfully addressed a challenging gold price environment and identified and capitalized on opportunities for the long-term success of the company:
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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38 |
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EXECUTIVE COMPENSATION |
Acquisition of Nevada assets
The acquisition of Bald Mountain and 50% of Round Mountain was an opportunistic strategic move made during a challenging gold price environment to add quality assets that fit well with the Kinross portfolio. The deal demonstrated management's prudent and disciplined approach to acquisitions, as it added quality assets while preserving balance sheet strength and liquidity.
The addition of Bald Mountain allowed us to leverage our existing strength and workforce in the U.S., expand our footprint in Nevada, one of the best mining jurisdictions in the world, and add to the company's production profile. Management recognized the significant upside potential at Bald Mountain, which is located in a large, underexplored land package: an opportunity to reduce costs, improve productivity, and carry out exploration to add resources and add to mine life. In 2016, Kinross was able to realize the asset's upside potential by doubling proven and probable reserve estimates and potentially extending mine life. Also, at Round Mountain, Kinross has commenced the Phase W expansion feasibility study to potentially extend mine life at one of the most consistent operations in the company's portfolio.
Prudent two-phased expansion at Tasiast
To minimize risk and ensure the strength of our balance sheet in a volatile gold price environment while at the same time recognizing the need for growth Kinross deferred the original expansion plan at Tasiast and developed a unique two-phased approach. The phased approach ensured that a number of potential risk items were addressed and mitigated in advance of beginning the expansion. Phase One development is now underway and is expected to almost double production and reduce operating costs by nearly half when it comes into full production, which is expected in Q2 2018. In parallel, Kinross commenced a feasibility study for the Phase Two expansion, demonstrating a prudent approach in developing this world-class deposit. Phase Two, if approved, is expected to again double production, significantly reduce costs and extend mine life. The market reacted positively to the phased expansion approach, as it strikes the right balance between a manageable investment and reduced execution risk, while preserving the attractive growth opportunity at Tasiast.
Extending life of mine at Kupol
At Kupol, which has been one of our most profitable mines, consistently outperforming its goals, we successfully advanced two high-grade projects to extend mine life: September Northeast, located 15 kilometers from Dvoinoye, where stripping has now commenced, and Moroshka, located four kilometers from Kupol, which is expected to begin mining in the first half of 2018.
We have also refocused exploration efforts within the existing mine footprint at Kupol, where mineralization is open in certain zones. The company's recent review of Kupol generated a series of extension targets. Drilling is planned to evaluate potential additions to mineral reserves and mineral resources from these extension areas.
Balance sheet strength
Maintaining balance sheet strength has been a key priority at Kinross and a foundation of our success. All investment decisions are based on ensuring we preserve our balance sheet strength, which remains one of the best in our peer group.
Kinross ended 2016 with $827 million in cash and cash equivalents and $1.43 billion in available credit for total liquidity of $2.3 billion, no debt maturities until 2020, and a trailing net debt to EBITDA (2) of 0.8. This leaves the company in an excellent position to fund the pipeline of organic development projects while maintaining the financial flexibility to capitalize on any potential opportunities for the longer term.
In the board's assessment, the company had a strong year, and we are very pleased with the efforts of management to deliver value both in 2016 and for the longer term. We have engaged in very productive discussions regarding the future direction of Kinross and are excited about the prospects for the coming years.
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Changes to the Senior Leadership Team
As announced in Q3 2016, Mr. Warwick Morley-Jepson left the company effective December 31, 2016 to pursue new opportunities. Effective January 1, 2017, two new members were added to the Senior Leadership Team ( SLT ): Mr. Lauren Roberts, Senior Vice-President and Chief Operating Officer, and Mr. Paul Tomory, Senior Vice-President and Chief Technical Officer. These changes emphasize our technical capabilities at the leadership level and reinforce the importance of operational excellence. It also allows for a more refined focus on both operations and projects, with clear mandates for both roles.
Our Named Executive Officers for 2016 include the four continuing SLT members (Messrs. Rollinson, Giardini and Gold, and Ms. Jardine), and Mr. Roberts. Mr. Roberts' 2016 compensation reflects his prior role as Senior Vice-President, Corporate Development.
2016 Compensation Highlights
As outlined above, 2016 was a strong year, delivering positive shareholder returns and solid operational performance and advancing organic growth opportunities in all regions. The compensation decisions made by the board reflect that performance:
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Reviewing our compensation programs
Each year, we review our compensation programs for alignment with company strategy and best practices. This is an all-encompassing review, covering the design of our incentive and equity plans, performance metrics used in these plans, pay mix, target compensation levels, comparator group composition, share ownership guidelines, and executive pension and benefits. An important part of our comprehensive review includes careful and close consideration of feedback from shareholders and the proxy advisory firms.
Since 2012, we have given our shareholders an opportunity to vote on our approach to executive compensation. We carefully consider the results of that vote with a view to understanding any concerns. In addition, for the past three years, we have reached out to shareholders to discuss governance and compensation matters, targeting our largest shareholders, and those who have expressed concerns through their votes. In 2016, we reached out to 20 of our largest shareholders, representing about 40% of our outstanding shares, as well as the two primary proxy advisory firms. Overall, these conversations were very positive. Key areas of discussion related to board succession planning, performance metrics used to determine compensation, and environmental, social and governance ( ESG ) matters. For details on this outreach, please see " Say on pay and shareholder engagement" on page 42.
During our 2016 review of our compensation programs, we considered the strong support for our "say on pay" vote, and the feedback we received from our shareholders through our outreach program. The feedback indicated overall satisfaction with our governance and compensation programs, and recognition of the changes we have made in recent years to our programs and disclosure. While no significant changes were made to our compensation program in 2016, we are continuing to review and evaluate alternative performance measures which could be used in our long-term incentive program in response to shareholder feedback.
Shareholder engagement has become an important part of 'how we do business', and we expect to continue our annual outreach.
Sincerely,
John E. Oliver
Chair of the Board and Chair of the Human Resource and
Compensation Committee
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Executive compensation discussion and analysis
Philosophy and approach
The following summarizes Kinross' compensation philosophy for the senior leadership team, outlining the key objectives of this program, as well as the key features which support meeting these objectives:
Kinross' executive compensation program covers the senior leadership team: the President and Chief Executive Officer ( CEO ) and his direct reports. Four of the five named executive officers ( NEOs ) were members of the senior leadership team in 2016. Mr. Lauren Roberts participated in our Canadian Vice-President compensation program. Both of these programs include base pay, a short-term cash incentive and long-term equity incentives, as well as pension and other benefits.
Compensation governance
Compensation oversight
Oversight of Kinross' director and executive compensation programs falls under the human resource and compensation committee.
Four independent directors currently sit on the human resource and compensation committee. The board determined that the composition of the committee should include the chair of the board and the chairs of the corporate governance and nominating committee and the audit and risk committee so that the human resource and compensation committee may benefit from input from their respective committees and expertise.
The committee also includes directors with ongoing direct industry involvement and relevant legal background, resulting in a well-rounded skill and knowledge base. All such directors are independent, and their average tenure on the human resource and compensation committee is more than ten years.
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All of the human resource and compensation committee members have gained experience in human resources and compensation matters by serving as senior executives of major organizations and were directly involved in the design, review and implementation of evolving changes to major compensation programs at such organizations. In addition, one member has specific experience and expertise in executive compensation and human resources management, and one member serves on the compensation committees of other public issuers.
All of the members of the human resource and compensation committee are financially literate.
Three human resource and compensation committee members are also members of the audit and risk committee thus helping ensure that material risks identified by the audit and risk committee are considered in determining executive compensation.
You can find more information about the background, experience and independence of each human resource and compensation committee member by reading their profiles under " About the nominated directors ", starting on page 13.
Say on pay and shareholder engagement
Kinross is committed to engaging with its shareholders on a range of matters, from company performance to corporate responsibility, and from governance to executive compensation (see also "About shareholder engagement" on page 103). Over the past year, Kinross board members and senior executives have engaged with our shareholders on a number of occasions to discuss items of interest to those shareholders.
In 2011, Kinross implemented a non-binding advisory vote to provide shareholders with an opportunity to vote on the company's approach to executive compensation. Following each annual general meeting, all voting results, including the results of the "say on pay" vote, are publicly filed under the company's profile on the SEDAR website at www.sedar.com . Our "say on pay" voting results are summarized below.
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Votes "for" (%) |
2011 | | 95.67 |
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2012 | | 78.47 |
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2013 | | 78.34 |
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2014 | | 74.75 |
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2015 | | 94.11 |
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2016 | | 88.76 |
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In 2014, we initiated a shareholder outreach program specific to compensation and governance where we contacted shareholders who had holdings totalling, in aggregate, over one-third of our issued and outstanding shares as well as the two proxy advisory firms. This program was very successful, leading to a very productive dialogue between Kinross management and the board, and key shareholders. As a result, we have made this outreach an annual event, and met with shareholders during late 2015 / early 2016, and again in 2016-17.
The feedback we receive during these meetings is shared with the human resource and compensation committee and considered when reviewing our compensation programs. Over the past three years, it has been a factor that has influenced a number of changes that we have made to our compensation and governance programs.
In 2016, we reached out to twenty of our largest shareholders holding, in aggregate, about 40% of our issued and outstanding shares, and the two top proxy advisory firms. In selecting the shareholders to whom we reached out, we considered not only the size of their shareholdings, but also those whose proxy voting indicated possible concerns so we could better understand their views and explain our approach. These meetings were very positive, and overall indicated support for our executive compensation and governance programs. There were three key areas raised by shareholders for discussion in these meetings:
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enhancing our disclosure regarding upcoming planned retirement dates. We shared with investors the changes that have taken place to our board since we began our outreach in 2014. In this period, six board members have left the board, three new members have been added, and we have reduced the size of the board from 12 members to nine. We also outlined our process for identifying successors for retiring board members and ensuring a balance of skills, experience and tenure on the board.
In discussing our compensation and governance programs, shareholders acknowledged that they had seen and appreciated some of the improvements we had made to our programs in recent years, and to our disclosure. Overall, our shareholders indicated they were satisfied with our approach to executive compensation and governance. We look forward to continuing these discussions in 2017.
Managing risk
Within the context of Kinross' risk oversight practices, the human resource and compensation committee seeks to approve compensation programs that motivate executives to take action to fulfill the business objectives of the company's strategy without taking undue risks.
Our compensation program for executives includes a number of important compensation and governance best practices that we believe help mitigate risk in this program:
What we do
ü Link incentive compensation measures to strategic and annual objectives
ü Use diversified measures to assess company and individual performance to provide a balanced approach to incentives and avoid undue focus on any particular measure
ü Cover a range of time periods in our incentive plans to balance short-term objectives and longer term performance measurement (from one to seven years)
ü Tie pay to performance by having more than 78% of NEO total direct compensation "at-risk", with annual incentive awards determined based on operational and relative performance
ü Cap incentive payments (150% of target on short-term incentives, and 200% of target on RPSU vesting)
ü Align realized pay to total shareholder returns by providing a significant portion of total compensation in equity awards, and increasing the weighting on performance-based equity while decreasing the weighting on stock options
ü Benchmark compensation against a size and industry appropriate comparator group and target compensation in the median range
ü Align interests of executives with those of shareholders through meaningful share ownership guidelines
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ü Use an independent compensation advisor
ü Apply board discretion, upward and downward, as appropriate to address exceptional circumstances not contemplated by the performance measures
ü Provide shareholders with a "say-on-pay" and conduct an annual shareholder outreach
ü Maintain compensation recoupment policies
ü Maintain double-trigger change of control provisions in executive agreements
ü Conduct an annual risk review of, and include a number of risk mitigation measures in, our compensation programs
ü Implement equity plans that prohibit option cash buyouts and repricing
ü Prohibit the senior leadership team, executives, employees and directors from hedging personal holdings against a decrease in the price of our common shares
What we don't do
ý Provide guaranteed minimum payouts on incentive plans or guaranteed vesting levels for RPSUs
ý Credit additional years of service not earned in the retirement plan
ý Provide future executive agreements that provide severance benefits exceeding two times base salary, bonus and benefits
ý Reprice or reload options
ý Provide loans to executives
ý Provide excise tax gross-ups for change-in-control payments
Annual risk review
Each year, the human resource and compensation committee completes a risk review of the compensation programs, policies and practices for executives and other employees.
This includes a review of both the performance measures and compensation plan designs to assess whether they collectively provide a balanced approach to risk. The goal is to ensure that there is appropriate governance in place to mitigate the risk of compensation practices providing incentives for excessive risk-taking, inappropriate decision-making or fraud.
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As part of its compensation risk review in 2016, the human resource and compensation committee completed the following:
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Reviewed "risk" in Kinross' global compensation programs | ||||
Objective | | Assess whether compensation plans might incent or motivate inappropriate risk-taking, or cause executives to take actions that could have a significant negative impact on the company. | ||
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Process | | The human resource and compensation committee reviewed Kinross' compensation programs, practices and documentation in the context of: | ||
| | | incentive plan performance measures, compensation plan funding, incentive plan performance periods, pay mix, goal setting and leverage, controls and processes; | |
| | | Canadian Securities Administrators' examples of potential situations that could encourage an executive officer to expose the company to inappropriate or excessive risks; and | |
| | | key business risks. | |
| Internal audit and risk has reviewed the materials prepared and provided comments prior to the materials being presented to the committee. | |||
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Outcome | | The human resource and compensation committee has reviewed Kinross' compensation programs and practices, and has not identified any compensation programs or practices that could motivate decision makers, individually or collectively, to take actions that could have a significant negative impact on the organization. Furthermore, the human resource and compensation committee is comfortable that Kinross' key business risks and related performance measures are appropriately considered in our incentive plans. |
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Reviewed realizable pay | ||||
Objective | | Understand actual compensation outcomes for the CEO relative to peers, and review the effectiveness of the compensation program in aligning pay to performance. | ||
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Process | | The human resource and compensation committee reviewed a range of realized and realizable pay calculations, as follows: | ||
| | | Reviewed both realized pay and realizable pay for the CEO calculated using Equilar, ISS and Conference Board Working Group methodologies; | |
| | | Compared realized / realizable pay and performance to six key gold comparators, and the full comparator group over a three year period (2013-2015); and | |
| | | Considered several different readily available performance measures: net income, revenue growth, total shareholder returns, and change in operating cash flow. | |
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Outcome | | The human resource and compensation committee is satisfied that realizable pay over the three-year period when considered relative to peers demonstrated pay for performance alignment. Kinross' realized pay ranked among the lowest of the key gold comparators, aligned to relative total shareholder returns, while realizable pay positioning varied based on the methodology. In addition, the committee recognized that Kinross' operating performance was equal to or better than many competitors during this period, yet realized pay for the CEO was significantly lower than that for key comparators. | ||
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Independent advice
The human resource and compensation committee has retained Mercer Canada Ltd. ( Mercer ) as its independent advisor since 2002 to review and advise the committee on market practices in executive compensation plan design and governance, as well as competitive market benchmarking. Mercer's mandate includes:
Mercer is a wholly-owned subsidiary of Marsh & McLennan Companies ( MMC ), and as such is affiliated with a number of other specialized organizations also owned by MMC, such as Oliver Wyman, Marsh Canada, and National Economic Research Associates. These affiliate organizations have provided services to Kinross that are not related to executive compensation.
Mercer's professional standards prohibit the individual consultant from considering any other relationships Mercer or any of its affiliates may have with the company in rendering his or her advice and recommendations. Mercer consultants are not compensated based upon client revenue from other lines of business or other MMC companies. As such, fees paid by Kinross to Marsh Canada of $1,715,395 do not impact or influence the compensation paid to Kinross' board advisor. The board is confident that Mercer's independence and objectivity is not compromised by the relationships the company has with other MMC entities, and continues to consider Mercer to be independent. Detailed below is the SEC six factor independence test which is reviewed annually by Kinross' human resource and compensation committee.
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Although Mercer provides independent advice to the human resource and compensation committee, the decisions reached by the committee reflect factors and considerations beyond the information and recommendations provided by Mercer.
In respect of fiscal 2016, Mercer conducted a competitive benchmarking analysis for the NEOs and other members of the senior leadership team and independent directors, provided assistance with the drafting of the management information circular disclosure, and updated the committee regarding governance matters. Mercer attended all or part of the human resource and compensation committee meetings.
The human resource and compensation committee must pre-approve services that Mercer provides to the company at the request of management with respect to executive compensation related services. From time to time Mercer and affiliate organizations may provide services to the company that are not related to executive compensation. The human resource and compensation committee reviews and considers those services and fees annually, but does not pre-approve such services.
Below is a summary of the fees paid to Mercer for its services to the human resource and compensation committee as well as fees paid to affiliates of Mercer for their unrelated services to the company, for the last two fiscal years ended December 31, excluding applicable taxes.
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Services provided |
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2016
(US$) (1) |
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Services provided |
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2015
(US$) (1) |
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Executive compensation-related fees | | $68,399 | | Executive compensation-related fees | | $80,266 | |
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Competitive benchmarking analysis for the NEOs and independent directors | | | Competitive benchmarking analysis for the NEOs and independent directors | | | ||
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Assistance with drafting of proxy disclosure | | | Assistance with drafting of proxy disclosure | | | ||
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Governance updates | | | Governance updates | | | ||
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Attendance at human resource and compensation committee meetings | | | Attendance at human resource and compensation committee meetings | | | ||
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Other fees Mercer | | $64,601 | | Other fees Mercer | | $59,999 | |
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Published surveys, industry forums and data, cost of living report | | | Published surveys, industry forums and data, cost of living report | | | ||
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| | Global mobility membership | | | |||
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Other fees affiliated organizations | | $1,715,395 | | Other fees affiliated organizations | | $2,273,683 | |
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Marsh Canada Limited insurance brokerage fees and insurance claim advocacy | | | Marsh Canada Limited insurance brokerage fees and insurance claim advocacy | | | ||
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Annual review and decision-making
Meeting the objectives of the company's executive compensation program requires careful consideration of several key factors:
It also requires diligent oversight and alignment with prudent risk-taking, as described under " Compensation governance " on page 41.
The human resource and compensation committee reviews each of these factors and the program as a whole on an annual basis to satisfy itself that they continue to be fair, competitive, and aligned with the objectives of the compensation program. They also consider shareholder feedback and best practices. Details on changes made as a result of the 2016 review are described in the following sections.
Market and peer reviews
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To ensure that our executive compensation program continues to "enable Kinross to attract and retain high performing executives", the human resource and compensation committee approves the companies in Kinross' compensation comparator group on an annual basis. In 2016, the committee considered companies that are similar to Kinross in size, scope, complexity of operations; and that are appropriate and reflective of the companies with which Kinross competes for executive management talent and/or capital. To be included in our compensation comparator group, a company needed to meet the criteria noted. In completing this review and making changes, the committee: |
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Considered shareholder
feedback relating to the composition of the comparator group;
Wanted to maintain a
high degree of comparability from year to year in the comparator group to minimize volatility in the compensation targets; and
Looked to keep a high proportion of the comparator group in the gold mining sector. |
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As a result of this review, the committee made only one change to the companies included in the comparator group, removing Peabody Energy Corporation which had filed for bankruptcy protection. |
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The following is the 2016 compensation comparator group:
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| | | | Market Cap (US$millions) | ||||
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Company (TSX or NYSE Ticker Symbol) |
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Industry (GICS) |
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Scope of Operations (2) |
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5 Year Average
(2011-2015) (US$) (1) |
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Dec 31/15
(US$) (1) |
Barrick Gold Corporation (ABX) | | Gold | | Argentina, Australia, Canada, Chile, Dominican Republic, Papua New Guinea, Peru, Saudi Arabia, United States, Zambia | | $28,346 | | $8,628 |
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Goldcorp, Inc. (G) | | Gold | | Argentina, Canada, Dominican Republic, Guatemala, Honduras, Mexico | | $25,813 | | $9,602 |
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Newmont Mining Corporation (NEM) | | Gold | | Australia, Ghana, Suriname, Peru, United States | | $18,697 | | $9,528 |
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Teck Resources Limited (TCK) | | Diversified Metals & Mining | | Canada, Chile, Peru, United States | | $16,222 | | $2,226 |
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Newcrest Mining Limited (NCM) | | Gold | | Australia, Côte d'Ivoire, Indonesia, Papua New Guinea | | $15,397 | | $7,685 |
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Encana Corporation (ECA) | | Oil & Gas Exploration & Production | | Canada, United States | | $14,439 | | $4,320 |
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Agrium Inc. (AGU) | | Fertilizers & Agricultural Chemicals | | Argentina, Australia, Brazil, Canada, Chile, Egypt, France, Germany, Italy, Romania, United States, Uruguay | | $13,811 | | $12,342 |
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AngloGold Ashanti Limited (AU) | | Gold | | Argentina, Australia, Brazil, Colombia, Democratic Republic of Congo, Ghana, Guinea, Mali, Tanzania | | $9,531 | | $2,781 |
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First Quantum Minerals Ltd. (FM) | | Diversified Metals & Mining | | Australia, Finland, Mauritania, Spain, Turkey, Zambia | | $9,462 | | $2,577 |
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Cameco Corporation (CCO) | | Coal & Consumable Fuels | | Canada, Kazakhstan, United States | | $8,102 | | $4,886 |
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Yamana Gold Inc. (YRI) | | Gold | | Argentina, Brazil, Canada, Chile | | $8,024 | | $1,760 |
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Randgold Resources Limited (RRS) | | Gold | | Democratic Republic of Congo, Côte d"Ivoire, Mali | | $7,606 | | $5,691 |
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Agnico Eagle Mines Ltd (AEM) | | Gold | | Canada, Finland, Mexico | | $7,118 | | $5,735 |
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Eldorado Gold Corp. (ELD) | | Gold | | Greece, Turkey | | $6,404 | | $2,125 |
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Gold Fields Limited (GFI) | | Gold | | Australia, Ghana, Peru, South Africa | | $6,403 | | $2,116 |
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Cliffs Natural Resources Inc. (CLF) | | Steel | | Australia, United States | | $5,054 | | $243 |
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New Gold Inc. (NGD) | | Gold | | Australia, Canada, Mexico, United States | | $3,428 | | $1,186 |
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IAMGOLD Corporation (IMG) | | Gold | | Burkina Faso, Canada, Mali, Suriname | | $3,357 | | $560 |
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The following charts show Kinross' size relative to the comparator group, as well as the breakdown of the comparator group by industry (based on the Global Industry Classification Standard, or GICS):
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Comparator group by industry
The compensation data gathered for the companies in the comparator group is referenced when determining a starting base salary for new executives, when considering annual total compensation awards (base salary increases, short- and long-term incentives) for the company's senior leadership team, as well as when reviewing other elements of the total compensation provided (e.g. pension and benefits) and market best practices. In addition, the human resource and compensation committee reviews compensation levels of companies in the S&P TSX 60 to understand the position of Kinross' compensation relative to the general Canadian market.
Each compensation element for each NEO is reviewed against the 50 th percentile and the 75 th percentile for comparable positions within the comparator group. The company targets total compensation in the median range of the comparator group, however other factors will influence the position of an executive's actual total compensation in any given year, including the number of applicable comparator positions, internal equity, unique roles and responsibilities and company and/or individual performance. Emphasis is placed on incentive or "at-risk" compensation. Where executive performance is below expectations, total compensation will be lower relative to the market; where executives achieve exceptional results, it will result in higher total compensation. However, in all cases the comparator data is used as a reference and guideline, and other factors are considered by the human resource and compensation committee in determining compensation for executives.
In addition, the company maintains a performance peer group , which is limited to the 12 gold companies in the compensation comparator group. As these companies are subject to the same commodity cycle and price pressures, we believe they are the most relevant group for assessing performance. The human resource and compensation committee considers this peer group when assessing Kinross' relative total shareholder returns and relative performance on other metrics.
Compensation mix
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To meet the objectives of the Kinross executive compensation program, Kinross has chosen to use a variety of forms of compensation, including base pay and "at-risk" compensation (short- and long-term incentives), as well as pension and other benefits. Kinross believes this mix will enable us to attract and retain a top calibre senior leadership team, align their | |
interests with Kinross' long-term strategy and the interests of shareholders, and reinforce Kinross' strategic performance and execution of strategic objectives. The human resource and compensation committee has established a target pay mix (the proportion of total direct compensation which comes from each of base salary, short- and long-term incentives) for senior executives. The target mix is reviewed annually to ensure that it continues to be effective, and adjustments are made from time to time as necessary. When annual compensation recommendations are prepared, actual mix is reviewed and adjustments to compensation may be made to better align proposed compensation to the target pay mix.
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The mix in direct compensation achieved in 2016 for Kinross' CEO and the average mix for the other NEOs is set out below. Further details regarding each element of compensation can be found under " Components of Executive Compensation " starting on page 55.
Compensation is in Canadian dollars and was converted to United States dollars for purposes of these graphs using the exchange rate of CAD $1.00 = USD $0.7448.
The mix of long-term incentive components is also reviewed annually. Kinross introduced restricted performance share units ( RPSUs ) as part of the 2008 annual compensation awards, with a weighting of 5% of total equity awards. Since then, the human resource and compensation committee has increased the weighting on RPSUs five times, resulting in the CEO receiving 50% of his equity in the form of RPSUs for 2014 to 2016, and RPSUs making up 50% of the equity granted to the other members of the senior leadership team for 2015 and 2016.
In all other aspects, the human resource and compensation committee concluded that the company's compensation mix in 2016 met its stated objectives.
Share ownership
An important objective of Kinross' executive compensation plan is to align executive interests with Kinross' long-term strategy and the interests of shareholders. To accomplish this objective, we include long-term equity-based incentives as a significant portion of annual compensation, and require the senior leadership team to hold common shares.
Kinross implemented a share ownership policy for its senior executives in December 2006, and then reviewed and updated it to increase the share ownership requirements in February 2008, and to include a portion of an executive's RPSUs in the calculation in 2012. No change is currently planned to the policy in 2017; however Kinross will be completing its annual review of its programs later this year to ensure alignment with market best practices, its long-term strategy and the interests of shareholders.
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| Under this policy, NEOs and certain other senior executives are required to hold a minimum value in common shares, restricted share units and/or RPSUs (but not options), determined as a multiple of his or her average year-end base salary for the most recent three years ( average salary ). The value held is determined as the greater of book value or market value of the common shares and/or restricted share units (including 80% of RPSUs) held by the executive. Senior executives must meet this requirement within three years of being hired or promoted to a level with a higher share ownership requirement. |
Kinross prohibits the senior leadership team, executives, employees and directors from hedging personal holdings against a decrease in the price of our common shares.
While the company has not implemented a holding policy, as a practice Kinross executives generally hold most of the shares they receive, both before and after meeting the share ownership requirements. For example, our CEO has not sold any shares in the past six years, except to cover taxes payable in connection with the issuance of these shares. The following table shows the status of each NEO's holdings relative to the share ownership requirements on December 31, 2016. All of Kinross' NEOs who have reached the deadline for achieving their share ownership requirements have met or exceeded their requirements.
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Name |
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Eligible share holdings (1)(2)(3) |
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2016 share ownership | ||||||||||||||
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Value of
RSUs (US$) |
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Value of
RPSUs (US$) |
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Value of
common shares (US$) |
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Value of
total (US$) |
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Required
multiple of average salary |
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Required
value (4) (US$) |
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Holdings
multiple of average salary |
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Multiple of
requirement met (3) |
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Deadline to meet
requirement (5) |
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| # of RSUs |
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# of RPSUs |
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# of common
shares |
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# of total |
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J. Paul Rollinson | | $2,158,942 | | $3,958,675 | | $3,956,075 | | $10,073,691 | | 5x | | $4,841,201 | | 10.4x | | 2.1 | | n/a |
| 675,685 | | 1,217,012 | | 728,683 | | 2,621,380 | | | | | | ||||||
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Tony S. Giardini | | $879,772 | | $1,277,981 | | $1,069,214 | | $3,226,967 | | 3x | | $1,452,360 | | 6.7x | | 2.2 | | n/a |
| 284,468 | | 393,986 | | 323,693 | | 1,002,146 | | | | | | ||||||
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Geoffrey P. Gold | | $934,329 | | $1,357,488 | | $2,281,796 | | $4,573,613 | | 3x | | $1,519,392 | | 9.0x | | 3.0 | | n/a |
| 302,664 | | 419,750 | | 316,497 | | 1,038,911 | | | | | | ||||||
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Gina M. Jardine | | $363,388 | | $458,034 | | $107,863 | | $929,285 | | 3x | | $1,061,340 | | 2.6x | | 0.9 | | April 7, 2018 |
| 143,144 | | 185,467 | | 20,928 | | 349,539 | | | | | | ||||||
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Lauren M. Roberts | | $494,379 | | $402,356 | | $487,561 | | $1,384,297 | | 3x | | $1,209,835 | | 3.4x | | 1.1 | | January 1, 2020 |
| 159,231 | | 123,630 | | 100,690 | | 383,551 | | | | | | ||||||
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53 |
EXECUTIVE COMPENSATION |
How we pay for performance
A substantial portion of the senior leadership team's compensation is at risk and linked to the company's performance:
Kinross' annual operating performance objectives are laid out in its Four Point Plan, with a short-list of strategic measures aligned to the Four Point Plan being used to measure company performance for the senior leadership team (the SLT measures ). Each year, the board approves the specific performance measures and associated metrics for the year, which are linked to the company's core purpose of leading the world in generating value through responsible mining, and are aligned to the long-term strategy, as further discussed under "Assessing 2016 company performance" on page 68. More detailed tactics and objectives are cascaded through the organization to provide alignment with performance objectives.
At the end of the year, company performance is assessed based on the Four Point Plan and SLT measures, and individual performance is assessed based on related individual objectives. In addition, company performance is reviewed relative to competitor companies. Considering both absolute and relative performance, individual and company performance multipliers are established for short-term incentive purposes, and a multiplier is determined to calculate long-term incentives. These decisions drive the calculation for the initial compensation recommendations for the senior leadership team, including the CEO, as outlined below.
After reviewing the initial compensation recommendations, the CEO and the human resource and compensation committee make adjustments based on pay mix, market positioning, internal equity, retention and shareholder returns, as well as extraordinary circumstances.
For more information on the performance measures established for the company and each individual, as well as actual performance relative to these targets which was considered in establishing individual and company multipliers, see " 2016 SLT measures " on page 69, and "Individual performance Named executive officers ", starting on page 76.
Using discretion
Kinross seeks to foster a culture that encourages an objective assessment of performance and the exercise of appropriate discretion to adjust compensation to reflect unsatisfactory or exceptional performance. While the emphasis is on actual and relative performance, as well as competitive market data, the CEO and the human resource and compensation committee may also exercise discretion to reflect extraordinary events and prevailing circumstances and market conditions.
In 2016, the human resource and compensation committee applied its judgment in the assessment of company and individual performance, and felt that the compensation outcomes resulting from the application of the compensation programs and formulae were appropriate. The committee did not exercise any further discretion to change these outcomes.
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54 |
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EXECUTIVE COMPENSATION |
Compensation approval process
The executive compensation process depends on assessing company and individual performance. The annual cycle to measure performance, then determine and approve executive compensation, is as follows:
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55 |
EXECUTIVE COMPENSATION |
The CEO evaluates his direct reports based on their performance against individual objectives and their contribution to overall company performance. Based on that assessment, he makes a recommendation regarding their individual short-term incentive ( STI ) component to the human resource and compensation committee for approval. The CEO and human resource and compensation committee may also exercise discretion when making incentive compensation decisions, as outlined under "Using discretion" above.
Details of the compensation granted to the NEOs are reported in the "Key summary tables" starting on page 82.
Components of executive compensation
The table below summarizes the components of our 2016 executive compensation plan applicable to all Named Executive Officers ( NEOs ). More information about the individual components and mix can be found on pages 56 to 67.
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Component |
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Form |
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Period |
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How we determine the award |
Base salary | |
Cash
(page 56) |
| One year | | Based on role, market comparators, internal equity, individual experience and performance. |
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Short-term
incentive |
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Cash
(page 56) |
| One year | |
Target award is established based on market comparators and internal equity.
Actual awards are based on company and individual performance, and consider overall pay mix guidelines. |
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Long-term (equity) incentive (pages 57 to 64) |
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Restricted share units ( RSUs ) (page 59) |
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Three years; vest in thirds over three years |
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Target grant value based on market comparators. Actual grant value may be above or below target based primarily on company and individual performance. The human resource and compensation committee determines the mix of equity to be granted to NEOs for each calendar year. For 2016, RSUs made up 30% of the NEO's long-term incentive award (50% for Mr. Roberts (1) ). |
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Restricted performance share units ( RPSUs ) (pages 60 to 63) |
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Three years; vest at end of three years, based on performance relative to targets |
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Target grant value based on market comparators. Actual grant value may be above or below target grant value based primarily on company and individual performance. Final amount vested is based on company performance relative to performance measures. For the 2016 grant, these measures were: relative total shareholder return; production; and all-in sustaining cost (2) per ounce. For the 2016 grant, RPSUs made up 50% of the NEOs long-term incentive award (35% for Mr. Roberts (1) ). |
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Options (page 64) |
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Seven year term; vest in thirds over three years |
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Target grant value based on market comparators. Actual grant value may be above or below target based primarily on company and individual performance. For the 2016 grant, options made up 20% of the NEOs' long-term incentive awards (15% for Mr. Roberts (1) ). |
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Employee
benefits and perquisites |
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Benefits and
perquisites (page 65) |
| Ongoing | |
Based on market comparators.
Includes life, accidental death, critical illness, and disability insurance, health & dental coverage, benefit reimbursement plan, security services, and other benefits. |
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Employee share
purchase plan (page 66) |
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Continuous based
on eligibility requirements |
| Employees including NEOs may contribute up to 10% of their base salary. 50% of the participant's contribution is matched by the company on a quarterly basis and total contributions are used to purchase company shares. | |
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Retirement allowance |
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Executive retirement allowance plan (page 67) |
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Ongoing |
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Based on market comparators. 15% or 18% of base salary and target bonus, accrued quarterly. Mr. Roberts did not participate in this plan or any other pension plan in 2016 (1) . |
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KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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56 |
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EXECUTIVE COMPENSATION |
Base salary
To attract and retain a high-performing senior executive team, Kinross targets base salaries around the median of the compensation comparator group.
Base salaries paid to individual executives reflect:
Each year Kinross reviews competitive market data and completes individual performance assessments. Where necessary, base salaries are adjusted to reflect individual performance and remain competitive in the market. The human resource and compensation committee reviewed base salaries in February 2016, but considering current market conditions and market data, decided not to increase base salaries at that time. Following two years of salary freeze, in February 2017, the committee approved increases for the existing SLT members to recognize performance and to better align to the market and internal equity. The following are the 2017 salaries for the named executive officers (all in Canadian dollars):
Further information regarding each executive's 2016 base salary is provided with the "Summary compensation table" on page 82.
Short-term incentive plan
Kinross' short-term incentive plan covers salaried employees across the company and is designed to reward company, site / region and individual performance in the most recent fiscal year. The measures for the year are focused on strategic and operational metrics which are within the control of executives and employees and are cascaded throughout the organization. The senior leadership team short-term incentives are calculated as follows:
Of the NEOs, only Mr. Roberts' short-term incentive was determined differently, with a target short-term incentive of 45%, and 50% weighting on each of the company and individual performance multipliers.
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57 |
EXECUTIVE COMPENSATION |
Target incentive Short-term incentive targets are established based on competitive market data and internal equity, and target levels are reviewed regularly for competitiveness. Mr. Roberts' target was increased to 75% effective January 1, 2017, as a result of his promotion to Senior Vice-President and Chief Operating Officer. No other adjustments were made to the short-term incentive targets for NEOs for 2016 or 2017.
Company performance multiplier Each year, the board reviews company performance against the objectives established for the senior leadership team, as well as the company's relative performance compared to its competitors. The board then determines the company performance multiplier which will apply to the senior leadership team. This multiplier can range from 0 150%, and makes up approximately 60% of their total short-term incentive. The weighting on company performance varies by level across the organization, and the multiplier for employees, determined based on Four Point Plan objectives, may be different from that for the senior leadership team. For 2016, the board approved a company performance multiplier of 107% for the senior leadership team (for details, see "2016 SLT measures" on page 69), and 107% based on the Four Point Plan which was applied to Mr. Roberts.
Individual performance multiplier The remaining 40% (approximately) of the short-term incentive is based on individual performance. The CEO reviews individual performance for his direct reports for the year against individual objectives aligned to the Four Point Plan, and determines an individual performance multiplier using the same range (0 150%). A similar review for the CEO's performance is completed by the human resource and compensation committee. The assessment of individual performance is not a formulaic process and judgment is exercised in determining the individual performance multiplier to be applied. Details regarding individual performance and the resulting multipliers are provided under "Individual performance Named executive officers" , starting on page 76.
Once the short-term incentive is calculated using the factors and formula outlined above, the pay mix is also reviewed, and adjustments may be made to the proposed short-term incentive and/or planned equity awards to better align cash and equity for the senior leadership team to the target pay mix.
In addition, the CEO and human resource and compensation committee retain discretion to make adjustments to the final individual incentive payments based on factors such as market performance and competitive compensation, year-over-year performance and compensation, and internal equity.
The CEO and human resource and compensation committee also retain the right to exercise discretion when making short-term incentive compensation decisions to reflect extraordinary events, prevailing circumstances and market conditions as outlined under "Using discretion" , on page 53. In 2016, no discretion was applied to adjust the short-term incentive awards for the CEO or other NEOs.
Occasionally, as part of an overall retention strategy and aligned to our talent management and succession programs, Kinross may grant retention bonuses to certain executives which are paid out in cash on a certain date, subject to continued employment until such date. Mr. Roberts received such awards in 2012, paid in 2014; in 2014, paid in 2015 and 2016, and in 2015 in connection with his relocation, paid in 2016. These amounts have been included in the "Summary compensation table" .
Long-term incentives
Kinross provides long-term equity incentive compensation with the following objectives:
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58 |
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EXECUTIVE COMPENSATION |
Long-term incentives are granted as part of the company's annual performance and compensation review, and may also be granted on hire, and in certain circumstances, as a result of a promotion. In determining eligibility and target grant levels for long-term incentives, the human resource and compensation committee considers competitive market practices, as well as internal equity and the importance of different roles to the organization.
The value of an individual's actual annual grant is determined as a multiplier of annual base salary based primarily on company and individual performance. Other factors considered include: position, level of responsibility, long-term performance, potential, and retention factors. The human resource and compensation committee also considers each NEO's existing holdings and outstanding awards (including previously granted awards) prior to determining the annual grant. The value of the annual grant may be further reduced or increased based on the positioning of total direct compensation relative to the comparator group, considering relative individual and company performance and other factors. The resulting pay mix is then reviewed with adjustments made to the proposed short-term incentive and/or planned equity awards to better align cash and equity for each NEO to the target pay mix. The CEO and the human resource and compensation committee may exercise discretion to reflect extraordinary events, prevailing circumstances and market conditions.
Once the total value of the grant has been determined, it is divided among the component elements of Kinross' equity incentive plan: share options, RSUs, and RPSUs. Each year the human resource and compensation committee reviews the relative weighting of each component as compared to current competitive market practices and the objectives of the plan, and makes adjustments as needed.
Over the last five years, the committee has made a number of adjustments to the mix, consistently increasing the weighting on RPSUs, while decreasing the weightings on options as well as RSUs. The weighting of the components of the annual equity award for 2011 to 2016 was as follows:
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| Component |
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2011
policy weightings |
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2012
weightings |
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2013
weightings |
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2014
weightings |
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2015
weightings |
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2016
weightings (2) |
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CEO (1) | | RPSUs | | 25% | | 33% | | 40% | | 50% | | 50% | | 50% | |
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| RSUs | | 40% | | 33% | | 40% | | 30% | | 30% | | 30% | | |
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| Options | | 35% | | 33% | | 20% | | 20% | | 20% | | 20% | | |
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Other NEOs | | RPSUs | | 25% | | 30% | | 33% | | 40% | | 50% | | 50% | |
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| RSUs | | 40% | | 40% | | 33% | | 40% | | 30% | | 30% | | |
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| Options | | 35% | | 30% | | 33% | | 20% | | 20% | | 20% | | |
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In 2009, Kinross implemented an automatic securities disposition plan (ASDP) to provide an opportunity for certain of its senior executives to sell a portion of the common shares issued on vesting of RSUs at times when they might otherwise be unable to do so due to restrictions under Canadian securities laws or trading blackouts imposed under Kinross' insider trading policy.
Executives make an election to participate in the ASDP and may participate only if they meet Kinross' minimum share ownership requirements (see page 51). The ASDP enables participating executives to automatically sell up to 25% of the common shares issuable to them following vesting of their RSUs. These common shares are sold by an independent securities broker following a pre-determined quarterly sales schedule. There are certain restrictions on an executive's ability to modify or terminate their participation in the plan.
In 2016, no senior executives participated in the ASDP.
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59 |
EXECUTIVE COMPENSATION |
Restricted share units
RSUs are granted under the Kinross Restricted Share Plan. In determining the value of grants for the NEOs, the human resource and compensation committee considers previous grants (i.e., existing holdings and outstanding awards). The number of units granted to an eligible employee is determined by dividing the dollar value of the grant by the closing share price on the last trading day immediately preceding the date of grant. Each RSU is exercisable for one common share, without additional consideration, after the expiry of a restricted period established at the time of grant. Holders also have the option of forfeiting shares otherwise receivable in exchange for the company paying taxes on the holder's behalf.
Key terms under the Restricted Share Plan that apply to all grants of RSUs (as well as all grants of RPSUs, which are also granted under this plan) include the following:
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60 |
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EXECUTIVE COMPENSATION |
For information on amendments which can be made to the plan, please see the "Additional equity compensation plan information" section beginning on page 87 and the "Plan amendments" section beginning on page 88.
Restricted performance share units
Beginning with the equity grant for 2008 (granted in February 2009), Kinross introduced RPSUs, which are RSUs with a performance element. In determining the value of grants for the NEOs, the human resource and compensation committee considers previous grants (i.e., existing holdings and outstanding awards). The number of units granted to an eligible employee is determined by dividing the dollar value of the grant by the unit value determined using a "Monte Carlo" model for the relative total shareholder return portion of the RPSUs and the closing share price on the last trading day immediately preceding the date of grant for the other performance measures.
RPSUs are granted under the Restricted Share Plan, and are subject to all the key terms under the Restricted Share Plan outlined above, including treatment on termination, death or disability, and change of control. As with all grants under the restricted share plan, the grant of RPSUs is accompanied by a restricted share agreement which outlines the specific terms associated with that grant. The agreement associated with RPSUs generally includes the following additional terms:
The performance measures associated with the RPSU grant are reviewed each year by the human resource and compensation committee and adjustments are made from time to time to align with company strategy. The following table outlines the measures and percent vesting for all grants from 2009 to 2016.
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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2008 |
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2009 |
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2010 |
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2011 |
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2012 |
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2013 |
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2014 |
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2015 |
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2016 | | |
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Performance measure |
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Measurement period |
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Weighting | | ||||||||||||||||
Relative total shareholder return | | Three calendar years | | 50% | | 50% | | 40% | | 40% | | 50% | | 50% | | 50% | | 50% | | 50% | |
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Production | | Annual, average of the multiplier realized in each of the three years | | 25% | | 25% | | 20% | | 20% | | 25% | | 25% | | 25% | | 25% | | 25% | |
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All-in sustaining cost per gold ounce sold (1) | | Annual, average of the multiplier realized in each of the three years | | | | | | 25% | | 25% | | 25% | | 25% | | 25% | | ||||
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Production cost of sales per gold equivalent ounce | | Annual, average of the multiplier realized in each of the three years | | 25% | | 25% | | 20% | | 20% | | | | | | | |||||
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Gold reserves | | Annual, average of the multiplier realized in each of the three years | | | | 20% | | 20% | | | | | | | |||||||
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Total | | | 100% | | 100% | | 100% | | 100% | | 100% | | 100% | | 100% | | 100% | | 100% | | |
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Percent of units granted that vested (year of vesting) (2) | | 37% | | 45% | | 58% | | 70% | | 67% | | 82% | | TBD | | TBD | | TBD | | ||
| | (2012) | | (2013) | | (2014) | | (2015) | | (2016) | | (2017) | | (Vest in 2018) | | (Vest in 2019) | | (Vest in 2020) | | ||
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Weighting |
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Vesting level | | |
| Relative total shareholder return | | Three calendar years | | 50% | | 50% | |
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| Production | | Annual, average of the multiplier realized in each of the three years | | 25% | | 125% | |
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| All-in sustaining cost per gold ounce sold | | Annual, average of the multiplier realized in each of the three years | | 25% | | 101% | |
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| Weighted average | | | | 82% | | ||
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The number of RPSUs that vest based on company performance relative to each of the measures is determined based on a vesting schedule established for each grant. The RPSUs included in 2016 compensation and granted in February 2017 will vest based on the schedule below. The 2017 vesting schedules for production and all-in sustaining cost per ounce will also apply to the 2015 and 2014 grants. Production and all-in sustaining cost per gold ounce sold targets and vesting schedules for the remaining years of the 2016 grant will be established by the human resource and compensation committee (HRCC) early in the applicable calendar year.
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Performance over three-year |
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Details |
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Percent of units that will vest | | ||||
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vesting period |
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Maximum
150% (1) |
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Target
100% |
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Threshold
0% |
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Relative total shareholder return (RTSR) ranking | | Total Shareholder Return performance over the three calendar years ranked against the performance peer group, as follows: Agnico-Eagle; Anglogold Ashanti (2) ; Barrick; Eldorado (2) ; Gold Fields (2) ; Goldcorp; IAMGOLD (2) ; New Gold (2) ; Newcrest (2) ; Newmont; Randgold (2) ; Yamana; S&P TSX Gold Index Performance of each peer company is assessed on the applicable U.S. stock exchange. The TSR for each company (including Kinross) and the index will be calculated for the three year period, and Kinross' ranking within that group is determined (i.e. 1st, 2nd etc.). The HRCC has discretion to adjust the RTSR measure in the event of a material change in the companies included in the peer group during the three year time frame. | |
1st to 3rd rank
and positive absolute TSR |
| 6th or 7th | | 12th to 14th | |
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Production
(2017 range) |
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Target is to meet production guidance for each calendar year. Multipliers are set annually by the HRCC based on the target production level for the year. Production will be adjusted from the figure disclosed in the financial statements for variances
in the ratio of gold to silver price which is used to convert silver production to gold equivalent ounces.
HRCC has discretion to adjust the production measure in the event of extraordinary circumstances. |
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+5.8%, and
still within guidance on All-in sustaining cost |
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Midpoint of
guidance |
| -15.4% | |
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All-in sustaining cost per ounce
(3)
(2017 range) |
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Target is to meet all-in sustaining cost per ounce targets set for each calendar year. The calculation of all-in sustaining cost for RPSUs is consistent with the figure publicly disclosed in 2014 as part of Kinross' annual guidance (except for
adjustments noted below), and is calculated from: by-product cost plus G&A (excluding severance), Business Development, Other Operating Costs (not related to growth), Exploration Expense (excl. offsite exploration), sustaining capital and
other capital (interest and exploration). Multipliers are set annually by the HRCC based on the target level for the year.
All-in sustaining cost per ounce will be adjusted from the figure disclosed in the financial statements for variances relative to budget to the following material assumptions: gold price; oil price, inflation and foreign exchange. |
| -10.3% | |
Midpoint of
guidance |
| +20.5% | |
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63 |
EXECUTIVE COMPENSATION |
The actual number of RPSUs to vest is calculated as follows:
The human resource and compensation committee has discretion to adjust performance measures in the event of extraordinary circumstances, and retains the right to modify the performance measures for future grants. No discretion was exercised relating to these performance measures in 2016.
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64 |
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EXECUTIVE COMPENSATION |
Stock options
Stock options are granted under the Share Option Plan. In determining the value of grants for the NEOs, the human resource and compensation committee considers previous grants (i.e., existing holdings and outstanding awards). The number of options to be granted to an eligible executive is determined by dividing the dollar value of the grant by the Black-Scholes value based on the closing share price on the last trading day immediately preceding the date of grant.
The following are some key terms under the Share Option Plan which apply to all grants of options:
For information on amendments which can be made to the plan, please see the "Additional equity compensation plan information" section beginning on page 87 and the "Plan amendments" section beginning on page 88.
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65 |
EXECUTIVE COMPENSATION |
Employee benefits and perquisites
Benefits and perquisites
Kinross provides all of its Canadian employees, including the NEOs, with a competitive benefits program including: medical and dental insurance for employees and their dependents; life, accidental death & dismemberment, and critical illness coverage; and income protection in case of disability. Employees can elect to purchase additional life and accidental death coverage at a reduced rate by paying additional premiums.
In addition to the benefits available to all Canadian employees, in 2016 members of the senior leadership team (all NEOs except Mr. Roberts) received the following benefits: additional life, accidental death, long-term disability and critical illness insurance; home security services (tax paid by the company); and a car allowance (CEO only). All NEO's also participated in the benefit reimbursement plan, which provides for reimbursement of certain eligible expenses up to an annual maximum based on executive level, and is taxable to the executive. Where an executive is relocated on hire or promotion, he or she may also receive benefits which are greater than those generally available to other employees. The company covers the taxes associated with relocation benefits provided to employees at all levels.
These benefits and perquisites are comparable to those offered by companies in the comparator group, are taxable to the executive where required under applicable tax laws (subject to tax gross-ups in certain circumstances), and cease being provided to the executive upon termination, retirement or death (see "Incremental payments on termination, retirement and death" on page 93 for further details).
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66 |
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EXECUTIVE COMPENSATION |
Employee share purchase plan
Under Kinross' employee share purchase plan (ESPP) , employees, including NEOs who elect to participate, may contribute up to 10% of their annual base salary to the plan, with Kinross matching up to 50% of the employee contributions. At the end of each quarter, common shares are purchased or issued to the employee with a value equal to the total of the employee and company contributions.
The following are some key terms under the share purchase plan which apply to all shares purchased or issued under this plan:
For further information on amendments which can be made to the plan, and which require shareholder approval, please see the "Additional equity compensation plan information" section beginning on page 87 and the "Plan amendments" section beginning on page 88.
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67 |
EXECUTIVE COMPENSATION |
Retirement allowance
Executive retirement allowance plan
As part of its competitive total compensation package to attract and retain executives, and to assist executives in planning for retirement, Kinross provides an executive retirement allowance plan ( ERAP ) for the senior leadership team. The benefits available to the senior executives under this plan are comparable to those offered by companies in the comparator group. Each of the NEOs except Mr. Roberts participated in this plan in 2016 in lieu of any other retirement plan; participants in this plan are not eligible to participate under any other Kinross-sponsored retirement plan. As Mr. Roberts was not a member of the senior leadership team in 2016, he was not eligible to participate in ERAP. He also did not meet the requirements to participate in the Canadian retirement plan, and therefore received a cash payment in lieu (as noted in the Summary compensation table ). In 2017, he will participate in ERAP.
The following sets out the terms of the executive retirement allowance plan:
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68 |
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EXECUTIVE COMPENSATION |
2016 Results
Assessing 2016 company performance
Setting appropriate company performance measures is a critical first step in achieving the objectives of our compensation programs. These performance measures:
This requires that we thoughtfully establish measures which reflect the key decisions executives make to deliver long-term value, and measure items within the control of our executives.
The following summarizes our approach to establishing these measures:
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EXECUTIVE COMPENSATION |
As shown above, our SLT members are measured against a short list of key metrics which are aligned to the Four Point Plan, but are intended to reflect the critical role of these executives in directing and making strategic decisions for the company without undue risk-taking and aligning to the long-term interests of shareholders. In developing these metrics, we first identified the key elements of our strategy the key areas the executives must manage each year and then determined an appropriate metric(s) to measure company success in each area. These strategic areas and the metrics identified to measure each are shown below:
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Key strategic area |
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Metric |
Corporate responsibility | | Corporate responsibility performance metric: incorporates leading and lagging measures for health and safety, environment, and community relations |
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Operational and financial performance | | Delivering against guidance: measures how well we deliver on our commitments to the market against the key publicly reported operational and financial metrics: production, all-in sustaining cost, and capital |
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Total cost: supports a continued focus on managing our costs, which is critical to maintaining profitable operations in a volatile gold price environment |
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Balance sheet | | Net Debt / EBITDA: measures our ability to repay debt, further access debt markets, and stay within our existing covenants |
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Shareholder returns | | Relative total shareholder returns: measured over a one year period, compared to our performance peer group |
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Building for the future | | Deliver targeted growth initiatives: an assessment of performance on eight key initiatives that are critical for advancing the company's organic growth agenda and continuing to position the company well for the future |
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It is expected that the strategic areas considered in the measures will remain relatively constant from year to year (subject to a significant change in strategy), however the metrics used to measure them may vary, and are aligned to the priorities and deliverables for each calendar year. For example, the metric for "Building for the future" is adjusted each year to align to the critical priorities in that year relating to delivering capital projects, exploration and other similar matters. In 2016, we added the cost measure to assess "Operational and financial performance" to reinforce the importance of managing costs through the gold price cycle.
In addition to assessing company performance against these objectives, the board also considers the company's performance relative to our gold mining competitors. The assessment of company performance is not solely a formulaic process and judgment is exercised in determining the final multiplier.
Gold mining is a capital intensive business with long business cycles, therefore decisions made by executives in one year may impact future years. While our short-term incentive plan rewards executives based on performance in that year, the heavier weighting on the long-term incentives is intended to encourage executives to focus on making decisions that are in the long-term best interests of the company. Longer term company performance is measured in our restricted performance share unit plan, and through the share price as reflected in the realized value of the equity executives receive.
2016 SLT measures
The following are the targets established for each of the SLT measures for 2016, along with performance results achieved, and the rating approved for that measure. A comparison of 2016 targets to 2015 targets shows that we have continued to 'raise the bar' on these measures, setting more challenging targets for ourselves in 2016 than in 2015. Performance on each measure, and for the final company multiplier, can range from 0% to 150%, and the company multiplier determines 60% of the short-term incentive payment for SLT members.
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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Measure |
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Weighting |
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Target |
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Actual performance |
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Rating |
Corporate responsibility performance metric |
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20% |
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Points out of 100:
Threshold:
65 points
Target: 80 points
Maximum: 97 points |
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91 points |
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100% |
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Delivering against guidance |
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15% |
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Performance against initial guidance on production (2.7-2.9 million ounces), all-in sustaining cost (1) or AISC ($890-990 per ounce), and sustaining capital (2) ($430M):
Threshold: both production and AISC marginally miss guidance; sustaining capital over
Target: both production & AISC are
within guidance; sustaining capital in line or under
Maximum: strongly beat guidance on both production & AISC, sustaining capital spend in line with or under guidance |
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Within initial guidance range on production and cost, and well under on sustaining capital |
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100% |
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Total cost |
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15% |
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Effectively managing costs (production cost before allocations, other operating cost and overhead):
Threshold: 2% over budget
Target: on budget
Maximum: 4% under budget |
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2.7% under budget |
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110% |
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Net debt / EBITDA |
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10% |
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Ratio of Net Debt to EBITDA (3) :
Threshold: 2.5
Target:
1.6
Maximum: 1.0 |
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Net Debt / EBITDA 0.8 |
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115% |
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Relative total shareholder returns ( TSR ) |
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25% |
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Relative ranking vs. performance peer group of 12 gold companies:
Threshold: 10
th
rank
Target: 6
th
rank
Maximum: 1
st
rank, positive absolute TSR
TSR was measured from December 31, 2015 to December 31, 2016, using the 20-day average share price at the start and end of the performance period |
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Ranked 4 th out of 13 |
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115% |
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Deliver targeted growth initiatives |
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15% |
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An assessment of performance against eight weighted key organic growth initiatives, with highest weighted items being: (a) delivering additional ounces at Bald Mountain (max performance = 20%); (b) adding ounces through exploration (max performance = 20%); and (c) Advancing Tasiast expansion project Phase One (max performance = 15%):
Threshold: 40%
Target: 70%
Maximum: 100% |
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Achieved 75% Included:
On target performance in adding
ounces at Bald Mountain and through exploration
Maximum performance on Tasiast expansion project, and in achieving additional ounces through Round Mountain Process Solution Management, and Paracatu Tailings |
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105% |
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Total | | 100% | | | | 107% | ||
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EXECUTIVE COMPENSATION |
In 2016, the company continued to deliver on all fronts:
completing the acquisition and integration of Bald Mountain and the remaining 50% of Round Mountain;
doubling the proven and probable mineral reserve estimate at Bald Mountain;
launching the Tasiast Phase One construction and the Phase Two feasibility study; and
commencing the Round Mountain Phase W feasibility study.
The human resource and compensation committee thus assigned the positive ratings against the performance measures as shown above to reflect this strong performance. Overall, the committee felt that a company multiplier of 107% appropriately reflected the year.
Prior year performance assessments were as follows:
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Year |
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Company performance multiplier |
2012 | | 100% |
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2013 | | 110% |
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2014 | | 95% |
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2015 | | 100% |
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2016 | | 107% |
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It should be noted that as Mr. Roberts was not a member of the SLT in 2016, the company rating used in his STI calculation while the same as for the other NEOs at 107% was determined based on Four Point Plan performance and was weighted 50% of his STI.
2016 compensation
In determining 2016 compensation, the human resource and compensation committee considered company performance as outlined above, as well as individual performance, the company's target of median position relative to external benchmarks, individual roles and responsibilities, internal equity, and other factors:
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EXECUTIVE COMPENSATION |
Share performance and NEO compensation
One of the principles of our executive compensation program is to align executive interests with Kinross' long-term strategy and those of shareholders. We accomplish this in a number of ways:
The following performance graph shows the cumulative total shareholder return over the five-year period ended December 31, 2016 for common shares (assuming reinvestment of dividends) compared to the S&P/TSX Composite Index and the S&P/TSX Global Gold Index. The graph and the table below show what a $100 investment made in common shares, the S&P/TSX Composite Index or S&P/TSX Global Gold Index at the end of 2011 would be worth every year and at the end of the five-year period following the initial investment.
Cumulative total shareholder return
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2011
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2012
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2013
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2014
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2015
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2016 | |
Kinross Gold Corp | | 100 | | 84.37 | | 41.02 | | 28.76 | | 22.14 | | 36.96 |
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S&P/TSX Composite Index | | 100 | | 107.18 | | 121.10 | | 133.87 | | 122.72 | | 148.59 |
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S&P/TSX Global Gold Index | | 100 | | 86.12 | | 48.25 | | 43.11 | | 37.49 | | 55.40 |
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EXECUTIVE COMPENSATION |
Total shareholder returns for Kinross have declined from 2011 through 2016, heavily influenced by the gold price. Thus, returns on gold equities generally have also declined from 2011 through 2016 as indicated by the S&P/TSX Global Gold Index performance which is largely aligned with Kinross' performance over this period. Kinross underperformed the gold index between 2012 and 2015, however outperformed the index in 2016.
From 2011 to 2016, NEO compensation was determined based primarily on company operational performance, which includes the items within the control of management. Total compensation for all NEOs was also affected by changes in senior leadership personnel. Total shareholder returns reflect many factors which are outside the control of management such as commodity prices, perception of geopolitical risk, and broader market factors as well as company performance and management decisions. The human resource and compensation committee strives to balance operational performance, financial results, and market outcomes (such as total shareholder returns) when determining NEO compensation. In addition, the committee may also exercise discretion to reflect extraordinary events, prevailing circumstances and market conditions.
The following are some of the ways in which compensation was aligned to total shareholder returns during this period:
As the summary above shows, the human resource and compensation committee has made a number of reductions in executive compensation to recognize share price performance and the impact that this has on shareholders. However, the committee believes that the strongest alignment between total shareholder returns and executive compensation is seen in the value of equity realized by executives over time. As the share price has fallen, not only has the compensation awarded decreased, but the value of the equity held by executives has been substantially reduced from the value reported in the Summary compensation table at time of grant. The following chart shows the values granted to our NEOs over the past five years, compared to the values realized (vested and/or exercised) and/or realizable (value at December 31, 2016 for equity which has not vested and/or been exercised). Over that period, these executives realized only 18% of the value of the equity granted, with the potential (as at December 31, 2016) to realize 65% of the value reported in the Summary compensation table. As at that date, they have lost a combined total of over CAD $14 million in equity value:
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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Compensation
year (1) |
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Value
granted (CAD$) (2) |
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Value vested
& exercised (realized) (CAD$) (3) |
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% realized |
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Remaining
value realizable (CAD$) (4) |
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Total
realized & realizable (CAD$) |
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Total %
realized or realizable |
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Value lost
(CAD$) (5) |
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2011 | | 4,300,296 | | 1,320,720 | | 31% | | 0 | | 1,320,720 | | 31% | | 2,979,576 | |
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2012 | | 8,137,808 | | 2,376,171 | | 29% | | 0 | | 2,376,171 | | 29% | | 5,761,638 | |
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2013 | | 9,721,634 | | 1,540,172 | | 16% | | 3,682,331 | | 5,222,503 | | 54% | | 4,499,131 | |
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2014 | | 9,478,767 | | 1,565,640 | | 17% | | 7,924,167 | | 9,489,807 | | 100% | | -11,040 | |
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2015 | | 9,764,054 | | 571,123 | | 6% | | 7,976,010 | | 8,547,132 | | 88% | | 1,216,922 | |
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Total | | 41,402,560 | | 7,373,826 | | 18% | | 19,582,508 | | 26,956,334 | | 65% | | 14,446,226 | |
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CEO: value of equity realized vs. TSR
Realized pay also shows strong alignment to shareholder returns. The following graph shows how total compensation of the individual in the CEO role has been impacted by and is aligned with share price performance. The value of equity compensation on grant date (as reported in the Summary compensation table) and as realized by the executive (at time of vest or exercise), is graphed against cumulative TSR. The equity granted to Mr. Rollinson decreased in 2014 and 2015 in recognition of falling shareholder returns. Mr. Rollinson's 'take home' pay has been impacted even more significantly by the falling share price as the value of the realized pay has been significantly lower than the value granted.
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EXECUTIVE COMPENSATION |
The following definitions have been applied in the graph above:
In 2016, normalized total direct compensation (base salary plus short- and long-term incentives) for NEOs decreased by 3% over 2015, while total compensation decreased by 7%. The decrease is primarily as a result of changes in the executives who comprise the NEOs, and is somewhat offset by a change in exchange rates.
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Total compensation
for NEOs (US$) |
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Normalized total direct
compensation for continuing NEOs (US$) (1) |
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Total compensation for
NEOs as a % of operating earnings (2),(3) |
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Total compensation for
NEOs as a % of total equity (3) |
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2016 (4) | | 14,547,300 | | 13,097,706 | | 7.83% | | 0.35% | |
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2015 (5) | | 15,673,075 | | 13,470,956 | | n/a | | 0.40% | |
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Change
(2015 to 2016) |
| (1,125,775 | ) | (373,250 | ) | n/a | | -0.05% | |
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2016 ($US) |
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2015 ($US) | | |
| Operating earnings (loss) | | 46.3 | | (742.9) | |
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| Add back: impairment | | 139.6 | | 699.0 | |
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| Operating earnings before impairment charges | | 185.9 | | (43.9) | |
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The 2015 value is "n/a" as the operating earnings before impairment charges are also negative, as shown above.
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
Individual performance Named executive officers
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J. Paul Rollinson President and Chief Executive Officer
Mr. Rollinson joined Kinross in September 2008 as the Executive Vice-President, New Investments, and subsequently assumed the role of
Executive Vice-President, Corporate Development. He was promoted to Chief Executive Officer in August 2012, and is now our President and Chief Executive Officer.
The following summarizes Mr. Rollinson's performance in 2016. Individual performance factors for the President and CEO are recommended by the human resource and compensation committee and approved by the board. |
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2016 Objectives |
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2016 Results |
Strategy and capital decisions:
Continue to refine company strategy in light of current conditions to deliver long-term value to shareholders. Make capital decisions in line with strategy,
including:
determining the best path forward on
Tasiast;
making decisions on possible
acquisitions;
determining the best allocation of
resources to existing mines and future projects;
maximizing the value of existing resources. |
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Tasiast Phase 1 "Go" decision
Closed acquisition of Bald Mountain and
Round Mountain in Nevada
Extended maturity dates of term loan and
revolving credit facility; no debt maturities before 2020
Moving forward on multiple organic
opportunities, including Tasiast Phase 2, Round Mountain Phase W, La Coipa, September North East and Moroshka
Maximizing production at various sites,
including at Paracatu through tailings reprocessing, and at Round Mountain through Process Solution Management
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External stakeholders:
Effectively manage external stakeholders. Continue to enhance perception of company value with investors. Build and maintain positive relationships with key governments.
Specific steps include:
engaging with
investors regarding company strategy, direction, options and results;
reinforcing key messages in the
market;
maintaining and continuing to enhance
credibility with investors;
identifying and seeking out new investors
as appropriate;
maintaining effective working relationships with governments. |
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Well received investor tour to Bald Mountain,
followed by positive analyst commentary
205 investor meetings; including
161 which took place during the 13 investor conferences Kinross attended
Attracted a number of new investors in
2016
Maintained strong government relations in
all countries in which we operate
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Leadership and culture:
Successfully lead the company through challenging times, aligning the organization to current realities and the strategy:
keep senior leadership team (SLT) engaged
and aligned despite challenges; transition responsibilities between SLT members; ensure effective interactions and team decision-making;
demonstrate leadership to the global
organization through communication of company direction and challenges;
maintain morale, and continue to reinforce Kinross values and culture. |
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Industry-leading safety record
Restructured the SLT to increase focus on
technical excellence and strengthened operations delivery; successfully transitioned leadership of government relations, corporate responsibility and communications
Strengthened SLT succession planning and
development process resulting in 5 significant development moves for senior leaders
Recognized as one of Canada's top
"Corporate Citizens" by Corporate Knights
Participated in industry leadership event
with "Women Who Rock" to demonstrate Kinross' commitment to diversity and inclusion
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Board interaction:
Maintain a productive two-way relationship with the board, thereby assisting them in carrying out their obligations to shareholders, through:
transparent communications;
engaging the board at appropriate times for decision-making. |
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Kinross continues to receive high marks on
Board Games, and was the highest ranked gold company
New board member engaged, Ian Atkinson
Provided opportunity for board members to visit site at Bald Mountain and understand progress |
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EXECUTIVE COMPENSATION |
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2016 Performance and Compensation | ||
Individual STI rating | | 103.5% |
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STI payment | | $1,533,693 |
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Total direct compensation | | $5,648,714 just above the median of the comparator group |
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Pay mix | |
83% at-risk pay (equity + STI); 56% in equity;
Equity mix includes 50% RPSUs, 30% RSUs, 20% Options |
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Total direct compensation
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Tony S. Giardini, Executive Vice-President and Chief Financial Officer
Mr. Giardini joined Kinross in December 2012, as the Executive Vice-President and Chief Financial Officer. In October of 2013, Mr. Giardini
assumed responsibility for Information Technology
(IT)
.
The following summarizes Mr. Giardini's performance in 2016 and the resulting compensation decisions, as recommended by the President and CEO and approved by the human resource and compensation committee, and the Kinross board of directors. |
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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Geoffrey P. Gold, Executive Vice-President, Corporate Development, External Relations and Chief Legal Officer
Mr. Gold joined Kinross in May 2006, as Senior Vice-President and Chief Legal Officer. In 2008, he was promoted to Executive Vice-President and
Chief Legal Officer. In the subsequent years, he took on responsibility for a number of additional portfolios, including human resources (from 2013 through 2015) and corporate office services (from 2013 through 2016), as well as corporate development,
security, and global lands. In 2016, he assumed the role of Executive Vice-President, Corporate Development, External Relations and Chief Legal Officer, with responsibility for corporate development, government and investor relations, communications,
security, global lands and legal.
The following summarizes Mr. Gold's performance in 2016 and the resulting compensation decisions, as recommended by the President and CEO and approved by the human resource and compensation committee, and the Kinross board of directors. |
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Gina M. Jardine, Senior Vice-President, Human Resources
Ms. Jardine joined Kinross in April 2015 as the Senior Vice-President, Human Resources.
The following summarizes Ms. Jardine's performance in 2016 and the resulting compensation decisions, as recommended by the President and CEO and approved by the human resource and compensation committee, and the Kinross board of directors. |
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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Lauren M. Roberts, Senior Vice-President, Corporate Development
Mr. Roberts joined Kinross in April 2004 as Operations Manager, Kettle River. He was promoted to the role of Vice-President and General Manager
of Kettle River in 2006, and subsequently assumed other more senior positions leading to the role of Regional Vice-President, Americas. In January 2016, he assumed the role of Senior Vice-President, Corporate Development in our Toronto office.
He began transitioning into the role of Senior Vice-President and Chief Operating Officer in November 2016 and formally assumed the role effective January 1, 2017.
The following summarizes Mr. Robert's performance in 2016 and the resulting compensation decisions, as recommended by the President and CEO and approved by the human resource and compensation committee, and the Kinross board of directors. |
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
Individual performance multipliers for each NEO were determined based on these accomplishments. The following table outlines the calculations which resulted in the short-term incentives given to each executive:
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Named Executive Officer |
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Title |
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Company
results × 60% weight (1) |
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+ |
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Individual
results × 40% weight (1) |
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= |
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Total
performance multiplier |
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x |
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2016 actual
target for purposes of calculating STI |
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= |
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Calculated
2016 STI ($USD) (2) |
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J. Paul Rollinson | | President and CEO | | 107% | | | 103.5% | | | 106% | | | 150% | | | 1,533,693 | | ||||
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Tony S. Giardini | | EVP & Chief Financial Officer | | 107% | | | 103.5% | | | 106% | | | 100% | | | 511,231 | | ||||
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Geoffrey P. Gold | | EVP, Corporate Development, External Relations & Chief Legal Officer | | 107% | | | 103.5% | | | 106% | | | 140% | | | 748,757 | | ||||
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Gina M. Jardine | | SVP, Human Resources | | 107% | | | 103.5% | | | 106% | | | 75% | | | 280,194 | | ||||
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Lauren M. Roberts | | SVP, Corporate Development | | 107% | | | 106.0% | | | 107% | | | 45% | | | 196,320 | | ||||
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These short-term incentive payouts were recommended by the human resource and compensation committee and approved by the board.
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EXECUTIVE COMPENSATION |
Key summary tables
Summary compensation table (1)
The following table provides information for the year ended December 31, 2016 regarding the annual compensation paid to or earned by the company's CEO, the Chief Financial Officer and the three other most highly compensated executive officers whose total salary and short-term incentives exceeded $150,000 for the year 2016 (the named executive officers , or NEOs ).
Compensation for the NEOs is paid in Canadian dollars, and reported in the table and associated footnotes in U.S. dollars (except as otherwise noted). Compensation may vary year-over-year based on the change in currency exchange rates.
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Name and |
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| Non-equity incentive | | |||||||||||||||
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Principal Position |
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Year |
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Salary (2) |
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Share-based
Awards (3)(5) |
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Option-based
Awards (4)(5) |
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Annual
Incentive Plans (6) |
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Long-term
Incentive Plans |
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Pension
Value (7) |
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All Other
Compensation (8) |
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Total
Compensation |
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| | (US$) |
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(US$) |
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(US$) |
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(US$) |
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(US$) |
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(US$) |
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(US$) |
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(US$) | | ||
J. Paul Rollinson | | 2016 | | 968,240 | | 2,517,425 | | 629,356 | | 1,533,693 | | n/a | | 435,708 | | 212,482 | | 6,296,904 | |
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President and CEO | | 2015 | | 939,250 | | 2,242,929 | | 560,732 | | 1,465,230 | | n/a | | 514,781 | | 229,212 | | 5,952,135 | |
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| 2014 | | 1,120,600 | | 3,448,000 | | 862,000 | | 1,428,765 | | n/a | | 420,225 | | 239,831 | | 7,519,421 | | |
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Tony S. Giardini | | 2016 | | 484,120 | | 1,006,970 | | 251,742 | | 511,231 | | n/a | | 145,236 | | 96,107 | | 2,495,406 | |
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Executive Vice-President | | 2015 | | 469,625 | | 969,306 | | 242,327 | | 469,625 | | n/a | | 140,888 | | 95,549 | | 2,387,319 | |
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and Chief Financial Officer | | 2014 | | 560,300 | | 1,255,072 | | 313,768 | | 554,697 | | n/a | | 168,090 | | 124,033 | | 2,975,960 | |
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Geoffrey P. Gold | | 2016 | | 506,464 | | 992,670 | | 248,167 | | 748,757 | | n/a | | 227,909 | | 74,420 | | 2,798,387 | |
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Executive Vice-President | | 2015 | | 491,300 | | 966,878 | | 241,720 | | 729,089 | | n/a | | 339,802 | | 76,621 | | 2,845,410 | |
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Corporate Development, External | | 2014 | | 586,160 | | 1,406,784 | | 351,696 | | 815,349 | | n/a | | 219,810 | | 94,171 | | 3,473,969 | |
Relations and Chief Legal Officer | | | | | | | | | | | |||||||||
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Gina M. Jardine | | 2016 | | 353,780 | | 608,502 | | 152,125 | | 280,194 | | n/a | | 92,868 | | 57,147 | | 1,544,616 | |
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Senior Vice-President | | 2015 | | 252,331 | | 1,004,239 | | 251,060 | | 409,793 | | n/a | | 60,058 | | 114,994 | | 2,092,475 | |
Human Resources | | | | | | | | | | | |||||||||
| | | | | | | | | | | | | | | | | | | |
Lauren M. Roberts | | 2016 | | 409,640 | | 435,243 | | 76,808 | | 382,580 | | n/a | | 0 | | 107,717 | | 1,411,987 | |
| | | | ||||||||||||||||
Senior Vice-President | | 2015 | | 479,130 | | 489,021 | | 86,298 | | 312,254 | | n/a | | 26,500 | | 25,403 | | 1,418,606 | |
| | | | ||||||||||||||||
Corporate Development | | 2014 | | 457,136 | | 426,690 | | 106,673 | | 415,275 | | n/a | | 26,000 | | 66,196 | | 1,497,969 | |
| | | | | | | | | | | | | | | | | | | |
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assumption |
|
February 20, 2017 |
|
February 15, 2016 |
|
May 8, 2015 |
|
February 13, 2015 |
|
February 18, 2014 | |
| Share price (CAD$) | | $5.06 | | $4.17 | | $2.96 | | $3.73 | | $5.72 | |
| | | ||||||||||
| Kinross beta versus the peer group | | 1.270 | | 1.162 | | 1.088 | | 1.095 | | 1.052 | |
| | | ||||||||||
| Average peer group volatility | | 50.0% | | 49.4% | | 41.7% | | 41.2% | | 36.3% | |
| | | ||||||||||
| Kinross volatility | | 61.5% | | 56.9% | | 43.4% | | 42.8% | | 40.2% | |
| | | ||||||||||
| Risk-free interest rate | | 1.48% | | 0.89% | | 0.71% | | 0.42% | | 1.19% | |
| | | ||||||||||
| Fair value of RPSU (CAD$/RPSU) | | $5.32 | | $4.47 | | $2.68 | | $3.69 | | $5.39 | |
| | |
Grants made in February 2014 with respect to performance in 2013 which are not included in the " Summary compensation table " were valued as follows: Mr. Rollinson $4,143,649, Mr. Giardini $1,087,498, Mr. Gold $1,176,879, and Mr. Roberts $394,884. For more details on these plans, including the treatment for the RSUs of any dividends payable on common shares, see the information under " Restricted share units" on page 59, and " Restricted performance share units" on pages 60 to 63.
|
|
|
|
|
|
|
|
|
|
|
|
|
| Assumption |
|
February 20, 2017 |
|
February 15, 2016 |
|
May 8, 2015 |
|
February 13, 2015 |
|
February 24, 2014 | |
| Share price (CAD$) | | $5.06 | | $4.17 | | $2.96 | | $3.73 | | $5.82 | |
| | | ||||||||||
| Expected dividend yield | | 0.00% | | 0.00% | | 0.00% | | 0.00% | | 0.00% | |
| | | ||||||||||
| Expected volatility | | 49.3% | | 56.9% | | 42.4% | | 43.3% | | 39.9% | |
| | | ||||||||||
| Risk-free interest rate | | 1.11% | | 0.56% | | 0.98% | | 0.63% | | 1.57% | |
| | | ||||||||||
| Expected option life | | 4.5 years | | 4.5 years | | 4.5 years | | 4.5 years | | 4.5 years | |
| | | ||||||||||
| Fair value per stock option granted (CAD$/option) | | $2.09 | | $1.92 | | $1.07 | | $1.35 | | $2.05 | |
| | |
See the information under " Stock options " on page 64 for more details.
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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|
|
|
|
|
84 |
|
|
EXECUTIVE COMPENSATION |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Executive |
|
| | Share-based awards |
|
| Number of units awarded | | |||||||||||
| | | | | | | | | | | | | | | | | | | | |
| |
Year included in
compensation |
|
Grant date |
|
RSUs |
|
RPSUs |
|
Total |
|
Option-based
awards |
|
RSUs |
|
RPSUs
(at target) |
|
Options | | |
| | | | | | | | | | | | | | | | | | | | |
| | | | (US$) |
|
(US$) |
|
(US$) |
|
(US$) |
|
(#) |
|
(#) |
|
(#) | | |||
| J. Paul Rollinson | | 2016 | | February 20, 2017 | | 944,034 | | 1,573,390 | | 2,517,425 | | 629,356 | | 250,495 | | 397,311 | | 404,268 | |
| | | | | ||||||||||||||||
| | 2015 | | February 15, 2016 | | 841,098 | | 1,401,831 | | 2,242,929 | | 560,732 | | 279,173 | | 434,547 | | 404,577 | | |
| | | | | ||||||||||||||||
| | 2014 | | February 13, 2015 | | 1,293,000 | | 2,155,000 | | 3,448,000 | | 862,000 | | 402,145 | | 677,507 | | 738,940 | | |
| | | | | | | | | | | | | | | | | | | | |
| Tony S. Giardini | | 2016 | | February 20, 2017 | | 377,614 | | 629,356 | | 1,006,970 | | 251,742 | | 100,198 | | 158,925 | | 161,708 | |
| | | | | ||||||||||||||||
| | 2015 | | February 15, 2016 | | 363,490 | | 605,816 | | 969,306 | | 242,327 | | 120,648 | | 187,794 | | 174,843 | | |
| | | | | ||||||||||||||||
| | 2014 | | February 13, 2015 | | 627,536 | | 627,536 | | 1,255,072 | | 313,768 | | 195,175 | | 197,290 | | 268,975 | | |
| | | | | | | | | | | | | | | | | | | | |
| Geoffrey P. Gold | | 2016 | | February 20, 2017 | | 372,251 | | 620,419 | | 992,670 | | 248,167 | | 98,775 | | 156,668 | | 159,411 | |
| | | | | ||||||||||||||||
| | 2015 | | February 15, 2016 | | 362,579 | | 604,299 | | 966,878 | | 241,720 | | 120,346 | | 187,324 | | 174,405 | | |
| | | | | ||||||||||||||||
| | 2014 | | February 13, 2015 | | 703,392 | | 703,392 | | 1,406,784 | | 351,696 | | 218,767 | | 221,139 | | 301,488 | | |
| | | | | | | | | | | | | | | | | | | | |
| Gina M. Jardine | | 2016 | | February 20, 2017 | | 228,188 | | 380,314 | | 608,502 | | 152,125 | | 60,549 | | 96,037 | | 97,718 | |
| | | | | ||||||||||||||||
| | 2015 | | February 15, 2016 | | 159,839 | | 266,399 | | 426,239 | | 106,560 | | 53,053 | | 82,580 | | 76,885 | | |
| | | | | ||||||||||||||||
| | 2015 | | May 8, 2015 | | 289,000 | | 289,000 | | 578,000 | | 144,500 | | 135,136 | | 149,254 | | 187,074 | | |
| | | | | | | | | | | | | | | | | | | | |
| Lauren M. Roberts | | 2016 | | February 20, 2017 | | 256,025 | | 179,218 | | 435,243 | | 76,808 | | 67,935 | | 45,256 | | 49,338 | |
| | | | | ||||||||||||||||
| | 2015 | | February 15, 2016 | | 287,659 | | 201,362 | | 489,021 | | 86,298 | | 95,479 | | 62,420 | | 62,266 | | |
| | | | | ||||||||||||||||
| | 2014 | | February 13, 2015 | | 240,013 | | 186,677 | | 426,690 | | 106,673 | | 74,649 | | 58,690 | | 91,444 | | |
| | | | | | | | | | | | | | | | | | | | |
|
|
|
|
|
|
|
|
|
| Name |
|
Type of Perquisite |
|
Value (US$) |
|
% of Total Perquisites | |
| J. Paul Rollinson | | Additional disability coverage | | 51,650 | | 31% | |
| | | | | ||||
| | Benefit reimbursement plan | | 55,860 | | 34% | | |
| | | ||||||
| Tony S. Giardini | | Benefit reimbursement plan | | 44,688 | | 62% | |
| | | ||||||
| Geoffrey P. Gold | | Benefit reimbursement plan | | 44,688 | | 60% | |
| | | ||||||
| Gina M. Jardine | | Benefit reimbursement plan | | 44,688 | | 78% | |
| | | ||||||
| Lauren M. Roberts | | Benefit reimbursement plan | | 18,620 | | 100% | |
| | | | | | | | |
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
|
|
|
|
|
|
|
|
85 |
EXECUTIVE COMPENSATION |
Outstanding share-based awards and option-based awards
The following table provides details regarding the outstanding restricted share units (including restricted performance share units) and options granted to the NEOs as of December 31, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name |
|
| Option-based awards |
|
Share-based awards | | |||||||||||
| | | | | | | | | | | | | | | | | |
| Grant date |
|
Number of
securities underlying unexercised options |
|
Option
exercise price (1) |
|
Option expiration
date (2) |
|
Value of
unexercised in-the- money options (3) |
|
Number of
shares or units of shares that have not vested (4) |
|
Market or payout
value of share- based awards that have not vested (1)(5) |
|
Market or payout
value of vested share-based awards not paid out or distributed |
| |
| | | | | | | | | | | | | | | | | |
| | (#) |
|
(US$) |
|
| | (US$) |
|
(#) |
|
(US$) |
|
(US$) | | ||
J. Paul Rollinson | | February 22, 2011 | | 152,966 | | 12.10 | | February 22, 2018 | | 0 | | 2,123,292 | | 6,626,183 | | 0 | |
| | | | ||||||||||||||
| February 21, 2012 | | 196,769 | | 8.10 | | February 21, 2019 | | 0 | | | | | ||||
| | | | ||||||||||||||
| September 17, 2012 | | 146,384 | | 7.43 | | September 17, 2019 | | 0 | | | | | ||||
| | | | ||||||||||||||
| February 19, 2013 | | 455,318 | | 5.98 | | February 19, 2020 | | 0 | | | | | ||||
| | | | ||||||||||||||
| February 24, 2014 | | 538,567 | | 4.33 | | February 24, 2021 | | 0 | | | | | ||||
| | | | ||||||||||||||
| February 13, 2015 | | 738,940 | | 2.78 | | February 13, 2022 | | 253,167 | | | | | ||||
| | | | ||||||||||||||
| February 15, 2016 | | 404,577 | | 3.11 | | February 15, 2023 | | 6,027 | | | | | ||||
| | | | | | | | | | | | | | | | | |
Tony S. Giardini | | December 3, 2012 | | 87,963 | | 7.49 | | December 3, 2019 | | 0 | | 757,618 | | 2,364,308 | | 0 | |
| | | | ||||||||||||||
| February 19, 2013 | | 14,043 | | 5.98 | | February 19, 2020 | | 0 | | | | | ||||
| | | | ||||||||||||||
| February 24, 2014 | | 282,693 | | 4.33 | | February 24, 2021 | | 0 | | | | | ||||
| | | | ||||||||||||||
| February 13, 2015 | | 268,975 | | 2.78 | | February 13, 2022 | | 92,153 | | | | | ||||
| | | | ||||||||||||||
| February 15, 2016 | | 174,843 | | 3.11 | | February 15, 2023 | | 2,604 | | | | | ||||
| | | | | | | | | | | | | | | | | |
Geoffrey P. Gold | | February 22, 2011 | | 115,174 | | 12.10 | | February 22, 2018 | | 0 | | 806,431 | | 2,516,640 | | 0 | |
| | | | ||||||||||||||
| February 21, 2012 | | 141,374 | | 8.10 | | February 21, 2019 | | 0 | | | | | ||||
| | | | ||||||||||||||
| February 19, 2013 | | 224,653 | | 5.98 | | February 19, 2020 | | 0 | | | | | ||||
| | | | ||||||||||||||
| February 24, 2014 | | 305,928 | | 4.33 | | February 24, 2021 | | 0 | | | | | ||||
| | | | ||||||||||||||
| February 13, 2015 | | 200,992 | | 2.78 | | February 13, 2022 | | 68,861 | | | | | ||||
| | | | ||||||||||||||
| February 15, 2016 | | 174,405 | | 3.11 | | February 15, 2023 | | 2,598 | | | | | ||||
| | | | | | | | | | | | | | | | | |
Gina M. Jardine | | May 8, 2015 | | 124,716 | | 2.20 | | May 8, 2022 | | 114,253 | | 374,978 | | 1,170,198 | | 0 | |
| | | | ||||||||||||||
| February 15, 2016 | | 76,885 | | 3.11 | | February 15, 2023 | | 1,145 | | | | | ||||
| | | | | | | | | | | | | | | | | |
Lauren M. Roberts | | February 22, 2011 | | 18,509 | | 12.10 | | February 22, 2018 | | 0 | | 307,751 | | 960,403 | | 0 | |
| | | | ||||||||||||||
| February 21, 2012 | | 42,943 | | 8.10 | | February 21, 2019 | | 0 | | | | | ||||
| | | | ||||||||||||||
| August 13, 2012 | | 55,632 | | 6.09 | | August 13, 2019 | | 0 | | | | | ||||
| | | | ||||||||||||||
| February 19, 2013 | | 62,263 | | 5.98 | | February 19, 2020 | | 0 | | | | | ||||
| | | | ||||||||||||||
| February 24, 2014 | | 87,986 | | 4.33 | | February 24, 2021 | | 0 | | | | | ||||
| | | | ||||||||||||||
| February 13, 2015 | | 91,444 | | 2.78 | | February 13, 2022 | | 31,329 | | | | | ||||
| | | | ||||||||||||||
| February 15, 2016 | | 62,266 | | 3.11 | | February 15, 2023 | | 928 | | | | | ||||
| | | | | | | | | | | | | | | | | |
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
|
|
|
|
|
|
86 |
|
|
EXECUTIVE COMPENSATION |
Incentive plan awards value vested or earned during the year
The following provides details on the value of awards vested or earned during the year ended December 31, 2016:
|
|
|
|
|
|
|
|
Name |
|
Option-based
awards (1) (3) Value vested during the year |
|
Share-based
awards (2) (3) Value vested during the year |
|
Non-equity incentive
plan compensation (3) Value earned during the year |
|
| | | | | | | |
| (US$) |
|
(US$) |
|
(US$) | | |
J. Paul Rollinson | | 80,720 | | 1,247,221 | | 1,533,693 | |
| | ||||||
Tony S. Giardini | | 29,382 | | 391,654 | | 511,231 | |
| | ||||||
Geoffrey P. Gold | | 32,934 | | 581,251 | | 748,757 | |
| | ||||||
Gina M. Jardine | | 127,722 | | 232,164 | | 280,194 | |
| | ||||||
Lauren M. Roberts | | 9,989 | | 186,766 | | 382,580 | |
| |
The following table provides information relating to amounts received upon the exercise of options during the year ended December 31, 2016:
|
|
|
|
|
|
|
|
|
|
Name |
|
Number of
options exercised and sold |
|
Grant
price (1) |
|
Share price
on exercise date (1) |
|
Value
realized (1) |
|
| | | | | | | | | |
| | | (US$) |
|
(US$) |
|
(US$) | | |
J. Paul Rollinson | | 0 | | n/a | | n/a | | 0 | |
| | ||||||||
Tony S. Giardini | | 0 | | n/a | | n/a | | 0 | |
| | ||||||||
Geoffrey P. Gold | | 100,496 | | 2.78 | | 5.27 | | 250,569 | |
| | ||||||||
Gina M. Jardine | | 62,358 | | 2.20 | | 5.30 | | 193,208 | |
| | ||||||||
Lauren M. Roberts | | 0 | | n/a | | n/a | | 0 | |
| |
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
|
|
|
|
|
|
|
|
87 |
EXECUTIVE COMPENSATION |
Additional equity compensation plan information
The following table provides details of compensation plans under which equity securities of the company are authorized for issuance as of December 31, 2016 (1) :
|
|
|
|
|
|
|
|
Plan category |
|
Number of securities to be
issued upon exercise of outstanding options, warrants and RSUs (2)(6) |
|
Weighted-average price of
outstanding options, warrants and RSUs (3) CAD$ |
|
Number of securities remaining
available for future issuance under equity compensation plans (4)(5) |
|
Equity compensation plans approved by security holders | | 21,293,798 | | 6.95 | | 26,850,735 | |
| | ||||||
Equity compensation plans not approved by security holders | | Nil | | N/A | | N/A | |
| | | | | | | |
Total | | 21,293,798 | | 6.95 | | 26,850,735 | |
| | | | | | | |
The following tables provide details of compensation plans under which equity securities of the company are authorized for issuance as of March 16, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Restricted Share Plan |
|
Share Option Plans |
|
Share Purchase Plan | | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| | |
Share
Option Plan |
|
Assumed Stock
Option Plan (1) |
|
Total Share
Option Plans |
|
| | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| No. |
|
% of Out-
standing Shares |
|
No. |
|
% of Out-
standing Shares |
|
No. |
|
% of Out-
standing Shares |
|
No. |
|
% of Out-
standing Shares |
|
No. |
|
% of Out-
standing Shares |
| |
Maximum shares issuable | | 35,000,000 | | 2.807 | | 31,166,667 | | 2.500 | | 420,180 | | 0.034 | | 31,586,847 | | 2.534 | | 5,666,666 | | 0.455 | |
| | ||||||||||||||||||||
Shares issued to date | | 13,922,445 | | 1.117 | | 6,427,245 | | 0.516 | | 303,035 | | 0.024 | | 6,730,280 | | 0.540 | | 5,156,120 | | 0.414 | |
| | ||||||||||||||||||||
Shares issuable under outstanding awards | | 9,178,095 | | 0.736 | | 12,018,543 | | 0.964 | | 117,145 | | 0.009 | | 12,135,688 | | 0.973 | | N/A | | N/A | |
| | ||||||||||||||||||||
Shares available for future awards | | 11,899,460 | | 0.954 | | 12,720,879 | | 1.020 | | N/A | | N/A | | 12,720,879 | | 1.020 | | 510,546 | | 0.041 | |
| |
|
|
|
Weighted average exercise price of all outstanding options under all plans: |
|
CAD $6.72 |
Weighted average remaining term of all outstanding options under all plans: | | 3.90 years |
Aggregate number of full-value awards that have not vested or earned | |
RSUs: 4,117,419
RPSUs: 5,060,676 |
|
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
Shares for issuance
|
|
|
|
|
|
|
|
Restricted
Share Plan |
|
Share
Option Plan |
|
Share
Purchase Plan |
|
Maximum number of common shares reserved for issuance, as of March 16, 2017 | | 35,000,000 | | 31,166,667 | | 5,666,666 |
| ||||||
Percent of common shares outstanding (approximate) | | 2.81% | | 2.50% | | 0.45% |
| ||||||
Maximum number of common shares authorized for issuance to any one insider and such insider's associates under each plan within a one-year period | |
5% of the total
common shares then outstanding |
| None | ||
| ||||||
Maximum number of common shares reserved for issuance to any one person under each plan | |
5% of the total
common shares then outstanding |
| None | ||
| ||||||
Maximum number of common shares authorized for issuance to insiders, at any time, under all compensation arrangements of the company | | 10% of total common shares outstanding | ||||
| ||||||
Maximum number of common shares issued to insiders under all compensation arrangements of the company within a one-year period | | 10% of total common shares then outstanding | ||||
|
The following table sets out the overhang, dilution and burn rate percentages in respect of options under the company's stock option plan for the fiscal years ended 2016, 2015, and 2014:
|
|
|
|
|
|
|
|
| 2016 |
|
2015 |
|
2014 | | |
Overhang | | | | | |||
the total number of options available for issuance, plus all options outstanding that have not yet been exercised, expressed as a percentage of the total number of issued and outstanding common shares of the company at the end of the fiscal year. | | 1.99% | | 2.22% | | 2.23% | |
| | ||||||
Dilution | | | | | |||
options issued but not exercised, expressed as a percentage of issued and outstanding common shares of the company at the end of the fiscal year. | | 0.99% | | 1.17% | | 1.02% | |
| | ||||||
Burn Rate | | | | | |||
the number of options issued each year, expressed as a percentage of the issued and outstanding common shares of the company at the end of the fiscal year. | | 0.15% | | 0.31% | | 0.29% | |
| |
Plan amendments
Restricted Share Plan
Under the terms of the restricted share plan, shareholder approval is required for any amendment, modification or change that:
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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|
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|
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|
89 |
EXECUTIVE COMPENSATION |
In addition, under TSX listing requirements, shareholder approval is required for any amendment, modification or change to remove or exceed the 10% limit on the number of common shares authorized for issuance, or issued, to insiders as a group.
Other amendments may be made without shareholder approval including amendments of a housekeeping nature, adjustments to outstanding RSUs in the event of certain corporate transactions, specifying practices with respect to applicable tax withholdings, the addition of covenants for the protection of participants, and changes to vesting provisions.
Share Option Plan
Under the terms of the share option plan, shareholder approval is required for any amendment, modification or change that:
In addition, under TSX listing requirements, shareholder approval is required for any amendment, modification or change to remove or exceed the 10% limit on the number of common shares authorized for issuance, or issued, to insiders as a group.
Other amendments may be made without shareholder approval including amendments of a housekeeping nature, adjustments to outstanding options in the event of certain corporate transactions, specifying practices with respect to applicable tax withholdings, the addition of covenants for the protection of participants, changes to vesting provisions, and a change to the termination provisions of an option which does not involve an extension of the term of an option beyond its original expiry date.
Share Purchase Plan
Under the terms of the share purchase plan, shareholder approval is required for any amendment, modification or change that:
In addition, under TSX listing requirements, shareholder approval is required for any amendment, modification or change to remove or exceed the 10% limit on the number of common shares authorized for issuance to insiders, or issued to insiders, as a group.
KINROSS GOLD CORPORATION 2017 MANAGEMENT INFORMATION CIRCULAR
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|
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|
90 |
|
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EXECUTIVE COMPENSATION |
Other amendments may be made without shareholder approval including amendments of a housekeeping nature, adjustments to outstanding shares under the share purchase plan in the event of certain corporate transactions, specifying practices with respect to applicable tax withholdings, the addition of covenants for the protection of participants, and changes to vesting provisions.
Pension and other benefit plans Executive retirement allowance plan
In 2004, the company adopted the executive retirement allowance plan, the terms of which are described under " Retirement allowance " on page 67. The following is a table showing the accumulated value under the executive retirement allowance plan in 2016 for each NEO (sum of elements may vary slightly due to rounding) (1) :
|
|
|
|
|
|
|
|
|
|
Name |
|
Accumulated value
at start of year |
|
Compensatory |
|
Non-compensatory |
|
Accumulated value
at year end |
|
| | | | | | | | | |
| (US$) |
|
(US$) |
|
(US$) |
|
(US$) | | |
J. Paul Rollinson | | 2,089,439 | | 435,708 | | 40,221 | | 2,565,367 | |
| | ||||||||
Tony S. Giardini | | 460,009 | | 145,236 | | 9,227 | | 614,473 | |
| | ||||||||
Geoffrey P. Gold | | 1,794,557 | | 227,909 | | 33,439 | | 2,055,905 | |
| | ||||||||
Gina M. Jardine | | 62,294 | | 92,868 | | 1,802 | | 156,964 | |
| | ||||||||
Lauren M. Roberts (2) | | 0 | | 0 | | 0 | | 0 | |
| |
Employment contracts
Upon hire or promotion, all members of the senior leadership team ( SLT ) enter into an agreement with the company relating to their employment (their employment agreement ). The employment agreements set out the starting compensation terms for the executive, as well as additional terms and conditions of employment. Compensation, including the annual salary payable under each of these employment agreements, is reviewed and may be adjusted annually or as required, as outlined on page 56.
Compensation on termination of employment
Among other things, the employment agreements for each of the SLT members generally outline terms relating to termination of employment with the company.
The tables below outline the compensation payable to SLT members in the event of termination of employment without cause by the company, or the resignation by an executive following a material or detrimental alteration of the employee's position, a material reduction of salary or other specific adverse events for the NEO (a triggering event). The tables also outline the compensation to SLT members if the executive's employment is terminated or the executive is subject to a triggering event within 18 months of the change of control of the company, which includes, among other things:
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In 2016, these terms applied to all NEOs except Mr. Roberts (whose offer letter from the company for his role as Senior Vice-President, Corporate Development did not specify terms relating to termination of employment). Effective January 1, 2017, Mr. Roberts is also subject to these same terms, as shown below.
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Provision |
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Termination without cause (1) |
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Termination following change of control |
Lump sum severance payment equal to the aggregate of: |
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2 times:
base salary, and
the greater of the target and average
bonus paid in the two prior fiscal years (or, if employed for less than two years, the previous year's bonus, or if none, the target bonus)
the greater of the target and average bonus paid in the two prior fiscal years, prorated to the date of termination, in respect of the final year of employment. |
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3 times (or 2 times in the case Ms. Jardine and Mr. Roberts):
base salary, and
the greater of the target and average
bonus paid in the two prior fiscal years (or, if employed for less than two years, the previous year's bonus, or if none, the target bonus)
the greater of the target and average bonus paid in the two prior fiscal years, prorated to the date of termination, in respect of the final year of employment. |
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Reimbursement for legal and financial counselling services: | |
up to CAD$10,000
(up to CAD$25,000 in the case of Mr. Rollinson) |
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up to CAD$10,000
(up to CAD$25,000 in the case of Mr. Rollinson) |
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Benefits: |
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continue for the ensuing 2 years or, alternatively, a lump sum payment in lieu of benefits equal to:
for Mr. Giardini and for
Ms. Jardine, the estimated cost to the company of providing health, dental and life insurance benefits;
for Mr. Gold, 30% of salary;
for Mr. Roberts, 20% of salary;
and
for Mr. Rollinson, a lump sum payment of CAD$500,000. |
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continue for 3 years (2 years for Ms. Jardine and Mr. Roberts) or, alternatively, a lump sum payment in lieu of benefits equal to:
for Mr. Giardini and for
Ms. Jardine, the estimated cost to the company of providing health, dental and life insurance benefits;
for Mr. Gold, 30% of salary;
for Mr. Roberts, 20% of salary;
and
for Mr. Rollinson, a lump sum payment of CAD$750,000. |
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Executive retirement allowance plan ( ERAP ): | | lump sum equal to the present value of 2 years of ERAP contributions. | | lump sum equal to the present value of 3 years of ERAP contributions (2 years for Ms. Jardine and Mr. Roberts). |
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RSUs, RPSUs and options: | |
CEO: 50% of all outstanding RSUs and options, and 50% of all RPSUs which would otherwise have vested during the ensuing 2 years, would vest immediately on termination, and the balance on the first anniversary of
termination, subject to potential forfeiture
(2)
.
Messrs. Giardini, Gold and Roberts (3) , and Ms. Jardine: all equity which would otherwise have vested during the ensuing 2 years (and for Ms. Jardine, all outstanding equity granted on May, 8, 2015 as part of her on hire grant) will be permitted to vest in normal course (not accelerated); and the executives will be permitted to exercise vested options at any time from vest through the date which is the earlier of: (a) sixty days after the end of the severance period or (b) the expiry date based on the original term of the option. All such equity will remain subject to the recoupment policy. |
| All outstanding RSUs, RPSUs and options vest immediately and remain in effect until their normal expiry. |
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Termination of employment is always by written notice, and may be by the company, with or without cause, or by the resignation of the executive. Following termination of employment, each of the SLT members under his or her employment agreement is subject to non-competition and non-solicitation covenants for a period of 12 months (except where such termination occurs in the first six months of employment, then such covenants are for three months).
Compensation on retirement or death
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Type of termination |
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Severance |
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Short-term
incentive |
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Options (1) |
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RSUs / RPSUs (1) |
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Benefits |
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Retirement
plan (2) |
Retirement | | None | | Prorated incentive paid based on date of retirement | | Vested options must be exercised within 60 days; unvested options are forfeited | | RSUs / RPSUs subject to a restricted period are forfeited, and those subject solely to a deferred payment date are settled for common shares | | None | | Accrued retiring allowance payable |
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Death | | None | | Prorated incentive paid based on date of death | | All unvested options vest, with lesser of 12 months and original term to exercise | | All RSUs / RPSUs are automatically settled for common shares | | Health and dental benefits continue for eligible dependents for 2 years | | Accrued retiring allowance payable to surviving beneficiary or estate |
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Incremental payments on termination, retirement and death
The following table shows the value of the estimated incremental payments, payables, and benefits to each NEO that would have resulted had the relevant triggering event occurred on the last business day of the most recently completed financial year.
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Name |
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Estimated incremental value of termination as of December 31, 2016 (1) | | ||||||||||
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Compensation
component |
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Termination
without cause |
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Termination
following change of control |
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Retirement /
resignation (2) |
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Death / change
of control (3) |
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Termination
with cause |
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J. Paul Rollinson | | Severance payment | | 4,841,201 | | 7,261,802 | | 0 | | 0 | | 0 | |
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| Accelerated vesting of equity | | 63,201 | | 67,373 | | 0 | | 67,373 | | 0 | | |
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| Benefits / ERAP | | 1,242,923 | | 1,841,221 | | 0 | | 0 | | 0 | | |
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| Total | | 6,147,325 | | 9,170,396 | | 0 | | 67,373 | | 0 | | |
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Tony S. Giardini | | Severance payment | | 1,936,480 | | 2,904,721 | | 0 | | 0 | | 0 | |
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| Accelerated vesting of equity | | 0 | | 26,102 | | 0 | | 26,102 | | 0 | | |
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| Benefits / ERAP | | 349,518 | | 528,150 | | 0 | | 0 | | 0 | | |
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| Total | | 2,285,999 | | 3,458,973 | | 0 | | 26,102 | | 0 | | |
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Geoffrey P. Gold | | Severance payment | | 2,532,321 | | 3,798,481 | | 0 | | 0 | | 0 | |
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| Accelerated vesting of equity | | 0 | | 27,115 | | 0 | | 27,115 | | 0 | | |
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| Benefits / ERAP | | 605,001 | | 820,546 | | 0 | | 0 | | 0 | | |
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| Total | | 3,137,322 | | 4,646,143 | | 0 | | 27,115 | | 0 | | |
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Gina M. Jardine | | Severance payment | | 1,238,230 | | 1,238,230 | | 0 | | 0 | | 0 | |
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| Accelerated vesting of equity | | 0 | | 15,751 | | 0 | | 15,751 | | 0 | | |
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| Benefits / ERAP | | 210,646 | | 210,646 | | 0 | | 0 | | 0 | | |
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| Total | | 1,448,876 | | 1,464,627 | | 0 | | 15,751 | | 0 | | |
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Lauren M. Roberts (4) | | Severance payment | | 593,978 | | 593,978 | | 0 | | 0 | | 0 | |
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| Accelerated vesting of equity | | 0 | | 10,482 | | 0 | | 10,482 | | 0 | | |
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| Benefits / ERAP | | 30,211 | | 30,211 | | 0 | | 0 | | 0 | | |
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| Total | | 624,189 | | 634,671 | | 0 | | 10,482 | | 0 | | |
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Termination payments are calculated and payable in Canadian dollars and were converted to United States dollars for purposes of this table using the exchange rate of CAD $1.00 = USD $0.7448.
Other than as described above, the company (and its subsidiaries) currently have no employment contracts in place with the NEOs, and no compensatory plans or arrangements with respect to the NEOs, that results or will result from the resignation, retirement or any other termination of such executives' employment with the company (and its subsidiaries), from a change of control of the company (and its subsidiaries) or a change in the NEOs' responsibilities following a change of control.
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Governance
Kinross and the board recognize the importance of corporate governance to the effective management of the company and to the protection of its employees, shareholders and other stakeholders. Kinross' approach to significant issues of corporate governance is designed with a view to ensuring that the business and affairs of the company are effectively managed so as to enhance shareholder value.
Highlights
Financial
Directors
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Regulatory compliance
The board, through its corporate governance and nominating committee, monitors the extensive and continuing changes to the regulatory environment with respect to corporate governance practices, and the corporate governance and nominating committee recommends to the board changes to the company's governance practices in light of changing governance expectations, regulations and best practices.
Regulatory changes have come into effect, or are proposed, under the rules and regulations in Canada, including the Capital Markets Act , as well as in the U.S., including clawback policy rules proposed under the Dodd-Frank Wall Street Reform and Consumer Protection Act . The board will continue to review and revise the company's governance practices in response to changing governance expectations, regulations and best practices.
Kinross' corporate governance practices have been designed to align with applicable Canadian corporate governance guidelines and other requirements. In addition, Kinross is fully compliant with National Instrument 52-110 pertaining to audit committees adopted by Canadian Securities Administrators.
Although, as a regulatory matter, the majority of the corporate governance listing standards of the New York Stock Exchange (the "NYSE standards" ) are not applicable to the company, the company has corporate governance practices that are substantially compliant with the NYSE standards. Details of the company's corporate governance practices compared to the NYSE standards are available for review on the company's website at www.kinross.com .
Our board of directors
There are currently nine members of the board, of whom eight are independent within the meaning of the corporate governance guidelines and the NYSE standards. The independent directors hold regularly scheduled meetings (at least once every quarter) at which non-independent directors and management are not present. Mr. Rollinson is not independent as he is an officer of Kinross.
The board has appointed a chair, Mr. John Oliver. The chair of the board (also referred to as the "independent chair" ) is an independent director who has been designated by the full board to assume the leadership of the board and to enhance and protect, with assistance from the corporate governance and nominating committee and the other committees of the board, the independence of the board.
The responsibilities of the independent chair are set out in a position description for the independent chair adopted by the board. These responsibilities may be delegated or shared with the corporate governance and nominating committee and/or any other independent committee of the board and include responsibilities such as:
A copy of the position description of the independent chair is available upon request to the Corporate Secretary of the company.
The board fulfills its mandate directly and through its committees at regularly scheduled meetings or as required. The frequency of meetings may be increased and the nature of the agenda items may be amended depending upon the state of the company's affairs and in light of the opportunities or risks that the company faces. The directors are kept informed of the company's operations at these meetings as well as through reports and discussions with management on matters within their particular areas of expertise.
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The board has adopted performance schedules for the board and each of its committees. These performance schedules have been developed by the corporate governance and nominating committee as a tool to ensure:
The directors meet regularly without management to review the business operations, corporate governance and financial results of the company. In 2016, the independent directors met without management present at six of the eight board meetings held during the year.
The attendance record of each director standing for re-election at the meeting, at all board committee meetings held during the last year and the names of other reporting issuers for whom certain Kinross directors also serve as directors, are set out in the tables appearing under "About the nominated directors" on page 13.
Code of business conduct and ethics
As part of its commitment to maintaining the highest ethical standards, the board has adopted a code of business conduct and ethics (the Code) for its directors, officers, employees and contractors. The corporate governance and nominating committee has responsibility for monitoring compliance with the Code by ensuring that all directors, officers, employees and contractors receive and familiarize themselves with the Code and acknowledge their support and understanding of the Code. Any non-compliance with the Code is to be reported in accordance with the Code and the company's Whistleblower Policy, to the chair of the corporate governance and nominating committee, the chair of the audit and risk committee, the Chief Legal Officer, the General Counsel or, as applicable, to the Vice-President, Human Resources.
A copy of the Code may be accessed on the company's website at www.kinross.com or under the company's profile on SEDAR at www.sedar.com .
The board takes steps to ensure that directors, officers and employees exercise independent judgment in considering transactions and agreements in respect of which a director, officer or employee of the company has a material interest, which include ensuring that directors, officers and employees are thoroughly familiar with the Code and, in particular, the rules concerning reporting conflicts of interest. Where a director declares an interest in any material contract or transaction being considered at a meeting of directors, the director absents himself or herself from the meeting during the consideration of the matter, and does not vote on the matter.
The board encourages adherence to an overall culture of ethical business conduct by:
The Code, along with the company's anti-corruption compliance protocol, addresses the compliance framework contemplated under various anti-corruption laws in Canada, United States and other jurisdictions in which Kinross operates.
The company's Vice-President, Compliance provides day-to-day leadership to and manages the company's global compliance with the Code and other core policies including management of the company's Whistleblower Policy and program, reporting quarterly on such matters to the board and/or its applicable committees.
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Role of the board of directors
The board mandate has been formalized in a written charter. The board discharges its responsibilities directly and through committees of the board, comprising the audit and risk committee; corporate governance and nominating committee; corporate responsibility and technical committee and human resource and compensation committee.
The charter of the board sets out specific responsibilities, some of which include:
Annually, the board reviews and approves a strategic plan that takes into account business opportunities and business risks consistent with Kinross' risk appetite.
Additional functions of the board are included in its charter or have been delegated to its committees. A complete copy of the charter of the board of directors of the company is attached as Appendix A to this circular and is available upon request to the Corporate Secretary or on the company's website at www.kinross.com .
In carrying out its mandate, the board met eight times in 2016, on six of these occasions also meeting without management present. At such meetings and pursuant to written resolutions, the board fulfilled its responsibilities by doing the following, among other things:
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Position descriptions
The independent chair of the board works with the chairs of the committees of the board to assist them in carrying out their roles and responsibilities as detailed in the committee charters.
In general, committee chairs fulfill their responsibilities by, among other things:
The board and the CEO engage in an ongoing dialogue regarding the board's ongoing expectations for the CEO's responsibilities, which include:
Assessing the board
The current practice of the board is for the independent chair, with the assistance of the corporate governance and nominating committee, to make ongoing formal and informal assessments of the performance of the board, board committees and individual directors. The board has a formal board and committee evaluation process which is completed annually and consists of evaluation forms for the board, as a whole, each of the committees and for individual directors. In addition to the above, performance evaluations are completed annually for the board chair and the chairs of the committees.
The evaluation of the board as a whole and the committees is aimed at determining the effectiveness of the board and how improvements could be made. The evaluation of individual directors is aimed at ensuring that each board member brings an adequate contribution to the board as a whole in light of its overall needs. Such evaluations are used by the independent chair and the corporate governance and nominating committee to recommend changes to board composition or board structure, as may be required from time to time.
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360 degree peer review
In 2016, the board conducted a 360 degree peer review of its members. Each director completed evaluation forms respecting their peers, their committees and the chair of the board. Forms were collected and reviewed by the independent chair and the chair of the corporate governance and nominating committee. The results were communicated to the corporate governance and nominating committee by its chair and to the entire board by the independent chair.
Nominating and method of voting for directors
The corporate governance and nominating committee, which is composed entirely of independent directors, is responsible for identifying and recruiting new candidates for nomination to the board.
Among the duties under its mandate, the corporate governance and nominating committee:
In assessing the composition of the board the corporate governance and nominating committee takes into account the following considerations:
Nominees to the board proposed for election at the meeting are elected by individual voting on each nominee to the board.
Diversity
Board diversity
Kinross believes in diversity and values the benefits diversity can bring to its board. Diversity includes gender, sexual preference, disability, age, ethnicity, business experience, functional expertise, stakeholder expectations, culture and geography. Kinross seeks to maintain a board comprised of talented and dedicated directors whose skills and backgrounds reflect the diverse nature of the business environment in which Kinross operates. Accordingly, the composition of the board is intended to reflect a diverse mix of skills, experience, knowledge and backgrounds, including an appropriate number of women directors. In addition to the relevant skills and experience contained in the above matrix, the corporate governance and nominating committee takes into account the diversity of candidates when filling board vacancies and changing its composition. Kinross also tracks the number of directors with significant, limited or no operations experience.
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In 2012, the board developed and approved a written board diversity policy, which is now part of the consolidated Corporate Governance Guidelines adopted by the board in November 2015. In 2013, with a focus on increasing the board's gender diversity, the corporate governance and nominating committee actively recruited for women and successfully added two women directors to the board. The board diversity policy was updated in December 2014 to include a target percentage for representation of women directors. The board has set as a target that at least 33% of the members of the board should be women. This target has been met with 3 of the 9 directors on the board being women. Mses. Lethbridge, McLeod-Seltzer and Power will stand for re-election at this meeting and upon successful election, the representation of women on the board will continue to be at 33% (3 of 9).
Kinross is committed to a merit-based system for board composition, which requires a diverse and inclusive culture. When identifying suitable candidates for appointment to the board, Kinross will consider candidates on merit against an objective criteria having due regard to the benefits of diversity and the needs of the board. Any search firm engaged to assist the board or the corporate governance and nominating committee in identifying candidates for appointment to the board shall be directed to include female candidates and female candidates will be included in the board's evergreen list of potential board nominees. The corporate governance and nominating committee will continue to review the board diversity policy annually and assess its effectiveness in promoting a diverse board which includes an appropriate number of women directors.
Diversity in executive officer appointments
Kinross believes in diversity and values the benefits diversity can bring to the company. In February 2015, Kinross adopted a global written policy on diversity and inclusion with respect to its employees. The policy is titled "The Kinross Way for Diversity and Inclusion", and it provides guiding principles for promoting a diverse and inclusive culture within Kinross. The policy interprets diversity to mean all the ways in which the employees of Kinross and its subsidiaries are different including visible differences such as ethnicity, race, gender, age and physical appearance as well as religion, nationality, disability, sexual orientation, education and ways of thinking.
The policy recognizes gender diversity as one aspect of diversity which it seeks to promote within the company. Kinross has chosen at this time not to target a specific number or percentage of women. Instead, Kinross has established a framework that will enable the evolution of diverse employee representation, including women as executive officers and believes this is a more meaningful and sustainable approach to improving diversity and inclusion in the workplace. This framework will be grounded in meaningful activities, with an overarching goal of increasing the representation of women based on merit. As of March 1, 2017, the representation of women in executive officer positions within Kinross and its subsidiaries was at 8 women which was 14.29% (March 1, 2016: 14.5%) of executive officer positions.
The Kinross Way for Diversity and Inclusion is supported by a number of activity based measurements specifically aimed at increasing the representation of women at Kinross globally, and is focused on recruitment, management development and succession. These include activities to assess the reasons female employees are attracted to work at Kinross and its subsidiaries as well as exit interviews to determine any unique reasons that women leave Kinross and activities to expand our inclusion of women in succession planning pools and in development programs. Kinross will strive to include female candidates for all key position openings and consider the representation of women in making appointments, including for executive officer roles. However, in all cases the decision on hiring and promotion will be based entirely on merit. While the initial focus of these activities is gender, it is believed that actions taken to improve the environment and opportunities for women will be beneficial for all employees and increase diversity more broadly at Kinross globally.
New director orientation and continuing education
The corporate governance and nominating committee, in conjunction with the independent chair of the board and the CEO of the company, is responsible for ensuring that new directors are provided with an orientation and education program which includes written information about the duties and obligations of directors (including board and committee charters, company policies and other materials), the business and operations of the company, documents from recent board meetings, and opportunities for meetings and discussion with senior management and other directors.
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Continuing education helps directors keep up to date on changing governance issues and requirements, and understand issues the company faces within the context of its business. The board recognizes the importance of ongoing director education and the need for each director to take personal responsibility for this process.
To facilitate ongoing education of the directors, the corporate governance and nominating committee, the independent chair or the CEO will, as may be necessary from time to time:
Each of the current directors is encouraged to complete a recognized director education program such as those offered by corporate governance institutes. Kinross provides access to and financial support for continuing education courses, with particular emphasis on best practices in corporate governance, and will cover 100% of the cost to attend and complete selected programs.
The following table provides details regarding various continuing education events held for, or attended by, the company's directors during the financial year ended December 31, 2016. In addition to these, the directors receive regular updates from management on matters of particular importance or emerging significance.
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Topic |
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Presented/Hosted by |
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Attended by |
January, 2016 | | Emerging and Evolving Audit Committee Issues | | Institute of Corporate Directors | | John A. Brough |
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February, 2016 | | Presentation on Current Corporate Governance Issues | | Osler, Hoskin & Harcourt LLP | |
John M.H. Huxley
Catherine McLeod-Seltzer Kelly Osborne |
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February, 2016 | | BMO Gold Industry Conference | | BMO | |
John A. Brough
Catherine McLeod-Seltzer |
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April, 2016 | | CSR Strategies That Work | | Institute of Corporate Directors | | Ave G. Lethbridge |
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April, 2016 | | Board's Role in Crisis Management | | Osler, Hoskin & Harcourt LLP and Institute of Corporate Directors | | Ave G. Lethbridge |
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May, 2016 | | Bald Mountain, Nevada Mine visit | | Kinross Gold Corporation | |
Ian Atkinson
Ave G. Lethbridge Catherine McLeod-Seltzer John E. Oliver Kelly J. Osborne Una M. Power |
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May, 2016 | | Governance of International Operations | | Institute of Corporate Directors | | John A. Brough |
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May, 2016 | | Navigating the Markets: Shareholder Activism | | Barclays and Stikeman Elliott LLP | | John A. Brough |
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June, 2016 | | Financial Services Audit Committee Roundtable | | Ernst & Young LLP | | John A. Brough |
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June, 2016 | | National Conference | | Institute of Corporate Directors | | Una M. Power |
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June, 2016 | | St. Petersburg International Economic Forum | | Ministry of Economic Development of the Russian Federation | | J. Paul Rollinson |
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June, 2016 | | Regulatory Activities and the Impact on Canadian Companies | | KPMG LLP | | John A. Brough |
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Presented/Hosted by |
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June, 2016 | | Mining Audit Committee Round Table | | KPMG LLP | | John A. Brough |
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September, 2016 | | Precious Metals Summit | | Precious Metals Summit Conferences, LLC | | Catherine McLeod-Seltzer |
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September, 2016 | | Denver Gold Group Conference | | Denver Gold Group | | Catherine McLeod-Seltzer |
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September, 2016 | | Cyber Security Future proofing the Boardroom | | Ernst & Young LLP | | John A. Brough |
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September, 2016 | | Panelist Annual Mining Executive and Director Forum | | KPMG LLP | | John A. Brough |
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October, 2016 | | SAP Global CEO Summit | | SAP | | J. Paul Rollinson |
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October, 2016 | | Foreign Investment Advisory Council | | Ministry of Economic Development of the Russian Federation | | J. Paul Rollinson |
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November, 2016 | | Major Challenges in Today's Boardrooms | | Stanford University-Rotman School of Business | |
John A. Brough
Ave G. Lethbridge |
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November, 2016 | | Mining Round Table Lunch | | National Bank Financial | | Catherine McLeod-Seltzer |
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November, 2016 | | Directors Education Program Module 1 | | Institute of Corporate Directors | | Una M. Power |
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November, 2016 | | Modern Management for 21 st Century Resources Companies | | Northwind Professional Institute | | John A. Brough |
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December, 2016 | | Conference for Audit Committees | | Chartered Professional Accountants of Canada | | Ave G. Lethbridge |
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December, 2016 | | The Foundation of Good Governance | | Institute of Corporate Directors | | Ave G. Lethbridge |
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December, 2016 | | Mining Audit Committee Round Table | | KPMG | |
John A. Brough
Ave G. Lethbridge |
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December, 2016 | | Mining Sector Outlook | | TD Bank | | Catherine McLeod-Seltzer |
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Board term and renewal
In February 2015, the board adopted the director service limits policy in order to assist with appropriate board renewal and succession planning for directors. These are now part of the consolidated Corporate Governance Guidelines adopted by the board in November 2015. The board is committed to a process of renewal and succession planning for directors which seeks to bring fresh thinking and new perspectives to the board while also maintaining an appropriate degree of continuity and adequate opportunity for transition of board and board committee roles and responsibilities.
In keeping with this commitment, term limits were adopted.
An independent director shall not stand for re-election at the first annual meeting of shareholders after 10 years following the later of (a) February, 2015 and (b) the date on which the director first began serving on the board. However, on the recommendation of the corporate governance and nominating committee a non-executive director may continue to stand for re-election for up to five additional years so long as the director continues to receive solid annual performance assessments and meets other board policies or legal requirements for board service. In no event shall an independent director stand for re-election at the first annual meeting of shareholders after reaching age 73.
These limits on board service apply notwithstanding that a director has continued to receive solid annual performance assessments, has the needed skills and experience and meets other board policies or legal requirements for board service.
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Additional governance information
About shareholder engagement
Kinross is committed to engaging in constructive and meaningful communication with its shareholders and other stakeholders. Kinross communicates with shareholders and other stakeholders through a variety of channels, including through its annual and quarterly reports and proxy circular, press releases, annual information form, website and industry conferences. Kinross holds a quarterly earnings call which is open to all. Kinross has also adopted a formal shareholder engagement policy which is available upon request to the Corporate Secretary or can be found on the company's website at www.kinross.com . During 2016, the board and management of Kinross met with a number of shareholders as part of a shareholder outreach program. At these meetings, various items of interest to the shareholders were discussed. For a detailed description of the shareholder outreach initiatives during the previous year, see "Say on pay and shareholder engagement" on page 42.
Feedback to the board of directors
Shareholders may communicate comments directly to the board by writing to the Independent Chair, care of the Corporate Secretary, at Kinross Gold Corporation, 25 York Street, 15 th Floor, Toronto, Ontario, M5J 2V5. All correspondence, with the exception of solicitations for the purchase or sale of products and services and other similar types of correspondence, will be forwarded to the independent chair. Alternatively, the independent chair may be contacted directly by telephone at (416) 365-5123 (ext. 2002).
Interest of certain persons in matters to be acted upon
No (a) director or executive officer of the company who has held such position at any time since January 1, 2016, (b) proposed nominee for election as a director of the company, or (c) associate or affiliate of a person in (a) or (b), has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the meeting, other than the election of directors.
Interest of informed persons in material transactions
Since January 1, 2016, no informed person of the company, nominee for election as a director of the company, or any associate or affiliate of an informed person or nominee, has or had any material interest, direct or indirect, in any transaction or any proposed transaction which has materially affected or will materially affect the company or its subsidiaries.
Indebtedness of directors and officers
To the knowledge of the company, as at March 16, 2017 there was no outstanding indebtedness to the company or its subsidiaries incurred by directors, officers or employees, or former directors, executive officers or employees of the company and its subsidiaries (or any associates of such persons) in connection with the purchase of securities of the company or its subsidiaries or otherwise, and there was no outstanding indebtedness incurred by any such individuals to another entity that was the subject of a guarantee, support agreement, letter of credit or other similar agreement or undertaking provided by the company or its subsidiaries. In addition, the company does not grant personal loans to its directors and executive officers (or any associates of such persons), as such terms are defined under the United States Sarbanes-Oxley Act of 2002, except in accordance with that Act.
Directors' and Officers' Insurance
The company arranges and maintains insurance for its directors and officers and those of its subsidiaries. The limit of liability applicable to all insured directors and officers under the current policies, which will expire on May 1, 2017, is $225 million in the aggregate, inclusive of defence costs. Under the policies, the company has reimbursement coverage to the extent that it has indemnified the directors and officers in excess of a deductible of $5 million for each loss on securities claims brought in the US and $2.5 million each for other claims (subject to certain exceptions that may apply). The total premium charged to the
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company in respect of coverage for 2016 was $1.4M, for 2015 was $1.4M and for 2014 was $1.3M, no part of which is or was payable by the directors or officers of the company.
The by-laws and standard indemnity agreements of the company also provide for the indemnification of the directors and officers of the company (and its affiliates) from and against any liability and cost in respect of any action or suit against them in connection with the execution of their duties of office, subject to the limitations contained in the Ontario Business Corporations Act .
In 2016, Kinross paid the legal expenses of certain current and former officers of Kinross and its subsidiaries arising as a result of the company's ongoing United States Securities and Exchange Commission/Department of Justice investigation in respect of alleged improper payments made to government officials in connection with its gold-mining operations in Mauritania and Ghana. Such payments in 2016 in aggregate fell largely, if not entirely, within the $2.5 million dollar retention/deductible of the company's D&O insurance coverage applicable in respect of such investigation. Once the retention/deductible amount has been paid by Kinross, the company expects insurance to cover any further D&O indemnification in the matter.
Officers of Kinross indemnified for legal expenses in 2016: James Crossland, Former Executive Vice-President, Corporate Affairs; Brant Hinze, Former President and Chief Operating Officer; Mark Isto, Former Senior Vice-President, Project Development; Kash Kelloff, Former Manager, Operational Readiness; Michael Osborne, Vice-President, Global Security; Mac Penney, Former Vice-President, Government Relations; Kenneth Thomas, Former Senior Vice-President, Project Development.
Officers of Kinross subsidiaries indemnified for legal expenses in 2016: Edward Akumaning, Former BPO Superintendent; Dennis Blasutti, Former Regional Financial Officer, Africa; Marc Dagenais, Former Vice-President and General Counsel, Africa; Harry Ferreira, Former Regional Security Manager, Africa; Patrick Hickey, Former Regional Vice-President, Africa; Real LaCroix, Former Site Finance, Africa; Kenneth Norris, Vice-President and General Manager, Chirano; Paul Ross, Supply Chain Manager, Africa; Dan Snodgress, Former General Manager, Tasiast; Melainine Tomy, Vice-President, Administration, Chirano; Murray Wright, Former Manager, Supply Chain Logistics.
Law Firms representing the indemnified individuals and the legal expenses paid in 2016: Robert V. Eye Law Office $2,850, Holland & Hart LLP- $4,741, Petrillo Klein & Boxer LLP $52,750, Debevoise & Plimpton LLP $102,442, Simpson Thacher $119,391, Spears & Imes LLP $173,690, Dechert LLP $216,827, Seward & Kissel LLP $246,643, Smith Villazor LLP $246,746, Milbank, Tweed, Hadley & McCloy LLP $343,780, Akin Gump Strauss Hauer & Feld LLP $609,037, Wilmer Cutler Pickering Hale and Dorr $622,763.
Additional information
Additional information relating to the company can be found under its profile on SEDAR at www.sedar.com and on the company's web site at www.kinross.com . Financial information is provided in the company's audited consolidated financial statements and management's discussion and analysis for the year ended December 31, 2016 and can also be found under the company's profile on SEDAR at www.sedar.com . Shareholders may also contact the Vice-President, Investor Relations of the company by phone at 416-365-5123 or by e-mail at info@kinross.com to request copies of these documents.
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Cautionary statement on forward looking information
All statements, other than statements of historical fact, contained or incorporated by reference in or made in giving this management information circular, including but not limited to any information as to the future performance of Kinross, constitute "forward looking statements" within the meaning of applicable securities laws, including the provisions of the Securities Act (Ontario) and the provisions for "safe harbour" under the United States Private Securities Litigation Reform Act of 1995 and are based on expectations, estimates and projections as of the date of this presentation. Forward-looking statements contained in this presentation include those statements made under the headings "Executive Summary" and "Compensation Letter to shareholders", and include without limitation statements with respect to timing of project development, the timing and amount of expected future production, the costs of future production and mine life extensions. The words "on track", "expected", "potentially" or "upside", or variations of or similar such words and phrases, or statements that certain actions, events or results may, can, could, would, should, might, occur or will be taken or realized, and similar expressions identify forward looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Kinross as of the date of such statements, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Statements representing management's financial and other outlook have been prepared solely for purposes of expressing their current views regarding the Company's financial and other outlook and may not be appropriate for any other purpose. Many of these uncertainties and contingencies can affect, and could cause, Kinross' actual results to differ materially from those expressed or implied in any forward looking statements made by, or on behalf of, Kinross. There can be no assurance that forward looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. All of the forward looking statements made in this management information circular are qualified by these cautionary statements, and those made in our filings with the securities regulators of Canada and the U.S., including but not limited to those cautionary statements made in the "Risk Factors" section of our most recently filed Annual Information Form, the "Risk Analysis" section of our FYE 2016 Management's Discussion and Analysis, and the "Cautionary Statement on Forward-Looking Information" in our news releases dated February, 2017, to which readers are referred and which are incorporated by reference in this management information circular, all of which qualify any and all forward-looking statements made in this management information circular. These factors are not intended to represent a complete list of the factors that could affect Kinross. Kinross disclaims any intention or obligation to update or revise any forward-looking statements or to explain any material difference between subsequent actual events and such forward-looking statements, except to the extent required by applicable law.
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APPENDIX A |
Appendix A
CHARTER OF THE BOARD OF DIRECTORS
I. Purpose
Kinross' Board of Directors is ultimately responsible for the stewardship of, and the supervision and coaching of the management of, the business and affairs of Kinross and must act in the best interests of Kinross. The Board of Directors will discharge its responsibilities directly and through its committees, currently consisting of an Audit and Risk Committee, Human Resources and Compensation Committee, Corporate Responsibility and Technical Committee and Corporate Governance and Nominating Committee. The Board of Directors shall meet regularly to review the business operations and corporate governance and financial results of Kinross. Meetings of the Board of Directors shall include regular meetings with management to discuss specific aspects of the operations of Kinross. The "Independent" board members shall also hold separate, regularly scheduled meetings at which management is not in attendance.
II. Composition
The Board of Directors shall be constituted at all times of a majority of individuals who are "independent directors" in accordance with applicable legal requirements, including the requirements published by the Canadian Securities Administrators and the Corporate Governance Rules of the New York Stock Exchange, as such rules are revised, updated or replaced from time to time. In addition at least (a) three of the independent directors shall be "independent directors" in accordance with applicable legal requirements for service on an audit committee and (b) three of the independent directors shall satisfy applicable legal requirements for service as an independent director on a compensation committee. A copy of the independence requirements is reproduced in Schedule "A" attached hereto.
III. Responsibilities
The Board of Directors' responsibilities include, without limitation to its general mandate, the following specific responsibilities:
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SCHEDULE "A"
Independence Requirements of National Instrument 52-110 Audit Committees ("NI 52-110")
A member of the Board shall be considered "independent" if he or she has no direct or indirect material relationship with the Company. A material relationship is a relationship which could, in the view of the Board, reasonably interfere with the exercise of a director's independent judgment.
The following individuals are considered to have a material relationship with the Company:
In addition to the independence criteria discussed above, for audit committee purposes, any individual who:
is deemed to have a material relationship with the Company, and therefore, is deemed not to be independent.
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The indirect acceptance by an individual of any consulting, advisory or other compensatory fee includes acceptance of a fee by:
Independence Requirement of NYSE Rules
A director shall be considered "independent" in accordance with NYSE Rules if that director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company) that may interfere with the exercise of his or her independence from management and the Company.
In addition:
Exceptions to Independence Requirements of NI 52-110 for Audit Committee Members
Every audit committee member must be independent, subject to certain exceptions provided in NI 52-110 relating to: (i) controlled companies; (ii) events outside the control of the member; (iii) the death, disability or resignation of a member; and (iv) the occurrence of certain exceptional circumstances.
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The
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www.kingsdaleadvisors.com
North American Toll Free Phone:
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