Outstanding Incentive Plan Awards Table — 2018

        The following table sets out the attendance of each of the directors to the Board of Directors meetings and the Committee meetings held in 2018.

Cease Trade Orders and Bankruptcies

        To the Company's knowledge, as at March 12, 2019 or within the last ten years, no proposed director of the Company is or has been:

(a)

a director, chief executive officer or chief financial officer of any company (including the Company):



(i)

subject to an order (including a cease trade order, an order similar to a cease a trade order or an order that denied the relevant company access to any exemption under securities legislation) for a period of more than 30 consecutive days, that was issued while the proposed director was acting in the capacity as director, chief executive officer or chief financial officer; or

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(ii)

subject to an order (including a cease trade order, an order similar to a cease trade order or an order that denied the relevant company access to any exemption under securities legislation) for a period of more than 30 consecutive days, that was issued after the proposed director ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer;



(b)

a director or executive officer of any company (including the Company), that while that person was acting in that capacity or within a year of the person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets,

        except as follows:

Mr. Leiderman, a director of the Company, was a director of Colossus Minerals Inc. ("Colossus") from August 1, 2011 until his resignation on November 13, 2013. On February 7, 2014, Colossus filed a proposal to its creditors under the Bankruptcy and Insolvency Act (Canada). On April 30, 2014, Colossus announced that it had completed the implementation of the previously announced court-approved proposal and plan of reorganization filed under the Bankruptcy and Insolvency Act  (Canada).

        In addition, to the Company's knowledge, as at March 12, 2019 or within the last ten years, no proposed director of the Company has become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangements or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.

Board of Directors Governance Matters

Majority Voting Policy

        As part of its ongoing review of corporate governance practices, on February 20, 2008 the Board of Directors adopted a policy providing that in an uncontested election of directors, any nominee who receives a greater number of votes "withheld" than votes "for" will tender his or her resignation to the Chairman of the Board of Directors immediately following the shareholders' meeting. This policy was most recently updated by the Board of Directors on February 14, 2019. Under the updated policy, the Corporate Governance Committee will consider the offer of resignation and will make a recommendation to the Board of Directors on whether to accept it. The Board of Directors will accept the resignation absent exceptional circumstances that would warrant the director continuing to serve on the Board of Directors, as determined by the Board of Directors in accordance with its fiduciary duties to the Company. A resignation shall be effective immediately upon acceptance by the Board. The Board of Directors will make its final decision and announce it in a press release (including fully stating its reasons for rejecting the resignation, if applicable) within 90 days following the shareholders' meeting. A director who tenders his or her resignation pursuant to this policy will not participate in any meeting of the Board of Directors or the Corporate Governance Committee at which the resignation is considered.

Diversity

        The Board of Directors recognizes that diversity is important to ensuring that the Board as a whole possesses the qualities, attributes, experience and skills to effectively oversee the strategic direction and management of the Company. The Board recognizes and embraces the benefits of being diverse, and has identified diversity within the Board as an essential element in attracting high caliber directors and maintaining a high functioning Board. The Board considers diversity to include different genders, ages, cultural backgrounds, races, ethnicities, geographic areas and other characteristics of its stakeholders and the communities in which the Company is present and conducts its business. To that end, in February 2015, the Board considered and, on the recommendation of the Corporate Governance Committee, adopted a Board of Directors Diversity Policy, setting out various diversity criteria the Board and Corporate Governance

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Committee will consider in identifying, assessing and selecting potential nominees for the Board. Pursuant to the Policy, "diversity" includes the characteristics outlined above, and provides a framework and criteria for the Corporate Governance Committee and the Board to review and assess the composition of the Board and its Committees and to identify, evaluate and recommend potential new directors. In new director appointments and ongoing evaluations of the effectiveness of the Board, its Committees and each director, the Corporate Governance Committee and the Board will take into consideration diversity (specifically including gender) as one of the factors in order to maintain an appropriate mix and balance of diversity, attributes, skills, experience and background on the Board of Directors and its Committees. Ultimately, Board appointments are based on merit against objective criteria and with due regard to the benefits of diversity in board composition and the desire to maximize the effectiveness of corporate decision-making, having regard to the best interests of the Company and its strategies and objectives, including the interests of its shareholders and other stakeholders. The Corporate Governance Committee is charged with overseeing the implementation of the Diversity Policy and monitoring and annually reporting to the Board of Directors on the diversity of the Board and its Committees to determine the Diversity Policy's effectiveness and the Company's progress is fostering diversity at the board level.

        The Board does not set any fixed percentages for any specific selection criteria as it believes that quotas or strict rules do not necessarily result in the identification or selection of the best candidates but, rather, all factors should be considered when assessing and determining the merits of an individual director and the composition of a high functioning Board. Assuming all nominated directors are elected at the Meeting, the proportion of women on the Board would be 33.3% (3 of 9) of the non-executive directors, the proportion of non-resident Canadians would be 22% (2 of 9) of the non-executive directors, the proportion of women on the entire Board of Directors would be 30% (3 of 10) of all directors and the proportion of women Committee chairs is currently 50% (2 of 4). The Board believes that the diversity represented by the directors seeking election at the Meeting in terms of gender, age, education, skills, geographic representation and competencies supports an efficient and effective Board.

Annual Director Assessments

        The Board has a formal, comprehensive process to annually assess the performance of the Board as a whole, each Committee and each individual director, which is effected under the direction of the Corporate Governance Committee. A list of suggested topics for consideration is circulated to each director, which is followed by one-on-one meetings with the Board Chair. Various issues are reviewed and discussed, including Board and Committee structure and composition; succession planning; risk management; director skills, experience and competencies; individual director engagement and contributions; and Board and Committee process and effectiveness. These one-on-one meetings take place throughout the year and a summary of the comments is prepared. The summary is initially provided to the Chair of the Corporate Governance Committee and then shared with all directors and forms the basis for the annual Board/Committee/Director review and discussion at the Corporate Governance Committee meeting and the subsequent Board meeting held each December.

Resignation Policy

        The Board does not currently have a director term limit policy or similar mechanisms in place for forcing the renewal or replacement of its directors. Rather, it has determined that the best means of ensuring director effectiveness is through rigorous annual performance evaluations and not adherence to arbitrary timelines. In conjunction with the annual performance evaluations, the Corporate Governance Committee will continue to monitor, evaluate and assess best corporate governance practices and proposals with respect to board renewal mechanisms having regard to, among other things, the performance of individual directors, the Board and to the best interests of the Company. As discussed in greater detail under "Appendix A: Statement of Corporate Governance Practices — Assessment of Directors", the Board has adopted a resignation policy primarily based on the directors' performance, commitment, skills and experience in order to foster an appropriate level of renewal and diversity of perspectives at the board level.

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Shareholder Engagement

        The Board and management recognize the importance of an open and consistent engagement process with the Company's shareholders and other stakeholders. This engagement process is effected by several means, including through the Company's annual and quarterly reports, annual information form, management proxy circular, annual report, annual general meeting of shareholders, quarterly conference calls, news releases, website, discussions with the investor stewardship or corporate governance departments of the Company's shareholders, industry conferences and an extensive and comprehensive program for members of senior management (and, on occasion, directors) to personally meet with the Company's existing and potential shareholders throughout the year (in 2018, meetings were held with representatives of entities holding, in aggregate, more than 50% of the outstanding shares of the Company).

        Shareholders may provide comments directly to the Board by addressing correspondence to the Chair of the Board, Agnico Eagle Mines Limited, Suite 400, 145 King Street East, Toronto, Ontario, Canada, M5C 2Y7, which will be forwarded to the independent Chair (except for solicitations for purchase of sale of products or services, or similar correspondence) or by e-mail to board@agnicoeagle.com.

Women in Leadership

        The Board and management view diversity and inclusion as essential to the growth and success of the Company. In support of this view, the Company implemented a Diversity and Inclusion Policy in December 2018. This policy values diversity and inclusion across all aspects of the Company.

        In that context, the Company aims to create an inclusive environment where the diversity of perspectives, experiences, cultures, genders, age and skills of employees can be leveraged at every level and the Company believes that one of its strengths lies in its ability to leverage the diversity of its employees to drive innovation and to quickly adapt to the ongoing changes in the global market and the gold mining industry. With this in mind,

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management has identified increasing the number of women in leadership positions within the Company as a priority to be achieved by focusing on the preparation and support of women in leadership positions, rather than the attainment of quotas.

        The Company continues to identify and work to mitigate the systemic barriers to the participation and advancement of women in the mining industry in Canada, with a particular focus in the Company's Northern Operations on eliminating systematic barriers that affect Inuit women at the Company's sites in Nunavut. In addition, the Company is increasing awareness in the context of diversity and inclusion in the North, by building self-awareness and leadership skills to further the development of women.

        The Company does not set any fixed percentages or quotas regarding women in executive officer positions as it does not believe that gender alone should be the overriding factor when selecting the best candidate, rather all factors should be considered when assessing and determining the merits of a potential executive officer. Traditionally, the mining industry has not had a large group of female professionals from which to draw upon. To address this issue, the Company has continued its efforts to increase the number of women entering its workforce. In 2018, women represented approximately 16% of the Company's global workforce (and 13% of the Company's corporate executives). As the Company plans for the future, efforts have been made and will be increased to include gender diverse candidates in the Company's succession planning and recruitment initiatives. In addition, management is developing a global long-term strategy of priorities for diversity and inclusion.

Appointment of Auditors

         The persons named in the enclosed form of proxy intend to VOTE FOR the appointment of Ernst & Young LLP as the Company's auditors, and for the directors to fix the remuneration of the auditors unless a shareholder has specified in his or her proxy that his or her common shares are to be withheld from voting for the appointment of Ernst & Young LLP as the Company's auditors. Representatives of Ernst & Young LLP are expected to be present at the Meeting to respond to appropriate questions and make a statement if they wish to do so. Ernst & Young LLP became the Company's auditors in 1983. Fees paid to Ernst & Young LLP for 2018 and 2017 are set out below.

        Audit fees were paid for professional services rendered by the auditors for the audit of the Company's annual financial statements and related statutory and regulatory filings and for the quarterly review of the Company's interim financial statements.

        Audit-related fees consist of fees paid for assurance and related services performed by the auditors that are reasonably related to the performance of the audit of the Company's financial statements. This includes consultation with respect to financial reporting, accounting standards and compliance with Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX").

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        Tax consulting fees were paid for professional services relating to tax compliance, tax advice and tax planning. These services included the review of tax returns and tax planning and advisory services in connection with international and domestic taxation issues.

        All other fees were paid for services other than the services described above and include fees for the translation of securities regulatory filings required to comply with securities laws in certain Canadian jurisdictions.

        No other fees were paid to auditors in the previous two years.

        The Audit Committee has adopted a policy that requires the pre-approval of all fees paid to Ernst & Young LLP prior to the commencement of the specific engagement, and all fees referred to above were pre-approved in accordance with such policy.

Financial Statements

        The audited annual financial statements for the year ended December 31, 2018 have been mailed to the Company's shareholders with this Circular.

Amendments to the Incentive Share Purchase Plan

        The Incentive Share Purchase Plan provides participants with an incentive to enhance shareholder value by providing a form of compensation that is tied to increases in the market value of the Company's common shares. Details on the Incentive Share Purchase Plan can be found on page 57 of this Circular.

        The Company currently has reserved 7,100,000 common shares for issuance under the Incentive Share Purchase Plan. The Compensation Committee considers the Incentive Share Purchase Plan to be an integral part of overall compensation in order to attract and retain employees with the skills and commitment needed to lead and grow the Company's business. The need to attract and retain skilled employees remains important in the competitive mining market. Accordingly, the Compensation Committee has recommended increasing the number of common shares reserved for issuance under the Incentive Share Purchase Plan by 1,000,000 common shares to 8,100,000 common shares. As at March 12, 2019, 6,443,125 common shares had been issued under the Incentive Share Purchase Plan, representing 2.74% of the 235,255,277 common shares issued and outstanding as of March 12, 2019. Accordingly, if the increase is approved, the number of common shares available for future common share issuance will be 1,656,875, representing 0.7% of the 235,255,277 common shares issued and outstanding as of March 12, 2019.

        At the meeting, shareholders will be asked to consider an ordinary resolution (attached to this Circular as Appendix B) to approve the above amendments to the Incentive Share Purchase Plan. A copy of the Incentive Share Purchase Plan which has been amended and restated to reflect the proposed amendments is attached to this Circular as Appendix C.

        The Incentive Share Purchase Plan does not limit the participation of insiders other than non-executive directors who are prohibited from participating in the Incentive Share Purchase Plan. The maximum amount a participant is permitted to contribute to the Incentive Share Purchase Plan is 10% of the participant's base salary and the Company is permitted to make a matching contribution of up to 50% of the participant's contributions. The aggregate number of the Company's common shares: (i) issued to insiders within any one year period, and (ii) issuable to insiders at any time under the Incentive Share Purchase Plan, could theoretically exceed 10% of the Company's issued and outstanding common shares and consequently TSX Rules provide that the votes attached to the securities held by all insiders eligible to participate in the Incentive Share Purchase Plan and their associates and affiliates (the "Eligible Insiders") must be excluded from the vote on the Incentive Share Purchase Plan resolution. Accordingly, shareholders of the Company, other than the Eligible Insiders, are being asked to approve the increase by a majority of the votes cast, by proxy or in person. As of March 12, 2019, 460,775 common shares were held by Eligible Insiders and will be excluded from the vote. In addition to shareholder approval, the increase in common shares available for future grants under the Incentive Share Purchase Plan is subject to regulatory approval. If you do not indicate how you want your

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common shares to be voted, the persons named in the proxy intend to vote your common shares FOR the proposed amendment to the Company's Incentive Share Purchase Plan.

        The Company has two security based compensation arrangements pursuant to which common shares may be issued from treasury:

1.

the Stock Option Plan, pursuant to which 4,978,139 common shares are available for future issuance and 8,200,337 common shares are issuable on the exercise of outstanding options, representing 5.6% of the Company's 235,255,277 issued and outstanding common shares as of March 12, 2019; and



2.

the Incentive Share Purchase Plan, pursuant to which 1,656,875 common shares will be issuable, if the resolution is approved, representing 0.7% of the Company's 235,255,277 issued and outstanding common shares as of March 12, 2019.

        Accordingly, if the resolution is approved, an aggregate number of 14,835,351 common shares will be issuable under all security based compensation arrangements of the Company, representing 6.3% of the Company's 235,255,277 issued and outstanding common shares as of March 12, 2019.

        Therefore, the burn rates for the Stock Option Plan have been: 2018 — 0.85%; 2017 — 0.88% and 2016 — 0.97%. The burn rates for the Incentive Share Purchase Plan have been: 2018 — 0.22%; 2017 — 0.17% and 2016 — 0.15%. The aggregate burn rates for the combined security-based compensation arrangements have been: 2018 — 1.07% dilution; 2017 — 1.04% dilution and 2016 — 1.12% dilution. The decreasing burn rates on Option grants and essentially stable aggregate burn rates for all plans demonstrate management's commitment to control the impact of compensation arrangements on dilution.

Advisory Vote on Approach to Executive Compensation

        The Board of Directors believes that the Company's compensation program must be competitive with companies in its peer group, provide a strong incentive to its executives to achieve the Company's goals and align the interests of management with the interests of the Company's shareholders. A detailed discussion of the Company's executive compensation program is provided under "Compensation Discussion & Analysis" starting on page 27 of this Circular. In line with corporate governance best practices in respect of executive compensation, commonly known as "Say on Pay", the Board of Directors has determined to provide shareholders with a "Say on Pay" advisory vote at the Meeting to endorse or not endorse the Company's approach to executive compensation. At the Company's last annual and special meeting of shareholders held on April 27, 2018, 71.84% of shareholders voted in favour of the Company's non-binding resolution on executive compensation (down from the 86.51% at the April 28, 2017 meeting). Based on discussions with certain of the Company's shareholders, the Company believes that it understands the issues relating to the decrease in support in 2018. Accordingly, the Company has revised the short-term incentive plan for executives to, among other things, provide more clearly defined objective goals and to include more per share metrics as performance targets. The Company monitors, assesses and, when warranted, will refine this approach in an effort to continue to make the executive compensation practices of the Company acceptable to shareholders.

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        At the Meeting, shareholders will be asked to consider the following resolution, which is also attached to this Circular as Appendix F:

BE IT RESOLVED THAT, on an advisory basis and not to diminish the role and responsibilities of the Board of Directors of the Company, the shareholders accept the approach to executive compensation disclosed in this Circular.

        Because this vote is advisory, it will not be binding upon the Board of Directors. However, the Board of Directors and the Compensation Committee will take the outcome of the vote into account in their ongoing review of executive compensation.

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SECTION 3: COMPENSATION AND OTHER INFORMATION

Letter from the Compensation Committee

March 12, 2019

Dear Fellow Shareholders:

        "Pay-for-performance" and "alignment with shareholders" are two philosophies which traditionally have formed the foundation of our executive compensation practices. While our performance in 2018 compared to our peer group remained strong (and has been for many years), we continue to take a measured approach to compensation to reflect not only our absolute and relative performance but the realities of prevailing market conditions.

        This letter describes the performance of the Company in 2018, the changes made to the Company's Short-Term Incentive Plan ("STIP") to more fully align the Company's STIP with best market practices and shareholder interests, and comments on the alignment of long-term incentive value and efforts being made to limit dilution.

2018 Performance

        The performance of the Company in 2018 remained strong. Annual gold production of 1,626,669 ounces at total cash costs per ounce of $637 and all-in sustaining costs per ounce of $877 meant that we have exceeded our production forecast and beat our cost guidance for the seventh consecutive year. 2018 was a transitional year as production levels at Meadowbank were at expected lower amounts (compared to prior years) as the mine moved from the last full year of mining at site while the Amaruq satellite deposit (which is expected to feed the Meadowbank mill beginning in 2019) and the Meliadine project were developed. With the lower production expected at Meadowbank, overall 2018 guidance was below the production level achieved in 2017. However, due to the work performed in 2018, the Meliadine and Amaruq projects were advanced in Nunavut with total expenditures tracking below budget and Meliadine production now expected one quarter earlier than previously scheduled, which has enabled the Company to increase 2019 production guidance. 2018 mineral reserves, net of 2018 production, increased by approximately 7% to 22.0 million ounces of gold and the reserve grade increased by approximately 8%. Mineral resources increased by approximately 19%. In addition, the Company's pipeline was enhanced with the completion of the acquisition of the remaining 50% interest in the Kirkland Lake and Hammond Reef projects not already owned by the Company.

2018 Compensation

Changes to Short-Term Incentive Plan

        The results of our "Say on Pay" votes have been disappointing. In 2018, members of senior management engaged with representatives of some of our largest shareholders and discussed the concerns these shareholders had with respect to the structure of our compensation program, with particular emphasis on issues relating to the STIP. Having regard to these comments, as well as comments made by proxy advisory firms, we substantially revised and replaced our STIP. The new STIP now incorporates: (1) an emphasis on clear, easy to measure targets and measuring performance against these identified goals; (2) a greater emphasis on per share metrics (including cash flow per share, dividends per share, and mineral reserve and mineral resource replacement per share) and profitability measures (such as return on invested capital); and (3) a more detailed explanation of the rationale behind the performance metrics and actual results versus targets.

        The STIP is broadly based on what the Company considers are three pillars of a successful company: (1) people — the health and safety of our workforce is of the highest priority; positive relations with the communities in which we operate, working in an environmentally responsible manner and in accordance with best governance practices and the development of our personnel is crucial to long-term success; (2) performance — the ability to execute in terms of both operations and financial results; and (3) pipeline — 

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the need to build new mines efficiently, find new properties effectively and continually find more mineral reserves and mineral resources on properties we already own or through selective acquisitions. The Company believes these metrics are key factors in delivering value to shareholders and they are assessed and evaluated as follows:

1.

People — 25% weighting: Health & Safety (15%); Environment, Social and Governance (5%); People Development (5%)



2.

Performance — Operational — 25% weighting: Production (10%); Total Cash Costs (7.5%); All-in Sustaining Costs (7.5%)



3.

Performance — Financial — 25% weighting: Operating Cash Flow per share (5%); Return on Invested Capital (5%); Dividends per share (5%); Total Shareholder Return (10%)



4.

Pipeline — 25% weighting: Capital Project Execution (10%); Mineral Reserves per share (5%); Mineral Resources per share (5%); Corporate Development Pipeline (5%)

        These criteria were chosen as the Company believes they cover significant elements in operating a successful business. While some criteria may also be included in PSU metrics, there are different measurement periods and peer groups (for instance, under the STIP, Total Shareholder Return is measured over a one year period while under the PSU Plan, the measurement period is almost three years and the peer group is more diverse) or a different weighting (in the STIP, Total Shareholder Return has a much lower weighting, production has a slightly lower weighting and total cash costs and all-in sustaining costs have a slightly higher weighting than in the PSU Plan). The Company believes that as these metrics are key drivers of value, it is appropriate that they be incorporated in both short-term and long-term incentive plans.

Long-Term incentive value is directly tied to share price performance; attention to dilution

        At the beginning of 2013, with the objective of more fully aligning management and shareholders interests in connection with the long-term incentive component of compensation, we decided to only grant RSUs (augmented by PSUs beginning in 2016) to the CEO (in addition, the President does not receive grants of Options); senior management would also receive RSUs (and PSUs) and Options, but the awards of Options are being gradually reduced over time (in 2018, officers received, in aggregate, 278,000 Options; 2017 — 349,000 Options; 2016 — 504,000 Options). Since 2013, the CEO has received a fixed, flat amount of RSUs annually (changed to 50% RSUs and 50% PSUs in 2016). Since 2017, the President also receives a fixed, flat amount of RSUs and PSUs (50% RSUs and 50% PSUs). Accordingly, as the number of RSUs and PSUs are fixed, the value of these awards fluctuates directly with changes in the share price. In 2018, 55% of the total compensation of the Named Executive Officers was comprised of the value of the long-term incentive awards. RSUs and PSUs are purchased in the market and therefore non-dilutive.

Conclusion

        We understand that compensation programs are not static and we will continue to review and consider other metrics which could potentially be used as factors when assessing and evaluating performance in the context of compensation adjustments and awards.

        The Board and Compensation Committee believe that the compensation practices of the Company achieve the objectives of "pay-for-performance" and "alignment with shareholders". The Board and management remains committed to delivering superior performance in a challenging environment, for the benefit of you, our owners.

        We trust that you agree with our approach and we look forward to continuing to deliver value to you.

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Compensation Discussion & Analysis

Role of the Compensation Committee

        The Compensation Committee exercises broad oversight responsibilities regarding Board, executive and senior management compensation. The Compensation Committee reviews, approves and recommends to the Board for its approval the Company's compensation policies. The Compensation Committee also reviews, approves and makes recommendations to the Board concerning the compensation proposed to be paid to the Board, Chief Executive Officer, President and other officers and senior management of the Company as well as awards proposed to be made to them under the Company's incentive plans. In conjunction with the Board, the Compensation Committee also reviews the Company's management development programs, its succession plans relating to senior management and performance goals and thresholds to be achieved under its incentive plans. As a means of assisting the Compensation Committee, management researches external sources for compensation data and external compensation consultants may be retained from time to time.

        A key compensation objective of the Company is that compensation should be aligned with performance. In 2018, the Company, among other things:

•

produced 1,626,669 ounces of gold — the seventh consecutive year in which gold production exceeded the original guidance (in 2018, 1,530,000 ounces of gold) for the year;



•

produced these ounces at total cash costs per ounce of $637 (below original guidance of total cash costs per ounce of $650 — midpoint between range of $625 and $675);



•

increased gold reserves by 7% to 22 million ounces (net of production) and increased the grade of the reserves by approximately 8%;



•

increased measured and indicated mineral resources by approximately 9% and inferred mineral resources by approximately 19%, though the grade of these mineral resources decreased as higher grade resources were transferred into mineral reserves in 2018;



•

advanced the two Nunavut projects, Meliadine and Amaruq satellite deposit at Meadowbank, with total expenditures under budget and both projects ahead of schedule to the extent that commercial production from Meliadine is now expected early in the second quarter of 2019 and that production from Amaruq is expected in the third quarter of 2019 (these two projects are key components to enable the Company to achieve the objective of producing 2 million ounces of gold in 2020);



•

completed the acquisition of the remaining 50% of the Kirkland Lake and Hammond Reef projects not already owned by the Company; and



•

advanced the Kittila shaft and mill expansion project.

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Compensation Program Philosophy

        The Named Executive Officers of the Company have a significant influence on corporate performance and creating shareholder value. With this in mind, the Company's philosophy regarding compensation is that it must:

•

ensure that the interests of the Named Executive Officers and the Company's shareholders are aligned;



•

be competitive in order to attract and retain Named Executive Officers with the skills and talent needed to lead and grow the Company's business; and



•

provide a strong incentive to achieve the Company's goals.

Elements of Compensation

        The compensation paid to the Company's Named Executive Officers has four components:

•

base salary and benefits;



•

short-term incentive compensation (annual bonus);



•

long-term incentive compensation that may consist of grants of RSUs, PSUs and Options (other than for the Vice-Chairman and Chief Executive Officer or President) as well as optional participation in the Incentive Share Purchase Plan; and



•

career compensation in the form of retirement benefits (pension).

Compensation Considerations

        The Compensation Committee begins to review corporate and management performance in October of each year and, after several meetings over the succeeding months, finalizes its review and analyses in early December and submits its compensation adjustment recommendations to the Board of Directors in mid-December. The Board of Directors considers the recommendations and, traditionally, the timing related to compensation matters is as follows: (i) base salary — any adjustment becomes effective on January 1 of the next calendar year; (ii) bonus — any bonus payment is made within that calendar year (which reflects performance relating to that year); and (iii) any long-term incentive grants (RSUs, PSUs or Options) relating to performance in the current year are awarded early in January of the next calendar year.

        When conducting its evaluation of each Named Executive Officer, the Compensation Committee considers, among other things, executive compensation surveys, recommendations by any executive compensation consultant retained by the Compensation Committee, evaluations prepared by the Vice-Chairman and Chief Executive Officer for each Named Executive Officer other than the Vice-Chairman and Chief Executive Officer and an evaluation prepared by the Chairman for the Vice-Chairman and Chief Executive Officer. The Board of Directors reviews the recommendations made by the Compensation Committee and gives final approval on the compensation of the Named Executive Officers. The Board of Directors has complete discretion over the amount and composition of each Named Executive Officer's compensation.

        In 2018, the Company's Human Resources department conducted an internal market analysis using publicly available information from the Company's peer group and surveys provided by different compensation firms, notably the 2018 Mercer Mining Industry Compensation Survey "Mining Industry Salary Survey — Corporate Report" (the "Mercer Mining Survey"). This market information, among other things, was used by the Compensation Committee and the Board of Directors in recommending and approving the salary adjustments and the bonuses for the Company's officers.

Compensation Consultant

        The Compensation Committee has retained Meridian Compensation Partners ("Meridian") as its independent executive compensation consultant. The engagement began in 2012. The mandate of the executive compensation consultant is to serve the Company and to work for the Compensation Committee in

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its review of executive and director compensation and related governance matters. The nature and scope of services provided by Meridian to the Compensation Committee in 2018 included market practices relating to annual incentive plan design.

        The Compensation Committee does not direct Meridian to perform the above services in any particular manner or under any particular method. It approves all invoices for executive compensation work performed by Meridian. The Compensation Committee has the final authority to hire and terminate Meridian as its executive compensation consultant. Meridian has not provided any other services to the Company other than executive and director compensation services. The aggregate fees related to the executive and directors compensation services paid to Meridian for the past two years were:

(7)

This measure is judgement based and is assessed against the Company's goal of growing the Company's dividend over time to return excess cash to shareholders, while taking into account competing uses of cash and the gold price environment.

(8)

This measure is assessed against the Company's performance relative to a peer group of companies comprised of B2Gold Corp., Barrick Gold Corporation, Goldcorp Inc., IAMGOLD Corporation, Kinross Gold Corporation, Newcrest Mining Limited, Newmont Mining Corporation, Randgold Resources Limited and Yamana Gold Inc. The factors for selecting the companies for purposes of the Total Shareholder Return peer group included consideration of whether: (i) the company operates primarily in the gold mining sector with a focus on exploration, development and production; (ii) the peer group should include an international cross-section of gold mining companies; (iii) the company has operations in countries in addition to its home country; and (iv) the company's market capitalization is between approximately one-eighth to two times that of the Company (the Company's market capitalization ranked fourth out of the nine companies in the peer group survey as at December 31, 2018).

The Company competes with these peer group companies for, among other things, shareholders and capital, and, accordingly, the Company believes that this peer group is an appropriate comparator group for assessing Total Shareholder Return. The Company has selected a different peer group for purposes of assessing Total Shareholder Return as compared to the Internal Survey because: (i) the Internal Survey included mining companies that are outside of the gold mining industry; as a significant factor in Total Shareholder Return for gold mining companies is a result of the performance of the gold price over the relevant time period, the Company believes that limiting the Total Shareholder Return peer group to only gold mining companies acts as a control to ensure that relative performance is assessed fairly; and (ii) the Internal Survey included mining companies that are North American headquartered; while the Company believes that such geographic concentration is appropriate for the Internal Survey for purposes of competition for personnel, the Company believes that competition for shareholders and capital is less geographically focused and, accordingly, it is appropriate to include additional companies to include an international cross-section of gold mining companies.

Total Shareholder Return is defined as:

A+B
C

Where: "A" is equal to the volume weighted average trading price of the common shares of the company calculated by dividing the aggregate value by the aggregate volume of the common shares of the company traded on the TSX or, if the common shares are not traded on the TSX, on such other public stock exchange on which the common shares are listed that has the greatest volume of trading, for the five trading days immediately preceding the last day of the reference period; "B" is equal to the total value of dividends paid by the company per common share during the reference period; and "C" is equal to the volume weighted average trading price of the common shares of the company calculated by dividing the aggregate value by the aggregate volume of the common shares of the company traded on the TSX or, if the common shares are not traded on the TSX, on such other public stock exchange on which

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the common shares are listed that has the greatest volume of trading, for the five trading days immediately preceding the first day of the reference period.

(9)

This measure is judgement based and is assessed against the execution of the Company's schedule and budget for the Company's key capital projects.

(10)

This measure is judgement based and is assessed against the Company's goal of growing Mineral Reserves Per Share over time, while maintaining a minimum of 10 to 15 times annual gold production in mineral reserves. Mineral Reserves Per Share is defined as:

total mineral reserve additions
weighted average number of common shares outstanding (basic)

(11)

This measure is judgement based and is assessed against the Company's goal of growing Mineral Resources Per Share over time. Mineral Resources Per Share is defined as the aggregate of:

total measured and indicated mineral resource additions
weighted average number of common shares outstanding (basic)

and

total inferred mineral resource additions
weighted average number of common shares outstanding (basic)

(12)

This measure is judgement based and is assessed against the Company's performance with respect to searching out acquisition opportunities in low-risk regions that are well matched to the Company's skills and abilities and the identification and evaluation of early to mid-staged candidates for inclusion in the project pipeline.

People (25% weighting; performance assessment: 23%)

        The health and safety of the Company's employees, including any contractors working on the Company's sites, is of the highest importance, as well as the Company's commitments to good environmental, social and governance practices and personnel development activities.

Health and Safety — Global Combined Frequency of Accidents (15% of total weighting):

•

There were no fatal accidents in 2018



•

The combined global accident frequency rate in 2018 was 1.26. In light of the Company's significant construction activity in Nunavut (and relatively higher use of contractors) in 2018, the result is slightly higher than the objective of 1.10, and higher than the Company's record safety performance of 2017



•

In 2018, the Company's workforce included almost 700 more workers (employees and contractors) than compared to 2017 (9,889 at the end of 2018 compared to 9,188 at the end of 2017); however, there were periods during the year when the workforce was much larger (for instance, 11,070 workers in the third quarter of 2018). Of the Company's total year end workforce, 4,599 were contracted workers in 2018, compared to 3,032 at the end of 2017, an increase of more than 1,500



•

The higher Global Combined Frequency of Accidents (relative to 2017 and relative to target) is primarily related to the significant project construction efforts in Nunavut, which resulted in:



•

a substantial number of new and less experienced employees, somewhat mitigated by a very capable but young supervisory team, and



•

an increased number of contractors, for whom it is more difficult for the Company to control all aspects of training and safety

In 2018, almost 59% of accidents took place in Nunavut where approximately 30% of the workforce of the Company were located.

Significant safety efforts have been made to improve safety performance during the remaining construction and subsequent commissioning and operating stages in Nunavut.

•

Lapa and Creston Mascota achieved a triple "0" accident frequency in 2018 (no fatality, no lost time accident, no light duty assignment)

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•

Pinos Altos earned the "Casco de Plata" award in 2018, a safety recognition awarded by the Mexico mining industry



•

Excluding the Company's activities in Nunavut, the accident frequency at the Company's other operating mines was at 0.72 in 2018, compared to 0.70 in 2017 and all of these mines were below their frequency objective in 2018, being almost 40% below target

Performance score 13 out of 15

Environmental, Social and Governance ("ESG") (5% of total weighting):

•

For the first time the Company held an ESG information session for investors in August. The Company expects to hold similar sessions in the future



•

In 2018, all mines were subjected to an external audit of the application of the Mining Association of Canada ("MAC") Toward Sustainable Mining ("TSM") protocols. All mines achieved level A and above and as such were awarded excellence awards from the MAC



•

Implementation of the new TSM tailings management protocol was carried out in 2018, which will help in reducing the risks associated with tailings and water



•

In 2018 there were with several crucial permitting timelines in Nunavut and Finland. The permitting teams were successful in obtaining the relevant permits on a timely basis thereby preserving project schedules



•

The Company's operations received various awards during the year, including two for La India, the Silver Helmet Award, Safety Performance from the Mexican mining industry and the Inclusive Company Award, presented by Mexico's Ministry of Labor and Social Welfare, for fostering a diverse workforce

Performance score 5 out of 5

People Development (5% of total weighting):

•

Substantial efforts continued to be made in 2018 towards designing and implementing a comprehensive succession plan/program for the Company:



•

The focus is on more than just senior executives, as the program also targets perceived potential future business leaders at lower management levels



•

The objective is to provide for a smooth transition whenever personnel changes are made at any management level



•

Discussions with key personnel initiated



•

Continued investment in training and experience for high potential, next generation of employees:



•

Rotation of work assignments to increase breadth of experience



•

Exposure to investors, analysts and industry peers



•

Inclusion in major strategic discussions



•

Business acumen, technical and other relevant training