Director Attendance — 2020

Cease Trade Orders and Bankruptcies

        To the Company's knowledge, as at March 22, 2021 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



(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; or



(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:

(i)

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); and



(ii)

Ms. Aglukkaq, a director of the Company, was a director of North Bud Farms Inc. ("NBFI") from May 7, 2018 until her resignation on February 16, 2021. On March 31, 2020, a management cease trade order was issued by the Ontario Securities Commission in respect of NBFI

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(the "March Order"). On June 2, 2020, the March Order was revoked and a failure-to-file cease trade order was issued by the Ontario Securities Commission in respect of NBFI (the "June Order" and, together with the March Order, the "Orders"). The Orders were issued in response to NBFI's failure to file certain periodic disclosure documents in connection with the year ended November 30, 2019 by the applicable filing deadlines. The June Order remains outstanding.

        In addition, to the Company's knowledge, as at March 22, 2021 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

        The Board of Directors has adopted a Majority Voting Policy that provides 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 Chair of the Board immediately following the shareholders' meeting. The Corporate Governance Committee will then 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 news 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 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 the skills, experiences, competencies and qualifications identified by the Board of Directors as being in the best interests of the Company 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.

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        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 Aboriginal directors would be 11% (1 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, the proportion of Aboriginal directors on the entire Board of Directors would be 10% (1 of 10) of all directors and the proportion of women Committee chairs is currently 25% (1 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 Chair of the Board. 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 of Directors does not have a mandatory retirement policy for directors based solely on age nor does it have any term limits or similar mechanisms in place for forcing the renewal or replacement of directors. Rather, it has determined that the best means of ensuring director effectiveness is through the rigorous annual performance evaluations described under "Annual Director Assessments" and not adherence to arbitrary timelines. In conjunction with the annual performance assessments, 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 strategies, needs and 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.

Director Education

        The Board believes in the importance of ongoing director education to enable directors to remain current with developments in the mining industry generally, with issues and challenges faced by the Company in particular and with evolving governance norms and practices.

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        In 2020, the following director education activities took place:

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 various 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 2020, meetings were held with individuals and 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 or sale of products or services, or similar correspondence) or by e-mail to board@agnicoeagle.com.

Diversity, Equity & Inclusion

        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.

        Management has developed a global long term strategy of priorities to accelerate and broaden the Company's approach to diversity and inclusion. The priorities cover four key areas: understanding the composition of the Company's communities and workforce; increasing awareness through training and resources; opening doors by providing opportunities for education, training and jobs; and partnering for success with industry associations, suppliers and interested groups. In addition, the Company has dedicated an experienced resource to advancing the Company's diversity and inclusion strategy.

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        In that context, the Company aims to create an inclusive environment where the diversity of perspectives, experiences, cultures, genders, ages 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, management has identified increasing the number of diverse candidates in leadership positions within the Company as a priority to be achieved by focusing on the preparation and support of diverse candidates in leadership positions, rather than the attainment of quotas.

        In particular, 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, the Company is focused on its Northern Operations on eliminating systemic 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 2020, women represented approximately 15% of the Company's global workforce (and 8% of the Company's senior corporate executives). In addition, one of the Company's Named Executive Officers is a visible minority (20%). 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.

        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 professional services rendered by the auditors in connection with 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, 2020 have been mailed to the Company's shareholders with this Circular.

        Therefore, the burn rates for the Stock Option Plan have been: 2020 — 0.66%; 2019 — 0.89%; and 2018 — 0.85%. The burn rates for the Incentive Share Purchase Plan have been: 2020 — 0.15%; 2019 — 0.18%; and 2018 — 0.22%. The aggregate burn rates for the combined security-based compensation arrangements have been: 2020 — 0.80%; 2019 — 1.08%; and 2018 — 1.07%. The stable to declining aggregate burn rates for all plans demonstrate management's ongoing commitment to control the impact of compensation arrangements on dilution while fostering alignment of employee and shareholder interest.

Amendments to the Stock Option Plan

        The Stock Option 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 Stock Option plan can be found on page 57 of this Circular.

        Currently, the Company has reserved 35,700,000 common shares for issuance under the Stock Option Plan. As at March 22, 2021, 33,671,276 Options have been granted under the Stock Option Plan (not including Options that were granted but subsequently cancelled or expired), with 2,028,724 Options available for future grants, representing 13.82% and 0.83%, respectively, of the 243,695,359 common shares issued and outstanding as at March 22, 2021. As at March 22, 2021, 4,812,417 Options granted under the Stock Option Plan were unexercised and 28,858,859 Options granted under the Stock Option Plan had been exercised, representing 1.97% and 11.84%, respectively, of the 243,695,359 common shares issued and outstanding as at such date.

        The need to attract and retain skilled employees remains particularly important to the success of the Company. The Company considers grants of Options under the Stock Option Plan to be a key factor in its ability to attract and retain skilled and experienced personnel at many levels. This is reflected by the granting of

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Options not only to executives (the Company does not grant Options to directors, the CEO or the President and the trend over the past few years has been to gradually decrease the amount of Options granted to officers (see "Letter from the Compensation Committee"), but also to a large number of other employees to enhance their incentive to continue to grow per share value. In 2021, approximately 246 employees (including executives) were granted Options (229 in 2020; 242 in 2019).

        The Company's practice of granting Options to employees even at a mid-level of management is a fundamental compensation tenet and it is important that the number of Options available to be granted under the Stock Option Plan be increased to maintain this practice and thereby fostering the growth and performance of the Company.

        The aggregate number of outstanding Options as at December 31, 2020 was 3,421,404, representing 1.41% of the common shares issued and outstanding as at December 31, 2020 (being 243,301,195 common shares) and 1,583,150 Options were granted in 2020 representing 0.65% of all common shares issued and outstanding as at December 31, 2020.

        The Board, on the recommendation of the Compensation Committee, is recommending to increase the number of common shares reserved for issuance under the Stock Option Plan by 3,000,000 common shares from 35,700,000 common shares to 38,700,000 common shares, representing: i) 1.23%, 14.67% and 15.91%, respectively, of the 243,301,195 common shares issued and outstanding as at December 31, 2020; and ii) 1.23%, 14.65% and 15.88%, respectively, of the 243,695,359 common shares issued and outstanding as at March 22, 2021. The aggregate number of outstanding Options at December 31, 2020 (being 3,421,404), together with the proposed increase of 3,000,000 represents 2.64% of the common shares issued and outstanding as at December 31, 2020 (being 243,301,195 common shares). The common shares available for grant, including the proposed increase, less the outstanding Options and the Options exercised as at December 31, 2020 is 6,602,050, which represents 2.71% of the common shares issued and outstanding as at December 31, 2020. At the Meeting, shareholders will be asked to consider an ordinary resolution (attached to this Circular as Appendix B) to approve this proposed amendment to the Stock Option Plan. If the resolution is approved, the number of common shares available for future Option grants will be 5,028,724, representing 2.06% of the 243,695,359 common shares issued and outstanding as at March 22, 2021.

        The TSX requires that the resolution amending the Stock Option Plan be passed by the affirmative vote of at least a majority of the votes cast, by proxy or in person. In addition to shareholder approval, the proposed amendments are subject to regulatory approval. If you do not indicate how you want your common shares to be voted, the persons named in the enclosed form of proxy intend to vote your common shares FOR the proposed amendments to the Stock Option 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 9,841,141 common shares are issuable, if the resolution is approved, representing 4.04% of the Company's 243,695,359 issued and outstanding common shares as at March 22, 2021; and

2.        the Incentive Share Purchase Plan pursuant to which 870,369 common shares are issuable, representing 0.36% of the Company's 243,695,359 issued and outstanding common shares as of March 22, 2021.

        Accordingly, if the resolution is approved, an aggregate number of 10,711,510 common shares will be issuable under all security based compensation arrangements of the Company, representing 4.40% of the Company's 243,695,359 issued and outstanding common shares as of March 22, 2021.

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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 32 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 May 1, 2020, 95.42% of shareholders voted in favour of the Company's non-binding resolution on executive compensation (a significant increase from the 71.77% of shares voted in favour at the April 26, 2019 meeting).

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

BE IT RESOLVED AS AN ADVISORY RESOLUTION THAT:

1.        on an advisory basis and not to diminish the role and responsibilities of the Board of Directors of the Company, the approach to executive compensation disclosed in this Circular is hereby accepted.

        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 and, if warranted, will refine the Company's approach to executive compensation in an effort to continue to make the executive compensation practices of the Company acceptable to shareholders.

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SECTION 3: COMPENSATION AND OTHER INFORMATION

Letter from the Compensation Committee

March 22, 2021

Dear Fellow Shareholders:

        2020 was a year which saw unprecedented challenges associated with the COVID-19 pandemic, but also a year in which our people demonstrated remarkable resiliency, innovation and teamwork. In the second quarter of 2020, operations at seven of the Company's eight mines were suspended or reduced — by the end of June, however, all operations were back to full production and the second half of 2020 achieved the strongest six-months of production and the greatest cashflow generation in the 63-year history of the Company. While facing these challenges, the Company also successfully positioned itself to enter 2021 prepared to set new production records and see continued growth for years to come.

        As important as what was achieved is how it was achieved. The Company recognized that the challenges of 2020 were an opportunity to step up and help our communities in a time when they needed help most. In every region we operate in, the Company went the extra mile to do what it could to help, and we made a difference.

        While facing these challenges, we remained committed to our philosophy that "pay-for-performance" and "alignment with shareholders" should continue to guide our executive compensation practices. This letter describes the performance of the Company in 2020, adjustments made with respect to COVID-19 and a discussion of the Company's practices for short and long term incentives.

2020 Performance

        The overall performance of the Company in 2020 was mixed. The Company successfully confronted the unprecedented challenges presented by the COVID-19 pandemic and annual gold production of 1,736,568 ounces was achieved, exceeding the Company's updated guidance released on April 30, 2020. Importantly, these ounces were produced safely, as the Company acheived the second lowest Global Combined Frequency of Accidents result in the Company's history. However, annual total cash costs per ounce of $775 and annual all-in sustaining costs of $1,051 were both above the midpoint of the updated cost guidance for 2020 — primarily due to higher costs at the Kittila mine resulting from contractor cost pressures and higher costs per ounce at several of the Company's operations related to lower gold production at those sites resulting from the temporary shutdowns or reduction in activities in the second quarter of 2020. In addition, early in 2020 the Company experienced operational issues at its LaRonde, Meadowbank and Meliadine operations, though these issues were successfully resolved by the second quarter.

        Mineral reserves at the end of 2020, net of 2020 production, increased by approximately 12% from 2019. While measured and indicated mineral resources decreased by approximately 15% (largely due to conversion into mineral reserves), inferred mineral resources increased by approximately 9% from the end of 2019 to the end of 2020 — demonstrating project pipeline potential to support future production growth.

        Quarterly dividends were increased in 2020 — by 75% ($0.20 to $0.35) in October.

2020 Compensation

COVID-19 Adjustments

        In the second quarter of 2020, due to the uncertainty resulting from the COVID-19 pandemic and with the suspension or reduction of operations at seven of the Company's eight mines, the salary of each of the Company's executives, other than the Chief Executive Officer, was reduced in order for the Company to conserve cash. In the case of the Chief Executive Officer, rather than a reduction in salary, Mr. Boyd committed to a significant reduction of his Short Term Incentive Plan ("STIP") award.

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        For 2020, the Compensation Committee initially awarded Mr. Boyd a short term incentive award of C$4.75 million, having regard to, among other things, his accomplishments achieved during the year as well as the significant increase in the Company's market capitalization over the course of the year. However, we determined that, notwithstanding we were prepared to award Mr. Boyd a short term incentive award of C$4.75 million, having regard to the fact that Mr. Boyd had committed to a reduction of his short term incentive award of C$1 million in response to the COVID-19 pandemic, the Compensation Committee would approve a short term incentive award of C$3.75 million. We commend Mr. Boyd for his leadership throughout the COVID-19 pandemic and results that the Company achieved while facing these unprecedented challenges.

Short Term Incentive Plan

        In 2018, we substantially revised and replaced our STIP to incorporate: (1) an emphasis on clear, easy to measure targets and comparing performance against these identified targets; (2) a greater emphasis on per share results (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 now broadly based on what the Company considers to be the 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 — 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 pillars are key factors in delivering value to shareholders.

        In 2019, the Company did not make any changes to the STIP as this was a new structure and we wished to monitor how well it functioned over multiple periods. We were pleased to see that at the Company's last annual and special meeting of shareholders held on May 1, 2020, 95.42% of shareholders voted in favour of the Company's non-binding resolution on executive compensation (a significant increase from the 71.77% of shares voted in favour at the April 26, 2019 meeting), which we view as an indication that our approach to executive compensation, including with respect to the STIP, is largely supported by shareholders.

        In 2020, having regard to the significant level of shareholder support at the May 1, 2020 annual and special meeting of shareholders, the objectives under the STIP have remained largely the same as in prior years, however, we increased the weighting on the "Environmental, Social & Governance" category from 5% to 7.5% to reflect ever increasing focus in this area.

Long-Term incentive value is directly tied to share price performance; continued 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 Chief Executive Officer (in addition, the President does not receive grants of Options); other senior management also receives RSUs and PSUs as well as Options, but the awards of Options are being gradually reduced over time (with respect to 2020 performance, officers received, in aggregate, 186,000 Options; 2019 — 200,500 Options; 2018 — 278,000 Options; 2017 — 349,000 Options). Since 2013, the Chief Executive Officer 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 awarded to the Chief Executive Office and President are fixed, the value of these awards fluctuates directly with changes in the Company's share price. In 2020, 62% of the total compensation of the Named Executive Officers was comprised of the value of the long-term incentive awards, with 60% of the total compensation being the value of RSUs and PSUs, which are purchased in the market and are therefore non-dilutive.

        In addition, the Company's practice of granting Options to employees even at a mid-level of management is a fundamental compensation tenet to fostering the growth and performance of the Company. As discussed on page 26 under "Three Year Burn Rate", the level of dilution associated with the Stock Option Plan has

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declined over the last three years and the Compensation Committee believes that this level of dilution is reasonable, particularly given that of the Options granted with respect to 2020 performance, approximately 88% were awarded to employees below the level of officer.

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 remain 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 2020, performance highlights included, among other things:

•

successfully confronting the unprecedented challenges presented by the COVID-19 pandemic, including ramping up production following the suspension or reduction of operations at seven of the Company's eight mines in the second quarter of 2020 and implementing extraordinary measures with a focus on protecting the health and safety of the Company's employees, on protecting and supporting the communities in which the Company operates and on protecting the Company's operations;



•

achieving the second lowest Global Combined Frequency of Accidents result in the Company's history;



•

annual production of 1,736,568 ounces of gold, exceeding the Company's updated guidance released on April 30, 2020;



•

achieving record net income and cash provided by operating activities;



•

gold mineral reserves (net of production) increased by 12%;



•

while measured and indicated mineral resources decreased by 15%, largely due to conversion into mineral reserves, inferred mineral resources increased by approximately 9%;



•

advancing the Odyssey project and Amaruq underground project in order to be approved for development in February 2021, completing the Kittila mill expansion (ahead of schedule) and advancing the Kittila shaft sinking project; and



•

increasing quarterly dividends in 2020 — by 75% ($0.20 to $0.35) in October.