The Compensation Committee directs the design and provides oversight of the Company's executive compensation program and has overall responsibility for recommending levels of executive compensation that are competitive in the marketplace and enable the Company to attract, retain and motivate executives. The Compensation Committee's principal functions are to:
The Company's CEO participates in executive compensation decisions by making recommendations to the Compensation Committee regarding the following:
The Compensation Committee reviews the basis for these recommendations and can exercise its discretion in modifying any of the recommendations prior to making its recommendations to the Board of Directors as a whole.
The following executive compensation principles guide the Compensation Committee in fulfilling its roles and responsibilities in the design and ongoing administration of the Company's executive compensation program:
The Company reviews the compensation practices of comparable peer mining companies to ensure our compensation approach is competitive within the marketplace. The Company also receives benchmark market data from industry surveys, annual information filings, compensation forums and external compensation consultants,. The Company implemented changes to the compensation arrangements for its officers and directors effective January 1, 2021 based on these market information sources. These changes were as a result of a comprehensive market analysis conducted by the Company, this analysis focused on reviewing annual filing data from our peer group of companies. The analysis focused on competitive compensation practices within the mining industry and in our peer group, with the sole focus of ensuring market competitiveness. In 2020, the Company did not utilize external compensation consultants.
The Company's general executive compensation philosophy is to pay its executive officers "base" compensation in the form of salaries that are competitive in the marketplace of other publicly traded mining companies. In addition, the Company endeavours to provide executives with the opportunity to earn above average "total" compensation through the potential attainment of annual incentive bonuses and through the Company's equity incentive plan.
Individual executive compensation consists of: base salary, annual incentive bonus, long-term equity award grants; benefits and perquisites. Each component of our executive compensation program has a specific role with respect to supporting the goals of the Company's executive compensation program and is structured to reinforce specific job and organizational requirements. Compensation guidelines with respect to these components are established for particular positions based on job responsibilities and within the context of the Company's overall executive compensation program.
Specific compensation recommendations are made to the Board of Directors by the Compensation Committee after discussion amongst the members of the Compensation Committee. Each component of compensation and the decisions of the Compensation Committee about each component have an impact on the Committee's decisions regarding other compensation components. For example, if a Named Executive Officer far exceeded his or her individual goals and objectives, this may affect the amount of compensation paid and/or equity awards granted. All of the compensation components together are intended to meet the Company's compensation objectives, which are intended to allow the Company to attract and retain qualified and experienced executives who are motivated to achieve the Company's business plans, strategies and goals on an annual and long-term basis, in order to increase shareholder value.
Among other factors, in designing the Company's compensation program, setting objectives and making incentive awards, the Board and the Compensation Committee carefully consider potential risks associated with the Company's compensation practices and policies. A number of business risks were mapped to decision-makers and compensation programs, including:
The Board did not identify any compensation practices or policies that are reasonably likely to have a material adverse effect on the Company. The Board of Directors, on the advice of the Compensation Committee, has determined to structure certain compensation arrangements to the specific circumstances of its senior management. The Board of Directors has accordingly determined that compensation paid to Mr. Neumeyer, who is resident outside of Canada, should be structured as a services arrangement. Please see "Summary Compensation Table" and "Services Agreement - Keith Neumeyer".
The Company has adopted a policy that prohibits officers, directors and employees from purchasing or selling financial instruments that are designed to hedge or offset a decrease in the market value of any equity securities held by such officers, directors and employees, including equity securities granted as compensation.
The Company's Say-on-Pay Policy is an important element in the Company's process for continuous review of executive compensation. See "Business of the Meeting - Say-on-Pay Vote" for more information.
A Named Executive Officer's base salary is intended to compensate the Named Executive Officer for performing their job responsibilities. Individual salary adjustments take into account annual performance contributions and overall business performance in connection with the executive's responsibilities. The base salaries for the Named Executive Officers are set out in their employment or service agreements, the terms of which are described below. The base salary of each executive officer is determined by the Board of Directors based on recommendation from by the Compensation Committee of the executive's sustained performance and consideration of competitive market compensation levels. In making its recommendations to the Board of Directors, the Compensation Committee also considers the particular skills and experience of the individual as
well as a consideration of the Company's immediate cash requirements with a view to providing competitive salaries without sacrificing opportunity for growth or placing undue reliance on variable compensation. A final determination on executive compensation, including salary, is made by the Board of Directors in its sole discretion based on the recommendations of the Compensation Committee and its knowledge of the industry and geographic markets in which the Company operates. While the CEO is requested to provide to the Compensation Committee his recommendation on the Named Executive Officers' annual base salaries, the Compensation Committee and the Board make the final determination on the annual base salaries of the Named Executive Officers. The CEO does not make a recommendation with respect to his own salary. The Compensation Committee does not use any type of quantitative formula to determine the base salary level of any of the Named Executive Officers.
The Company has entered into an employment or service agreement with each of its Named Executive Officers. The agreements specify the terms and conditions of employment, the duties and responsibilities of the executive during the term of employment or service, the compensation and benefits to be provided by the Company in exchange for the executive's services, the compensation and benefits to be provided by the Company in the event of a qualifying termination of employment not preceded by a change in control of the Company, and the compensation and benefits to be provided by the Company in the event of a qualifying termination of employment that is preceded by a change in control of the Company. The Committee believes that such agreements benefit the Company by clarifying the terms of employment and ensuring the Company is protected by non-compete and nondisclosure provisions.
Following are the significant terms of each of the Named Executive Officers' employment and services agreements:
The Company's subsidiary, FMS Trading AG, entered into a Services Agreement effective December 8, 2011 (as subsequently amended) with Mr. Neumeyer which amended agreement replaces all other previous employment and service agreements with Mr. Neumeyer. Pursuant to the Services Agreement, Mr. Neumeyer is engaged as President and CEO for an unspecified term at a current fee of $1,200,000 per annum plus benefits and the granting of stock options, RSU's, PSU's and the awarding of annual bonuses which will be determined at the absolute discretion of the Board of Directors or a committee of the Board. For the year ended December 31, 2020, a bonus of $930,166 was paid. The Services Agreement may be terminated by the Company, without cause, by payment of 12 months' base payment plus benefits. This amount increases by two months for each additional year of engagement from 2003. The Services Agreement may be terminated by Mr. Neumeyer with 90 days' written notice. In the event of a change of control, the Company may terminate the Services Agreement without cause, or Mr. Neumeyer shall have 60 days to elect to terminate the agreement, and upon such termination the Company is required to make severance payments to Mr. Neumeyer totaling 12 months' base payments plus benefits set out as follows:
This termination payment to Mr. Neumeyer shall increase by two months for each additional year of service from September 26, 2003.
The Company and Mr. Holmes entered into an Employment Agreement effective February 3, 2020 pursuant to which Mr. Holmes is employed as Chief Operating Officer for an unspecified term at a current salary of $550,000 per annum plus benefits and the granting of stock options, RSU's, PSU's and the awarding of annual bonuses to be determined at the absolute discretion of the President, CEO and Compensation Committee. For the year ended December 31, 2020, a bonus of $297,267 was paid. The Employment Agreement may be terminated by Mr. Holmes with 60 days' written notice or by the Company, at any time, without cause, by payment of 12 months' base salary plus benefits. In the event of a change of control and termination, this termination payment to Mr. Holmes shall increase by one month for each additional year of service from February 3, 2020, to a maximum of 24 months of base salary.
The Company and Mr. Polman entered into an Employment Agreement effective February 1, 2007 and subsequently amended (most recently on January 1, 2019), pursuant to which Mr. Polman is employed as Chief Financial Officer for an unspecified term at a current salary of C$500,000 per annum plus benefits and the granting of stock options, RSU's, PSU's and the awarding of annual bonuses to be determined at the absolute discretion of the President, CEO and Compensation Committee. For the year ended December 31, 2020, a bonus of C$352,484 was paid. The Employment Agreement may be terminated by Mr. Polman with 60 days' written notice or by the Company, at any time, without cause, by payment of 12 months' base salary plus benefits and this payment shall increase by two months for each year of employment to a maximum total of 24 months' base salary. In the event of a change of control and termination, the Company is required to make severance payments to Mr. Polman totaling 12 months' base salary and this payment amount to Mr. Polman shall increase by two months for each year of employment to a maximum total of 24 months' base salary.
The Company and Mr. Mendoza entered into an Employment Agreement effective April 3, 2014 and subsequently amended (most recently on January 1, 2020), pursuant to which Mr. Mendoza was employed as Vice President Technical Services for an unspecified term at a salary of C$397,100 per annum plus benefits and the granting of stock options, RSU's, PSU's and the awarding of annual bonuses to be determined at the absolute discretion of the President & CEO. For the year ended December 31, 2020, a bonus of C$98,441 was paid. The Employment Agreement may be terminated by Mr. Mendoza with one months' written notice or by the Company, at any time, without cause, by provision to the employee of a maximum of one (1) month's notice of termination, or basic pay in lieu of notice, or income continuance, subject to the employee's duty to mitigate which shall be at the absolute discretion of First Majestic, and the employee has no further claim to any other form of severance whatsoever. In the event of a change of control and termination, the Company is required to make severance payments to Mr. Mendoza totaling six months' base salary. It is important to note, that in 2019 Mr. Mendoza performed the role of Vice President Operations until a permanent COO replacement could be recruited. Mr. Mendoza continued to perform this function for all of 2019 and was awarded a discretionary bonus for his performance in this acting capacity. In 2020, Mr. Mendoza was awarded a discretionary bonus for transitioning the COO replacement into his role. This one-time discretionary payment of C$91,500 is not included in the above noted bonus disclosure. While included in the Named Executive Officers for the Company, Mr. Mendoza is not an officer of the Company and as such, his compensation and bonus awards are not determined by the Compensation Committee, but solely by the CEO. In determining bonus awards for Mr. Mendoza, the CEO utilizes a different set of metrics, one that is consistent with all other Vice-Presidents of the Company and aligned with corporate objectives of the Company.
The Company and Ms. Hsia entered into an Employment Agreement effective July 2, 2019, pursuant to which Ms. Hsia is employed as General Counsel for an unspecified term at current salary of C$325,000 per annum plus benefits and the granting of stock options, RSU's, PSU's and the awarding of annual bonuses to be determined at the absolute discretion of the President & CEO. For the year ended December 31, 2020, a bonus of C$186,156 was paid. The Employment Agreement may be terminated by Ms. Hsia with one months' written notice or by the Company, at any time, without cause, by provision to the employee of a maximum of one (1) month's notice of termination, or basic pay in lieu of notice, or income continuance, subject to the employee's duty to mitigate which
shall be at the absolute discretion of First Majestic, and the employee has no further claim to any other form of severance whatsoever. In the event of a change of control and termination, the Company is required to make severance payments to Ms. Hsia totaling six months' base salary. This termination payment to Ms. Hsia shall increase by two months for each additional year of service from July 2, 2019, to a maximum of 24 months base salary.
Named Executive Officers may receive performance-based bonus payments. In granting these bonus payments, the Board considers factors such as the Named Executive Officer's performance and contributions. In determining the bonus amounts, the Board of Directors sets targets, based on the Company's annual budget and operating plan, for operational performance, financial performance and achieving safety and environmental goals to guide the calculation of the bonus. The Board of Directors also considers accomplishments by management which enhance the Company and Shareholder value. The target annual bonus payment to the CEO is 100% of salary and the target annual bonus payment to the COO and the CFO is 80% of salary. The target annual bonus payment to the General Counsel is 65% of salary. The target annual bonus payment to the VP Technical Services is 30% of salary. The Board in its sole and absolute discretion may decide not to pay performance bonuses where the Board believes that it is not prudent to pay bonuses as a result of adverse economic conditions or financial conditions of the Company. For the year ending December 31, 2020, a total of $1,702,759 performance-based bonuses were accrued to the Named Executive Officers. See "Information Respecting the Company - Executive Compensation - Summary Compensation Table" for information on the actual annual incentive bonus paid to each of the Named Executive Officers for the most recently completed financial year.
The share based and stock option component of the Named Executive Officers' compensation are intended to advance the interests of the Company by encouraging the Named Executive Officers and the directors, officers, employees and consultants of the Company to remain associated with the Company and furnishing them with additional incentive in their efforts on behalf of the Company. Grants under the Long Term Incentive Plan are intended to provide long-term awards linked directly to the market value performance of the Company's shares, thereby aligning the short-term performance goals of Company personnel that are based on operational and financial results with the long-term increase in shareholder value that results from the achievement of the short-term performance goals. The Compensation Committee reviews management's recommendations and itself recommends to the Board of Directors the granting of stock options, RSU's and PSU's to directors, officers, employees and consultants of the Company and its subsidiaries. Stock options, RSU's and PSU's are granted according to the specific level of responsibility of the particular executive and the number of options, RSU's and PSU's for each level of responsibility is determined by the Compensation Committee. The number of outstanding options, RSU's, PSU's and previous grants is also considered by the Compensation Committee when determining the number of options, RSU's and PSU's to be granted in any particular year due to the limited number of options, RSU's and PSU's which are available for grant under the Long Term Incentive Plan. A detailed description of the Long Term Incentive Plan is included in Appendix "B".
The primary purpose of providing benefits and perquisites to the Company's executives is to attract and retain key talent. The Company intends that the type and value of benefits and perquisites offered are to be competitive to overall market practices. Details of the benefits and perquisites provided to the Named Executive Officers are disclosed in the "All Other Compensation" column of the Summary Compensation Table set forth in this Information Circular. The primary benefits for the Company's executives include participation in the Company's health and dental coverage, various company-paid insurance plans, including disability and life insurance, paid time off and paid holidays. In general, the Company will provide a specific perquisite only when the perquisite provides competitive value and promotes retention of executives, or when the perquisite provides shareholder value by increasing the efficiency of its executives, or their effectiveness in achieving their individual and corporate goals. The limited perquisites the Company provides its executives include parking and an annual executive medical examination.
As a measure of accountability and to ensure that incentive compensation paid by the Company is based on accurate financial data, the Board may require reimbursement or forfeiture of any overpayment received by an officer, director or employee in the event that there is a restatement or correction to the Company's financial statements and the Board determines that a lower amount of compensation would have been paid based on the restated financial results such that the individual received an excess amount of compensation. In determining whether to require reimbursement or forfeiture of the overpayment, the Board may take into account a variety of considerations and recovery may be made regardless of any wrong-doing that gave rise to the restatement or correction.
The Company does not currently have a retirement policy for its executive officers.
The Company's executive compensation program is reviewed and considered at least annually by the Compensation Committee to determine if the objectives of the executive compensation program are being achieved and whether any modifications to that program are required. This includes a review of base salaries payable, potential bonuses payable and entitlement and participation in equity related incentive plans for all executive officers. It also includes a review of the metrics used to assess performance, the targets established with respect to those performance metrics, whether previously established targets have been achieved and to what degree, and whether the performance metrics and targets are still appropriate in light of the then current industry, stock market and general economic conditions. The Compensation Committee considers the establishment of new performance metrics and related targets to be used to assess executive officer performance and determine executive officer compensation on a go-forward basis. In completing this review, the Compensation Committee considers the recommendations of management and the CEO. Upon completion of that review, the Compensation Committee in turn makes its recommendations with respect to the Company's executive compensation program to the full Board of Directors. The Board of Directors then approves the executive compensation program, including the individual components thereof, subject to any modifications it deems necessary.
The Compensation Committee is comprised of three independent directors. The current members of the Compensation Committee are Robert McCallum, Ana Lopez and Marjorie Co; however, Robert McCallum will not be a nominee for re-election as a director as he has fulfilled his term under the Director Tenure Policy. The Board believes that the Compensation Committee has the knowledge, experience and background required to fulfill its mandate. All of the members of the Compensation Committee have direct experience in both public and private sector executive compensation. The Compensation Committee is responsible for recommending levels of executive compensation that are in order to attract, retain and motivate executives.
The Company may from time to time engage a third-party compensation consultant to provide specific advice to it on executive and director compensation matters; however, for the year ended December 31, 2020, the Company did not engage a compensation consultant. The Company implemented changes to the compensation arrangements for its officers and directors effective January 1, 2021 based on prevailing marketplace practices, review ofannual filings of our peer companies market information sources.
During the year ended December 31, 2020, the Company did not incur any fees related to the compensation review for the Company's directors, executive officers and employees.
The following graph compares the percentage change in the cumulative total shareholder return for C$100 invested in common shares of the Company on January 1, 2016 against the cumulative total shareholder return of the S&P/TSX Composite Index for five years through December 31, 2020, assuming reinvestment of all dividends. The graph also depicts total annual compensation for the Named Executive Officers in each particular year from 2016 to 2020 for comparative purposes. The performance graph shows a general trend that compensation paid to the Company's executives correlates to the Company's total shareholder return.
Part Five
Summary Compensation Table
The following table sets forth compensation information for the fiscal year ended December 31, 2020 for the (a) President and Chief Executive Officer of the Company; (b) the Chief Operating Officer of the Company; (c) the Chief Financial Officer of the Company (d) the Vice President Technical Services; and (e) General Counsel, who are collectively the "Named Executive Officers" for the purposes of this Information Circular.
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-equity incentive
plan compensation ($)
|
|
|
|
|
|
|
|
|
|
|
Name and
principal position
|
Year
|
|
Salary
($)
|
|
|
Share-
based
awards
($)(4)
|
|
|
Option-
based
awards
($)(5)
|
|
|
Annual
incentive
plans(6)
|
|
|
Long-term
incentive
plans
|
|
|
Pension
value
($)
|
|
|
All other
compensation
($)
|
|
|
Total
compensation
($)
|
|
Keith Neumeyer
President, CEO(1)
|
2020
|
$
|
950,000
|
|
$
|
546,727
|
|
$
|
867,180
|
|
$
|
930,166
|
|
|
Nil
|
|
|
Nil
|
|
$
|
41,703 (7)
|
|
$
|
3,335,776
|
|
|
2019
|
$
|
950,000
|
|
$
|
930,309
|
|
$
|
489,259
|
|
$
|
993,950
|
|
|
Nil
|
|
|
Nil
|
|
$
|
185,690(7)
|
|
$
|
3,549,208
|
|
|
2018
|
$
|
900,000
|
|
|
Nil
|
|
$
|
543,175
|
|
$
|
200,000
|
|
|
Nil
|
|
|
Nil
|
|
$
|
28,815(7)
|
|
$
|
1,671,990
|
|
Steven Holmes,
COO(2)
|
2020
|
$
|
355,382
|
|
$
|
233,499
|
|
$
|
1,011,914
|
|
$
|
297,267
|
|
|
Nil
|
|
|
Nil
|
|
$
|
48,199(8)
|
|
$
|
1,946,261
|
|
|
2019
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
2018
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
Raymond Polman
CFO(3)
|
2020
|
$
|
335,745
|
|
$
|
356,561
|
|
$
|
502,445
|
|
$
|
262,988
|
|
|
Nil
|
|
|
Nil
|
|
$
|
3,071(9)
|
|
$
|
1,460,810
|
|
|
2019
|
$
|
339,165
|
|
$
|
601,101
|
|
$
|
312,348
|
|
$
|
283,885
|
|
|
Nil
|
|
|
Nil
|
|
$
|
49,025(9)
|
|
$
|
1,585,524
|
|
|
2018
|
$
|
320,422
|
|
|
Nil
|
|
$
|
346,807
|
|
$
|
57,908
|
|
|
Nil
|
|
|
Nil
|
|
$
|
8,533(9)
|
|
$
|
733,670
|
|
Ramon Mendoza
VP Technical
Services(3)
|
2020
|
$
|
266,093
|
|
$
|
180,967
|
|
$
|
218,775
|
|
$
|
73,447
|
|
|
Nil
|
|
|
Nil
|
|
$
|
72,658(10)
|
|
$
|
811,940
|
|
|
2019
|
$
|
237,416
|
|
|
Nil
|
|
$
|
297,011
|
|
$
|
91,680
|
|
|
Nil
|
|
|
Nil
|
|
$
|
51,340(10)
|
|
$
|
677,447
|
|
|
2018
|
$
|
231,630
|
|
|
Nil
|
|
$
|
173,404
|
|
$
|
11,582
|
|
|
Nil
|
|
|
Nil
|
|
$
|
8,533(10)
|
|
$
|
425,149
|
|
Sophie Hsia
General Counsel(3)
|
2020
|
$
|
218,234
|
|
$
|
148,567
|
|
$
|
306,285
|
|
$
|
138,891
|
|
|
Nil
|
|
|
Nil
|
|
$
|
3,071(11)
|
|
$
|
815,048
|
|
|
2019
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
2018
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Amounts paid as salary to Mr. Neumeyer are paid in Swiss Francs and are reflected here based on the average rates of $1.00 equaling CHF 0.9404 in 2020, CHF 0.9948 in 2019 and CHF 0.9883 in 2018.
(2) Amounts paid as salary to Mr. Holmes are paid in US$.
(3) Amounts paid as salary to Mr. Polman, Mr. Mendoza and Ms. Hsia are paid in Canadian dollars and are reflected here based on the average rates of $1.00 equaling C$1.3403 in 2020, $1.00 equaling C$1.3269 in 2019 and $1.00 equaling C$1.2952 in 2018.
(4) Share-based awards are calculated in Canadian dollars and are reflected here based on the average rates of $1.00 equaling C$1.3403 in 2020. The value of the share based awards was calculated using the share price on the granted day.
(5) Option based awards are calculated in Canadian dollars and are reflected here based on the average rates of $1.00 equalling C$1.3403 in 2020, $1.00 equaling C$1.3269 in 2019 and $1.00 equalling C$1.2952 in 2018.
The value of the option based awards was calculated using the Black-Scholes Option Pricing Model with the following assumptions:
|
Year
|
Weighted average fair
value at grant date
|
Expected
dividend yield
|
Average risk-free
interest rate
|
Expected
life
|
Expected
volatility
|
|
2020
|
C$ 6.28
|
-
|
1.37 %
|
5.92
|
49.0 %
|
|
2019
|
C$ 4.16
|
-
|
2.24 %
|
5.88
|
52.0 %
|
|
2018
|
C$ 4.55
|
-
|
1.77 %
|
5.40
|
52.0 %
|
Part Five
This was the calculation under IFRS 2 as the Black-Scholes Option Pricing Model is an industry accepted model for valuing share-based payments.
(6) Non-equity annual incentive plan payments to Mr. Neumeyer are paid in Swiss Francs and Mr. Holmes are paid in US dollars while Mr. Polman, Mr. Mendoza and Ms. Hsia are paid in Canadian dollars and reflected here based on the average rate of $1.00 equaling C$1.3403 in 2020, $1.00 equaling C$1.3269 in 2019 and $1.00 equaling C$1.2952 in 2018.
(7) Represents the cost of insurance premiums paid or payable by the Company for personal insurance, medical expenses, unused vacations, parking, apartment compensation and renewal of visa for Mr. Neumeyer.
(8) Represents the cost of insurance premiums paid or payable by the Company for personal insurance, medical expenses, automobile, and renewal of residency for Mr. Holmes during the year ended December 31, 2020.
(9) Represents the cost of parking and unused vacation for Mr. Polman.
(10) Represents the cost of parking and a bonus as acting and transition of COO role for Mr. Mendoza during the year ended December 31, 2020.
(11) Represents the cost of parking for Ms. Hsia.
Incentive Plan Awards
Outstanding share-based awards and option-based awards
The following table sets forth the outstanding share-based awards and option-based awards granted to the Named Executive Officers during the most recently completed financial year:
|
|
|
Option-based awards
|
|
|
Share-based awards
|
|
|
Name
|
|
Number of
securities
underlying
unexercised
options
(#)
|
|
|
Option
exercise
price
($)(1)
|
|
|
Option
expiration
date
|
|
|
Value of
unexercised
in-the-money
options
($)(2)
|
|
|
Number of
shares or
units of
shares
that have
not vested
(#)
|
|
|
Market or
payout
value of
share-
based
awards that
have not
vested
($)(3)
|
|
|
Market or
payout
value of
vested
share-
based
awards
not paid
out or
distributed
($)
|
|
|
Keith Neumeyer,
|
|
120,000
|
|
$
|
12.51
|
|
|
2-Jan-30
|
|
$
|
108,385
|
|
|
46,000
|
|
$
|
617,073
|
|
|
Nil
|
|
|
President, CEO
|
|
50,000
|
|
$
|
7.09
|
|
|
31-Mar-30
|
|
$
|
316,124
|
|
|
|
|
|
|
|
|
|
|
|
Steven Holmes,
|
|
200,000
|
|
$
|
10.48
|
|
|
3-Feb-30
|
|
$
|
587,479
|
|
|
24,000
|
|
$
|
321,951
|
|
|
Nil
|
|
|
COO
|
|
25,000
|
|
$
|
7.09
|
|
|
31-Mar-30
|
|
$
|
158,062
|
|
|
|
|
|
|
|
|
|
|
|
Raymond Polman,
|
|
70,000
|
|
$
|
12.51
|
|
|
2-Jan-30
|
|
$
|
63,225
|
|
|
30,000
|
|
$
|
402,439
|
|
|
Nil
|
|
|
CFO
|
|
35,000
|
|
$
|
7.09
|
|
|
31-Mar-30
|
|
$
|
221,286
|
|
|
|
|
|
|
|
|
|
|
|
Ramon Mendoza,
|
|
25,000
|
|
$
|
12.51
|
|
|
2-Jan-30
|
|
$
|
22,580
|
|
|
15,226
|
|
$
|
204,251
|
|
|
Nil
|
|
|
VP Technical Services
|
|
25,000
|
|
$
|
7.09
|
|
|
31-Mar-30
|
|
$
|
158,062
|
|
|
|
|
|
|
|
|
|
|
|
Sophie Hsia,
|
|
35,000
|
|
$
|
12.51
|
|
|
2-Jan-30
|
|
$
|
31,612
|
|
|
12,500
|
|
$
|
167,683
|
|
|
Nil
|
|
|
General Counsel
|
|
|
|
|
7.09
|
|
|
31-Mar-30
|
|
$
|
221,286
|
|
|
|
|
|
|
|
|
|
|
(1) The option exercise prices were converted to U.S. dollars at the exchange rate of C$1.00 = $0.7854, being the exchange rate quoted by the Bank of Canada on December 31, 2020.
(2) This amount is the aggregate dollar amount of in-the-money unexercised options held at the end of the year based on the per share price at December 31, 2020 as reported by the TSX of C$17.08 or $13.41.
(3) This amount is the aggregate dollar amount of market value of share base awards that have not vested using the year-end share price as reported by the TSX of C$17.08 or $13.41.
Part Five
Value Vested or Earned During the Year
The following table sets forth details of the value vested or earned for all incentive plan awards during the most recently completed financial year by each Named Executive Officer:
|
Name
|
|
Option-based awards -
Value vested during the
year(1)
($)
|
|
|
Share-based awards -
Value vested during the year(2)
($)
|
|
|
Non-equity incentive plan
compensation - Value
earned during the year(3)
($)
|
|
|
Keith Neumeyer, President, CEO
|
$
|
343,298
|
|
$
|
631,933
|
|
$
|
930,166
|
|
|
Steven Holmes, COO
|
|
Nil
|
|
|
Nil
|
|
$
|
297,267
|
|
|
Raymond Polman, CFO
|
$
|
455,139
|
|
$
|
505,350
|
|
$
|
262,988
|
|
|
Ramon Mendoza, VP Technical Services
|
$
|
415,869
|
|
|
Nil
|
|
$
|
73,447
|
|
|
Sophie Hsia, General Counsel
|
$
|
104,262
|
|
|
Nil
|
|
$
|
138,891
|
|
(1) This amount is based on the aggregate dollar value that would have been realized if the options under the option-based award had been exercised on the vesting date. It was computed using the dollar value that would have been realized by determining the difference between the market price of the underlying securities at exercise and the exercise or base price of the options under the option-based award on the vesting date. All option-based awards are made in Canadian dollars. The value vested or earned during the year have been translated at December 31, 2020 exchange rate of $0.7854.
(2) This amount is based on the aggregate dollar value realized. It was computed using the dollar value realized by multiplying the share price on the exercise date by the vested number of share based awards. All share-based awards are made in Canadian dollars. The value vested or earned during the year have been translated at the December 31, 2020 exchange rate of $0.7854.
(3) All the non-equity incentive plan compensation is paid in Canadian dollars, except for the CEO and COO who are paid in US dollars. The value earned during the year have been translated at the December 31, 2020 exchange rate of $0.7854.
During the most recently completed financial year, an aggregate of 260,000 options and 107,000 RSU's held by Named Executive Officers vested under the Long Term Incentive Plan, an aggregate of 477,500 options were exercised and an aggregate of 107,000 RSU's were settled by Named Executive Officers.
Part Five
Option-Based Awards and Share Based Awards - Outstanding at Year End
The following table sets forth for each Named Executive Officer, the number of options and share-based awards that were outstanding as at December 31, 2020 and includes the exercise price, expiration date and the value of such options and share-based awards as at December 31, 2020.
|
|
|
Option-based awards
|
|
|
Share-based awards
|
|
|
Name
|
|
Number of
securities
underlying
unexercised
options
(#)
|
|
|
Option
exercise
price(1)
($)
|
|
|
Option
expiration
date
|
|
|
Value of
unexercised
in-the money
options(2)
($)
|
|
|
Number of
shares or
units of
shares
that have
not vested
|
|
|
Market or
payout value
of share-based
awards that
have not
vested(3)
($)
|
|
|
Market or
payout
Value of
vested
share
based
awards not
paid out or
distributed
($)
|
|
|
Keith Neumeyer,
|
|
200,000
|
|
$
|
9.10
|
|
|
10-Dec-21
|
|
$
|
862,369
|
|
|
46,000
|
|
$
|
617,073
|
|
|
Nil
|
|
|
President, CEO
|
|
300,000
|
|
$
|
8.51
|
|
|
3-Jan-22
|
|
$
|
1,470,269
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
$
|
7.08
|
|
|
2-Jan-28
|
|
$
|
950,727
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000
|
|
$
|
6.42
|
|
|
2-Jan-29
|
|
$
|
1,048,509
|
|
|
|
|
|
|
|
|
|
|
|
|
|
120,000
|
|
$
|
12.51
|
|
|
2-Jan-30
|
|
$
|
108,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
$
|
7.09
|
|
|
31-Mar-30
|
|
$
|
316,124
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
970,000
|
|
|
|
|
|
|
|
$
|
4,756,383
|
|
|
46,000
|
|
$
|
617,073
|
|
|
Nil
|
|
|
Steven Holmes
|
|
200,000
|
|
$
|
10.48
|
|
|
3-Feb-30
|
|
$
|
587,479
|
|
|
24,000
|
|
$
|
321,951
|
|
|
Nil
|
|
|
COO
|
|
25,000
|
|
$
|
7.09
|
|
|
31-Mar-30
|
|
$
|
158,062
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
225,000
|
|
|
|
|
|
|
|
$
|
745,541
|
|
|
24,000
|
|
$
|
321,951
|
|
|
Nil
|
|
|
Raymond Polman,
|
|
100,000
|
|
$
|
9.10
|
|
|
10-Dec-21
|
|
$
|
431,185
|
|
|
30,000
|
|
$
|
402,439
|
|
|
Nil
|
|
|
CFO
|
|
150,000
|
|
$
|
8.51
|
|
|
3-Jan-22
|
|
$
|
735,134
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
$
|
7.08
|
|
|
2-Jan-28
|
|
$
|
316,909
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100,000
|
|
$
|
6.42
|
|
|
2-Jan-29
|
|
$
|
699,006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
|
$
|
12.51
|
|
|
2-Jan-30
|
|
$
|
63,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
$
|
7.09
|
|
|
31-Mar-30
|
|
$
|
221,286
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
505,000
|
|
|
|
|
|
|
|
$
|
2,466,745
|
|
|
30,000
|
|
$
|
402,439
|
|
|
Nil
|
|
|
Ramon Mendoza
|
|
50,000
|
|
$
|
8.51
|
|
|
3-Jan-22
|
|
$
|
245,045
|
|
|
15,226
|
|
$
|
204,251
|
|
|
Nil
|
|
|
VP Technical Services
|
|
25,000
|
|
$
|
6.42
|
|
|
2-Jan-29
|
|
$
|
174,752
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
$
|
6.20
|
|
|
21-May-29
|
|
$
|
180,249
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
$
|
12.51
|
|
|
2-Jan-30
|
|
$
|
22,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
25,000
|
|
$
|
7.09
|
|
|
31-Mar-30
|
|
$
|
158,062
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
150,000
|
|
|
|
|
|
|
|
$
|
780,688
|
|
|
15,226
|
|
$
|
204,251
|
|
|
Nil
|
|
|
Sophie Hsia,
|
|
87,500
|
|
$
|
8.12
|
|
|
2-Jul-29
|
|
$
|
463,190
|
|
|
12,500
|
|
$
|
167,683
|
|
|
Nil
|
|
|
General Counsel
|
|
35,000
|
|
$
|
12.51
|
|
|
2-Jan-30
|
|
$
|
31,612
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35,000
|
|
$
|
7.09
|
|
|
31-Mar-30
|
|
$
|
221,286
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
157,500
|
|
|
|
|
|
|
|
$
|
716,088
|
|
|
12,500
|
|
$
|
167,683
|
|
|
Nil
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The option exercise prices were converted to U.S. dollars at the exchange rate of C$1.00 = $0.7854, being the exchange rate quoted by the Bank of Canada on December 31, 2020.
(2) This amount is the aggregate dollar amount of in-the-money unexercised options held at the end of the 2020 financial year using the per share price at December 31, 2020 as reported by the TSX of C$17.08 or $13.41.
(3) This amount is the aggregate dollar amount of market value of share based awards that have not vested, using the year-end share price as reported by the TSX of C$17.08 or $13.41.
Part Five
Termination and Change of Control Benefits
Each of the Named Executive Officers have termination and change of control benefits provided for in their respective employment or services agreements. The terms of each of the Named Executive Officers' employment and services agreements is contained in this Information Circular under the heading "Statement of Executive Compensation - Compensation Discussion and Analysis".
The following table sets out the maximum amount the Company could be obligated to pay in the event that a Named Executive Officer was terminated without cause as of December 31, 2020. The Company would also be obligated to pay the Named Executive Officer's actual accrued base salary and expenses up to the date of termination and continue the Named Executive Officer's health benefits and option entitlements for the period set out in their respective employment or services agreements.
|
Name
|
|
Base salary
during period
|
|
|
Bonus
during period
|
|
|
Vacation pay
during period
|
|
|
Total gross
payment
|
|
|
Keith Neumeyer, President, CEO(1)
|
$
|
4,455,342
|
|
|
Nil
|
|
$
|
117,218
|
|
$
|
4,572,560
|
|
|
Steven Holmes, COO(2)
|
$
|
541,712
|
|
|
Nil
|
|
$
|
5,082
|
|
$
|
546,794
|
|
|
Raymond Polman, CFO(3)(6)
|
$
|
785,400
|
|
|
Nil
|
|
$
|
62,082
|
|
$
|
847,482
|
|
|
Ramon Mendoza, VP Technical Services(4)(6)
|
$
|
155,941
|
|
|
Nil
|
|
$
|
55,828
|
|
$
|
211,769
|
|
|
Sophie Hsia, General Counsel(5)(6)
|
$
|
127,628
|
|
|
Nil
|
|
$
|
6,980
|
|
$
|
134,608
|
|
(1) On a termination without cause or following a change of control, Mr. Neumeyer's services agreement provides that he will be entitled to payment of 12 months' base salary plus benefits. This amount will increase by two months for each additional year of employment from September 26, 2003 and is subject to a market compensation review.
(2) On a termination without cause or following a change of control, Mr. Holmes' employment agreement provides that he will be entitled to payment of 12 months' base salary plus benefits. This amount will increase by one month for each additional year of employment to a maximum total of 24 months' base salary
(3) On a termination without cause or following a change of control, Mr. Polman's employment agreement provides that he will be entitled to payment of 12 months' base salary plus benefits. This amount will increase by two months for each additional year of employment to a maximum total of 24 months' base salary.
(4) On a termination without cause or following a change of control, Mr. Mendoza's employment agreement provides that he will be entitled to payment of 6 months' base salary plus benefits.
(5) On a termination without cause or following a change of control, Ms. Hsia's employment agreement provides that she will be entitled to payment of 6 months' base salary plus benefits. This amount will increase by two months for each additional year of employment to a maximum of 24 months' base salary.
(6) Amounts due to Mr. Polman, Mr. Mendoza and Ms. Hsia are converted to U.S. dollars at the exchange rate of C$1.00 = $0.7854, being the exchange rate quoted by the Bank of Canada on December 31, 2020.
|
PART SIX
OTHER INFORMATION
|
|
|
Part Six
Normal Course Issuer Bid
In March 2013, the board of directors approved a share repurchase program (the "Share Repurchase") pursuant to a normal course issuer bid in the open market through the facilities of the TSX or alternative Canadian market places over the ensuing 12 months. The Share Repurchase was renewed in March of each year from 2014 to 2021. Pursuant to the renewed Share Repurchase, the Company may repurchase up to 10,000,000 common shares of the Company, which represent approximately 4.5% of the 221,681,131 issued and outstanding shares of the Company as of March 8, 2021. The Company did not repurchase any common shares for cancellation under its prior normal course issuer bid which commenced on March 21, 2020 and expired on March 20, 2021. The security holders may obtain a copy of the notice of the normal course issuer bid, without charge, by contacting the Corporate Secretary of the Company toll-free, at 1-866-529-2807.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table sets out, as of December 31, 2020, the information required with respect to compensation plans under which equity securities of the Company are authorized for issuance:
|
Plan Category
|
|
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
|
|
|
Weighted-average
exercise price of
outstanding
options, warrants
and rights(1)
(b)
|
|
|
Number of securities
remaining available for
issuance under equity
compensation plans
(excluding securities
reflected in column
(a)) (c)
|
|
|
Equity compensation plans approved by securityholders
|
|
7,367,610
|
|
$
|
9.59
|
|
|
10,389,591
|
|
|
Equity compensation plans not approved by securityholders
|
|
Nil
|
|
|
Nil
|
|
|
Nil
|
|
|
Totals
|
|
7,367,610
|
|
$
|
9.59
|
|
|
10,389,591
|
|
(1) The option exercise prices were converted to U.S. dollars at the exchange rate of C$1.00 = $0.7854 being the exchange rate quoted by the Bank of Canada on December 31, 2020.
A detailed description of the Company's Long Term Incentive Plan is set out in Appendix "B".
Indebtedness of Directors and Senior Officers to the Company
No director or senior officer of the Company or any associate or affiliate of any such director or senior officer is or has been indebted to the Company or any of its subsidiaries at any time during the Company's last completed financial year however, a loan to Steve Holmes was made on January 7, 2021 in the amount of US$80,000 The loan to Mr. Holmes relates to a tax over contribution made to the government of Mexico on behalf of Mr. Holmes by the Company. This over-contribution relates to work income he received from the Company and it resulted in Mr. Holmes paying taxes on the same income in both Mexico and the United States. This overpayment was a result of a Company error and the Company agreed to provide Mr. Holmes with a loan equal to the amount of the tax overpayment, until such time as it can be recouped from the Government of Mexico.
Interest of Informed Persons in Material Transactions
Other than as set forth in this Information Circular, none of the proposed directors or persons who were directors or executive officers of the Company or a subsidiary of the Company at any time during the Company's last financial year, no person or company who beneficially owns, directly or indirectly, or who exercises control or direction over (or a combination of both) more than 10% of the issued and outstanding common shares of the Company, nor any associate or affiliate of any such person, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any transaction since the commencement of the Company's most recently completed financial year or in any proposed transaction, which has materially affected or would materially affect the Company.
Part Six
Management Contracts
The management functions of the Company are not to any substantial degree performed by any person other than the senior officers and the Board of Directors of the Company.
Audit Committee
As required by National Instrument 52-110 - Audit Committees, information about the Company's Audit Committee is provided in the Company's most recent Annual Information Form ("AIF") under "Directors and Officers". The AIF may be obtained from the Company's disclosure documents available on the Company's website at www.firstmajestic.com or under the Company's profile on SEDAR at www.sedar.com.
Additional Information
Financial information concerning the Company is also provided in the Company's audited consolidated financial statements and management's discussion and analysis for the year ended December 31, 2020.
Shareholders may obtain a copy of the Company's financial statements and management's discussion and analysis upon request to the Company at Suite 1800 - 925 West Georgia Street, Vancouver, BC, V6C 3L2 or can view them on the Company's website at www.firstmajestic.com.
Additional information relating to the Company can be found under the Company's profile on SEDAR at www.sedar.com.
Approval of the Board of Directors
The contents of this Information Circular have been approved, and the delivery of it to each shareholder of the Company entitled thereto and to the appropriate regulatory agencies has been authorized by the Board of Directors.
Certificate
The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made.
DATED at Vancouver, British Columbia the 21st day of April, 2021.
"Keith Neumeyer"
Keith Neumeyer,
President and Chief Executive Officer
APPENDIX "A"
BOARD OF DIRECTORS' MANDATE
(Adopted by the Board of Directors of First Majestic Silver Corp. (the "Company") with immediate effect on March 7, 2019 and amended on February 19, 2021)
INTRODUCTION
The board of directors (the "Board") of the Company is responsible for the overall stewardship of the Company and its primary objective is to enhance and preserve long-term shareholder value. In pursuing this primary objective and in the performance of its functions, the Board should also take into account the legitimate interests of its other stakeholders, such as its employees and the communities and the environment in which it operates.
The Board is responsible for the management or supervising the management of the Company's business and affairs. In supervising the conduct of the business, the Board, through the Chief Executive Officer (the "CEO"), sets the standards of conduct for the Company.
This mandate is prepared to assist the Board and management in clarifying responsibilities and ensuring effective communication between the Board and management.
COMPOSITION OF THE BOARD
1. Each director must be qualified to serve as a director pursuant to, and meet the requirements of, the Business Corporations Act (British Columbia) (the "Act"), all applicable securities laws and the rules, instruments, policies, regulations and guidelines of all applicable securities regulatory authorities, including without limitation the securities commissions in each of the provinces of Canada, and all stock exchanges on which the Company's securities are listed, including without limitation the Toronto Stock Exchange and the New York Stock Exchange (collectively, "Applicable Laws").
2. A minimum of two-thirds of directors comprising the Board must qualify as "independent" as determined by Applicable Laws.
3. Nominees for directors are approved by the Board and elected annually at the Company's annual general meeting of shareholders. The Corporate Governance and Nominating Committee selects, reviews and recommends to the Board candidates for director nominees. In selecting, reviewing, and accepting candidates for nomination as directors, as applicable, the Board and the Corporate Governance and Nominating Committee must consider and evaluate the composition of the Board as a whole, including considering and making a determination as to the independence of each director nominee under Applicable Laws, and consider the existence and the impact of any Board Interlocks or Committee Interlocks on director independence and the functioning and independence of the Board as a whole. For the purposes of this Mandate, the term "Board Interlock" means when two or more directors of the Company sit together on the board (or equivalent) of another reporting issuer, and the term "Committee Interlock" means when a Board Interlock exists, and in addition, the relevant two or more directors also sit together on a board committee of the Company or the other reporting issuer.
Appendix "A"
4. No director of the Company may serve as a director (a "Directorship") on a board (or equivalent) of more than five reporting issuers (excluding the Board) without the prior approval of the Board. In determining to recommend or accept, as applicable, a candidate for nomination as a director who holds more than five Directorships, the Board and the Corporate Governance and Nominating Committee must consider whether or not the number of Directorships a nominee holds will prevent such director from devoting sufficient time and resources to his or her duties as a member of the Board.
5. The Company must disclose in its management information circular for each general meeting of shareholders at which directors are nominated for election to the Board, the following:
(a) all Board Interlocks, Committee Interlocks and Directorships held by nominee directors;
(b) the Board's judgment as to whether any Board Interlocks or Committee Interlocks exist which could impact the independence of those directors or their ability to act in the best interests of the Company; and
(c) if a director nominee holds more than five Directorships, the Board's judgment as to whether or not such director can devote sufficient time and resources to his or her duties as a member of the Board.
6. During the period between annual shareholder meetings, directors must advise the Corporate Governance and Nominating Committee of their intention to join or be nominated for election to the board (or equivalent) or any committee thereof of another reporting issuer.
ADMINISTRATION, DUTIES AND RESPONSIBILITIES
1. Meetings of the Board
(a) The Board will meet a minimum of four times per year and may also hold additional meetings as considered necessary.
(b) Each director of the Company is expected to use all reasonable efforts to attend a minimum of 75% of all regularly scheduled Board and applicable committee meetings, except to the extent that any absence is due to medical or other valid reasons.
(c) The members of the Board who are "independent" as determined by Applicable Laws may hold in camera sessions at each Board meeting.
2. Managing the Affairs of the Board
The Board operates by delegating certain of its responsibilities and authority, including spending authorizations, to management, and by reserving certain powers to itself. Certain of the powers that the Board retains may be delegated to committees of the Board, pursuant to the policies, mandates, charters and terms of reference of such committees as approved by the Board.
The legal obligations of the Board are described below under the heading "General Legal Obligations of the Board of Directors". Subject to these legal obligations and to the Articles of the Company, the Board retains the responsibility for managing its own affairs, including:
(a) annually reviewing the skills and experience represented on the Board in light of the Company's strategic direction and approving a Board composition plan recommended by the Corporate Governance and Nominating Committee;
(b) annually, following each annual general meeting of shareholders:
(i) electing a Chair of the Board and appointing the President and CEO of the Company,
(ii) on the recommendation of the CEO, appointing the senior officers of the Company, and
(iii) appointing committees of the Board, including an Audit Committee, Corporate Governance and Nominating Committee, Compensation Committee, and any other standing committee the Board determines is necessary or advisable from time to time, and determining the composition of those committees, within the following parameters:
Appendix "A"
(A) all members of committees of the Board must be "independent" as determined by Applicable Laws; and
(B) directors who are also officers of the Company shall not participate in determining the composition of the Corporate Governance and Nominating Committee and no more than 1/3 of the members of that committee may be the CEO or President of another reporting issuer;
(c) establishing from time to time, as determined necessary or advisable by the Board, special committees of the Board;
(d) periodically setting and updating (from time to time as determined to be necessary by the Board) the policies, mandates, charters and terms of reference of the committees of the Board, as applicable;
(e) determining and implementing an appropriate process for assessing the effectiveness of the Board, the Chair of the Board, each committee of the Board and each individual director in fulfilling their respective responsibilities;
(f) periodically assessing the adequacy and form of director compensation;
(g) assuming responsibility for the Company's governance practices;
(h) establishing new director orientation and ongoing director education processes;
(i) ensuring that the independent directors meet regularly without executive directors and management present;
(j) to the extent feasible, satisfying itself as to the integrity of the Board as a whole;
(k) setting the terms of reference for the Board; and
(l) appointing the secretary to the Board.
3. Human Resource Matters
The Board has the responsibility to:
(a) provide advice and counsel to the CEO in the execution of the CEO's duties;
(b) appoint and discharge the CEO and plan CEO succession;
(c) set terms of reference for the CEO;
(d) annually approve corporate goals and objectives that the CEO is responsible for meeting;
(e) monitor and, at least annually, review the CEO's performance against agreed upon annual objectives;
(f) set the CEO's compensation including salary, incentives, benefits and pension plans and review and approve employment or consulting agreements, as applicable, between the Company and the CEO;
(g) approve the CEO's acceptance of significant public service commitments or outside directorships;
(h) approve decisions relating to senior management, including:
(i) review senior management structure including such duties and responsibilities to be assigned to each of the officers of the Company;
(ii) on the recommendation of the CEO, appoint and discharge the officers of the Company;
(iii) review compensation plans for senior management including salary, incentives, benefit and pension plans; and
(iv) employment contracts, termination and other special arrangements with executive officers;
(i) to the extent feasible, satisfy itself as to the integrity of the CEO and other senior officers, and that the CEO and other senior officers create a culture of integrity throughout the Company;
Appendix "A"
(j) approve certain matters relating to the Company's employees in general, including:
(i) the Company's broad compensation strategy and philosophy; and
(ii) new benefit programs or material changes to existing programs; and
(k) ensure succession planning programs are in place, including programs to train and develop management.
4. Strategy and Plans
The Board has the responsibility to:
(a) adopt and periodically review a strategic planning process for the Company;
(b) participate with management in the development of and annually approve a strategic plan for the Company that takes into consideration, among other things, the risks and opportunities of the business;
(c) approve annual capital and operating budgets that support the Company's ability to meet its strategic objectives;
(d) direct management to develop, implement and maintain a reporting system that accurately measures the Company's performance against its business plans;
(e) approve the entering into, or withdrawing from, lines of business that are, or are likely to be, material to the Company;
(f) approve material acquisitions and divestitures;
(g) conduct periodic reviews of human, technological and capital resources required to implement the Company's strategic plan;
(h) conduct periodic reviews of the environmental and social, cultural or governmental constraints of the business of the Company; and
(i) review regularly any recent developments that may affect the Company's business and its strategic plan, and advise management on emerging trends and issues.
5. Financial and Corporate Matters
The Board has the responsibility to:
(a) take reasonable steps to ensure the implementation and integrity of the Company's internal control and management information systems;
(b) review and approve release by management of any materials reporting on the Company's financial performance or providing guidance on future results to its shareholders;
(c) ensure the Company's public disclosure is disseminated on a timely and regular basis in accordance with Applicable Law, accurately and fairly reflects the state of affairs of the Company, and is in accordance with generally accepted accounting principles, including quarterly results press releases and quarterly financial statements, any guidance provided by the Company on future results, Company information circulars, annual information forms, annual reports, offering memoranda, prospectuses and registration statements;
(d) ensure the CEO and CFO certify the Company's annual and interim financial statements, annual and interim MD&A and Annual Information Form, and that the content of the certification meets all legal and regulatory requirements;
(e) declare dividends if and when the Board deems it to be appropriate;
(f) approve financings, issuances and repurchases of shares, issuances of debt securities, listings of shares and other securities, issuances of commercial paper, and related offering memoranda, prospectuses or registration statements; and recommend changes in the Company's authorized share capital to shareholders for their approval;
Appendix "A"
(g) approve the incurrence of any material debt by the Company outside the ordinary course of business;
(h) approve the commencement or settlement of litigation that may have a material impact on the Company; and
(i) recommend to the Company's shareholders the appointment of external auditors and, if so authorized by the Company's shareholders, approve auditors' fees.
6. Business and Risk Management
The Board has the responsibility to:
(a) ensure management identifies the principal risks of the Company's business and implements appropriate systems to manage these risks;
(b) evaluate and assess information provided by committees of the Board, management and others about principal risks of the Company's business and the effectiveness of risk management systems in place;
(c) approve any plans to hedge mineral sales; and
(d) review the adequacy of security of information, information systems and recovery plans.
7. Corporate Communications and Compliance Reporting
The Board has the responsibility to:
(a) ensure the Company has in place effective communication processes with shareholders, management, employees and other stakeholders and financial, regulatory and other recipients;
(b) ensure all communications with shareholders and information otherwise disseminated by the Company adheres to the requirements of the Company's Disclosure of Information, Confidentiality and Restrictions on Trading Policy;
(c) ensure the Board has measures in place to receive feedback from shareholders;
(d) approve interaction with shareholders on all items requiring shareholder response or approval;
(e) ensure timely reporting of any other developments that have a significant and material effect on the Company in accordance with Section 5(b)-(d) above, as applicable; and
(f) report annually to the shareholders on the Board's stewardship for the preceding year.
8. Company Policies
The Board has the responsibility to:
(a) direct management to ensure the Company operates at all times within applicable laws and regulations and to the highest ethical and moral standards;
(b) approve and monitor, through management, compliance with all significant policies and procedures that govern the Company's operations; and
(c) approve and periodically review the following:
(i) the Company's Code of Ethical Conduct;
(ii) the Company's Whistle Blower Policy;
(iii) the Company's Disclosure of Information, Confidentiality and Restrictions on Trading Policy; and
(iv) the Company's policies with respect to corporate social responsibility and environmental health and safety.
Appendix "A"
GENERAL LEGAL OBLIGATIONS OF THE BOARD OF DIRECTORS
1. The Board is responsible for the management of or supervising the management of the business and affairs of the Company and directing management to ensure legal requirements have been met and documents and records have been properly prepared, approved and maintained.
2. The Act requires that each director:
(a) acts honestly and in good faith with a view to the best interests of the Company, including the duty:
(i) to disclose conflicts of interest;
(ii) not to appropriate or divert corporate opportunities;
(iii) to maintain confidential information of the Company and not use such information for personal benefit; and
(iv) to disclose information vital to the business of the Company in the possession of a director;
(b) exercises the care, diligence and skill that a reasonably prudent individual would exercise in comparable circumstances; and
(c) acts in accordance with the Act and the Company's Articles.
ANNUAL PERFORMANCE EVALUATION
The Board, committees and each individual director will be regularly assessed regarding his, her, or its effectiveness and contribution. An assessment will consider (a) in the case of the Board or a board committee, its mandate or charter, and (b) in the case of an individual director, the applicable position description(s), as well as the competencies and skills each individual director is expected to bring to the Board.
The Company will organize annual board performance evaluations which will involve individual director assessments.
EFFECTIVE DATE
This Mandate was approved and adopted by the Board on March 7, 2019, and amended on February 19, 2021 (the "Effective Date") and is and shall be effective and in full force and effect in accordance with its terms and conditions from and after such date.
GOVERNING LAW
This Mandate shall be interpreted and enforced in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable in that province.
Appendix "B"
APPENDIX "B"
DESCRIPTION OF LONG TERM INCENTIVE PLAN
The Long Term Incentive Plan ("LTIP") was approved by shareholders at the Company's annual and special meeting held May 23, 2019. A full copy of the LTIP was included in the information circular for that meeting and is available under the Company's profile at www.sedar.com. Capitalized terms used in this summary and not otherwise defined shall have the meanings given to such terms in the LTIP.
The annual "burn rate" for the Company's LTIP for the year ended December 31, 2020 was 1.38%.
The material terms of the LTIP are set out below.
• Maximum Number of Shares Issuable - The maximum number of shares issuable under the LTIP, together with the number of shares issuable under any other Security-Based Compensation Arrangements of the Company, shall not in the aggregate exceed 8% of the issued and outstanding shares of the Company (calculated as at the grant date of such Awards), provided that the maximum number of Share Units (which includes Restricted Share Units, Performance Share Units and Deferred Share Units) will not exceed 1.0% of the issued and outstanding shares of the Company (calculated as at the grant date of such Awards).
• Types of Awards - Pursuant to the LTIP, the Company may issue Options, Restricted Share Units, Performance Share Units and Deferred Share Units.
• Plan Limits - When combined with all of the Company's other security-based compensation arrangements, the LTIP shall not result in:
• the number of Shares issuable to any one person at any time exceeding 5% of the issued and outstanding Shares;
• the number of Shares issued to Insiders within a one-year period exceeding 8% of the issued and outstanding Shares; or
• the number of Shares issuable to Insiders at any time exceeding 8% of the issued and outstanding Shares.
The LTIP shall not result in:
• the number of Shares issuable to all non-executive directors of the Company exceeding 1% of the issued and outstanding Shares at such time; or
• the number of Shares issuable to any one non-executive director within a one-year period exceeding an Award value of $150,000 per such non-executive director, of which no more than $100,000 may comprise Options based on a valuation method acceptable to the Board.
Options
• Stock Option Terms and Exercise Price - The number of Shares subject to each Option grant, the exercise price, vesting, expiry date and other terms and conditions thereof will be determined by the Board. The exercise price of each Option shall in no event be lower than the Market Price of the Shares on the grant date.
• Term - Unless otherwise specified at the time of grant, Options shall expire 10 years from the date of grant, unless terminated earlier in accordance with the LTIP. Options that otherwise expire during a trading blackout shall be extended until ten trading days following the expiration of the blackout period.
• Vesting Schedule - Options vest and become exercisable in 25% increments on each of the 12 month, 18 month, 24 month and 30 month anniversaries from the grant date. Options granted to the Chief Executive Officer of the Corporation which have an initial expiry date which is more than five years after the Award Date shall instead vest in equal portions on each of the first, second, third, fourth and fifth anniversaries of the Award Date.
Appendix "B"
• Exercise of Option - A participant may exercise vested Options by (i) payment of the exercise price per Share subject to each Option, or (ii) if permitted by the Board, on a cashless basis by receiving that number of Shares equal to the current Market Price less the Option Price multiplied by the number of Options exercised as the numerator, divided by the current Market Price, as the denominator.
• Circumstances Causing Cessation of Entitlement - If a Participant ceases to be a Director, Employee or Consultant of the Company, the Options will vest and expire in accordance with Section 5.5 of the LTIP. A summary of these provisions for Directors and Employees in contained in the table below:
(a) If the Participant is an Employee:
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Reason for Termination
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Vesting
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Expiry of Option
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Death or Disability
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Any Options held by a Participant on the date of death or disability and which are unvested as of such date will not vest.
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The expiry date of the Options will be the earlier of (i) the expiry date established under Section 5.2(c) of the LTIP and (ii) one year from the date of death or disability of the Participant.
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Change in Control
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Options will vest in accordance with Section 11 of the LTIP.
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Options expire in accordance with Section 11 of the LTIP.
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Ceasing to be Employed for Employee Cause Event
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Any Options which are unvested as of the date the Participant ceases to be an Employee will not vest, unless determined otherwise by the Board.
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The expiry date of the Options will be the date the Participant ceases to be an Employee.
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Mandatory Retirement
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All unvested Options of the Participant will immediately vest and become immediately exercisable
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The expiry date of the Options will be the earlier of (i) the expiry date established under Section 5.2(c) of the LTIP and (ii) one year from the date of retirement.
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Ceasing to be Employed but continues to be engaged as a Director or Consultant
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The vesting of the Options will continue as set out in the Option Award Agreement.
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The expiry date of the Options will remain unchanged.
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Ceasing to be Employed other than as set out above
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Any Options which are unvested as of the date the Participant ceases to be an Employee will not vest, unless determined otherwise by the Board.
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The expiry date of the Options will be the earlier of (i) the expiry date established under Section 5.2(c) of the LTIP and (ii) the 60th day following the date the Participant ceases to be an Employee.
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(b) If the Participant is a Director:
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Reason for Termination
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Vesting
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Expiry of Option
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Death or Disability
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Unvested Options will automatically vest in full as of the date of death or disability and become immediately exercisable.
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The expiry date of the Options will be the earlier of (i) the expiry date established under Section 5.2(c) of the LTIP and (ii) one year from the date of death or disability of the Participant.
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Change in Control
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Options will vest in accordance with Section 11 of the LTIP.
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Options expire in accordance with Section 11 of the LTIP.
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Appendix "B"
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Reason for Termination
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Vesting
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Expiry of Option
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Ceasing to Hold Office but continues to be engaged as an Employee or Consultant
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The vesting of the Options will continue as set out in the Option Award Agreement.
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The expiry date of the Options will remain unchanged.
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Ceasing to Hold Office for Director Cause Event
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Any Options held by Participant on the date the Participant ceases to be a Director which are unvested as of such date will not vest.
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The expiry date of the Options will be the date the Participant ceases to be a Director.
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Mandatory Retirement
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All unvested Options of the Participant will immediately vest and become immediately exercisable
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The expiry date of the Options will be the earlier of (i) the expiry date established under Section 5.2(c) of the LTIP and (ii) one year from the date the Participant ceases to be a Director.
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Ceasing to Hold Office other than as set out above
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All unvested Options of the Participant will immediately vest and become immediately exercisable.
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The expiry date of the Options will be the earlier of (i) the expiry date established under Section 5.2(c) of the LTIP and (ii) the 180th day following the date the Participant ceases to be a Director.
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(c) If the Participant is a Consultant:
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Reason for Termination
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Vesting
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Expiry of Option
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Death or Disability
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Any Options held by a Participant on the date of death or disability and which are unvested as of such date will not vest.
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The expiry date of the Options will be the earlier of (i) the expiry date established under Section 5.2(c) of the LTIP and (ii) one year from the date of death or disability of the Participant.
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Change in Control
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Options will vest in accordance with Section 11 of the LTIP.
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Options expire in accordance with Section 11 of the LTIP.
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Ceasing to be a Consultant due to completion/termination of contract
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Any Options which are unvested as of the date the Participant ceases to be a Consultant will not vest, unless determined otherwise by the Board
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The expiry date of the Options will be the earlier of (i) the expiry date established under Section 5.2(c) of the LTIP and (ii) the 60th day following the date the Participant ceases to be a Consultant
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Ceasing to be a Consultant due to completion/termination of contract but continues to be engaged as a Director or Employee
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The vesting of the Options will continue as set out in the Option Award Agreement.
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The expiry date of the Options will remain unchanged.
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Ceasing to be a Consultant and concurrently hired and becomes an Employee
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The Options previously granted to the Consultant will flow through to the Employee on the same terms and conditions of the original grant of Options.
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The Options previously granted to the Consultant will flow through to the Employee on the same terms and conditions of the original grant of Options.
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Appendix "B"
Restricted Share Units and Performance Share Units
• Terms - Restricted Share Units and Performance Share Units are notional securities that entitle the recipient to receive cash or Shares at the end of a vesting period. Vesting of Performance Share Units is contingent upon achieving certain performance criteria, thus ensuring greater alignment with the long-term interests of shareholders. The terms applicable to Restricted Share Units and Performance Share Units under the LTIP (including the vesting schedule, performance cycle, performance criteria for vesting and whether dividend equivalents will be credited to a participant's account) are determined by the Board at the time of the grant.
• Vesting - Unless otherwise provided, Restricted Share Units typically vest in three equal instalments on the first three anniversaries of the date the Restricted Share Unit was granted. Unless otherwise noted, Performance Share Units shall vest as at the date that is the end of their specified performance cycle, subject to any performance criteria having been satisfied.
• Settlement - On settlement, the Company shall, for each vested Restricted Share Unit or Performance Share Unit being settled, deliver to a Participant either (a) one Share, (b) a cash payment equal to the Market Price of one Share as of the vesting date, or (c) any combination of cash and Shares equal to the Market Price of one Share as of the vesting date, at the discretion of the Board.
• Dividend Equivalents - As dividends are declared, additional Restricted Share Units and Performance Share Units may be credited to a Participant in an amount equal to the greatest whole number which may be obtained by dividing (i) the value of such dividend or distribution on the payment date therefore by (ii) the Market Price of one Share on such date.
• Circumstances Causing Cessation of Entitlement - If a Participant ceases to be a Director, Employee or Consultant of the Company, the Restricted Share Units and Performance Share Units will be treated in accordance with Section 7.6 and 6.6 of the LTIP respectively. A summary of these provisions for Directors and Employees in contained in the table below:
(a) Restricted Share Units - If the Participant is an Employee:
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Reason for Termination
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Treatment of Restricted Share Units
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Death or Disability
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Outstanding Restricted Share Units that were vested on or before the date of death or disability will be settled the earlier of (i) the date set out as the settlement date in the settlement notice delivered by the Participant; (ii) the date 60 days following the date of death or disability; and (iii) December 31st of the calendar year in which death or disability occurs. Outstanding Restricted Share Units that were not vested on or before the date of death or disability will in all respects terminate as of the date of death or disability.
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Change in Control
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Restricted Share Units vest in accordance with Section 11 of the LTIP.
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Ceasing to be Employed for Employee Cause Event
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Outstanding Restricted Share Units (whether vested or unvested) will automatically terminate on the date the Participant ceases to be an Employee.
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Mandatory Retirement
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Outstanding Restricted Share Units that were vested on or before the date the Participant ceases to be an Employee will be settled the earlier of (i) the date set out as the settlement date in the settlement notice delivered by the Participant (ii) the date 60 days following the date the Participant ceases to be an Employee; and (iii) December 31st of the calendar year in which the Participant ceases to be an Employee. Subject to the foregoing, any remaining Restricted Share Units will in all respects terminate as of the date the Participant ceases to be an Employee.
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Ceasing to be Employed but continues to be engaged as a Director or Consultant
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Outstanding Restricted Share Units will continue to vest pursuant to the RSU Award Agreement.
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Appendix "B"
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Reason for Termination
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Treatment of Restricted Share Units
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Ceasing to be Employed other than as set out above
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Outstanding Restricted Share Units that were vested on or before the date the Participant ceases to be an Employee will be settled the earlier of (i) the date set out as the settlement date in the settlement notice delivered by the Participant; (ii) the date 60 days following the date the Participant ceases to be an Employee; and (iii) December 31st of the calendar year in which the Participant ceases to be an Employee. Subject to the foregoing, any remaining Restricted Share Units will in all respects terminate as of the date the Participant ceases to be an Employee.
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(b) Restricted Share Units - If the Participant is a Director:
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Reason for Termination
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Treatment of Restricted Share Units
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Death or Disability
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Outstanding Restricted Share Units that were vested on or before the date of death or disability will be settled as of the date of death or disability. Outstanding Restricted Share Units that would have vested on the next vesting date following the date of death or disability will vest and be settled as of the date of death or disability, prorated to reflect the actual period between the Grant Date and the date of death or disability. Subject to the foregoing, any remaining Restricted Share Units will in all respects terminate as of the date of death or disability.
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Change in Control
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Restricted Share Units vest in accordance with Section 11 of the LTIP.
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Ceasing to Hold Office but continues to be engaged as an Employee or Consultant
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Outstanding Restricted Share Units will continue to vest pursuant to the RSU Award Agreement.
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Ceasing to Hold Office for Director Cause Event
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Outstanding Restricted Share Units (whether vested or unvested) will automatically terminate on the date the Participant ceases to be a Director.
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Ceasing to Hold Office other than as set out above including Mandatory Retirement
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Outstanding Restricted Share Units that were vested on or before the date the Participant ceases to be a Director will be settled as of the date of the Participant ceases to be a Director. Outstanding Restricted Share Units that would have vested on the next vesting date following the date the Participant ceases to be a Director will vest and be settled as of such vesting date. Subject to the foregoing, any remaining Restricted Share Units will in all respects terminate as of the date the Participant ceases to be a Director.
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(c) Restricted Share Units - If the Participant is a Consultant:
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Reason for Termination
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Treatment of Restricted Share Units
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Death or Disability
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Outstanding Restricted Share Units that were vested on or before the date of death or disability will be settled the earlier of (i) the date set out as the settlement date in the settlement notice delivered by the Participant; (ii) the date 60 days following the date of death or disability; and (iii) December 31st of the calendar year in which death or disability occurs. Outstanding Restricted Share Units that were not vested on or before the date of death or disability will in all respects terminate as of the date of death or disability.
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Change in Control
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Restricted Share Units vest in accordance with Section 11 of the LTIP.
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Appendix "B"
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Reason for Termination
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Treatment of Restricted Share Units
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Ceasing to be a Consultant due to completion/termination of contract
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Outstanding Restricted Share Units (whether vested or unvested) will automatically terminate on the date the Participant ceases to be a Consultant.
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Ceasing to be a Consultant due to completion/termination of contract but continues to be engaged as a Director or Employee
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Outstanding Restricted Share Units will continue to vest pursuant to the RSU Award Agreement.
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Ceasing to be a Consultant and concurrently hired and becomes an Employee
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The Restricted Share Units previously granted to the Consultant will flow through to the Employee on the same terms and conditions of the original grant of Restricted Share Units.
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(d) Performance Share Units - If the Participant is an Employee:
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Reason for Termination
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Treatment of Performance Share Units
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Death or Disability
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Outstanding Performance Share Units that were vested on or before the date of death or disability will be settled the earlier of (i) the date set out as the settlement date in the settlement notice delivered by the Participant; (ii) the date 60 days following the date of death or disability; and (iii) December 31st of the calendar year in which death or disability occurs. Outstanding Performance Share Units that were not vested on or before the date of death or disability will in all respects terminate as of the date of death or disability.
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Change in Control
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Performance Share Units vest in accordance with Section 11 of the LTIP.
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Ceasing to be Employed for Employee Cause Event
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Outstanding Performance Share Units (whether vested or unvested) will automatically terminate on the date the Participant ceases to be an Employee.
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Mandatory Retirement
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Outstanding Performance Share Units that were vested on or before the date the Participant ceases to be an Employee will be settled the earlier of (i) the date set out as the settlement date in the settlement notice delivered by the Participant; (ii) the date 60 days following the date the Participant ceases to be an Employee; and (iii) December 31st of the calendar year in which the Participant ceases to be an Employee. Subject to the foregoing, any remaining Performance Share Units will in all respects terminate as of the date the Participant ceases to be an Employee.
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Ceasing to be Employed but continues to be engaged as a Director or Consultant
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Outstanding Performance Share Units will continue to vest pursuant to the PSU Award Agreement.
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Ceasing to be Employed other than as set out above
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Outstanding Performance Share Units that were vested on or before the date the Participant ceases to be an Employee will be settled the earlier of (i) the date set out as the settlement date in the settlement notice delivered by the Participant; (ii) the date 60 days following the date the Participant ceases to be an Employee; and (iii) December 31st of the calendar year in which the Participant ceases to be an Employee. Subject to the foregoing, any remaining Performance Share Units will in all respects terminate as of the date the Participant ceases to be an Employee.
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Appendix "B"
(e) Performance Share Units - If the Participant is a Director:
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Reason for Termination
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Treatment of Performance Share Units
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Death or Disability
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Outstanding Performance Share Units that were vested on or before the date of death or disability will be settled as of the date of death or disability. Outstanding Performance Share Units that were not vested on or before the date of death or disability will vest and be settled as of the date of death or disability , prorated to reflect the actual period between the commencement of the performance cycle and the date of death or disability, based on the Participant's performance for the applicable performance period(s) up to the date of death or disability. Subject to the foregoing, any remaining Performance Share Units will in all respects terminate as of the date of death or disability.
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Change in Control
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Performance Share Units vest in accordance with Section 11 of the LTIP.
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Ceasing to Hold Office but continues to be engaged as an Employee or Consultant
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Outstanding Performance Share Units will continue to vest pursuant to the PSU Award Agreement.
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Ceasing to Hold Office for Director Cause Event
|
Outstanding Performance Share Units (whether vested or unvested) will automatically terminate on the date the Participant ceases to be a Director.
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Ceasing to Hold Office other than as set out above including Mandatory Retirement
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Outstanding Performance Share Units that were vested on or before the date the Participant ceases to be a Director will be settled as of the date the Participant ceases to be a Director. Outstanding Performance Share Units that would have vested on the next vesting date following the date the Participant ceases to be a Director, prorated to reflect the actual period between the commencement of the performance cycle and the date the Participant ceases to be a Director, based on the Participant's performance for the applicable performance period(s) up to the date the Participant ceases to be a Director, will be settled as of such vesting date. Subject to the foregoing, any remaining Performance Share Units will in all respects terminate as of the date the Participant ceases to be a Director.
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(f) Performance Share Units - If the Participant is a Consultant
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Reason for Termination
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Treatment of Performance Share Units
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Death or Disability
|
Outstanding Performance Share Units that were vested on or before the date of death or disability will be settled the earlier of (i) the date set out as the settlement date in the settlement notice delivered by the Participant; (ii) the date 60 days following the date of death or disability; and (iii) December 31st of the calendar year in which death or disability occurs. Outstanding Performance Share Units that were not vested on or before the date of death or disability will in all respects terminate as of the date of death or disability.
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|
|
Change in Control
|
Performance Share Units vest in accordance with Section 11 of the LTIP.
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Ceasing to be a Consultant due to completion/termination of contract
|
Outstanding Performance Share Units (whether vested or unvested) will automatically terminate on the date the Participant ceases to be a Consultant.
|
|
Appendix "B"
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Reason for Termination
|
Treatment of Performance Share Units
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Ceasing to be a Consultant due to completion/termination of contract but continues to be engaged as a Director or Employee
|
Outstanding Performance Share Units will continue to vest pursuant to the PSU Award Agreement.
|
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Ceasing to be a Consultant and concurrently hired and becomes an Employee
|
The Performance Share Units previously granted to the Consultant will flow through to the Employee on the same terms and conditions of the original grant of Performance Share Units.
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Deferred Share Units
• Terms - A Deferred Share Unit is a notional security that entitles the recipient to receive cash or Shares upon termination of the holder from all positions with the Company The terms applicable to Deferred Share Units under the LTIP (including whether dividend equivalents will be credited to a Participant's DSU Account) are determined by the Board at the time of the grant.
Under the LTIP, the Board may grant discretionary Deferred Share Units and mandatory or elective Deferred Share Units that are granted as a component of a non-executive director's annual retainer or an officer or employee's annual incentive.
• Vesting - Unless otherwise provided, mandatory or elective Deferred Share Units vest immediately, and the Board determines the vesting schedule for discretionary Deferred Share Units at the time of grant.
• Settlement - Deferred Share Units may only be settled after the DSU Separation Date. At the grant date, the Board shall stipulate whether the Deferred Share Units are paid in cash, Shares, or a combination of both, in an amount equal to the Market Price of the notional Shares represented by the Deferred Share Units in the Participant's DSU Account.
• Credit to Account - As dividends are declared, additional Deferred Share Units may be credited to a Participant in an amount equal to the greatest whole number which may be obtained by dividing (i) the value of such dividend or distribution on the payment date therefore by (ii) the Market Price of one Share on such date.
• Circumstances Causing Cessation of Entitlement - If a Participant ceases to be a Director, Employee or Consultant of the Company, the Deferred Share Units will be treated in accordance with Section 8.6 of the LTIP. A summary of these provisions for Directors and Employees is contained in the table below:
(a) If the Participant is an Employee:
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Reason for Termination
|
Treatment of Deferred Share Units
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Death or Disability
|
Outstanding Deferred Share Units that were vested on or before the date of death or disability will be settled as of the date of death or disability. Outstanding Deferred Share Units that were not vested on or before the date of death or disability will in all respects terminate as of the date of death or disability. Outstanding Deferred Share Units that were not vested on or before the date of death or disability will in all respects terminate as of the date of death or disability.
|
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|
|
|
|
|
Change in Control
|
Deferred Share Units vest in accordance with Section 11 of the LTIP.
|
|
|
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|
Ceasing to be Employed for Employee Cause Event
|
Outstanding Deferred Share Units (whether vested or unvested) will automatically terminate on the date the Participant ceases to be an Employee.
|
|
Appendix "B"
|
|
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|
|
Reason for Termination
|
Treatment of Deferred Share Units
|
|
|
|
|
|
|
Mandatory Retirement
|
Outstanding Deferred Share Units that were vested on or before the date the Participant ceases to be an Employee will be settled as of the date the Participant ceases to be an Employee. Subject to the foregoing, any remaining Deferred Share Units will in all respects terminate as of the date the Participant ceases to be an Employee.
|
|
|
|
|
|
|
Ceasing to be Employed but continues to be engaged as a Director or Consultant
|
Outstanding Deferred Share Units will continue to vest pursuant to the DSU Award Agreement.
|
|
|
|
|
|
|
Ceasing to be Employed other than as set out above
|
Outstanding Deferred Share Units that were vested on or before the date the Participant ceases to be an Employee will be settled as of the date the Participant ceases to be an Employee. Outstanding Deferred Share Units that would have vested on the next vesting date following the date the Participant ceases to be an Employee will be settled as of such vesting date. Subject to the foregoing, any remaining Deferred Share Units will in all respects terminate as of the date the Participant ceases to be an Employee.
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(b) If Participant is a Director
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Reason for Termination
|
Treatment of Deferred Share Units
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|
|
Death or Disability
|
Outstanding Deferred Share Units that were vested on or before the date of death or disability will be settled as of the date of death or disability. Outstanding Deferred Share Units that were not vested on or before the date of death or disability will vest and be settled as of the date of death or disability, prorated to reflect the actual period between the Grant Date and the date of death or disability. Subject to the foregoing, any remaining Deferred Share Units will in all respects terminate as of the date of death or disability.
|
|
|
|
|
|
|
Change in Control
|
Deferred Share Units vest in accordance with Section 11 of the LTIP.
|
|
|
|
|
|
|
Ceasing to Hold Office but continues to be engaged as an Employee or Consultant
|
Outstanding Deferred Share Units will continue to vest pursuant to the DSU Award Agreement.
|
|
|
|
|
|
|
Ceasing to Hold Office for Director Cause Event
|
Outstanding Deferred Share Units (whether vested or unvested) will automatically terminate on the date the Participant ceases to be a Director.
|
|
|
|
|
|
|
Ceasing to Hold Office other than as set out above including Mandatory Retirement
|
Outstanding Deferred Share Units that were vested on or before the date the Participant ceases to be a Director will be settled as of the date the Participant ceases to be a Director. Outstanding Deferred Share Units that would have vested on the next vesting date following the date the Participant ceases to be a Director will be settled as of such vesting date. Subject to the foregoing, any remaining Deferred Share Units will in all respects terminate as of the date the Participant ceases to be a Director.
|
|
Appendix "B"
(c) If the Participant is a Consultant:
|
|
|
|
|
Reason for Termination
|
Treatment of Deferred Share Units
|
|
|
|
|
|
|
Death or Disability
|
Outstanding Deferred Share Units that were vested on or before the date of death or disability will be settled as of the date of death or disability. Outstanding Deferred Share Units that were not vested on or before the date of death or disability will in all respects terminate as of the date of death or disability.
|
|
|
|
|
|
|
Change in Control
|
Deferred Share Units vest in accordance with Section 11 of the LTIP.
|
|
|
|
|
|
|
Ceasing to be a Consultant due to completion/termination of contract
|
Outstanding Deferred Share Units will continue to vest pursuant to the DSU Award Agreement.
|
|
|
|
|
|
|
Ceasing to be a Consultant due to completion/termination of contract but continues to be engaged as a Director
or Employee
|
Outstanding Deferred Share Units will continue to vest pursuant to the DSU Award Agreement.
|
|
|
|
|
|
|
Ceasing to be a Consultant and concurrently hired and becomes an Employee
|
The Deferred Share Units previously granted to the Consultant will flow through to the Employee on the same terms and conditions of the original grant of Deferred Share Units.
|
|
General
• Clawback Policy - Awards granted under the LTIP may be subject to forfeiture in certain instances under the Company's Code of Ethical Conduct. See "Executive Compensation-Incentive Compensation Clawback Policy".
• Assignment - Awards under the LTIP are non-assignable and non-transferable other than to a Participant's Personal Representatives.
• Amendments Not Requiring Shareholder Approval - The Board may amend the LTIP or Awards at any time, provided, however, that no such amendment may materially and adversely affect any Award previously granted to a Participant without the consent of the Participant, except to the extent required by applicable law (including TSX requirements). Any such amendment will be subject to all necessary regulatory approvals. Without limiting the generality of the foregoing, the Board may make certain amendments to the LTIP or Awards without obtaining the approval of the shareholders of the Company including, but not limited to:
(a) altering, extending or accelerating the terms and conditions of vesting of any Awards;
(b) a change to the termination provisions of the LTIP or any Award which does not entail an extension beyond the original expiry date;
(c) amending or modifying the mechanics of exercise or settlement of Awards;
(d) effecting amendments of a "housekeeping" or ministerial nature (i.e. any amendment necessary to comply with the provisions of applicable laws or rules, regulations and policies of the TSX);
(e) effecting amendments respecting the administration of the LTIP;
(f) effecting amendments necessary to suspend or terminate the LTIP;
(g) amending the change of control provisions of the LTIP, provided that any amendment does not allow Participants to be treated any more favourably than other holders of shares with respect to the consideration that the Participants would be entitled to receive for their Shares upon a Change in Control;
(h) any other amendment, whether fundamental or otherwise, not requiring shareholder approval under applicable law (including, without limitation, the rules, regulations and policies of the TSX) or that is not expected to materially adversely affect the interests of the shareholders of the Company.
Appendix "B"
• Amendments Requiring Shareholder Approval - Shareholder approval (or disinterested shareholder approval, if required by the policies of the TSX) will be required for the following types of amendments:
(a) any increase in the number of shares issuable under the LTIP or the percentage limit set out in Section 4.1 of the LTIP, except such increases by operation of Sections 4.1 or 10 of the LTIP;
(b) with respect to Options, any reduction in the exercise price of an Option or the cancellation and reissue of an Option;
(c) any extension of (i) the term of an Option beyond its original expiry date or (ii) the date on which a Performance Share Unit, Restricted Share Unit or Deferred Share Unit will be forfeited or terminated in accordance with its terms, except as may be effected in connection with a blackout period;
(d) any amendment to permit the transfer or assignment of an Award other than for normal estate settlement purposes;
(e) any amendment to the insider participation limits or non-executive director limits under the LTIP or any amendment to the amendment sections of the LTIP; and
(f) any amendment required to be approved by shareholders under applicable law or pursuant to the rules, regulations and policies of the TSX.
• Financial Assistance - The LTIP provides that the Company may not offer financial assistance in respect of the exercise of any Award.
