The Meeting will be held at the Company’s head
office located at Suite 1225, Two Bentall Centre, 555 Burrard Street, Vancouver, British Columbia, V7X 1M9, Canada.
The accompanying Circular provides additional
information relating to the matters to be dealt with at the Meeting and is deemed to form part of this notice of meeting (the “Notice
of Meeting”). Also accompanying this Notice of Meeting is a form of proxy and a financial statement and MD&A request form.
Any adjournment of the Meeting will be held at a time and place to be specified at the Meeting.
Only holders of Shares of record at the close
of business on April 26, 2021 will be entitled to receive notice of and vote at the Meeting. If you are unable to attend the Meeting virtually,
please complete, sign and date the enclosed form of proxy and return the same in the enclosed return envelope provided for that purpose
within the time and to the location set out in the form of proxy accompanying this Notice of Meeting.
The Meeting materials, including this Notice
of Meeting, are available on Alexco’s website at www.alexcoresource.com/investors/annual-general-meeting/
and will remain on the website for at least one full year from the date of this Notice of Meeting. The Meeting materials are
also available under Alexco’s profile on SEDAR at www.sedar.com.
Any shareholder who wishes to receive a printed
paper copy of the Circular at no cost prior to the date of the Meeting must request a copy from Alexco no later than May 10, 2021 by
calling toll-free in North America at 1-844-392-3035, or by e-mailing info@alexcoresource.com.
To obtain a paper copy of the Circular after the date of the Meeting, please contact Alexco’s Chief Financial Officer at (604)
633-4888. Alexco will send paper copies of the Circular to requesting shareholders at no cost to them within ten calendar days of their
request. In order to receive a copy of Alexco’s financial statements and MD&A, a shareholder may also contact Alexco at the
contact number above or by sending written request to the Company’s head office address.
To obtain additional information about the notice-and-access
provisions, a shareholder may contact Alexco’s transfer agent, Computershare Investor Services Inc., at the following toll-free
number: 1-866-964-0492.
This Circular is furnished in connection with
the solicitation of proxies by the management of Alexco for use at the Meeting to be held on June 10, 2021 and at any adjournments thereof.
Unless the context otherwise requires, references to Alexco include Alexco and its subsidiaries. The solicitation will be conducted by
mail and may be supplemented by telephone, electronic or other personal contact to be made without special compensation by the directors,
officers and employees. The cost of solicitation will be borne by Alexco.
A proxy will not be valid unless it is dated
and signed by you or your attorney duly authorized in writing or, if you are a corporation, by an authorized director, officer, or attorney
of the corporation.
Completed forms of proxy must be deposited at
the office of Alexco’s registrar and transfer agent, Computershare, Proxy Department, 100 University Avenue, 8th Floor, Toronto,
Ontario, M5J 2Y1, not later than forty-eight (48) hours, excluding Saturdays, Sundays and holidays, prior to the time of the Meeting,
unless the chair of the Meeting elects to exercise his discretion to accept proxies received subsequently. Duly appointed proxyholders
will receive an e-mail from Computershare containing an assigned Username after the proxy voting deadline has passed and the proxyholder
has been both duly appointed and registered as described above.
In February 2013, the Canadian Securities Administrators
implemented regulatory amendments to securities laws, including National Instrument 54-101 Communication with Beneficial Owners of
Securities of a Reporting Issuer (“NI 54-101”) and National Instrument 51-102 Continuous Disclosure Obligations
(“NI 51-102”), governing the delivery of proxy-related materials by public companies. As a result, public companies
are now permitted to deliver proxy-related materials to their shareholders using the “notice-and-access” mechanism (as defined
under NI 54-101, and sometimes referred to herein as the “notice-and-access provisions”) by posting such materials both on
SEDAR and a non-SEDAR website, rather than delivering the materials by mail. The use of notice-and-access reduces paper waste and mailing
costs to Alexco. In order for Alexco to employ notice-and-access, Alexco must send a notice to Shareholders indicating that the proxy-related
materials have been posted electronically and explaining how a Shareholder can access them or obtain from Alexco a paper copy of those
materials. Certain of the required elements of such notice have been built into the accompanying Notice of Meeting.
Non-registered
Shareholders who have not objected to their Intermediary disclosing certain ownership information about themselves to Alexco are referred
to as “non-objecting beneficial owners” (“NOBOs”). Those non-registered holders who have objected to their
Intermediary disclosing ownership information about themselves to Alexco are referred to as “objecting beneficial owners”
(“OBOs”).
In accordance with the requirements of NI 54-101,
Alexco has elected to send the Meeting Materials directly to NOBOs. If Alexco or its agent has sent these materials directly to you (instead
of through an Intermediary), your name and address and information about your holdings of securities have been obtained in accordance
with applicable securities regulatory requirements from the Intermediary holding on your behalf. By choosing to send these materials to
you directly, Alexco (and not the Intermediary holding on your behalf) has assumed responsibility for (i) delivering these materials to
you and (ii) executing your proper voting instructions.
Intermediaries are required to forward the Meeting
Materials to Non-Registered Holders unless a Non-Registered Holder has waived the right to receive them. Every intermediary has its own
mailing procedures and provides its own return instructions to clients.
The form of proxy supplied to you by your broker
will be similar to the proxy provided to registered shareholders by the Company. However, its purpose is limited to instructing the intermediary
on how to vote your Shares on your behalf. Most brokers delegate responsibility for obtaining instructions from clients to Broadridge
Financial Solutions, Inc. (“Broadridge”) in the United States and in Canada.
The VIF will name the same persons as the Company’s
Proxy to represent your Shares at the Meeting. You have the right to appoint a person (who need not be a Non-Registered Holder of the
Company), other than any of the persons designated in the VIF, to represent your Shares at the Meeting and that person may be you. To
exercise this right, insert the name of the desired representative (which may be you) in the blank space provided in the VIF.
Broadridge then tabulates the results of all
instructions received and provides appropriate instructions respecting the voting of Shares to be represented at the Meeting and the appointment
of any Shareholder’s representative.
Only registered Shareholders have the power to
revoke proxies previously given. In addition to revocation in any other manner permitted by law, a proxy may be revoked by instrument
in writing, including a proxy bearing a later date, executed by the Shareholder or by attorney authorized in writing or, if the Shareholder
is a corporation, under its corporate seal or by an officer or attorney thereof duly authorized. The instrument revoking the proxy must
be deposited at the registered office of Alexco, at any time up to and including the last business day preceding the date of the Meeting,
or any adjournment thereof, or with the chair of the Meeting on the day of the Meeting.
Non-Registered Holders who wish to change their
vote must in sufficient time in advance of the Meeting, arrange for their respective Intermediaries to change their vote and, if necessary,
revoke the proxy on their behalf.
Alexco is authorized to issue an unlimited number
of Shares without par value. As at April 26, 2021, the record date for the Meeting, 142,442,774 Shares were issued and outstanding. Holders
of record of Shares at the close of business on April 26, 2021 are entitled to receive notice of and to vote at the Meeting. The holders
of Shares are entitled to one vote for each Share held.
To the knowledge of the directors and executive
officers of Alexco, as at the record date, April 26, 2021, no persons or companies beneficially own, control or direct, directly or indirectly,
Shares carrying ten percent (10%) or more of the voting rights attached to all outstanding Shares of Alexco.
Shareholder approval will be sought to fix the
number of directors at six, and unless instructed otherwise the Management Proxyholders named in the form of proxy accompanying this Circular
intend to vote in favour of this proposal.
The Board adopted a Majority Voting Policy on
May 1, 2013, as amended March 13, 2019, pursuant to which if, in an uncontested election of directors, the number of Shares “withheld”
for any nominee exceeds the number of Shares voted “for” the nominee, then, notwithstanding that such director was duly elected
as a matter of corporate law, he or she shall tender his or her written resignation to the chair of the Board. The N&CG Committee
will consider such offer of resignation and will make a recommendation to the Board concerning the acceptance or rejection of the resignation
after considering all factors deemed relevant. The Board must take formal action on the N&CG Committee’s recommendation within
90 days of the date of the applicable Shareholders’ meeting and announce its decision by press release. Absent exceptional circumstances,
the Board will be expected to accept the resignation which will be effective on such date. If the Board declines to accept the resignation,
it will include in the press release the reason(s) for its decision.
The Board proposes to nominate each of the following
persons for election as a director. Information concerning such persons, as furnished by the individual nominees as of May 3, 2021, is
as follows:
As of the date of this Circular, the standing
committees of Alexco are the Audit; N&CG; Compensation; and EHS&T committees (each, a “Committee”).
Unless instructed otherwise, the Management Proxyholders
named in the form of proxy accompanying this Circular intend to vote for the election of the foregoing individuals as directors to hold
office until the close of the next annual general meeting of the Shareholders or until their successors are elected.
Attendance at Board and Committee
Meetings
The following table contains the attendance record
of each director for all Board and Committee meetings since the beginning of the most recently completed financial year, being the year
ended December 31, 2020:
|
Name of Director
|
Board
|
Audit
|
Compensation
|
Nominating & Corporate Governance
|
Environmental, Health, Safety & Technical
|
Total
|
|
Clynton R. Nauman
|
11 out of 11
|
n/a
|
n/a
|
n/a
|
n/a
|
11 out of 11
(100%)
|
|
Elaine Sanders
|
11 out of 11
|
6 out of 6
|
5 out of 5
|
2 out of 2
|
n/a
|
24 out of 24
(100%)
|
|
Karen McMaster
|
11 out of 11
|
n/a
|
n/a
|
4 out of 4
|
5 out of 5
|
20 out of 20
(100%)
|
|
Michael D. Winn
|
7 out of 7
|
n/a
|
1 out of 1
|
n/a
|
2 out of 2
|
10 out of 10
(100%)
|
|
Richard N. Zimmer
|
11 out of 11
|
6 out of 6
|
4 out of 4
|
n/a
|
5 out of 5
|
26 out of 26
(100%)
|
|
Rick Van Nieuwenhuyse
|
10 out of 11
|
n/a
|
n/a
|
4 out of 4
|
5 out of 5
|
19 out of 20
(95%)
|
|
Terry Krepiakevich
|
11 out of 11
|
6 out of 6
|
5 out of 5
|
2 out of 2
|
n/a
|
24 out of 24
(100%)
|
Cease Trade Orders, Bankruptcies,
Penalties or Sanctions
To the knowledge of Alexco, no proposed director:
|
|
(a)
|
is, as at the date of this Circular, or has been, within 10 years before the date of this Circular, a
director, chief executive officer (“CEO”) or chief financial officer (“CFO”) of any company (including
Alexco) that:
|
|
|
(i)
|
was the subject, while the proposed director was acting in the capacity as director, CEO or CFO of such
company, of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation,
that was in effect for a period of more than 30 consecutive days; or
|
|
|
(ii)
|
was subject to a cease trade or similar order or an order that denied the relevant company access to any
exemption under securities legislation, that was in effect for a period of more than 30 consecutive days, that was issued after the proposed
director ceased to be a director, CEO or CFO but which resulted from an event that occurred while the proposed director was acting in
the capacity as director, CEO or CFO of such company; or
|
|
|
(b)
|
is, as at the date of this Circular, or has been, within 10 years before the date of this Circular, a
director or executive officer of any company (including Alexco) that, while that person was acting in that capacity, or within a year
of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency
or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee
appointed to hold its assets; or
|
|
|
(c)
|
has, within the 10 years before the date of this Circular, become bankrupt, made a proposal under any
legislation relating to bankruptcy or insolvency or become subject to or instituted any proceedings, arrangement or compromise with creditors
or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director; or
|
|
|
(d)
|
has been subject to any penalties or sanctions imposed by a court relating to securities legislation or
by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or
|
|
|
(e)
|
has been subject to any penalties or sanctions imposed by a court or regulatory body that would likely
be considered important to a reasonable securityholder in deciding whether to vote for a proposed director.
|
Appointment of Auditors
PricewaterhouseCoopers LLP, Chartered Professional
Accountants (“PwC”), of Vancouver, British Columbia are the auditors for Alexco. Unless instructed otherwise, the Management
Proxyholders named in the form of proxy accompanying this Circular intend to vote for the re-appointment of PwC as the auditors to hold
office for the ensuing year at remuneration and on terms of engagement to be fixed by the directors.
|
Management Information Circular | 11
|
|
PwC were first appointed as Alexco’s auditors
in 2005.
Approval of Unallocated Awards under the Corporation’s
RSU Plan
The RSU Plan was last approved by the Corporation’s
shareholders at the Corporation’s annual general meeting held on June 6, 2019. The Board has approved the RSU Plan, which
provides for the grant of RSUs to eligible directors, employees, officers and consultants of the Corporation up to a maximum of 3.0% of
the Corporation’s outstanding issue.
The RSU Plan is an essential component of the
Corporation’s overall equity incentive program, which is intended to secure for the Corporation and its shareholders the benefits
inherent in share ownership by directors, officers, employees and service providers of the Corporation and its affiliates who will be
largely responsible for the Corporation’s future growth and success, by providing such persons an opportunity to acquire or increase
a direct proprietary interest in the operations and future success of the Corporation.
For a description of the RSU Plan, please see
“Compensation Discussion and Analysis - Equity Incentive Plans - Summary of RSU Plan”.
As at the date of this Circular, the Corporation
has RSUs outstanding under the RSU Plan pursuant to which up to 316,339 Shares may be issued and representing approximately 0.2% of the
Corporation’s issued and outstanding Shares. Up to an additional 3,956,944 RSUs remain available for grant under the RSU Plan.
Shareholder Approval
At the Meeting, the shareholders will be asked
to pass an ordinary resolution approving all unallocated awards under the RSU Plan, such resolution to be substantially in the form set
forth below. Under applicable TSX policies, the Corporation is required to obtain shareholder approval of all unallocated awards under
the RSU Plan every three years. As such, if shareholder approval is obtained at the Meeting to the grant of unallocated awards under the
RSU Plan, the Corporation will not be required to seek further approval of the grant of unallocated awards under the RSU Plan until the
Corporation’s 2024 annual shareholders’ meeting (provided that such meeting is held on or prior to June 10, 2024).
In the event the unallocated awards under the
RSU Plan are not approved by the shareholders:
a) all unallocated awards under the RSU
Plan will be cancelled; and
b) no further awards may be granted under
the RSU Plan until shareholder approval is obtained.
At the Meeting, shareholders will be asked to
vote on the following ordinary resolution:
“BE IT RESOLVED AS AN ORDINARY RESOLUTION THAT:
|
|
1.
|
all unallocated entitlements under the RSU Plan and the ability for the Corporation
to grant awards under the RSU Plan until June 10, 2024 be and are hereby approved; and
|
|
|
2.
|
any director or officer of the Corporation is hereby authorized and directed to perform
such acts and deeds and things and execute all such documents, agreements and other writings as may be required to give effect to the
true intent of these resolutions.”
|
Compensation
Discussion and Analysis
The following compensation discussion and analysis
(the “Compensation Discussion and Analysis”) describes and explains the significant elements of Alexco’s compensation
program, with particular emphasis on the process for determining compensation payable to the CEO, CFO, and the three other most highly
compensated executive officers whose total compensation for the most recent financial year is at least $150,000 (collectively, the “Named
Executive Officers” or “NEOs”). For the year ended December 31, 2020, the NEOs of Alexco are comprised of
|
|
•
|
Chairman
& CEO - Clynton Naumann
|
|
|
•
|
President
- Bradley Thrall
|
|
|
•
|
CFO
& Corporate Secretary - Mike Clark
|
|
Management Information Circular | 12
|
|
|
|
•
|
Vice
President Exploration - Alan McOnie
|
|
|
•
|
Senior
Vice President, Corporate Development - Paul Jones
|
Objectives of Compensation Program
The objectives of Alexco’s compensation
program are to attract, hire, retain and incentivize highly qualified executive officers and directors who will drive the success of Alexco,
while at the same time promote a greater alignment of interests between such executive officers and directors and Alexco’s shareholders.
Alexco’s compensation program is designed to recruit and retain key individuals and reward individual and company performance with
compensation that has long-term growth potential, while recognizing that the executives work as a team to achieve corporate results.
Elements of Executive Compensation
Executive compensation comprises three main elements:
base salary, annual bonus incentive and equity-based incentive awards. Alexco positions executive pay relative to its Comparator Group
with total direct compensation targeted around the median of the Board approved peer group. In addition, when setting compensation levels,
the Board and management take into consideration tenure, experience, performance and the complexity of the role that the executive holds.
Through the design of both the short and long-term incentive plans, Alexco targets the opportunity to earn at the median (50th
percentile) contingent on the achievement of performance against a set of performance objectives defined by the Board at the beginning
of each fiscal year.
|
|
1.
|
Base Salary - The primary element of Alexco’s compensation program is base salary. Alexco
considers a competitive base salary to be a necessary element for attracting and retaining qualified executive officers. The amount payable
to an executive officer as base salary is determined primarily by the number of years’ experience, personal performance, and by
comparisons to the base salaries and total compensation paid to executives of comparable publicly traded companies within the Canadian
mining sector. For benchmarking purposes, Alexco targets a range for executive officer base salaries at each positional level which is
+/-20% of a midpoint that is developed from the median (“P50”) of the Comparator Group.
|
|
|
2.
|
Annual Bonus - Annual performance-based cash incentives are a variable compensation element intended
to encourage and recognize strong levels of performance by linking compensation to achievement of corporate and individual goals and objectives.
Annual bonus awards are evaluated against predefined corporate and personal objectives and finalized at the discretion of the Board based
on the achievement against each objective (see “Short-term Incentive Plan - 2020 Compensation - Performance Scorecard”
for a summary of the 2020 objectives and the level of achievement against each objective). The Compensation Committee is responsible for
reviewing the Company’s performance against management’s objectives for the year and recommending to the Board annual bonuses
after taking into consideration recommendations by management awards for executives based on a percentage of the targeted performance.
The Compensation Committee considers a number of key performance indicators, generally relative to budget expectations and achievement
of corporate objectives that are set by management early in the year and agreed upon by the Board. The annual cash incentive bonus targets
for the NEOs along with the percentage of the amounts awarded which take into consideration the overall company performance are as follows:
|
|
NEO Name
|
NEO Position
|
2020 Target Bonus of Base Salary
(%)
|
2020 Target Bonus of Base Salary
($)
|
Percentage of 2020 Target Awarded 1
|
2020 Target Awarded
($)
|
|
Clynton R. Nauman
|
Chairman and CEO
|
50%
|
US$150,000
|
76%
|
US$114,000
|
|
Brad Thrall
|
President
|
40%
|
US$110,000
|
76%
|
US$83,600
|
|
Michael Clark
|
CFO and Corporate Secretary
|
40%
|
CDN$100,800
|
76%
|
CDN$76,600
|
|
Alan McOnie
|
VP Exploration
|
31%
|
CDN$38,750
|
76%
|
CDN$29,500
|
|
Paul Jones2
|
Senior VP Corporate Development
|
40%
|
CDN$30,600
|
76%
|
CDN$23,300
|
|
|
(1)
|
The results of the 2020 annual bonus plan are described in more detail under the “Determination
of Executive Compensation for 2020” section.
|
|
|
(2)
|
The 2020 target bonus and bonus awarded for Mr. Jones reflects a prorated amount based on his commencement
of employment with Alexco on September 8, 2020.
|
|
Management Information Circular | 13
|
|
|
|
3.
|
Equity-Based Incentive Awards - Equity-based incentive awards take the form of Options, RSUs and
DSUs granted under Alexco’s Equity Incentive Plans. The award of incentive Options, RSUs, and DSUs are intended to give each holder
an interest in preserving and maximizing shareholder value in the longer term, to align the interests of executive officers with those
of Shareholders, and to enable Alexco to attract and retain individuals with experience and ability. Such equity-based incentive awards
are considered when reviewing executive officer compensation packages as a whole. Options generally have a five-year term, are typically
subject to vesting provisions over two years, and carry an exercise price equal to the Fair Market Value of the Shares as at the date
of grant. RSU awards generally vest over two years (one third on grant and one third on each of the first and second anniversaries of
the award), and are settled by issuance of Shares from treasury. DSU awards are only available to Directors of the Company, including
the CEO, and vest immediately and are redeemed upon the director ceasing to be a director at which time they are settled by issuance of
Shares from treasury. The periodic award of Options, RSUs, and DSUs, which generally occurs at the end of the calendar year, is determined
by the Board based on the recommendations of the Compensation Committee, is discretionary and takes into account previously granted equity-based
incentive awards as well as typical market practices of the Comparator Group of companies and the available room under the Shareholder-approved
Equity Incentive Plans.
|
Role of Compensation Committee
The Compensation Committee, under the supervision
of the Board, has overall responsibility for recommending to the Board levels of compensation for Alexco’s executive officers as
well as certain key employees and non-executive officers for approval by the Board, and for recommending compensation for directors, including
the granting of equity-based incentive awards for approval by the Board. The full responsibilities, powers and operating procedures of
the Compensation Committee are outlined in its charter, a copy of which is attached as Schedule “B” hereto.
Each fall, the Compensation Committee initiates
the annual compensation determination process, including considering the retention of an independent compensation consultant, establishing
guidance in formulating the current year’s recommendations and determining the current year’s Comparator Group, all to the
extent considered appropriate. Over the remainder of the year, the Compensation Committee receives and reviews the advice of the compensation
consultant, if retained, and the recommendations of the CEO regarding compensation determinations. In the later part of the current year,
typically December, the Compensation Committee determines its final recommendations to the Board regarding base salaries for the upcoming
year and equity-based incentive awards and annual bonus awards for the year just completed, as well as recommendations regarding director
compensation for the upcoming year.
As at December 31, 2020 and as the date of the
Circular, the members of the Compensation Committee were Elaine Sanders, Terry Krepiakevich and Richard N. Zimmer, each of whom, in the
opinion of the Board, is independent as prescribed by NI 52-110 under the rules of the TSX and pursuant to Sections 803A and 805(c)(1)
of the NYSE American Company Guide. Through the combined business experiences of its members, including experience with the management
of public companies generally and with financial and compensation determination matters in particular, the Board considers the Compensation
Committee to possess the skills and experience necessary to make decisions on the suitability of Alexco’s compensation policies
and practices.
Role of CEO
During the compensation determination process,
the CEO completes a review of the performance of Alexco’s executive officers as well as certain key employees and non-executive
officers for the year just completed. This review entails a qualitative and quantitative assessment of each individual’s performance,
with reference to both the success of Alexco and the individual’s contribution. The individual’s contribution is assessed
with reference to a number of key performance indicators as described above under “Elements of Executive Compensation”, and
in the context of circumstances and challenges arising through the year. Based on these assessments, the CEO makes a recommendation to
the Compensation Committee regarding base salary, annual bonus and equity-based incentive awards, which the Compensation Committee takes
into consideration when determining its final recommendations to the Board.
Role of Compensation Consultant and Peer Benchmarking
and Determination of Comparator Group
In 2020, the Compensation Committee retained
Global Governance Advisors (“GGA”) as its independent Compensation Consultant. GGA is an internationally recognized,
independent advisory firm that provides counsel to boards of directors on matters relating to executive compensation and governance. In
2020, GGA updated its review of the Company’s compensation philosophy, a detailed review of executive and director compensation
including a proposed updated Comparator Group for the Company and a detailed compensation review for the Company’s executives, key
personnel and directors to the peer companies’ executive and independent director pay levels and practices for 2020 and 2021. GGA
also provided a summary of pay trends in the mining sector that was based on GGA’s Global Mining compensation surveys, database
and professional experience with similar organizations and performed a review of Alexco’s 2020 Circular.
|
Management Information Circular | 14
|
|
A summary of executive compensation-related fees
billed by GGA or other compensation consultants, for each of the two most recently completed financial years are summarized as follows:
|
Financial Year Ended December 31
|
Executive Compensation-Related
Fees
|
All Other
Fees
|
|
2020
|
$20,660
|
Nil
|
|
2019
|
$13,880
|
Nil
|
For 2020, to identify appropriate comparable
peer companies, the Company used the following criteria for the Comparator Group:
|
|
•
|
Companies
of a fairly similar size to Alexco (0.25x to 4x), primarily from a market capitalization
perspective, but also taking into account other factors such as revenues and assets;
|
|
|
•
|
Companies
with operations in similar geographical locations to Alexco to account for geographic risk;
|
|
|
•
|
Companies
primarily mining for silver and other precious metals;
|
|
|
•
|
Companies
who are operational and produce revenue; and
|
|
|
•
|
Publicly
traded companies on major Canadian exchanges.
|
These criteria were validated by GGA and Alexco’s
Compensation Committee.
For 2020, the Comparator Group was amended as
follows:
|
2019 Comparator Group Retentions
|
2020 Comparator Group Additions
|
|
Americas Gold and Silver Corporation
|
Ascot Resources Ltd.
|
|
Endeavour Silver Corp.
|
Avino Silver & Gold Mines
|
|
Excellon Resources Inc.
|
Premier Gold Mines Limited
|
|
Great Panther Silver Ltd.
|
Pure Gold Mining Inc.
|
|
Harte Gold Corp.
|
|
|
Sabina Gold & Silver Corp.
|
|
|
Silvercorp Metals Inc.
|
|
|
Silvercrest Metals Inc.
|
|
|
Victoria Gold Corp.
|
|
|
Wesdome Gold Mines Ltd.
|
|
Peers removed from the Comparator Group included
Bear Creek Mining Corporation, Belo Sun Mining Corp., Osisko Mining Inc., Roxgold Inc., Sierra Metals Inc., and Trilogy Metals Inc. These
peers were removed due to relative size and the fact that most were still in the exploration phase and did not produce revenue, unlike
Alexco in 2020.
Consideration of Risks Associated with Compensation
Policies and Practices
The Board is responsible, in participation with
management, for reviewing and identifying what are perceived to be the principal risks to Alexco. These risks include but are not limited
to those arising from Alexco’s compensation policies and practices, such as the risk that an executive officer or other employee
is incentivized to take inappropriate or excessive risks, or that such policies and practices give rise to any other risks that are reasonably
likely to have a material adverse effect on Alexco. The Board undertakes this review with management on at least an annual basis, and
ensures that the Compensation Committee adequately considers risks arising from Alexco’s compensation policies and practices when
determining its recommendations to the Board regarding the compensation of executive officers. The Company is of the view
that its compensation programs do not incent its executives to take undue risks because:
|
|
•
|
executives
receive a mix of compensation elements with a significant portion of compensation in the
form of long-term equity-based awards;
|
|
Management Information Circular | 15
|
|
|
|
•
|
the
Company’s risk mitigation practices include caps on annual incentive payouts to avoid
excessive or extreme compensation awards;
|
|
|
•
|
annual
incentive metrics that include a balance of key performance indicators that are not focused
on a single financial measure; and
|
|
|
•
|
an
incentive claw back policy (the “Claw Back Policy”) for both short-term
and long-term variable compensation is in place.
|
In addition, the Board maintains discretion related
to the affordability of the incentive payouts and maintains the right to determine if an incentive is paid, as well as the settlement
feature (i.e., cash or equity).
Policy Regarding Purchase of Financial Instruments
to Hedge Equity Based Compensation
Alexco has adopted a policy expressly forbidding
directors and all employees, including executive officers, from purchasing or selling financial instruments designed to hedge or offset
a decrease or increase in market value of equity securities granted as compensation.
Effective April 24, 2018, the Board approved
the adoption of a Claw Back Policy for Alexco. Under the Claw Back Policy, in situations where: (i) the amount of incentive compensation
received by an executive officer or former executive officer to whom the policy applies was calculated based or contingent upon the achievement
of certain financial results that were subsequently the subject of, or affected by, a material restatement of all or a portion of the
Company’s financial statements; (ii) the executive officer or former executive officer engaged in intentional misconduct or fraud
that caused, or potentially caused, the need for the restatement, as admitted by the executive officer or, in the absence of such admission,
as determined by a court of competent jurisdiction in a final judgment that cannot be appealed; and (iii) the incentive compensation payment
received would have been lower had the financial results been properly reported, then the Board may, to the extent permitted by applicable
laws and to the extent it determines that it is in the Company’s best interest to do so, require reimbursement of the amount by
which the after-tax incentive compensation received by such executive officer under the Company’s annual and long-term incentive
plans exceeded that which the executive officer would have received had the financial statements not been materially restated.
Executive Compensation
Determination of Executive Compensation
for 2020
In 2020, Alexco achieved several milestones,
which led to the ultimate objective of restarting mining operations at the Keno Hill Silver Project (“Keno Hill”),
located in the Yukon Territory, Canada. On February 14, 2020, the Company sold its environmental consulting business, AEG, to the management
of AEG for total consideration of $13.35 million ($12.1 million paid cash on closing and a promissory note for $1.25 million), allowing
Alexco’s management to focus wholly on Alexco’s mining and exploration activities. In June, Alexco received the renewed and
expanded Water Use License (“WUL”) for Keno Hill and the Company promptly announced a positive construction decision
to restart operations at Keno Hill. Also, in June the Company amended its silver streaming agreement with Wheaton Precious Metals Corp.
(“Wheaton”), thereby simplifying the calculation of the price to be paid by Wheaton to Alexco for each ounce of silver
sold to Wheaton and de-risking Keno Hill by securing a higher exposure to rising silver prices and more importantly, increasing the silver
payment when the silver prices decline, especially during the crucial first two years of operations.
At Keno Hill, Alexco intensified recruitment
efforts and assembled Keno Hill’s management team to restart mining operations. Several surface capital infrastructure projects
were completed in 2020, including the installation of the underground production-related portal and construction of a water treatment
plant at Bermingham, construction of a lined treatment pond, initial construction of a coarse ore storage pad, upgrades to the existing
haul roads and the expansion of the camp accommodation complex and administration facilities. Several mill upgrade projects were also
completed in 2020, including the installation of new cyclones, a new tailings filter press, a second ball mill, and two concentrate regrind
mills, as well as modifications to the fine ore feeder. Bellekeno underground operations were restarted in October and the Keno Hill mill
was re-commissioned in November.
Alexco’s 2020 surface exploration program
focused on the Bermingham Northeast Deep zone. The program completed over 7,650 meters of core drilling in 14 holes. The program successfully
confirmed the presence of high-grade silver mineralization, located 250 meters to the east of the currently planned Bermingham primary
decline. An extensive drilling campaign to further substantiate this zone and possibly delineate a mineral resource is planned in 2021,
which if successful, will establish Bermingham as one of the more significant silver deposits at Keno Hill.
|
Management Information Circular | 16
|
|
Due to the COVID-19 pandemic and the unprecedented
measures implemented around the world to curb the spread of the virus, the silver market experienced extreme volatility during the first
months of 2020. Despite this initial volatility, overall silver prices saw a steady rise in 2020 along with gold and copper. Conversely,
lead and zinc prices declined as economic activities were severely curtailed or shut down worldwide. The equities markets substantially
improved in the second half of the year and the majority of the Comparator Group experienced strong increases in market capitalization
during the year.
Alexco’s share performance during 2020
resulted in a 35% increase in market capitalization which places it in the 38th percentile of its Comparator Group (excluding
Alexco).
For short-term incentive purposes, the Compensation
Committee considered management’s assessment of performance against corporate objectives for the fiscal year ended December 31,
2020. A condensed version below summarizes the corporate objectives and actual results for 2020:
|
Management Information Circular | 17
|
|
Short-term Incentive Plan - Performance
Scorecard
|
Objective
|
Weighting
|
2020 Results
|
Assessment
|
|
Points
|
%
|
|
Mining Operations
|
|
Upon production decision, complete underground development, other infrastructure, build out operations team, and successfully achieve 2020 production and concentrate targets.
|
125
|
42%
|
Partially Achieved
Made a positive production decision and advancements on mining operations,
including the mill re-commissioning in Q4; however not all development targets were fully achieved.
|
82
|
|
Obtain amended WUL.
|
10
|
3%
|
Achieved
Obtained WUL in July 2020.
|
10
|
|
Exploration
|
|
Complete planned surface exploration program and generate additional silver
mineral resource in vicinity of proposed mining centers.
|
25
|
8%
|
Achieved
Completed successful ~7,500 meter program, on budget and expanded high-grade
silver mineralization below Bermingham mineral resource.
|
25
|
|
Environment, Health & Safety
|
|
Ensure Company operates with high level of safety and achieve low incident, and severity targets.
|
15
|
5%
|
Achieved
Reached over 7.5 years without lost time accident.
|
11
|
|
Ensure compliance with corporate governance and environmental standards.
|
10
|
3%
|
Achieved
No issues to note on corporate governance and no major negative environmental
standard events occurred.
|
9
|
|
Keno Hill historical clean-up through wholly owned ERDC. Meet project budget/forecast/schedule and deliverables while completing all detailed work plans (“DWP”) requirements with CIRNAC acceptance.
|
10
|
3%
|
Partially Achieved
Milestones achieved during the year include completing the environmental
assessment for the Reclamation Plan, receipt of the final Evaluation Report and the final Decision Document.
|
8
|
|
Economic Performance & Finance
|
|
Target annual share performance in top quartile of peer group.
|
35
|
12%
|
Not Achieved
For the 2019 Peer Group, Alexco performed in the 38th percentile
for 2020.
|
20
|
|
Ensure that the Company has adequate financial capacity to achieve its 2020 objectives.
|
20
|
7%
|
Achieved
Alexco raised a total of $38.6 million in 2020.
|
20
|
|
To update and improvement for financial reporting systems.
|
20
|
7%
|
Partially Achieved
Made significant advancements and improvements; however delays occurred in
reaching targeted completion date.
|
12
|
|
Successfully monetize AEG subsidiary business and advance corporate development opportunities.
|
20
|
6%
|
Achieved
Successfully closed sale of AEG for $13.25 M in February 2020.
|
20
|
|
Restructure streaming agreement with Wheaton Precious Metals.
|
10
|
3%
|
Achieved
Restructured in August 2020.
|
10
|
|
Total
|
300
|
|
|
227
|
|
Overall Performance 2020
|
76%
|
|
|
|
|
|
|
|
|
Management Information Circular | 18
|
|
Long-term Incentive Plan and
Stock Option Performance Objectives
For long-term incentive purposes, in late 2020
the Board granted equity-based compensation awards to each of the executive officers, in the form of both Options and RSUs and in the
case of the CEO, DSUs were awarded. In late 2020 and as described above, annual bonuses for 2020 for each of the executive officers were
determined.
All recommendations of the Compensation Committee
were accepted and approved by the Board.
Summary Compensation Table
The following table sets forth information concerning
compensation to each of the NEOs during the three most recently completed financial years:
|
NEO
Name
And
Principal
Position
|
Year
|
Salary
($)(1)
|
Share-Based Awards
($)(2)(3)(4)
|
Option Based Awards
($)(2)(5)
|
Non-Equity Incentive Plan Compensation
|
Pension Value
($)
|
All Other Compensation
($)(7)
|
Total Compensation
($)(2)
|
|
Annual Incentive Plans
($)(2)(6)
|
Long-Term Incentive Plans
($)
|
|
Amounts reported in US Dollars (1)
|
Clynton R. Nauman
Chairman and CEO(9)
|
2020
2019
2018
|
300,000
300,000
300,000
|
292,635
375,377(2)
60,211
|
312,548
530,788(2)
609,358(8)
|
114,000
123,800
100,000
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
51,250
51,227
54,932
|
1,070,433 1,381,192(2)
1,124,500
|
Bradley Thrall
President
|
2020
2019
2018
|
275,000
261,120
261,120
|
209,305
233,419(2)
15,971
|
223,583
379,673(2)
412,622(8)
|
83,600
67,300
75,000
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
55,450
66,770
59,112
|
846,938
1,008,282(2)
823,826
|
|
Amounts reported in Canadian dollars
|
Michael Clark
CFO and Corporate Secretary
|
2020
2019
2018
|
252,000
242,550
220,500
|
210,540
225,750(2)
62,100
|
224,510
403,500(2)
168,085
|
76,600
58,400
60,000
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
20,748
31,037
19,045
|
784,398
961,237(2)
529,730
|
|
Paul Jones
Senior VP Corporate Development(9)
|
2020
|
77,000
|
175,450
|
197,050
|
23,300
|
Nil
|
Nil
|
20,468
|
493.268
|
Alan McOnie
Vice President, Exploration
|
2020
2019
2018
|
73,150
104,050
120,350
|
73,370
97,000(2)
Nil
|
78,500
205,500(2)
112,056
|
29,500
20,000
Nil
|
Nil
Nil
Nil
|
Nil
Nil
Nil
|
Nil
5,374
Nil
|
254,520
431,924(2)
232,406
|
|
|
(1)
|
Salary and annual bonuses are paid in US currency to Clynton Nauman and Bradley Thrall. As a result, all
compensation in this table related to Clynton Nauman and Bradley Thrall is reflected in US dollars. The exchange rates used to convert
all of the amounts to US currency for the 2020, 2019, and 2018 financial years were CDN$1.00 = US$0.7456, CDN$1.00 = US$0.7537, CDN$1.00
= US$0.7715, respectively. The Company’s financial statements report these amounts in Canadian dollars.
|
|
|
(2)
|
In December 2019 the Company elected to accelerate the date of annual equity grants to the month of December,
which in previous years was completed in the month of January (of the following year). The result is that there were effectively two equity
grants to management during 2019; one in January 2019 and one December 2019 (the “Double Grants”), which resulted in
2019 having higher than normal equity-based compensation. The Corporation now only makes annual bonus payments and equity grant determinations,
if any, in December of each year.
|
|
|
(3)
|
This column includes the grant date fair value of RSUs awarded by Alexco to the NEOs during the indicated
year. All grant date fair values equal the accounting fair values determined for financial reporting purposes in accordance with IFRS
2 Share-based Payment, and were determined by reference to the Fair Market Value of Alexco at the date of grant. The grant date
fair value of the awards for the 2020 financial year was Cdn$3.19 (2019 - Cdn$1.27 & Cdn$2.61; 2018 - Cdn$2.07) per RSU.
|
|
|
(4)
|
This column includes the grant date fair value of DSUs awarded by Alexco to the CEO during the indicated
year. All grant date fair values equal the accounting fair values determined for financial reporting purposes in accordance with IFRS
2 Share-based Payment, and were determined by reference to the Fair Market Value of Alexco at the date of grant. The grant date
fair value of the award for the 2020 financial year was Cdn$3.19 (2019 - $2.61; 2018 - N/A) per DSU.
|
|
|
(5)
|
This column includes the grant date fair value of all Options granted by Alexco to the NEOs during the
indicated year. All grant date fair values equal the accounting fair values determined for financial reporting purposes in accordance
with IFRS 2 Share-based Payment, and were estimated using the Black-Scholes option pricing model and determined by reference to the Fair
Market Value of Alexco at the date of grant. The weighted average grant date fair values of all options granted during the 2020 financial
year were estimated by assuming a risk-free interest rate of 0.37% (2019 - 1.75%; 2018 - 2.01%) per annum, an expected life of options
of 4 (2019 - 4; 2018 - 4) years, an expected volatility of 66% (2019 - 67%; 2018 - 73%), an expected forfeiture rate of 0.40% (2019 -
1%; 2018 - 2%) and no expected dividends (2019 - nil; 2018 - nil). The Black-Scholes options pricing model has been used to determine
grant date fair value due to its wide acceptance across industry as an option valuation model.
|
|
Management Information Circular | 19
|
|
|
|
(6)
|
2020 and 2019 annual bonuses are attributed to the financial year in respect of which they have been awarded.
For all years prior to 2019, the financial statements reflected the impact of the annual bonuses in the first quarter of the following
year.
|
|
|
(7)
|
Included in “All Other Compensation” are the amounts paid each year for benefits, as well
as RRSP and 401K contributions, vehicle allowances, benefits and parking fees paid by Alexco.
|
|
|
(8)
|
The 2018 Option grant to the CEO and the President in the amounts of 350,000 options and 237,000 options,
respectively, included performance-based Options, expiring within five years, whereby these Options will only vest upon the Company reaching
400 tonnes per day of material being milled through the Keno Hill mill for 30 consecutive days.
|
|
|
(9)
|
On September 8, 2020, Mr. Jones commenced employment with the Company as Senior Vice President, Corporate
Development.
|
Similar to the prior two years, the CEO
fully endorsed the Compensation Committee’s recommendation to the Board to maintain a freeze on his salary for 2021 following the
2018 reduction of the CEO’s salary by 13.5%.
Outstanding Share-Based Awards and
Option-Based Awards
The following table sets forth information concerning
all awards outstanding under incentive plans of Alexco at December 31, 2020, being the end of the most recently completed financial year,
including awards granted before the most recently completed financial year, to each of the NEOs:
|
|
Option-based Awards
|
Share-based Awards
|
|
Name
|
Number of securities underlying unexercised options
(#)
|
Option exercise price
($)
|
Option expiration date
|
Value of unexercised in-the money options
($)(1)
|
Number of shares or units of shares that have not
vested
(#)
|
Market or payout value of share-based awards that
have not vested
($)(2)
|
Market or payout value of vested share-based awards
not paid out or distributed
($)(5)
|
Clynton R. Nauman
Chairman and CEO
|
450,000
350,000
700,000(3)
150,000(4)
200,000
385,000
267,000
|
0.84
2.32
2.07
1.27
1.27
2.61
3.19
|
Feb 12, 2021
Feb 01, 2022
Jan 29, 2023
Jan 04, 2022
Jan 04, 2024
Dec 13,2024
Dec 15, 2025
|
1,444,500
605,500
1,386,000
417,000
556,000
554,400
229,600
|
65,666
|
265,947
|
1,024,650
|
Bradley Thrall
President
|
237,000
474,000(3)
100,000(4)
150,000
275,000
191,000
|
2.32
2.07
1.27
1.27
2.61
3.19
|
Feb 01, 2022
Jan 29, 2023
Jan 04, 2022
Jan 04, 2024
Dec 13, 2024
Dec 15, 2025
|
410,010
938,520
278,000
417,000
396,000
164,260
|
115,332
|
467,095
|
Nil
|
|
Michael Clark
CFO and Corporate Secretary
|
160,000
150,000
75,000(4)
125,000
220,000
143,000
|
2.32
2.07
1.27
1.27
2.61
3.19
|
Feb 01, 2022
Jan 29, 2023
Jan 04, 2022
Jan 04, 2024
Dec 13,2024
Dec 15, 2025
|
276,800
297,000
208,500
347,500
316,800
122,980
|
85,665
|
346,943
|
Nil
|
Alan McOnie
Vice President, Exploration
|
110,000
50,000
|
2.61
3.19
|
Dec 13, 2024
Dec 15, 2025
|
158,400
43,000
|
31,998
|
129,592
|
Nil
|
|
Paul Jones
Senior Vice President,
Corporate Development
|
50,000
65,000
|
3.86
3.19
|
Sept 08, 2025
Dec 15, 2025
|
9,500
55,900
|
36,668
|
148,505
|
Nil
|
|
|
(1)
|
The “Value of unexercised in-the money options” is calculated on the basis of the difference
between the closing price of the Shares on the TSX on December 31, 2020, which was $4.05, and the exercise price of the options.
|
|
Management Information Circular | 20
|
|
|
|
(2)
|
The “Market or payout value of share-based awards that have not vested” related to RSUs are
calculated at the closing price of the Shares on the TSX on December 31, 2020, which was $4.05.
|
|
|
(3)
|
This stock option amount includes 50% of performance-based options that will vest upon the Company reaching
400 tonnes per day of material being milled through the Keno Hill mill for 30 consecutive days.
|
|
|
(4)
|
This stock option amount is a performance-based option that will vest upon the Company reaching 400 tonnes
per day of material being milled through the Keno Hill mill for 30 consecutive days.
|
|
|
(5)
|
The “Market or payout value of share-based awards that have vested” related to DSUs are calculated
based on the closing price of the Shares on the TSX on December 31, 2020 of $4.05.
|
Incentive Plan Awards - Value Vested
or Earned During the Year
The following table sets out the value of all
incentive plan awards that vested or were earned during the most recently completed financial year, being the year ended December 31,
2020, for each of the NEOs:
|
Name
|
Option-based awards - Value vested during the year
($)(1)
|
Share-based awards - Value vested during the year
($)(2)
|
Non-equity incentive plan compensation - Value earned
during the year
($)(3)
|
Clynton R. Nauman (4)
Chairman and CEO
|
539,340
|
513,579
|
152,896(4)
|
Bradley Thrall (4)
President
|
395,254
|
250,178
|
112,124(4)
|
|
Michael Clark
CFO and Corporate Secretary
|
320,343
|
214,295
|
76,600
|
Alan McOnie
Vice President, Exploration
|
206,133
|
70,783
|
29,500
|
|
Paul Jones
SVP, Corporate Development
|
21,800
|
53,335
|
23,300
|
|
|
(1)
|
The “Option-based awards - Value vested during the year” is calculated on the basis of the
difference between the closing price of the Shares on the TSX on December 31, 2020 of $4.05 and the weighted average exercise price of
the vested options.
|
|
|
(2)
|
The “Share-based awards - Value vested during the year” is calculated on the closing price
of the Shares on the TSX on the various RSU and DSU vesting dates, which have a weighted average share price of $3.03.
|
|
|
(3)
|
The “Non-equity incentive plan compensation - Value earned during the year” includes cash
bonuses awarded that are attributed to the year ended December 31, 2020. All equity-based awards are reflected in the year in which they
vest.
|
|
|
(4)
|
This table reflects all amounts in Canadian dollars, while the Summary Compensation Table reports all
compensation for Clynton Nauman and Bradley Thrall in US dollars. The exchange rate used to convert the amounts to CDN currency for 2020
was US$1.00 = CDN$1.3412.
|
|
|
(5)
|
For Clynton Nauman, the value of non-equity plan compensation value earned during the year includes US$57,000
that was settled by way of issuance of 24,000 RSUs.
|
Pension Plan Benefits
Alexco does not have any form of pension plan
that provides for payments or benefits to the NEOs at, following, or in connection with retirement.
|
Management Information Circular | 21
|
|
Employment Contracts with Named Executive
Officers
Alexco is party to the following employment agreements
(“Executive Employment Agreements”) with the NEOs:
|
|
1.
|
Employment agreement dated effective January 1, 2007 with Clynton Nauman;
|
|
|
2.
|
Employment agreement dated effective January 1, 2007 with Bradley Thrall;
|
|
|
3.
|
Employment agreement dated effective December 15, 2014 with Michael Clark; and
|
|
|
4.
|
Employment agreement dated effective September 8, 2020 with Paul Jones.
|
Except for the specific duties of each NEO and
other than as set forth below, the material provisions of the Executive Employment Agreements are substantially identical. Each Executive
Employment Agreement is for an indefinite period unless terminated by either Alexco or the applicable NEO in accordance with the provisions
thereof as described below.
As at December 31, 2020 and pursuant to their
respective Executive Employment Agreements, Mr. Nauman, Mr. Thrall, Mr. Clark, and Mr. Jones were entitled to annual base salaries,
paid semi-monthly, of US$300,000, US$275,000, $285,000, and $245,000 respectively. Such annual base salaries are subject to annual review
by Alexco.
Each Executive Employment Agreement may be terminated
by Alexco upon the NEO dying or becoming permanently disabled or disabled for a period exceeding 180 consecutive or 180 non-consecutive
days calculated on a cumulative basis over any two year period during the term of the agreement, or voluntarily by the NEO with three
months’ notice to Alexco for Mr. Nauman, Mr. Thrall, and 2 months’ notice to Alexco for Mr. Clark and Mr. Jones. Under
each Executive Employment Agreement, in the event of termination by Alexco without just cause or termination by the NEO for non-cured
material breach or default of the agreement by Alexco, or in the event of termination by the NEO upon a change of control as further described
below, the NEO will be entitled to receive a severance payment equal to all compensation (salary plus annual bonus) paid to the NEO under
the agreement for the previous fiscal year multiplied by the applicable multiplying factor (for Mr. Nauman and Mr. Thrall, the multiplying
factor is 2.5 and, for Mr. Clark the multiplying factor is 2, and for Mr. Jones the multiplying factor is 1.5), and Alexco shall
also continue the NEOs group insurance benefits for 12 months after the date of termination for Mr. Nauman and Mr. Thrall and 6 months
for Mr. Clark and Mr. Jones. In the event of termination by Alexco upon a NEO dying or becoming disabled as described above and so long
as the NEO receives life insurance or long-term disability benefits under Alexco’s benefit plans, the NEO will be entitled to receive
his then-current salary for one year. If the NEO does not receive such benefits, other than for acts of the NEO resulting in lawful denial
of such coverage, then the NEO shall be entitled to receive the amounts due in the event of termination without cause. In the event of
termination by Alexco for just cause, or voluntary termination by the NEO, the NEO shall not be entitled to receive any incremental payments
or benefits.
In the event that a change of control (as defined
in the Executive Employment Agreements) and described below under “Termination and Change of Control Benefits” occurs, each
of the NEOs may terminate his obligations under the agreement by providing one month’s notice in writing to Alexco at any time between
the 90th day and the 180th day following the date on which there is a change of control.
If a NEO’s employment with Alexco is terminated,
and within two years of such termination for Mr. Nauman and Mr. Thrall, and three years for Mr. Clark and Mr. Jones, the NEO acquires
directly or indirectly other than from Alexco or its subsidiaries any present or future interest in any mining claims or properties or
mineral interests within 10 kilometres of the external boundaries of any mineral property held by Alexco during the time the NEO was employed
by Alexco, the NEO will offer Alexco, in writing, the right to acquire such interest in exchange for reimbursement of his direct or indirect
acquisition costs. Alexco shall have 30 days after receipt of such offer to accept the offer and 90 days after receipt of such offer to
reimburse such costs.
Termination and Change of Control
Benefits
The Executive Employment Agreements provide for
payment or benefits in the event of termination of employment (as described above) or a change of control of the Company. As at the date
of this Circular, under the Executive Employment Agreements, a “change of control” is deemed to have occurred when:
|
|
(a)
|
at least 50% in fair-market value of all the assets of Alexco are sold; or
|
|
|
(b)
|
there is a direct or indirect acquisition by a person or group of persons acting jointly or in concert
of voting shares of Alexco that when taken together with any voting shares owned directly or indirectly by such person or group of persons
at the time of the acquisition, constitutes 50% or more of the outstanding voting shares of Alexco; or
|
|
|
(c)
|
a majority of the then-incumbent Board’s nominees for election to the Board are not elected at any
annual or special meeting of shareholders of Alexco.
|
In addition, in 2017 the Board approved the following
changes to any executive contracts entered into in the future:
|
Management Information Circular | 22
|
|
|
|
(a)
|
a Change of Control clause will have a double trigger, which requires the “change of control”
criteria listed above as well as a material change in the executive’s status or responsibilities. The contract for Paul Jones has
a double trigger. The existing contracts for the CEO, CFO and President have single modified triggers which have been grandfathered in.
|
|
|
(b)
|
employment agreements will not exceed a 2 times multiplier for severance. Currently the CEO and President
have a severance provision with a 2.5 times multiplier which has been grandfathered in. The 2.5 times multiplier was adjusted in 2013
from 2 to 2.5 as a result of both the CEO and President agreeing to reduce their salaries by 20%. Furthermore, in 2018 the CEO further
reduced his salary by an additional 13.5%.
|
As at the date of this Circular, each of the
Executive Employment Agreements provides that, in the event of a change of control of Alexco, Alexco shall continue to employ and the
Executive shall continue to serve Alexco in the same capacity.
For the NEOs employed by Alexco as at December
31, 2020 (other than Mr. McOnie, whose current consulting agreement does not contain a termination or change of control clause), the following
table discloses the estimated incremental amounts payable to each of Mr. Nauman, Mr. Thrall, Mr. Clark and Mr. Jones under a number of
termination or change-of-control circumstances, other than termination by Alexco for just cause or voluntary termination by the NEO. Amounts
disclosed in the table below assume that a change of control occurred and/or the NEOs employment was terminated on December 31, 2020.
|
|
Clynton R. Nauman
Chairman and CEO(3)
|
Bradley Thrall
President(3)
|
Michael Clark
CFO and Corporate Secretary
|
Paul Jones
SVP, Corporate Development
|
|
Termination without just cause, for unremedied breach or default by Alexco,
in connection with a change of control, or in event of non-receipt of benefits upon death or disability (1)
Cash severance payment
Group insurance benefits
Accelerated vesting of equity-based awards(2)
Total
|
US$1,057,500
US$38,671
US$2,042,000
US$3,138,171
|
US$944,000
US$28,272
US$1,085,000-
US$2,057,272
|
$723,200
5,868
743,000-
$1,472,068
|
$402,450
5,868
257,000
$665,318
|
|
Termination upon death or disability where benefits due are received:
One year salary
|
US$300,000
|
US$275,000
|
$285,000
|
$245,000
|
|
|
(1)
|
These figures do not include perquisites and other personal benefits where the aggregate
amount of such compensation is less than $50,000.
|
|
|
(2)
|
Under the Equity Incentive Plan, if a bona fide take-over bid is issued that results
in the offeror becoming a control person of Alexco within the meaning of the Securities Act (British Columbia), all outstanding
Options, RSUs and DSUs immediately become vested for all holders and not just the NEOs. The accelerated vested equity value is calculated
on the basis of i) the difference between the closing price of the Shares on the TSX on December 31, 2020 of $4.05 and the weighted average
exercise price of the unvested Options and ii) the closing price of the Shares on the TSX on December 31, 2020 of $4.05 multiplied by
the number of unvested RSUs and DSUs.
|
|
|
(3)
|
Amounts for Mr. Nauman and Mr. Thrall are reported in US dollars.
|
Performance Graph
The following graph compares the yearly percentage
change in the cumulative total shareholder return of the Shares, assuming a $100 investment in the Shares on January 1, 2016, with the
S&P/TSX Composite Index, assuming dividend reinvestment.
Over the five most recently completed financial
years, changes in compensation levels for the NEOs have generally been consistent with changes in shareholder value. Compensation for
the NEOs also demonstrates the high level of “at risk” or variable compensation that forms part of the total compensation
program for Alexco’s executives. The level of compensation paid to the NEOs has been reflective of the significant advancements
made at Alexco’s Keno Hill District properties in the Yukon with the significant exploration success realized in the District through
2020 and advances toward recommencing production in the Keno Hill District.
|
Management Information Circular | 23
|
|
Director Compensation
Determination of Director Compensation
for 2020
Alexco’s non-executive directors are compensated
for their services with an annual fee, as well as by the grant of equity-based incentive awards. Directors are also reimbursed for the
cost of individual travel and other ancillary expenses incurred in connection with attending Board and Committee meetings. For the period
January 1, 2020 through December 31, 2020, each director (excluding Mr. Nauman, who is an executive director and is compensated as a NEO)
received compensation according to the following structure:
|
Annualized Fees
|
Amount ($)
|
|
Board Member
|
$36,000
|
|
Lead Director
|
$5,000
|
|
Audit Committee Chair
|
$15,000
|
|
Audit Committee Members
|
$7,500
|
|
Other Committee Chairs
|
$10,000
|
|
Other Committee Members
|
$5,000
|
In addition to the annualized fees disclosed in the
table above, each non-executive director was granted Options and DSUs under Alexco’s Equity Incentive Plans. The value of these
grants for 2020 are provided in the table below.
The following table sets forth information concerning
fees and other compensation provided for the most recently completed financial year, being the year ended December 31, 2020, to the non-executive
directors of Alexco:
|
Name
|
Fees earned
($)
|
Share-based awards
($)(1)
|
Option-based awards
($)(2)
|
Non-equity incentive plan compensation
($)
|
Pension value
($)
|
All other compensation
($)
|
Total
($)
|
|
Terry Krepiakevich
|
58,174
|
95,700
|
47,100
|
Nil
|
Nil
|
Nil
|
200,974
|
|
Rick Van Nieuwenhuyse
|
51,000
|
95,700
|
47,100
|
Nil
|
Nil
|
Nil
|
193,800
|
|
Michael D. Winn(3)
|
24,199
|
Nil
|
Nil
|
Nil
|
Nil
|
Nil
|
24,199
|
|
Richard N. Zimmer
|
60,332
|
95,700
|
47,100
|
Nil
|
Nil
|
Nil
|
203,132
|
|
Elaine Sanders
|
55,643
|
95,700
|
47,100
|
Nil
|
Nil
|
Nil
|
198,443
|
|
Karen McMaster
|
48,143
|
95,700
|
47,100
|
Nil
|
Nil
|
Nil
|
190,943
|
|
|
(1)
|
This column includes the grant date fair value of DSUs awarded by Alexco to the directors. All grant date
fair values equal the accounting fair values determined for financial reporting purposes in accordance with IFRS 2 Share-based Payment,
and were determined by reference to the Fair Market Value of Alexco at the date of grant. The grant date fair value of the award for the
2020 financial year was $3.19 per DSU.
|
|
Management Information Circular | 24
|
|
|
|
(2)
|
This column includes the grant date fair value of Options awarded by Alexco to the directors during the
financial year. All grant date fair values equal the accounting fair values determined for financial reporting purposes in accordance
with IFRS 2 Share-based Payment, and were estimated using the Black-Scholes option pricing model and determined by reference to the Fair
Market Value of Alexco at the date of grant. The weighted average grant date fair values of all options granted during the 2020 financial
year were estimated by assuming a risk-free interest rate of 0.37% per annum, an expected life of options of 4 years, an expected volatility
of 66%, an expected forfeiture rate of 0.39% and no expected dividends. The Black-Scholes options pricing model has been used to determine
grant date fair value due to its wide acceptance across industry as an option valuation model.
|
|
|
(3)
|
Michael Winn resigned from the Board of Directors effective July 27, 2020.
|
Outstanding Share-Based Awards and
Option-Based Awards
The following table sets forth information concerning
all share-based and option-based awards outstanding at the end of the most recently completed financial year, including awards granted
before the most recently completed financial year, to each of the non-executive directors:
|
|
Option-based Awards
|
Share-based Awards
|
|
Name
|
Number of securities underlying unexercised options
(#)
|
Option exercise price
($)
|
Option expiration date
|
Value of unexercised in-the money options
($)(1)
|
Number of shares or units of shares that have not
vested
(#)
|
Market or payout value of share-based awards that
have not vested
($)(2)
|
Market or payout value of vested share-based awards
not paid out or distributed
($)(3)
|
|
Terry Krepiakevich
|
100,000
35,000
75,000
100,000
60,000
30,000
|
1.73
2.32
2.07
1.27
2.61
3.19
|
Jun 10, 2021
Feb 01, 2022
Jan 29, 2023
Jan 04, 2024
Dec 13, 2024
Dec 15, 2025
|
232,000
60,550
148,500
278,000
86,400
25,800
|
16,666
|
67,497
|
222,750
|
|
Rick Van Nieuwenhuyse
|
150,000
35,000
75,000
100,000
60,000
30,000
|
1.73
2.32
2.07
1.27
2.61
3.19
|
Jun 10, 2021
Feb 01, 2022
Jan 29, 2023
Jan 04, 2024
Dec 13, 2024
Dec 15, 2025
|
348,000
60,550
148,500
278,000
86,400
25,800
|
16,666
|
67,497
|
222,750
|
|
Richard N. Zimmer
|
100,000
60,000
30,000
|
1.27
2.61
3.19
|
Jan 04, 2024
Dec 13, 2024
Dec 15, 2025
|
278,000
86,400
25,800
|
16,666
|
67,497
|
222,750
|
|
Elaine Sanders
|
150,000
35,000
75,000
100,000
60,000
30,000
|
1.78
2.32
2.07
1.27
2.61
3.19
|
Jun 28, 2021
Feb 01, 2022
Jan 29, 2023
Jan 04, 2024
Dec 13, 2024
Dec 15, 2025
|
340,500
60,550
148,500
278,000
86,400
25,800
|
16,666
|
67,497
|
222,750
|
|
Karen McMaster
|
60,000
100,000
60,000
30,000
|
1.93
1.27
2.61
3.19
|
May 10, 2023
Jan 04, 2024
Dec 13, 2024
Dec 15, 2025
|
127,200
278,000
86,400
25,800
|
16,666
|
67,497
|
222,750
|
|
|
(1)
|
The “Value of unexercised in-the money options” is calculated on the basis of the difference
between the closing price of the Shares on the TSX on December 31, 2020 of $4.05 and the exercise price of the options.
|
|
|
(2)
|
The “Market or payout value of share-based awards that have not vested” related to RSUs are
calculated based on the closing price of the Shares on the TSX on December 31, 2020 of $4.05.
|
|
|
(3)
|
The “Market or payout value of share-based awards that have vested” related to DSUs are calculated
based on the closing price of the Shares on the TSX on December 31, 2020 of $4.05.
|
|
Management Information Circular | 25
|
|
Incentive Plan Awards - Value Vested
or Earned During the Year
The following table sets out the value of all
incentive plan awards that vested or were earned during the most recently completed financial year, being the year ended December 31,
2020, for each of the non-executive directors:
|
Name
|
Option-based awards - Value vested during the year
($)(1)
|
Share-based awards - Value vested during the year
($)(2)
|
Non-equity incentive plan compensation - Value earned
during the year
($)
|
|
Terry Krepiakevich
|
176,400
|
163,574
|
Nil
|
|
Rick Van Nieuwenhuyse
|
176,400
|
163,574
|
Nil
|
|
Michael D. Winn(3)
|
167,800
|
67,874
|
Nil
|
|
Richard N. Zimmer
|
176,400
|
163,574
|
Nil
|
|
Elaine Sanders
|
176,400
|
163,574
|
Nil
|
|
Karen McMaster
|
176,400
|
179,088
|
Nil
|
|
|
(1)
|
The “Option-based awards - Value vested during the year” is calculated on the basis of the
difference between the closing price of the Shares on the TSX on December 31, 2020 of $4.05 and the weighted average exercise price of
the vested options.
|
|
|
(2)
|
The “Share-based awards - Value vested during the year” is calculated on the closing price
of the Shares on the TSX on the various RSU and DSU vesting dates, which have a weighted average share price of $3.03.
|
|
|
(3)
|
Michael Winn resigned from the Board of Directors effective July 27, 2020.
|
Securities Authorized For Issuance
Under Equity Compensation Plans
The following table sets forth information with
respect to Alexco’s compensation plans under which equity securities are authorized for issuance as at December 31, 2020.
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
(b)
|
Number of securities remaining available for future
issuance under equity compensation plans (excluding securities reflected in column (a))
(c)
|
|
Equity compensation plans approved by securityholders
|
11,340,277
|
$2.23
|
8,633,705
|
|
Equity compensation plans not approved by securityholders
|
Nil
|
Nil
|
Nil
|
|
Total
|
11,340,277
|
$2.23
|
8,633,705
|
Equity Incentive Plans
On June 6, 2019, the Corporation’s shareholders
approved the following equity incentive plans:
|
|
1.
|
a stock option plan (“Option Plan”);
|
|
|
2.
|
a restricted share unit plan (“RSU Plan”); and
|
|
|
3.
|
a deferred share unit plan (“DSU Plan”)
|
(collectively, the “Equity
Incentive Plans”).
Under the policies of the TSX, all unallocated
options, rights or other entitlements under a security-based compensation arrangement which does not have a fixed maximum amount of securities
issuable must be approved every three years after institution by a majority of the Corporation’s directors and shareholders.
Purpose
The purpose of the Equity Incentive Plans is
to secure for the Corporation and its Shareholders the benefits inherent in share ownership by directors, officers, employees and service
providers of the Corporation and its affiliates who will be largely responsible for the Corporation’s future growth and success,
by providing such persons an opportunity to acquire or increase a direct proprietary interest in the operations and future success of
the Corporation.
|
Management Information Circular | 26
|
|
The Equity Incentive Plans, together with any other
security-based compensation arrangements of the Corporation, collectively provide that the aggregate number of Shares that may be issued
or reserved for issuance may not exceed in aggregate 15% of the Corporation’s issued and outstanding Shares from time to time. As
of April 26, 2021, there is a balance of 6,097,325 Shares available for future grants under the Option Plan, 3,956,944 Shares available
for future grants under the RSU Plan, and 1,547,000 Shares available for future grants under the DSU Plan (representing 8% of the Corporation’s
issued and outstanding share capital as at the date of this Circular).
The following are summaries of the material terms
of the Equity Incentive Plans and are qualified in its entirety by reference to the specific terms of each of the Option Plan, RSU Plan
and DSU Plan, the full text of which are included on SEDAR.
Summary of Option Plan
The Option Plan is a “rolling” plan,
pursuant to which the aggregate number of Shares to be issued under the Option Plan shall not exceed 10% of the Corporation’s issued
and outstanding Shares from time to time on a non-diluted basis (the “Corporation’s outstanding issue”) and together
with any other security-based compensation arrangements of the Corporation in effect from time to time, shall not exceed 15% of the Corporation’s
outstanding issue from time to time.
In addition, the aggregate number of Shares that
may be issued and issuable under the Option Plan (when combined with all of the Corporation’s other security-based compensation
arrangements, as applicable),
|
|
(a)
|
to insiders shall not exceed 10% of the Corporation’s outstanding issue from time to time;
|
|
|
(b)
|
to insiders within any one-year period shall not exceed 10% of the Corporation’s outstanding issue from time to time; and
|
|
|
(c)
|
to any one insider and his or her associates or affiliates within any one-year period shall not exceed 5% of the Corporation’s
outstanding issue from time to time.
|
The maximum aggregate grant date fair value (equal
to the accounting fair value so determined) of awards under the New Option Plan together with the Corporation’s other security-based
compensation arrangements, as applicable, to any non-employee director of the Corporation in any fiscal year of the Corporation shall
not exceed $150,000 of which, no more than $100,000 may be in the form of stock options.
Option Grants
The Option Plan authorizes the Board, on the
recommendation of the Compensation Committee, to grant Options to directors, employees, officers and service providers of Alexco and its
subsidiaries.
The number of Shares, the exercise price per
Share, the vesting period and any other terms and conditions of options granted pursuant to the Option Plan, from time to time are determined
by the Board, on the recommendation of the Compensation Committee, at the time of the grant, subject to the defined parameters of the
Option Plan. The date of grant of an Option shall be the date that the grant was approved by the Board.
Exercise Price
The exercise price of any Option cannot be
less than the Fair Market Value , provided that, with respect to any Option granted to an optionee who is a U.S. citizen or U.S. resident
(as defined in the U.S. Internal Revenue Code of 1986, as amended)(a “U.S. Participant”), the Fair Market Value shall
not be less than the closing price of the Shares on the TSX on the last trading day immediately prior to the date of grant.
Option Period and Vesting
Options are exercisable for a period of five years
from the date the option is granted or such greater or lesser period as determined by the Board, which period may not exceed ten years.
Options may be earlier terminated in the event of death or termination of employment or appointment.
Unless otherwise determined by the Board, Options
will vest as to 33 1/3% immediately and then as to 33 1/3% on each of the first and second anniversary dates of the grant date.
The maximum grant-date fair value (equal to the
accounting fair value determined in respect of option granting for the Corporation’s annual financial reporting purposes) of stock
options granted to any non-employee director of the Corporation in any fiscal year of the Corporation shall not exceed $100,000.
|
Management Information Circular | 27
|
|
In the event of a change of control, unless otherwise
determined by the Board, (i) all outstanding Options will vest and be exercisable; and (ii) all Options that are not otherwise exercised
contemporaneously with the completion of the change of control will terminate and expire immediately thereafter.
Blackout Periods
Pursuant to the Option Plan, when the expiry
date of an Option occurs during, or within ten (10) days following, a “blackout period”, the expiry date of such option is
deemed to be the date that is ten (10) days following the expiry of such blackout period. Blackout periods are imposed by the Corporation
to restrict trading of the Corporation’s securities by directors, officers, employees and certain others who hold Options, in accordance
with the Corporation’s Corporate Disclosure, Confidentiality and Securities Trading Policy and similar policies in effect from time
to time, in circumstances where material non-public information exists, including where financial statements are being prepared but results
have not yet been publicly disclosed. Notwithstanding the foregoing, Options granted to U.S. Participants generally may not be extended
beyond their original expiry date.
Cashless Exercise Rights
Cashless exercise rights may also be granted
under the Option Plan, at the discretion of the Board on the recommendation of the Compensation Committee, to an optionee in conjunction
with, or at any time following the grant of, an Option. Cashless exercise rights under the Option Plan effectively allow an optionee to
exercise an Option on a “cashless” basis by electing to relinquish, in whole or in part, the right to exercise such Option
and receive, in lieu thereof, a number of fully paid Shares. The number of Shares issuable on the cashless exercise right is equal to
the quotient obtained by dividing the difference between the aggregate Fair Market Value and the aggregate option price of all Shares
subject to such option by the Fair Market Value of one Share.
Termination or Death
If an optionee dies while employed by the Corporation,
any Option held by him or her will be exercisable for a period of 12 months or prior to the expiration of the Options (whichever is sooner)
by the person to whom the rights of the optionee shall pass by will or applicable laws of descent and distribution. Similarly, an incentive
stock option held by a U.S. Participant who incurs a permanent disability will be exercisable for a period of 12 months or until the expiration
of the Option (whichever is sooner). If an optionee is terminated for cause, no Option will be exercisable following the date of termination
unless the Board determines otherwise. If an optionee ceases to be employed or engaged by the Corporation for any reason other than for
cause or death, then the Options will be exercisable for a period of no more than 3 months or prior to the expiration of the Options (whichever
is sooner).
Incentive Stock Options
Options granted to U.S. Participants may be
granted as “incentive stock options” or “nonqualified stock options”, as specified by the Corporation in the award
agreement. Incentive stock options (“ISOs”) generally do not require payroll or income tax withholding upon exercise
and their taxation depends on whether the optionee has met two separate holding periods prior to disposition of the Shares: at least two
years from the date of grant and at least one year from the date of exercise. If both holding periods are met, the disposition of Shares
will result in the proceeds being taxed at long-term capital gains rates. Options may only be granted as ISOs to the extent that the aggregate
Fair Market Value of the Shares as of the date of grant underlying all ISOs that are exercisable for the first time during any calendar
year (under the Option Plan and all other plans for the Corporation and any parent or subsidiary) does not exceed US$100,000.
ISOs may not be granted with an exercise price
less than 100% of the Fair Market Value of a Share on the date of grant. In addition, any ISO granted to an optionee who is a 10% shareholder
may not have an exercise price less than 110% of the Fair Market Value of a Share on the date of grant. All ISOs will terminate no later
than ten years after the date of grant (or no later than five years after the date of grant if the optionee is a 10% shareholder).
Transferability
Pursuant to the Option Plan, any awards granted
to a participant shall not be transferable except by will or by the laws of descent and distribution.
|
Management Information Circular | 28
|
|
Amendments to the Option Plan
The Board may amend, suspend or terminate the
Option Plan or any Award granted under the Option Plan without shareholder approval, including, without limiting the generality of the
foregoing: (i) changes of a clerical or grammatical nature; (ii) changes regarding the persons eligible to participate in the Option Plan;
(iii) changes to the cashless exercise right provisions; and (iv) any other non-material administrative matter relating to the Option
Plan and the Awards granted thereunder, provided however that:
|
|
(a)
|
such amendment, suspension or termination is in accordance with applicable laws and the rules of any stock
exchange on which the Corporation’s shares are listed;
|
|
|
(b)
|
no amendment to the Option Plan or to an Award granted thereunder will have the effect of impairing, derogating
from or otherwise adversely affecting the terms of an Award which is outstanding at the time of such amendment without the written consent
of the holder of such Award;
|
|
|
(c)
|
the expiry date of an Option shall not be more than ten (10) years from the date of grant of such Option,
provided, however, that at any time the expiry date should be determined to occur either during a blackout period or within ten business
days following the expiry of a blackout period, the expiry date of such Option shall be deemed to be the date that is the tenth business
day following the expiry of the blackout period;
|
|
|
(d)
|
the Board of Directors shall obtain shareholder approval of:
|
|
|
(i)
|
any amendment to the aggregate number of Shares issuable under the Option Plan;
|
|
|
(ii)
|
any amendment to the limitations on Shares that may be reserved for issuance, or issued, to insiders;
|
|
|
(iii)
|
any amendment that would reduce the exercise price of an outstanding Option other than pursuant to a declaration
of stock dividends of shares or consolidations, subdivisions or reclassification of shares, or otherwise;
|
|
|
(iv)
|
any amendment that would extend the expiry date of any Option granted under the Option Plan except in
the event that such option expires during or within ten (10) business days following the expiry of a blackout period;
|
|
|
(v)
|
any amendment to eligible participants that may permit the introduction or reintroduction of non-employee
directors on a discretionary basis or amendments that increase limits previously imposed on non-employee director participation;
|
|
|
(vi)
|
any amendment which would permit options granted under the Plan to be transferable or assignable other
than for normal estate settlement purposes; and
|
|
|
(vii)
|
any amendment to the plan amendment provisions.
|
If the Option Plan is terminated, the provisions
of the Option Plan and any administrative guidelines and other rules and regulations adopted by the Board and in force on the date of
termination will continue in effect as long as any Award pursuant thereto remain outstanding.
Summary of RSU Plan
The RSU Plan is a “rolling” plan,
pursuant to which the aggregate number of Shares to be issued under the RSU Plan shall not exceed 3.0% of the Corporation’s outstanding
issue and, together with any other security-based compensation arrangements of the Corporation in effect from time to time, shall not
exceed 15% of the Corporation’s outstanding issue from time to time.
Eligible RSU Participants and Plan Maximum
Pursuant to the RSU Plan, RSUs may be awarded
to any Eligible Director Eligible RSU Participants.
In addition:
|
Management Information Circular | 29
|
|
|
|
a)
|
the aggregate number of Shares that may be issued and issuable under the RSU Plan (when combined with
all of the Corporation’s other security-based compensation arrangements, as applicable):
|
|
|
(i)
|
to insiders shall not exceed 10% of the Corporation’s outstanding issue from time to time;
|
|
|
(i)
|
to insiders within any one-year period shall not exceed 10% of the Corporation’s outstanding issue
from time to time;
|
|
|
(ii)
|
the number of Shares issuable to any one Eligible RSU Participant or other individual pursuant to an RSU
award within any one-year period, cannot exceed 1% of the Corporation’s outstanding issue; and
|
|
|
(iii)
|
the number of Shares issuable to all Eligible RSU Participants pursuant to awards within any one-year
period, cannot exceed 2% of the Corporation’s outstanding issue.
|
|
|
b)
|
the maximum aggregate grant date fair value (equal to the accounting fair value so determined) of Awards
under the RSU Plan, together with the Corporation’s other security-based compensation arrangements, as applicable, to any non-employee
director in any fiscal year of the Corporation shall not exceed $150,000 excluding any one-time sign-on awards or equity granted in lieu
of cash retainers.
|
RSU Grants and Settlement
The RSU Plan authorizes the Board, on the recommendation
of the Compensation Committee, to grant RSUs. The number of Shares, the vesting period and any other terms and conditions of RSUs granted
pursuant to the RSU Plan, from time to time are determined by the Board, on the recommendation of the Compensation Committee, at the time
of the grant, subject to the defined parameters of the RSU Plan. The date of grant of RSUs shall be, as determined by the Board, the latest
to occur of (i) the date as of which the Board approves an RSU award, (ii) the date on which the recipient of an RSU award first becomes
eligible to receive an RSU award, or (iii) such other date as may be specified by the Board. The award of RSUs under the RSU Plan may
be made as performance incentives to reward attainment of annual or long-term performance goals in accordance with the terms thereof.
Settlement of RSUs shall be in Shares issued
by the Corporation from treasury. The Committee shall specify the circumstances in which awards shall be made or forfeited in the event
of termination of service by the grantee prior to vesting.
Exercise Period and Vesting
At the time a grant of RSUs is made,
the Board may, in its sole discretion, establish an RSU Vesting Period applicable to such RSUs. Each RSU award may be subject to a different
RSU Vesting Period. The Board may, in its sole discretion, at the time a grant of RSU is made, prescribe restrictions in addition to or
other than the expiration of the RSU Vesting Period, including the satisfaction of certain corporate and/or individual performance objectives,
which may be applicable to all or any portion of the RSUs.
Notwithstanding the foregoing:
|
|
(a)
|
RSUs that vest solely by the passage of time shall not vest in full in less than 2 years from the date of grant; and
|
|
|
(b)
|
RSUs for which vesting may be accelerated by achieving performance targets shall not vest in full in less than 6 months from the date
of grant.
|
Upon expiration of the RSU
Vesting Period and the satisfaction of any other restrictions prescribed by the Board, RSUs shall vest and shall be settled in Shares
issued by the Corporation from treasury and, unless otherwise provided in the award agreement in respect of such RSUs, a share certificate
for that number of Shares equal to the number of vested RSUs shall be delivered, to the grantee or the grantee’s beneficiary or
estate, as the case may be.
At the time a grant of RSUs
is made, the Board may in its sole discretion establish a period of time during which the RSUs may not be sold, transferred, assigned,
pledged or otherwise encumbered or disposed of (other than to the grantee’s beneficiary or estate, as the case may be, upon the
death of the grantee).
Effective of a Takeover Bid
In the event of a Change of Control
(as defined below) and a grantee who was also an officer or employee of, or consultant to, the Corporation prior to the Change of Control
has their position, employment or consulting agreement terminated, or the grantee is constructively dismissed within twelve months following
the Change of Control, then all unvested RSU awards shall immediately vest and be settled.
|
Management Information Circular | 30
|
|
On April 26, 2021, the Board approved
an update to the definition of “Change of Control” in the RSU Plan to (a) clarify how a Change of Control could be triggered
in the event of a contested election of directors in subparagraph (v) of the definition; and (b) to add a new subparagraph (vi) to the
definition, such that the definition is as follows:
“‘Change of
Control’ means the occurrence and completion of any one or more of the following events:
|
|
(i)
|
the Corporation shall not be the surviving entity in a merger, amalgamation or
other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Corporation);
|
|
|
(ii)
|
the Corporation shall sell or otherwise transfer, including by way of the grant
of a leasehold interest or joint venture interest (or one or more subsidiaries of the Corporation shall sell or otherwise transfer, including
without limitation by way of the grant of a leasehold interest or joint venture interest) property or assets (A) aggregating more than
50% of the consolidated assets (measured by either book value or fair market value) of the Corporation and its subsidiaries as at the
end of the most recently completed financial year of the Corporation or (B) which during the most recently completed financial year of
the Corporation generated, or during the then current financial year of the Corporation are expected to generate, more than 50% of the
consolidated operating income or cash flow of the Corporation and its subsidiaries, to any other person or persons (other than one or
more Designated Affiliates of the Corporation), in which case the Change of Control shall be deemed to occur on the date of transfer of
the assets representing one dollar more than 50% of the consolidated assets in the case of clause (A) or 50% of the consolidated operating
income or cash flow in the case of clause (B), as the case may be;
|
|
|
(iii)
|
the Corporation is to be dissolved and liquidated;
|
|
|
(iv)
|
any person, entity or group of persons or entities acting jointly or in concert
acquires or gains ownership or control (including, without limitation, the power to vote) more than 50% of the Corporation’s outstanding
voting securities;
|
|
|
(v)
|
individuals who comprise the Board as of the date hereof (the “Incumbent
Board”) for any reason cease to constitute at least a majority of the members of the Board, unless the election, or nomination
for election by the Corporation’s shareholders, of any new director(s) was approved by a vote of at least a majority of the Incumbent
Board, and in that case such new director(s) shall be considered as a member or members of the Incumbent Board; or
|
|
|
(vi)
|
any other event which the Board determines to constitute a change in control of
the Corporation.”
|
The above update was made to the
RSU Plan in compliance with section 5.2 thereof, pursuant to which the Board is permitted to revise the terms of the RSU Plan to accelerate
the date on which RSUs may vest under the RSU Plan (see “Amendment and Termination of RSU Plan” below).
Voting and Dividend Rights
On April 26, 2021, the Board approved
an amendment to section 8.4(a) of the RSU Plan in order to comply with the requirement under TSX policies that a grantee should not be
entitled to participate in distributions or dividends and must not have rights (e.g., voting rights) similar to those of securityholders
who have paid for their securities, whereby section 8.4(a) has been amended to reflect the following correction whereby the word “may”
was replaced with the word “must” as set out below:
“The Board may provide
in an Award Agreement evidencing a grant of Restricted Share Units that the Grantee shall be entitled to receive, upon the Corporation’s
payment of a cash dividend on its outstanding Shares, a cash payment for each Restricted Share Unit granted equal to the per-share dividend
paid on the outstanding Shares. Such Award Agreement may must also provide that such cash payment will be deemed reinvested
in additional Restricted Share Units at a price per unit equal to the Fair Market Value of the Shares on the date that such dividend is
paid.”
As the foregoing amendment is of
a “housekeeping” nature, shareholder approval is not required in respect thereof.
|
Management Information Circular | 31
|
|
Amendment and Termination of RSU Plan
The Board may suspend or terminate the RSU Plan
at any time, or from time to time amend or revise the terms of the RSU Plan or any granted award without the consent of the Eligible RSU
Participants provided that such suspension, termination, amendment or revision shall:
|
|
(a)
|
not adversely alter or impair the rights of any Eligible RSU Participant, without the consent of such
Eligible RSU Participant except as permitted by the provisions of the RSU Plan;
|
|
|
(b)
|
be in compliance with applicable law and with the prior approval, if required, of the shareholders of the Corporation, the TSX, or
any other regulatory body having authority over the Corporation; and
|
|
|
(c)
|
be subject to shareholder approval, where required by law or the requirements of the TSX provided that the Board may, from time to
time, in its absolute discretion and without approval of the shareholders of the Corporation make the following amendments to the RSU
Plan:
|
|
|
(i)
|
any amendment to the vesting provision, if applicable, or assignability provisions of the awards;
|
|
|
(ii)
|
any amendment regarding the effect of termination of a participant’s employment or engagement;
|
|
|
(iii)
|
any amendment which accelerates the date on which any RSU may vest under the RSU Plan;
|
|
|
(iv)
|
any amendment necessary to comply with applicable law or the requirements of the TSX or any other regulatory
body;
|
|
|
(v)
|
any amendment of a “housekeeping” nature, including to clarify the meaning of an existing
provision of the RSU Plan, correct or supplement any provision of the RSU Plan that is inconsistent with any other provision of the RSU
Plan, correct any grammatical or typographical errors or amend the definitions in the RSU Plan;
|
|
|
(vi)
|
any amendment regarding the administration of the RSU Plan;
|
|
|
(vii)
|
any amendment to add provisions permitting the grant of awards settled otherwise than with Shares issued
from treasury, a form of financial assistance or clawback; and
|
|
|
(viii)
|
any other amendment that does not require the approval of the shareholders of the Corporation under subparagraph
(b) above.
|
Notwithstanding the foregoing, the Board shall
not adopt any of the following amendments without having obtained shareholder approval thereof:
|
|
(a)
|
any amendment to the number of Shares available for issuance;
|
|
|
(b)
|
amendments to eligible participants that may permit the introduction or reintroduction of non-employee directors on a discretionary
basis or amendments that increase limits previously imposed on non-employee director participation; and
|
|
|
(c)
|
amendments to the amendment provisions of the RSU Plan.
|
Termination of Service
Unless the Board otherwise provides
in an award agreement or in writing after the award agreement is issued, subject to prior TSX approval, upon the termination of a grantee’s
service, any RSUs granted to such grantee that have not vested and will not vest within 30 days from the date of termination, or with
respect to which all applicable restrictions and conditions have not lapsed, shall immediately be deemed forfeited. Upon forfeiture of
RSUs, the grantee shall have no further rights with respect to such award, including but not limited to any right to receive dividends
with respect to the RSUs.
|
Management Information Circular | 32
|
|
Summary of DSU Plan
The DSU Plan is a “fixed” plan, pursuant
to which the maximum aggregate number of Shares that may be issued is 2,100,000 Shares.
Eligible DSU Participants and Plan Maximum
Pursuant to the DSU Plan, deferred share units (“DSUs”)
may be awarded to any director of the Corporation designated by the Compensation Committee (each a “DSU Participant”).
In addition:
|
|
(a)
|
the maximum number of DSUs which may be awarded under the DSU Plan shall be 2,100,000 or such greater
number as may be approved from time to time by an ordinary resolution of the shareholders of the Corporation and the TSX;
|
|
|
(b)
|
the maximum number of Shares reserved for issuance under the DSU Plan shall be 2,100,000 or such greater
number as may be approved from time to time by an ordinary resolution of the shareholders of the Corporation and the TSX;
|
|
|
(c)
|
the maximum aggregate grant date fair value (equal to the accounting fair value so determined) of Awards
under the DSU Plan, together with the Corporation’s other security-based compensation arrangements, as applicable, to any non-employee
director in any fiscal year of the Corporation shall not exceed $150,000 excluding any one-time sign-on awards or equity granted in lieu
of cash retainers;
|
|
|
(d)
|
the number of Shares issued to insiders under the DSU Plan, or when combined with any other previously
established or proposed share compensation arrangements, within any one-year period, may not exceed 10% of the Corporation’s outstanding
issue; and
|
|
|
(e)
|
the number of Shares issuable to insiders under the DSU Plan, or when combined with any other previously
established or proposed share compensation arrangements, at any time, may not exceed 10% of the Corporation’s outstanding issue.
|
DSU Grants and Settlement
The DSU Plan authorizes the Board, on the recommendation
of the Compensation Committee, to award DSUs to Directors, in such number and effective as of such date as the Board may determine. The
Board shall base its decision to award DSUs to DSU Participants on such criteria as the Board or Committee may determine, provided that
such criteria and the award shall, in any event, relate to services performed or to be performed by the DSU Participant as a Director
of the Corporation.
Each DSU Participant shall be entitled to redeem
his or her DSUs during the period commencing on the business day immediately following the date on which DSU Participant ceases to be
a director of the Corporation and all Affiliates, including in the event of the death of the Participant (the “Termination Date”)
and ending on the 90th day following the Termination Date by providing a written notice of redemption to the Corporation in the form prescribed
in the DSU Plan. In the event of the death of a DSU Participant, the notice of redemption shall be filed by the administrator or liquidator
of the estate of the DSU Participant.
The Board shall determine in its sole discretion
whether such redemption shall be settled by:
|
|
(a)
|
a cash payment equal to the number of DSUs credited to the DSU Participant’s account as of the Termination
Date multiplied by the Share Price (as defined below) on the Termination Date;
|
|
|
(b)
|
Shares purchased on the DSU Participant’s behalf on the open market or Shares issued from treasury;
or
|
|
|
(c)
|
a percentage of the number of DSUs paid out in cash and the remaining percentage of the DSUs paid out
as Shares either purchased on the DSU Participant’s behalf on the open market or Shares issued from treasury.
|
For the purposes of the DSU Plan, the “Share
Price” means the volume weighted average trading price of the Corporation’s Shares on the TSX for the five (5) consecutive
trading days immediately preceding either (a) the Termination Date in respect of redemption by non-U.S. DSU Participants or (b) the date
of the expiration of the six-month period referenced in Section 20 of the DSU Plan in respect of redemption by “U.S. Eligible Participants”
(as defined in the DSU Plan) or the date of death, as applicable, or in the event such Shares are not traded on the TSX or other recognized
stock exchange, the fair market value of such Shares as determined by the Compensation Committee acting in good faith.
|
Management Information Circular | 33
|
|
DSU Plan Amendment and Termination
The Compensation Committee may decide to discontinue
granting awards under the DSU Plan at any time in which case no further DSUs shall be awarded or credited. Any DSUs which remain outstanding
in a DSU Participant’s account at that time shall continue to be dealt with according to the terms of the DSU Plan. The DSU Plan
shall terminate when all payments owing pursuant to the DSU Plan have been made and all DSUs have been cancelled in all DSU Participants’
accounts.
The Board may at any time, and from time to time,
and without shareholder approval, amend any provision of the DSU Plan, subject to any regulatory or stock exchange requirement at the
time of such amendment, including, without limitation:
|
|
(a)
|
amendments to the termination provisions of the DSU Plan;
|
|
|
(b)
|
amendments necessary or advisable because of any change in applicable securities laws;
|
|
|
(c)
|
amendments to Section 4 relating to the administration of the DSU Plan; and
|
|
|
(d)
|
any other amendment, fundamental or otherwise, not requiring shareholder approval under applicable laws
or the rules of the TSX, including amendments of a “clerical” or “housekeeping” nature.
|
In addition:
|
|
(a)
|
any amendment shall not alter the terms or conditions of any DSU or impair any right of any holder of
DSUs pursuant to any DSU granted prior to such amendment;
|
|
|
(b)
|
no amendment shall be made which prevents the DSU Plan from continuously meeting the requirements of paragraph
6801(d) of the Income Tax Regulations (Canada) or any successor provision thereto;
|
|
|
(c)
|
notwithstanding the foregoing, the Board shall not adopt any of the following amendments without having
obtained shareholder approval thereof:
|
|
|
(i)
|
any amendment to the number of Shares available for issuance;
|
|
|
(ii)
|
amendments to eligible participants that may permit the introduction or reintroduction of non-employee
directors on a discretionary basis or amendments that increase limits previously imposed on non-employee director participation; and
|
|
|
(iii)
|
amendments to the amendment provisions of the DSU Plan.
|
As of April 26, 2020, there are 8,146,952 Options,
316,339 RSUs, and 528,000 DSUs issued and outstanding under the Equity Incentive Plans, representing 6.3% of Alexco’s issued and
outstanding Share capital.
|
Management Information Circular | 34
|
|
Burn Rate
In accordance with the policies of the TSX, the
following table sets out the annual burn rate, calculated in accordance with section 613(p) of the TSX Company Manual, of each of the
Corporation’s security-based compensation arrangements for the three most recently completed financial years:
|
|
(1)
|
Annual burn rate is expressed as a percentage and is calculated by dividing the number of securities granted
under the Equity Incentive Plan by the weighted average number of securities outstanding for the applicable fiscal year.
|
|
|
(2)
|
In December 2019 the Company elected to accelerate the date of annual equity grants to the month of December,
which in previous years was completed in the month of January (of the following year). The result is that there were effectively two equity
grants to the Board and management during 2019; one in January 2019 and one in December 2019. The burn rate attributable to the January
2019 equity grants is 2.2% and the burn rate attributable to the December 2019 equity grants is 2.3% for a combined total of 4.5%. For
2020 onwards, the Corporation now only makes equity grants determinations, if any, in December of each year.
|
Corporate Governance
Practices
TSX listed
companies are required to describe, on an annual basis, their practices and policies with regards to corporate governance by way of a
corporate governance statement contained in Alexco’s annual report or Circular. The
disclosure is required to be made pursuant to National Instrument 58-101 Disclosure of Corporate Governance Practices, and the
guidelines contained in National Policy 58-201 Corporate Governance Guidelines, against which Alexco has reviewed its own
corporate governance practices. In certain cases, Alexco’s practices comply with the guidelines; however, the Board considers that
some of the guidelines are not suitable for Alexco at its current stage of development and therefore these guidelines have not been adopted.
Sustainability - Environmental, Social, and
Governance (“ESG”)
In 2020 and under Board oversight, Alexco created
a Management ESG Committee (the “ESG Committee”), to further develop the corporate sustainability strategy, document
our sustainability values, and identify short, mid, and long-term ESG focused priorities and initiatives. The ESG Committee is responsible
for making recommendations in respect of benchmarking Alexco’s governance practices and developing a framework to guide internal
data collection and reporting in the areas of sustainability and broader ESG with the ultimate goal of outlining and implementing an ESG
external reporting framework. The Board considers the work of the ESG Committee, taking into account the values and principles of the
Corporation, and accepts, modifies and/or rejects the recommendations of the ESG Committee as the Board deems appropriate.
From its inception, Alexco has been and remains
committed to excellence and innovation to improve ESG practices throughout the organization. This includes a bottoms-up ESG opportunity
and risk identification, enhanced ESG risk assessment, and reporting and accountability to the Board. To support our commitment, Alexco
has added ESG-specific objectives to its 2021 Corporate objectives and performance scorecard.
|
Management Information Circular | 35
|
|
Alexco recognizes the growing importance of ESG
analysis in the investment community’s decisions. We focus our activities to support our principles and values of safeguarding the
health and safety of the workers and communities where we operate, and minimizing the impact of our activities on the ecosystem, while
respecting the conditions of the natural environment and safeguarding Alexco’s operations and assets.
Independence of the Board and Participation
of Directors in Other Reporting Issuers
Alexco’s Board currently consists of six
directors, five of whom are independent as at the date of this Circular based upon the tests for independence set forth in NI 52-110.
Each of Elaine Sanders, Karen McMaster, Richard N. Zimmer, Rick Van Nieuwenhuyse and Terry Krepiakevich comprise the Company’s independent
directors. Clynton Nauman is not independent as he is the Chairman and Chief Executive Officer of Alexco. As a result of Mr. Nauman’s
role as Chairman of Alexco, in addition to his existing title of CEO, Mr. Zimmer, who is an independent director, is the Lead Director
of Alexco.
The independent directors exercise their responsibilities
for independent oversight of management through their position of parity on the Board. The Board follows a practice of having the non-executive
directors meet in camera, without management being in attendance, as a standing agenda item for every Board meeting. Also, to further
facilitate open and candid discussion among its independent directors, and to facilitate the Board’s exercise of independent judgment
in carrying out its responsibilities, the Board encourages Alexco’s independent directors to meet at any time they consider necessary
without any members of management or non-independent directors being present. Alexco’s auditors, legal counsel and employees may
also be invited to attend meetings. In addition, a standing agenda item for every meeting of the Audit Committee, which is composed entirely
of independent directors, is for the Committee to meet with Alexco’s auditors in camera, without management being in attendance.
The Audit Committee has held five in-camera meetings with its auditors since January 1, 2020.
|
Management Information Circular | 36
|
|
|
|
|
Independent Directors
|
|
Planned Committee Memberships
|
Clynton R. Nauman (1)
|
Elaine Sanders
|
Karen McMaster
|
Terry Krepiakevich
|
Richard N. Zimmer (2)
|
Rick Van
Nieuwenhuyse
|
|
Audit Committee
|
|
√
|
|
C
|
√
|
|
|
N&CG Committee
|
|
|
√
|
√
|
|
C
|
|
Compensation Committee
|
|
C
|
|
√
|
√
|
|
|
EHS&T Committee
|
|
|
√
|
|
C
|
√
|
|
Additional Information
|
|
|
Director Since
|
2004
|
2016
|
2018
|
2009
|
2012
|
2005
|
|
2020
% “For” Votes
|
98.7%
|
98.6%
|
98.6%
|
98.6%
|
98.7%
|
98.6%
|
|
Other Public Company Boards
|
• Novagold
Resources Inc.
|
|
|
• Kaizen
Discovery Inc.
• Metalla
Royalty & Streaming Ltd.
|
• Capstone
Mining Corp.
• Ascott
Resources Ltd.
|
• Solidus
Gold Inc.
• Contango
Ore Inc.
|
C = Chair of the Committee √ = Member of the Committee
(1) Mr. Nauman currently serves as Chairman of the Board of Directors and
non-independent Director. He is also Chief Executive Officer of the Corporation.
(2) Mr. Zimmer is Lead Director.
|
Management Information Circular | 37
|
|
|
Skills
|
Clynton R. Nauman
|
Elaine Sanders
|
Karen McMaster
|
Richard N. Zimmer
|
Rick Van Nieuwenhuyse
|
Terry Krepiakevich
|
|
Mining Operations
|
•
|
¡
|
¡
|
•
|
•
|
¡
|
|
Exploration/Geology
|
•
|
¡
|
•
|
•
|
•
|
¡
|
|
Environmental
/ Health / Safety / Sustainability / Social Economic
|
•
|
¡
|
•
|
•
|
•
|
¡
|
|
Finance
/ Banking / Treasury
|
•
|
•
|
•
|
•
|
•
|
•
|
|
Mergers
& Acquisitions
|
•
|
•
|
•
|
•
|
•
|
•
|
|
Accounting
/ Financial Audit
|
•
|
•
|
•
|
•
|
¡
|
•
|
|
Governance
|
•
|
•
|
•
|
•
|
•
|
•
|
|
Legal
|
•
|
•
|
•
|
¡
|
¡
|
¡
|
|
Government
Relations / Foreign Policy
|
•
|
¡
|
¡
|
¡
|
•
|
•
|
|
Project
Management
|
•
|
•
|
•
|
•
|
•
|
•
|
|
Strategic
Planning
|
•
|
•
|
•
|
•
|
•
|
•
|
|
•
|
Expert
- worked directly or had individuals directly reporting to him/her in the specific area
|
|
•
|
Experienced
- has a wide range of understanding in the specific area
|
|
¡
|
Knowledgeable - has knowledge about the specific area
|
Board Mandate
The Board has adopted a written mandate, a copy
of which is attached as Schedule “A” hereto. The role of the Board is to supervise management and to approve major and strategic
decisions. The Board relies on management for periodic reports, and to provide the support and information necessary to enable the Board
to fulfil its obligations effectively. Major matters are to be analysed in reports prepared by management and submitted to the Board for
its approval. All material transactions must be reviewed and approved by the Board prior to implementation. Any responsibility that is
not delegated to senior management or a Board committee remains with the full Board.
The Company has established measures for its
stakeholders to provide feedback to the Board. Stakeholders may contact the Company Ethics Officer or the Chair of the Audit Committee,
who can provide stakeholders with direct contact to the independent directors of the Company.
The Board meets on a regular basis to plan for
the strategic growth of Alexco; throughout the year the Board identifies risks of Alexco’s business, thus ensuring the implementation
of appropriate systems to manage these risks; monitors senior management; ensures timely disclosure of material transactions; reviews
and, if thought fit, approves opportunities as presented by management; and provides guidance to management. Frequency of Board meetings
as well as the nature of agenda items change depending upon the state of Alexco’s affairs and in light of opportunities or risks
that Alexco faces. When necessary and appropriate, issues may be approved and adopted by the Board by way of written resolutions.
|
Management Information Circular | 38
|
|
Board Chair and Lead Director
The Chair of the Board is held by Mr. Nauman.
As a result of Mr. Nauman not being an independent director, Mr. Zimmer, who is considered an independent director, was appointed Lead
Director of Alexco. Under written terms of reference adopted by the Board, the Chair, or Lead Director
when the Chair is not independent, shall act as the effective leader of the Board and shall ensure it carries out its responsibilities
effectively, efficiently and independently of management and in the long-term best interests of Alexco. The Chair or Lead Director acts
as a liaison between management and the Board and as the primary representative and spokesperson for the Board, and promotes effective
relations with Shareholders, other stakeholders and the public. The Chair or Lead Director provides leadership to and, with the N&CG
Committee, assists the Board in understanding and meeting its obligations and responsibilities, including those relating to the Mandate
of the Board and other corporate governance matters, and in assessing the Board’s success in meeting its obligations. The Chair
or Lead Director is also responsible for overseeing the performance of the CEO and senior management and leading the Board’s review
of the CEO’s performance, as well as providing leadership to, and acting as a sounding board and advisor for, the CEO.
Position Descriptions
The Board has developed a written position description
for the Chair, or the Lead Director when the Chair is not independent, of the Board. The Board has also developed general terms of reference
for Committees which include descriptions of roles and responsibilities for the chairs of Committees. The Board has developed a written
position description for the Chief Executive Officer.
Board Committees
In addition to its Audit, Compensation and N&CG
Committees, Alexco has an EHS&T Committee, which, under the supervision of the Board, has overall responsibility for developing and
monitoring standards for ensuring a safe and healthy work environment and the protection of the environment and for reviewing Alexco’s
technical work.
The Audit Committee is comprised of three independent
Board members, including Terry Krepiakevich (Chair), Elaine Sanders and Richard N. Zimmer.
The N&CG Committee is comprised of three
independent Board members, including Rick Van Nieuwenhuyse (Chair), Karen McMaster, and Terry Krepiakevich.
The Compensation Committee is comprised of three
independent Board members, including Elaine Sanders (Chair), Terry Krepiakevich and Richard N. Zimmer.
The EHS&T Committee is comprised of three
independent Board members, including Richard N. Zimmer (Chair), Rick Van Nieuwenhuyse, and Karen McMaster.
All Committees are accountable to the full Board.
Assessments
The Board, on at least an annual basis, reviews
the performance and effectiveness of the Board, its Committees and individual directors. The N&CG
Committee is responsible for assessing on at least an annual basis the overall effectiveness of the Board as a whole, each of the
Committees (other than the N&CG Committee itself, which is evaluated by the full Board),
the Chair of the Board and individual directors. Each Committee is requested to complete a self-assessment of its performance, and formal
surveys are conducted with each of the individual directors. As part of the assessments, the Board or the individual Committee may review
their respective mandate or charter and conduct reviews of applicable corporate policies. The N&CG
Committee reports the results of its assessments to the full Board, which report the Board takes into consideration when completing
its overall performance and effectiveness reviews. In addition, the Lead Director of the Board conducts a one-on-one session with each
director to seek candid feedback regarding each other director of the Board, the Board performance and any concerns or issues the director
may have, and presents a summary of their findings to the Board as a whole.
Orientation and Continuing Education
Alexco provides informal continuing education
to its Board members with guest speakers invited to present at Board and Committee meetings, and also encourages them to communicate with
management, auditors and technical consultants; to keep themselves current with industry trends and developments and changes in legislation
with management’s assistance; and to attend related industry seminars and visit Alexco’s properties. Board members have full
access to Alexco’s records. Advisors are invited to attend Board meetings as appropriate to make presentations and answer questions
from time to time.
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Management Information Circular | 39
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|
During the year, Alexco had the following presentations:
|
Presentation Topic
|
Presenter
|
Directors Present
|
|
Cyber Risk Insights
|
Ernst & Young Global Limited
|
Board of Directors
|
|
Insurance Landscape
|
Hub International Insurance
|
Board of Directors
|
|
Executive and Director Compensation
|
Global Governance Advisors
|
Compensation Committee
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Trends in ESG Disclosure in Mining
|
PwC
|
Board of Directors
|
The N&CG
Committee is responsible, among other things, for determining appropriate orientation programs for new Board members. New Board
members are provided with:
|
|
1.
|
Information respecting the functioning of the Board and Committees, including a copy of Alexco’s
Corporate Governance Manual;
|
|
|
2.
|
Access to recent publicly filed documents of Alexco;
|
|
|
3.
|
Access to Alexco’s management, auditors and technical consultants; and
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|
|
4.
|
Further information as deemed appropriate and desirable by the N&CG
Committee on a case-by-case basis.
|
Ethical Business Conduct
The Board views good corporate governance as
an integral component to the success of Alexco and to meet responsibilities to Shareholders. The Board has adopted a written code of
business conduct and ethics (the “Code”), which is applicable to all of Alexco’s directors, officers and employees
and which may be viewed by visiting Alexco’s web site at www.alexcoresource.com as well
as under Alexco’s profile on SEDAR at www.sedar.com. The Board monitors compliance with
the Code by requesting that any person who becomes aware of any existing or potential violation of the Code promptly notify the Chair
of the Audit Committee or Alexco’s Ethics Officer. No material change report filed since the beginning of Alexco’s most recently
completed financial year pertains to any conduct of a director or executive officer that constitutes a departure from the Code. The N&CG
Committee is responsible (among other things) for overseeing the procedure for monitoring directors’ responsibility and
diligence and for determining the independence of directors. Under the Code, as well as under terms of reference for directors that have
been developed by the Board, directors are required to exercise independent judgement in considering transactions and agreements in respect
of which a director or executive officer has a material interest. In addition, Alexco requires that directors who have a material interest
declare that interest to the Board and, where applicable, the Committees as well.
Nomination of Directors
Alexco’s N&CG
Committee is comprised solely of directors who are considered independent under the tests prescribed by NI 52-110, and is responsible,
among other things, for recommending candidates for nomination, appointment, election and re-election to the Board and its Committees,
and for annually assessing Board performance. The N&CG Committee assesses potential Board
candidates to fill perceived needs on the Board for required skills, expertise, independence and other factors. Members of the Board and
representatives from industries relevant to the business of Alexco are consulted for possible candidates, and search firms may be retained
to the extent the Committee considers appropriate.
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Management Information Circular | 40
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Director Share Ownership Requirements
During the financial year ended December 31,
2012, the Board implemented a policy requiring each director to own and hold a minimum of 20,000 Shares, including RSUs and DSUs but not
including any Shares represented by unexercised stock options, with a period of up to three years provided to acquire such ownership position.
As at December 31, 2020 and as at April 26, 2021, all directors met this minimum Share ownership requirement. The following chart illustrates
Alexco’s non-executive Directors’ equity ownership as of May 3, 2021:
Compensation
The determination of compensation for Alexco’s
officers and directors is the responsibility of the Board, taking into consideration the recommendations of Alexco’s Compensation
Committee. All of the members of the Compensation Committee must be independent under the tests prescribed by NI 52-110. For further information
regarding the process by which compensation is determined for Alexco’s officers and directors, refer to the Compensation Discussion
and Analysis section commencing on page 15, and particularly the sub-heading Role of Compensation Committee.
Director Term Limits and Other Mechanisms
of Board Renewal
Alexco has not adopted term limits for its directors
or other mechanisms for Board renewal. The N&CG Committee, on an annual basis, reviews the size, composition, mandate and performance
of the Board and the various committees of the Board, and makes recommendations for appointment, removal of directors or other adjustments
as appropriate.
The N&CG Committee has considered whether
to propose that the Board adopt term limits for directors and has determined not to do so after consideration of a number of factors,
including the significant advantages associated with the continued involvement of long-serving directors who have gained a deep understanding
of Alexco’s projects, operations and objectives during their tenure; the experience, corporate memory and perspective of such directors;
the professional experience, areas of expertise and personal character of members of the Board; and the current needs and objectives of
Alexco.
Policies Regarding the Representation of Women
on the Board
The Board has adopted a diversity policy (the
“Diversity Policy”) which recognizes and embraces the benefits of having a diverse Board and executive team, including
but not limited to gender diversity. The Board believes gender diversity is a significant aspect of diversity and acknowledges the role
that women can play in contributing to diversity of perspective in the boardroom.
The objective of the Diversity Policy, as it
relates to women on the Board, is to ensure that gender diversity is taken into account when reviewing board composition and that there
is a required identification of women candidates embedded in the director nomination and executive level appointment process of the N&CG
Committee.
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Management Information Circular | 41
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Selection of female candidates to join the Board
or the executive team will be, in part, dependent on the pool of female candidates with the requisite skills, knowledge and experience.
The ultimate decision will be based on merit and the contribution the chosen candidate will bring to the Company.
In order to promote the specific objective of
gender diversity, the selection process for Board and senior executive appointments must involve the following steps (including where
the Company engages an external recruitment agency to identify and assess candidates):
|
|
•
|
a
short-list identifying potential candidates for the appointment which must include at least
50% qualified female candidates; and
|
|
|
•
|
if, at the end of the selection process, a female candidate is not selected, the Board must be satisfied
that there are objective reasons to support its determination.
|
The Company targets to maintain a Board in which
at least 25% of the Board is represented by female directors. At the date of this Circular, the Board consists of 6 Directors, of which
2 Directors are female, representing 33% female representation on the Board.
On an annual basis, the N&CG Committee assesses
the effectiveness of Alexco’s performance in meeting the objectives outlined in the Diversity Policy by a review of our progress
in increasing diversity amongst management and on the Board, by the percentage of female candidates identified during the process to fill
any vacancies in management or on the Board and the percentage of female candidates. The Board has oversight of any diversity initiative
implemented by management and will monitor measurable goals for achieving the objectives established for the initiative.
Consideration of the Representation of Women
in the Director Identification and Selection Process
Selection of female candidates to join the Board
will be, in part, dependent on the pool of female candidates with the necessary skills, knowledge and experience. The consideration of
potential candidates for appointments must include at least 50% qualified female candidates. If, at the end of the selection process a
female candidate is not selected, the Board must be satisfied that there are objective reasons to support its determination, which will
advance the Company’s commitment to diversity.
Consideration Given to the Representation
of Women in Executive Officer Appointments
Alexco’s views with respect to the representation
of women in executive officer positions when making executive officer appointments is the same as its views on the representation of women
in the director identification and selection process. The consideration of potential candidates for appointments must include at least
50% qualified female candidates. If, at the end of the selection process a female candidate is not selected, the Board must be satisfied
that there are objective reasons to support its determination, which will advance the Company’s commitment to diversity.
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Management Information Circular | 42
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Targets Regarding the Representation of Women
on the Board and in Executive Officer Positions
Although Alexco has adopted specific targets
for women on the Board, it has not adopted specific targets for women in executive positions (roles including
and above vice president). Alexco has had female leadership in executive positions and as part of Alexco’s desire to facilitate
gender diversity in management and leadership roles, Alexco will also:
|
|
•
|
consider
policies which address impediments to gender diversity in the workplace and review their
availability and utilisation;
|
|
|
•
|
regularly
review the proportion of women at all levels of the Company;
|
|
|
•
|
monitor
the effectiveness of, and continue to expand on, existing initiatives designed to identify,
support and develop talented women with leadership potential; and
|
|
|
•
|
continue
to identify new ways to entrench diversity as a cultural priority across the organisation.
|
Number of Women on the Board and in Executive
Officer Positions
As of the Record Date, two of six (33%) directors
of Alexco are female and one of eight (12.5%) executives of Alexco are female. See also “Policies Regarding the Representation of
Women on the Board” above.
Majority Voting Policy
See “Election of Directors - Majority Voting
Policy”.
Cyber Security Policy
In 2020 and in response to the COVID-19 pandemic,
among other directives, Alexco continues to encourage and facilitate remote working arrangements wherever possible. As a result, the risk
of external cyber security threats has increased and the Company has adopted a Cyber Security Policy in order to preserve the security
of the Company’s data and information technology (“IT”) and infrastructure. This policy applies to all Alexco
full-time and part-time employees, to its directors, independent contractors, consultants, vendors, suppliers, agents and any and all
users of Alexco’s IT resources and infrastructure (the “Users”). The policy has been communicated to all Users and has
been made available through the corporate website.
Interlocking Directorships
As of December 31, 2020, there are no interlocking
directorships.
Audit Committee Information
Detailed information with respect to Alexco’s
Audit Committee is contained under the heading “Audit Committee Information” in Alexco’s Annual Information Form dated
March 11, 2021 for the year ended December 31, 2020 filed under Alexco’s profile on SEDAR at www.sedar.com.
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Management Information Circular | 43
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Other Information
Indebtedness to Corporation of Directors and
Officers
As at April 26, 2021, other than routine indebtedness,
there was no indebtedness outstanding of any current or former director, executive officer or employee of Alexco or its subsidiaries which
is owing to Alexco or its subsidiaries, or which is owing to another entity which indebtedness is the subject of a guarantee, support
agreement, letter of credit or other similar arrangement or understanding provided by Alexco or its subsidiaries, entered into in connection
with a purchase of securities or otherwise.
No individual who is, or at any time during the
most recently completed financial year was, a director or executive officer of Alexco, no proposed nominee for election as a director
of Alexco and no associate of such persons:
|
|
(i)
|
is or at any time since the beginning of the most recently completed financial year has been, indebted
to Alexco or its subsidiaries; or
|
|
|
(ii)
|
is indebted to another entity, which indebtedness is, or at any time since the beginning of the most recently
completed financial year has been, the subject of a guarantee, support agreement, letter of credit or other similar arrangement or understanding
provided by Alexco or its subsidiaries,
|
in relation to a securities purchase program
or other program.
Management Contracts
No management functions of Alexco are performed
to any substantial degree by a person other than the directors or executive officers.
Interest of Certain Persons or Companies in
Matters To Be Acted Upon
Except as otherwise disclosed, to the knowledge
of Alexco, no director or executive officer since the commencement of Alexco’s last completed fiscal year, proposed nominee of management
for election as a director, or any associate or affiliate of the foregoing persons, has any
material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matters to be acted upon at the
Meeting other than the election of directors or appointment of auditors.
Interest of Informed Persons in Material Transactions
No informed person, officer or proposed director
and no associate or affiliate of the foregoing persons has or has had any material interest, direct or indirect, in any transaction since
the commencement of Alexco’s most recently completed financial year or in any proposed transaction which in either such case has
materially affected or would materially affect Alexco or any of its subsidiaries.
Additional Information
Financial information is provided in Alexco’s
comparative financial statements and MD&A for its most recently completed financial year. Additional information relating to Alexco,
including audited comparative financial statements, MD&A, annual information form and US Form 40-F for its most recently completed
financial year, is on Alexco’s web site at www.alexcoresource.com and on SEDAR at www.sedar.com
and on EDGAR at www.sec.gov/edgar.shtml. Shareholders may contact Alexco at Suite
1225, Two Bentall Centre, 555 Burrard Street, Box 216, Vancouver, British Columbia, V7X 1M9 to request, free of charge, hard copies of
Alexco’s audited financial statements and MD&A.
DATED as of this 3rd day of
May, 2021.
BY ORDER OF THE BOARD
(signed) Clynton R. Nauman
Clynton R. Nauman, Chairman and Chief Executive Officer
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Management Information Circular | 44
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Schedule “A”
MANDATE OF THE BOARD OF DIRECTORS
GENERAL
This Mandate identifies the specific responsibilities
of the Board of Directors of the Company (the ”Board”). The Board is responsible for the stewardship of the Company
and oversees the management of the business and affairs of the Company to maximize long term financial strength and shareholder value.
The Board also sets and oversees policies and standards, including corporate governance principles and guidelines, which promote the integrity
of the Company and its officers and employees, and protect the interests of shareholders. The Board may discharge certain of its responsibilities
identified in this Mandate by delegating certain duties to committees of the Board and management. The specific duties delegated to each
such committee are outlined in the respective charter for each committee.
COMPOSITION
The Chair of the Board should be “independent”
as defined in National Instrument 52-110 - Audit Committees. Where this is not appropriate, an independent director should be appointed
to act as “lead director”. The Chair, or lead director if the Chair is not independent, shall act as the effective leader
of the Board and shall be responsible to ensure that the Board executes this Mandate effectively, efficiently, and independently of management.
Upon resignation of a member of the Board, such vacancy shall be filled by appointment by the Board, taking into consideration the recommendation(s)
of the Nominating & Corporate Governance Committee, as soon as practical.
RESPONSIBILITIES
Leadership and Integrity
To promote leadership and integrity throughout
the Company, the Board, with the assistance of the committees as appropriate, selects senior management, directors, officers and advisors
who the Board believes will conduct themselves with utmost integrity and will comply with the Board’s directions and policies and
applicable laws and regulations. The Board, with the assistance of the Nominating & Corporate Governance Committee, determines the
number of directors, nominates a majority of directors who are independent of management and who have appropriate skills and experience
in order to create an effective Board, and selects a director who is independent of management to serve as chair (or lead director) of
the Board.
On at least an annual basis, through the appropriate
committees, the Board reviews the ongoing performance of management, directors and officers and committees of the Board. To the extent
feasible, whilst conducting such reviews, the applicable committees also satisfy themselves as to the integrity of the Chief Executive
Officer (“CEO”) and other executive officers of the Company and evaluate the extent to which the CEO and other executive
officers of the Company create a culture of integrity throughout the Company. In addition, each of the independent members of the committees
meet from time to time as necessary, and the independent members of the Board meet at least annually separately from other members of
the Board and management, in order to help ensure that the interests of the Company and its shareholders can be considered independently
of any contribution from non-independent members of the Board and management.
Strategic Planning
The Board, in consultation with management, annually
reviews and approves the strategic direction for the Company and the process for implementing the plan. The Board provides direction to
the CEO and other senior management to ensure the strategic direction set by the Board is followed. The Board receives reports of management
on a regular basis throughout the year on the current and proposed operations of the Company and reviews the opportunities of the Company
and assesses risks to which the Company is exposed so that the direction can be adjusted where required. At each Board meeting, recent
developments that may impact the Company’s strategic direction are reviewed and revisions to the direction and operations are made
as required. The Board reviews the human and corporate resources required to achieve the goals of the strategic direction and approves
the Company’s annual capital and operating plans, material equity and debt financing, material contracts and material acquisitions
and divestitures. All such plans and reports may be orally presented to the Board or may be in written form if so required by the Board.
Dealing with Risks
The Board, on at least an annual basis and in
participation with management, reviews and identifies what it perceives to be the principal risks to the Company and reviews management’s
plans for monitoring and managing those risks. The Board shall instruct management to assist the Board in identifying risks and to promptly
alert the Board when a risk has materialized and to implement and monitor appropriate procedures and systems in accordance with normal
industry practice and applicable laws and regulations. The Board also reviews the systems in place for managing the risks, including insurance
coverage, to determine the adequacy of such risk management systems. The Board may from time to time appoint committees or advisors to
assist in assessing different risks.
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Management Information Circular | 45
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Succession Planning and Performance Reviews
The Board, through the Nominating & Corporate
Governance Committee, annually identifies the key individuals of the Company and, in consultation with management, determines how best
to replace such individuals should the need arise. The Board’s policy is to select individuals who have the required expertise and
therefore would require minimal training in order to assume their role with the Company. The CEO is assigned the responsibility of ensuring
the new person is informed of the Company’s policies and practices and would be instructed to arrange additional training if required.
The CEO has primary responsibility for supervising,
reviewing and reporting to the Board, through the Compensation Committee, on the performance of other senior management. The Board also
reviews on an annual basis the performance of the CEO against the performance criteria established from time to time.
Communication
The Code of Business Conduct and Ethics governs
communication with shareholders and others and reflects the Company’s commitment to timely, effective and accurate corporate disclosure
in accordance with all applicable laws and with a view to enhancing the Company’s relationship with its shareholders.
The Company has established measures for its
stakeholders to provide feedback to the Board. Stakeholders may contact the Company Ethics Officer or the Chair of the Audit Committee,
who can provide stakeholders with direct contact to the independent directors of the Company. Please refer to the Code of Business Conduct
and Ethics for the contact information of the Company Ethics Officer and the Chair of the Audit Committee.
Internal Controls and Management Information
Systems
The effectiveness of the Board and the success
of the Company are tied to the effectiveness and integrity of the Company’s internal control and management information systems.
To maintain the effectiveness and integrity of the Company’s financial controls, the Board, through the Audit Committee and the
oversight of the Company’s auditors, oversees the implementation and monitoring of internal control and management information systems,
takes an active role in overseeing the operations of the Company and assesses information provided by management.
Corporate Governance Principles and Guidelines
The Board has appointed the Nominating &
Corporate Governance Committee which is composed solely of independent directors and which has overall responsibility for developing the
Company’s approach to corporate governance. In particular, the Committee is responsible for reviewing legal requirements and trends
regarding corporate governance, reviewing the Company’s corporate governance policies, practice and compliance, and monitoring and
assessing the functioning of the Board and committees of the Board. The Board has adopted the Company’s Code of Business Conduct
and Ethics which sets forth guiding principles for the business operations of the Company. Subject to committee delegation, the Board
is responsible for monitoring the Code of Business Conduct and Ethics. Waivers from the Code of Business Conduct and Ethics for the benefit
of the directors or executive officers of the Company may be granted only by the Board.
Expectations and Responsibilities of Directors
The Board has adopted Terms of Reference for
Directors which set forth the expectations and responsibilities of individual directors. The Terms of Reference for Directors prescribe,
among other things, the requirements that directors demonstrate integrity and high ethical standards in the performance of their duties,
observe their fiduciary duty to the Company, avoid conflict by reporting to the Board potential or actual conflict situations and advise
the Chair of all directorships or other positions held in public and non-public companies, regularly attend and prepare for Board and
committee meetings and comply with all applicable laws and regulations, and policies and guidelines established for the Company.
Orientation and Continuing Education
The Board will ensure that all new incoming directors
receive a comprehensive orientation such that all new directors fully understand the role of the Board and its committees, as well as
the contribution individual directors are expected to make (including, in particular, the commitment of time and resources that the Company
expects from its directors). The Board will ensure that all new directors understand the nature and operation of the Company’s business.
The Board will provide continuing education opportunities for all directors, so that individuals may maintain or enhance their skills
and abilities as directors, as well as to ensure their knowledge and understanding of the Company’s business remains current.
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Management Information Circular | 46
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SPECIFIC
DUTIES AND TASKS
In addition to the above responsibilities, the
Board’s mandate includes the following duties and tasks:
|
|
1.
|
Reviewing and approving any proposed changes to the Company’s notice of articles or articles.
|
|
|
2.
|
Taking responsibility for, and appropriate action with respect to, any take-over bid, proposed merger,
amalgamation, arrangement, and acquisition of all or substantially all of the assets or any similar form of business combination, including
the approval of any agreements, circulars or other documents in connection therewith.
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|
|
3.
|
Approving payment of distributions to shareholders.
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|
|
4.
|
Approving any offerings, issuances or repurchases of share capital or other securities.
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|
|
5.
|
Approving the establishment of credit facilities and any other long-term commitments.
|
|
|
6.
|
Developing clear position descriptions or terms of reference for the Chair of the Board, the Chair of
each Board committee and the CEO (which includes delineating management’s responsibilities).
|
|
|
7.
|
Developing or approving the corporate goals and objectives that the CEO is responsible for meeting.
|
|
|
8.
|
Selecting and appointing the CEO, the President and the Chief Financial Officer (“CFO”),
evaluation of and (if necessary) termination of the CEO, the President and the CFO, and approving the hiring of any other senior executive
or appointment of any corporate officer.
|
|
|
9.
|
Succession planning and other human resource issues.
|
|
|
10.
|
Approving the compensation of the senior executive officers, including performance bonus plans and stock
options (if any).
|
|
|
11.
|
Adopting a strategic planning process, approving the strategic direction on at least an annual basis,
and monitoring performance against such strategic direction.
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|
|
12.
|
Reviewing and approving annual operational budgets, capital expenditures and corporate objectives, and
monitoring performance on each of the above.
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|
|
13.
|
Reviewing policies and procedures to identify business risks, identifying the principal business risks
and ensuring that systems and actions are in place to monitor them.
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|
|
14.
|
Reviewing policies and processes to ensure that the Company’s internal control and management information
systems are operating properly.
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15.
|
Approving the financial statements, MD&A and other continuous disclosure requirements in accordance
with applicable laws, and making a recommendation to shareholders for the appointment of auditors.
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|
16.
|
Approving the Company’s Code of Business Conduct and Ethics, and other codes, mandates and policies,
and monitoring their effectiveness and application.
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|
|
17.
|
Assessing the contribution of the Board, committees and individual directors annually, and planning for
succession of the Board and senior management.
|
|
|
18.
|
To the extent feasible, attending each meeting of the Board.
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|
|
19.
|
To the extent feasible, reviewing the applicable meeting materials in advance of each meeting of the Board.
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Management Information Circular | 47
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|
20.
|
Developing the Company’s approach to corporate governance, including developing a set of corporate
governance principles and guidelines specifically tailored to the Company and in accordance with all applicable laws and regulations,
including any stock exchange upon which the Company’s securities are traded.
|
BOARD
MEETING PROCESS
The powers of the Board may be exercised at a
meeting for which notice has been given and at which a quorum is present or, in appropriate circumstances, by resolution in writing signed
by all the directors.
Responsibility for Convening
Regular meetings of the directors may be called
and held at such time and at such place as the Board may by resolution from time to time determine. Any director may call a meeting of
the Board at any time.
Notice of Meeting
The Chair (or his or her delegate) of the Board
shall arrange to provide notice of the time and place of every meeting in writing (including by email or facsimile) to each director at
least 24 hours prior to the time fixed for such meeting, provided, however, that a director may in any manner waive a notice of a meeting.
Attendance of a director at a meeting constitutes a waiver of notice of the meeting, except where a director attends a meeting for the
express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.
The Chair will also attempt to ensure that an
agenda for the meeting and all required materials for review by the members of each committee are delivered to the members with sufficient
time for their review.
Quorum
The quorum for the transaction of business at
any meeting of the Board shall be a majority of directors or such other number of directors as the Board may from time to time determine
according to the articles of the Company.
Voting
At all meetings of the Board every resolution
shall be decided by a majority of the votes cast on the resolution. A member of the Board will be deemed to have consented to any resolution
passed or action taken at a meeting of the Committee unless the member dissents.
Minutes of Board Meetings
A secretary should be named for each Board and
committee meeting and minutes should be circulated at in a timely manner after such meeting. Minutes of the meetings of each of the committees
meetings will be made available to each Board member.
Meetings of Independent Directors
The independent directors on the Board should
hold regularly scheduled meetings at which non-independent directors and members of management are not in attendance.
Effective
date
Updated and adopted by the Board effective March
13, 2019.
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Management Information Circular | 48
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SCHEDULE
“B”
COMPENSATION COMMITTEE CHARTER
GENERAL
The Compensation Committee, under the supervision
of the Board of Directors of the Company (the “Board”), has the overall responsibility for recommending levels of executive
compensation that are competitive and motivating in order to attract, hire, retain and inspire the Company’s President, Chief Executive
Officer, Chief Financial Officer and other executive officers (collectively, “Management”) and certain key employees
and non-executive officers below the vice-president level (collectively, “Non-Management Officers”) and for recommending
compensation for directors.
The term “compensation” shall include
salary, bonus, stock options, securities issuable pursuant to incentive-compensation plans and equity-based plans, severance arrangements
and other compensatory rights or benefits, direct or indirect, as applicable.
COMPOSITION
The Compensation Committee shall be comprised
of a minimum of three (3) directors of the Company, all of whom shall be “independent” as defined in section 1.4 of National
Instrument 52-110 - Audit Committees. Upon resignation of a member of the Compensation Committee, such vacancy shall be filled
by appointment by the Board as soon as practical.
RESPONSIBILITIES
Subject to the powers and duties of the Board,
the Board hereby delegates to the Compensation Committee the following powers and duties to be performed by the Compensation Committee
on behalf of and for the Board.
The Compensation Committee shall:
|
|
(a)
|
review on an annual basis, and from time to time as required, and recommend to the Board for approval
the compensation for directors who serve on the Board or its committees;
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|
|
(b)
|
review on an annual basis, and from time to time as required, and recommend to the Board for approval
as necessary the performance targets and corporate goals relevant to Management compensation, and evaluate the performance of Management
based on such goals;
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|
|
(c)
|
review and recommend to the Board for approval the proposed appointment of any person to Management;
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|
(d)
|
review as necessary from time to time any person to a Non-Management Officer position;
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(e)
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review on an annual basis, and from time to time as required, and recommend to the Board for approval
the compensation of Management, considering all relevant matters including the goals of the Company and the effectiveness of Management
in achieving such goals, the skill, qualifications and level of responsibility of Management, and compensation provided by comparative
companies;
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(f)
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review as necessary from time to time the compensation of Non-Management Officers, considering all relevant
matters including the goals of the Company and the effectiveness of such Non-Management Officers in achieving those goals, the skill,
qualifications and level of responsibility of the Non-Management Officers, and compensation provided by comparative companies, provided
that such approval and determination shall be subject to any applicable Board policies;
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(g)
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oversee the Company’s stock option plan, employee benefit plans and other compensatory plans adopted
by the Company and review and approve benefits to be granted under such plans to Management, and Non-Management Officers as applicable,
in accordance with any guidelines established by the Board;
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(h)
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with the assistance of Management, monitor trends in compensation of directors and management, review
and recommend to the Board for approval as necessary the Company’s compensation policies and plans;
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(i)
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review and recommend to the Board for approval all of the Company’s executive compensation disclosure,
including compensation philosophy, before it is publicly disclosed;
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Management Information Circular | 49
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(j)
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review and recommend to the Board for approval all disclosure regarding the Company’s stock option
plans, employee benefit plans and other compensatory plans adopted by the Company that are submitted for shareholder approval;
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(k)
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review and approve all reports of the Compensation Committee in preparing the annual information circular,
annual information form or other filings required in accordance with relevant securities laws as applicable; and
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(l)
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conduct an annual assessment of its performance and report the results of such assessment to the Board.
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It shall be the general policy of the Company
not to grant loans to directors, Management or Non-Management Officers.
The Compensation Committee shall have authority
to engage and compensate outside advisors to review the Company’s compensation program and assist the Compensation Committee in
carrying out its duties, as appropriate.
The Compensation Committee shall conduct a portion
of each meeting without the presence of either Management or Non-Management Officers as the Committee deems necessary.
The Compensation Committee shall also have such
other powers and duties as are delegated to it by the Board from time to time.
EFFECTIVE DATE
This Compensation Committee Charter was updated
and adopted by the Board effective March 13, 2019.
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Management Information Circular | 50
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YOUR
VOTE IS IMPORTANT
QUESTIONS MAY BE DIRECTED TO:
North America Toll-Free
(1-844-392-3035)
Email:
info@alexcoresource.com
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CORPORATE OFFICE
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CONTACT INFORMATION
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SHARE LISTING
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1225 - 555 Burrard St., Vancouver, B.C., V7X 1M9
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Tel: 604.633.4888 Fax: 604.633.4887
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NYSE AMERICAN/TSX: AXU
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Canada
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Email:
info@alexcoresource.com
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Management Information Circular ׀ 51
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