March 29, 2022
Dear Shareholders,On behalf of the Board of Directors and management of The Lion Electric Company, we are pleased to invite you to attend the annual meeting of shareholders of Lion that will be held virtually on May 6, 2022 at 11:00 a.m. (Eastern Time).
This past year has been one of transition for Lion as we have strengthened our structure required to grow. We are confident that the initiatives we have taken on will help accelerate growth, while making a concrete, long-term impact on the society we live in. The electrification of transportation was where we decided to fully invest in, more than a decade ago, continuously innovating for several reasons: to help improve the environment, contribute to providing people and our society with a better quality of life today and tomorrow, and be part of the emerging green economy. For more than 10 years, we have focused all our energies and resources on electric vehicles and the related ecosystem and laid the foundation for a true social revolution.
Today, Lion is one of the few companies that design, manufacture and sell 100% electric heavy- and medium-duty vehicles, including buses and trucks. More than 550 of our vehicles are on the road in North America and have logged over nine million miles in real-life operating conditions. Also, decisions we made through the years were influenced by the impact they would have on our customers who are at the heart of our ecosystem, which was designed to support them as they transition to electrification.
As a shareholder of Lion, you have the right to vote your shares on all items that come before the annual meeting of shareholders. You can vote your shares either by proxy or online at the meeting. The management information circular will provide you with information about these items and how to exercise your right to vote. It will also tell you about the director nominees, the proposed auditors, the compensation of directors and certain executives of Lion, as well as our approach to executive compensation. Detailed instructions on how to participate in our virtual meeting can be found in the management information circular. Your vote and participation are very important to us.
I would like to conclude by thanking Lion's employees and management team who work with passion and dedication to make Lion a key player in the electric vehicle industry and who share our optimism for the future. Thanks also to our Board of Directors for their commitment that inspires us to excel and to you, our shareholders, for your confidence in us.
Sincerely,
Marc Bedard (Signed)
CEO—Founder
CEO—Founder
2NOTICE OF 2022 ANNUAL MEETING OF SHAREHOLDERS
NOTICE IS HEREBY GIVEN that the annual meeting (the "Meeting") of shareholders of The Lion Electric Company (the "Company") will be conducted in virtual-only format at https://web.lumiagm.com/442208210 at 11:00 a.m. (Eastern Time) on May 6, 2022 via live webcast, to consider and take action on the following matters:
(1) to receive the audited annual consolidated financial statements of the Company for the fiscal year ended December 31, 2021, together with the auditor’s report thereon;
(2) to elect the eight (8) directors named in the Circular who will serve until the next annual meeting of shareholders or until their successors are elected or appointed;
(3) to appoint the independent auditor of the Company and authorize the directors to fix its remuneration; and
(4) to transact such other business as may properly be brought before the Meeting or any postponement or adjournment thereof.
The Company’s board of directors has fixed the close of business on March 25, 2022 as the record date for determining shareholders entitled to receive notice of, and to vote at, the Meeting, or any postponement or adjournment thereof. No person who becomes a shareholder of record after that time will be entitled to vote at the Meeting or any postponement or adjournment thereof.
The Company is holding the Meeting as a completely virtual meeting, which will be conducted via live webcast. Shareholders will not be able to attend the Meeting in person. Shareholders of the Company (the "Shareholders") may attend the Meeting online at https://web.lumiagm.com/442208210. However, only registered Shareholders and duly appointed proxyholders (including non-registered Shareholders who have duly appointed themselves as proxyholder) will be entitled to vote and ask questions at the Meeting. Non-registered Shareholders (being Shareholders who hold their shares through a nominee such as a trustee, financial institution, or securities broker) who have not duly appointed themselves as proxyholder will be able to attend the Meeting only as guests. Guests will be able to listen to the Meeting but will not be able to vote, ask questions or otherwise participate at the Meeting.
If you are unable to attend the Meeting, please complete, date, sign and return the accompanying form of proxy or voting instruction form, as applicable, in accordance with the instructions set out on such form and in the Circular, or, alternatively, please vote over the Internet or by telephone, at your discretion, in accordance with the instructions provided on such form and in the Circular. To be effective, the attached form of proxy or voting instruction form must be received no later than May 4, 2022 at 11:00 a.m. (Eastern Time), or if the Meeting is postponed or adjourned, by no later than 48 hours prior to the time of such postponed or adjourned meeting (excluding Saturdays, Sundays, and holidays). Your shares will be voted in accordance with your instructions as indicated on the proxy.
Shareholders who wish to appoint a proxyholder other than the persons designated by the Company on the form of proxy or voting instruction form (including non-registered Shareholder who wish to appoint themselves as proxyholder) must carefully follow the instructions in the Circular and on their form of proxy or voting instruction form. These instructions include the additional step of registering such proxyholder with the Company’s transfer agent, TSX Trust Company, after submitting their form of proxy or voting instruction form. Failure to register the proxyholder will result in the proxyholder not receiving a control number that will act as their online sign-in credentials and is required for them to vote at the meeting and, consequently, will only be able to attend the Meeting online as a guest. Non-registered Shareholders located in the United States must also provide TSX Trust Company with a duly completed proxy if they wish to vote at the Meeting or appoint a third party as their proxyholder.
This year, the Company is using the notice-and-access procedures as permitted by Canadian securities laws for the delivery of the Circular and the audited annual consolidated financial statements of the Company for the fiscal year ended December 31, 2021, together with the independent auditor’s report thereon and the related management’s discussion and analysis (the "Proxy Materials") to both its registered and non-registered Shareholders. Under the notice-and-access procedures, instead of receiving paper copies of the Proxy Materials, Shareholders will receive a notice of availability of proxy materials (the "Notice-and-Access Letter") (which provides information on how to access copies of the Proxy Materials, how to request a paper copy of the Proxy Materials and details about the Meeting). The
3Notice-and-Access Letter and form of proxy or voting instruction form have been sent to both registered and non-registered Shareholders. Notice-and-access substantially reduces the Company's printing and mailing costs and is more environmentally friendly as it reduces paper and energy consumption. The Proxy Materials are available on the Company's website at ir.thelionelectric.com and under its profiles on SEDAR at www.sedar.com and EDGAR at www.sec.gov.
Shareholders may request a paper copy of this Circular, the annual consolidated financial statements of the Company and related management’s discussion and analysis, at no cost, up to one year from the date this Circular is filed on SEDAR. Shareholders may make such a request at any time prior to the Meeting (a) on the web at ir.thelionelectric.com; (b) by contacting TSX Trust Company at 1-888-433-6443 (toll free in Canada and the United States) or 416-682-3860 (other countries); or (c) by contacting the Company's Investor Relations department by email at ir@thelionelectric.com.
If a Shareholder requests a paper copy of the Proxy Materials, please note that another form of proxy or voting instruction form will not be sent.
Dated at Saint-Jerome, Quebec, this 29th day of March, 2022.
By order of the board of directors,
François Duquette (Signed)
Chief Legal Officer and Corporate Secretary
4THE LION ELECTRIC COMPANY
MANAGEMENT INFORMATION CIRCULAR
TABLE OF CONTENTS
Page
Summary Compensation Table | 46 | ||||
Incentive Plan Awards | 48 | ||||
Summary of NEO Employment Agreements | 48 | ||||
Securities Authorized for Issuance under Equity Compensation Plans | 51 | ||||
5 Schedule A - Mandate of the Board of Directors | 64 | ||||
6GENERAL INFORMATION
This management information circular (the "Circular") is furnished in connection with the solicitation by management of The Lion Electric Company (the "Company") of proxies for use at the annual meeting of shareholders of the Company (the "Meeting") to be held on May 6, 2022 at 11:00 a.m. (Eastern Time), or any postponements or adjournments thereof, for the purposes set forth in the accompanying notice of 2022 annual meeting of shareholders (the "Notice of Meeting").
The Meeting will be held as a completely virtual meeting, which will be conducted via live webcast. Shareholders of the Company (the "Shareholders") will not be able to attend the Meeting in person. A summary of the information Shareholders will need to attend the Meeting online is provided below.
No person has been authorized to give any information or to make any representation in connection with any other matters to be considered at the Meeting other than those contained in this Circular and, if given or made, any such information or representation must not be relied upon as having been authorized.
Certain Defined Terms
Unless otherwise noted or the context otherwise requires, all information provided in this Circular is given as at March 25, 2022 and references to "Lion", "we", "our", "us", "the Company" or similar terms refer to The Lion Electric Company and its subsidiaries, on a consolidated basis. We publish our consolidated financial statements in U.S. dollars. In this Circular, unless otherwise specified, all monetary amounts are in U.S. dollars, all references to "$", "US$" and "USD" and "dollars" mean U.S. dollars and all references to "C$", "CDN$", "CAD$", mean Canadian dollars.
Forward-Looking Statements
Certain statements in this Circular constitute forward-looking statements within the meaning of applicable securities laws. Any statements contained in this Circular that are not statements of historical fact, including statements about Lion’s beliefs and expectations, are forward-looking statements and should be evaluated as such.
Forward-looking statements may be identified by the use of words such as "believe", "may", "will", "continue", "anticipate", "intend", "expect", "should", "would", "could", "plan", "project", "potential", "seem", "seek", "future", "target" or other similar expressions and any other statements that predict or indicate future events or trends or that are not statements of historical matters, although not all forward-looking statements contain such identifying words. These forward-looking statements include statements regarding the Company’s order book and the Company's ability to convert it into actual sales, the Company’s long-term strategy and future growth, the Company’s battery plant and innovation center project in Quebec and its U.S. manufacturing facility, and the expected launch of new models of electric vehicles. Such forward-looking statements are based on a number of estimates and assumptions that Lion believes are reasonable when made, including that Lion will be able to retain and hire key personnel and maintain relationships with customers, suppliers and other business partners, that Lion will continue to operate its business in the normal course, that Lion will be able to implement its growth strategy, that Lion will be able to successfully and timely complete the construction of its U.S. manufacturing facility and its Quebec battery plant and innovation center, that Lion will not suffer any further supply chain challenges or any material disruption in the supply of raw materials on competitive terms, that Lion will be able to maintain its competitive position, that Lion will continue to improve its operational, financial and other internal controls and systems to manage its growth and size, that its results of operations and financial condition will not be adversely affected, that Lion will be able to benefit, either directly or indirectly (including through its clients), from government subsidies and economic incentives in the future, and that Lion will be able to secure additional funding through equity or debt financing on terms acceptable to Lion when required in the future. Such estimates and assumptions are made by Lion in light of the experience of management and their perception of historical trends, current conditions and expected future developments, as well as other factors believed to be appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct.
Many factors could cause the Company’s actual results or affairs to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the factors
7discussed in the "Risk Factors" section of the Company’s annual report on Form 20-F dated March 29, 2022 (the "Annual Report"), in respect of the fiscal year ended December 31, 2021 ("Fiscal 2021"), which are incorporated by reference in this cautionary statement. Although these factors are not intended to represent a complete list of the factors that could affect the Company, they should be considered carefully. The forward-looking statements contained in this Circular are made as of the date of this Circular, and the Company has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, changes in circumstances or beliefs or otherwise, unless required by applicable securities regulations. In the event that the Company does update any forward-looking statements contained in this Circular, no inference should be made that the Company will make additional updates with respect to that statement, related matters or any other forward-looking statement. The forward-looking statements contained in this Circular are expressly qualified by this cautionary statement.
8GENERAL PROXY MATTERS
Proxy Solicitation
The solicitation of proxies pursuant to this Circular is being made by or on behalf of Management primarily by mail, but proxies may also be solicited via the Internet, by telephone, in writing or in person, by directors, officers or regular employees of the Company who will receive no compensation therefor in addition to their regular remuneration. The Company may also reimburse brokers and other persons holding Common Shares in their name or in the name of nominees for the costs incurred in sending proxy materials to their principals in order to obtain their proxies. The cost of the solicitation is expected to be nominal and will be borne by the Company.
Who Can Vote
Only persons registered as holders of Common Shares as of the close of business on March 25, 2022 (the "Record Date") are entitled to receive notice of, and to vote at, the Meeting or any postponement or adjournment thereof, and no person becoming a Shareholder after the Record Date shall be entitled to receive notice of, and to vote at, the Meeting or any postponement or adjournment thereof. The failure of any Shareholder to receive notice of the Meeting does not deprive the Shareholder of the right to vote at the Meeting to which the Shareholder would have otherwise been entitled.
Notice-and-Access
This year, the Company is using the notice-and-access procedures as permitted by Canadian securities laws for the delivery of the Circular, the audited annual consolidated financial statements of the Company for the fiscal year ended December 31, 2021 (the "Financial Statements"), together with the independent auditor’s report thereon and the related management’s discussion and analysis (the "Proxy Materials") to both its registered and non-registered Shareholders. Under the notice-and-access procedures, instead of receiving paper copies of the Proxy Materials, Shareholders will receive a notice of availability of proxy materials (which provides information on how to access copies of the Proxy Materials, how to request a paper copy of the Proxy Materials and details about the Meeting). The Notice-and-Access Letter and form of proxy or voting instruction form have been sent to both registered and non-registered Shareholders, as applicable. Notice-and-access substantially reduces the Company's printing and mailing costs and is more environmentally friendly as it reduces paper and energy consumption. The Proxy Materials are available on the Company's website at ir.thelionelectric.com and under its profiles on SEDAR at www.sedar.com and EDGAR at www.sec.gov.
How to Request a Paper Copy of the Proxy Materials
Before the Meeting
If your name appears on a share certificate or a DRS statement, you are considered as a "registered Shareholder". If your Common Shares are listed in an account statement provided to you by an intermediary, you are considered as a "non-registered Shareholder". Whether you are a registered Shareholder or a non-registered Shareholder, you may request paper copies of the Proxy Materials at no cost by calling TSX Trust Company at 1-888-433-6443 (toll free within North America) or 416-682-3860 (outside of North America), or by email at tsxt-fulfilment@tmx.com.
Please note that you will not receive another form of proxy or voting instruction form; please retain your current one to vote your Common Shares.
In any case, requests for paper copies should be received at least five (5) business days prior to the proxy deposit date and time, which is set for May 4, 2022, at 11:00 a.m. (Eastern Time) in order to receive the Proxy Materials in advance of such date and the Meeting date. To ensure receipt of the paper copies in advance of the voting deadline and Meeting date, we estimate that your request must be received by no later than 5:00 p.m. (Eastern Time) on April 27, 2022.
After the Meeting
By telephone at 450-432-5466 or by email at ir@thelionelectric.com. Paper copies of the Proxy Materials should be sent to you within ten (10) calendar days of receiving your request.
9How to Attend the Meeting
This year, the Company is holding the Meeting as a virtual meeting only, which will be conducted via live webcast, where all Shareholders regardless of geographic location will have an equal opportunity to participate at the Meeting. Shareholders will not be able to attend the Meeting in person. This decision was made in an effort to contain the spread of the coronavirus (COVID-19) and to prioritize and support the well-being of our Shareholders, employees, directors and other Meeting attendees. Only registered Shareholders and duly appointed Proxyholders (including non-registered Shareholders who have duly appointed themselves as Proxyholder) will be entitled to vote and ask questions at the Meeting. We will try to answer any such questions submitted that are germane to the proposals and/or this meeting. Non-registered Shareholders who have not duly appointed themselves as proxyholder will be able to attend the Meeting only as guests. Guests will be able to listen to the Meeting but will not be able to vote, ask questions or otherwise participate at the Meeting.
To access the Meeting, follow the instructions below:
•Log in at https://web.lumiagm.com/442208210. We encourage you to log in to the Meeting sufficiently in advance of the time it is scheduled to begin so that you have ample time to check into the Meeting online.
•Click "I am a guest" and then complete the online form; OR
•Click "I have a control number" and then enter your unique 13-digit control number or 13-digit proxyholder control number and password "lion2022" (case sensitive).
How to find the control number to access the Meeting:
•Registered Shareholders: The control number is located on the form of proxy or in the email notification you received from TSX Trust Company. If you use your control number to log in to the Meeting, any vote you cast at the Meeting will revoke any proxy you previously submitted. If you do not wish to revoke a previously submitted proxy, you should not vote during the Meeting.
•Proxyholders: The 13-digit proxyholder control number will have been provided by email from TSX Trust Company following your registration, following the instructions set forth in this Circular. Failing to register will result in the proxyholder not receiving a control number, which is required to vote at the Meeting.
When you attend the Meeting online, it is important that you are connected to the Internet at all times during the Meeting in order to vote when balloting commences. It is your responsibility to ensure connectivity for the duration of the Meeting. You should allow ample time to check into the Meeting online. You will need the latest versions of Chrome, Safari, Edge or Firefox. Please do not use Internet Explorer. Internal network security protocols including firewalls and VPN connections may block access to the Lumi platform. If you are experiencing any difficulty connecting or watching the Meeting, ensure your VPN setting is disabled or use a computer on a network not restricted to security settings of your organization.
Your Vote is Important
As a Shareholder, it is very important that you read the following information on how to vote the common shares of the Company (the "Common Shares") held by you and then vote your Common Shares, either by proxy or by attending the Meeting. The following questions and answers provide guidance on how to vote your Common Shares.
Voting
You can attend the Meeting or you can appoint someone else to vote for you as your proxyholder. A Shareholder entitled to vote at the Meeting may, by means of a proxy, appoint a proxyholder or one or more alternate proxyholders, who are not required to be Shareholders, to attend and act at the Meeting in the manner and to the extent authorized by the proxy and with the authority conferred by the proxy. Voting by proxy means that you are giving the person named on your form of proxy (the "Proxyholder") the authority to vote your Common Shares for you in accordance with your instructions at the Meeting or any adjournment or postponement thereof.
10Marc Bedard, CEO—Founder and François Duquette, Chief Legal Officer and Corporate Secretary, who are named on the form of proxy or voting instruction form you have received ("Named Proxyholders"), are executive officers of the Company and will vote your Common Shares for you in accordance with your instructions. As a Shareholder, you have the right to appoint a person or company other than the Named Proxyholders to be your Proxyholder at the Meeting by filling in the name of the person voting for you in the blank space provided on the form of proxy or the voting instruction form. If you appoint someone else, he or she must attend the Meeting to vote your Common Shares, otherwise your vote will not be taken into account.
Registered Shareholders who wish to appoint a third-party Proxyholder to represent them at the Meeting, and non-registered Shareholders who wish to appoint themselves as Proxyholder, MUST follow the instructions described below under "How to Vote – Registered Shareholders – By Proxy"; or "How to Vote – Non-Registered Shareholders—By Proxy", as applicable, to register that Proxyholder with TSX Trust Company.
If you are a non-registered Shareholder and wish to attend and vote online at the meeting, you MUST insert your own name in the space provided on the voting instruction form sent to you by your intermediary, follow all of the applicable instructions provided by your intermediary AND register yourself as your Proxyholder, as described below. By doing so, you are instructing your intermediary to appoint you as Proxyholder. It is important that you comply with the signature and return instructions provided by your intermediary.
If you are a non-registered Shareholder located in the United States and wish to vote at the meeting or, if permitted, appoint a third-party as your Proxyholder, you must obtain a valid legal proxy from your intermediary. Follow the instructions from your intermediary included with the legal proxy and the voting information form sent to you, or contact your intermediary to request a legal proxy if you have not received one. After obtaining a valid legal proxy from your intermediary, you must then submit such legal proxy to TSX Trust Company. Requests for registration from non-registered Shareholders located in the United States that wish to vote at the meeting or, if permitted, appoint a third-party as their proxyholder must be sent by courier to: TSX Trust Company, Attention: Proxy Department, P.O. Box 721, Agincourt, Ontario M1S 0A1 and must be labeled "Legal Proxy" and received not later than the voting deadline of 11:00 a.m. (Eastern Time) on May 4, 2022 or, if the Meeting is postponed or adjourned, by no later than 48 hours prior to the time of such postponed or adjourned meeting (excluding Saturdays, Sundays, and holidays).
How to Vote – Registered Shareholders
You are a registered Shareholder if your name appears on your share certificate or a DRS statement.
If you are not sure whether you are a registered Shareholder, please contact the Company’s transfer agent, TSX Trust Company, at 1-800-387-0825 (toll free in Canada and the United States) or 416-682-3860 (other countries).
By Proxy
By Mail
Complete your form of proxy and return it in the business reply envelope we have provided you or by delivery to TSX Trust Company’s office at P.O Box 721 Agincourt, ON M1S 0A1 for receipt no later than 11:00 a.m. (Eastern Time) on May 4, 2022, or by delivery to the Corporate Secretary at the Company’s registered office, 921, chemin de la Rivière-du-Nord, Saint-Jerome, Québec J7Y 5G2, prior to commencement of the Meeting on the day of the Meeting or on the day of any adjournment or postponement thereof.
You can appoint a person other than the Named Proxyholders as your Proxyholder. This person does not have to be a Shareholder. Enter the name of the person you are appointing in the blank space provided on the form of proxy. Make sure that the person you appoint as your Proxyholder is aware that he or she has been appointed and attends the Meeting online, otherwise your vote will not be taken into account.
If you are a registered Shareholder and wish to appoint a third party as your Proxyholder, you MUST submit your form of proxy, appointing that Proxyholder AND register that Proxyholder with TSX Trust Company by calling 1-866-751-6315 (toll free in Canada and the United States) or
11212-235-5754 (other countries), or complete the online form at https://www.tsxtrust.com/control-number-request, by no later than 11:00 a.m. (Eastern Time) on May 4, 2022, or, if the Meeting is postponed or adjourned, by no later than 48 hours prior to the time of such postponed or adjourned meeting (excluding Saturdays, Sundays, and holidays), so that TSX Trust Company may provide such Proxyholder with a 13-digit proxyholder control number via email. Such 13-digit proxyholder control number will differ from the control number set forth on your form of proxy. Registering your Proxyholder is an additional step to be completed AFTER you have submitted your form of proxy so that TSX Trust Company may provide your Proxyholder with a control number via email. Failure to register the Proxyholder will result in the Proxyholder not receiving a control number that will act as their online sign-in credentials and is required for them to vote or ask questions at the meeting and, consequently, would result in your Proxyholder only being able to attend the meeting online as a guest. See “How to Attend the Meeting” for additional information on how to login to the Meeting.
You may choose to direct how your Proxyholder shall vote on matters that may come before the Meeting or any adjournment or postponement thereof. Unless you instruct otherwise your Proxyholder will have full authority to attend, vote, and otherwise act in respect of all matters that may come before the Meeting or any adjournment or postponement thereof, even if these matters are not set out in the form of proxy or the Circular. You can also change your Proxyholder online at www.tsxtrust.com/vote-proxy. Please refer to the section of this Circular "Completing the Form of Proxy" on page 15 for further details.
By the Internet
Go to the website www.tsxtrust.com/vote-proxy and follow the instructions on the screen. Your voting instructions are then conveyed electronically over the Internet.
You will need your 13-digit control number. You will find this number on your form of proxy.
If you return your proxy via the Internet, you can appoint a person other than the Named Proxyholders as your Proxyholder. This person does not have to be a Shareholder. Go to www.tsxtrust.com/vote-proxy and enter the name of the person you are appointing in the space provided on the website. Make sure that the person you appoint as your Proxyholder is aware that he or she has been appointed and attends the Meeting online, otherwise your vote will not be taken into account.
If you are a registered Shareholder and wish to appoint a third party as your Proxyholder, you MUST go to www.tsxtrust.com/vote-proxy and appoint that Proxyholder AND register that Proxyholder with TSX Trust Company by calling 1-866-751-6315 (toll free in Canada and the United States) or 212-235-5754 (other countries), or complete the online form at https://www.tsxtrust.com/control-number-request, by no later than 11:00 a.m. (Eastern Time) on May 4, 2022, or, if the Meeting is postponed or adjourned, by no later than 48 hours prior to the time of such postponed or adjourned meeting (excluding Saturdays, Sundays, and holidays), so that TSX Trust Company may provide such proxyholder with a 13-digit proxyholder control number via email. Such 13-digit proxyholder control number will differ from the control number set forth on your form of proxy. Registering your Proxyholder is an additional step to be completed AFTER you have submitted your form of proxy so that TSX Trust Company may provide your Proxyholder with a control number via email. Failure to register the Proxyholder will result in the Proxyholder not receiving a control number that will act as their online sign-in credentials and is required for them to vote or ask questions at the meeting and, consequently, would result in your Proxyholder only being able to attend the meeting online as a guest. See “How to Attend the Meeting” for additional information on how to login to the Meeting.
You may choose to direct how your Proxyholder shall vote on matters that may come before the Meeting or any adjournment or postponement thereof. Unless you instruct otherwise your Proxyholder will have full authority to attend, vote, and otherwise act in respect of all matters that may come before the Meeting or any adjournment or postponement thereof, even if these matters are not set out in the proxy form or the Circular. You can also change your Proxyholder online at www.tsxtrust.com/vote-proxy.
The cut-off time for voting over the Internet is 11:00 a.m. (Eastern Time) on May 4, 2022.
By Telephone
Voting by proxy using the telephone is only available to Shareholders located in Canada or the United States.
12Call 1-888-489-7352 (toll-free in Canada and the United States) from a touchtone telephone and follow the instructions. Your voting instructions are then conveyed by using touchtone selections over the telephone.
You will need your 13-digit control number. You will find this number on your form of proxy.
If you choose to convey your instructions by telephone, you cannot appoint as your Proxyholder any person other than the Named Proxyholders.
The cut-off time for voting over the telephone is 11:00 a.m. (Eastern Time) on May 4, 2022.
At the Virtual Meeting
The Meeting will be a virtual meeting conducted via live webcast. You do not need to complete or return your form of proxy to vote at the Meeting. Simply login to the Meeting and complete a ballot online during the Meeting. Registered Shareholders can access the Meeting by visiting https://web.lumiagm.com/442208210. You will need your 13-digit control number found on your form of proxy. If you plan to vote at the Meeting, it is important that you are connected to the Internet at all times during the Meeting in order to vote when balloting commences. It is your responsibility to ensure Internet connectivity for the duration of the Meeting. You should allow ample time to log in to the Meeting online and complete the check-in procedures.
How to Vote – Non-Registered Shareholders
You are a non-registered Shareholder if your Common Shares are held in the name of a depositary or a nominee such as a trustee, financial institution, or securities broker (a "Nominee"). If you are not sure whether you are a non-registered Shareholder, please contact your Nominee, person servicing your account or other intermediary.
If you are not sure whether you are a non-registered Shareholder, please contact the Company’s transfer agent, TSX Trust Company, at 1-800-387-0825 (toll free in Canada and the United States) or 416-682-3860 (other countries).
By Proxy
Your Nominee is required to ask for your voting instructions before the Meeting. In most cases, non-registered Shareholders will receive a voting instruction form which allows them to provide their voting instructions by mail, the Internet or by telephone. Please contact your Nominee if you did not receive a request for voting instructions with your Notice-and-Access Letter.
By Mail
You may vote your Common Shares by completing the voting instruction form as directed on the form and returning it in the business reply envelope provided for receipt no later than 11:00 a.m. (Eastern Time) on May 4, 2022. If you return your voting instruction form by mail, you can appoint yourself or a person other than the Named Proxyholders as your Proxyholder. This person does not have to be a Shareholder. Make sure that the person you appoint as your Proxyholder is aware that he or she has been appointed and attends the Meeting online, otherwise your vote will not be taken into account.
If you are a non-registered Shareholder and wish to appoint yourself or a person other than the Named Proxyholders as your Proxyholder, you MUST submit your voting instruction form, appointing that Proxyholder by the voting deadline AND register that Proxyholder with TSX Trust Company by calling 1-800-387-0825 (toll free in Canada and the United States) or 416-682-3860 (other countries), or complete the online form at https://www.tsxtrust.com/control-number-request, by no later than 11:00 a.m. (Eastern Time) on May 4, 2022, or, if the Meeting is postponed or adjourned, by no later than 48 hours prior to the time of such postponed or adjourned meeting (excluding Saturdays, Sundays, and holidays), so that TSX Trust Company may provide such Proxyholder with a 13-digit proxyholder control number via email. Registering your Proxyholder is an additional step to be completed AFTER you have submitted your form of proxy so that TSX Trust Company may provide your Proxyholder with a control number via email. Failure to register the Proxyholder will result in the Proxyholder not receiving a control number that will act as their online sign-in credentials and is required for them to vote or ask questions at the meeting and, consequently, would result in your Proxyholder only being able to attend
13the meeting online as a guest. See "How to Attend the Meeting" for additional information on how to login to the Meeting.
You may choose to direct how your Proxyholder shall vote on matters that may come before the Meeting or any adjournment or postponement thereof. Unless you instruct otherwise, your Proxyholder will have full authority to attend, vote, and otherwise act in respect of all matters that may come before the Meeting or any adjournment or postponement thereof, even if these matters are not set out in the voting instruction form or the Circular. You can also change your Proxyholder online at www.proxyvote.com.
By the Internet
Go to the website at www.proxyvote.com and follow the instructions on the screen. Your voting instructions are then conveyed electronically over the Internet.
You will need the 16-digit control number found on your voting instruction form.
If you vote online, you can appoint yourself or a person other than the Named Proxyholders indicated on the voting instruction form as your Proxyholder. This person does not have to be a Shareholder. To do so, go to www.proxyvote.com and enter your name or the name of the person you are appointing in the space provided on the website. Make sure that the person you appoint as your Proxyholder is aware that he or she has been appointed and attends the Meeting online, otherwise your vote will not be taken into account.
If you are a non-registered Shareholder and wish to appoint yourself or a person other than the Named Proxyholders as your Proxyholder, you MUST submit your voting instruction form, appointing that Proxyholder by the voting deadline AND register that Proxyholder with TSX Trust Company by calling 1-866-751-6315 (toll free in Canada and the United States) or 212-235-5754 (other countries), or complete the online form at https://www.tsxtrust.com/control-number-request, by no later than 11:00 a.m. (Eastern Time) on May 4, 2022, or, if the Meeting is postponed or adjourned, by no later than 48 hours prior to the time of such postponed or adjourned meeting (excluding Saturdays, Sundays, and holidays), so that TSX Trust Company may provide such Proxyholder with a 13-digit proxyholder control number via email. Registering your Proxyholder is an additional step to be completed AFTER you have submitted your form of proxy so that TSX Trust Company may provide your Proxyholder with a control number via email. Failure to register the Proxyholder will result in the Proxyholder not receiving a control number that will act as their online sign-in credentials and is required for them to vote or ask questions at the meeting and, consequently, would result in your Proxyholder only being able to attend the meeting online as a guest. See "How to Attend the Meeting" for additional information on how to login to the Meeting.
You may choose to direct how your Proxyholder shall vote on matters that may come before the Meeting or any adjournment or postponement thereof. Unless you instruct otherwise your Proxyholder will have full authority to attend, vote, and otherwise act in respect of all matters that may come before the Meeting or any adjournment or postponement thereof, even if these matters are not set out in the voting instruction form or the Circular. You can also change your Proxyholder online at www.proxyvote.com.
The cut-off time for voting over the Internet is 11:00 a.m. (Eastern Time) on May 4, 2022.
By Telephone
Voting by proxy using the telephone is only available to Shareholders located in Canada or the United States.
Call 1-800-474-7493 or 1-800-474-7501 (toll-free in Canada in English or French, respectively) from a touchtone telephone and follow the instructions. Your voting instructions are then conveyed by using touchtone selections over the telephone.
You will need the 16-digit control number found on your voting instruction form.
If you choose to convey your instructions by telephone, you cannot appoint as your Proxyholder any person other than the Named Proxyholders.
The cut-off time for voting over the telephone is 11:00 a.m. (Eastern Time) on May 4, 2022.
14At the Virtual Meeting
You can vote your Common Shares at the Meeting if you have instructed your Nominee to appoint you as Proxyholder. To do this, write your name in the blank space provided on the voting instruction form and otherwise follow the instructions of your Nominee.
If you do not duly appoint yourself as Proxyholder, then you will not be able to ask questions or vote at the Meeting, but will be able to attend the Meeting online as a guest. This is because the Company and its transfer agent, TSX Trust Company, do not have a record of the non-registered Shareholders, and, as a result, will have no knowledge of your shareholdings or entitlement to vote unless you appoint yourself as Proxyholder. Guests will be able to listen to the Meeting, but will not be able to vote or ask questions at the Meeting. TSX Trust Company will provide you with a 13-digit proxyholder control number by email after the proxy voting deadline has passed, provided you have been duly appointed and registered with TSX Trust Company. This control number is your username for purposes of logging in to the meeting. See "Attending the Virtual Only Meeting" for additional information on how to login to the meeting and "How to Vote – Non-Registered Shareholders – By Proxy" for additional information on appointing yourself as Proxyholder and registering with TSX Trust Company.
If you plan to vote at the Meeting, it is important that you are connected to the Internet at all times during the Meeting in order to vote when balloting commences. It is your responsibility to ensure Internet connectivity for the duration of the Meeting. You should allow ample time to log in to the Meeting online and complete the check-in procedures.
Completing the Form of Proxy
You can choose to vote "FOR" or "WITHHOLD" with respect to the election of each of the proposed nominee directors, namely, Sheila C. Bair, Marc Bedard, Pierre Larochelle, Ann L. Payne, Pierre-Olivier Perras, Michel Ringuet, Lorenzo Roccia and Pierre Wilkie (the "Nominee Directors"), and the appointment of the independent auditor. If you are a non-registered Shareholder voting your Common Shares, please follow the instructions provided in the voting instruction form.
When you submit the form of proxy or voting instruction form, as applicable, without appointing an alternate Proxyholder, you authorize the Named Proxyholders to vote your Common Shares for you at the Meeting in accordance with your instructions.
If you have NOT specified how to vote on a particular matter, your Proxyholder is entitled to vote your Common Shares as they see fit. Please note that if you return your proxy without specifying how you want to vote your Common Shares and if you have authorized the Named Proxyholders as your Proxyholder, the Named Proxyholders will vote your Common Shares FOR electing the director nominees who are named in this circular, and FOR appointing Raymond Chabot Grant Thornton LLP as the independent auditor of the Company and as they see fit on any other matter that may properly come before the Meeting.
Management is not aware of any other matters which will be presented for action at the Meeting. If, however, other matters properly come before the Meeting, the Named Proxyholders will vote in accordance with their judgment, pursuant to the discretionary authority conferred by the proxy with respect to such other matters.
You have the right to appoint a person or company other than the Named Proxyholders to be your Proxyholder. If you are appointing someone else to vote your Common Shares for you at the Meeting, fill in the name of the person voting for you in the blank space provided on the form of proxy or voting instruction form (as applicable). If you do not specify how you want your Common Shares voted, your Proxyholder will vote your Common Shares as he or she sees fit on each item scheduled to come before the meeting and on any other matter that may properly come before the Meeting.
A Proxyholder has the same rights as the Shareholder by whom he or she was appointed to participate at the Meeting in respect of any matter, to vote by way of ballot at the Meeting and, except where the Proxyholder has conflicting instructions from more than one Shareholder, to vote at the Meeting in respect of any matter.
15If you are an individual Shareholder, you or your authorized attorney must sign the form of proxy or voting instruction form. If you are a corporation or other legal entity, an authorized officer or attorney must sign the form of proxy or voting instruction form.
Changing Your Vote
In addition to revocation in any other manner permitted by law, a Shareholder giving a proxy and submitting it by mail may revoke it by an instrument in writing executed by the Shareholder or the Shareholder’s authorized attorney and deposited either at TSX Trust Company’s office located at 1 Toronto Street, Suite 1200, Toronto, ON M5C 2V6 or at the Company’s registered office, 921, chemin de la Rivière-du-Nord, Saint-Jerome, Québec J7Y 5G2, to the attention of the Corporate Secretary at any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof, at which the proxy is to be used.
If the voting instructions were conveyed online, by telephone or by mail, conveying new voting instructions online, by telephone or by mail prior to the applicable cut-off times will revoke the prior instructions. If you are a registered Shareholder, voting at the Meeting will automatically cancel any proxy you completed and submitted earlier.
Voting Requirements
Each Common Share owned as at the close of business on the Record Date entitles the holder to one vote on any and all resolutions voted on at the Meeting. This includes the election of directors, the appointment of the independent auditor of the Company and any other ordinary business that may arise at the Meeting. All matters that are scheduled to be voted upon at the Meeting are ordinary resolutions. Ordinary resolutions are passed by a simple majority, meaning that if more than half of the votes that are cast at the Meeting are in favour, then the resolution passes. Shareholders may oppose any matter proposed at the Meeting by either withholding their vote from, or voting their Common Shares against, any resolution at the Meeting, depending on the specific resolution. If there is a tie, the chairman of the meeting is not entitled to a second or casting vote. TSX Trust Company will count and tabulate the votes.
For details regarding the Company’s majority voting policy with respect to the election of directors, see "Disclosure of Corporate Governance Practices - Majority Voting Policy".
Submitting Questions at the Meeting
If a registered Shareholder or duly appointed Proxyholder (including a non-registered Shareholder who has duly appointed himself or herself as Proxyholder) has a question about one of the items to be voted on by the Shareholders at the Meeting, such question may be submitted in the field provided in the web portal https://web.lumiagm.com/442208210 at or before the time the matters are presented before the Meeting for consideration. Questions will be answered on any items to be voted on by the Shareholders at the Meeting before the voting is closed.
Only registered Shareholders and duly appointed Proxyholders (including non-registered Shareholders who have duly appointed themselves as Proxyholder) may submit questions at the Meeting, that are germane to the proposals and/or the Meeting. Guests will not be able to submit questions, vote or otherwise participate at the Meeting; however, they will be able to join the webcast as a guest. Shareholders voting by proxy in advance of the Meeting are welcome to join the Meeting as guests.
The Chair of the Meeting reserves the right to edit questions or to reject questions he deems inappropriate in accordance with the rules of conduct and procedures of the Meeting which are available at http://ir.thelionelectric.com/English/events-and-presentations/AGM and on the web platform https://web.lumiagm.com/442208210. To ensure the Meeting is conducted in a manner that is fair to all Shareholders, the Chair of the Meeting may exercise broad discretion with respect to, for example, the order in which questions are asked and the amount of time devoted to any one question. The Chair of the Meeting may also limit the number of questions per Shareholder in order to ensure that as many Shareholders as possible will have the opportunity to ask questions.
In the event of technical malfunction or other significant problem that disrupts the Meeting, the Chair of the Meeting may adjourn, recess, or expedite the Meeting, or take such other action that the Chair determines is appropriate considering the circumstances.
16For further information, please consult the rules of conduct and procedures available on the Company’s website at http://ir.thelionelectric.com/English/events-and-presentations/AGM.
17Voting Shares Outstanding and Quorum
The Company’s authorized share capital consists of an unlimited number of Common Shares and unlimited number of preferred shares, issuable in series. As of March 25, 2022, there were 190,002,712 Common Shares issued and outstanding, and no preferred shares were issued and outstanding. Under the Company’s articles, each Common Shares carries the right to one (1) vote.
A quorum is present at the Meeting if, at the opening of the meeting, two persons representing at least twenty-five per cent (25%) of the shares that carry the right to vote at the Meeting are present in person or represented by proxy at the Meeting.
Principal Shareholders
The following table discloses the names of the persons or companies who, to the knowledge of the Company, as of March 25, 2022 beneficially owned, or controlled or directed, directly or indirectly, more than 10% of any class or series of the voting securities of the Company:
| NAME OF SHAREHOLDER | COMMON SHARES CURRENTLY BENEFICIALLY OWNED, CONTROLLED OR DIRECTED | PERCENTAGE OF OUTSTANDING SHARES(1) | ||||||
| Power Energy Corporation................... | 67,301,166(2) | 35.4% | ||||||
9368-2672 Quebec Inc. ..……………... | 26,458,653(3) | 13.9% | ||||||
_________________
(1) Figures represent ownership percentage on a non-diluted basis.
(2) Power Energy Corporation is a wholly-owned subsidiary of Power Sustainable Capital Inc., which in turn is a wholly-owned subsidiary of Power Corporation of Canada, in which a controlling voting interest is held by the Desmarais Family Residuary Trust.
(3) Marc Bedard, CEO—Founder of Lion, has control over, directly and indirectly, a majority of the voting shares of 9368-2672 Québec Inc. Marc Bedard also holds options entitling him to purchase 2,956,375 Common Shares of which 2,798,907 Common Shares could be acquired through the exercise of options exercisable within 60 days of the Record Date.
18BUSINESS OF THE MEETING
Shareholders will be asked to consider and vote on the following matters at the Meeting:
(1) to elect the eight (8) directors named in the Circular who will serve until the next annual meeting of shareholders or until their successors are elected or appointed;
(2) to appoint the independent auditor of the Company and authorizing the directors to fix its remuneration; and
(3) to transact such other business as may properly be brought before the Meeting or any postponement or adjournment thereof.
The audited annual consolidated financial statements of the Company for Fiscal 2021, together with the auditor's report thereon, will be submitted at the Meeting, but no vote thereon is required or expected. These audited annual consolidated financial statements, together with the related management’s discussion and analysis, are available under the Company's profiles on SEDAR at www.sedar.com and on EDGAR at www.sec.gov and on the Company's website at ir.thelionelectric.com.
Election of Directors
The Company’s articles provide that its board of directors (the "Board of Directors" or "Lion’s Board") shall consist of not less than three (3) and not more than twenty (20) directors. The Company’s directors are elected annually at the annual meeting of shareholders and each director is expected to hold office until the next annual meeting of shareholders or until his or her successor is elected or appointed. Under the Business Corporations Act (Québec), between annual general meetings of Lion’s shareholders, the directors may appoint one or more additional directors, but the number of additional directors may not at any time exceed one third of the number of directors elected at the previous annual meeting of shareholders.
The Board of Directors is currently comprised of seven (7) directors: Sheila C. Bair, Marc Bedard, Pierre Larochelle, Pierre-Olivier Perras, Michel Ringuet, Lorenzo Roccia and Pierre Wilkie. The eight (8) persons identified in the section entitled "Description of Proposed Director Nominees" will be nominated for election as directors at the Meeting. All such persons are presently directors of the Company, except for Ann L. Payne, who will stand for election for the first time at the Meeting. Shareholders may vote for each proposed director nominee individually.
The Board of Directors adopted a majority voting policy providing that in “uncontested election” of directors, any nominee who receives a greater number of votes “withheld” than votes “for” his or her election will promptly tender his or her resignation to the Chairman of the Board of Directors for consideration. Following receipt of a resignation submitted pursuant to this policy, the Nominating and Corporate Governance Committee of the Company shall consider such resignation, and recommend to the Board of Directors whether or not to accept it. Absent exceptional circumstances that would warrant the director to continue to serve on the Board of Directors, the Board of Directors will accept the resignation. A press release disclosing the Board of Directors’ determination (and the reasons for rejecting the resignation, if applicable) shall be issued within 90 days following the date of the meeting of shareholders. A copy of such press release shall be sent concurrently to the TSX and the NYSE. The resignation will become effective when accepted by the Board of Directors. For details regarding the Company’s majority voting policy with respect to the election of directors, see “Disclosure of Corporate Governance Practices - Majority Voting Policy”.
Pursuant to the nomination rights agreement (the "Nomination Rights Agreement") entered into on May 6, 2021 between the Company, Power Energy Corporation ("Power Energy") and 9368-2672 Québec Inc. ("9368-2672"), each of Power Energy and 9368-2672 will, for so long as it and its affiliates collectively hold at least 20% of the outstanding Common Shares (on a non-diluted basis), be entitled to designate a number of director nominees equal to the product of (rounding to the nearest whole number) (i) the percentage of the outstanding Common Shares held by it (on a non-diluted basis) multiplied by (ii) the size of Lion’s Board. In addition, 9368-2672 will, for so long as it and its affiliates collectively hold at least 5% of the outstanding Common Shares (on a non-diluted basis), be entitled to designate (i) for so long as Marc Bedard serves as chief executive officer of Lion, one director nominee (in addition to Marc Bedard, who will be appointed to Lion’s Board for so long as he serves as chief executive officer thereof) and (ii) at any other time, Marc Bedard as a director nominee. As of the date
19hereof, Power Energy has appointed Pierre Larochelle and Pierre-Olivier Perras in reliance of such nomination rights and 9368-2672 has appointed Marc Bedard in reliance of such nomination rights. See "Disclosure of Corporate Governance Practices – Nomination Rights Agreement".
Unless a proxy specifies that the Common Shares it represents should be withheld from voting in respect of the election of one or more directors or voted in accordance with the specification in the proxy, the Named Proxyholders intend to vote FOR the election of each of the nominees listed in this Circular.
Management of the Company does not expect that any of the nominees will be unable, or for any reason, will become unwilling, to stand for election as director at the Meeting. However, if, for any reason, at or before the time of the Meeting, any of the nominees becomes unable to serve and unless otherwise specified, it is intended that the persons designated in the form of proxy will vote in their discretion for a substitute nominee or nominees.
20Description of Proposed Nominee Directors
| PIERRE LAROCHELLE | Director and Chairman of the Board | ||||||||||||||||||||||||||||||||||||||||
 Age: 50Québec, Canada Not independent(1) Director since 2017 | Pierre Larochelle has served as a member of Lion’s Board since October 2017 where he also serves as Chairman of Lion’s Board. Mr. Larochelle has been an investor and financial advisor for the last 25 years. Since 2022, he is Co-Managing Partner at Idealist Capital. Previously, Mr. Larochelle was President and CEO of Power Energy, a subsidiary of Power Corporation of Canada and Partner, Co-Head of Energy Infrastructure at Power Sustainable Capital Inc., the parent company of Power Energy and a wholly-owned subsidiary of Power Corporation of Canada. Prior to joining Power Corporation of Canada, Mr. Larochelle was President and Chief Executive Officer at Adaltis Inc., a position he held between November 2003 and February 2009. Previously, he also held the positions of Vice-President, Business Development at Picchio Pharma Inc. and Vice-President, Mergers and Acquisitions for Credit Suisse First Boston in London, England. Mr. Larochelle started his career as a lawyer, at the Montréal offices of Ogilvy Renault. Mr. Larochelle also serves on the board of directors of Bellus Health Inc. Mr. Larochelle holds a law degree from Université de Montréal, a masters degree in international business law from McGill University and an MBA degree from INSEAD in Fontainebleau, France. | ||||||||||||||||||||||||||||||||||||||||
| Board/Committee Membership | Attendance | Other Public Board Membership | |||||||||||||||||||||||||||||||||||||||
| Board of Directors | 10/10 | Entity Since | |||||||||||||||||||||||||||||||||||||||
| Bellus Health 2009 | |||||||||||||||||||||||||||||||||||||||||
Total: 100% | |||||||||||||||||||||||||||||||||||||||||
Value of Total Compensation Received as Director(2) | |||||||||||||||||||||||||||||||||||||||||
| Fiscal 2021: | $74,168 | ||||||||||||||||||||||||||||||||||||||||
Securities Held as of December 31, 2021 | |||||||||||||||||||||||||||||||||||||||||
| Common Shares (#) | Market Value of Common Shares ($) | Options (#) | Value of Unexercised In-the-Money Options ($) | Deferred Share Units (#) | Market Value of Deferred Share Units(3) ($) | Total Market Value of Securities Held(3) ($) | |||||||||||||||||||||||||||||||||||
| - | - | - | - | 5,186 | 51,549 | 51,549 | |||||||||||||||||||||||||||||||||||
| Notes | |||||||||||||||||||||||||||||||||||||||||
| (1) | Mr. Pierre Larochelle is not considered independent as that term is defined under NYSE Listing Rules and NI 58-101. See "Disclosure of Corporate Governance Practices — Board of Directors — Independence". | ||||||||||||||||||||||||||||||||||||||||
| (2) | For a complete itemization of the compensation, see "Compensation of Directors". | ||||||||||||||||||||||||||||||||||||||||
| (3) | Based on the closing price of the Common Shares on the NYSE (US$9.94) on December 31, 2021. | ||||||||||||||||||||||||||||||||||||||||
21
Age: 58 22| SHEILA C. BAIR | Director | |||||||||||||||||||||||||||||||||||||
 Age: 67Maryland, U.S.A. Independent Director since 2020 | Sheila C. Bair has served as a member of Lion’s Board since September 2020. She is the chairperson of the Nominating and Corporate Governance Committee and is a member of the Audit Committee. Ms. Bair is a corporate director. Ms. Bair was President of Washington College from August 2015 to June 2017. Prior to that, she was Senior Advisor to The Pew Charitable Trusts for four years. Ms. Bair was also Senior Advisor to DLA Piper, an international law firm. Ms. Bair was the Chair of the Federal Deposit Insurance Corporation from June 2006 to July 2011. From 2002 to 2006, she was the Dean’s Professor of Financial Regulatory Policy for the Isenberg School of Management at the University of Massachusetts-Amherst. She also served as Assistant Secretary for Financial Institutions at the U.S. Department of the Treasury from 2001 to 2002, Senior Vice President for Government Relations of the New York Stock Exchange from 1995 to 2000, Commissioner of the Commodity Futures Trading Commission from 1991 to 1995, and as counsel to Kansas Republican Senate Majority Leader Bob Dole from 1981 to 1988. Ms. Bair also serves on the boards of directors of Bunge Limited, where she serves as deputy chair and chair of the corporate governance and nominations committee, and Fannie Mae, where she serves as the board chairwomen and on the community responsibility and sustainability committee. Ms. Bair previously served on the boards of directors of Thomson Reuters Corporation, where she served as chair of the risk committee, and on the audit committee, and Host Hotels & Resorts, Inc., where she served on the audit and nominating and corporate governance committees. Ms. Bair holds a bachelor’s degree and law degree from the University of Kansas. She is a frequent commentator and op-ed contributor on financial regulation and the student debt crisis, as well as author of the NY Times Best Seller Bull by the Horns, her 2012 memoir of the financial crisis. She is also author of Albert Whitman’s Money Tales series for young people. | |||||||||||||||||||||||||||||||||||||
| Board/Committee Membership | Attendance | Other Public Board Membership | ||||||||||||||||||||||||||||||||||||
| Board of Directors | 10/10 | Entity Since | ||||||||||||||||||||||||||||||||||||
| Audit Committee | 3/3 | Bunge Limited 2019 | ||||||||||||||||||||||||||||||||||||
| Fannie Mae 2019 | ||||||||||||||||||||||||||||||||||||||
| Nominating and Corporate Governance Committee | 2/2 | |||||||||||||||||||||||||||||||||||||
Total: 100% | ||||||||||||||||||||||||||||||||||||||
Value of Total Compensation Received as Director(1) | ||||||||||||||||||||||||||||||||||||||
| Fiscal 2021: | $105,530 | |||||||||||||||||||||||||||||||||||||
Securities Held as of December 31, 2021 | ||||||||||||||||||||||||||||||||||||||
| Common Shares (#) | Market Value of Common Shares ($) | Options (#) | Value of Unexercised In-the-Money Options(2) ($) | Deferred Share Units (#) | Market Value of Deferred Share Units(2) ($) | Total Market Value of Securities Held(2) ($) | ||||||||||||||||||||||||||||||||
| - | - | 41,289 | 176,717 | 1,926 | 19,144 | 195,861 | ||||||||||||||||||||||||||||||||
| Notes | ||||||||||||||||||||||||||||||||||||||
| (1) | For a complete itemization of the compensation, see "Compensation of Directors". | |||||||||||||||||||||||||||||||||||||
| (2) | Based on the closing price of the Common Shares on the NYSE (US$9.94) on December 31, 2021. | |||||||||||||||||||||||||||||||||||||
23
Age: 62 24| PIERRE-OLIVIER PERRAS | Director | |||||||||||||||||||||||||||||||||||||||||||
 Age: 53Québec, Canada Not independent(1) Director since 2021 | Pierre-Olivier Perras has served as a member of Lion’s Board since January 2021. Since 2019, Mr. Perras serves as President of Power Energy and, since 2020, Mr. Perras serves as Partner, Co-Head of Energy Infrastructure at Power Sustainable Capital Inc. Prior to joining Power Energy, Mr. Perras worked at BMO Capital Markets, for over two decades, where he held various leadership positions in the Investment and Corporate Banking Group, in his last role he was Head of the Power, Utilities and Infrastructure Group, leading an international team across North America and Europe. Prior to joining BMO Capital Markets, Mr. Perras was a senior consultant analyst with an actuarial consultant. As part of his role at Power Energy, Mr. Perras also serves as Chairman of the board of directors of Nautilus Solar Energy and sits on the boards of Lumenpulse Inc. and Potentia Renewables Inc. Mr. Perras holds a Master of Business Administration degree from McGill University and a Bachelor of Science in Actuarial Sciences from Laval University. He is a Chartered Financial Analyst (CFA). | |||||||||||||||||||||||||||||||||||||||||||
| Board/Committee Membership | Attendance | Other Public Board Membership | ||||||||||||||||||||||||||||||||||||||||||
| Board of Directors | 10/10 | None | ||||||||||||||||||||||||||||||||||||||||||
| Human Resources and Compensation Committee | 3/3 | |||||||||||||||||||||||||||||||||||||||||||
| Nominating and Corporate Governance Committee | 2/2 | |||||||||||||||||||||||||||||||||||||||||||
Total: 100% | ||||||||||||||||||||||||||||||||||||||||||||
Value of Total Compensation Received as Director(2) | ||||||||||||||||||||||||||||||||||||||||||||
| Fiscal 2021: | $54,082 | |||||||||||||||||||||||||||||||||||||||||||
Securities Held as of December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||
| Common Shares (#) | Market Value of Common Shares ($) | Options (#) | Value of Unexercised In-the-Money Options ($) | Deferred Share Units (#) | Market Value of Deferred Share Units(3) ($) | Total Market Value of Securities Held(3) ($) | ||||||||||||||||||||||||||||||||||||||
- | - | - | - | 1,891 | 18,797 | 18,797 | ||||||||||||||||||||||||||||||||||||||
| Notes | ||||||||||||||||||||||||||||||||||||||||||||
| (1) | Mr. Perras is not considered independent as that term is defined under the NYSE Listing Rules and NI 58-101. See "Disclosure of Corporate Governance Practices — Board of Directors — Independence". | |||||||||||||||||||||||||||||||||||||||||||
| (2) | For a complete itemization of the compensation, see "Compensation of Directors". | |||||||||||||||||||||||||||||||||||||||||||
| (3) | Based on the closing price of the Common Shares on the NYSE (US$9.94) on December 31, 2021. | |||||||||||||||||||||||||||||||||||||||||||
25| MICHEL RINGUET | Lead Director | |||||||||||||||||||||||||||||||||||||||||||
 Age: 63Québec, Canada Independent Director since 2017 | Michel Ringuet has served as a member of Lion’s Board since October 2017 and is, since May 2021, the Lead Director of the Board. From 2006 to 2016, Mr. Ringuet served as Chief Executive Officer of Master Group Inc., a leader in the distribution of HVAC/R equipment in eastern Canada, where he also served from 1990 to 2006 as Vice-President Finance and Administration. Prior to joining the Master Group, Mr. Ringuet worked in various finance and investment departments at the National Bank of Canada and Bank of Montréal. Mr. Ringuet sits on the board of Lumenpulse Inc., where he previously served on the audit committee while the company was listed on the TSX. Mr. Ringuet holds a bachelor’s degree in administration from Université Laval and an MBA from McGill University. | |||||||||||||||||||||||||||||||||||||||||||
Board/Committee Membership(1) | Attendance | Other Public Board Membership | ||||||||||||||||||||||||||||||||||||||||||
| Board of Directors | 10/10 | None | ||||||||||||||||||||||||||||||||||||||||||
Audit Committee | 3/3 | |||||||||||||||||||||||||||||||||||||||||||
Total: 100% | ||||||||||||||||||||||||||||||||||||||||||||
Value of Total Compensation Received as Director(2) | ||||||||||||||||||||||||||||||||||||||||||||
| Fiscal 2021: | $58,716 | |||||||||||||||||||||||||||||||||||||||||||
Securities Held as of December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||
Common Shares (#)(3) | Market Value of Common Shares(4) ($) | Options (#) | Value of Unexercised In-the-Money Options(4) ($) | Deferred Share Units (#) | Market Value of Deferred Share Units(4) ($) | Total Market Value of Securities Held(4) ($) | ||||||||||||||||||||||||||||||||||||||
| 1,168,557 | 11,615,457 | - | - | 2,053 | 20,407 | 11,635,864 | ||||||||||||||||||||||||||||||||||||||
| Notes | ||||||||||||||||||||||||||||||||||||||||||||
(1) (2) | Mr. Ringuet was appointed to the Human Resources and Compensation Committee on February 24, 2022. For a complete itemization of the compensation, see "Compensation of Directors". | |||||||||||||||||||||||||||||||||||||||||||
| (3) | Michel Ringuet does not personally own any Common Shares. The Common Shares reported herein are directly owned by Capital Mimar Inc. Mr. Ringuet has control over, directly and indirectly, a majority of the voting shares of Capital Mimar Inc. | |||||||||||||||||||||||||||||||||||||||||||
| (4) | Based on the closing price of the Common Shares on the NYSE (US$9.94) on December 31, 2021. | |||||||||||||||||||||||||||||||||||||||||||
26| LORENZO ROCCIA | Director | |||||||||||||||||||||||||||||||||||||||||||
 Age: 47Milan, Italy Independent Director since 2021 | Mr. Lorenzo Roccia is Chairman of RON Transatlantic Holdings, an international financial holding company with interests in the financial services, logistics, energy and beer sectors in the United States, Latin America and Europe. Additionally, he is a Founder & Chairman of Transatlantic Power Holdings and Non Executive Director of Skyline Renewables, one of the leading independent renewable energy companies in the US with over 1GW+ of Wind and Solar assets. Mr. Roccia founded Roccia Ventures, L.P. and became a major shareholder of and Senior Analyst in the Private Equity Group at Wit Soundview - an internet and technology Investment Bank. Roccia Ventures, L.P. became one of the largest shareholders of the bank along with the Goldman Sachs Group, Draper Fisher Jurvetson and Mitsubishi Corporation. The firm was taken public and subsequently sold to the Charles Schwab Group. Mr. Roccia started his career with Salomon Smith Barney. | |||||||||||||||||||||||||||||||||||||||||||
| Board/Committee Membership | Attendance(1) | Other Public Board Membership | ||||||||||||||||||||||||||||||||||||||||||
Board of Directors Nominating and Corporate Governance Committee | 5/5 0/0 | None | ||||||||||||||||||||||||||||||||||||||||||
Total: 100% | ||||||||||||||||||||||||||||||||||||||||||||
Value of Total Compensation Received as Director(2) | ||||||||||||||||||||||||||||||||||||||||||||
| Fiscal 2021: | $54,082 | |||||||||||||||||||||||||||||||||||||||||||
Securities Held as of December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||
| Common Shares (#) | Market Value of Common Shares(3) ($) | Options (#) | Value of Unexercised In-the-Money Options ($) | Deferred Share Units (#) | Market Value of Deferred Share Units(4) ($) | Total Market Value of Securities Held(4) ($) | ||||||||||||||||||||||||||||||||||||||
100,000 | 994,000 | - | - | 1,891 | 18,797 | 1,012,797 | ||||||||||||||||||||||||||||||||||||||
| Notes | ||||||||||||||||||||||||||||||||||||||||||||
| (1) | Mr. Roccia was appointed to the Board of Directors and to the Nominating and Corporate Governance Committee on August 11, 2021 and October 26, 2021, respectively. | |||||||||||||||||||||||||||||||||||||||||||
(2) (3) | For a complete itemization of the compensation, see "Compensation of Directors". Mr. Roccia does not personally own any Common Shares. The Common Shares reported herein are directly owned by Transatlantic Mobility Holdings LLC. Mr. Roccia has control over, directly and indirectly, a majority of the voting shares of the managing member of Transatlantic Mobility Holdings. | |||||||||||||||||||||||||||||||||||||||||||
| (4) | Based on the closing price of the Common Shares on the NYSE (US$9.94) on December 31, 2021. | |||||||||||||||||||||||||||||||||||||||||||
27| PIERRE WILKIE | Director | |||||||||||||||||||||||||||||||||||||||||||
 Age: 61Québec, Canada Independent Director since 2019 | Pierre Wilkie has served as a member of Lion’s Board from 2011 to 2017 and again since May 2019. He is the chair of the Human Resources and Compensation Committee since February 2022. Mr. Wilkie is a serial entrepreneur who has founded or participated in the creation of many enterprises, including in the manufacturing industry. He is currently the co-owner of M.A.C. Métal Architectural Inc. He also serves as the President of Déco Nat Inc. Prior to that, he acted as the co-president of Laboratoire Dr Renaud Inc. Mr. Wilkie holds a bachelor’s degree in Economy and Finance from the École des Hautes Études Commerciales (HEC), Université de Montréal. | |||||||||||||||||||||||||||||||||||||||||||
| Board/Committee Membership | Attendance(1) | Other Public Board Membership | ||||||||||||||||||||||||||||||||||||||||||
| Board of Directors | 10/10 | None | ||||||||||||||||||||||||||||||||||||||||||
| Audit Committee | 1/1 | |||||||||||||||||||||||||||||||||||||||||||
Human Resources and Compensation Committee | 3/3 | |||||||||||||||||||||||||||||||||||||||||||
Total: 100% | ||||||||||||||||||||||||||||||||||||||||||||
Value of Total Compensation Received as Director(2) | ||||||||||||||||||||||||||||||||||||||||||||
| Fiscal 2021: | $54,082 | |||||||||||||||||||||||||||||||||||||||||||
Securities Held as of December 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||
| Common Shares (#) | Market Value of Common Shares ($) | Options (#) | Value of Unexercised In-the-Money Options ($) | Deferred Share Units (#) | Market Value of Deferred Share Units(3) ($) | Total Market Value of Securities Held(3) ($) | ||||||||||||||||||||||||||||||||||||||
| - | - | - | - | 3,782 | 37,593 | 37,593 | ||||||||||||||||||||||||||||||||||||||
| Notes | ||||||||||||||||||||||||||||||||||||||||||||
(1) (2) (3) | Mr. Wilkie was appointed to the Audit Committee on October 26, 2021. For a complete itemization of compensation, see "Compensation of Directors". Based on the closing price of the Common Shares on the NYSE (US$9.94) on December 31, 2021. | |||||||||||||||||||||||||||||||||||||||||||
28Cease Trade Orders
To the knowledge of the Company and based upon information provided by the proposed director nominees, none of the Company’s proposed director nominees is, as at the date of this Circular, or has been, within the 10 years prior to the date of this Circular, a director, chief executive officer or chief financial officer of any company (including the Company) that, while such person was acting in that capacity (or after such person ceased to act in that capacity but resulting from an event that occurred while that person was acting in such capacity), was the subject of a cease trade order, an order similar to a cease trade order, or an order that denied the company access to any exemption under securities legislation, in each case, for a period of more than 30 consecutive days.
Bankruptcies
To the knowledge of the Company and based upon information provided by the proposed director nominees, none of the Company’s proposed director nominees is, as at the date of this Circular, or has been, within the 10 years prior to the date of this Circular, a director or executive officer of any company (including the Company), that, while that person was acting in that capacity, or within a year of 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 comprise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets.
To the knowledge of the Company and based upon information provided by the proposed director nominees, none of the Company’s proposed director nominees has, within the 10 years prior to 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 comprise with creditors, or had a receiver, receiver manager or trustee appointed to hold his or her assets.
Securities Penalties or Sanctions
To the knowledge of the Company and based upon information provided by the proposed director nominees, none of the Company’s proposed director nominees has (i) 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 (ii) been subject to any other 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 nominee director.
29Appointment of Independent Auditor
At the Meeting, Shareholders will be asked to appoint the firm of Raymond Chabot Grant Thornton LLP to hold office as the Company’s independent auditor until the close of the next annual meeting of Shareholders.
Raymond Chabot Grant Thornton LLP has served as independent auditor of the Company since 2014 and has informed the Company that it is independent with respect to the Company within the meaning of the Code of Ethics of the Ordre des comptables professionnels agréés du Québec.
Unless a proxy specifies that the Common Shares it represents should be withheld from voting in respect of the appointment of the independent auditor or voted in accordance with the specification in the proxy, the Named Proxyholders intend to vote FOR the appointment of Raymond Chabot Grant Thornton LLP as independent auditor of the Company.
For Fiscal 2021 and the fiscal year ended December 31, 2020 ("Fiscal 2020"), the Company was billed the following fees by its independent auditor, Raymond Chabot Grant Thornton LLP:
| FISCAL 2021 | FISCAL 2020 | |||||||||||||
Audit Fees(1) | C$ 664,050 | C$ 381,270 | ||||||||||||
Audit Related Fees(2) | C$ 30,575 | C$ 221,137 | ||||||||||||
Tax Fees(3) | C$ 73,010 | C$ 86,500 | ||||||||||||
All Other Fees(4) | C$ 37,500 | - | ||||||||||||
| Total Fees Paid | C$ 805,135 | C$ 688,907 | ||||||||||||
(1) "Audit Fees" include fees necessary to perform the annual audit or reviews of the consolidated financial statements.
(2) "Audit Related Fees" include fees for assurance and related services by the independent auditor that are reasonably related to the performance of the audit or review of the Company’s financial statements other than those included in “Audit Fees”, such as advisory on accounting and reporting matters.
(3) "Tax Fees" include fees for all tax services other than those included in “Audit Fees” and “Audit-Related Fees”. This category includes fees for tax compliance, tax advice and tax planning.
(4) "Other Fees" include fees for products and services provided by the independent auditor other than those included above.
The audit committee of the Company (the "Audit Committee") is responsible for the pre-approval of all and any non-audit services to be provided to the Company or its subsidiary entities by the independent auditor. At least annually, the Audit Committee reviews and confirms the independence of the independent auditor by obtaining statements from the independent auditor on any non-audit services.
30COMPENSATION OF DIRECTORS
The director compensation program of the Company is designed to attract and retain the most qualified individuals to serve on the Board, while staying aligned with the long-term interests of the Company and Shareholders.
Before Fiscal 2021, the Company did not have a formal compensation policy with respect to service on Lion’s Board. During Fiscal 2021, the Human Resources and Compensation Committee retained the services of Willis Tower Watson to review the Company's director compensation market positioning and to assist in refining the director compensation policy going forward. On August 11, 2021, Lion’s board of directors adopted a formal director compensation policy for non-employee directors (the "Outside Directors") which became effective on that day. As a result, all directors except Mr. Marc Bedard, CEO—Founder of the Company, are entitled to director compensation as of August 11, 2021. As CEO—Founder, Mr. Marc Bedard does not receive compensation for his services as director of the Company. Mr. Bedard’s compensation serving as CEO—Founder is disclosed under the section "Executive Compensation ― Discussion and Analysis".
The written mandate of the Human Resources and Compensation Committee provides that the Compensation Committee shall periodically evaluate and make recommendations to the Board of Directors with respect to appropriate forms and amounts of compensation for Outside Directors, to ensure that it properly aligns the interests of directors with the long-term interests of the Company and Shareholders and that it realistically reflects the responsibilities and risks involved in being an effective director of the Company.
Director Compensation
Outside Directors are entitled to be paid as member of the Board of Directors, and, if applicable, as members of any committee of the Board of Directors, the following annual retainers:
| Role | Cash Retainer | Equity Retainer | Total Amount per Year | ||||||||
| Annual Retainer | |||||||||||
| Chairman of the Board | C$120,000 | C$120,000 | C$240,000 | ||||||||
| Member of the Board | C$87,500 | C$87,500 | C$175,000 | ||||||||
| Committee Chair Retainer | |||||||||||
| Chair of the Audit Committee | C$7,500 | C$7,500 | C$15,000 | ||||||||
| Chair of the Human Resources and Compensation Committee | C$6,250 | C$6,250 | C$12,500 | ||||||||
| Chair of the Nominating and Corporate Governance Committee | C$5,000 | C$5,000 | C$10,000 | ||||||||
The equity retainer is payable in the form of Deferred Stock Units ("DSUs") granted under the Company’s omnibus incentive plan (the "Omnibus Plan") adopted effective May 6, 2021. Detailed information about the Omnibus Plan can be found in the subsection entitled "Omnibus Plan" under the section "Executive Compensation ― Discussion and Analysis ― Long-Term Incentive Plans (LTIP)" of this Circular.
The director compensation policy was adopted in August 2021 on a non-retroactive basis and, as such, the director compensation policy was only in effect for a portion of the year.
31All DSUs granted to Outside Directors under the Omnibus Plan vest entirely on the date of grant and take the form of a bookkeeping entry credited to the eligible director’s account to be paid after the director ceases to act as director. In the event any dividend were to be paid on the Common Shares, outstanding DSUs would earn dividend equivalents in the form of additional DSUs at the same rate as dividends would be paid on the Common Shares. DSUs will be settled in cash and/or in Common Shares of the Company purchased on the open market or issued from treasury, at the discretion of the Board of Directors. Each Outside Director can elect to receive up to 100% of his or her annual cash retainer in the form of DSUs. The cash and equity retainers are payable bi-annually with the number of DSUs to be issued determined based on the volume-weighted average trading price on the TSX for the five trading days prior to each such issuance. For Fiscal 2021, Mr. Pierre Larochelle and Mr. Pierre Wilkie both elected to receive 100% of their annual cash retainer in the form of DSUs. Because the director compensation policy was only in effect for a portion of Fiscal 2021, there was only one grant of DSUs awarded to directors which took place on December 1, 2021.
In addition to the compensation described above that is payable to Outside Directors, directors are entitled to be reimbursed for reasonable travel and other expenses incurred by them in carrying out their duties as directors of the Company. The Company does not offer a meeting fee for Board of Directors members. The total retainer is deemed to be the full payment for the role of director. For a summary of the total compensation earned by such directors during Fiscal 2021, please refer to the next section.
Total Compensation of Outside Directors
The following table shows the allocation of fees and the total fees earned by Outside Directors of the Company during Fiscal 2021.
| Name | Cash Retainer ($)(1) | Equity Retainer ($)(2) | All Other Compensation ($)(3) | Total ($) | Allocation of Total Compensation(1),(4) | |||||||||||||||
In Cash ($)(5) | In DSUs(6) ($) | |||||||||||||||||||
| Pierre Larochelle | $37,084 | $37,084 | - | $74,168 | - | $74,168 | ||||||||||||||
Sheila C. Bair(7) | $27,765 | $27,765 | $50,000 | $105,530 | $77,765 | $27,765 | ||||||||||||||
Christopher Jarratt(8) | $28,972 | $28,972 | - | $57,944 | $28,972 | $28,972 | ||||||||||||||
| Pierre-Olivier Perras | $27,041 | $27,041 | - | $54,082 | $27,041 | $27,041 | ||||||||||||||
| Michel Ringuet | $29,358 | $29,358 | - | $58,716 | $29,358 | $29,358 | ||||||||||||||
Lorenzo Roccia(8) | $27,041 | $27,041 | $54,082 | $27,041 | $27,041 | |||||||||||||||
| Pierre Wilkie | $27,041 | $27,041 | - | $54,082 | - | $54,082 | ||||||||||||||
Ian Robertson(8) | $18,218 | $18,218 | - | $36,436 | $36,436(9) | - | ||||||||||||||
(1) Amounts of fees awarded to directors on account of their annual cash retainer for Fiscal 2021 reflect the fact that the director compensation policy was adopted in August 2021 on a nonretroactive basis. All amounts are paid in Canadian dollars and have been converted to U.S. dollars at an exchange rate of C$1.00 = US$0.7888, being the daily rate of exchange posted by the Bank of Canada for conversion of Canadian dollars into U.S. dollars on December 31, 2021.
(2) Share-based awards for Fiscal 2021 relate to DSUs granted on December 1st, 2021 on account of the directors’ annual equity retainer. Amounts of fees awarded to directors on account of their annual equity retainer for Fiscal 2021 reflect the fact that the director compensation policy was adopted in August 2021 on a nonretroactive basis. The value of share-based awards paid during Fiscal 2021 is calculated based on the grant date fair value of the awards granted under the Omnibus Plan. The grant date fair value was determined in compliance with IFRS 2, Share-based Payment and based on the volume weighted average trading price of the Common Shares on the TSX for the five days immediately preceding the grant date.
(3) Prior to the adoption of the director compensation policy in August 2021, no Outside Director received any compensation for his or her service as member of the Board of Directors, except for Sheila C. Bair who received compensation paid in cash in the amount of $50,000 for services rendered during the period from January 1, 2021 until the adoption of the
32director compensation policy in August 2021. None of the Outside Directors are entitled to perquisites or other personal benefits which, in the aggregate, are worth C$50,000 or more, or over 10% of their fees.
(4) In addition to the annual equity retainer disclosed under “Share-Based Awards”, each Outside Director can elect to receive up to 100% of his or her annual cash retainer in the form of DSUs. The cash and equity retainers are payable on a bi-annual basis with the number of DSUs to be issued determined based on the volume-weighted average trading price on the TSX for the five trading days prior to each such issuance. For Fiscal 2021, Messrs. Larochelle and Wilkie elected to receive 100% of their annual cash retainer in the form of DSUs.
(5) Payments with respect to cash retainers earned by directors in Fiscal 2021 and disclosed in this column are expected be made during the first half of 2022.
(6) A first grant of DSUs earned by directors during Fiscal 2021 was made on December 1, 2021 on account of the directors annual equity retainer, comprised of 5,186 DSUs for Mr. Larochelle representing a value of C$72,986, 1,926 DSUs for Ms. Bair representing a value of C$27,103, 2,026 DSUs for Mr. Jarratt representing a value of C$28,510, 1,891 DSUs for Mr. Perras representing a value of C$26,609, 2,053 DSUs for Mr. Ringuet representing a value of C$28,890, 1,891 DSUs for Mr. Roccia representing a value of C$26,609 and 3,782 DSUs for Mr. Wilkie representing a value of C$53,219. The remainder of DSUs earned by directors on account of annual equity retainers during Fiscal 2021 will be granted in 2022.
(7) In addition to the compensation paid by Lion to Sheila C. Bair as compensation for her services as a director of Lion, Power Sustainable Capital Inc. ("Power Sustainable"), the parent company of Power Energy, agreed to grant Ms. Bair stock appreciation rights ("SARs") of Power Sustainable relating to Power Energy’s Common Shares. Pursuant to such SARs, Ms. Bair will be entitled, on December 15, 2025 and in proportion to the then applicable number of vested SARs, to receive from Power Sustainable a cash amount to be determined based on the increase in the fair market value attributable to the interests held by Power Energy in Lion between January 1, 2020 and December 15, 2025. The SARs will vest in five equal tranches over a five-year period on January 1 of each year, starting on January 1, 2021, subject to Ms. Bair’s continued directorship with Lion. Ms. Bair is not an employee or a director of, or otherwise entitled to receive any consultant or similar compensation from, Power Sustainable or any of its affiliates, including Power Energy. Lion is not party to this arrangement between Ms. Bair and Power Sustainable nor is Lion responsible for any payment in connection with such SARs.
(8) Messrs. Roccia and Robertson were members of the Board of Directors only for a part of Fiscal 2021. Mr. Roccia was appointed to the Board of Directors effective August 11, 2021, and Mr. Robertson resigned from the Board of Directors effective November 11, 2021. As a result, this table reflects the fees they earned for the applicable period of time during which they were members of the Board of Directors during Fiscal 2021. Mr. Jarratt resigned from the Board of Directors effective February 24, 2022.
(9) Due to his resignation in November 2021, Mr. Robertson's compensation for Fiscal 2021 will exceptionally be paid 100% in cash.
Director Incentive Plan Awards
Outstanding Share-Based Awards and Option-Based Award
The following table summarizes, for each Outside Director, the number and value of all option-based and share-based awards which were outstanding as at December 31, 2021, being the last day of Fiscal 2021.
| OPTION-BASED AWARDS | SHARE-BASED AWARDS | |||||||||||||||||||
| Name | Number of securities underlying unexercised options (#)(1) | Option exercise price ($) | Option expiration date | Value of unexercised in-the-money options ($)(2) | Number of DSUs that have not vested (#)(3) | Market or Payout Value of DSUs not paid out or distributed ($)(4) | ||||||||||||||
| Pierre Larochelle | - | - | - | - | - | 51,548 | ||||||||||||||
| Sheila C. Bair | 41,289(5) | $5.66 | 2030/09/15 | 176,717 | - | 19,144 | ||||||||||||||
Christopher Jarratt(6) | - | - | - | - | - | 20,138 | ||||||||||||||
| Pierre-Olivier Perras | - | - | - | - | - | 18,797 | ||||||||||||||
| Michel Ringuet | - | - | - | - | - | 20,407 | ||||||||||||||
| Lorenzo Roccia | - | - | - | - | - | 18,797 | ||||||||||||||
| Pierre Wilkie | - | - | - | - | - | 37,593 | ||||||||||||||
Ian Robertson(6) | - | - | - | - | - | |||||||||||||||
(1) Represent a grant of options made under the Legacy Option Plan (as defined below) in prior fiscal years. No option grant was made under the Legacy Plan since the adoption of the Omnibus Plan on May 6, 2021.
33(2) The value of unexercised in-the-money options is calculated based on the difference between the exercise price of the option and the closing price of the Common Shares on the NYSE on December 31, 2021, being $9.94 per Common Share.
(3) All DSUs granted to Outside Directors under the Omnibus Plan vest entirely on the date of grant.
(4) Represents DSUs granted under the Omnibus Plan as well as DSUs granted as a result of Outside Director(s) having elected to receive all or a portion of his or her annual retainer in the form of DSUs. The value of DSUs not paid out or distributed is calculated based on the closing price of the Common Shares on the NYSE on December 31, 2021, being $9.94 per Common Share.
(5) On September 15, 2020, Ms. Bair received an options grant under the Legacy Plan, entitling her to purchase (taking into account the share split completed in connection with the Business Combination (as defined below)), subject to any vesting conditions, 41,289 Common Shares at an option exercise price per Common Shares of $5.66.
(6) Messrs. Robertson and Jarratt stepped down from the Board of Directors effective November 11, 2021 and February 24, 2022, respectively.
Incentive Plan Awards – Value Vested or Earned During the Year
The following table provides, for each Outside Director, a summary of the value of the option-based and share-based awards vested during Fiscal 2021.
| Name | Option-Based Awards – Value Vested During the Year(1) ($) | ||||
| Sheila C. Bair | 160,507 | ||||
(1) Calculated as the difference between the market price of the Common Shares on the date of vesting and the exercise price payable in order to exercise the vested option-based awards.
Share Ownership Guidelines for Directors
On August 11, 2021, the Board of Directors adopted share ownership guidelines for Outside directors according to which each Outside Director is expected to hold a minimum of 2.5x their total annual retainer in Common Shares and/or DSUs. Pursuant to the guidelines, each director will be required to attain the required level of share ownership within five years of the later of (i) the date on which such director joined the Board of Directors, or (ii) the date of adoption of the guidelines. As of the date of this Circular, only Michel Ringuet has met the Company's share ownership guidelines for Outside Directors.
34EXECUTIVE COMPENSATION ― DISCUSSION AND ANALYSIS
The following discussion describes the significant elements of the Company’s executive compensation program, with particular emphasis on the process for determining the compensation payable to the named executive officers ("Named Executive Officer" or "NEOs"), being (i) the Chief Executive Officer ("CEO"), (ii) the Chief Financial Officer ("CFO"), and (iii) each of the three other most highly compensated executive officers (or individuals acting in a similar capacity) of the Company. For Fiscal 2021, the Company’s NEOs were:
•Marc Bedard, CEO—Founder;
•Nicolas Brunet, Executive Vice President and Chief Financial Officer;
•François Duquette, Chief Legal Officer and Corporate Secretary;
•Nathalie Giroux, Chief People Officer; and
•Brian Piern, Chief Commercial Officer.
Executive Compensation Philosophy and Objectives
Lion operates in a dynamic and rapidly evolving industry. To succeed in this environment and to achieve its business and financial objectives, Lion needs to attract, retain and motivate a highly talented team of executive officers. The executive compensation program is based on a pay-for-performance philosophy.
Lion’s compensation philosophy is designed to:
•align the compensation provided to its executives, including the Named Executive Officers, with the achievement of business objectives including growth and expansion;
•enable Lion to attract, motivate and retain key individuals who contribute to Lion’s long-term success;
•promote increase in shareholder value and strong alignment with the shareholders’ interests;
•encourage teamwork and innovation;
•determine a clear link between both business and individual performance and all short-term and long-term components of compensation;
•encourage nimbleness and agility in managing the business to succeed.
The Human Resources and Compensation Committee and the Board of Directors will continue to evaluate the Company’s philosophy and compensation program as circumstances require and intend to review compensation on an annual basis. As part of this review process, they expect to be guided by the philosophy and objectives outlined above, as well as other factors which may become relevant, such as the cost to the Company if it were required to find a replacement for a key executive.
Role and Accountabilities of the Human Resources and Compensation Committee
The Human Resources and Compensation Committee is currently composed of Messrs. Wilkie, Perras and Ringuet, with Mr. Wilkie acting as chairperson. All members of the Human Resources and Compensation Committee have a working familiarity with human resources and compensation matters.
35The relevant experience of each member of the Human Resources and Compensation Committee is described as part of their respective biographies. See "Business of the Meeting –Description of Proposed Nominee Directors". Each of Mr. Wilkie and Mr. Ringuet is considered independent under the standards set forth under Section 1.4 of NI 52-110, whereas Mr. Perras is not considered independent under such standards. See "Disclosure of Corporate Governance Practices – Board of Directors - Independence" for a discussion on the independence of the members of the Board of Directors.
The Human Resources and Compensation Committee plays a critical role in the oversight and governance of the executive compensation policies and programs of the Company. The purpose of the Committee is to assist the Board of Directors in fulfilling its oversight responsibilities as they relate to the Company’s key human resources and compensation policies, plans and programs, and to review the performance of, and to review and determine (or recommend to the Board of Directors for approval) the compensation to be paid to, the Company’s executive officers.
The Human Resources and Compensation Committee evaluates and recommends to the Board of Directors for approval the compensation policies, plans and programs advisable for the executive officers of the Company, and evaluate and recommend to the Board of Directors from time to time for approval the adoption of any new policies, plans and programs or any modification or termination of existing policies, plans and programs as it deems necessary. The objective of the Human Resources and Compensation Committee is to maintain an overall compensation structure designed to attract, retain and motivate executive officers by providing appropriate levels of risk and reward in proportion to individual contribution and individual and corporate performance.
The Human Resources and Compensation Committee reviews and approves, or recommends to the Board of Directors for approval, individual and corporate goals and objectives relevant to the compensation of the Company’s executive officers, evaluates the performance of the Company’s executive officers in light of such goals and objectives and with appropriate input from other independent directors and, in the case of the Company’s executive officers other than the CEO—Founder, the CEO—Founder, and determines and recommends to the Board of Directors for approval the compensation levels for the CEO and the Company’s other executive officers.
The Board of Directors has adopted a written charter for the Human Resources and Compensation Committee describing the mandate of the Committee. Under its charter, the Human Resources and Compensation Committee assumes various responsibilities on matters that are specific to executive compensation. Please refer to the section “Disclosure of Corporate Governance Practices – Board of Directors Committees – Human Resources and Compensation Committee” for further information regarding the Human Resources and Compensation Committee and its mandate.
Compensation Consulting Services
Under its charter, the Human Resources and Compensation Committee has the authority to retain and does retain, from time to time, the services of executive compensation consultants to provide independent advice on executive and/or director compensation and related governance issues. The Human Resources and Compensation Committee also has the authority to determine and pay the fees of such consultants. All compensation and non-compensation services provided by such independent advisors, consultants and experts to the Company must be pre-approved by the Human Resources and Compensation Committee or its chairperson.
In Fiscal 2021, the Board of Directors retained Willis Towers Watson, an independent consulting firm, to provide advice in connection with executive compensation matters for Fiscal 2021, including, among other things, the following:
•establishing a peer comparator group of public companies with similar attributes to the Company;
•conducting a market review for the purpose of benchmarking executive compensation policies and plans;
36•supporting the design of an equity-based, long-term incentive compensation framework for the executive officers of the Company; and
•reviewing proposed terms of the Company’s Omnibus Plan and grants thereunder.
All decisions and actions taken by the Board of Directors have been based on numerous factors and circumstances, including the information and advice obtained from Willis Towers Watson. The Company incurred C$101,237.79 in fees for services rendered by Willis Towers Watson in Fiscal 2021 and no fees in the fiscal year ended December 31, 2020.
Executive Compensation-Related Fees
| Fiscal Year Ended December 31, 2021 | Fiscal Year Ended December 31, 2020 | ||||||||||
Executive Compensation-Related Fees(1) | C$101,237.79 | C$0 | |||||||||
| All Other Fees | C$0 | C$0 | |||||||||
| Total Fees Paid | C$101,237.79 | C$0 | |||||||||
(1) See discussion above for further details regarding the services rendered. | |||||||||||
Market Positioning and Benchmarking
As part of the executive compensation review and design process, the Human Resources and Compensation Committee established a peer group for Fiscal 2021 (the "Comparator Group") to benchmark compensation.
The selection criteria used to determine the composition of the Comparator Group include the following:
•companies competing for similar talent in North America;
•companies in similar industry sectors;
•publicly-traded organizations in Canada and the United States; and
•companies of comparable size, measured by market capitalization.
The companies forming the Comparator Group for Fiscal 2021 meet all or some of the foregoing criteria and are listed below:
This Comparator Group, supplemented by other sources of competitive pay information, is an important input in establishing compensation levels and structure for Fiscal 2021 and beyond. The Human Resources and Compensation Committee, in accordance with its compensation philosophy, will
37periodically assess the competitiveness of the compensation package to make compensation-related decisions.
Principal Elements of Compensation
The compensation of the Company’s executive officers includes three major elements: (i) base salary; (ii) short-term incentives, consisting of annual bonuses and (iii) long-term equity incentives, consisting of awards under the Omnibus Plan. Perquisites and personal benefits are not a significant element of compensation of the executive officers of the Company. The Company’s compensation philosophy is to set the total direct compensation package for its Named Executive Officers at market median based on the Company's Comparator Group and is designed to result in above market median compensation when performance so warrants.
Base Salary
Annual base salaries are intended to provide a fixed component of compensation to Lion’s Named Executive Officers, reflecting their skill sets, experience, roles and responsibilities. Base salaries for Lion’s Named Executive Officers have generally been set at levels deemed necessary to attract and retain individuals with superior talent. A Named Executive Officer’s base salary is determined by taking into consideration the NEO’s total compensation package and the Company’s overall compensation philosophy.
The Human Resources and Compensation Committee reviews base salaries periodically, and at least annually, to ensure that they continue to reflect individual performance and market conditions, and merit increases or other adjustments are made, as deemed appropriate. Additionally, Lion may choose to adjust base salaries as warranted throughout the year to reflect promotions or other changes in the scope or breadth of a Named Executive Officer’s role or responsibilities, as well as to maintain market competitiveness, including within the Comparator Group.
Annual Short-Term Incentive Program (STIP)
In accordance with the terms of their respective employment agreements, certain of Lion’s Named Executive Officers and other executive officers are eligible to receive discretionary annual cash bonuses based on individual and company performance or otherwise as may be determined by Lion’s Board of Directors from time to time. The Company's STIP is designed to motivate executive officers to meet the Company's business and financial objectives generally.
For Fiscal 2021, the Human Resources and Compensation Committee adopted an approach to setting the annual cash bonuses awarded to NEOs under the STIP pursuant to which 50% of the total amount of annual bonus awarded to NEOs was based on the Company's performance, and 50% on individual performance. This methodology is intended to be used by the Committee in setting STIP awards for all NEOs in the future.
For Fiscal 2022 and beyond, with respect to NEOs, the bonus to be awarded under the STIP will be determined at the end of each fiscal year by the Board of Directors upon recommendation from the Human Resources and Compensation Committee. For Fiscal 2022, the Board of Directors determined that STIP for NEOs and other members of management will be based on business performance metrics (50%) and achievement of personal goals (50%). Business performance metrics and targets and corresponding payout levels are established by the Board of Directors upon recommendation from the Human Resources and Compensation Committee.
The following performance metrics comprise the business performance component of the Fiscal 2022 STIP:
| Performance Metric | Weight of Metric | ||||
| Revenue | 50% | ||||
| Gross Margin | 25% | ||||
Adjusted EBITDA(1) | 25% | ||||
38(1) Refer to the management discussion and analysis of the Company for the year ended December 31, 2021 for additional information on Adjusted EBITDA, a non-IFRS measure.
The individual performance of the NEO is determined by clear pre-determined criteria for achievement of the respective NEO’s personal goals.
In accordance with the terms and provisions of the STIP, the actual STIP awards can range from zero to two times the NEOs’ target STIP, the actual award dependent upon achievement of the previously described business and individual performance goals. Furthermore, if a NEO doesn’t meet a certain threshold on his/her personal goals, his/her actual STIP award will be nil for that reference year, regardless of the business performance.
Long-Term Equity Incentives
Equity-based incentive awards granted to Named Executive Officers are variable elements of compensation which are designed to align Lion’s interests and those of its shareholders with those of its employees, including its Named Executive Officers. Equity awards reward performance and continued employment by an executive officer, with associated benefits to Lion of attracting and retaining employees. The Company believes that options, restricted share units ("RSUs") and performance share units ("PSUs") provide executive officers with a strong link to long-term corporate performance and the creation of shareholder value. As of the date hereof, stock option awards and RSUs are the two types of equity awards that Lion has granted to its Named Executive Officers. See "Long-Term Incentive Plans" below for vesting, settlement, and other terms of such awards.
Prior to adoption of the Omnibus Plan, Lion made equity-based awards to NEOs by issuing options under the Company’s legacy equity-based incentive plan adopted in November 2017, as amended and restated in December 2019 and May 2021 (the "Legacy Plan"). Following adoption of the Omnibus Plan, equity-based awards made by Lion have been made under the Omnibus Plan, and no further grants were nor will be made under the Legacy Plan. The terms of Lion’s equity plans are described below in the section entitled "Executive Compensation – Principal Elements of Compensation – Long-Term Incentive Plans (LTIP)".
In connection with the grants of equity-based awards, the Human Resources and Compensation Committee determines the grant size and terms to be recommended to the Board of Directors. As part of their annual review of the Company’s compensation practices, the Human Resources and Compensation Committee and the Board of Directors determine the precise structure of long-term incentive compensation. For Fiscal 2021, none of the NEOs received long-term incentive compensation grants pursuant to annual LTIP awards. Mr. Duquette and Ms. Giroux received a one-time special LTIP grant upon hire, comprised of 50% RSUs and 50% stock options, and Mr. Piern received a one-time special LTIP grant upon hire, comprised of 9,409 RSUs and 236,569 stock options. Option-based awards granted under the Omnibus Plan in Fiscal 2021 have a 10-year term and vest in four equal tranches over the first four employment anniversary dates. RSU-based awards granted in Fiscal 2021 vest entirely on the third employment anniversary date and can be settled in cash or Common Shares at the option of the Company promptly following vesting.
For Fiscal 2022, the Board of Directors determined that LTIP for NEOs will be divided in two types of awards which are the Restricted Shares Units (RSUs) and Options, both weighted at 50%.
Long-Term Incentive Plans (LTIP)
The principal features of Lion’s Long-Term Incentive Plans (LTIP) are summarized below. As further discussed in the section "Executive Compensation ― Discussion and Analysis - Principal Elements of Compensation" above, the value of the LTIP grants varies by the level of responsibility and the Named Executive Officer’s performance as assessed by the Human Resources and Compensation Committee and the Board of Directors.
Omnibus Plan
General. Lion adopted its Omnibus Plan in May 2021 in connection with the listing of its Common Shares on the NYSE and the TSX. The Omnibus Plan provides different types of equity-based incentives to be granted to certain of the Company’s directors, executive officers, employees and consultants, including options, RSUs, PSUs and DSUs, collectively referred to as "awards". The Board of Directors is responsible for administering the Omnibus Plan and may delegate its responsibilities thereunder to a committee thereof or to a plan administrator. The following discussion is qualified in its entirety by the full text of the Omnibus Plan and each grant agreement evidencing the applicable awards.
39The Board of Directors is entitled to, in its sole discretion, from time to time, designate the directors, executive officers, employees and consultants to whom awards will be granted and determine, if applicable, the number of Common Shares to be covered by such awards and the terms and conditions of such awards. Awards under the Omnibus Plan are generally made by the Board of Directors upon recommendation from the Human Resources and Compensation Committee.
For Fiscal 2022, Lion’s LTIP for NEOs is divided in two vehicles which are the Restricted Shares Units (RSUs) and Options, both weighted at 50%.
Shares Available Under the Plan. The maximum number of Common Shares available for issuance, in the aggregate, under the Omnibus Plan and the Legacy Plan shall not exceed ten percent (10%) of the aggregate number of Common Shares issued and outstanding from time to time (calculated on a non-diluted basis). As of December 31, 2021, 190,002,712 Common Shares were issued and outstanding and, as such, a maximum of 19,000,271 Common Shares could be issued in the aggregate pursuant to awards granted under the Omnibus Plan and the Legacy Plan.
The number of Common Shares available for issuance under the Omnibus Plan and the Legacy Plan will increase as the number of issued and outstanding Common Shares increases from time to time. Any Shares subject to an award which has been exercised or settled in Common Shares will again be available for issuance under the Omnibus Plan. Common Shares will not be deemed to have been issued pursuant to the Omnibus Plan with respect to any portion of an award that is settled in cash.
Subject to the insider participation limit set out below and the overall shares available under the Omnibus Plan described above, the Omnibus Plan does not limit the maximum number of Common Shares that any one person or company is entitled to receive under the Omnibus Plan.
Insider Participation Limit. The aggregate number of Common Shares issuable to insiders and their associates at any time under the Omnibus Plan, the Legacy Plan or any other proposed or established share compensation arrangement, will not exceed 10% of the issued and outstanding Common Shares, and the aggregate number of Common Shares issued to insiders and their associates under the Omnibus Plan or any other proposed or established share compensation arrangement within any one-year period will not exceed 10% of the issued and outstanding Common Shares.
Options. All options granted under the Omnibus Plan will have an exercise price determined and approved by the Board of Directors at the time of grant, which will not be less than the market price of the Common Shares on the date of the grant. For purposes of the Omnibus Plan, the market price of the Common Shares as of a given date will generally be the volume weighted average trading price on the TSX (on the NYSE for U.S. based employees) for the five trading days immediately preceding such date.
Subject to any vesting conditions set forth in a participant’s grant agreement, an option will be exercisable during a period established by the Board of Directors which will not be more than ten years from the grant of the option. The Omnibus Plan provides that the exercise period will automatically be extended if the date on which it is scheduled to terminate will fall during a blackout period. In such cases, the extended exercise period will terminate ten business days after the last day of the blackout period. The Board of Directors is entitled, in its discretion, to provide for procedures to allow a participant to elect to undertake a "cashless exercise" or a "net exercise" in respect of options.
Share Units. The Board of Directors is authorized to grant RSUs, PSUs and DSUs evidencing the right to receive Common Shares, cash based on the value of a Common Share or a combination thereof at some future time to eligible persons under the Omnibus Plan. Although DSUs may be available for grant to directors, executive officers, employees and consultants, Lion currently expects to only grant DSUs as a form of non-executive director compensation.
RSUs generally become vested, if at all, following a period of continuous employment. PSUs are similar to RSUs, but their vesting is, in whole or in part, conditioned on the attainment of specified performance metrics as may be determined by the Board of Directors. The terms and conditions of grants of RSUs and PSUs, including the quantity, type of award, grant date, vesting conditions, vesting periods, settlement date and other terms and conditions with respect to these awards will be set out in the participant’s grant agreement. Subject to the achievement of the applicable vesting conditions, the settlement of an RSU or PSU will generally occur on or as soon as reasonably practicable following the vesting date. The settlement of a DSU will generally occur following a pre-established deferral period, which may be upon or following the participant ceasing to be a director, executive officer, employee or consultant of Lion, subject to satisfaction of any applicable conditions.
40RSUs, PSUs and DSUs can be settled, at Lion's option, in cash or Common Shares which shares can be bought on secondary markets or issued from treasury.
Dividend Share Units. If, as the case may be, dividends (other than share dividends) are paid on Common Shares, additional share unit equivalents may be automatically granted to each participant who holds RSUs, PSUs or DSUs on the record date for such dividends. If the Board of Directors provides for an award of RSUs, PSUs or DSUs to receive dividend share units, such units will be subject to the same vesting or other conditions applicable to the underlying RSUs, PSUs or DSUs, as applicable.
Recapitalization. In the event of any change in the capital structure or any other change affecting the Common Shares, the Board of Directors will equitably adjust the aggregate number or kind of shares that may be delivered under the Omnibus Plan, the number or kind of shares or other property (including cash) subject to an award, and the terms and conditions of awards.
In the event of any other change in the capital structure or business of Lion or other corporate transaction, the Board of Directors will be entitled, in its sole discretion, to make equitable adjustments to be made in such circumstances in order to maintain the economic rights of the participants in respect of awards under the Omnibus Plan.
Change of Control. In the event of a change of control, or other changes in Lion or the outstanding Common Shares by reason of a recapitalization, reorganization, arrangement, merger, consolidation, combination, exchange or other relevant change, the Board of Directors will have the power, in its sole discretion, to modify the terms of the Omnibus Plan and/or the awards granted thereunder, including to cause the power to accelerate vesting, waive any forfeiture conditions or otherwise modify or adjust any other condition or limitation regarding an award. The Board of Directors will be entitled, at its discretion, to accelerate the time of exercisability of an award, redeem in whole or in part outstanding awards, cancel awards that remain subject to a restricted period, and make such adjustments to awards then outstanding as the Board of Directors deems appropriate to reflect the change of control or other such event, including providing for the substitution, assumption, or continuation of awards by the successor company or a parent or subsidiary thereof.
Trigger Events. The Omnibus Plan provides that, except as otherwise determined by the Board of Directors, upon the termination for cause of a participant, any awards granted to such participant, whether vested or unvested, will automatically terminate and become void. The Omnibus Plan further provides that upon a participant’s termination of employment without cause, or upon the resignation or retirement of a participant, (i) the Board of Directors may determine, in its sole discretion, that a portion of the PSUs, RSUs and/or DSUs granted to such participant will immediately vest (based on the vesting terms, including, if applicable, achievement of performance criteria, up to the termination date, as determined in the final and sole discretion of the Board of Directors), (ii) all unvested options will be forfeited, and (iii) vested options will remain exercisable until the earlier of 90 days (30 days for a resignation or retirement) after the termination date or the expiration date of the options. Finally, upon a participant’s termination of employment as a result of death or disability, except as otherwise determined by the Board of Directors, (i) all rights, title and interest in the options granted to such participant which are unvested will continue to vest in accordance with the terms of the Omnibus Plan and the participant’s grant agreement, for a period of up to two years, (ii) vested options (including such options that vest during the period following the termination date) will remain exercisable until the earlier of (A) two years after the termination date, and (B) the expiry date of the options, and (iii) a portion of PSUs, RSUs and/or DSUs granted to the participant will immediately vest, as determined by the Board of Directors.
Amendments and Termination. The Omnibus Plan terminates in accordance with its terms on the 10th anniversary of the date it was adopted by the Board of Directors. The Board of Directors is entitled to suspend or terminate the Omnibus Plan at any time, or from time to time amend or revise the terms of the Omnibus Plan or of any granted award, provided that no such suspension, termination, amendment or revision will be made, (i) except in compliance with applicable laws and with the prior approval, if required, of the shareholders, the NYSE and/or TSX or any other regulatory body having authority over Lion, and (ii) if it would adversely alter or impair the rights of any participant, without the consent of the participant except as permitted by the terms of the Omnibus Plan.
41The Board of Directors will be required to obtain shareholder approval to make the following amendments:
•except for adjustments permitted by the Omnibus Plan, any reduction in the exercise price of an option or any cancellation of an option and replacement of such option with an option with a lower exercise price, to the extent such reduction or replacement benefits an insider;
•any increase in the maximum number of Common Shares issuable pursuant to the Omnibus Plan, including any amendment to the maximum number of Common Shares expressed as a fixed percentage;
•any increase in the maximum number of Common Shares that may be issuable to insiders pursuant to the insider participation limit;
•any extension of the term of an award beyond its original expiry date, to the extent such amendment benefits an insider;
•any amendment which increases the maximum number of Common Shares that may be issuable upon exercises of options issued under the Omnibus Plan as incentive stock options intended to meet the requirements of Section 422 of the U.S. Internal Revenue Code of 1986;
•any amendment to the Omnibus Plan’s amendment provisions; and
•any amendment which modifies the definition of eligible participant used for purposes of determining eligibility for the grant of any award under the Omnibus Plan.
Except as specifically provided in a grant agreement approved by the Board of Directors, awards granted under the Omnibus Plan will generally not be transferable other than by will or the laws of succession.
Legacy Plan
General. The Company has previously granted options to acquire Common Shares to certain directors, officers and employees of the Company and its subsidiaries under the Legacy Option Plan. The Legacy Plan was originally adopted in November 2017, and subsequently amended and restated in December 2019. In May 2021, Lion made certain amendments to the Legacy Plan to take into account, among other things, the fact that the Common Shares were traded on the NYSE and the TSX. The options issued under the Legacy Plan were granted at exercise prices equal to or exceeding the fair market value of the underlying shares at the time of initial grant. Following adoption of the Omnibus Plan, no further awards were nor will be made under the Legacy Plan; however, awards outstanding under the Legacy Plan continue in full effect in accordance with their existing terms. The Legacy Plan includes terms and conditions required by the TSX for an equity incentive plan such as restrictions relating to amendments of the plan and restrictions on insider participation.
The Board of Directors administers the Legacy Plan and has full authority and discretion to administer and interpret the Legacy Plan and to prescribe such rules and regulations and make such other determinations as it deems necessary or useful for the administration of the Legacy Plan.
Share Reserve. The maximum number of Common Shares reserved for issuance under the Legacy Plan is 12,854,615. As discussed under the section entitled "Omnibus Plan" above, the maximum number of Common Shares available for issuance, in the aggregate, under the Omnibus Plan and the Legacy Plan shall not exceed ten percent (10%) of the aggregate number of Common Shares issued and outstanding from time to time (calculated on a non-diluted basis). As of December 31, 2021, options to purchase 8,777,295 Common Shares at exercise prices ranging from $0.7332 (C$0.9335) to $5.66 were outstanding under the Legacy Plan.
Capital Reorganization. In the event of any reorganization, change in the number of issued and outstanding Common Shares by reason of any stock dividend, stock split, recapitalization, merger, or exchange of shares or other similar corporate change, an equitable adjustment will be made by the Board of Directors in the number and/or kind of shares subject to outstanding options under the Legacy Plan and in the exercise price of such outstanding options.
42Trigger Events; Change of Control. The Legacy Plan provides that certain events, including termination for cause, resignation, termination other than for cause, retirement, death or disability, may trigger forfeiture or reduce the vesting period, where applicable, of outstanding stock options. In the event of a change of control, the Board of Directors will have the right to accelerate the vesting of any unvested options in connection with such change of control. Except as otherwise set forth in any document evidencing a grant of any option, in the event of any change of control transaction in which there is an acquiring or surviving entity, the Board of Directors may provide for substitute or replacement options of similar value from, or the assumption of outstanding options by, the acquiring or surviving entity or one or more affiliates of such entity, any such substitution, replacement or assumption to be on such terms as the Board of Directors in good faith determines. The Board of Directors will be entitled to, in its sole discretion, terminate any or all stock option outstanding, provided that any such stock option that have vested will remain exercisable until consummation of such change of control.
Other Benefits
The Named Executive Officers are eligible to participate in benefits available generally to salaried employees, including health, dental, life and disability insurance benefits on the same terms as all other employees.
Hedging / Anti-Hedging Policy
The NEOs and the directors are, under the terms of the Company’s insider trading policy, prohibited from engaging in any hedging or monetization activities including, without limitation, any use of financial instruments (such as options, puts, calls, forward contracts, futures, swaps, collars or units of exchange funds) or any other transactions that are designed to hedge or offset a decrease in the market value of any Common Shares or other Lion securities beneficially owned by an NEO or director, directly or indirectly, or in the value of any equity-based compensation awards of an NEO or director (such as stock options, deferred share units, restricted share units and performance share units).
Compensation Risk Management
The Board and the Human Resources and Compensation Committee consider the implications of the risks associated with Lion's compensation policies and practices as part of their respective responsibilities related to overseeing matters related to executive and director compensation.
The Company’s current compensation structure attempts to ensure that compensation and incentive plans do not promote unwanted behavior and unnecessary risk-taking based on, amongst other things:
•a reasonable balance of fixed and variable compensation, and an appropriate mix of share-based compensation and short and long-term compensation;
•qualitative and quantitative metrics used to form a balanced scorecard to determine the amounts of awards to NEOs with respect to the STIP and the LTIP;
•share ownership requirements requiring outside directors to maintain a meaningful equity ownership in the Company;
•a prohibition on the hedging of equity-based compensation;
•policies and practices being generally applied on a consistent basis to all executive officers;
•services rendered by external consultants ensures that the Human Resources and Compensation Committee gets an independent opinion on Lion’s executive compensation program;
•an annual market review of executive compensation to ensure continued relevance, effectiveness and alignment with the Company’s compensation objectives; and
43•a Human Resources and Compensation Committee composed of a majority of independent directors.
After considering the overall policies and practices applicable to all employees, including the NEOs, the Human Resources and Compensation Committee did not identify any risks arising from the Company's compensation policies and practices that would be reasonably likely to have a material adverse effect on the Company.
Performance Results
Given that the Common Shares have only been publicly traded since May 7, 2021, there is insufficient historical data to provide a relevant performance graph showing the Company’s cumulative total shareholder return over a given period of time versus the trend in the Company’s compensation to executive officers over the same period.
Summary Compensation Table
The following table sets forth information concerning the compensation paid by the Company to the NEOs for the fiscal years ended December 31, 2021 and December 31, 2020.
| Name and Principal Position | Fiscal Year | Base Salary ($)(1), (2) | Share-Based Awards ($)(1), (3) | Option- Based Awards ($)(1), (4) | Non-Equity Incentive Plan Compensation | Pension Value ($) | All Other Compensation ($)(1), (6) | Total Compensation ($) | |||||||||||||||||||||
Annual Incentive Plan ($)(1), (5) | Long-Term Incentive Plans ($) | ||||||||||||||||||||||||||||
Marc Bedard CEO— Founder | 2021 | 391,291 | ― | ― | 195,823 | ― | ― | ― | 587,114 | ||||||||||||||||||||
| 2020 | 215,991 | ― | ― | ― | ― | ― | 3,557 | 219,548 | |||||||||||||||||||||
Nicolas Brunet Executive Vice President and Chief Financial Officer | 2021 | 286,698 | ― | ― | 108,697 | ― | ― | ― | 395,395 | ||||||||||||||||||||
| 2020 | 196,356 | ― | ― | ― | ― | ― | ― | 196,356 | |||||||||||||||||||||
François Duquette(7) Chief Legal Officer and Corporate Secretary | 2021 | 167,316 | 59,141 | 59,164 | 42,595 | ― | ― | ― | 328,216 | ||||||||||||||||||||
| 2020 | ― | ― | ― | ― | ― | ― | ― | ― | |||||||||||||||||||||
Nathalie Giroux(8) Chief People Officer | 2021 | 95,566 | 142,015 | 141,983 | 76,423 | ― | ― | 78,880 | 534,867 | ||||||||||||||||||||
| 2020 | ― | ― | ― | ― | ― | ― | ― | ― | |||||||||||||||||||||
Brian Piern(9) Chief Commercial Officer | 2021 | 129,808 | 175,854 | 1,960,92010 | 39,900 | ― | ― | 88,781 | 2,395,263 | ||||||||||||||||||||
| 2020 | ― | ― | ― | ― | ― | ― | ― | ― | |||||||||||||||||||||
(1) The base salaries, share-based awards, option-based awards, annual incentive and all other compensation of Messrs. Bedard, Brunet, Duquette and Ms. Giroux are paid in Canadian dollars. Mr. Piern's compensation is paid in U.S. dollars. Except where otherwise noted, the amounts reported in the above table for Messrs. Bedard, Brunet, Duquette and Ms. Giroux have been converted to U.S. dollars (i) in the case of amounts relating to Fiscal 2021, at an exchange rate of C$1.00 = US$0.7888, being the daily rate of exchange posted by the Bank of Canada for conversion of Canadian dollars into U.S. dollars on December 31, 2021, and (ii) in the case of amounts relating to Fiscal 2020, at an exchange rate of C$1.00 = US$0.7854, being the daily rate of exchange posted by the Bank of Canada for conversion of Canadian dollars into U.S. dollars on December 31, 2020.
(2) The amounts reported in this column represent the earned base salary received by each NEO in the applicable fiscal year. For Fiscal 2021, the earned base salary received for NEOs who are paid in Canadian dollars was C$496,058 for Mr. Bedard, C$363,461 for Mr. Brunet, C$212,115 for Mr. Duquette and C$121,154 for Ms. Giroux.
(3) The amounts reported in this column represent the grant date fair value of RSUs granted to NEOs under the Omnibus Plan. The grant date fair value was determined in compliance with IFRS 2, Share-based Payment and based on the volume weighted average trading price of the Common Shares on the TSX or the NYSE, as applicable, for the five days immediately preceding the grant date. During Fiscal 2021, the RSU grants reported in this column were made to each of Mr. Duquette, Ms. Giroux and Mr. Piern as an inducement for each of them to enter into a full-time employment agreement with the Company.
44(4) The amounts reported in this column represent the estimated grant date fair value of options granted under the Omnibus Plan during Fiscal 2021 to Mr. Duquette, Ms. Giroux and Mr. Piern as an inducement for each of them to enter into a full-time employment agreement with the Company. The amounts reported in this column do not represent cash received by the optionees, and the actual value realized upon the future vesting and exercise of such options may be less or greater than the grant date fair values indicated in this column. Amounts shown have been calculated using the Black-Scholes method based on the volume weighted average trading price on the TSX or the NYSE, as applicable, for the five trading days prior to the grant date. The Black-Scholes method is used to estimate the grant date fair value of option-based awards because it is the most commonly used share-based award pricing model and is considered to produce a reasonable estimate of fair value. The assumptions used to measure the fair value of the options granted during Fiscal 2021 under the Black-Scholes method at the grant date were as follows:
| June 28, 2021 Grant (Canadian) | June 28, 2021 Grant (U.S.) | August 24, 2021 Grant | |||||||||
| Dividend yield | 0% | 0% | 0% | ||||||||
| Expected volatility | 40% | 40% | 40% | ||||||||
| Risk-free interest rate | 1.42 | 1.25 | 1.16 | ||||||||
| Expected option term | 7.5 | 7.5 | 7.5 | ||||||||
| Black-Scholes Value | 8.125 | 8.289 | 5.38 | ||||||||
(5) The amounts reported in this column represent the annual cash bonuses awarded to each NEO under the STIP for services rendered in each fiscal year as described in "Executive Compensation ― Discussion and Analysis ― Principal Elements of Compensation ― Annual Short-Term Incentive Program (STIP)". For Fiscal 2021, the cash bonus awarded under the STIP to NEOs who are paid in Canadian dollars was C$248,254 for Mr. Bedard, C$137,800 for Mr. Brunet, C$54,000 for Mr. Duquette and C$96,885 for Ms. Giroux.
(6) Perquisites and other personal benefits which, in the aggregate, are worth less than C$50,000 or 10% of the total salary of a NEO are not included under "All Other Compensation". For Fiscal 2021, the payments made to Mr. Piern include (i) a car allowance of $6,923, and (ii) an amount of $81,858 related to relocation and (ii) the payments made to Ms. Giroux represent a lump sum signing bonus of C$100,000 in connection with the signing of her employment agreement with the Company. Mr. Bedard received a car allowance in Fiscal 2021 and Fiscal 2020, and Mr. Duquette received a car allowance in Fiscal 2021.
(7) Mr. Duquette was appointed as Chief Legal Officer and Corporate Secretary of the Company on April 12, 2021 and did not earn any compensation from the Company prior to such date. On June 28, 2021, Mr. Duquette was awarded 7,282 options and 3,257 RSUs under the Omnibus Plan as an inducement to enter into a full-time employment agreement with the Company.
(8) Ms. Giroux was appointed as Chief People Officer of the Company on August 9, 2021 and did not earn any remuneration from the Company prior to such date. On August 24, 2021, Ms. Giroux was awarded 26,389 options and 11,653 RSUs under the Omnibus Plan as an inducement to enter into a full-time employment agreement with the Company.
(9) Mr. Piern was appointed as Chief Commercial Officer of the Company on June 7, 2021 and did not earn any remuneration from the Company prior to such date. On June 28, 2021, Mr. Piern was awarded 236,569 options and 9,409 RSUs under the Omnibus Plan as an inducement to enter into a full-time employment agreement with the Company.
(10) Represents 236,569 options granted to Mr. Piern under the Omnibus Plan as an inducement to enter into a full-time employment agreement with the Company. As of December 31, 2021, none of the options granted to Mr. Piern during Fiscal 2021 were in-the-money. See “Incentive Plan Awards - Outstanding Share-Based Awards and Option-Based Awards Table".
45Incentive Plan Awards
Outstanding Share-Based Awards and Option-Based Awards Table
The following table summarizes, for each of the NEOs, the number of option-based and share-based awards which were outstanding as at December 31, 2021, being the last day of Fiscal 2021.
| Option-Based Awards | Share-Based Awards | ||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#)(1) | Option Exercise Price ($)(2) | Option Expiration Date | Value of Unexercised In-the-Money Options ($)(3) | Number of Shares or Units of Shares that have not Vested (#)(4) | Market or Payout Value of Share-Based Awards that have not Vested ($)(5) | Market or Payout Value of Vested Share-Based Awards not Paid out or Distributed ($) | ||||||||||||||||
| Marc Bedard | 314,936 | 0.74 | 2029/06/14 | 2,871,753 | — | — | — | ||||||||||||||||
2,641,439 | 0.74 | 2027/11/01 | 24,086,036 | — | — | — | |||||||||||||||||
| Nicolas Brunet | 2,245,917 | 0.74 | 2029/12/26 | 20,479,457 | — | — | — | ||||||||||||||||
| François Duquette | 7,282 | 18.16 | 2031/04/12 | — | 3,257 | $32,114 | — | ||||||||||||||||
| Nathalie Giroux | 26,389 | 12.19 | 2031/08/09 | — | 11,653 | $114,899 | — | ||||||||||||||||
| Brian Piern | 236,569 | 18.69 | 2031/06/07 | — | 9,409 | $93,525 | — | ||||||||||||||||
(1) Represents the number of vested and unvested unexercised options.
(2) All options included in this table, to the exception of options granted to Mr. Piern’s, have an exercise price in Canadian dollars. The conversion price for such options has been converted to U.S. dollars at an exchange rate of C$1.00 = US$0.7888, being the daily rate of exchange posted by the Bank of Canada for conversion of Canadian dollars into U.S. dollars on December 31, 2021.
(3) Options are in-the-money if the market value of the Common Shares underlying the options is greater than the option exercise price. The value shown is equal to the excess, if any, of the Common Share closing price on the TSX or NYSE (being C$12.50 and $9.94, respectively), as applicable, on December 31, 2021, over the option’s exercise price. The actual value realized will be based on the actual in-the-money value upon exercise of the options, if any. The options vest in 25% tranches over a period of four years beginning on the first anniversary date of (i) the date of hire with respect to options granted to Mr. Duquette, Ms. Giroux and Mr. Piern or (ii) the date of grant with respect to options granted to Mr. Bedard and Mr. Brunet.
(4) Represents shares underlying RSUs granted to NEOs under the Omnibus Plan. RSUs vest on the third anniversary of the date of hire for Mr. Duquette, Ms. Giroux and Mr. Piern.
(5) Value is based on the Common Share closing price on December 31, 2021 on the TSX or NYSE (being C$12.50 and $9.94, respectively), as applicable. The market or payout value of share-based awards that have not vested for all NEOs, except for Mr. Piern, has been calculated in Canadian dollars and converted to U.S. dollars at an exchange rate of C$1.00 = US$0.7888, being the daily rate of exchange posted by the Bank of Canada for conversion of Canadian dollars into U.S. dollars on December 31, 2021.
Incentive Plan Awards – Value Vested or Earned During the Year
The following table provides, for each of the NEOs, a summary of the value of the option-based and share-based awards vested or non-equity incentive plan compensation earned during Fiscal 2021:
| Name | Option-Based Awards – Value Vested During the Year ($)(1) | Share-Based Awards – Value Vested During the Year ($) | Non-Equity Incentive Plan Compensation – Value Earned During the Year ($)(2) | ||||||||
| Marc Bedard | 13,101,600 | — | 195,823 | ||||||||
| Nicolas Brunet | 5,865,815 | — | 108,697 | ||||||||
| François Duquette | — | — | 42,595 | ||||||||
| Nathalie Giroux | — | — | 76,423 | ||||||||
| Brian Piern | — | — | 39,900 | ||||||||
(1) Calculated as the difference between the market price of the Common Shares on the date of vesting or the last trading day prior to vesting, if applicable, and the exercise price payable in order to exercise the options.
(2) Amounts are equal to those shown in the “Non-Equity Incentive Plan Compensation – Annual Incentive Plans” column in the Summary Compensation Table.
46Summary of NEO Employment Agreements
We have entered into an employment agreement with each of Lion's Named Executive Officers. Each employment agreement has an indefinite term. The material terms of each of our NEO employment agreements follow:
Marc Bedard
In May 2015, Marc Bedard entered into an employment agreement with Lion. Mr. Bedard’s employment with Lion will continue until terminated in accordance with the terms of the employment agreement. The employment agreement provides for (1) a base salary; and (2) an annual performance bonus. Mr. Bedard is also entitled to participate in the Company's long term incentive plan. The employment agreement provides Mr. Bedard with potential severance benefits if his employment with Lion is terminated for any reason other than (i) death, (ii) insolvency or bankruptcy, (iii) permanent or long-term incapacity or disability, (iv) for cause or (v) Mr. Bedard's voluntary resignation or his retirement, in a maximum amount equivalent to 24 months of his then current annual base salary, paid in lump sum. Under his employment agreement, Mr. Bedard is subject to non-competition obligations during and for two years following his termination of employment, is subject to restrictions on soliciting Lion’s employees during and for three years following his termination of employment, and is subject to confidentiality and intellectual property assignment covenants.
Nicolas Brunet
On December 11, 2019, Nicolas Brunet entered into an employment agreement with Lion to serve as Executive Vice-President and Chief Financial Officer of Lion. Mr. Brunet’s employment with Lion will continue until terminated in accordance with the terms of the employment agreement. The employment agreement provides for (1) a base salary; (2) an annual performance bonus; and (3) participation in the Company's long term incentive plan. The employment agreement provides Mr. Brunet with potential severance benefits if his employment with Lion is terminated without cause, in a maximum amount equivalent to 12 months of its then current annual base salary, paid in lump sum. Under his employment agreement, Mr. Brunet is subject to restrictions on soliciting Lion’s employees during and following his termination of employment, and is subject to confidentiality and intellectual property assignment covenants.
François Duquette
On March 8, 2021, François Duquette entered into an employment agreement with Lion to serve as Chief Legal Officer and Corporate Secretary of Lion. Mr. Duquette’s employment with Lion will continue until terminated in accordance with the terms of the employment agreement. The employment agreement provides for (1) a base salary; (2) an annual performance bonus; and (3) participation in the Company's long term incentive plan. The employment agreement provides Mr. Duquette with potential severance benefits if his employment with Lion is terminated without cause, in a maximum amount equivalent to 12 months of its then current annual base salary, paid in lump sum. Under his employment agreement, Mr. Duquette is subject to non-competition obligations during and for 12 months following his termination of employment, is subject to restrictions on soliciting Lion’s employees, clients and suppliers during and for 12 months following his termination of employment, and is subject to confidentiality and intellectual property assignment covenants.
Nathalie Giroux
On July 1, 2021, Ms. Giroux entered into an employment agreement with Lion to serve as Chief People Officer of Lion. Ms. Giroux's employment with Lion will continue until terminated in accordance with the
47terms of the employment agreement. The employment agreement provides for (1) a base salary; (2) an annual performance bonus; (3) participation in the Company's long-term incentive plan; and (4) a signing bonus comprised of stock options and a cash bonus. The employment agreement provides Ms. Giroux with potential severance benefits if her employment with Lion is terminated without cause, in a maximum amount equivalent to 12 months of her then current annual base salary, paid in lump sum. Under her employment agreement, Ms. Giroux is subject to non-competition obligations during and for 12 months following her termination of employment, is subject to restrictions on soliciting Lion’s employees, client and suppliers during and for 12 months following termination of employment, and is subject to confidentiality and intellectual property assignment covenants.
Brian Piern
On May 2, 2021, Brian Piern entered into an employment agreement with Lion to serve as Chief Commercial Officer of Lion. Mr. Piern’s employment with Lion will continue until terminated in accordance with the terms of the employment agreement. The employment agreement provides for (1) a base salary; (2) an annual performance bonus; (3) participation in the Company's long-term incentive plan; (4) an initial grant of stock options and RSUs; (5) a signing bonus in the form of stock options; and (6) certain other perquisites. The employment agreement provides Mr. Piern with potential severance benefits if his employment with Lion is terminated without cause, in a maximum amount equivalent to 12 months of its then current annual base salary, paid in lump sum. Under his employment agreement, Mr. Piern is subject to non-competition obligations during and for 12 months following his termination of employment, is subject to restrictions on soliciting Lion’s employees, clients and suppliers during and for 12 months following his termination of employment, and is subject to confidentiality and intellectual property assignment covenants.
Severance on Termination of Employment
Employment of an NEO can be terminated by any of the following means: resignation by the executive, termination by the Company for cause, termination by the Company other than for cause, the retirement of the executive or disability or death of the executive. Severance entitlements are set out in individual NEO employment agreements and the Omnibus Plan and Legacy Plan.
48The following table sets forth estimates of the minimum amounts payable to each of the NEOs who were employed by the Company as at the end of Fiscal 2021 upon the occurrence of certain events as of December 31, 2021:
| Name of the NEO | Termination other than for Cause ($)(1) | Voluntary Resignation, Retirement ($) | Termination for Cause ($) | ||||||||
Marc Bedard Salary/Severance RSUs Options | 954,448 — — | — — — | — — — | ||||||||
Nicolas Brunet Salary/Severance RSUs Options | 335,240 — — | — — — | — — — | ||||||||
François Duquette Salary/Severance RSUs Options | 276,080 — — | — — — | — — — | ||||||||
Nathalie Giroux Salary/Severance RSUs Options | 236,640 — — | — — — | — — — | ||||||||
Brian Piern Salary/Severance RSUs Options | 225,000 — — | — — — | — — — | ||||||||
(1) Termination other than for cause includes termination other than for cause following a Change of Control. Amounts exclude all vested in-the-money options which were outstanding as of December 31, 2021.
A NEO is not entitled to receive any payment under the STIP relating to a partially completed financial year if the effective date of his or her termination (with or without cause) or resignation occurs prior to the end of the fiscal year in respect of which the payout under the STIP is calculated. Moreover, upon an NEO's termination of employment without cause, or upon the resignation or retirement of an NEO, the Board may determine, in its sole discretion, that (i) a portion of the awards granted to such NEO will immediately vest, (ii) all unvested options will be forfeited, and (iii) vested options will remain exercisable until the earlier of 90 days (30 days for a resignation or retirement) after the termination date or the expiration date of the options. In addition, except as otherwise determined by the Board, on the effective date of a NEO’s termination for cause, all such NEO’s vested and unvested options are forfeited and all his or her other benefits are terminated. For additional discussion on the various provisions that apply upon termination of employment of a NEO or a change of control of the Company see "Executive Compensation – Long-Term Incentive Plans (LTIP)".
49Securities Authorized for Issuance under Equity Compensation Plans
The following table provides a summary, as of December 31, 2021, of the security-based compensation plans or individual compensation arrangements pursuant to which equity securities of the Company may be issued:
Plan Category(1) | Number of Securities to be Issued upon Exercise of Outstanding Options, RSUs or DSUs (#) | Weighted-Average Exercise Price of Outstanding Options ($) | Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Appearing in Second Column) (#) | ||||||||
Legacy Plan | Options: 8,777,295 | C$1.15 | 9,873,120 | ||||||||
| Omnibus Plan | Options: 294,854 DSUs: 18,755 RSUs: 36,247 | C$21.86 - - | |||||||||
| Total | 9,127,151 | C$1.81 | 9,873,120 | ||||||||
(1) See "Executive Compensation ― Equity Incentive Plans” for a description of the Legacy Plan and Omnibus Plan.
50DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES
The Canadian securities regulatory authorities have issued corporate governance guidelines pursuant to National Policy 58-201—Corporate Governance Guidelines (the "Corporate Governance Guidelines"), together with certain related disclosure requirements pursuant to National Instrument 58-101—Disclosure of Corporate Governance Practices ("NI 58-101"). The Corporate Governance Guidelines are recommended as “best practices” for issuers to follow. Lion recognizes that good corporate governance plays an important role in its overall success and in enhancing shareholder value and, accordingly, Lion has adopted certain corporate governance policies and practices which reflect its consideration of the recommended Corporate Governance Guidelines. The disclosure set out below describes the Company’s approach to corporate governance.
Board of Directors
Board of Directors Size
The Board of Directors is currently comprised of seven directors, all of which are standing for re-election at the Meeting and one director nominee is standing for election for the first time at the Meeting. See "Election of Directors" – "Description of Proposed Director Nominees ". The Board of Directors is of the view that its size and its composition are adequate and allow for the efficient functioning of the Board of Directors as a decision-making body.
Independence
Under the NYSE Listing Rules, an independent director means a person who, in the opinion of Lion’s Board, has no material relationship with Lion. Under NI 58-101, a director is considered to be independent if he or she is independent within the meaning of Section 1.4 of National Instrument 52-110—Audit Committees ("NI 52-110"). Pursuant to NI 52-110, an independent director is a director who is free from any direct or indirect material relationship with Lion which could, in the view of Lion’s Board, be reasonably expected to interfere with the exercise of such director’s independent judgement. Lion’s Board agrees with this approach to assessing director independence.
Based on information provided by each director and nominee director concerning his or her background, employment and affiliations, Lion’s Board has determined that as at March 25, 2022, four out of the seven current directors are considered independent as that term is defined under the NYSE Listing Rules and NI 58-101, namely Ms. Sheila C. Bair and Messrs. Michel Ringuet, Lorenzo Roccia and Pierre Wilkie. Ann L. Payne, who will stand for election for the first time at the Meeting, is also considered independent, such that on May 6, 2022, assuming the election of all proposed director nominees at the Meeting, the Board of Directors will be comprised of eight (8) directors with five (5) of them being independent as that term is defined under the NYSE Listing Rules and NI 58-101. In making this determination, Lion’s Board considered the current and prior relationships that each such non-employee director has with Lion and all other facts and circumstances that Board deemed relevant in determining their independence.
Furthermore, all members of the Audit Committee of the Board of Directors are considered independent as that term is defined under the NYSE Listing Rules and NI 58-101 and each committee is chaired by an independent chair.
Marc Bedard is considered non-independent due to the fact that he acts as the CEO–Founder of Lion. Pierre Larochelle and Pierre-Olivier Perras are considered non-independent under the NYSE Listing Rules and NI 58-101 due to their relationship with Power Sustainable and Power Energy, respectively.
Six of the seven current members of the Board, as well as the new proposed nominee, are not members of Lion’s management. Lion’s Board believes that, except for Mr. Bedard, all of the individuals who serve on Lion’s Board or who will be standing for election at the Meeting are independent of management, and have no other relationships that could reasonably interfere with the exercise of their independent judgment in discharging their duties to Lion. The following table shows which directors or
51proposed directors are not considered independent within the meaning of the NYSE Listing Rules and NI 58-101, and the reason for such non-independence of individual directors.
| NAME | WITHIN THE NYSE LISTING RULES AND NI 58-101 | REASON FOR NON-INDEPENDENCE | |||||||||
| Independent | Not Independent | ||||||||||
| Marc Bedard | ü | Mr. Bedard is not independent as he is the CEO—Founder of the Company. | |||||||||
| Sheila C. Bair | ü | ||||||||||
| Pierre Larochelle | ü | Mr. Larochelle is not independent due to his current advising role with Power Sustainable. | |||||||||
| Ann L. Payne | ü | ||||||||||
| Pierre-Olivier Perras | ü | Mr. Perras is not independent as he is an executive of Power Energy. | |||||||||
| Michel Ringuet | ü | ||||||||||
| Lorenzo Roccia | ü | ||||||||||
| Pierre Wilkie | ü | ||||||||||
Lion’s Board believes that given its size and structure, it is able to facilitate independent judgement in carrying out its responsibilities. To enhance such independent judgement, the independent members of Lion’s Board may meet in the absence of non-independent directors and members of management. The independent directors of the Company consider, at each meeting, whether an in camera meeting without the non-independent directors and members of management would be appropriate, and may hold an in camera meeting where appropriate. In addition, any independent director may, at any time, if considered necessary to facilitate open and candid discussion among the independent directors, call a meeting or request an in camera session without management and non-independent directors. During Fiscal 2021, the Board of Directors did not hold any in camera sessions, and the Audit Committee held three (3) in camera sessions where members met without non-independent directors and members of management.
In addition, considering that the Chairman of the Board of Directors is considered non-independent, Mr. Michel Ringuet was appointed by the Board of Directors to serve as independent Lead Director in order to ensure appropriate leadership for the independent directors. Lion’s Board adopted a written position description for the Lead Director. His primary functions are to provide leadership to the directors to enhance the effectiveness and independence of the Board of Directors, to facilitate the efficient functioning of the Board of Directors, to ensure that there is an effective relationship between management and the members of the Board of Directors and to advise the Chairman of the Board of Directors on the appropriate flow of information to the Board of Directors.
For purposes of managing any potential conflicts of interest, a director who has a material interest in a matter before Lion’s Board or any committee on which he or she serves is required to disclose such interest as soon as the director becomes aware of it. In situations where a director has a material interest in a matter to be considered by Lion’s Board or any committee on which he or she serves, such director may be required to absent himself or herself from the meeting while discussions and voting with respect to the matter are taking place. Directors are also required to comply with the relevant provisions of the Business Corporations Act (Québec) regarding conflicts of interest.
Directorship of Other Reporting Issuers
Some members of the Company’s Board of Directors are also members of the boards of other public companies. See "Business of the Meeting - Election of Directors - Description of Proposed Director Nominees". The Board of Directors has not adopted a director interlock policy but is keeping informed of other public directorships held by its members. As at March 25, 2022, none of the Company’s directors served together on any other public company’s board of directors.
52Mandate of the Board of Directors
Lion’s Board is responsible for supervising the management of Lion’s business and affairs, including providing guidance and strategic oversight to management. The Board of Directors holds regularly scheduled meetings as well as ad hoc meetings from time to time. Lion’s Board has adopted a formal mandate that includes the following:
•ensuring a strategic planning process is in place and reviewing, on at least an annual basis, the principal business objectives for the Company and monitoring the Company’s success in implementing the strategy and achieving its goals;
•appointing the Chief Executive Officer of the company and developing the corporate goals and objectives that the Chief Executive Officer is responsible for meeting, and reviewing the performance of the Chief Executive Officer against such goals and objectives;
•overseeing communications with shareholders, other stakeholders, analysts and the public, including the adoption of measures for receiving feedback from stakeholders and reporting to shareholders as necessary; and
•monitoring the implementation of procedures, policies and initiatives relating to corporate governance, risk management, corporate social responsibility, health and safety, ethics and integrity.
Under its mandate, the Board of Directors is entitled, among other things, to delegate certain matters it is responsible for to Board of Directors' committees. The text of the Board of Director’s mandate is attached to this Circular as Schedule A.
Position Descriptions
Chairman of the Board of Directors and Committee Chairs
Lion’s Board adopted written position descriptions for the Chairman of Lion’s Board and the chairperson of the board committees. Their primary roles are to manage the affairs of Lion’s Board or of such relevant committee, including ensuring Lion’s Board or such committee is organized properly, functions effectively and meets its obligations and responsibilities. Each committee has a chairperson that conducts the affairs of the applicable committee in accordance with the charter of such committee. In addition, Lion’s Board adopted a written position description for the Lead Director of the Board of Directors as further described in "Disclosure of Corporate Governance Practices—Board of Directors—Independence".
Lion’s Board and CEO—Founder have not developed at this time a written position description for the CEO—Founder or for other executive officers. The role of the CEO—Founder is delineated on the basis of customary practice. Lion’s Board considers that the role and responsibilities of the CEO—Founder are to develop the company’s strategic plans and policies and recommending such plans and policies to Lion’s Board, provide executive leadership, oversee a comprehensive operational planning and budgeting process, supervise day-to-day management, report relevant matters to Lion’s Board, facilitate communications between Lion’s Board and the senior management team, and identify business risks and opportunities and manage them accordingly, and has communicated the same to the CEO—Founder.
Nomination of Directors
Pursuant to the Nomination Rights Agreement, each of Power Energy and 9368-2672 will, for so long as it and its affiliates collectively hold at least 20% of the outstanding Common Shares (on a non-diluted basis), be entitled to designate a number of director nominees equal to the product of (rounding to the nearest whole number) (i) the percentage of the outstanding Common Shares held by it (on a non-diluted basis) multiplied by (ii) the size of Lion’s Board. In addition, 9368-2672 will, for so long as it and its
53affiliates collectively hold at least 5% of the outstanding Common Shares (on a non-diluted basis), be entitled to designate (i) for so long as Marc Bedard serves as chief executive officer of Lion, one director nominee (in addition to Marc Bedard, who will be appointed to Lion’s Board for so long as he serves as chief executive officer thereof) and (ii) at any other time, Marc Bedard as a director nominee. See "Disclosure of Corporate Governance Practices ― Nomination Rights Agreement" for a summary description of the rights contained in the Nomination Rights Agreement.
The Nominating and Corporate Governance Committee is responsible for Board and committee succession planning and for making annual recommendations to the Board regarding the size and composition of its committees. It also proposes new nominees for election as director. The Nominating and Corporate Governance Committee will consider the competencies and skills that the Board considers to be necessary for the Board as a whole to possess, the competencies and skills that the Board considers each existing director to possess, and the competencies and skills each new nominee will bring to the boardroom in making recommendations for director nominations.
Board Evaluation
Lion’s Nominating and Corporate Governance Committee is responsible for overseeing the evaluation of Lion’s Board and its committees and, in that respect, the Committee assesses the contribution of each director on an ongoing basis and in light of the opportunities and risks facing the Company, as well as the skills and competencies requirement of directors. Moreover, each director is required, annually, to complete a confidential written evaluation with respect to the performance of the Board and the performance of its Committees.
Orientation and Continuing Education
The Company recognizes ongoing director education as an important component of good governance. Directors ensure to be informed about current best practices, emerging trends in corporate governance and relevant regulatory developments. The Nominating and Corporate Governance Committee is responsible for overseeing director continuing education designed to maintain or enhance the skills and abilities of the directors and to ensure that their knowledge and understanding of Lion’s business remains current. The chairperson of each committee is responsible for coordinating orientation and continuing director development programs relating to the committee’s mandate.
Pursuant to the Company's orientation program, each new director will meet upon his or her election to the Board of Directors, separately with the Chairman, individual directors and members of the senior management to familiarize himself or herself with the nature and operation of the Company and its business, the role of Lion's Board and its committees as well as the expected contribution that an individual director is expected to make. A new director will be presented with the Board of Directors policies and procedures, the Company’s current strategic plan, organizational structure, operations, governance and compensation plans, financial plan and capital plan, the most recent core public disclosure documents and other materials relating to key business issues. A new director will also be visiting selected facilities.
Director Term Limits and Other Mechanisms of Board Renewal
The Nominating and Corporate Governance Committee is charged under its charter with selecting candidates for election as independent directors. See "Disclosure of Corporate Governance Practices ― Board of Directors Committees ― Nominating and Corporate Governance Committee".
Lion’s Board has not adopted director term limits or other automatic mechanisms of board renewal. Rather than adopting formal term limits, mandatory age-related retirement policies and other mechanisms of board renewal, the Nominating and Corporate Governance Committee will seek to maintain the composition of Lion’s Board in a way that provides, in the judgement of Lion’s Board, the best mix of skills and experience to provide for Lion’s overall stewardship.
54Board of Directors Committees
Lion’s Board has three standing committees: the Audit Committee, the Human Resources and Compensation Committee, and the Nominating and Corporate Governance Committee. Each of the committees operates under its own written charter adopted by Lion’s Board, each of which is available on Lion’s website.
Audit Committee
Lion’s Audit Committee is composed of Michel Ringuet, Sheila C. Bair and Pierre Wilkie, with Michel Ringuet serving as chairperson of the committee. Lion’s Board has determined that all such directors meet the independence requirements under the NYSE Listing Rules, NI 52-110 and under Rule 10A-3 of the Exchange Act. Lion complies with NI 52-110 by relying on the exemptions for U.S. listed issuers thereunder. The relevant experience of each member of the Audit Committee is described as part of their respective biographies. See "Business of the Meeting - Election of Directors - Description of Proposed Director Nominees".
The Board of Directors has adopted a written charter describing the mandate of the Audit Committee. The Audit Committee’s responsibilities include:
•appointing, compensating, retaining and overseeing the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services and reviewing and appraising the audit efforts of Lion’s independent accountants;
•pre-approving audit and permissible non-audit services, and the terms of such services, to be provided by Lion’s independent registered public accounting firm;
•establishing procedures for (i) the receipt, retention and treatment of complaints regarding accounting, internal accounting controls or auditing matters and (ii) confidential and anonymous submissions by Lion’s employees of concerns regarding questionable accounting or auditing matters;
•engaging independent counsel and other advisers, as necessary and determining funding of various services provided by accountants or advisers retained by the committee;
•reviewing Lion’s financial reporting processes and internal controls;
•establishing, overseeing and dealing with issues related to the Company’s code of ethics for managers and financial officers;
•reviewing and approving related-party transactions or recommending related-party transactions for review by independent members of Lion’s Board; and
•providing an open avenue of communication among the independent accountants, financial and senior management and Lion’s Board.
Additional information relating to the Audit Committee can be found under the Company's profiles on SEDAR at www.sedar.com and on EDGAR at www.sec.gov and on the Company's website at ir.thelionelectric.com.
Human Resources and Compensation Committee
The Human Resources and Compensation Committee is currently composed of Messrs. Wilkie, Perras and Ringuet, with Mr. Wilkie acting as chairperson. The primary purpose of the Human Resources and Compensation Committee, with respect to compensation, is to assist Lion’s Board in fulfilling its
55oversight responsibilities and to make recommendations to Lion’s Board with respect to the compensation of Lion’s directors and executive officers.
The Board of Directors has adopted a written charter describing the mandate of the Human Resources and Compensation Committee. The principal responsibilities and duties of the Human Resources and Compensation Committee include:
•establishing and reviewing Lion’s overall compensation philosophy;
•evaluating Lion’s CEO—Founder’s and other executive officer’s performance in light of the goals and objectives established by Lion’s board of directors and, based on such evaluation, with appropriate input from other independent members of Lion’s board of directors, determining the CEO—Founder’s and other executive officer’s compensation;
•reviewing management’s assessment of existing management resources and succession plans;
•administering Lion’s equity-based and incentive compensation plans and making recommendations to Lion’s Board about amendments to such plans and the adoption of any new employee incentive compensation plans;
•reviewing executive compensation disclosure before the company publicly discloses this information; and
•engaging independent counsel and other advisers, as necessary and determining funding of various services provided by advisers retained by the committee.
The Company's approach to compensation is described under "Business of the Meeting - Compensation of Directors" and "Business of the Meeting - Executive Compensation ― Discussion and Analysis".
Nominating and Corporate Governance Committee
Lion’s Nominating and Corporate Governance Committee is composed of Sheila C. Bair, Pierre-Olivier Perras and Lorenzo Roccia, with Sheila C. Bair serving as chairperson of the committee. The Board of Directors has adopted a written charter describing the mandate of the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee’s responsibilities include:
•developing and recommending to Lion’s Board criteria for board and committee membership;
•recommending to Lion’s Board the persons to be nominated for election as directors and to each of the committees of Lion’s Board;
•assessing the independence of directors within the meaning of securities laws and stock exchange rules as applicable;
•considering resignations by directors submitted pursuant to Lion’s majority voting policy, and making recommendations to Lion’s Board as to whether or not to accept such resignations;
•reviewing and making recommendations to the board of directors in respect of Lion’s corporate governance principles;
•providing for new director orientation and continuing education for existing directors on a periodic basis;
56•performing an evaluation of the performance of the committee; and
•overseeing the evaluation of Lion’s Board and its committees.
The following matrix provides a summary of the competencies, skills, experience and expertise that each current director or proposed director nominee possesses as well as other information that may be relevant for purposes of identifying new directors.
Finance and Accounting | Budget Oversight | Environment Expertise | Strategic Planning | Industry Expertise | Human Resources | Business and Management | Marketing and Communications | Legal and Corporate Governance | Risk Management | Information Technology and Cybersecurity | Government relations | |||||||||||||||||||||||||||
| Sheila C. Bair | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||||||||
| Marc Bedard | ü | ü | ü | ü | ü | ü | ||||||||||||||||||||||||||||||||
| Pierre Larochelle | ü | ü | ü | ü | ü | ü | ü | ü | ||||||||||||||||||||||||||||||
| Ann L. Payne | ü | ü | ü | ü | ||||||||||||||||||||||||||||||||||
| Pierre-Olivier Perras | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||||||||
| Michel Ringuet | ü | ü | ü | ü | ü | ü | ||||||||||||||||||||||||||||||||
| Lorenzo Roccia | ü | ü | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||||||
| Pierre Wilkie | ü | ü | ü | ü | ü | |||||||||||||||||||||||||||||||||
Code of Ethics
The Company has a written code of business conduct and ethics (the "Code of Conduct") applicable to all of its directors, officers and employees. The Code of Conduct sets out Lion’s fundamental values and standards of behavior that are expected from Lion’s directors, officers and employees with respect to all aspects of Lion’s business. The objective of the Code of Conduct is to provide guidelines for maintaining Lion’s integrity, reputation and honesty with a goal of honoring others’ trust in Lion at all times. The Code of Conduct sets out guidance with respect to conflicts of interest, protection and proper use of corporate assets and opportunities, confidentiality of corporate information, fair dealing with third parties, compliance with laws and reporting of any illegal or unethical behavior.
Lion’s audit committee is responsible for reviewing and evaluating the Code of Conduct periodically and recommends any necessary or appropriate changes thereto to Lion’s Board for consideration. The audit committee also assists Lion’s Board with the monitoring of compliance with the Code of Conduct and is responsible for considering any waivers of the Code of Conduct (other than waivers applicable to Lion’s directors or executive officers, which shall be subject to review by Lion’s Board as a whole).
The Company has a Whistleblower Hotline which employees and others can access by phone or online, and choose to report anonymously or not at their option. The chairperson of the Audit Committee is automatically notified of any whistleblower reports and the Audit Committee is provided with periodic updates from management on any whistleblower reports that may have been reported and how they were investigated and resolved.
The Code of Conduct is available under the Company's profile on SEDAR at www.sedar.com, on EDGAR at www.sec.gov. and on the Company's website at ir.thelionelectric.com.
57Insider Trading Policy
Lion has adopted an insider trading policy which prohibits its executives, other employees and directors from: (i) trading in its securities while in possession of material undisclosed information about Lion; and (ii) entering into certain derivative-based transactions that involve, directly or indirectly, securities of Lion, during a restricted period.
Diversity
Lion recognizes the importance and benefit of having a board of directors and senior management composed of highly talented and experienced individuals having regard to the need to foster and promote diversity among board members and senior management with respect to attributes such as gender, ethnicity and other factors. In support of this goal, the Nominating and Corporate Governance Committee will, when identifying candidates to nominate for election to Lion’s Board or appoint as senior management or in its review of senior management succession planning and talent management:
•consider individuals who are highly qualified, based on their talents, experience, functional expertise and personal skills, character and qualities having regard to Lion’s current and future plans and objectives, as well as anticipated regulatory and market developments;
•consider criteria that promote diversity, including with regard to gender, ethnicity, and other dimensions;
•consider the level of representation of women on its board of directors and in senior management positions, along with other markers of diversity, when making recommendations for nominees to Lion’s Board or for appointment as senior management and in general with regard to succession planning for Lion’s Board and senior management; and
•as required, engage qualified independent external advisors to assist Lion’s Board in conducting its search for candidates that meet the board of directors’ criteria regarding skills, experience and diversity.
The Nominating and Corporate Governance Committee considers the level of representation of directors from diverse backgrounds on the Board of Directors by overseeing the selection process and ensuring that diverse candidates, including women and racial and ethnic minorities, are included in the list of candidates proposed to the Board of Directors as potential directors. The Nominating and Corporate Governance Committee also sets measurable objectives for achieving diversity. In connection with these objectives, the Board of Directors has set the following two targets to be achieved at or prior to the Company's next annual meeting of shareholders to be held in 2023: (i) at least 30% of directors on the Board of Directors should be women and (ii) at least one director should be a minority. Lion currently has one woman on its board of directors and one woman as executive officer, representing 14.3% of Lion’s directors and 16.7% of its senior management team. Two (2) of the eight (8) directors nominees being proposed for election at this year’s Meeting are women. Assuming the election of all nominated directors at the Meeting, women would represent 25% of the Board of Directors.
Nomination Rights Agreement
Pursuant to the Nomination Rights Agreement, each of Power Energy and 9368-2672 were granted certain rights to nominate members of Lion’s Board (including, in certain cases, members of committees of Lion’s Board) for so long as it holds a requisite percentage of the total voting power of Lion. More specifically, each of Power Energy and 9368-2672 will, for so long as it and its affiliates collectively hold at least 20% of the outstanding Common Shares (on a non-diluted basis), be entitled to designate a number of director nominees equal to the product of (rounding to the nearest whole number) (i) the percentage of the outstanding Common Shares held by it (on a non-diluted basis) multiplied by (ii) the size of Lion’s Board.
58The foregoing rights of Power Energy and 9368-2672 to so designate director nominees will be submitted for approval of the Shareholders at the first annual meeting of the Shareholders to be held following the fifth anniversary of the date of the Nomination Rights Agreement, and at every fifth annual meeting of the Shareholders thereafter. Failing approval by the Shareholders, such nomination rights will become void and shall have no further force or effect.
Notwithstanding any shareholder approval of the nomination rights described above, 9368-2672 will, for so long as it and its affiliates collectively hold at least 5% of the outstanding Common Shares (on a non-diluted basis), be entitled to designate (i) for so long as Marc Bedard serves as chief executive officer of Lion, one director nominee (in addition to Marc Bedard, who will be appointed to Lion’s Board for so long as he serves as chief executive officer thereof) and (ii) at any other time, Marc Bedard as a director nominee.
At least one of each of Power Energy and 9368-2672’s director nominees (other than Marc Bedard), must be an independent director as determined by the Nominating and Corporate Governance Committee, and all director nominees of Power Energy and 9368-2672 must also receive the favorable recommendation of the Nominating and Corporate Governance Committee, having regard to the characteristics, experience, skill set, independence and diversity desired by Lion’s Board. In the even that any of Power Energy or 9368-2672’s director nominees are disqualified for failing to satisfy the foregoing criteria, the affected shareholder shall be entitled to designate a replacement director nominee.
The nomination rights contained in the Nomination Rights Agreement provide that Power Energy and 9368-2672, at the relevant time, will cast all votes to which they are entitled to elect directors designated in accordance with the terms and conditions of the Nomination Rights Agreement.
The Nomination Rights Agreement further provides that for so long as Power Energy has the right to designate a director nominee, it shall have the right to designate one of its director nominees as the Chairman of Lion’s Board. In the event that such designated director nominee is not an independent director, the remaining directors will select a lead independent director from amongst the independent directors of Lion’s Board.
Each of Power Energy and 9368-2672 also has the right under the Nomination Rights Agreement to appoint one member of each committee of Lion’s Board, except that neither Marc Bedard or 9368-2672 has the right to appoint any director to the Human Resources and Compensation Committee, the composition of which shall be determined by the Board of Directors in its sole discretion.
The foregoing description of the Nomination Rights Agreement is qualified in its entirety by reference to the full text of the form of Nomination Rights Agreement, a copy of which can be found under the Company's profiles on SEDAR at www.sedar.com and EDGAR at www.sec.gov.
Majority Voting Policy
The Company does not employ the practice of “slate voting” and, as such, at meetings of shareholders where directors are to be elected, shareholders of the Company are entitled to vote FOR, or to WITHHOLD from voting, separately for each director nominee. The Company ensures that the number of shares voted in favor or withheld from voting for each director nominee is recorded and promptly disclosed after the Meeting.
The Board of Directors adopted a majority voting policy in order to promote enhanced director accountability. The policy stipulates that, in an “uncontested election” (as defined below) of directors, any nominee for director who receives a greater number of votes withheld from his or her election than votes for his or her election will promptly tender his or her resignation to the Chair of the Board of Directors following the shareholder's meeting. Following receipt of such resignation, the Nominating and Corporate Governance Committee will consider such resignation, and recommend to the Board whether or not to accept it.
59The Board shall act on the Nominating and Corporate Governance Committee's recommendation within 90 days after the date of the relevant shareholders' meeting. The Board will accept the resignation absent exceptional circumstances that would warrant the director to continue to serve on the Board. A press release disclosing the Board of Directors’ determination (and the reasons for rejecting the resignation, if applicable) shall be promptly issued. A copy of such press release shall be sent concurrently to the TSX and the NYSE. The resignation will become effective when accepted by the Board of Directors.
If a resignation is accepted, the Board of Directors may, in accordance with the provisions of the Business Corporations Act (Québec), the constating documents of the Company, applicable securities laws and regulation and applicable agreements, including the Nomination Rights Agreement, appoint a new director to fill any vacancy created by the resignation, reduce the size of the Board, leave any vacancy open until the next annual general meeting of the shareholders, call a special meeting of shareholders at which nominees will be presented to fill any vacancies, or any combination of the above.
The policy only applies in circumstances involving an uncontested election of directors. For purposes of the majority voting policy, an “uncontested election” means an election where the number of nominees for directors equals the number of directors to be elected.
Advance Notice Requirements for Director Nominations
The Company's by-laws contain an advance notice provision (the "Advance Notice By-law") for the purpose of providing shareholders, directors and management of the Company with a clear framework for nominating directors of the Company in connection with any annual or special meeting of shareholders.
The purpose of the Advance Notice By-law is to (i) ensure that all shareholders receive adequate notice of director nominations and sufficient time and information with respect to all nominees to make appropriate deliberations and register an informed vote; and (ii) facilitate an orderly and efficient process for annual or special meetings of shareholders of the Company. The Advance Notice By-law fixes the deadlines by which holders of record of Common Shares must submit director nominations to the Company prior to any annual or special meeting of shareholders and sets forth the information that a shareholder must include in a timely written notice to the Company for any director nominee to be eligible for election at such annual or special meeting of shareholders. In the case of an annual meeting of shareholders (including an annual and special meeting) a notice of nomination by a nominating shareholder must be made not less than thirty (30) nor more than sixty (60) days prior to the date of the meeting, provided, however, that in the event that the meeting is to be held on a date that is less than fifty (50) days after the date (the "Notice Date") on which the first public announcement of the date of the meeting was made, notice by a nominating shareholder must be made not later than the close of business on the tenth (10th) day following the Notice Date. In the case of a special meeting (which is not also an annual meeting) of shareholders called for the purpose of electing directors (whether or not also called for other purposes), a notice of nomination by a nominating shareholder must be made not later than the close of business on the fifteenth (15th) day following the day on which the first public announcement of the date of the meeting was made.
The by-laws of the Company are available under the Company's profiles on SEDAR at www.sedar.com and EDGAR at www.sec.gov.
Indemnification and Insurance
The Company has implemented a director and officer insurance program and has entered into indemnification agreements with each of its directors and executive officers. The indemnification agreements generally require that the Company indemnify and hold the indemnitees harmless to the greatest extent permitted by law for liabilities arising out of the indemnitees’ service to the Company as directors and executive officers, provided that the indemnitees acted honestly and in good faith and in a manner the indemnitees reasonably believed to be in or not opposed to the Company’s best interests and, with respect to criminal and administrative actions or proceedings that are enforced by monetary
60penalty, the indemnitees had no reasonable grounds to believe that his or her conduct was unlawful. The indemnification agreements also provide for the advancement of defence expenses to the indemnitees by the Company.
61ADDITIONAL INFORMATION
Indebtedness of Directors and Executive Officers
None of the directors or proposed director nominees, executive officers, employees, former directors, former executive officers or former employees of the Company or any of its subsidiaries, and none of their associates, is or has, at any time since the beginning of the Company’s most recently completed fiscal year, been indebted to the Company or any of its subsidiaries. Additionally, the Company or any of its subsidiaries has not provided any guarantee, support agreement, letter of credit or other similar agreement or understanding in respect of any indebtedness of any such person to any person or entity, except for routine indebtedness as defined under applicable securities legislation.
Interest of Certain Persons and Companies in Matters to be Acted Upon
No director, proposed director nominee or officer of the Company, or any person who has been a director or officer of the Company at any time since the beginning of the Company’s last fiscal year, nor any associate or affiliate of any such person, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting, other than as set forth herein.
Interest of Informed Persons in Material Transactions
Other than as set out below or as described elsewhere in this Circular, management of the Company is not aware of any material interest, direct or indirect, of any informed person of the Company, any proposed director nominee, or any associate or affiliate of any informed person or proposed director nominee, in any transaction since the commencement of the Company’s most recently completed fiscal year or in any proposed transaction that has materially affected or would materially affect the Company or any of its subsidiaries.
PIPE Financing
Immediately prior to closing of the business and plan of reorganization (the "Business Combination") between a wholly-owned subsidiary of Lion and Northern Genesis Acquisition Corp. which was completed on May 6, 2021, Lion completed a private placement (the "PIPE Financing") pursuant to which a number of investors agreed to purchase, and Lion agreed to sell to such investors, an aggregate of 20,040,200 Common Shares for an aggregate purchase price of $200,402,000. In connection with the PIPE Financing, Lion entered into subscription agreement with Power Energy pursuant to which Power Energy purchased, subject to the terms and conditions contained therein, a total of 1,662,500 Common Shares for a total purchase price of $16,625,000. In addition, Lion entered into subscription agreements with certain of Lion’s shareholders, directors and/or officers pursuant to which such subscribers purchased, directly or indirectly, subject to the terms and conditions contained therein, Common Shares at a purchase price of $10.00 per share. Such Common Shares were acquired upon the same terms and conditions as the Common Shares acquired by all other subscribers in the PIPE Financing.
Registration Rights Agreement
Effective as of closing of the Business Combination, Lion entered into a registration rights agreement (the "Registration Rights Agreement") pursuant to which, subject to the terms and conditions contained therein, each of Power Energy, 9368-2672 and Amazon.com NV Investment Holdings LLC (the "Warrantholder") were granted certain rights with respect to the registration or qualification by prospectus in the United States and/or Canada of the sale of the Common Shares held by them. A summary of the terms of the Registration Rights Agreement is described in the Section entitled “Material Contracts” of the Company’s annual report on Form 20-F dated March 29, 2022 and which is available under the Company's profiles on SEDAR at www.sedar.com and EDGAR at www.sec.gov.
62Available Information
The Company is required under applicable Canadian and U.S. securities laws to file various documents, including financial statements. Financial information is provided in the audited annual consolidated financial statements of the Company for Fiscal 2021, together with the notes thereto, the Report of Independent Registered Public Accounting Firm thereon and the related management’s discussion and analysis. Copies of these documents and additional information concerning the Company can be found under the Company's profiles on SEDAR at www.sedar.com and EDGAR at www.sec.gov. Copies of the Company’s audited annual consolidated financial statements and management’s discussion and analysis can also be obtained upon request made to the Vice President, Investor Relations and Sustainable Development of the Company, Ms. Isabelle Adjahi, at the head office: 921, chemin de la Rivière du Nord, Saint-Jerome (Québec), Canada, J7Y 5G2.
Shareholder Proposals for Next Annual Meeting of Shareholders
The Company received no shareholder proposal for inclusion in this Circular. The Company will include proposals from shareholders that comply with applicable laws in next year’s management proxy circular for its next annual shareholder meeting to be held in respect of the fiscal year ending on December 31, 2022. Shareholder proposals must be received prior to the close of business on December 30, 2023 and be sent to the Chief Legal Officer and Corporate Secretary of the Company, Mr. François Duquette, at the head office: 921, chemin de la Rivière du Nord, Saint-Jerome (Québec), Canada, J7Y 5G2.
Approval by Directors
The Board of Directors of the Company approved the contents of this Circular and authorized it to be made available to and/or sent, as applicable, to each shareholder of the Company who is eligible to receive notice of, and vote his or her Common Shares at, the Meeting, as well as to the Company's independent auditor and each of its directors.
Dated at Saint-Jerome, this 29th day of March, 2022.
François Duquette (Signed)
Chief Legal Officer and Corporate Secretary
63SCHEDULE A
THE LION ELECTRIC COMPANY MANDATE OF THE BOARD OF DIRECTORS | ||
Introduction
The Board of Directors (the "Board") of The Lion Electric Company (the "Company") is responsible for exercising all the powers necessary to manage, or supervise the management of, the business and affairs of the Company. Its members (the "Directors") are elected by the shareholders of the Company. The purpose of this mandate of the Board (the "Mandate") is to describe the primary duties and responsibilities of the Board, as well as some of the policies and procedures that apply to the Board in discharging its duties and responsibilities.
Certain aspects of the composition and organization of the Board are prescribed and/or governed by the Business Corporations Act (Québec) and the constating documents of the Company, and applicable agreements, including the nomination rights agreement dated May 6, 2021 (the "Nomination Rights Agreement").
Duties and Responsibilities of the Board
Pursuant to applicable laws, in exercising their powers and discharging their duties, Directors are duty-bound toward the Company to act with prudence and diligence, honesty and loyalty and in the interest of the Company. In furtherance of its responsibility and purpose, the primary duties and responsibilities of the Board include:
Corporate Strategy and Budgets
•ensuring a strategic planning process is in place and reviewing, on at least an annual basis, the principal business objectives for the Company, which consider, among other things, the opportunities and risks of the business;
•approving the Company’s annual operating and capital budgets;
•monitoring the Company’s success in implementing the strategy and achieving its goals;
Risk Management
•identifying, in conjunction with management, the principal risks applicable to the Company, and overseeing management’s implementation of appropriate systems to seek to effectively monitor, manage and mitigate the impact of such risks, provided that pursuant to its duty to oversee the implementation of effective risk management policies and procedures, the Board may delegate to applicable Board committees the responsibility for assessing and implementing appropriate policies and procedures to address specified risks, including delegation of risk management to committees of the Board;
•ensuring adequate disclosure of how the Board oversees risk;
•overseeing the Company’s corporate governance policies and practices and their disclosure in public disclosure documents;
•monitoring the size and composition of the Board, determining the appropriate qualifications and criteria for the selection of Board members and overseeing the nomination process for new Directors, in each case subject to the terms of the Nomination Rights Agreement or any other agreement among shareholders of the Company and the Company, as applicable;
•developing a succession plan for the Directors;
•developing position descriptions for the chair of the Board and the chair of each committee of the Board;
•developing a process for the assessment of the effectiveness and contribution of the Board, the committees of the Board and the individual Directors;
•ensuring that all new Directors receive a comprehensive orientation with respect to the role of the Board and its committees and nature and operations of the Company’s
64business 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);
•providing continuing education opportunities for all Directors, so that individuals may maintain or enhance their skills and abilities as Directors, as well as ensuring their knowledge and understanding of the Company’s business remains current;
•adopting and monitoring compliance with key corporate policies and procedures designed to ensure that the Company, its Directors, officers and employees comply with all applicable laws, rules and regulations and conduct their business ethically and with honesty and integrity;
•monitoring the implementation of procedures and initiatives relating to corporate social and environmental responsibilities, and health and safety rules and regulations in the organization;
Chief Executive Officer, Officers and Compensation and Benefits
•appointing the Chief Executive Officer (the "CEO") and developing the corporate goals and objectives that the CEO is responsible for meeting, and reviewing the performance of the CEO against such goals and objectives;
•developing, together with the CEO, a position description for the CEO, which includes delineation of management’s responsibilities;
•approving the appointment of the senior officers of the Company and the assessment of each senior officer’s contribution to the achievement of the Company’s strategy;
•evaluating the performance of the CEO and other executive officers against the objectives established by the Board;
•approving the compensation of the senior executives of the Company upon recommendation of the Human Resources and Compensation Committee;
•providing stewardship in terms of succession planning, and ensuring that the Company has effective programs in place for leadership development and the appointment, training and supervision of management;
•establishing the goals and objectives relevant to the compensation philosophy, overseeing executive compensation and evaluating risks associated with executive compensation and incentive plans;
•approving the Company’s compensation policy for Directors;
•taking steps to satisfy itself as to the integrity of the senior executives of the Company and that the senior executives create a culture of integrity throughout the organization;
Financial Reporting and Transactions
•approving the Company’s financial statements and other financial information filed with applicable securities regulators;
•appointing, subject to approval of shareholders, and removing of the Company’s auditor;
•monitoring internal controls and management information systems, and reviewing related procedures and reporting;
•reviewing, approving and overseeing the Company’s disclosure controls and procedures;
•serving as an advisor to management and reviewing and approving major business decisions including material transactions outside the ordinary course of business and those matters which the Board is required to approve under the Company’s governing statute, including the payment of dividends, issuances, purchases and redemptions of securities, and acquisitions and dispositions of material capital assets;
Legal Requirements and Communications
•overseeing compliance with disclosure requirements applicable to the Company, including disclosure of material information in accordance with applicable securities laws and stock exchange rules;
65•adopting a disclosure policy for the Company and overseeing communications with shareholders, other stakeholders, analysts and the public, including the adoption of measures for receiving feedback from stakeholders and reporting to shareholders as necessary;
•overseeing the adequacy of the Company’s processes to ensure compliance by the Company with applicable legal and regulatory requirements;
Review of Mandate and Delegation
The Board may, from time to time, permit departures from the terms of this Mandate, either prospectively or retrospectively. This Mandate is not intended to give rise to civil liability on the part of the Company or its Directors or officers to shareholders, securityholders, customers, suppliers, competitors, employees or other persons, or to any other liability whatsoever on their part. The Board may review and recommend changes to the Mandate from time to time and the Nominating and Corporate Governance Committee may periodically review and assess the adequacy of this Mandate and recommend any proposed changes to the Board for consideration.
The Board shall delegate to the CEO, other officers and management personnel appropriate powers to manage the business and affairs of the Company. The Board may delegate, subject to applicable laws, certain matters it is responsible for to committees of the Board, presently consisting of the Audit Committee, the Nominating and Corporate Governance Committee and the Human Resources and Compensation Committee.
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