Exhibit
99.3
Denison Mines
Corp.
Annual General
Meeting of Shareholders
Thursday, June
25, 2020
Notice of Meeting
&
Management
Information Circular
Dated May 12,
2020
Dear Denison
Shareholder,
On behalf of the
Board of Directors, I hereby provide notice to you of
Denison’s annual general meeting of shareholders to be held
on Thursday, June 25, 2020 at the offices of the Corporation, 1100
– 40 University Avenue, Toronto, Ontario,
Canada.
Given the
extraordinary social and economic impacts of the COVID-19 pandemic,
including governmental recommendations and/or orders for physical
distancing and restrictions on non-essential travel and business
activities, we request that
shareholders do not attend the meeting in person. As at the
date of this notice, the Ontario government has banned gatherings
of more than 5 people. While such restrictions, and others of the
like, may change by the date of the meeting, we believe it is in
the best interests of our shareholders, directors and employees for
shareholders to communicate their votes and their opinions with the
Corporation in advance of, instead of at, the meeting.
It is important to vote your shares. The
attached Management Information Circular contains important
information about the matters to come before the meeting, how you
can ask questions of the directors and/or management and how you
can vote in advance of the meeting.
2019 represented
a year of transition for Denison, as we completed a 23 week
first-of-its-kind In-Situ Recovery (“ISR”) field test
program as an initial step in aggressively de-risking the
application of ISR mining method for the Phoenix uranium deposit on
the Company’s flagship Wheeler River project. This follows
the completion of the highly successful Pre-Feasibility Study
(“PFS”) for Wheeler River, and the Board's decision to
advance the project into permitting, in late 2018. We also launched
the Environmental Assessment process in 2019 and received a
positive project scoping decision from the Federal regulators.
After this work, the prospect of successfully bringing ISR mining
to the Athabasca Basin is higher than it has ever
been.
However, due to
the siginificant social and ecoonomic disruption caused by the
COVID-19 pandemic, Denison recently decided to temporarily suspend
further environmental assessment and other project evaluation
activities. We made this decision in the interest of the safety of
our staff and local communities and to exercise prudent financial
discipline. Unfortunately, the duration of the suspension is
currently unknown.
Despite this, the
management team continues to focus on positioning Denison as a high
leverage uranium development company, poised to become
Canada’s next uranium producer.
The Board of
Directors and I thank you for your continued support and interest
in Denison, particularly in this difficult time.
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What’s
Inside
Notice of Meeting
Management Information
Circular… 1
Business of the
Meeting
.….… 5
● Receiving the Consolidated Financial
Statements
● Reappointment of the Auditor
● Election of Directors
●
Non-binding Advisory Vote on Executive Compensation
Denison’s Corporate
GovernancePractices ...14
Director
Compensation
………..…23
Executive
Compensation
………...28
Equity Compensation
Plans ……...43
●
Option Plan
●
Share Unit Plan
Additional Information
....48
Appendices:
A - Board of
Directors’ Mandate ...49
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Sincerely,
David
Cates,
Director,
President & Chief Executive Officer
NOTICE OF ANNUAL
GENERAL MEETING OF SHAREHOLDERS
You are hereby given notice of Denison Mines
Corp.’s Annual General Meeting of
Shareholders.
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When
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Where
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Thursday, June 25, 2020
9:30 a.m. Meeting
There will be no reception
or refreshments in advance
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The offices of the
Corporation
1100 – 40 University
Avenue,
Toronto, Ontario M5J 1T1
Please
plan to vote in advance of the meeting and not attend in
person
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The purpose of the Meeting
is:
(a) to receive the consolidated financial
statements of Denison Mines Corp. for the year ended December 31,
2019, along with the auditor’s report on the
statements;
(b) to reappoint the auditor for the
upcoming year and to authorize the directors to fix the
remuneration of the auditor;
(c) to elect eight directors to the Board
for the upcoming year;
(d) to consider a non-binding advisory
resolution on the Company’s approach to executive
compensation; and
(e) to transact such other business as may
properly come before the Meeting.
If
you held shares in Denison Mines Corp. on May 6, 2020, you are
entitled to receive notice of and vote at this Meeting or any
postponement or adjournment of it.
Your vote is
important. Given the extraordinary social and economic
impacts of the COVID-19 pandemic, including governmental
recommendations and/or orders for social distancing and
restrictions on non-essential travel and business activities,
we
request that shareholders do not attend the meeting in
person. We believe it is in the best interests of our
shareholders, directors and employees for shareholders to
communicate their votes and their opinions with the Corporation in
advance of, instead of at, the meeting.
This notice is accompanied by the Management
Information Circular which describes who can vote, how to vote, and
what the Meeting will cover. We recommend you refer to the Annual
General Meeting page of the Corporation’s website at
www.denisonmines.com
for the most up-to-date information regarding the meeting and as a
method to ask questions of the directors and/or management in
advance of the meeting.
The 2019 Annual Report, including the audited
consolidated financial statements and related management’s
discussion and analysis for the year ended December 31, 2019, has
been mailed to those
shareholders who requested a copy. This information is also
available on Denison’s website at www.denisonmines.com, on the
System for Electronic Document Analysis and Retrieval
(“SEDAR”) at
www.sedar.com, on
the Electronic Data Gathering, Analysis, and Retrieval system
(“EDGAR”) of the
United States Securities and Exchange Commission at www.sec.gov/edgar or by request
to the Corporate Secretary of the Company at 1100 - 40 University
Avenue, Toronto, Ontario M5J 1T1.
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2020 DENISON NOTICE OF
MEETING
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As
described in the “notice and access” notification
mailed to shareholders of the Company, Denison has opted to deliver
its Meeting materials to shareholders by posting them on its
website at www.denisonmines.com. The use
of this alternative means of delivery is more environmentally
friendly and more economical as it reduces the Company’s
paper and printing use and the Company’s printing and mailing
costs.
The Meeting materials will be available on the
Company’s website on May 19, 2020 and will remain on the
website for one full year. The Meeting materials will also be
available on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov/edgar
on May 19, 2020.
Shareholders who wish to receive paper copies of
the Meeting materials prior to the meeting may request copies from
the Company by calling 1-888-689-7842 or by sending an email to
info@denisonmines.com no
later than June 15, 2020.
Please vote by
using the proxy form or voting instruction form included
with the “notice and access” notification and return it
before 9:30 a.m. (Eastern Time) on June 23, 2020 in accordance with
the instructions provided.
Yours truly,
David Cates
Director, President & Chief Executive
Officer
Dated May 12, 2020
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2020
DENISON NOTICE OF
MEETING
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MANAGEMENT
INFORMATION CIRCULAR
ABOUT THIS
CIRCULAR
You have received
this Circular because you owned shares of Denison Mines Corp. on
May 6, 2020, the record date. As a Shareholder, you have the right
to vote at the Annual General Meeting of Shareholders on June 25,
2020 (the “Meeting”).
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Management
is soliciting your proxy for the Meeting.
Given the
extraordinary social and economic impacts of the COVID-19 pandemic,
including governmental recommendations and/or orders for physical
distancing and restrictions on non-essential travel and business
activities, we request that
shareholders do not attend the meeting in person. We believe
it is in the best interests of our shareholders, directors and
employees for shareholders to communicate their votes and their
opinions with the Corporation in advance of, instead of at, the
meeting.
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We recommend you refer to the
Annual General Meeting page of the Corporation’s website at
www.denisonmines.com for the most up-to-date information regarding
the meeting and as a method to ask questions of the directors
and/or management in advance of the meeting.
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This Circular
provides the information that you need to have your vote recorded
at the Meeting.
●
If you are a registered
holder of Shares, you have been sent a proxy form.
●
If your Shares are held by a
nominee, you may receive either a proxy form or voting instruction
form and should follow the instructions provided by the
nominee.
The Board of
Directors has approved the contents of this document and has
directed management to make it available to you. The information in
the Circular is given as of May 12, 2020 unless otherwise
noted.
Management’s
solicitation of proxies is being made by mail and electronic means,
at Denison’s expense. Proxies may also be solicited
personally or by telephone by directors, officers, employees and
agents of the Company.
In this Circular,
Denison or the Company means Denison Mines Corp.,
Shareholders means holders
of Denison’s common shares and Shares means Denison’s common
shares. All amounts are in Canadian
dollars, unless otherwise indicated. References to
USD$
mean United States
dollars.
VOTING
YOUR DENISON SHARES
We
kindly ask that Shareholders do not attend the Meeting in person,
and vote by other means.
Registered Shareholders
If you were a
registered Shareholder on the record date, you may vote in person
at the Meeting or give another person authority to represent you
and vote your Shares at the Meeting, as described below under
“Voting by Proxy”.
Non-Registered Shareholders
Your Shares may
not be registered in your name but in the name of a nominee, which
is usually a trust company, securities broker or other financial
institution. If your Shares are registered in the name of a
nominee, you are a non-registered Shareholder.
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2020 DENISON MANAGEMENT INFORMATION
CIRCULAR
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Your nominee is
entitled to vote the Shares held by it on the record date. Your
nominee is required to seek your instructions as to how to vote
your Shares. You may vote your Shares through your nominee or in
person.
To vote your
Shares through your nominee, you should follow the instructions of
your nominee with respect to the procedures to be followed for
voting. Generally, nominees will provide non-registered
Shareholders with either: (a) a voting instruction form for
completion and execution by you, or (b) a proxy form, executed by
the nominee and restricted to the number of Shares owned by you,
but otherwise uncompleted. These procedures are to permit
non-registered Shareholders to direct the voting of the Shares that
they beneficially own.
If you are a
non-registered Shareholder and would like to vote your Shares in
person at the Meeting, you should take the following
steps:
1. appoint
yourself as the proxyholder by writing your own name in the space
provided on the voting instruction form or proxy form,
and
2. follow
the nominee’s instructions for return of the executed form or
other method of response.
Do not otherwise complete the form.
Your vote, or your designate’s vote, will be taken at the
Meeting.
There are two
kinds of non-registered Shareholders (i) those who object to their
name being made known to the issuers of securities which they own,
known as objecting beneficial owners or “OBOs” and (ii) those who do not
object to their name being made known to the issuers of securities
they own, known as non-objecting beneficial owners or
“NOBOs”.
In accordance
with the requirements of National Instrument 54-101 of the Canadian
Securities Administrators, Denison has elected to send the notice
of meeting, this Circular and proxy form (collectively, the
“Meeting
Materials”) indirectly to the NOBOs.
Denison intends
to pay for intermediaries such as stockbrokers, securities dealers,
banks, trust companies, trustees and their agents and nominees
(“Intermediaries”) to forward the
Meeting Materials to OBOs.
Voting by Proxy
We are
encouraging all Shareholders to vote by using the proxy form or
voting instruction form provided, instead of attending in person. A
proxy must be in writing and must be executed by you or by your
attorney authorized in writing, unless you have chosen to complete
your proxy by telephone or the Internet, as described on the proxy
form or voting instruction form provided.
Your Proxy Vote and Appointing a Proxyholder
On the proxy
form, you can indicate how you want to vote your Shares or you can
let your proxyholder decide for you.
All Shares
represented by properly completed proxies received at the Toronto
office of Computershare Investor Services Inc. by 9:30 a.m. (Eastern time) on June 23,
2020 or not less than 48 hours (excluding Saturdays, Sundays
and holidays) before any adjourned or postponed Meeting will be
voted or withheld from voting at the Meeting. Proxies should be
delivered to:
Computershare
Investor Services Inc. Toronto Office, Proxy
Department
100 University
Avenue, 8th Floor
Toronto, Ontario,
Canada M5J 2Y1
For more
information on how to vote, Shareholders may contact Computershare
by telephone at 1-800-564-6253 or by e-mail to
service@computershare.com.
2020 DENISON MANAGEMENT INFORMATION
CIRCULAR
If you give directions on how to vote your
Shares, your proxyholder must vote (or withhold from voting) your
Shares according to your instructions, including on any ballot
votes that take place at the Meeting. If you have not
specified how to vote on a particular matter, then your proxyholder
can vote your Shares as he or she sees fit. Your proxy authorizes
the proxyholder to vote and act for you at the Meeting, including
any continuation after an adjournment of the Meeting.
A proxyholder is
the person you appoint to act on your behalf at the Meeting and to
vote your Shares. You may choose
anyone to be your proxyholder, including someone who is not a
Shareholder of Denison. Simply fill in the name in the blank
space provided on the enclosed proxy form. If you leave the space
in the proxy form blank, the persons designated in the form, who
are officers of Denison, are appointed to act as your proxyholder.
If you have not specified whether
or how to vote on a particular matter and the persons designated in
the form are appointed as your proxyholder, your Shares will be
voted as follows:
●
FOR the reappointment of
PricewaterhouseCoopers LLP as independent auditor until the next
Annual Meeting of Shareholders and the authorization of the Board
of Directors to fix its remuneration;
●
FOR the election as directors of all
nominees listed in this Circular; and
●
FOR the non-binding advisory vote on
executive compensation.
Revoking Your Proxy
If you are a
registered Shareholder who has given a proxy, you may revoke it by
delivering a written notice, stating that you want to revoke your
proxy to: The Corporate Secretary, Denison Mines Corp., 1100 - 40
University Avenue, Toronto, Ontario, Canada M5J 1T1 not less than
48 hours (excluding Saturdays, Sundays and holidays) before the
time of the Meeting, or by attending the Meeting and notifying the
Chair of the Meeting prior to the commencement of the Meeting that
you have revoked your proxy. A registered Shareholder may also
revoke its proxy by completing and signing a proxy bearing a later
date and depositing it with Computershare, provided it is received
not less than 48 hours (excluding Saturdays, Sundays and holidays)
before the time of the Meeting.
The notice can be
from you or your attorney, if he or she has your written
authorization. If the Shares are owned by a corporation, the
written notice must be from its authorized officer or
attorney.
Additional Matters Presented at the Meeting
The proxy form or
voting instruction form provided confers discretionary authority
upon the persons named as proxies with respect to any amendments or
variations to the matters identified in the Notice of Meeting and
with respect to other matters which may properly come before the
Meeting.
If you sign and
return the proxy form and any matter is presented at the Meeting in
addition, as an amendment or a variation to the matters described
in the Notice of Meeting, the Denison officers named as proxies
will vote in their best judgment. When this Circular went to press,
Denison’s management was not aware of any matters to be
considered at the Meeting other than the matters described in the
Notice of Meeting or any amendments or variations to the matters
described in the Notice.
ELECTRONIC DELIVERY OF DOCUMENTS
Every year, as
required by laws governing public companies, the Company delivers
documentation to shareholders. In order to make this process more
convenient, Shareholders may choose to be notified by email when
the Company’s documentation, including the Meeting materials,
is posted on the Company’s website (www.denisonmines.com) and,
accordingly, such documentation will not be sent in paper form by
mail other than as required by applicable laws.
2020 DENISON MANAGEMENT INFORMATION
CIRCULAR
Delivery in an
electronic format, rather than paper, reduces costs to the Company
and benefits the environment. Shareholders who do not consent to
receive documentation through email notification will continue to
receive such documentation by mail or otherwise, in accordance with
securities laws. By consenting to electronic delivery,
Shareholders:
(i)
agree to receive all
documents to which they are entitled electronically, rather than by
mail; and
(ii)
understand that access to the
Internet is required to receive a document electronically and
certain system requirements must be installed (currently Adobe
Acrobat Reader to view Adobe’s portable document format
(“PDF”)). Such
documents may include the interim consolidated financial reports,
the annual report (including audited annual consolidated financial
statements and management’s discussion and analysis
(“MD&A”)),
the notice of annual and/or special meeting and related management
information circular and materials, and other corporate information
about the Company.
At any time,
Denison may elect to not send a document electronically, or a
document may not be available electronically. In either case, a
paper copy will be mailed to Shareholders.
Registered
Shareholders can consent to electronic delivery by completing and
returning the form of consent included with the form of proxy.
Non-registered Shareholders can consent to electronic delivery by
completing and returning the appropriate form received from the
applicable intermediary.
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Shareholders may
request copies of the Meeting materials by mail at no cost for up
to one year from the date the Information Circular was filed on
SEDAR by email to info@denisonmines.com or by calling
1-888-689-7842. For Shareholders who wish to receive copies of the
Circular in advance of the voting deadline, requests must be
received no later than June 15,
2020.
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Shareholders are
not required to consent to electronic delivery. The Company will
notify consenting Shareholders at the email address provided by the
Shareholder on the form of proxy when the documents that the
Shareholder is entitled to receive are posted on the
Company’s website, with a link to the specific pages of the
website containing the PDF document.
NOTICE AND
ACCESS
The Company
delivers its Meeting materials to Shareholders by posting them on
its website at www.denisonmines.com, rather
than mailing physical copies of the materials to all Shareholders.
The Meeting materials will be available on the Company’s
website on May 19, 2020 and will remain on the website for one full
year. The Circular will also be available on May 19, 2020 on the
System for Electronic Document Analysis and Retrieval
(“SEDAR”) at
www.sedar.com and
on the Electronic Data Gathering, Analysis, and Retrieval system
(“EDGAR”) of the
United States Securities and Exchange Commission at www.sec.gov/edgar.
The Company has
decided to mail paper copies of the Circular to those registered
and non-registered Shareholders who had previously elected to
receive paper copies of the Company’s Meeting materials. All
other Shareholders will receive a “notice and access”
notification which will contain information on how to obtain
electronic and paper copies of the Circular in advance of the
Meeting and for a full year following the Meeting.
VOTING
SECURITIES
Denison’s
Shares are the only shares issued by the Company. On May 6, 2020,
the record date for the Meeting, the Company had 626,008,148 Shares
issued and outstanding, and all of these Shares are entitled to be
voted at the meeting. Each Share entitles the holder to one vote on
all matters at the Meeting.
2020 DENISON MANAGEMENT INFORMATION
CIRCULAR
In accordance
with the provisions of the Business Corporations Act (Ontario)
(the “OBCA”),
the Company prepared a list of Shareholders on the record date of
May 6, 2020. Each Shareholder named on the list will be entitled to
vote at the Meeting the Shares shown on the list opposite his or
her name.
Principal Holders of Shares
To the knowledge
of Denison’s directors and executive officers, no person or
company beneficially owns or exercises control or direction over,
directly or indirectly, more than 10% of Denison’s Shares as
at May 6, 2020.
Interest of Certain Persons or Companies in Matters to be Acted
Upon
No director or
executive officer or any person
who has held such a position since January 1, 2019, nor any
associate or affiliate of the foregoing persons, has any
material interest, direct or indirect, by way of beneficial
ownership of securities or otherwise, in matters to be acted upon
at the Meeting other than their election pursuant to the election
of directors, as applicable.
BUSINESS
OF THE MEETING
The purpose of
the Meeting is:
(a) to
receive the consolidated financial statements of Denison Mines
Corp. for the year ended December 31, 2019, along with the auditor’s report on the
statements;
(b) to
reappoint the auditor for the upcoming year and to authorize the
directors to fix the remuneration of the auditor;
(c) to elect
eight directors to the Board for the upcoming year;
(d) to
consider a non-binding advisory resolution on the Company’s
approach to executive compensation; and
(e) to
transact such other business as may properly come before the
Meeting.
Receiving
the Consolidated Financial Statements
The consolidated
financial statements of the Company for the fiscal year ended
December 31, 2019 are included in Denison’s 2019 Annual
Report, which has been mailed to the Company’s registered and
non-registered Shareholders who requested it. The 2019 Annual
Report is also available on Denison’s website at www.denisonmines.com, on SEDAR
at www.sedar.com
and on EDGAR at www.sec.gov/edgar.shtml.
Management will
be available to discuss Denison’s consolidated financial
results at the Meeting, and Shareholders and proxyholders in
attendance will be given an opportunity to discuss these results
with management. No vote of Shareholders is required with respect
to this item of business.
The Reappointment of the Auditor
The Board
recommends the re-appointment of PricewaterhouseCoopers LLP
(“PwC”) as the
Company’s independent auditor to hold office until the end of
the next annual meeting of shareholders, with the directors to fix
the remuneration to be paid to PwC for their services.
You may either
vote for reappointing PwC
as Denison’s auditor to hold office until the end of the next
annual meeting, and authorizing the directors to fix the
auditors’ remuneration, or you can withhold your vote. Unless otherwise instructed, the named
proxyholders will vote FOR reappointing PwC and authorizing the
directors to fix PwC’s remuneration.
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2020 DENISON MANAGEMENT INFORMATION
CIRCULAR
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The
Election of Directors
The term of
office of each of the present directors of the Company expires at
the Meeting. The Board has nominated eight directors to be elected
at the Meeting, to serve as a director until the next annual
meeting unless he or she resigns or is otherwise removed from
office earlier.
All of the proposed nominees are currently
directors of Denison and have been directors since the dates
indicated below. Each of the nominated directors is eligible
to serve as a director and has expressed his or her willingness to
do so.
Unless otherwise
instructed, proxies and
voting instructions given pursuant to this solicitation by
Denison’s management will be voted FOR the election of the
proposed nominees. If any proposed nominee is unable to
serve as a director or withdraws his or her name, the named
proxyholders reserve the right to nominate and vote for another
individual in their discretion.
Denison’s
Board recognizes that the quality of its directors is an important
factor in the overall success of the Company. Denison is committed
to ensuring that its Board is composed of members who have the
competencies, capabilities and diversity required to understand
Denison’s business, along with the integrity and motivation
required to properly discharge their fiduciary duties in the long
term best interests of the Company and all of its
Shareholders.
When considering
the Board as a whole and assessing directors’ candidacy for
the Board, the Corporate Governance and Nominating Committee
(“CGN
Committee”) follows established guidelines for the
Board’s composition, including its Diversity Policy (see
“Denison’s Corporate Governance Practices –
Diversity within Denison” on page 15 for a summary) and its
“Guidelines for the
Composition of Denison’s Board”, and seeks
directors that have some or all of the following
attributes:
●
Financial accreditation
and/or financial literacy
●
Sound business experience and
expertise
●
Corporate governance
experience
●
Industry specific experience
and knowledge, including mining and metallurgy and occupational
health and safety
●
Sustainability knowledge,
including stakeholder engagement and environmental
management
●
Experience in government
relations, operations and regulatory issues
●
Financing and
merger/acquisition experience
●
Strong reputation within the
financial and business communities
●
Candidacy consistent with the
Diversity Policy and the targets set thereunder
●
Strong board skills, such as
integrity, networking abilities, interpersonal skills, ability to
think strategically and act independently
●
Independence, as such term is
defined by the Canadian Securities Administrators
When determining
nominees for election, the Board also considers the strategic
relationship agreement with KHNP Canada (the “KHNP SRA”). Under the KHNP SRA,
the Board must nominate one person designated by KHNP Canada for
election as a director at any Shareholder meeting where directors
are to be elected, so long as KHNP Canada or an affiliate holds
over 5% of the outstanding Shares. KHNP Canada has designated Mr.
Jun Gon Kim as its nominee. As General Manager of the Nuclear Fuel
Supply Section of KHNP, Mr. Kim brings to the Board substantial
business and industry-specific experience.
According to the
Company’s by-laws, the Company must receive advance notice of
nominations of directors by Shareholders. As at the date of this
Circular, the Company has not received notice of any director
nominations in connection with this year’s Meeting.
Accordingly, the only persons currently nominated for election to
the Board at the Meeting are the following nominees.
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2020 DENISON MANAGEMENT INFORMATION
CIRCULAR
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Profiles of the Nominated Directors
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The tables
below set forth information about the nominated directors as of May
12, 2020, including their background and experience, main areas of
expertise, other exchange listed company boards of which each is a
member and their equity holdings in the Company. Each director has
provided the information about the securities that he or she owns
or over which he or she exercises control or
direction.
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The Board has adopted a Share
ownership requirement. Generally, within 5 years of joining the
Board, Non- employee directors must own Shares with a cost of
acquisition equal to three times the value of their annual
retainers. The Board exempted nominees of KHNP Canada from this
requirement.
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David D.
Cates, 38
Toronto, ON
Canada
Shares:
885,000
Options:
4,756,564
Share Units:
2,210,000
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Mr. Cates was
appointed President & CEO of Denison in 2015 and has also
served as Vice President Finance, Tax & Chief Financial Officer
as well as Director, Taxation during his tenure with the Company,
which began in 2008. Mr. Cates also serves on the board of
directors of the Canadian Nuclear Association, a non-profit
organization representing the nuclear industry in Canada. Mr. Cates
is a Chartered Professional Accountant (CPA, CA) and holds Master
of Accounting (MAcc) and Honours Bachelor of Arts (BA) degrees from
the University of Waterloo.
Mr. Cates also
sits on the board of directors of GoviEx Uranium Inc. (TSX-V) and
Skyharbour Resources Ltd. (TSX-V).
Areas of Expertise: Finance, Management,
International Business, Mergers & Acquisitions, the Mining and
Exploration Industry, the Nuclear Energy Industry, Compensation,
Taxation
Denison
Board Details:
● Director since August
9, 2018
● Non-Independent
● Share
ownership requirement does not apply
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W. Robert
Dengler, 79
Aurora, ON
Canada
Shares:
632,706
Options:
100,000
Share Units:
81,334
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Robert Dengler
has been a corporate director for over 13 years, after retiring
from his position as Non Executive Vice-Chairman of Dynatec
Corporation in 2006. Mr. Dengler founded Dynatec Corporation and
served as its President and Chief Executive Officer for 25 years
until January 2005. Prior to Dynatec, Mr. Dengler was a partner and
Vice President & General Manager of J.S. Redpath Limited. Mr.
Dengler obtained his B.Sc. from Queen's University in 1964 and was
awarded an Honorary Doctorate of Science from Queen’s
University in 1988.
Areas of Expertise: Finance,
International Business, the Mining and Exploration Industry,
Compensation, Operations
Denison
Board Details:
● Director since
December 1, 2006; served as a director of a predecessor of Denison
since 2004
● Independent
● Member
of the Corporate Governance & Nominating Committee
● Chair
of the Environment, Health and Safety Committee
● Chair
of the ad hoc Technical Committee
● Complies
with Share ownership requirement
|
|
2020 DENISON MANAGEMENT INFORMATION
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|
-7-
|
|
Brian D.
Edgar, 70
Vancouver, BC
Canada
Shares:
70,000
Options:
100,000
Share Units:
103,000
|
Brian Edgar is
the Chairman of Silver Bull Resources Inc., a mineral exploration
company listed on the TSX and the OTCMKTS, a position he has held
since 2010. Before that Mr. Edgar practiced Corporate and
Securities law in Vancouver, BC Canada for 16 years and then in
1992, he co-founded a private investment company, Rand Edgar
Investment Corp. Mr. Edgar has served on public company boards for
over 30 years. Mr. Edgar holds a Bachelor of Arts degree and a Law
degree, both from the University of British Columbia.
Mr. Edgar also
sits on the board of directors of Silver Bull (TSX and
OTCMKTS).
Areas of Expertise: Finance,
International Business, the Mining and Exploration Industry,
Corporate Governance, Compensation
Denison
Board Details:
● Director
since March 22, 2005
● Independent
● Chair
of the Corporate Governance and Nominating Committee
● Member
of the Audit Committee
● Complies
with Share ownership requirement
|
|
Ron F.
Hochstein, 58
Coquitlam, BC
Canada
Shares:
1,000,666
Options:
300,000
Share Units:
81,334
|
Ron Hochstein is
the President and Chief Executive Officer of Lundin Gold Inc. Mr.
Hochstein served as Executive Chairman of the Company in 2015 and
as President and Chief Executive Officer from 2009 to 2015. Prior
to that, Mr. Hochstein served as President and Chief Operating
Officer starting in 2006 when International Uranium Corporation
(“IUC”) and Denison Mines Inc. (“DMI”)
combined to form the Company. Before then, Mr. Hochstein served as
President and Chief Executive Officer of IUC. Mr. Hochstein joined
the Company in October 1999 as Vice-President, Corporate
Development and later served as Vice-President and Chief Operating
Officer, prior to his appointment as President and Chief Executive
Officer in April 2000. Prior to joining the Company, Mr. Hochstein
was a Project Manager with Simons Mining Group and was with Noranda
Minerals as a metallurgical engineer. Mr. Hochstein is a
Professional Engineer and holds an M.B.A. from the University of
British Columbia and a B.Sc. from the University of
Alberta.
Mr.
Hochstein1 is also a director
of Lundin Gold Inc. (TSX, Nasdaq Stockholm) and Josemaria Resources
Inc. (TSX, Nasdaq Stockholm).
Areas of Expertise: Finance, Management,
International Business, Mining and
Exploration,
Operations, Compensation
Denison
Board Details:
● Director
since April 6, 2000
● Independent
● Member
of the Compensation Committee
● Member
of the Environment, Health and Safety Committee
● Member
of the ad hoc Technical Committee
● Complies
with Share ownership requirement
|
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
|
Jun Gon
Kim, 55
Gyeogju-si,
Gyeongsangbuk-do, Republic of Korea
Shares:
Nil
Options:
Nil
Share Units:
38,000
|
Based in Korea,
Mr. Kim is currently General Manager of the Nuclear Fuel Supply
Section of Korea Hydro Nuclear Power (“KHNP”), a
subsidiary of the Korea Electric Power Corporation. Mr. Kim has
professional expertise developed through working in the nuclear
industry and has held various positions at KHNP, including most
recently the General Manager of the Reactor Engineering Team (from
2016 to 2019). Prior to that, Mr. Kim held the positions of Senior
Manager of the Corporate Communications Office and Senior Manager
of the Public Relations Team. Mr. Park has a Bachelor’s
degree in Nuclear Engineering from Hanyang University.
Areas of Expertise: Management,
Operations, Energy, Communications and Public
Relations.
Denison
Board Details:
● Director
since February 17, 2020
● Not
independent
● Share
ownership requirement does not apply.
|
|
Jack O.A.
Lundin, 30
Vancouver, BC
Canada
Shares:
250,000
Options:
Nil
Share Units:
70,000
|
Jack Lundin is
the President and Chief Executive Officer of Bluestone Resources
Inc. From 2016 to February 2020, he was involved in the successful
execution of Lundin Gold Inc.’s Fruta del Norte (FDN) Gold
Mine in southern Ecuador, where he served as the Project
Superintendent. Mr. Lundin has been involved in the natural
resource industry his entire life through exposure to several
Lundin Group companies and mentorship under Messrs. Lukas, Ian and
the late Adolf Lundin. He began his career in the sector working
prospecting jobs on various early stage projects in Canada, Russia,
Ireland and Portugal and also worked as a commercial analyst for
Lundin Norway AS., a subsidiary of Lundin Petroleum AB. Mr. Lundin
received a Bachelor of Science degree in Business Administration
from Chapman University and a Master of Engineering degree in
Mineral Resource Engineering from the University of Arizona. Mr.
Lundin serves on the board of the University of Arizona’s
Lowell Institute for Mineral Resources.
Mr. Lundin also
sits on the board of directors of the public companies Josemaria
Resources Inc. (TSX) and Bluestone Resources Inc.
(TSX-V)
Areas of Expertise: Mining and Energy
Project Economics, Mine Development and Operations, International
Business
Denison
Board Details:
● Director
since August 9, 2018
● Not
independent
● Member
of the Environment, Health and Safety Committee
● Member
of the ad hoc Technical Committee
● Complies
with Share ownership requirement
|
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
|
Catherine
Stefan, 68
Toronto, ON
Canada
Shares:
166,666
Options:
100,000
Share Units:
81,334
|
Catherine Stefan,
Chair of the Denison Board, is a corporate director. Until 2016,
Ms. Stefan was President of Stefan & Associates, a consulting
firm, and from 1999 to 2008 was Managing Partner of Tivona Capital
Corporation, a private investment firm. Prior to that, she had
served as Chief Operating Officer of O&Y Properties Inc. from
1996 to 1998. Ms. Stefan holds a Bachelor of Commerce degree from
the University of Toronto and is a Chartered Professional
Accountant (CPA, CA). Ms. Stefan is also a member of the Institute
of Corporate Directors and Women in Mining, with over 30 years of
business experience, primarily in senior management of public
companies in the real estate sector.
Ms. Stefan is
also a director of Lundin Mining Corporation (TSX, Nasdaq
Stockholm).
Areas of Expertise: Management, Finance,
International Business, Compensation, Law
Denison
Board Details:
●
Director since December 1, 2006; served as a director of a
predecessor of Denison since 2004
● Independent
●
Chair of the Board since August 9, 2018; previously Lead Director
since 2015
● Chair
of the Audit Committee
● Member
of the Corporate Governance and Nominating Committee
● Complies
with Share ownership requirement
|
|
Patricia
M. Volker, 62
Burlington, ON
Canada
Shares:
155,666
Options:
Nil
Share Units:
59,334
|
Patricia Volker
is a corporate director, whose experience is highlighted by over 17
years of service at the Chartered Professional Accountants of
Ontario, the self-regulating body for Ontario’s Chartered
Professional Accountants, including the roles of Director of
Standards Enforcement and then Director, Public Accounting, which
she held until her retirement on December 31, 2015. Ms. Volker
served in various capacities in the accounting profession during
her 30+ year career and brings a wealth of advisory, public
accounting, banking and regulatory expertise to the Denison Board.
Ms. Volker is a CPA, CA and CMA and holds a B.Sc. from the
University of Toronto. Ms. Volker is on the board, and serves on
committees, for each of Ornge and Burlington Hydro Electric
Inc.
With respect to
the boards of other public companies, Ms. Volker is also a director
of The Empire Life Insurance Company (TSX) and Labrador Iron Ore
Royalty Corporation (TSX).
Areas of Expertise: Management,
Finance
Denison
Board Details:
●
Director since August 9, 2018
● Independent
● Member
of the Audit Committee
● Chair
of the Compensation Committee
● Sole
director on the Company’s SOX Steering Committee
● Complies
with Share ownership requirement
|
Notes to
Profiles of the Nominated Directors:
1.
Ron Hochstein was a director
of Sirocco Mining Inc. (“Sirocco”). Pursuant to a plan
of arrangement completed on January 31, 2014, Canadian Lithium
Corp. amalgamated with Sirocco to form RB Energy Inc.
(“RBI”). In October 2014, RBI commenced proceedings
under the Companies' Creditors Arrangement Act (the
“CCAA”). CCAA proceedings continued in 2015 and a
receiver was appointed in May 2015. The TSX de-listed RBI’s
common shares in November 24, 2014 for failure to meet the
continued listing requirements of the TSX. Ron Hochstein was a
director of RBI from the time of the plan of arrangement with
Canadian Lithium Corp. to October 3, 2014.
2020 DENISON MANAGEMENT INFORMATION
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Majority Voting Policy
Shareholders are
entitled to vote for, or
withhold from voting for,
each individual director nominee at a Shareholders’ meeting.
The Board has adopted a Majority Voting Policy which provides, if
the number of Shares withheld
from any nominee exceeds the number of Shares voted
for the nominee, then such
nominee must immediately tender his or her resignation to the
Board. Denison’s CGN Committee will review the matter and
recommend to the Board whether to accept the resignation or not.
The Board shall accept the resignation absent exceptional
circumstances. The director involved does not participate in any
Board or committee deliberations on the matter. The Board must
announce its decision within 90 days of the applicable Shareholder
Meeting.
The Majority
Voting Policy applies only in circumstances involving an
uncontested election of directors, meaning an election in which the
number of nominees is equal to the number of directors to be
elected.
Nominee 2019 Attendance Record
At Denison, we
believe that attendance at meetings is a critical ingredient to an
engaged and effective Board. Personal attendance at Board and
committee meetings is expected of all directors. Directors can
participate by teleconference if they cannot attend in person. The
table below shows the number of Board and committee meetings each
nominated director attended in 2019.
At every Board
and committee meeting, including those held by teleconference,
directors have an opportunity to meet in camera without management
present and the independent directors also have an opportunity to
meet without the non-independent directors. The independent
directors also have an in-person session annually, at which all
independent directors were in attendance in 2019.
|
Name
|
Board
|
Audit
Committee
|
Compensation
Committee
|
Environment, Health & Safety Committee
|
Corporate Governance & Nominating Committee
|
|
David
Cates
|
7 of
7
|
100%
|
|
|
|
|
|
|
|
|
|
Robert
Dengler3,4
|
7 of
7
|
100%
|
|
|
1 of
1
|
100%
|
4 of
4
|
100%
|
1 of
1
|
100%
|
|
Brian
Edgar
|
7 of
7
|
100%
|
4 of
4
|
100%
|
|
|
|
|
3 of
3
|
100%
|
|
Ron
Hochstein3,4
|
7 of
7
|
100%
|
|
|
2 of
2
|
100%
|
4 of
4
|
100%
|
|
|
|
Jun Gon
Kim2
|
0 of
0
|
n/a
|
|
|
|
|
|
|
|
|
|
Jack
Lundin4
|
7 of
7
|
100%
|
|
|
|
|
4 of
4
|
100%
|
|
|
|
Catherine
Stefan
|
7 of
7
|
100%
|
4 of
4
|
100%
|
|
|
|
|
3 of
3
|
100%
|
|
Patricia
Volker3
|
7 of
7
|
100%
|
1 of
1
|
100%
|
2 of
2
|
100%
|
|
|
1 of
1
|
100%
|
Notes:
1.
Mr. Rand attended all
applicable Board and Committee meetings in 2019, but will not stand
for re-election.
2.
Mr. Kim joined the Board on
February 17, 2020, subsequent to the resignation of Mr. Geun Park.
Mr. Park attended all meetings of the Board held during his
tenure.
3.
Effective May, 2019, after
the 2019 Annual General Meeting of Shareholders, the composition of
certain of the standing committees changed.
4.
Messrs. Dengler, Hochstein
and Lundin attended 100% of the meetings of the ad hoc Technical
Committee held during 2019.
Information about Denison’s Relationship with KEPCO &
KHNP
One of the
nominees for election, Mr. Jun Gon Kim, is employed by KHNP, a
wholly-owned subsidiary of KEPCO and the parent company of KHNP
Canada. KEPCO is the primary electric utility in South Korea. KHNP
operates large nuclear and hydroelectric plants in South Korea,
which are responsible for over 30% of the country's electric power
supply. Through its indirect corporate holdings, KEPCO is a
significant Shareholder of the Company (holding approximately 9.31%
of the Shares of Denison as at May 6, 2020, according to publicly
available information).
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
Denison and KHNP
Canada entered into an amended and restated strategic relationship
agreement in 2017 (replacing the 2009 strategic relationship
agreement with KEPCO), which continues to provide for a long-term
collaborative business relationship. Under the KHNP SRA, so long as
KHNP Canada or an affiliate holds more than 5% of the outstanding
Shares, the Board must nominate one person designated by KHNP
Canada or its affiliate for election as a director at any
Shareholder meeting where directors are to be elected.
The KHNP SRA also
provides KHNP Canada (a) a right of first offer if Denison intends
to sell any of its substantial assets and a right to participate in
certain purchases of substantial assets which Denison proposes to
acquire; and (b) the right to participate in future offerings of
Shares of a certain size in order to preserve its interest in the
Company. To date, neither KEPCO nor KHNP have exercised such rights
under the prior strategic relationship agreement or the KHNP SRA,
respectively.
Advisory Vote on the Company’s Approach to Executive
Compensation
The Board has
adopted a non-binding shareholder advisory vote on the
Company’s approach to executive compensation. As a formal
opportunity to provide their views on the disclosed objectives of
the Company’s pay for performance compensation model,
shareholders are asked to review and vote, in a non-binding,
advisory manner, on the following resolution:
BE IT RESOLVED
THAT, on an advisory basis and not to diminish the role and
responsibilities of the Board of Directors, the shareholders accept
the approach to executive compensation as disclosed in the
management information circular of the Company dated May 12,
2020.
The Compensation
Committee, and the Board, will take the results of the vote into
account, as appropriate, when considering future compensation
policies, procedures and decisions (see Executive Compensation for
details regarding the compensation philosophy and guidelines of the
Board and the performance metrics and process used to assess
performance).
Shareholders who
have questions or concerns, or who may vote against the resolution,
are encouraged to contact the Board, to enable the Board to better
understand their concerns.
Shareholders may
either vote for the
non-binding advisory resolution on the Company’s approach to
executive compensation, or vote against. The Board recommends that
Shareholders vote FOR the resolution to accept the Company’s
approach to executive compensation. Unless otherwise instructed, proxies and voting
instructions given pursuant to this solicitation by Denison’s
management will be voted FOR the approval of the
resolution.
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
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DENISON’S CORPORATE GOVERNANCE PRACTICES
This section of
the Circular describes Denison’s corporate governance
practices with reference to the framework provided in National
Policy 58-201 - Corporate
Governance Guidelines and National Instrument 58-101 -
Disclosure of Corporate Governance
Practices (collectively, the “Governance Guidelines”) of the
Canadian Securities Administrators.
Denison is a
reporting issuer in all of the provinces of Canada and is
classified as a foreign private issuer by the SEC. The Shares trade
on the Toronto Stock Exchange (DML: TSX) and on NYSE American LLC
(DNN: NYSE American). As such, Denison adheres to Canadian
corporate governance requirements and also complies with the
requirements of NYSE American. The Company’s CGN Committee
closely monitors this regulatory environment and, where applicable,
makes recommendations to the Board to modify the Company’s
governance practices as needed.
Denison’s Code of Ethics
The Company is
committed to conducting its business in compliance with the law and
the highest ethical standards. The Company has adopted a written
Code of Ethics which applies to directors, officers and all
employees of the Company. The Code of Ethics sets out principles
and standards for honest and ethical behavior at Denison and covers
the following key areas:
●
compliance with applicable
laws
●
quality of disclosure and
accountability
●
compliance with anti-bribery
and corruption laws in Canada and other jurisdictions
●
confidentiality and corporate
opportunity
●
reporting illegal or
unethical behavior
Directors,
officers or employees who have concerns about violations of laws,
rules or regulations, or the Code of Ethics are to report them to
the Corporate Secretary or to the Chair of the Audit Committee.
Following receipt of any complaints, the Corporate Secretary of the
Company or Chair of the Audit Committee, as the case may be, will
investigate each matter so reported and report to the Audit
Committee. The Audit Committee has primary authority and
responsibility for monitoring compliance with and enforcing the
Code of Ethics, subject to the supervision of the
Board.
The Code of
Ethics is available on the Company’s website at www.denisonmines.com and has
been filed on and is accessible through SEDAR under the
Company’s profile at www.sedar.com.
Whistleblower
Policy
|
The Audit Committee has
established a policy and procedures for the receipt, retention and
treatment of complaints regarding accounting, internal accounting
controls or auditing matters (the “Whistleblower Policy”) to encourage employees,
officers and directors to raise concerns regarding accounting,
internal controls or auditing matters on a confidential basis, free
from discrimination, retaliation or harassment. The Whistleblower
Policy is available on the Company’s website at www.denisonmines.com.
|
|
In support of the
Whistleblower Policy, Denison has established a third party
web-based reporting service so that any employee can report any
issue or instance of misconduct easily and
confidentially.
|
Anti-bribery
Policy
Denison has
adopted an Anti-bribery Policy, the purpose of which is to
reiterate Denison’s commitment to compliance with
Canada’s Corruption of Foreign Public Officials Act
(“CFPOA”), the U.S. Foreign Corrupt Practices Act
(“FCPA”) and any local anti-bribery or anti-corruption
laws that may be applicable. This policy applies to all officers,
directors, employees and agents of the Company, and supplements the
Code of Ethics and all applicable laws.
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
The policy
provides guidelines for compliance with the CFPOA, the FCPA and
Company policies applicable to Denison’s operations
world-wide. Denison’s CEO is responsible for administering
and interpreting the policy under the oversight of the Audit
Committee. Denison’s Anti-bribery Policy is available on the
Company’s website at www.denisonmines.com.
The
Disclosure Policy
Denison has a
Disclosure Policy, codifying its ongoing commitment to full and
fair financial disclosure and best practices in corporate reporting
and governance. This policy outlines the internal control
structures that Denison has established to effectively manage the
dissemination of material information to the public and remain
compliant with all applicable legal and business requirements. The
Disclosure Policy is available on the Company’s website at
www.denisonmines.com or on
SEDAR under the Company’s profile at www.sedar.com. Denison has also
adopted a guide for employees on the use of social media in
compliance with the Disclosure Policy.
Shareholder Communications
Denison works to
ensure effective communication between the Company and its
Shareholders and the public. Shareholders, employees and other
interested parties are encouraged to reach out directly to
management and/or the Board of the Company, to communicate any
questions or concerns, and the Company regularly receives and
responds to such inquiries.
The
Company’s representatives are always engaged in investor
relations and other Shareholder and stakeholder outreach, such as
taking part in various public and private conferences throughout
the year, and generally making themselves available to respond to
inquiries and concerns. The Company’s investor relations
procedures are monitored by the Board, and are intended to be a
tool for the concerns of Shareholders and other interested parties
to be addressed on an individual basis. Shareholders and the public
are also informed of developments in the Company by the issuance of
timely press releases and quarterly reports which are also posted
to the Company’s website and filed on SEDAR and
EDGAR.
The Board also
adopted the annual Shareholder advisory vote on the Company’s
executive compensation practices, as a means for Shareholders to
provide their views on the Company’s pay for performance
compensation model. While this advisory vote is a useful tool for
the Board and management, Shareholders are encouraged to contact
the Board directly to enable the Board to better understand the
voting results and address any concerns Shareholders may
have.
Shareholders,
employees or other interested parties may communicate directly with
management, the Chair of the Board and/or the other directors by
writing to them at Denison’s Toronto office (1100 – 40
University Avenue, Toronto, Ontario, M5J 1T1). Correspondence
should be marked to the attention of the appropriate
party.
The Board
monitors all the policies and procedures that are in place to
ensure a strong, cohesive, sustained and positive image of the
Company with Shareholders, governments and the public
generally.
Executive Officer Succession Policy
The Board
acknowledges that a change in executive leadership can be a
critical time in a company’s history and that a smooth
transition is essential to maintain the confidence of investors,
business partners, customers and employees and to provide the
incoming officer with a solid platform from which to move the
company forward. In connection therewith, the Board has adopted an
Executive Officer Succession Policy to help Denison plan for and
address a change in leadership, planned or unplanned, to ensure
stability. The policy is periodically reviewed by the Board and
certain matters regarding its administration are delegated to the
CGN Committee.
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
Board Composition
It is proposed
that Denison’s Board will be comprised of eight directors.
The size and composition of the Board reflects diversity and
breadth of backgrounds and experience that the Board believes is
important for effective governance and oversight of a diversified
and active company.
The Board has
determined that it is highly effective and well composed, and has
not sought to fill the vacancy created by Mr. William Rand
declining to seek reelection this year. Corporate governance best
practices focus on developing high performing boards that have
integrity and are accountable, independent and experienced. Under
the stewardship of the CGN Committee, the Denison Board has focused
on meeting or exceeding the governance guidelines.
Denison has not
adopted a term limit or retirement policy; the Board is of the
position that no appreciable benefit would be achieved through the
adoption of such policies. Organically, the Board has seen
significant renewal in recent years, including the appointments of
David Cates, Jack Lundin, Moo Hwan Seo and Patricia Volker in 2018,
Mr. Park in 2019 and Mr. Kim in 2020.
Diversity within Denison
Denison’s
Board recognizes that diversity enriches the decision making
process and is important to the Company’s good governance,
and Board and management at the Company strive to ensure gender
diversity and pay equity amongst its Board, executive officers and
other employees.
The Board has a
Diversity Policy, which clarifies the Company’s commitment to
identifying and considering women for its Board and in senior
officer positions. Upon adoption of the Diversity Policy, Denison
set targets of at least maintaining its current level of female
representation among directors and senior officers. The CGN
Committee reviews the targets each year and measures and reports to
the Board on the Company’s annual and cumulative progress in
achieving the Diversity Policy targets for representation of women
within Denison.
Board Diversity
Along with the
adoption of the Diversity Policy and to further the Board’s
goals of achieving greater gender diversity, the Board amended its
guidelines, by which the CGN Committee considers the composition of
the Board and evaluates candidates, to include a commitment for the
CGN Committee to consider qualified female candidates for
nomination to the Board.
For example, when
changes to the Board were being considered in 2018, the Board made
a concerted effort to ensure qualified female candidates were
sought, and the Board was very pleased to have Patricia Volker,
with her rich accounting and finance background, agree to join the
team.
The CGN Committee
reported Denison’s female Board representation as at December
31, 2019 as follows:
●
Two female directors on the
Board out of nine directors, representing 22.2% of the Board;
and
●
Chairs of the Board, Audit
Committee and Compensation Committee are female.
Denison believes
that the current composition of the Board is highly effective and
that the Board is well-composed. With Mr. Rand’s departure
from the Board in 2020, the CGN Committee assessed the needs and
capabilities of the Board, and determined that a Board of 8 members
would be appropriate for the Company at this time. If changes are
made to the Board, the CGN Committee will continue to consider
gender diversity as a key factor in its nomination
process.
Diversity of Senior Officers and Management
Similarly,
management of the Company seeks to include women, having the
necessary skills, knowledge and experience, as potential candidates
for senior officer and other positions at the Company. As reported
by the CGN Committee, the female senior officer representation as
at the end of 2019 was as follows:
2020 DENISON MANAGEMENT INFORMATION
CIRCULAR
-15-
●
One female senior officer out
of seven senior officers, representing 14.3% of the senior
officers.
●
One female out of three
senior officers at the Company’s major subsidiary, DMI,
representing 33.3% of the senior officers of DMI.
Denison’s
team has grown in recent years, with the Company advancing its
flagship Wheeler River project in Northern Saskatchewan. Many of
these new and important portfolios and key technical positions are
led by women, due to the Company’s focus on hiring the best
candidates for the role and ensuring a balance of gender in those
candidates. As at the end of 2019, Denison’s management team
beyond the senior officer level was comprised of 15
“directors” and “managers” with
responsibilities over various areas including the Company’s
Denison Environmental Services division (now Denison’s Closed
Mines group), Human Resources, Wheeler River Project matters,
Exploration, Technical matters, Corporate Social Responsibility,
the Environment, Finance and Financial Reporting. Eight (or 53%) of
those directors and managers are women.
Independence
The Board is
responsible for determining whether or not each director is
independent. This assessment is made in accordance with standards
of the Canadian Securities Administrators in National Instrument
52-110 – Audit
Committees (“NI
52-110”) and the Governance Guidelines. With the
assistance of the CGN Committee, the Board reviews each
director’s independence annually and upon the appointment or
election of a new director. The Board last considered this matter
at its meeting on March 5, 2020. The following table sets out the
Board’s determination and reasoning with respect to each
nominee for election at the Meeting:
|
Name
|
Independent
|
Not Independent
|
Commentary on Independence
|
|
David
Cates
|
|
X
|
As President and
Chief Executive Officer of the Company, Mr. Cates is not
independent.
|
|
Robert
Dengler
|
X
|
|
|
|
Brian
Edgar
|
X
|
|
|
|
Ron
Hochstein
|
X
|
|
Mr. Hochstein had
been an executive officer of the Company, but resigned as CEO
effective March 23, 2015.
|
|
Jack
Lundin
|
|
X
|
Mr. Jack Lundin
cannot be regarded as independent, as he is an immediate family
member of Mr. Lukas Lundin who, within the last three years, served
as Executive Chair of the Company until his resignation on August
9, 2018.
|
|
Geun
Park
|
|
X
|
Mr. Park is
regarded as having an indirect material relationship which could
reasonably be expected to interfere with his exercise of
independent judgment, considering the Company’s strategic
relationship with KHNP Canada and Mr. Park’s position with
KHNP.
|
|
Catherine
Stefan
|
X
|
|
|
|
Patricia
Volker
|
X
|
|
|
In addition, the
Board believes that adequate structures and processes are in place
to facilitate the functioning of the Board independently of
management, including:
|
● The
Board has an independent Chair
|
Ms. Stefan has
been appointed Chair of the Board, and previously served as the
independent Lead Director. The Chair facilitates the functioning of
the Board independently of management, serves as an independent
leadership contact for directors and assists in maintaining and
enhancing the quality of the Company’s corporate governance.
With her extensive experience in corporate governance matters, Ms.
Stefan is leading and managing the Board in a manner that ensures
it functions independently of management, in an effective and
efficient manner.
|
2020 DENISON MANAGEMENT INFORMATION
CIRCULAR
-16-
|
● The
Audit, Compensation and Corporate Governance and Nominating
Committees are entirely independent.
|
Aside from the
Environment, Health and Safety Committee, all of the Board’s
standing committees are composed entirely of independent directors.
The Board has considered the membership of Mr. Lundin on the
Environment, Health and Safety Committee and determined that his
operational experience is a benefit to the committee and that his
lack of independence does not interfere with that committee’s
responsibilities or interfere with his judgment.
|
|
● The
Board regularly meets without management.
|
The Board has an
opportunity to meet in camera without management at every Board and
committee meeting. In 2019, the independent directors met formally
each quarter and met in person once in November. Only independent
directors attend the in camera sessions of the Audit Committee,
Compensation Committee and CGN Committee, as all of the members of
these committees are independent.
|
|
● The
Board, a committee or an individual director may engage an
independent advisor.
|
Individual
directors may, in appropriate circumstances and with the
authorization of the applicable committee or the Chair, engage
independent advisors at the expense of the Company.
|
The Board takes
steps to ensure directors exercise independent judgment in
considering transactions and agreements in respect of which a
director or executive officer has a material interest. Such steps
have included the adoption of the Code of Ethics, which provides
examples of conflicts of interests and outlines the procedure to be
followed in situations that present an actual or potential conflict
of interest (including reporting such conflict or potential
conflict to the Chair of Denison’s Audit
Committee).
The Role of the Board
The Board is responsible for overseeing the
management of the business and affairs of Denison, with a view to
the long-term best interests of the Company. The Board has adopted a formal mandate setting out
the role and responsibilities of the Board (see Appendix A). In
order to delineate the roles and responsibilities of the Chair of
the Board and the President and Chief Executive Officer, the Board
has also adopted written position descriptions for these
positions.
In discharging
its stewardship over the Company, the Board has undertaken the
following specific duties and responsibilities:
●
satisfying itself as to the
integrity of the Chief Executive Officer and other executive
officers and as to a culture of integrity throughout the
Company;
●
approving, supervising and
providing guidance to management on the Company’s strategic
planning process;
●
identifying the principal
risks of the Company’s business and ensuring
management’s implementation and assessment of appropriate
risk management systems;
●
ensuring that the Company has
highly qualified management and adequate and effective succession
plans for senior management;
●
overseeing the
Company’s communications policy with its Shareholders and
with the public generally; and
●
assessing directly and
through its Audit Committee, the integrity of the Company’s
internal control and management information systems.
Generally,
operations in the ordinary course or that are not in the ordinary
course and do not exceed material levels of expenditures or
commitment on the part of the Company have been delegated to
management. Decisions relating to matters that are not in the
ordinary course and that involve material expenditures or
commitments on the part of the Company generally require prior
approval of the Board. As the Board has plenary power, any
responsibility which is not delegated to management or a Board
committee remains with the Board.
The
responsibilities of the Chair of the Board include presiding over
Board meetings, assuming principal responsibility for the
Board’s operation and functioning independent of management
and ensuring that Board functions are effectively carried
out.
2020 DENISON
MANAGEMENT INFORMATION CIRCULAR
-17-
The
responsibilities and authorities of the Chair of each committee of
the Board are set out in the mandate for each committee and in the
Board’s mandate. Generally, the Chair of a committee leads
and oversees the activities of the committee to ensure that it
fulfills its mandate and operates independently of
management.
The Role of the CEO
Denison’s
Chief Executive Officer ("CEO") is appointed by the Board and the
Board has adopted a position description for the CEO. Subject to
the oversight of the Board, the CEO is responsible for the
management of the Company’s business, providing leadership
and vision, developing and recommending significant corporate
strategies and objectives for approval by the Board, and developing
and recommending to the Board annual operating budgets. Each year,
the CEO develops annual objectives which are reviewed and approved
by the Compensation Committee and then reported to the Board. The
CEO is accountable to the Board and its committees, and the
Compensation Committee conducts a formal review of his performance
each year. The Board has also established limits of authority for
the CEO. These are described in the Company’s delegation of
authority policy, which is regularly reviewed and
updated.
Board
Committees
|
To assist
the Board with its responsibilities, the Board has four standing
committees (the Audit Committee, the Compensation Committee, the
CGN Committee and the Environment, Health and Safety Committee (the
“EHS Committee”)) and has also formed an ad hoc
Technical Committee.
Each
standing committee has a written mandate and reviews its mandate
annually. Copies of the standing committee mandates are available
on the Company’s website.
|
|
Each of the committees has
responsibility in its area of expertise for identifying the
principal risks in Denison’s business and monitoring
management’s implementation and assessment of appropriate
risk management systems.
|
The Audit Committee
The Audit
Committee has three members:
●
Catherine Stefan
(Chair)
The Board has
satisfied itself that all members of the Audit Committee are
independent and financially literate for the purposes of NI 52-110
and the requirements of NYSE American. All three members are also
considered by the Company to have financial expertise within the
meaning of the Sarbanes Oxley Act
of 2002. Mr. Edgar has a law degree and practiced for 16
years in corporate finance law. In addition, he has served as
President and Chief Executive Officer of a public company and
served on public company boards and audit committees for over 30
years. Ms. Stefan is a Chartered Accountant and a Chartered
Professional Accountant with a Bachelor of Commerce degree. In
addition, she has held the position of Senior Vice President of a
public company. Ms. Volker is a Chartered Professional Accountant,
Chartered Accountant and a Certified Management Accountant and has
served in various capacities in the accounting profession during
her 30+ year career and brings a wealth of advisory, public
accounting, banking and regulatory expertise to the Denison Board.
Ms. Volker also chairs the audit committee of another public
company, as well as chairs the finance and audit committee of a
private organization board.
The Audit
Committee oversees the accounting and financial reporting processes
of the Company and its subsidiaries and all audits and external
reviews of the financial statements of the Company, on behalf of
the Board. The Audit Committee is also responsible for examining
all financial information, including annual and quarterly financial
statements, prepared for securities commissions and similar
regulatory bodies prior to filing or delivery of the
same.
2020 DENISON
MANAGEMENT INFORMATION CIRCULAR
-18-
The Audit
Committee recommends to the Board the firm of independent auditors
to be nominated for appointment by the Shareholders. All auditing
services and non-audit services to be provided to the Company are
pre-approved by the Audit Committee, in part to ensure that the independence of the Company’s
auditor is not compromised through engaging it for other
services. The Audit Committee reviews, on a continuous
basis, any reports prepared by the Company’s auditor relating
to the Company’s accounting policies and procedures, as well
as internal control procedures and systems.
The following
table discloses the fees billed to the Company by PwC during the
last two fiscal years.
|
Financial
Year
|
|
Audit-Related
|
|
|
Ending
|
Audit Fees(1)
|
Fees (2)
|
Tax Fees (3)
|
All Other Fees(4)
|
|
December 31,
2019
|
$180,775
|
$115,254
|
Nil
|
Nil
|
|
December 31,
2018
|
$171,434
|
$123,994
|
Nil
|
Nil
|
Notes:
1.
The aggregate fees billed for
audit services of the Company’s consolidated financial
statements.
2.
The aggregate fees billed for
assurance and related services that are reasonably related to the
performance of the audit or review of the Company’s financial
statements and are not disclosed in the Audit Fees column. Fees
relate to reviews of interim consolidated financial statements and
specified audit procedures not included as part of the audit of the
consolidated financial statements.
3.
The aggregate fees billed for
tax compliance, tax advice, and tax planning services, such as
transfer pricing and tax return preparation.
4.
The aggregate fees billed for
professional services other than those listed in the other three
columns.
The Audit
Committee also oversees the Company’s internal audit function
and oversees the Code of Ethics, the Whistleblower Policy and the
Anti-bribery Policy and reviews each such policy annually. The
Audit Committee has the responsibility for oversight of internal
controls, including the Company’s Internal Audit Charter, and
the Company’s senior internal auditor reports directly to the
Chair of the Audit Committee on matters related to internal
accounting controls. For additional information regarding the audit
committee required by NI 52-110, please refer to the
Company’s Annual Information Form under the heading
“Standing Committees – Audit
Committee”.
The Audit
Committee is required to meet a minimum of four times each year,
and it met four times in 2019. It met in camera without management
present at every meeting with the external auditor.
The Compensation Committee
The Compensation
Committee currently has three members, each of whom is independent
for the purposes of section 1.4 of NI 52-110:
●
Patricia Volker
(Chair)
In accordance
with its mandate, members of the Compensation Committee must be
independent and have experience and skills relevant to executive
compensation. Mr. Hochstein brings over 20 years of first-hand
experience working with executive compensation in the mining
industry, including in his current position of Chief Executive
Officer of Lundin Gold Corp. Ms. Volker draws on the skills and
knowledge of executive compensation and disclosure issues acquired
during her varied career as a Chartered Professional Accountant,
Chartered Accountant and a Certified Management Accountant. Mr.
Rand has extensive experience in executive compensation, and has
been a compensation committee member on the boards of various
public companies. Additionally, Mr. Rand draws on the skills and
knowledge of executive compensation and disclosure issues which he
acquired during his long career as a corporate securities
lawyer.
The Compensation
Committee is responsible for the Company’s executive
compensation policy and determines the general compensation
structure, policies and programs of the Company, including the
extent and level of participation in incentive programs, for
recommendation to the Board.
|
2020
DENISON MANAGEMENT
INFORMATION CIRCULAR
|
The Compensation
Committee is also responsible for considering any risks associated
with the Company’s compensation policies and practices and
the steps that may be taken to mitigate any identified
risks.
The Compensation
Committee evaluates the Chief Executive Officer’s performance
and recommends to the Board the elements and amounts of the Chief
Executive Officer’s compensation. The Compensation Committee
reviews management’s recommendations for, and approves the
compensation of, the other officers of the Company. The
Compensation Committee also reviews and approves the executive
compensation disclosure included in the Company’s Circular
each year.
The Compensation
Committee has also been mandated to review the adequacy and form of
the compensation of directors and to ensure that such compensation
realistically reflects the responsibilities and risks involved in
being an effective director.
The Compensation
Committee met three times during 2019 to address matters pertaining
to its mandate.
The Corporate Governance and Nominating Committee
The CGN Committee
has three members, each of whom is independent for the purposes of
section 1.4 of NI 52-110:
This Committee is
responsible for Denison’s approach to corporate governance,
monitors the regulatory environment and recommends changes to the
Company’s practices when appropriate. The CGN Committee
oversees the effective functioning of the Board and the
relationship between the Board and management. The CGN Committee
ensures that the Board can function independently of management as
required, makes recommendations with respect to the appointment of
an independent Chair of the Board or Lead Director, identifies
individuals qualified to become new Board members and recommends to
the Board the director nominees at each annual meeting of
Shareholders and, with the assistance of the Board and, when
necessary, develops an orientation and education program for new
recruits to the Board.
In identifying
possible nominees to the Board, the CGN Committee considers the
competencies and skills necessary for the Board as a whole, the
skills of existing directors and the competencies and skills each
new nominee will bring to the Board, as well as whether or not each
nominee will devote sufficient time and resources to the Board and
whether he or she is independent within the meaning of the
Governance Guidelines.
The CGN Committee
also annually reviews and makes recommendations to the Board with
respect to: (i) the size and composition of the Board; (ii) the
independence of Board members; (iii) the composition of the
committees of the Board; (iv) the effectiveness and contribution of
the Board, its committees and individual directors, having
reference to their respective mandates, charters and position
descriptions; and (v) compliance with and amendments to the Board
mandates, policies and guidelines.
Early in each
year the CGN Committee distributes, receives and reviews the
results of written board effectiveness assessments. The assessments
question members of the Board as to their level of satisfaction
with the functioning of the Board, its interaction with management
and the performance of the standing committees of the Board. The
Board members also conduct peer reviews and a self-assessment as to
their effectiveness as a Board member. After the assessments are
reviewed, the CGN Committee reports to the Board as to the results
and makes recommendations to the Board to improve the
Company’s corporate governance practices. This process occurs
prior to the consideration by the CGN Committee of nominations for
Board member elections at the annual meeting of Shareholders each
year.
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
-20-
In addition, the
CGN Committee reviews the Company’s disclosure of its
corporate governance practices in the Company’s Circular each
year.
The CGN is also
responsible for talent and succession risk. In particular, the CGN
Committee has been delegated certain responsibilities under the
Company's Executive Officer Succession Policy, which include
reviewing the current state of succession planning matters and
reporting to the Board on its findings and recommendations;
assuring that Denison has in place appropriate planning to address
emergency CEO succession planning in the event of extraordinary
circumstances; and reviewing the policy and Denison’s CEO
succession plans at least annually.
The CGN Committee
met four times during 2019.
The Environment, Health and Safety Committee
The EHS Committee
currently has three members:
The mining
industry, by its very nature, can have an impact on the natural
environment and can involve certain risks to employees. As a
result, environmental planning and compliance and safety programs
must play a very important part in the operations of any company
engaged in these activities. The Company takes these issues very
seriously and has established the EHS Committee to oversee the
Company’s efforts to act in a responsible and concerned
manner with respect to matters affecting the environment, health
and safety and its stakeholders. The EHS Committee met four times
during 2019.
The Technical Committee
The Technical
Committee currently has three members:
The Technical
Committee has been formed as an ad hoc advisory committee of the
Board to assist in fulfilling the Board’s oversight
responsibilities for significant technical and operation matters,
policies and programs of the Company. The Technical Committee does
not have regularly scheduled meetings or fixed mandates. At any
time, the Board or management of the Company may recommend specific
matters for the consideration of the Technical
Committee.
The Technical
Committee’s responsibilities may include (a) reviewing the
technical and operational programs of the Company and any
significant technical risks, mitigation strategies and
opportunities associated with the Company’s projects; and (b)
reporting to the Board with respect to matters within any
applicable mandate.
The Technical
Committee met four times in 2019.
Director Education
The Board
encourages directors and senior management to participate in
appropriate professional and personal development activities,
courses and programs, and supports management’s commitment to
the training and development of all permanent
employees.
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
Director
education is implemented in the following ways at
Denison:
|
● An
on-line board portal dedicated exclusively to the
Board
|
In addition to
storing meeting materials, Denison’s board portal houses a
reference manual, which includes corporate information, industry
information, regulatory and governance updates and corporate
policies. As a hosted website dedicated to our Board, the portal is
current and available to directors wherever they are.
In 2019, the
Board Portal was updated with various information,
including:
1. Annual
Memorandum on Corporate Governance Updates
2. Recent
Publications on Best Practices, such as:
a. Directors’
and officers’ duties
b. Continuous
disclosure considerations in the age of social media
c. Climate
change related risks
3. Uranium
Mining Overview publication by the World Nuclear
Association
|
|
● Management
Presentations to the Board and to Committees
|
When appropriate,
management prepares and presents relevant information to Board
members. For instance:
1. At
each quarterly Board meeting, management provides the Board with
industry and market updates
2. Denison’s
Chief Financial Officer ensures that the Audit Committee is
apprised of relevant developments and issues
3. The
Company’s legal counsel provides updates regarding applicable
corporate governance developments
|
|
● Third-Party
Presentations for the Board
|
Annually,
industry or legal speakers provide topical presentations via
webinar or other presentation to Denison’s Board. In
addition, KHNP is invited to provide industry updates to the Board,
and the Company’s external auditor provides director
education when requested and warranted.
In 2019, the
Board had the opportunity to take part in 2 director education
sessions:
1. The
directors were invited to a presentation by a senior industry
professional on Environmental, Social and Governance matters for
public companies.
2. The
Company’s external legal counsel provided a presentation on
directors’ duties and responsibilities.
|
|
● Updates
and Subscriptions
|
Management
distributes updates, newsletters and articles on industry
information to the Board on a regular basis via email.
Additionally, the Company maintains subscriptions to newsletters on
topics of interest for circulation to the Board.
|
The Chair of the
CGN Committee also coordinates an interview and orientation package
for new Board members, covering a range of topics applicable to the
role of the director and the Board.
Directors’
and Officers’ Liability Insurance
The Company
maintains liability insurance for its directors and officers acting
in their respective capacities in an aggregate amount of
$50,000,000, subject to a deductible of $500,000 per occurrence for
insured claims including claims under securities laws for which the
Company has provided an indemnity. There is no deductible for
non-indemnified claims. The current policy is for the period from
November 1, 2019 to November 1, 2020. The premium paid by the
Company in 2019 for its directors’ and officer’s
liability insurance was $337,963. No amounts were paid by
individual directors and officers for this coverage.
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
DIRECTOR COMPENSATION
Denison
recognizes the contribution that its directors make to the Company
and seeks to compensate them accordingly. The Compensation
Committee is responsible for making recommendations as to director
compensation for the Board’s consideration and approval. When
annually reviewing the Board’s compensation arrangements, the
Compensation Committee considers the following
objectives:
|
● Board
compensation should be competitive to attract talent.
|
Compensation is
set at a level that will attract desirable candidates and retain
current directors. Denison recognizes that there is considerable
competition for qualified directors in the mining
sector.
|
|
● Board
compensation should reward directors appropriately.
|
Denison
recognizes that directors need to be compensated fairly for their
time and efforts and the risks and responsibilities which they
assume as directors in an increasingly complex regulatory
environment.
|
|
● Board
compensation should align the interests of directors with those of
the Shareholders.
|
Denison’s
compensation package, including fees, share units and options,
coupled with the Share ownership requirement imposed on directors,
aligns directors’ interests with those of its
Shareholders.
|
|
● Board
compensation should be fair.
|
Denison seeks to
reward its directors reasonably and on par with directors of
comparable companies.
|
In 2015, the
Compensation Committee engaged Global Governance Advisors
("GGA") to assist in the
evaluation of the Board's compensation in comparison to the
Company's peer group, with reference to the "2014 Report on
Executive & Board Remuneration" produced by GGA. Having
considered the report by GGA and the Company's current operations,
the Compensation Committee concluded that a revision to the Board
compensation would be appropriate. The compensation was adjusted to
remove compensation for attendance at individual meetings of the
Board and the four standing committees.
In 2018 and 2019,
as part of the Compensation Committee’s ongoing review of
Board compensation, and its broader commitment to enhance
governance practices and to be cognizant of current market trends
in directors’ compensation, the Board revised its
compensation structure and granted Restricted Share Units under the
Company’s Share Unit Plan, and did not grant stock options to
the directors. See “Equity Compensation” for more
details.
Cash
Compensation
In 2019,
Denison’s director cash compensation included an annual
retainer which varied depending on a director’s role on the
Board, an annual chair fee for serving as a committee chair and an
annual committee membership fee for serving on a committee of the
Board. The table below sets out non-employee directors’
retainers and fees as at December 31, 2019.
|
Annual Retainer1
|
CAD$
|
|
Non-employee
Directors
|
30,000
|
|
Committee / Chair Fees
|
CAD$
|
|
Board
Chair
|
10,000
|
|
Audit Committee
Chair
|
15,000
|
|
Other Committee
Chairs
|
8,500
|
|
Committee
membership2
|
3,000
|
Note to Cash
Compensation:
1.
No retainer is payable to any
director who attends less than 50% of Board meetings.
2.
The EHS Committee chair and
members have waived receipt of fees for their services on such
committee.
3.
The Technical Committee
members receive $5,000 annual fee for their participation with that
committee.
Denison also
reimburses directors for any reasonable travel and out-of-pocket
expenses relating to their duties as directors.
2020
DENISON MANAGEMENT
INFORMATION CIRCULAR
-23-
Equity
Compensation
The Board
believes that equity grants help to align directors’
interests with those of Shareholders and also provide additional
incentive to directors for corporate performance.
In 2019, Denison
compensated its directors through the grant of share units under
the Company’s Share Unit Plan (the “Share Unit Plan”). Effective March
18, 2019, 32,000 Restricted Share Units (“RSUs”) were granted to each
Denison director. In 2018, 33,000 RSUs had been issued to each
director. In prior years, directors had been granted stock options,
pursuant to Denison’s Share Option Plan (the
“Option Plan”).
In 2017 and 2016, the Board granted 100,000 options to its
Executive Chairman and 50,000 options to each other
director.
2019
Director Compensation
The table below
sets out what Denison paid to non-employee directors in retainers
and fees in 2019.
|
Name
|
Retainer and Fees Earned
|
Share-based Awards
|
Option-based Awards
|
All Other Compensation
|
Total
|
|
|
(CAD$)
|
(CAD$)1
|
(CAD$)
|
(CAD$)
|
(CAD$)
|
|
Robert
Dengler2
|
39,833
|
23,360
|
Nil
|
Nil
|
63,193
|
|
Brian
Edgar
|
41,500
|
23,360
|
Nil
|
Nil
|
64,860
|
|
Ron
Hochstein2
|
37,000
|
23,360
|
Nil
|
Nil
|
60,360
|
|
Jack
Lundin2
|
35,000
|
23,360
|
Nil
|
Nil
|
58,360
|
|
Geun
Park3
|
24,375
|
23,360
|
Nil
|
Nil
|
47,735
|
|
William
Rand
|
33,000
|
23,360
|
Nil
|
Nil
|
56,360
|
|
Moo Hwan
Seo3
|
5,625
|
Nil
|
Nil
|
Nil
|
5,625
|
|
Catherine
Stefan
|
58,800
|
23,360
|
Nil
|
Nil
|
82,160
|
|
Patricia
Volker4
|
42,067
|
23,360
|
Nil
|
Nil
|
65,427
|
Notes to 2019
Director Compensation:
1.
This amount represents the
fair value of awards made under the Share Unit Plan for the
applicable financial year. The fair value is determined using the
closing price of Denison’s shares on the TSX on the trading
day prior to the grant date.
2.
For participation on the
Company’s ad hoc Technical Committee in 2019, Mr. Dengler,
Mr. Hochstein and Mr. Lundin each received $5,000 in
fees.
3.
Directors fees for Mr. Seo
(until his resignation on March 6, 2019) and Mr. Park (from his
appointment on March 7, 2019) were paid to KHNP Canada Energy
Ltd.
4.
Mses. Stefan and Volker
received $800 and $2,400, respectively, for attendance at SOX
meetings in 2019 in addition to her annual retainer.
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
Directors’
Outstanding Option-Based Awards
Each non-employee
director’s option-based awards outstanding at the end of 2019
is as follows:
|
Name
|
Number of
Shares underlying unexercised options (#)
|
Option
exercise price ($)
|
Option
expiration date
|
Value of
unexercised in-the- money options ($)1
|
|
Robert
Dengler
|
50,000
|
1.10
|
March 6,
2020
|
Nil
|
|
|
50,000
|
0.64
|
March 10,
2021
|
Nil
|
|
|
50,000
|
0.85
|
March 8,
2022
|
Nil
|
|
Total
|
150,000
|
|
|
|
|
Brian
Edgar
|
50,000
|
1.10
|
March 6,
2020
|
Nil
|
|
|
50,000
|
0.64
|
March 10,
2021
|
Nil
|
|
|
50,000
|
0.85
|
March 8,
2022
|
Nil
|
|
Total
|
150,000
|
|
|
|
|
Ron
Hochstein
|
250,0002
|
1.10
|
March 6,
2020
|
Nil
|
|
|
50,000
|
0.64
|
March 10,
2021
|
Nil
|
|
|
50,000
|
0.85
|
March 8,
2022
|
Nil
|
|
Total
|
350,000
|
|
|
|
|
Jack
Lundin3
|
Nil
|
Nil
|
N/A
|
Nil
|
|
Total
|
Nil
|
|
|
|
|
Geun
Park3
|
Nil
|
Nil
|
N/A
|
Nil
|
|
Total
|
Nil
|
|
|
|
|
William
Rand
|
50,000
|
1.10
|
March 6,
2020
|
Nil
|
|
|
50,000
|
0.64
|
March 10,
2021
|
Nil
|
|
|
50,000
|
0.85
|
March 8,
2022
|
Nil
|
|
Total
|
150,000
|
|
|
|
|
Moo Hwan
Seo3
|
Nil
|
Nil
|
N/A
|
Nil
|
|
Total
|
Nil
|
|
|
|
|
Catherine
Stefan
|
50,000
|
1.10
|
March 6,
2020
|
Nil
|
|
|
50,000
|
0.64
|
March 10,
2021
|
Nil
|
|
|
50,000
|
0.85
|
March 8,
2022
|
Nil
|
|
Total
|
150,000
|
|
|
|
|
Patricia
Volker3
|
Nil
|
Nil
|
N/A
|
Nil
|
|
Total
|
Nil
|
|
|
|
Notes to
Directors’ Outstanding Option-Based Awards:
1.
Option values have been
calculated using the closing price of the Shares on the TSX on the
last trading date of 2019 of $0.54 per share, less the applicable
exercise price of the outstanding options. As at December 31, 2019,
some of the above options had not fully vested. The above value of
unexercised in-the-money options has been computed assuming that
all of the options have vested.
2.
Mr. Hochstein received a
grant of options in recognition of his services as President and
CEO prior to resigning those roles in January 6, 2015 and March 23,
2015, respectively, in addition to the options received for his
role as Executive Chairman of Denison at the time of this
grant.
3.
No options have been granted
to directors since Ms. Volker and Messrs. Lundin, Park and Seo
joined the Board.
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2020 DENISON MANAGEMENT INFORMATION CIRCULAR
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Directors’
Outstanding Share-Based Awards
Each non-employee
director’s share-based awards outstanding at the end of 2019
is as follows:
|
Name
|
UnvestedShare Units
(#)
|
Market or
payout value of Unvested Share Units
($)
|
Vested but
Unpaid Share Units
(#)
|
Market or
payout value of Vested but Unpaid Share Units
($)
|
|
Robert
Dengler
|
54,000
|
29,160
|
N/A
|
Nil
|
|
Total
|
54,000
|
|
|
|
|
Brian
Edgar
|
54,000
|
29,160
|
11,000
|
5,940
|
|
Total
|
54,000
|
|
|
|
|
Ron
Hochstein
|
54,000
|
29,160
|
N/A
|
Nil
|
|
Total
|
54,000
|
|
|
|
|
Jack
Lundin2
|
32,000
|
17,280
|
N/A
|
Nil
|
|
Total
|
32,000
|
|
|
|
|
William
Rand
|
54,000
|
29,160
|
N/A
|
Nil
|
|
Total
|
54,000
|
|
|
|
|
Geun
Park
|
32,000
|
17,280
|
N/A
|
Nil
|
|
Total
|
32,000
|
|
|
|
|
Catherine
Stefan
|
54,000
|
29,160
|
N/A
|
Nil
|
|
Total
|
54,000
|
|
|
|
|
Patricia
Volker2
|
32,000
|
17,280
|
N/A
|
Nil
|
|
Total
|
32,000
|
|
|
|
Notes to
Directors’ Outstanding Share-Based Awards:
1.
In April 2018, each
non-employee director on the Board at that time received a grant of
33,000 RSUs (subject to ratification of the Share Unit Plan which
occurred in May 2018), vesting equally over three years. In March
2019, each non-employee director on the Board received a grant of
32,000 RSUs, vesting equally over three years. Share unit values
have been calculated using the closing price of the Shares on the
TSX on December 31, 2019 (last trading date of 2019) of $0.54 per
share.
2.
Ms. Volker and Messrs. Lundin
joined the Board in August 2018, after equity compensation was
granted to directors in April 2018.
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Value Vested or Earned in 2019
The following
table sets out for each non-employee director the value of the
Company’s equity plan compensation vested or earned during
the financial year ended December 31, 2019. The Company had no
non-equity incentive plan compensation for directors at December
31, 2019.
|
Name
|
Option-based awards
Value vested during the year1
($)
|
Share-based awards
Value vested during the year2
($)
|
|
Robert
Dengler
|
(4,250)
|
7,810
|
|
Brian
Edgar
|
(4,250)
|
7,810
|
|
Ron
Hochstein
|
(4,250)
|
7,810
|
|
Jack Lundin
4
|
N/A
|
N/A
|
|
Geun Park
3,4
|
N/A
|
N/A
|
|
William
Rand
|
(4,250)
|
7,810
|
|
Moo Hwan Seo
3,4
|
N/A
|
N/A
|
|
Catherine
Stefan
|
(4,250)
|
7,810
|
|
Patricia Volker
4
|
N/A
|
N/A
|
Notes to
Value Vested or Earned in 2019:
1.
The value vested during the
year reflects the aggregate dollar value that would have been
realized if the options that vested in 2019 were exercised on their
vesting date. A negative value indicates that the exercise price of
the option exceeds the market value of Denison’s shares on
the vesting date.
2.
The value vested during the
year reflects the aggregate dollar value that would have been
realized if the share units that vested in 2019 were exercised on
their vesting dates. Share units have a Nil exercise
price.
3.
Mr. Seo resigned from, and
Mr. Park joined, the Board on March 6, 2019 and March 7, 2019,
respectively. Neither had vested equity awards during
2019.
4.
No options were granted to
directors in 2018 or 2019, and Messrs. Lundin, Park and Seo and Ms.
Volker joined the board in 2018 or 2019. Mr. Lundin and Ms. Volker
did not have vested equity during 2019.
Share Ownership Requirement
The Board has a
Share ownership requirement for its members. It provides that all
non-employee directors, within five years of becoming a
non-employee director, must own Shares with a cost equal to three
times the value of their annual director retainers. Stock options
and share units do not count toward directors’ Share
ownership requirements. The Board has exempted nominees of KHNP,
the Company’s largest shareholder, from this requirement. In
2019, all directors were in compliance with the Share ownership
requirement (owning sufficient shares, being within the five year
period of becoming a non-employee director or otherwise
exempt).
Loans to
Directors
As at the date of
this Circular, Denison and its subsidiaries had no loans
outstanding to any current or former directors, except routine
indebtedness as defined under Canadian securities
laws.
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2020 DENISON MANAGEMENT INFORMATION CIRCULAR
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EXECUTIVE COMPENSATION
This section of
the Circular discusses Denison’s executive compensation
program and the pay decisions affecting its Named Executive
Officers (Denison’s CEO, CFO and the other three most highly
compensated executive officers, collectively, the
“NEOs”). The
NEOs for 2019 were:
|
NEO
|
Position(s)
during 2019
|
|
David
Cates
|
President &
Chief Executive Officer
|
|
Mac
McDonald
|
Executive Vice
President & Chief Financial Officer
|
|
Tim
Gabruch
|
Vice President
Commercial
|
|
Michael
Schoonderwoerd
|
Vice President
Controller
|
|
Dale
Verran
|
Vice President
Exploration
|
The Objectives of the Company’s Compensation
Program
Denison strives
to improve Shareholder value through sustainable corporate
performance. The Company recognizes that its employees and, in
particular, the leaders within the organization have a significant
impact on Denison’s success.
In support of its
goal, Denison’s executive compensation program has three
objectives:
1. Align the
interests of its executive officers with the long-term interests of
the Company and its Shareholders.
2. Link
compensation to the performance of both the Company and the
executive.
3. Compensate
executive officers at a level and in a manner that ensures that
Denison is capable of attracting and retaining talented
executives.
Managing Risk
When determining
an executive’s compensation package, the Compensation
Committee seeks to balance annual performance incentives, which are
awarded based on success against pre-established short-term
corporate and individual goals, with long-term incentive payments
focused on longer term performance of the Company, including stock
option grants under the Option Plan and share units granted under
the Share Unit Plan. The Compensation Committee also considers the
implications of each of the various components of the
Company’s compensation policies and practices to ensure that
executive officers are not inappropriately motivated towards
shorter-term results or excessive risk taking or illegal
behaviour.
The Compensation
Committee uses a number of strategies to reduce the risk associated
with compensation, including:
●
Reviewing and approving
annual individual objectives of executives and then assessing
performance against these objectives when awarding the individual
performance component of the annual bonus;
●
Considering the
Company’s performance relative to its peers when reviewing
the corporate performance component of the NEO’s annual
bonus;
●
Making the annual bonus
payment of the CEO and the CFO conditional upon a claw back
agreement, whereby each of them personally agrees to reimburse any
portion of their bonus payment which is awarded for achievements
that are found to involve their fraud, theft or other illegal
conduct;
●
Considering individual
performance against set objectives when determining the quantum of
any equity grants to executives;
●
Setting equity compensation
granting policies, including setting standard vesting and/or
settlement terms for share unit and stock option grants which align
optionees’ interests with longer term growth of the
Company;
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2020 DENISON MANAGEMENT INFORMATION CIRCULAR
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●
Acknowledging the
Board’s role in overseeing compensation policies and
practices and exercising discretion to adjust payouts up or down;
and
●
Prohibiting Denison’s
directors and officers from purchasing financial instruments that
are designed to hedge or offset a decrease in market value of the
Shares.
Compensation
Decision-Making
At the beginning
of each year, the Board reviews the Company’s performance and
the analysis and recommendations of the Compensation Committee in
respect of NEO compensation. As applicable, the Compensation
Committee provides to the Board (a) its assessment of the
competitiveness of base salaries within Denison's peer group, (b)
its recommendations for annual performance incentives for the
Company’s executives, based on the prior year’s
performance of such executives and the Company as a whole, and (c)
its recommendations regarding base salaries, long term incentive
awards and annual performance objectives for the current fiscal
year.
The Compensation
Committee reviews all of Denison’s policies and programs
relating to executive compensation and makes recommendations to the
Board. This process involves:
|
● Benchmarking
and Executive Incentive Bonus Plan review
|
The Compensation
Committee periodically reviews Denison’s compensation
practices against a peer group of companies to ensure that the
Company’s compensation is in line with industry. At the same
time, the Compensation Committee reviews the Executive Incentive
Bonus Plan (the “Bonus
Plan”) annually and considers if any modifications are
required.
|
|
● Establishing
objectives to measure performance
|
The objectives of
the CEO are reviewed by the Compensation Committee and recommended
to the Board for ultimate approval. The Compensation Committee
reviews and approves the annual objectives of the other
NEOs.
|
|
● Evaluating
performance
|
The performance
of the CEO is reviewed by the Compensation Committee. The
performance of the other NEOs is reviewed by the CEO and reported
to the Compensation Committee.
|
|
● Determining
compensation packages
|
The CEO’s
base salary and bonus grants are calculated, reviewed by the
Compensation Committee and recommended to the Board for ultimate
approval. The base salaries and bonuses of the other NEOs are
reviewed and approved by the Compensation Committee. The Board
approves all equity based grants.
|
Compensation
Consultant Advice
In connection
with the appointment of David Cates as its new President and CEO in
2015, Denison retained the services of Global Governance Advisors
("GGA") to review the
compensation of the President and CEO and to provide insight
regarding market best practices for CEO severance provisions and
one-time equity awards upon promotion.
In 2017, Denison
again retained the services of GGA to review and report on the
competitiveness of the Company’s long-term incentive plan,
after the Company received feedback from certain investors,
suggesting the Company’s management could hold more equity in
the Company.
Benchmarking
Denison seeks to
provide competitive total compensation packages to its executive
officers to ensure that it attracts and retains the most talented
individuals. Accordingly, the Compensation Committee relies on
input from independent compensation advisors from time to time and
other outside information, including the insight of Board members.
Denison’s target compensation position is the median against
a peer group of similar type and size of Canadian mining
companies.
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2020 DENISON MANAGEMENT INFORMATION CIRCULAR
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In early 2017,
Denison retained the services of GGA to review the Company’s
peer group, assess the Company’s long term incentive plan and
to provide insight regarding the typical pay mix for CEOs within
the peer group. Included in the report was a digest of the mix of
CEO pay amongst salary, short and long term incentive, as well as
share ownership levels of the CEOs included in the peer
group.
The following
criteria were used in creating the Company’s peer group:
North American-based companies, with a preference for Canadian
headquartered companies listed on the TSX, at the pre-production
stage of development, focused on exploration and development of
precious metals or other minerals with three or more current
expansion projects and generally of a similar size (0.5x to 2.0x)
in terms of total assets and market capitalization. Based on these
factors, it was determined that the following companies were
suitable peer comparators for consideration in determining levels
of senior executive compensation: Alexco Resources Corp., Energy
Fuels Inc., UR-Energy Inc., Largo Resources Inc., NexGen Energy
Ltd., Roxgold Inc., Fission Uranium Corp., Seabridge Gold Inc.,
Continental Gold Inc., Sabina Gold & Silver Corp., Lundin Gold
Inc., Altius Minerals Corporation, Polymet Mining Corp., Premier
Gold Mines Limited, Mountain Province Diamonds Inc. and Platinum
Group Metals Ltd.
The results of
the 2017 benchmarking review by GGA illustrated that the
Company’s current pay mix was disproportionately weighted to
base pay, as compared to its peers, and that the long term
incentive portion of the pay mix was lacking. Accordingly, the
Compensation Committee made modifications to its approach for the
issuance of long term incentive awards, with a focus on the
issuance of equity compensation in the form of stock options and
share units. Going forward, the Compensation Committee will
continue to evaluate the overall appropriateness of the
Company’s NEO compensation.
Executive
Compensation-Related Fees
Fees of (a)
$16,800 were paid to GGA for services rendered to the Company in
2015 and, (b) $13,808 were paid to GGA for services rendered to the
Company in 2017.
Compensation Framework
The Company uses
three key compensation components to achieve the executive
compensation program’s objectives: base salary, annual
performance incentive and long-term incentive.
Base Salary
Base salary is a
fixed component of pay that compensates executives for fulfilling
their roles and responsibilities and aids in attracting and
retaining the qualified executives. Base salaries are reviewed
annually to ensure that they reflect how an individual fulfills his
responsibilities and to ensure that Denison’s compensation
stays competitive.
Annual Performance Incentives
Denison’s
annual performance incentive is a short-term variable element of
compensation in the form of a cash bonus. Based on a recommendation
of the Compensation Committee, Denison’s Board has approved
the Bonus Plan for Denison’s CEO, CFO and Vice-Presidents.
Depending on an executive’s position within the Company, his
or her bonus represents a varying percentage of his or her target
total compensation. Denison’s most senior executives have the
highest amount and proportion of annual incentive compensation as
follows:
CEO – up to 80% of base
salary
CFO – up to 50% of base
salary
VP – up to 40% of base
salary
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2020 DENISON MANAGEMENT INFORMATION CIRCULAR
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The stated goal
of Denison’s compensation program is to improve Shareholder
value through sustainable corporate performance. Linking corporate
and personal performance to support this goal, Denison has
incorporated two performance measures into its bonus
calculations:
1. Corporate
performance
2. Individual
performance
|
Corporate performance is
based on quantitative performance measures, while the individual
component is both qualitative and quantitative.
|
Corporate Performance
Measures: Denison has chosen to measure
corporate performance using recognized and objective measurements
for Shareholders:
Shareholder Return (SR)
measures, on the last day of the year, how well management has
enhanced Denison’s Share price.
Shareholder Return Relative to
Industry (SRI) measures the
return of Denison’s Shareholders relative to the uranium
industry’s return to shareholders.
The allocation of
the Corporate Performance measure is 50% to the SR measure and 50%
to the SRI measure. This allocation is intended to ensure alignment
of bonus compensation with shareholder return, while incentivizing
management to outperform the Company’s peers, even in times
when market conditions are challenging.
For 2017 and prior periods, industry return was
assessed with reference to the Global X Uranium ETF, an investment
fund listed on NYSE Arca. In 2018, the Global X Uranium ETF made
substantial changes to its portfolio, as a result of which the
Compensation Committee felt it no longer represented an appropriate
benchmark to the industry in which the Company operates. As a
result, the Compensation Committee has amended its approach to the
calculation of SRI under the Executive Incentive Bonus Plan, by
annually selecting a peer group of five directly comparable
companies, expected to be the five largest pure uranium producers,
developers and/or explorers with a market capitalization under $3
billion (small to mid-cap range) (the “SRI Peer
Group”).
For
2018 and 2019, the SRI Peer Group was comprised of NexGen Energy
Ltd., Fission Uranium Corp., Uranium Energy Corp., Paladin Energy
Ltd. and Energy Fuels Inc., which collectively hold assets in
Canada, the United States and Europe and have a combined market
capitalization of approximately $2.1 billion.
The annual target
for SR is set at the beginning of the year and determined by the
Compensation Committee in consultation with the CEO. The actual
results of the Corporate Performance Measures are determined based
on the Company’s share price at the end of the fiscal year.
To eliminate the impact of a single trade at the close of the
trading day, the share price used to evaluate SR and SRI will
generally be the single day volume weighted average on the last
trading day of the year.
Individual Performance
Measures: Denison’s qualitative
performance measurements reflect the performance of individuals and
their teams in meeting Denison's annual business objectives. They
include health, safety and environment metrics, budget cost control
and execution of key business activities. For example, if in any
year the Company suffers a fatality at any of its operations, the
performance measurement of health, safety and environment component
of the individual performance measure will be assessed at 0% for
all executives under the plan.
Each year, the
CEO meets with the executives to develop a set of Individual
Performance Measures and to set objectives for the year, which are
then presented to and approved by the Compensation Committee. The
CEO also presents his Individual Performance Measures to the
Compensation Committee for recommendation to the Board for
approval.
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2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
Bonus Weighting and Proportions
The following are
the performance measure categories, and their weighting, for each
executive.
|
|
Corporate
(%)
|
Individual
(%)
|
|
CEO
|
70
|
30
|
|
CFO
|
60
|
40
|
|
VP
|
50
|
50
|
For each
Performance Measure, there are three levels of
achievement:
|
|
Base
Target
|
Stretch
Target
|
Breakthrough
Target
|
|
CEO
|
Up to
50%
|
60%
|
80%
|
|
CFO
|
Up to
30%
|
40%
|
50%
|
|
VP
|
Up to
20%
|
30%
|
40%
|
Long-Term Incentives
Equity based
compensation, such as stock option and share unit grants to
executives, play an important role in helping Denison meet the
objectives of its compensation program. Equity compensation rewards
long-term growth and an appreciation in Share price, thus creating
Shareholder value. Additionally, equity compensation is commonplace
in the Canadian mining industry and is an important part of keeping
Denison’s compensation competitive with that of its
peers.
The Compensation
Committee has a “Stock Based
Compensation Grant Policy” (the “Grant
Policy”), which provides for a uniform granting practice for
eligible employees at Denison. Under the Grant Policy, equity
grants are made annually following the release of year end
results.
For stock
options, the exercise price will be set in accordance with the
Option Plan and the Company’s Disclosure Policy. The Option
Plan is described in detail starting on page 44 of this Circular.
All options granted pursuant to the Grant Policy have a five year
term, with half of the options granted vesting on the first
anniversary of the grant, with the remainder vesting on the second
anniversary.
Under the
Company’s Share Unit Plan, share units can be granted as
Restricted Share Units (where the Shares typically vest after the
passage of a pre-determined amount of time) or Performance Share
Units (where the Shares will only become issuable if, at the time
of vesting, certain pre-determined performance conditions have been
met). Any such grants would be in keeping with the policies of the
Compensation Committee, and in keeping with the provisions of the
Grant Policy and Share Unit Plan. The Share Unit Plan is described
in detail starting on page 45 of this Circular.
The magnitude of
an equity compensation grant for an employee is based
on:
(a)
Scope of
Role & Responsibility: an employee’s level of
responsibility and ability to impact the Company’s results;
and
(b)
Individual
and Corporate Performance: the assessment of individual and
corporate performance (as detailed above) is a factor in
determining the quantity of equity compensation to be granted to
Denison’s executive officers, linking the magnitude of equity
based compensation to the objectives and achievements of each
executive officer.
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2020 DENISON MANAGEMENT INFORMATION CIRCULAR
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Compensation of Named Executive Officers
The table below
is a summary of base salary, incentive-based awards and other
compensation awarded to the NEOs in the last three financial
years.
Summary Compensation Table
|
Name and
PrincipalPosition
|
Year
|
Salary($)
|
Share-based
awards1($)
|
Option-based
awards2($)
|
Non-equity
Annual Incentive Plans3($)
|
All other compensation4
($)
|
Total compensation
($)
|
|
David
Cates
President and
CEO
|
2019
2018
2017
|
313,040
306,300
300,000
|
321,115
627,900
n/a
|
167,025
130,251
457,042
|
134,920
147,630
55,500
|
24,295
25,343
25,427
|
960,395
1,237,424
837,969
|
|
Mac
McDonald
Executive Vice
President & CFO
|
2019
2018
2017
|
258,790
253,210
248,000
|
230,540
460,850
n/a
|
123,420
106,856
345,871
|
84,540
82,040
43,650
|
23,648
22,874
22,668
|
720,936
925,830
660,189
|
|
Tim
Gabruch
Vice President
Commercial 5
|
2019
2018
2017
|
234,140
76,667
n/a
|
229,840
Nil
n/a
|
37,995
62,746
n/a
|
60,870
15,300
n/a
|
16,696
4,629
n/a
|
579,541
159,342
n/a
|
|
Michael
Schoonderwoerd
Vice President
Controller
|
2019
2018
2017
|
202,030
197,680
193,610
|
70,635
209,950
n/a
|
33,915
30,987
119,791
|
49,390
48,530
26,810
|
25,368
27,055
24,671
|
381,338
514,112
364,882
|
|
Dale
Verran
Vice President
Exploration
|
2019
2018
2017
|
217,850
213,990
210,000
|
74,245
252,972
n/a
|
36,210
33,185
119,104
|
70,810
50,070
32,130
|
13,703
13,325
13,287
|
412,818
563,542
374,521
|
Notes to
Summary Compensation Table:
1.
Granted pursuant to the Share
Unit Plan. The fair value has been determined using the closing
price of Denison’s shares on the trading day prior to the
accounting grant date. The Share Unit Plan came into effect in
2018.
2.
This amount represents the
fair value, on the date of grant, of awards made under the Option
Plan for the applicable financial year. The grant date fair value
has been calculated using the Black Scholes option-pricing model.
The key assumptions and estimates used for the calculation of the
grant date fair value under this model include the risk-free
interest rate, expected stock price volatility, expected life and
expected dividend yield. Reference is made to the disclosure
regarding the Option Plan in Note 20 in the Consolidated Financial
Statements for the Year Ended December 31, 2019 available on SEDAR
and EDGAR.
3.
These amounts were earned in
the fiscal year noted and were paid in the following fiscal year.
For 2019, NEO bonuses were approved in March 2020, with 100% of the
NEO bonuses payable by special grant of RSUs (see page 38 for more
details). For 2018, 50% of the NEO bonuses were paid in cash, with
50% of the bonuses paid by a special grant of RSUs. For 2017, 25%
of the NEO bonuses were paid in cash, with 75% of the NEO bonuses
paid by a special grant of stock options.
4.
These amounts consist of car
allowance, travel-to-work or parking benefits, life insurance
premiums and retirement savings benefits. The retirement savings
benefits component exceeds 25% of the benefits included under the
heading “All Other Compensation”, in 2019, 2018 and
2017, respectively as applicable, as follows (i) for Mr. Cates:
$12,522, $12,252, $12,000; (ii) for Mr. McDonald: $10,352, $10,128,
$9,920; (iii) for Mr. Gabruch: $11,707, $3,067; (iv) for Mr.
Schoonderwoerd: $14,142, $13,837, $12,343; and (v) for Mr. Verran:
$8,714, $8,560, $8,400.
5.
Mr. Tim Gabruch joined
Denison in September 2018.
None of the NEOs
received any non-equity awards under a long-term incentive plan,
and the Company does not have any defined benefit or actuarial
plans for active employees.
|
2020
DENISON MANAGEMENT
INFORMATION CIRCULAR
|
Five-Year Trend Discussion
The annual
compensation in the graphs below reflect total compensation for the
CEO and the four other NEOs disclosed each year, rather than
compensation from 2015 to 2019 for the current NEOs who may not
have been NEOs in prior years. For example, Mr. Gabruch was not an
NEO in 2018, and thus his compensation for that year is not
included in “Other NEO Pay” in 2018.
Base Salaries:
After
consultation with GGA on NEO Compensation in 2015, the Compensation
Committee approved moderate increases in salary compensation for
the NEOs for 2016. In 2017, the Compensation Committee deemed a
further modest increase in salary compensation appropriate, in
consideration of the team’s achievements. For 2018 and 2019,
the Compensation Committee approved only a cost of living
adjustment for each NEO base salary.
With respect to
the changes for each NEO, Mr. Cates became CFO on January 1, 2013,
and the Compensation Committee did not make any adjustment to Mr.
Cates’s base compensation in 2014 and early 2015 in his role
as CFO, except for minor cost of living increases. In connection
with his promotion to President and CEO in 2015, the Compensation
Committee approved a 33.9% increase in Mr. Cates' salary,
increasing it to $250,000. Mr. Cates’ salary was later
increased to $270,000 for 2016 and $300,000 for 2017, in response
to industry benchmarking and corporate achievements, with a small
cost of living adjustment increasing it to $306,300 for 2018 and
$313,040 for 2019.
When Mr. McDonald
was appointed CFO on March 23, 2015 his salary was set at $205,000
and he received increases to $220,000 in 2016 and $248,000 in 2017
to bring his salary closer to market benchmarks, with a cost of
living adjustment to $253,210 in 2018 and 258,790 in 2019. Mr.
Gabruch joined the Company in September 2018, as VP Commercial, and
his compensation was set at $230,000 for 2018 and $234,140 for
2019. Mr. Schoonderwoerd was appointed VP Controller on January 1,
2013. In 2017, Mr. Schoonderwoerd's salary was $193,610, which was
modestly increased to $197,680 in 2018 and $202,030 in 2019. Mr.
Verran was appointed VP Exploration and became an NEO effective
January 1, 2016. His salary in 2017 was $210,000, with modest
increases to $213,990 in 2018 and $217,850 in 2019.
Equity Compensation:
In part due to
investor feedback suggesting that the Company’s relatively
young roster of NEOs could hold more equity in the Company, GGA was
engaged in March 2017 to provide a report, in part, on the
competitiveness of the Company’s long-term incentive plan.
After consideration, in 2017 the Compensation Committee approved
both an “ordinary” grant of options (with the grant of
2,065,000 options to NEO’s in accordance with the
Company’s Stock Option Grant Policy) and a
“special” grant of options (with the additional grant
of 1,735,000 stock options), thereby increasing the NEOs’
stake in the Company’s equity. As a result, equity
compensation saw a larger than typical increase in 2017. The
“special” grant of options was also intended to
compensate NEOs for what was assessed as under-optioning the
previous year, based on the most recent benchmarking provided by
GGA.
In addition, the
Compensation Committee considered the form of equity being issued
pursuant to the Company’s long-term incentive plan with
reference to the March 2017 GGA report, which noted that the grant
of share units under a share unit plan would assist management in
increasing their respective share ownership levels in response to
investor feedback. As a result, the Company’s Share Unit
Plan, providing for the issuance of Restricted Share Units and
Performance Share Units was adopted in March, 2018 and each NEO
received a grant of both Performance Share Units, intended to be a
one-time special grant to increase NEO equity holdings, and
Restricted Share Units, as part of the annual bonus assessment. As
a result, equity compensation saw another larger than typical
increase in 2018. Mr. Gabruch also received a grant of Performance
Share Units in 2019, to bring his holdings in line with the other
NEOs. There were no options or other equity compensation held by
the NEOs that were re-priced downward during the most recently
completed financial year of the Company.
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
- 34 -
Performance Graphs
Cumulative Value of $100 Investment
The following
graph compares the cumulative total shareholder return for $100
invested in the Shares on the Toronto Stock Exchange for the
Company’s five most recently completed financial years with
the cumulative total shareholder return of the TSX S&P/TSX
Composite Index for the same period. The Share performance as set
out in the graph does not necessarily indicate future price
performance. The Shares trade on the TSX under the symbol
“DML”.
Data
supplied by the TSX.
Five-Year Trend in NEO Total Compensation
Compared to Denison Cumulative Value of $100
Investment
To evaluate the
trend in Denison compensation levels in relation to Share
performance as measured in the graph above, Denison relied on the
total annual compensation awarded for fiscal years 2016 through
2019 on the same basis as is currently disclosed in the
“Summary Compensation Table” above, using the fiscal
year 2015 as a base amount for comparing changes in compensation
over time.
Denison Share
data supplied by the TSX.
For 2018, the
chart above reflects the one-time special grant to increase NEO
equity holdings. See “Compensation of Named Executive
Officers – Five Year Trend Discussion” for more
details.
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
Annual Performance Incentives
Denison's NEOs
were eligible to receive a bonus for the year ended December 31,
2019, in accordance with the Company’s Bonus Plan. As
previously discussed, computation of bonuses is based on
assessments of corporate and individual performance.
2019
Corporate Performance
As explained on
page 31 of the Circular, Corporate Performance Measures are
assessed by looking at Shareholder Return (SR) and Shareholder
Return Relative to Industry (SRI). The Compensation Committee had
set a base target of 8% SR for 2019. For SRI, the performance of
the Company’s selected SRI Peer Group is used as the bench
mark for measuring industry performance. In 2019, the market cap
weighted share price performance of the SRI Peer Group (when
comparing their share price on the last trading day of the year in
2018 against 2019) was -36.91%.
When the
Compensation Committee assessed the Company’s performance in
2019, it determined that Denison’s SR for the year was
-16.43%. This performance was below the 8% SR target, and no bonus
was awardable on the basis of SR. However, the Company’s
performance significantly exceeded the SRI benchmark of -36.91%. As
a result, a bonus on account of SRI was approved to be paid to NEOs
of $192,800 in the aggregate.
2019
Individual Performance
In March 2019,
the Board of Directors approved individual objectives for Mr. Cates
upon the recommendation of the Compensation Committee. In March
2020, the Compensation Committee assessed Mr. Cates' performance
against these objectives to determine his entitlement under the
Bonus Plan. The Compensation Committee determined that Mr. Cates
had substantially completed his objectives, and the results of the
Compensation Committee’s review are summarized, in part, as
follows:
|
Objective
|
|
Assessment
|
|
1. Drive
the development of the Wheeler River project consistent with the
Company’s objective of becoming the next uranium producer in
the Athabasca Basin.
|
√
|
● A number of significant
milestones were reached in the year, including (a) the acceptance
of the Project Description by provincial and federal regulators in
connection with the commencement of the Environmental Assessment
process, and (b) successful completion of field programs and
metallurgical testing, as part of the de-risking process for the
project
|
|
2. Pursue
various opportunities and obtain the necessary financing to allow
for the advancement of the Wheeler River project.
|
√
|
● Advanced the evaluation of
various alternatives for long-term financing to support the
advancement of the Wheeler River project.
|
|
3. Obtain
financing to fund continued exploration and evaluation activities
at Wheeler River and other high priority properties to the end of
2020 and beyond.
|
√
|
● Obtained financing for 2020
exploration program with closing of $4.7 million bought deal
private placement of flow-through Shares in December
2019.
|
|
4. Continue
to dynamically manage the Company’s strategic resource base
and evaluate opportunities to upgrade or enhance the
Company’s exploration portfolio projects outside of Wheeler
River.
|
√
|
● The Company evaluated
various options to manage its strategic resource base throughout
2019, and completed an acquisition of the minority interest in the
Murphy Lake property.
|
|
5. Meet or
surpass operating plan / budget objectives.
|
√
|
● The Company was successful
in extending its Management Services Agreement with Uranium
Participation Corporation for a five year term.
● The Company successfully
extended its contracts with key clients of its Closed Mines
business.
|
2020 DENISON MANAGEMENT INFORMATION
CIRCULAR
- 36
-
|
6. Continue
to enhance the scope of the Company’s investor relations and
stakeholder relations activities to ensure investors and analysts
are well informed and that relationships with key stakeholders are
maintained.
|
√
|
● The Company enhanced its
investor relations activities, including increased involvement of
the Company’s Vice President Commercial.
● The Company successfully
hosted joint venture partners, local community members and
investment analysts for tours of the Wheeler River
project.
|
|
7. Continue
to work towards resolution of the Uranium Industry a.s. dispute,
related to the previous sale of the GSJV interest.
|
√
|
● The arbitration proceedings
advanced during 2019, with hearings held in early December 2019 and
final written submissions made shortly thereafter.
|
|
8. Continue
to instill a culture of 100% regulatory EH&S
compliance
|
√
|
● Consistently positive
Environment, Health and Safety reports from operations continue to
speak to Denison’s overall commitment to a culture of 100%
regulatory and environmental compliance.
|
|
9. Continue
to instill a culture of 100% ethical business conduct and zero
tolerance
|
√
|
● Denison continues to be
committed to maintaining a culture of 100% ethical business conduct
and a reputation amongst industry participants and regulators as
being highly reputable and ethical.
|
Each of the other
NEO's eligible for a bonus for 2019 set individual performance
objectives for 2019, and the Compensation Committee assessed their
performance against these objectives for determining entitlement
under the Bonus Plan.
In looking at Mr.
McDonald's performance over 2019, the Compensation Committee
determined that Mr. McDonald met or exceeded his bonus targets on
all of his objectives. Among targets which he surpassed, Mr.
McDonald (a) was a key contributor to corporate development,
capital raising, investor relations and other strategic activities
during the year; and (b) managing budgetary cost controls for
corporate general and administrative expenses.
The Compensation
Committee concluded that Mr. Gabruch’s performance in 2019
had met or exceeded his objectives in 2019, including (a) working
to advance Denison’s 3-year commercial plan and strategy
related to the development of the Wheeler River project, including
creating and growing relationships with global utilities, traders
and other industry participants; (b) becoming a key contributor to
the Company’s investor relations efforts, and (c) managing
the commercial aspects of the Company’s services to Uranium
Participation Corporation.
Mr.
Schoonderwoerd met or exceeded expectations during 2019, most
notably by (a) providing leadership in the preparation of budgets
and the budget processes for Wheeler River evaluation activities;
and (b) continuing to take ownership of the Company’s tax
reporting and compliance responsibilities.
The Compensation
Committee also considered Mr. Verran’s performance in 2019
against his objectives and concluded that Mr. Verran had
outperformed against most of his objectives in 2019. Mr. Verran and
the exploration team were successful in (a) discovering new
mineralization at the Company’s high priority and pipeline
projects; (b) supporting the Company’s community engagement
activities; and (c) meeting and exceeding exploration cost targets
on an “all-in” dollars per metre drilled basis. Mr.
Verran was also given additional recognition for his extraordinary
efforts in supporting the Project Development team’s efforts
to execute on 2019 field programs for the Wheeler River project
during a period of management transition (leading to a special
individual performance assessment of 22.5% out of a possible 20%,
as per the summary below).
2020 DENISON MANAGEMENT INFORMATION
CIRCULAR
- 37
-
All NEOs were
recognized as exceeding their objectives in 2019 relating to health
and safety, as the Company had no lost time accidents and was 100%
compliant with applicable environmental and health and safety laws
and regulations.
Based on the
foregoing, the assessment of the following NEOs’ bonus
entitlement was:
|
Name
|
Corporate
Calc./Max
|
Individual
Calc./Max
|
Total
Calc./Max
|
|
David
Cates
|
28.0% /
56.0%
|
15.1% /
24.0%
|
43.1% /
80.0%
|
|
|
$87,650
|
$47,270
|
$134,920
|
|
Mac
McDonald
|
15.0% /
30.0%
|
16.9% /
20.0%
|
31.9% /
50.0%
|
|
|
$39,750
|
$44,790
|
$84,540
|
|
Tim
Gabruch
|
10.0% /
20.0%
|
16.0% /
20.0%
|
26.0% /
40.0%
|
|
|
$23,410
|
$37,460
|
$60,870
|
|
Mike
Schoonderwoerd
|
10.0% /
20.0%
|
14.5% /
20.0%
|
24.5% /
40.0%
|
|
|
$20,200
|
$29,190
|
$49,390
|
|
Dale
Verran
|
10.0% /
20.0%
|
22.5% /
20.0%
|
32.5% /
40.0%
|
|
|
$21,790
|
$49,020
|
$70,810
|
It was determined
by the Compensation Committee and the Board, on a recommendation
from management, that the bonus entitlements be paid to the NEOs by
way of equity compensation, as outlined below. Management’s
approach provides for further equity investment in the Company by
the NEO’s, and allows for conservation of the Company’s
cash for investment in the Company’s 2020
objectives.
|
Name
|
Total
Bonus($)
|
Bonus RSUs to be Granted (1)(#)
|
|
David
Cates
|
$134,920
|
335,250
|
|
Mac
McDonald
|
$84,540
|
209,750
|
|
Tim
Gabruch
|
$60,870
|
151,000
|
|
Michael
Schoonderwoerd
|
$49,390
|
122,750
|
|
Dale
Verran
|
$70,810
|
176,250
|
|
Total
|
$400,530
|
995,000
|
Note:
1.
The RSUs granted in lieu of
cash bonus compensation were valued at approximately $0.40 per
Share Unit, based on a $0.54 Share price at December 31, 2019 and
an estimated present value of the Shares to vest under the RSUs
over the three year vesting period at an annual discount rate of
15%.
Of the total
Bonus RSUs approved for issuance to management, 75% were granted in
March 2020 and 25% are expected to be granted in May
2020.
Long Term Incentive Plan Awards
In years prior to
2018, the Company employed two forms of incentive plans to award
its employees for individual and Company performance, namely
option-based awards and non-equity based awards in the form of cash
bonuses. In March 2018, the Board adopted the Share Unit Plan and
now the Company is able to grant share-based incentives. See
“Equity Compensation Plans” below, for more
information.
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
Outstanding Option-Based Awards
The following
table sets out for each NEO the number and value of their options
outstanding on December 31, 2019.
|
Name
|
Shares underlying unexercised options (#)
|
Option
exercise price ($)
|
Option
expiration date
|
Value of unexercised in-the- money options ($)1
|
|
David
Cates
|
155,000
|
1.10
|
Mar 6,
2020
|
Nil
|
|
|
200,000
|
0.55
|
Nov 6,
2020
|
Nil
|
|
|
355,7502
|
0.64
|
Mar 10,
2021
|
Nil
|
|
|
1,927,6003
|
0.85
|
Mar 10,
2022
|
Nil
|
|
|
774,2144
|
0.60
|
Mar 11,
2023
|
Nil
|
|
|
655,000
|
0.68
|
Mar 10,
2024
|
Nil
|
|
Total
|
4,067,564
|
|
|
Nil
|
|
Mac
McDonald
|
103,000
|
1.01
|
Mar 20,
2020
|
Nil
|
|
|
100,000
|
0.55
|
Nov 6,
2020
|
Nil
|
|
|
260,3002
|
0.64
|
Mar 10,
2021
|
Nil
|
|
|
1,400,9003
|
0.85
|
Mar 10,
2022
|
Nil
|
|
|
627,1814
|
0.60
|
Mar 11,
2023
|
Nil
|
|
|
484,000
|
0.68
|
Mar 10,
2024
|
Nil
|
|
Total
|
2,975,381
|
|
|
Nil
|
|
Tim
Gabruch
|
274,000
|
0.68
|
Sep 3,
2023
|
Nil
|
|
|
149,000
|
0.68
|
Mar 10,
2024
|
Nil
|
|
Total
|
423,000
|
|
|
Nil
|
|
Michael
|
74,000
|
1.10
|
Mar 6,
2020
|
Nil
|
|
Schoonderwoerd
|
80,000
|
0.55
|
Nov 6,
2020
|
Nil
|
|
|
126,5502
|
0.64
|
Mar 10,
2021
|
Nil
|
|
|
533,2003
|
0.85
|
Mar 10,
2022
|
Nil
|
|
|
229,7484
|
0.60
|
Mar 11,
2023
|
Nil
|
|
|
133,000
|
0.68
|
Mar 10,
2024
|
Nil
|
|
Total
|
1,176,498
|
|
|
Nil
|
|
Dale
Verran
|
29,000
|
1.10
|
Mar 6,
2020
|
Nil
|
|
|
80,000
|
0.55
|
Nov 6,
2020
|
Nil
|
|
|
63,000
|
0.64
|
Mar 10,
2021
|
Nil
|
|
|
529,9003
|
0.85
|
Mar 10,
2022
|
Nil
|
|
|
192,9004
|
0.60
|
Mar 11,
2023
|
Nil
|
|
|
142,000
|
0.68
|
Mar 10,
2024
|
Nil
|
|
Total
|
1,036,800
|
|
|
Nil
|
Notes for
Outstanding Option-Based Awards:
1.
Option values have been
calculated using the closing price of the Shares on the TSX on
December 31, 2019 of $0.54 per share, less the applicable exercise
price of the outstanding options. As at December 31, 2019, some of
the options had not fully vested. The above value of unexercised
in-the-money options has been computed assuming that all of the
options have vested.
2.
Comprised in part of a
special stock option grant to each NEO in lieu of cash payments, on
account of NEO 2015 bonuses: Cates, 198,750; McDonald, 135,300; and
Schoonderwoerd, 56,550.
3.
Comprised in part of special
stock option grants to each NEO (a) in lieu of cash payments, on
account of NEO 2016 bonuses: Cates, 477,600; McDonald, 282,900;
Schoonderwoerd, 163,200; and Verran, 161,900; and (b) to address
investor feedback and increase NEOs’ equity stake in the
Company: Cates, 653,000; McDonald, 520,000; Schoonderwoerd,
172,000; and Verran, 153,000.
4.
Comprised in part of special
stock option grants to each NEO in lieu of cash payments on account
of NEO 2017 bonuses: Cates, 198,214; McDonald, 154,181;
Schoonderwoerd, 95,748; and Verran, 45,900.
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
Outstanding Share-Based Awards
The following
table sets out for each NEO the number and value of their share
units outstanding on December 31, 2019.
|
Name
|
UnvestedShare Units
(#)1
|
Market or
payout value of Unvested Share Units
($)2
|
Vested but
Unpaid Share Units
(#)
|
Market or
payout value of Vested but Unpaid Share Units
($)
|
|
David
Cates
|
751,667
RSUs
|
405,900
|
105,333
RSUs
|
56,880
|
|
|
520,000
PSUs
|
280,800
|
130,000
PSUs
|
70,200
|
|
Total
|
1,271,667
|
686,700
|
235,333
|
127,080
|
|
Mac
McDonald
|
544,667
RSUs
|
294,120
|
86,333
RSUs
|
46,620
|
|
|
360,000
PSUs
|
194,400
|
90,000
PSUs
|
48,600
|
|
Total
|
904,667
|
488,520
|
176,333
|
95,220
|
|
Tim
Gabruch
|
88,000
RSUs
|
47,520
|
Nil
|
Nil
|
|
|
240,000
PSUs
|
129,600
|
Nil
|
Nil
|
|
Total
|
328,000
|
177,120
|
Nil
|
Nil
|
|
Michael
Schoonderwoerd
|
178,667
RSUs
|
96,480
|
24,333
RSUs
|
13,140
|
|
|
200,000
PSUs
|
108,000
|
50,000
PSUs
|
27,000
|
|
Total
|
378, 667
|
204,480
|
74,333
|
40,140
|
|
Dale
Verran
|
210,288
RSUs
|
113,555
|
37,144
RSUs
|
20,058
|
|
|
240,000
PSUs
|
129,600
|
60,000
PSUs
|
32,400
|
|
Total
|
450,288
|
243,155
|
97,144
|
52,458
|
Notes for
Outstanding Share-Based Awards:
1.
The PSUs were received as
special grant of performance share units in 2018, as approved by
Shareholders on May 3, 2018, to further address investor feedback
and increase NEOs’ equity stake in the Company. Mr. Gabruch
joined Denison in September 2018, received a prorated grant of PSUs
in 2019.
2.
Share unit values have been
calculated using the closing price of the Shares on the TSX on
December 31, 2019 of $0.54 per share.
Value Vested or Earned during 2019
The table below
sets out information concerning the value of incentive plan awards,
including option-based and non-equity incentive plan compensation,
vested or earned during the financial year ended December 31, 2019
for each NEO.
|
Name
|
Option-based awards Value vested during year($)1
|
Share-based awardsValue vested during year($)2
|
Non-equity incentive plan compensation – Value earned during
the year($)
|
|
David
Cates
|
(132,877)
|
167,086
|
134,920
|
|
Mac
McDonald
|
(93,989)
|
125,196
|
84,540
|
|
Tim
Gabruch
|
(10,960)
|
Nil
|
60,870
|
|
Michael
Schoonderwoerd
|
(36,132)
|
52,776
|
49,390
|
|
Dale
Verran
|
(37,326)
|
68,972
|
70,810
|
Note for
Value Vested or Earned During 2019:
1.
The option value vested
during the year reflects the aggregate dollar value that would have
been realized if the options that vested in 2019 were exercised on
their vesting date. Numbers in brackets constitute a negative
value. For options, a negative value indicates that the exercise
price of the options exceeds the market value of Denison’s
shares on the vesting date.
2.
The share unit value vested
during the year reflects the aggregate dollar value realizable if
the shares were issued on their vesting date.
2020 DENISON MANAGEMENT INFORMATION
CIRCULAR
-40-
Loans to Executives
As of the date of
this Circular, Denison and its subsidiaries had no loans
outstanding to any current or former NEOs, except routine
indebtedness as defined under Canadian securities
laws.
Compensation on Termination
Messrs. McDonald,
Gabruch, Schoonderwoerd and Verran all had similar written
executive employment agreements with the Company at the end of the
financial year, which set out their rights in the event of
termination, including termination without cause or termination by
the executive for "Good Reason" (as defined below).
Upon termination
of the employment agreement by either party for any reason, the NEO
shall be paid all compensation earned by him (regardless of whether
yet paid) as of the effective date of termination. In the event
that the NEO's employment is terminated (a) by the Company for a
reason other than just cause or (b) by the NEO in the event of a
Good Reason, the NEO will be entitled to a payment equal to 18
months’ salary and a bonus payment in an amount equal to the
bonus payment earned by such NEO for the fiscal year ending
immediately prior to the effective date of
termination.
Pursuant to Mr.
Cates' executive employment agreement with the Company, upon
termination of the employment agreement by either party for any
reason, Mr. Cates shall be paid all compensation earned by him
(regardless of whether yet paid) as of the effective date of
termination. In the event that Mr. Cates's employment is terminated
(a) by the Company for a reason other than just cause or (b) by Mr.
Cates in the event of a Good Reason, Mr. Cates will be entitled to
(i) a payment equal to 24 months’ salary, (ii) a bonus
payment in an amount equal to the bonus payment earned by Mr. Cates
for the fiscal year ending immediately prior to the effective date
of termination, and (iii) a payment equivalent to 19% of the amount
determined pursuant to (i) as compensation for discontinued
benefits.
In each contract,
a Good Reason means:
●
the assignment of any duties
inconsistent with the status of the executive's assigned office or
a material alteration in the executive’s duties,
responsibilities, status or reporting relationship;
●
a reduction in the
executive’s annual base salary;
●
requiring the executive to be
based in a different location;
●
any other events or
circumstances which would constitute a constructive dismissal at
common law; or
●
a “change of
control” of the Company. A “change of control”
means (a) the acquisition of control or direction by any holder of
the voting rights of 50% or more of the Shares, (b) a cessation of
the incumbent directors constituting a majority of the Board when
the incumbent directors do not recommend or approve of the
replacement directors, or (c) the approval by the Shareholders of
(i) a business arrangement (such as an amalgamation, arrangement or
merger) not approved by the Board which results in the current
Shareholders immediately thereafter not holding more than 50% of
the Shares; (ii) the liquidation, dissolution or winding up of the
Company; or (iii) the sale, lease or other disposition of all or
substantially all of the assets of the Company.
Pursuant to the
Company's Option Plan, subject to a specific provision in an NEO
employment agreement, all options held by directors and employees
of the Company vest immediately following a change of control,
which is defined in the Option Plan as the acquisition of 30% or
more of the then outstanding Shares or a sale by the Company of
substantially all of its assets. All options are then exercisable
for a period of 60 days following the close of any such
transaction.
Pursuant to the
Share Unit Plan, subject to the provisions of any NEO employment
agreement, all non-performance conditioned SUs vest in the event of
a Termination on Change of Control, (a) all unvested RSUs
outstanding shall immediately vest on the date of such termination;
and (b) all unvested PSUs (with performance criteria outstanding)
shall vest on the date of such termination using an Adjustment
Factor as determined by the Compensation Committee. See
“Equity Compensation Plans – Share Unit
Plan”.
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Pursuant to the
employment agreements for each of Messrs. Cates, McDonald, Gabruch,
Schoonderwoerd and Verran, if the NEO's employment agreement is
terminated by the Company without cause or by the NEO for Good
Reason, any of such NEO's unvested stock options will automatically
vest and all stock options held by the NEO will be exercisable for
a 90-day period.
The table below
is a summary of the compensation that would have been paid to the
NEOs if any of them had been terminated on December 31, 2019, which
includes situations of termination without cause and termination
without cause in the event of a change of control.
|
Name
|
Separation Pay($)
|
Bonus Payment($)
|
Value of In-the- Money Equity
Awards1,2($)
|
Payment in lieu of Benefits ($)
|
Total($)
|
|
David
Cates
|
626,080
|
147,630
|
813,780
|
118,955
|
1,706,445
|
|
Mac
McDonald
|
388,185
|
82,040
|
583,740
|
Nil
|
1,053,965
|
|
Tim
Gabruch
|
351,210
|
15,300
|
177,120
|
Nil
|
543,630
|
|
Michael
Schoonderwoerd
|
303,045
|
48,530
|
244,620
|
Nil
|
596,195
|
|
Dale
Verran
|
326,775
|
50,070
|
295,613
|
Nil
|
672,458
|
Notes to
Termination Payouts:
1.
Includes the value of options
and share units. Option and share unit values have been calculated
using the closing price of the Shares on the TSX on December 31,
2019 of $0.54 per share.
2.
The amount shown represents
the incremental value of the NEOs’ unexercised in-the-money
equity as at December 31, 2019, assuming all of the options and
share units have vested. The Company would not be required to make
any cash payment for this amount upon termination of the
NEO.
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
EQUITY COMPENSATION PLANS
Denison’s
Option Plan is a fixed number share option plan under which a
maximum of 39,670,000 Shares have been authorized for issuance on
the exercise of options, representing 6.64% of the Company’s
issued and outstanding Shares as at December 31, 2019. The Option
Plan was first implemented in 1997, and was amended and updated
(with shareholder and regulatory approval) in 2006 and then again
in 2013.
Denison’s
Share Unit Plan is a fixed number share unit plan under which a
maximum of 15,000,000 Shares were authorized for issuance. The
Share Unit Plan was first implemented by the Board on March 8,
2018, ratified and confirmed by Shareholders at the Annual General
and Special Meeting of Shareholders held on May 3,
2018.
On December 31,
2019, there were an aggregate of 13,827,243 options, 2,754,099 RSUs
and 2,140,000 PSUs outstanding under their respective plans. For
the fiscal years ended December 31, 2017, 2018 and 2019 (a) the
annual burn rate for all of Denison’s equity compensation
arrangements is 1.16%, 1.23% and 0.88%, respectively; and (b) the
annual burn rate for securities issued under the Option Plan is
1.16%, 0.61% and 0.51%, respectively. The Share Unit Plan was first
adopted in 2018, and the annual burn rate for the fiscal years
ended December 31, 2018 and 2019 was 0.62% and 0.37%,
respectively.
As at December
31, 2019, the number and price of Shares to be issued under the
Option Plan and Share Unit Plan, and the percentage relative to the
number of issued and outstanding Shares of the Company, was as
follows:
|
Plan
Category
|
Number of
Shares to be Issued upon Exercise of Outstanding Equity
Compensation
(a)
|
The number in (a) as Percentage of Issued and Outstanding
Shares
|
Weighted – Average Exercise Price of Outstanding Equity
Compensation
(b)
|
Number of Shares Remaining Available for Future Issuance Under
Equity Plan
(excluding
Shares reflected in (a))
|
Percentage of Issued and Outstanding Shares
|
|
Equity
Compensation Plans Approved by Shareholders1
- Option
Plan
- Share Unit
Plan
|
13,827,243
4,894,099
|
2.32%
0.82%
|
$0.75
N/A4
|
17,769,9072
9,672,5683
|
2.98%
1.62%
|
|
Equity
Compensation Plans Not Approved by Shareholders
|
N/A
|
N/A
|
N/A
|
N/A
|
N/A
|
Notes:
1.
The Company’s
Shareholder approved equity plans are the Option Plan and the Share
Unit Plan. Reference is made to the disclosure regarding the Option
Plan and the Share Unit Plan in Note 20 in the Consolidated
Financial Statements for the Year Ended December 31, 2019, which
are available on SEDAR and EDGAR.
2.
The maximum number of shares
issuable under the Option Plan is 39,670,000. As at December 31,
2019, 21,900,093 options had been granted (less cancellations)
since the Option Plan’s inception in 1997.
3.
The maximum number of shares
issuable under the Share Unit Plan is 15,000,000. As at December
31, 2019, 2,754,099 RSUs and 2,140,000 PSUs had been granted (less
cancellations) and 433,333 Shares had been issued on settlement of
RSUs and PSUs since the Share Unit Plan’s inception in March
2018.
4.
The share units issued under
the Share Unit Plan do not have an exercise price and they entitle
the holder to Shares upon vesting and settlement. As at December
31, 2019, the issued and outstanding share units had a fair value
of $0.54 per unit, based on the closing price of the Shares on the
TSX on that date.
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
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Option Plan
The purpose of
the Option Plan is to attract, retain and motivate the
Company’s directors, officers, key employees and consultants
and to align their interests with those of the Company and its
Shareholders. The Compensation Committee administers grants under
the Option Plan. All grants are subject to the approval of the
Board.
Below are the key
provisions of Denison’s Option Plan:
●
A maximum of 39,670,000
Shares are currently authorized for issuance under the Option
Plan.
●
Denison’s directors,
officers, employees and consultants of the Company or a subsidiary
of the Company or any employee of a management company providing
services to the Company or a subsidiary of the Company are eligible
to participate under the Option Plan.
●
Options cannot have a term of
over ten years; however, since 2011, the Board has adopted a
practice of granting options with five year terms, with vesting in
two equal parts on the first anniversary and the second anniversary
from the grant date. The Compensation Committee takes into account
previous grants when it considers new grants of
options.
●
Grants are typically done
annually. The Board fixes the exercise price of an option at the
time of the grant at the TSX closing price of Shares on the trading
day immediately before the date of the grant, and the exercise
price cannot be lower than this price.
●
If a director, officer or an
employee leaves the Company, all of their options will expire 30
days after they cease to be a director or an employee, except the
expiry period is extended if the options would otherwise expire
during a period of time when trading Shares is restricted. In
certain cases, individual employment agreements may vary vesting
rights and expiry periods upon termination or upon a change of
control. See “Compensation on Termination” starting on
page 41 for more information. The Option Plan provides that options
granted to a consultant will terminate 30 days after the consultant
agreement terminates.
●
The Option Plan does not
provide for a restriction on the maximum number of securities
issuable to any one person or company. However, no more than 10% of
total Shares issued and outstanding can be reserved for issuance to
insiders in a one-year period under the Option Plan and any other
security based compensation arrangement, and no more than 10% of
total Shares issued and outstanding can be issued to all insiders
in a one-year period under the Option Plan and any other share
compensation arrangement. Options cannot be transferred to another
person.
●
The following kinds of
changes require Shareholder approval under the terms of the Option
Plan:
✓
any change to the number of
Shares that can be issued under the plan, including increasing the
fixed maximum number of Shares, or changing from a fixed maximum
number to a fixed maximum percentage of Shares
✓
any change that increases the
number of categories of people who are eligible to receive options,
if it could increase the participation of insiders
✓
the addition of any form of
financial assistance or any amendment to a financial assistance
provision which is more favourable to participants
✓
the addition of a cashless
exercise feature which does not provide for a full deduction of the
number of underlying Shares from the plan reserve
✓
the addition of a deferred or
restricted share unit or any other provision which results in
Shares being received while no consideration is received by
Denison
✓
discontinuance of the Option
Plan
✓
any other amendments that
could lead to a significant dilution of the Company’s
outstanding Shares or may provide additional benefits to
participants under the Option Plan, especially insiders, at the
expense of the Company and its existing Shareholders
|
2020 DENISON MANAGEMENT INFORMATION CIRCULAR
|
●
No change to the Option Plan
can alter or affect the rights of an option holder in a negative
way without his or her consent, except as described in the Option
Plan.
●
The Board has the power,
subject to regulatory approval where required, to make a limited
number of changes to the Option Plan, including amendments of a
house keeping nature, changes to the vesting provisions of an
option, a change to the termination provisions of an option,
provided that the extension does not go beyond the original expiry
date of the option and add a cashless exercise feature that
provides for a full deduction of Shares from the plan
reserve.
●
The Company prohibits the
giving of financial assistance to facilitate the purchase of Shares
to directors, officers or employees who hold options granted under
the Option Plan.
●
Option grants to the CEO and
the CFO are conditional upon a claw back agreement, whereby each of
them personally agrees to reimburse any portion of their bonus
payment (including options granted pursuant thereto) which is
awarded for achievements that are found to involve their fraud,
theft or other illegal conduct.
Share Unit Plan
The
Company’s goal with equity compensation in general is for it
to act as an important tool to help motivate directors, officers,
key employees and consultants, attract and retain the best people,
and to align the participant’s interests with those of the
Company and its Shareholders. The purpose of the Share Unit Plan is
to update the Company’s equity compensation program, bringing
it in line with current market practices, and to create more
flexibility in the types of incentive awards that may be made to
eligible participants.
The Share Unit
Plan was adopted in March 2018 (and ratified by Shareholders on May
3, 2018), after the Company received feedback from certain
investors suggesting the Company’s management could hold more
equity in the Company. As a result of that feedback, GGA was
requested to provide a report, in part, on the competitiveness of
the Company’s long-term incentive plan. In Part, the GGA
report noted that the grant of share units under a share unit plan
would assist management in increasing their respective share
ownership levels and increase their exposure to the share price, in
a different way than more traditional stock option
ownership.
Below are the key
provisions of Denison’s Share Unit Plan:
●
The Share Unit Plan
authorizes a maximum of 15,000,000 Shares for issuance thereunder.
As a result of settlement of Shares under the Share Unit Plan since
its inception, there are currently a maximum of 14,538,003 Shares
still authorized for issuance on settlement of Share Units,
representing 2.32% of the Company’s issued and outstanding
Shares as at December 31, 2019.
●
Participants may be granted
restricted share units (“RSUs”) or performance share
units (“PSUs”) or any combination of the
foregoing.
●
Eligible participants in the
Share Unit Plan are Denison’s directors, officers, employees
and consultants of the Company or an affiliate of the Company or
any employee of a management company providing services to the
Company or an affiliate of the Company.
●
Grants are anticipated to be
done annually.
●
The Board will approve the
terms of the RSUs and PSUs, as applicable, at the time of grant of
the applicable Share Units, and each grant letter will describe the
vesting and settlement provisions. The PSUs to be conditionally
granted under the Share Unit Plan will vest over five years, based
upon the achievement of the performance vesting conditions. The
RSUs conditionally granted under the Share Unit Plan will have a
ratable vesting over three years.
2020 DENISON MANAGEMENT INFORMATION
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●
Share Units will be settled
on the first business day following the applicable vesting date,
unless the holder of the Share Unit has elected to defer
settlement.
●
Participants shall be
entitled to elect, by written notice to the Company, to defer the
settlement of their Share Units until the date which is the earlier
of (i) the date to which the participant has elected to defer
receipt of Shares in accordance with Section 3.4 of the Share Unit
Plan; and (ii) the date of the Participant’s Retirement,
Resignation, Termination with Cause or Termination Without Cause or
Termination after Change of Control of the Company (as each term is
defined in the Share Unit Plan).
●
The Board will have the
option, at the time of the grant of the Share Units, to allow a
participant to elect to settle their Share Units in cash instead of
Shares issued from treasury. If, at the time of settlement, the
participant elects to settle in cash, the cash payment will be
determined by the number of Shares the participant would be
eligible to receive multiplied by the market value, as calculated
in accordance with the Share Unit Plan. The Company has the right
to override the participant’s election and settle such RSUs
or PSUs in shares issued from treasury. If a participant has
elected to defer settlement, they will no longer be entitled to
elect to receive cash on settlement of their Share
Units.
●
Subject to the terms of the
grant letter or a participant’s employment
agreement:
●
in the event of Termination
Without Cause: (a) if the participant has been continuously
employed for at least two years, (i) any unvested RSUs will
automatically vest and become available for settlement, and (i) the
unvested PSUs will vest using an Adjustment Factor as determined by
the Board, and (b) if the participant has been continuously
employed for less than two years, all of the unvested RSUs and PSUs
shall become void and the participant shall have no entitlement to
the issuance of Shares under such Share Units.
●
in the event of the
Retirement of a participant, their unvested Share Units will
automatically vest on the date of Retirement and the Shares
underlying such Share Units will be issued to the participant as
soon as reasonably practical thereafter.
●
in the event of the death of
a participant, their unvested Share Units will automatically vest
on the date of death and the Shares underlying all Share Units will
be issued to the participant’s estate as soon as reasonably
practical thereafter.
●
in the event of the
disability of a participant (as may be determined in accordance
with the policies, if any, or general practices of the Company or
any subsidiary), any of their unvested Share Units will
automatically vest on the date on which the participant is
determined to be totally disabled and the Shares underlying the
Share Units held will be issued to the Participant as soon as
reasonably practical thereafter.
●
in the event of a Termination
on Change of Control, (a) all unvested RSUs outstanding shall
immediately vest on the date of such termination; and (b) all
unvested PSUs (with performance criteria outstanding) shall vest on
the date of such termination using an Adjustment Factor as
determined by the Board.
●
Except pursuant to (a) a will
or by the laws of descent and distribution, or (b) any registered
retirement savings plans or registered retirement income funds of
which the participant is and remains the annuitant, no Share Unit
and no other right or interest of a participant is assignable or
transferable.
2020 DENISON MANAGEMENT INFORMATION
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●
Unless the Company has
received requisite shareholder approval, under no circumstances
shall the Share Unit Plan, together with all other security based
compensation arrangements of the Company (including the Option
Plan), result, at any time, in: (i) the aggregate number of Shares
reserved for issuance to insiders (as a group) at any point in time
exceeding 10% of the Company’s issued and outstanding Shares;
(ii) the issuance to insiders (as a group), within a
one‐year period, of
an aggregate number of Shares exceeding 10% of the Company’s
issued and outstanding Shares; (iii) the aggregate number of Shares
reserved for issuance to all non‐employee directors of the
Company exceeding 1% of the Company’s issued and outstanding
Shares; or (iv) the grant to any individual non‐employee director of the Company
of more than $150,000 worth of Shares annually. Subject to
compliance with the foregoing, the Share Unit Plan does not provide
for a restriction on the maximum number of securities issuable to
any one person or company.
●
Shareholder and applicable
stock exchange approvals will be required for any amendment,
modification or change to the provisions of the Share Unit Plan
which would:
✓
materially increase the
benefits to the holder of the Share Units who is an Insider to the
material detriment of the Company and its
shareholders;
✓
increase the maximum number
of Shares which may be issued from treasury pursuant to Share Units
granted pursuant to the Share Unit Plan (other than by virtue of
adjustments pursuant to the Share Unit Plan);
✓
extend the expiry date for
Share Units granted to Insiders under the Share Unit
Plan;
✓
permit Share Units to be
transferred, other than for normal estate settlement purposes or
transfers to any registered retirement savings plans or registered
retirement income funds of which the participant is and remains the
annuitant;
✓
remove or exceed the Insider
participation limits set forth in the Share Unit Plan;
✓
amend the definition of
“Participant” to allow for additional categories of
Participants or otherwise materially modify the eligibility
requirements for participation in the Share Unit Plan;
or
✓
modify the amending
provisions in section 4.5 of the Share Unit Plan.
●
The Board has the power,
subject to regulatory approval where required, to make a limited
number of changes to the Share Unit Plan, including amendments of a
house keeping nature, changes to the vesting or settlement
provisions of an Share Unit, a change to the termination provisions
of a Share Unit or the Share Unit Plan, any amendment respecting
the administration of the Share Unit Plan, and any amendments to
reflect changes to applicable securities or tax laws or that are
otherwise necessary to comply with applicable law or the
requirements of the applicable stock exchanges or other regulatory
body having authority over the Company, the Share Unit Plan, the
participants, or the Shareholders.
●
In the event of a Takeover
Bid, if a bona fide Offer for Shares is made, the Board will have
the sole discretion to amend, abridge or otherwise eliminate any
vesting schedule related to each participant’s Share Units so
that notwithstanding the other terms of this Plan, the underlying
Shares may be conditionally issued to each participant holding
Share Units so (and only so) as to permit the participant to tender
the Shares pursuant to the Offer.
●
In the event of a Change of
Control, the Board has the right to provide for the conversion or
exchange of any outstanding Share Units into or for units, rights
or other securities in any entity participating in or resulting
from a Change of Control, provided that the value of previously
granted Share Units and the rights of participants are not
materially adversely affected by any such changes. If the successor
entity does not assume or provide valuable substitute security for
the outstanding Share Units, (a) the Plan will be terminated
effective immediately prior to the Change of Control, (b) all RSUs
will vest and a specified number of outstanding PSUs will vest, as
determined in the Board’s discretion using an Adjustment
Factor (in accordance with the Share Unit Plan), and (c) the Share
Units will automatically convert into the entitlement to receive a
cash payment, to be paid by the Company in the same manner and
timing as the underlying Share Unit would have been in accordance
with the Plan, provided however, that such cash payment will not be
paid later than December 31 of the third calendar year following
the year in which the services giving rise to the award were
rendered.
2020 DENISON MANAGEMENT INFORMATION
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●
If a dividend becomes payable
by the Company on its Shares, at the Board’s discretion
participants may be entitled to be credited with dividend
equivalent payments in the form of additional RSUs and/or PSUs, as
applicable, which additional units will be settled at the same time
that the underlying RSUs and/or PSUs, as applicable, are
settled.
●
Pursuant to the Share Unit
Plan and the applicable policies and procedures of the Company, any
Share Unit Awards granted to the CEO and CFO are conditional upon a
claw back agreement, whereby each of them personally agrees to
forfeit or reimburse any portion of their bonus payment, including
PSUs, RSUs or Shares issued thereunder, which were awarded for
achievements that are found to involve their fraud, theft or other
illegal conduct.
The
Board or the Compensation Committee administer grants under the
Share Unit Plan, and subject to the terms of the Share Unit Plan,
certain Grant Letters may alter the terms of the Share Unit Plan as
it applies to any particular participant’s grant of Share
Units. In addition, in certain cases, individual employment
agreements may vary the rights of participants. All grants are
subject to the approval of the Board, unless the Board delegates
such approval to the Compensation Committee.
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS
No informed
person, including any director, proposed director or executive
officer of the Company, had any material interest, direct or
indirect, in any transaction since the commencement of the
Company's most recently completed financial year or in any proposed
transaction which has materially affected or would materially
affect the Company or any of its subsidiaries.
ADDITIONAL INFORMATION
Additional
information relating to the Company is available on Denison’s
website at www.denisonmines.com, on SEDAR
under the Company’s profile at www.sedar.com and on EDGAR at
www.sec.gov/edgar.shtml.
Financial information related to the Company is contained in the
Company’s financial statements and related management’s
discussion and analysis for its most recently completed financial
year.
You may request a
printed copy of the following documents free of charge by writing
to the Corporate Secretary of the Company at 1100 - 40 University
Avenue, Toronto, Ontario M5J 1T1:
●
The Company’s 2019
Annual Report, containing the Company’s consolidated
financial statements and related MD&A for its year ended
December 31, 2019;
●
Any subsequently filed
quarterly report; or
●
The Company’s most
recent Annual Information Form or Annual Report on Form
40-F.
APPROVAL
The contents and
the sending of this Circular to Shareholders, the directors and the
auditor of the Company have been approved by the
Board.
By Order of the
Board of Directors,
Catherine
Stefan
Chair of the
Board
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2020 DENISON MANAGEMENT INFORMATION CIRCULAR
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APPENDIX A
MANDATE OF THE BOARD, POSITION DESCRIPTIONS
AND LIMITS TO MANAGEMENT’S RESPONSIBILITIES
The Board of
Directors of Denison Mines Corp. has adopted this written mandate
and position descriptions for the Board, the Chair of the Board,
the Chair of each Committee of the Board and the Chief Executive
Officer (“CEO”), including the definition of the limits
to management’s responsibilities.
On at least an
annual basis, the Corporate Governance and Nominating Committee
shall review and assess the adequacy of this mandate and make a
recommendation to the Board regarding updating or amending the
same.
1.
MANDATE AND POSITION
DESCRIPTION FOR THE BOARD
(a)
The Board has adopted the
following mandate in which it explicitly acknowledges
responsibility for the stewardship of the Company and, as part of
the overall stewardship responsibility, responsibility for the
following matters:
(i)
to the extent feasible,
satisfying itself as to the integrity of the CEO and other
executive officers and that
the CEO and other
executive officers create a culture of integrity throughout the
organization;
(ii)
the strategic planning
process and approving, on at least an annual basis, a strategic
plan which takes into account, among other things, the
opportunities and risks of the business;
(iii) the
identification of the principal risks of the Company’s
business and ensuring the implementation of appropriate systems to
manage these risks;
(iv)
succession planning,
including appointing, training and monitoring of senior
management;
(v)
the Company’s
communications policy; and
(vi)
the Company’s internal
control and management information systems.
(b)
The Board takes its
responsibilities very seriously and expects that all directors will
participate in Board and Committee meetings on a regular basis, to
the extent reasonably practicable, and will review all meeting
materials in advance of each meeting. Attendance of directors shall
be taken at each Board meeting by the Corporate Secretary or
Assistant Corporate Secretary.
(c)
At all times, a majority of
the Board will satisfy the independence requirements set out by the
Canadian Securities Administrators in National Policy 58-201 and
any other applicable laws and regulations as the same may be
amended from time to time. The independent directors shall meet at
least once per year to discuss the Company’s
matters.
(d)
The Company, together with
its subsidiaries, is committed to conducting its business in
compliance with the law and the highest ethical standards, and to
the highest standards of openness, honesty and accountability that
its various stakeholders are entitled to expect. The Audit
Committee of the Board has established a Policy and Procedures for
the Receipt, Retention and Treatment of Complaints Regarding
Accounting or Auditing Matters, and the Company has established a
Code of Ethics for Directors, Officers and Employees, which
establishes procedures for directors, officers and employees to
report any concerns or questions they may have about violations of
the Code or any laws, rules or regulations. In addition, the Board
will consider adopting other measures for receiving feedback from
stakeholders if at any time the Board or its independent directors
consider the foregoing to be inadequate.
(e)
All new directors will
receive a comprehensive orientation. This orientation may vary from
director to director, depending on his or her expertise and past
experience, but in each case will be sufficient to ensure that each
director fully understands the role of the Board and its
committees, the contribution individual directors are expected to
make (including the commitment of time and resources that is
expected) and an understanding of the nature and operation of the
Company’s business.
(f)
The Board will provide
continuing education opportunities for all directors, where
required, so that individual directors may maintain or enhance
their skills and abilities as directors, as well as to ensure that
their knowledge and understanding of the Company’s business
remains current.
(g)
Prior to nominating or
appointing individuals as directors, the Board will consider the
advice and input of the Corporate
Governance and Nominating Committee on all relevant matters,
including:
(i)
the appropriate size of the
Board, with a view to facilitating effective decision making;
(ii)what competencies and skills the Board, as a whole, should
possess; and
(iii)
what competencies and skills
each existing director possesses.
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2.
POSITION DESCRIPTIONS FOR THE
CHAIR OF THE BOARD, THE LEAD DIRECTOR, THE CHAIR OF BOARD
COMMITTEES AND THE CEO
(a)
Where the Chair of the Board
is not an independent director, in accordance with paragraph 1(c)
of this Mandate and upon recommendation of the Corporate Governance
and Nominating Committee, the Board will appoint from among the
independent directors, a Lead Director to serve as such until the
next meeting of shareholders where directors are elected, unless
otherwise removed by resolution of the Board of
Directors.
(b)
The Chair of the Board, if
independent, or the Lead Director will:
(i)
act as the effective leader
of the Board and ensure that the Board’s agenda will enable
it to successfully carry out its duties;
(ii)
provide leadership for the
Board’s independent directors;
(iii)
organize the Board to
function independently of management, and ensure that the
responsibilities of the Board are well understood by both the Board
and management and that the boundaries between the Board and
management responsibilities are clearly understood and
respected;
(iv)
ensure that the Board has an
opportunity to meet without members of management, regularly, and
without non-independent directors at least once per
year;
(v)
determine, in consultation
with the Board and management, the time and places of the meetings
of the Board;
(vi)
manage the affairs of the
Board, including ensuring that the Board is organized properly,
functions effectively and meets its obligations and
responsibilities and mandates, where appropriate, through its duly
appointed committees, including:
o
ensuring that the Board works
as a cohesive team and providing the leadership essential for this
purpose;
o
ensuring that the resources
available to the Board (in particular timely and relevant
information) are adequate to support its work;
o
ensuring that a process is in
place by which the effectiveness of the Board and its committees is
assessed on a regular basis;
o
ensuring that a process is in
place by which the contribution of individual directors to the
effectiveness of the board and committees is assessed on a regular
basis; and
o
ensuring that, where
functions are delegated to appropriate committees, the functions
are carried out and results are reported to the Board.
(vii)
ensure that the Board has a
succession planning process is in place to appoint the Chief
Executive Officer and other members of management when
necessary;
(viii)
co-ordinate with management
and the Corporate Secretary or Assistant Corporate Secretary to
ensure that matters to be considered by the Board are properly
presented and given the appropriate opportunity for
discussion;
(ix)
preside as chair of each
meeting of the Board;
(x)
communicate with all members
of the Board to co-ordinate their input, ensure their
accountability and provide for the effectiveness of the
Board;
(xi)
in consultation with the CEO,
and as appropriate, be available to, and respond to inquiries from,
internal and external stakeholders; and
(xi)
act as liaison between the
Board and management to ensure that relationships between the Board
and management are conducted in a professional and constructive
manner, which will involve working with the Chief Executive Officer
to ensure that the conduct of Board meetings provides adequate time
for serious discussion of relevant issues and that the Company is
building a healthy governance culture.
The Chair of the
Board or the Lead Director may, as the case may be, delegate or
share, where appropriate, certain of these responsibilities with
any committee of the Board.
(c)
Any special responsibilities
and authorities of the Chair of any committee of the Board will be
set out in the Terms of Reference/Mandate for the Committee. In
general, the Chair of a Committee shall lead and oversee the
Committee to ensure that it fulfills its mandate as set out in the
Committee’s Terms of Reference/Mandate. In particular, the
Chair shall:
(i)
organize the Committee to
function independently of management, unless specifically provided
otherwise in the Committee’s Mandate;
(ii)
ensure that the Committee has
an opportunity to meet without members of management as
necessary;
(iii)
determine, in consultation
with the Committee and management, the time and places of the
meetings of the Committee;
(iv)
manage the affairs of the
Committee, including ensuring that the Committee is organized
properly, functions effectively and meets its obligations and
responsibilities;
(v)
co-ordinate with management
and the Secretary to the Committee to ensure that matters to be
considered by the Committee are properly presented and given the
appropriate opportunity for discussion;
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(vi)
provide advice and counsel to
the CEO and other senior members of management in the areas covered
by the Committee’s mandate;
(vii)
preside as chair of each
meeting of the Committee; and
(viii)
communicate with all members
of the Committee to co-ordinate their input, ensure their
accountability and provide for the effectiveness of the
Committee.
(d)
The CEO, subject to the
authority of the Board, shall have general supervision of the
business and affairs of the Company and such other powers and
duties as the Board may specify, from time to time. These
responsibilities shall include making recommendations to the Board
regarding the implementation, performance and monitoring, as the
case may be, of each of the items referred to in paragraphs 2(b)(i)
to (b)(viii) of this mandate and ensuring that procedures are in
place and followed by the Company so that each of those items and
any other requirement of the Board is implemented, performed and
monitored in a prudent and responsible manner in accordance with
the determinations of the Board. The Board will develop and approve
periodically, as the Board considers necessary, the corporate goals
and objectives that the CEO is responsible for
meeting.
3.
LIMITS ON THE CEO’S
AUTHORITY
(a)
Unless specifically
instructed otherwise by the Board, and except as set out in Section
127(3) of the Ontario Business
Corporations Act (the “OBCA”), the CEO of the
Company has the responsibility and authority to transact any
business or approve any matter:
(i)
in the ordinary course of
business of the Company; and
(ii)
that is not in the ordinary
course of business of the Company, but that is not likely to result
in a material change, within the meaning of the Ontario
Securities Act, with
respect to the Company; and
(b)
In addition to those matters
referred to in Section 127(3) of the OBCA, Board approval is
required with respect to any business or matter that is not in the
ordinary course of business of the Company and that is likely to
result in a material change, within the meaning of the Ontario
Securities Act, with
respect to the Company.
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Denison Mines Corp.
1100 - 40 University Avenue
Toronto, ON M5J 1T1
T
416 979 1991 F 416 979 5893
www.denisonmines.com
TSX: DML
NYSE American: DNN
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