EX-99.3
4
denison-circular2023agmvf.htm
MANAGEMENT INFORMATION CIRCULAR
denison-circular2023agmvf
Exhibit
99.3
Denison Mines
Corp.
Annual General
Meeting of Shareholders
Monday, May 15,
2023
Notice of Meeting
&
Management
Information Circular
Dated April 3,
2023
Dear
Denison Shareholder,
On behalf of the
Board of Directors, I hereby provide notice to you of the annual
general meeting of shareholders of Denison Mines Corp.
(‘Denison’ or the ‘Company’) to be held on
Monday, May 15, 2023 at the offices of the Company, 1100 – 40
University Avenue, Toronto, Ontario, Canada.
Your vote
is important. We recommend you vote your Denison shares in advance
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 Company in advance of, instead of only at, the meeting.
Only registered
shareholders and duly appointed proxyholders will be permitted
access to the meeting. 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.
If you have general questions about the
Company’s business, please do not wait for the
meeting. Instead, contact us at any time (see contact details in
the Management Information Circular).
Our results
from 2022 reflect an incredibly successful year highlighted by
significant de-risking and regulatory milestones supporting the
continued advancement of our flagship Wheeler River
project.
We made
history with the successful permitting and operation of the
Feasibility Field Test facilities at the high-grade Phoenix uranium
deposit – where we achieved the first known recovery of
uranium bearing solution via in-situ recovery (‘ISR’)
mining in Saskatchewan’s prolific Athabasca Basin region. In
parallel to our technical de-risking efforts, we achieved a notable
milestone in the permitting process for Phoenix with the submission
of a draft Environmental Impact Statement, which demonstrates that
the project has the potential to achieve a superior standard of
environmental sustainability and re-shape the future of uranium
mining in Saskatchewan.
The
exceptional efforts of our growing and highly motivated team, to
challenge the norm and achieve what others may have previously
considered impossible, have positioned Denison as an industry
leader on the cusp of deploying the world’s lowest cost
uranium mining method at one of the world’s highest grade
uranium deposits. Our timing is excellent, as our success comes
while we are observing sustained improvements in both the global
sentiment towards nuclear energy’s necessity in the battle
against climate change and the underlying uranium
market.
As we
advance towards our goal of becoming Canada’s next uranium
producer, the Board of Directors and the management team thank you
for your continued support of, and interest in,
Denison.
Sincerely,
David Cates,
Director,
President &
Chief Executive Officer
What’s
Inside
Notice of
Meeting
Management
Information Circular
1
Business of
the
Meeting
6
● Receiving the
Consolidated Financial Statements
6
● Re-Appointment of
the Auditor 6
● Election of
Directors 7
● Non-binding
Advisory Vote on Executive Compensation
16
Corporate
Governance Practices
17
● Roles of Board, Chair,
CEO 17
● Board
Committees
18
● Denison’s Core
Policies 21
● Diversity within
Denison 24
● CSR &
Sustainability
25
● Risk Governance &
Oversight 26
● Director
Education
28
Director
Compensation 29
Executive
Compensation
34
Equity
Compensation
Plans
51
Additional
Information
56
●
Shareholder Engagement
●
Additional Disclosure
Appendix A:
Mandate of the Board
58
Notice of
Annual General Meeting of Shareholders
You are hereby
given notice of Denison Mines Corp.’s Annual General Meeting
of Shareholders.
When
Where
Monday, May 15,
2023
11:30 a.m.
(Eastern Time)
Please plan to vote in advance of the meeting.
The offices of
the Company
1100 – 40
University Avenue,
Toronto, Ontario
M5J 1T1
There
will be no reception, presentation or refreshments.
The purpose of
the Meeting is:
(a) to
receive the consolidated financial statements of Denison Mines
Corp. for the year ended December 31, 2022, along with the
auditor’s report on the statements;
(b) to
approve the re-appointment of KPMG LLP as the Company’s
auditor for the upcoming year, and to authorize the directors to
fix its remuneration;
(c) to elect
eight directors to the Board of Directors 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 March 27, 2023, you are entitled
to receive notice of and vote at this Meeting or any postponement
or adjournment of it.
Your vote
is important. We recommend you vote your shares in advance 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 Company in advance of, instead of only at, the meeting. There
will be no reception, presentation or refreshments. Accordingly, only registered
shareholders and duly appointed proxyholders will be permitted
access to the meeting.
The Company is
not aware of any items of business to be brought before the Meeting
other than those noted above and further described in the
accompanying Management Information Circular (the
“Circular”). There will be no management presentation
on the business or operations of the Company at the
Meeting.
We also recommend
you refer to the Annual General Meeting page of the Company’s
website at www.denisonmines.com
for the most up-to-date information regarding the
meeting.
2023 DENISON NOTICE OF MEETING
How to Vote:
This notice is
accompanied by the Circular which describes who can vote, how to
vote, and what the Meeting will cover.
Please vote by
using the proxy form or voting instruction form, as
applicable, included with the “notice and access”
notification and return it before 11:30 a.m. (Eastern Time) on May
11, 2023 in accordance with the instructions provided.
Meeting Materials:
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 April
6, 2023 and will remain on the website for one full year. The
Meeting materials will also be available 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 on April 6,
2023.
Shareholders who
wish to receive paper copies of the Meeting materials prior to the
meeting may request copies from Denison by calling 1-888-260-4455
or by sending an email to info@denisonmines.com.
We recommend requests be made no later than April 28, 2023. Please note that Denison cannot guarantee
delivery, and delivery could be subject to
delay.
The 2022 Annual
Report, including the audited consolidated financial statements and
related management’s discussion and analysis for the year
ended December 31, 2022, has been mailed to those shareholders who
requested a copy. This information is also available on
Denison’s website at www.denisonmines.com, on SEDAR
and EDGAR or on request by contacting the Company.
Contact
Us:
If you have
questions about the matters to be considered at the meeting and/or
if you wish to obtain additional information about Denison’s
business, please do not wait until the Meeting. You can contact the
Company directly:
Online:
www.denisonmines.com and https://denisonmines.com/agm2023
Email:
info@denisonmines.com
Regular
Mail:
1100 - 40
University Avenue, Toronto, Ontario M5J 1T1
Phone:
416-979-1991 or
1-888-260-4455
Yours
truly,
David
Cates
Director,
President & Chief Executive Officer
Dated April 3,
2023
2023 DENISON NOTICE OF MEETING
Management
Information Circular
About this
Circular
You have received
this Management Information
Circular (the “Circular”) because you owned common
shares of Denison Mines Corp. on March 27, 2023 (the
“Record Date”).
As a Shareholder, you have the right to vote at the Annual General
Meeting of Shareholders on May 15, 2023 (the “Meeting”).
Management
is soliciting your proxy for the Meeting.
We recommend you vote your Shares in advance 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 Company in
advance of, instead of only at, the meeting. There will be no
reception, presentation or refreshments. Accordingly, only registered
shareholders and duly appointed proxyholders will be permitted
access to the meeting.
We recommend you refer to
the Annual General Meeting page of the Company’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.
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 Company is not aware of any items of business to be brought
before the Meeting other than those described in this Circular and
there will be no management presentation on the business and
operations of the Company at the Meeting.
The Board of
Directors has approved the Circular contents and has directed
management to make it available to you. The information in the
Circular is given as of April 3, 2023 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., “Shares” means Denison’s
common shares and “Shareholders” means holders of
Shares. All amounts are in Canadian
dollars, unless otherwise indicated.
Voting
Your Denison Shares
We are
encouraging all Shareholders to vote by using the proxy form or
voting instruction form provided, to vote their Shares in advance of the
Meeting and avoid voting in person.
2023 DENISON MANAGEMENT INFORMATION CIRCULAR
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Registered Shareholders
If you were a
registered Shareholder on the Record Date, you may vote in person
at the Meeting or give management, or another person, the authority
to represent you and vote your Shares at the Meeting, as described
below under “Voting by Proxy”. Importantly, if you vote
by proxy and 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.
You are asked to
return your proxies using the following methods by the proxy
deposit date noted on your proxy, which is by 11:30 a.m.
(Eastern Time) on May 11, 2023:
Internet:
Go to
www.investorvote.com and follow the instructions.
Telephone:
You may enter
your voting instructions by telephone at:
1-866-732-8683
(toll free within North America), or312-588-4290 (international
direct dial)
Facsimile:
Fax to
Computershare at 1-866-249-7775 or 416-263-9524.
Regular Mail:
Complete the form
of proxy or any other proper form of proxy, sign it and mail it to
Computershare at:
Computershare
Investor Services Inc.
Toronto Office,
Proxy Department
100 University
Avenue, 8th Floor
Toronto, Ontario,
Canada M5J 2Y1
Non-Registered (Beneficial) 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. 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.
Many of the
Company’s non-registered Shareholders are asked to return
voting instructions using the following methods at least one business day in advance
of the proxy deposit date noted on your voting instruction
form:
Internet:
Go to
www.proxyvote.com and follow the instructions.
Telephone:
You may enter
your voting instructions by telephone at: 1-800-474-7493 (English)
or 1-800-474-7501 (French).
Regular Mail:
Complete the
voting instruction form, sign it and mail it in the envelope
provided.
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 response.
2023 DENISON MANAGEMENT INFORMATION CIRCULAR
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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
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
All Shares
represented by properly completed proxies received at the Toronto
office of Computershare Investor Services Inc. by 11:30 a.m.
(Eastern Time) on May 11, 2023 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 in
accordance with your instructions on the proxy form.
On the proxy
form, you can indicate how you want to vote your Shares or you can
let your proxyholder decide for you. A proxyholder is the person
you appoint to act on your behalf at the Meeting and to vote your
Shares.
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.
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 re-appointment of KPMG LLP as
the Company’s independent auditor until the next Annual
Meeting of Shareholders, and authorization of the Board 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.
For more
information on how to vote, registered Shareholders may contact
Computershare by telephone at 1-800-564-6253 or by e-mail to
service@computershare.com.
2023
DENISON MANAGEMENT INFORMATION CIRCULAR
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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: 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.
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 April 6, 2023 and will remain on the
website for one full year. The Circular will also be available on
April 6, 2023 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
(“SEC”) 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 specifically 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.
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.
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
2023
DENISON MANAGEMENT INFORMATION CIRCULAR
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(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.
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
1-888-260-4455.
For Shareholders who wish to receive copies of the Circular in
advance of the voting deadline, we recommend requests be made
no later than April 28,
2023.
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.
Voting Securities
Denison’s
common shares are the only shares issued by the Company and each
Share entitles the holder to one vote on all matters at the
Meeting. In accordance with the provisions of the Business Corporations Act (Ontario)
(the “OBCA”),
the Company prepared a list of Shareholders on the Record Date for
the Meeting of March 27, 2023. Each Shareholder named on the list
will be entitled to vote at the Meeting the Shares shown on the
list opposite such Shareholder’s name.
On March 27,
2023, the Company had 835,360,866 Shares issued and
outstanding.
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.
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, 2022, 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.
2023 DENISON MANAGEMENT INFORMATION CIRCULAR
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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, 2022, along with the auditor’s report on the
statements;
(b) to
re-appoint KPMG LLP as the Company’s 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, 2022 are included in Denison’s 2022 Annual
Report. The 2022 Annual Report was mailed to the Company’s
registered and non-registered Shareholders who requested it and is
available on Denison’s website at www.denisonmines.com, on SEDAR
at www.sedar.com
and on EDGAR at www.sec.gov/edgar.shtml.
No vote of
Shareholders is required with respect to this item of
business.
The Re-Appointment of the Auditor
The Board
recommends the re-appointment of KPMG LLP (“KPMG”) 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 KPMG for their services. KPMG was
initially appointed auditor of the Company effective October 1,
2020 for the fiscal year ended December 31, 2020.
You may either
vote for the
re-appointment of KPMG as the
Company’s auditor, to hold office until the end of the
next annual meeting, and authorizing the directors to fix the
auditor’s remuneration, or you can withhold your vote. Unless otherwise instructed, the named
proxyholders will vote FOR the re-appointment of KPMG and
authorizing their appointment and for the directors to fix
KPMG’s remuneration.
2023 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. Each of the nominated directors is eligible to
serve as a director and has expressed his or her willingness to do
so.
The Board is
pleased to introduce Mr. Byeong Min An, who joined the Board
effective March 9, 2023.
The other
proposed nominees were each elected at the previous annual general
meeting and have served as directors of Denison since the dates
indicated in their profiles below.
Denison’s Board is composed of
members with a diversity and
breadth of backgrounds and experience, 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.
Advance Notice
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 nominees described
herein.
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: 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 Corporate Governance & Nominating Committee
(“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.
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 for
director. 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.
2023 DENISON MANAGEMENT INFORMATION CIRCULAR
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Profiles of the Nominated Directors
The tables below
set forth information about the nominated directors as of March 27,
2023 (the Record Date for the meeting).
Byeong Min
An, 44
Gyeogju-si,
Gyeongsangbuk-do, Republic of Korea
Shares:
Nil
Options:
60,000
Share Units:
42,000
Total
Value2:
$57,120
Byeong Min An is
currently General Manager of the Nuclear Fuel Supply Section of
Korea Hydro & Nuclear Power Co., Ltd. (“KHNP”) in Korea. Mr. An has
substantial professional expertise developed through working in the
nuclear industry and has held various positions at KHNP, including
his last position as the Senior Manager of the Nuclear Fuel Supply
Section (2016 to 2022).
Mr. An holds a
Bachelor’s degree in Nuclear Engineering from Seoul National
University.
Denison Board Details:
● Director
since March 9, 2023
● Not
independent
● 2022
AGM Voting Results: Not applicable
● Complies
with share ownership requirement for directors (see page
33)
Other Public Boards: None.
David D.
Cates, 40
Toronto, ON
Canada
Shares:
2,000,564
Options:
2,968,000
Share Units:
3,333,250
Total
Value2,3:
$7,253,987
David Cates was
appointed President & CEO of Denison in 2015 and previously
served as Vice President Finance, Tax & Chief Financial Officer
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.
Denison Board Details:
● Director since August 9,
2018
● Not
Independent
● 2022
AGM Voting Results: 98.33% For Reelection (287,858,710
votes)
● Complies with
share ownership requirement (see page 48 for details of the share
ownership requirement applicable to executive officers of the
Company)
Other Public Boards: GoviEx Uranium Inc.
(TSX-V) and Skyharbour Resources Ltd. (TSX-V)
2023 DENISON MANAGEMENT INFORMATION CIRCULAR
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-
Brian D.
Edgar, 73
Vancouver, BC
Canada
Shares:
170,000
Options:
263,000
Share Units:
261,000
Total
Value2:
$586,160
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. Mr. Edgar also serves as non-executive Chair of Arras
Minerals Corp., a company listed on the TSX. 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.
Denison Board Details:
● Director
since March 22, 2005
● Independent
● Chair
of the Corporate Governance & Nominating Committee
● Member
of the Audit Committee
● 2022
AGM Voting Results: 97.49% For Reelection (285,402,715
votes)
● Complies
with share ownership requirement for directors (see page
33)
Other Public Boards: Silver Bull
Resources Inc. (TSX and OTCMKTS) and Arras Minerals Corp.
(TSX)
Ron F.
Hochstein, 61
Coquitlam, BC
Canada
Shares:
1,427,891
Options:
263,000
Share Units:
144,667
Total
Value2:
$2,138,679
Ron Hochstein is
the President and Chief Executive Officer of Lundin Gold Inc., and
was instrumental in its acquisition of the now operating Fruta del
Norte gold project. Mr. Hochstein served as President and Chief
Executive Officer of Denison from 2009 to 2015 and previous roles
also included working for International Uranium Corporation prior
to its business combination with Denison Mines Inc. in 2006 to form
the Company.
Mr. Hochstein is
a Professional Engineer and holds an M.B.A. from the University of
British Columbia and a B.Sc. in metallurgical engineering from the
University of Alberta.
Denison Board Details:
● Director
since April 6, 2000
● Independent
● Chair
of the Environment, Health, Safety & Sustainability
Committee
● Member
of the Technical Committee
● 2022
AGM Voting Results: 73.40% For Reelection (214,886,081
votes)
● Complies
with share ownership requirement for directors (see page
33)
Other Public Boards4: Lundin Gold Inc. (TSX, Nasdaq
Stockholm) and Filo Mining Corp. (TSX, Nasdaq First North Growth
Market)
2023 DENISON MANAGEMENT INFORMATION CIRCULAR
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-
David
Neuburger, 63
Saskatoon, SK
Canada
Shares:
26,000
Options:
263,000
Share Units:
132,000
Total
Value2:
$214,880
David Neuburger
is a corporate director and consultant, with more than 30
years’ experience in mining, in executive leadership,
operations management, corporate strategic planning, projects and
mine engineering for companies involved in uranium, gold, nickel
and copper/zinc mining. From 2013 to 2018, Mr. Neuburger was Vice
President, General Manager, Kupol Operations for Kinross Gold
Corporation; prior to that, he held the positions of Vice
President, International Mining (2010 to 2013) and Vice President,
Mining Division (2004 to 2010) for Cameco Corporation. Mr.
Neuburger has also volunteered as President and in other executive
committee roles with the Saskatchewan Mining
Association.
Mr. Neuburger is
a Professional Engineer registered in Saskatchewan and holds a
Master of Business Administration degree from the University of
Saskatchewan and a Bachelor of Engineering degree in Mining and a
Bachelor of Science degree in Biology from McGill
University.
Denison Board Details:
● Director
since May 6, 2021
● Independent
● Chair
of the Technical Committee
● Member
of the Audit Committee
● Member
of the Environment, Health, Safety & Sustainability
Committee
● 2022
AGM Voting Results: 99.20% For Reelection (290,203,734
votes)
● Complies
with share ownership requirement for directors (see page
33)
Other Public Boards: None.
Laurie
Sterritt, 53
Vancouver, BC
Canada
Shares:
Nil
Options:
116,000
Share Units:
80,000
Total
Value2:
$108,800
Laurie Sterritt
is a Partner at Leaders International, an executive search firm in
Canada. In 2018, Ms. Sterritt formed a non-profit association to
launch the first-of-its-kind Indigenous Women’s Leadership
Summit (IWLS), with a mandate to inspire and uplift Indigenous
women throughout their personal and professional journeys. Prior to
that, Ms. Sterritt developed and implemented the Indigenous
Employment and Business Development strategy for BC Hydro and led
the start-up and growth of the Aboriginal Mentoring and Training
Association (AMTA) and its subsidiary social enterprise, First
Resources Impact Ventures (FRIV).
Ms. Sterritt is a
member of the Kispiox Band of the Gitxsan Nation and has been
recognized for her commitment to creating respectful and inclusive
workplaces and, most notably, was a nominee for the 2013 YWCA Women
of Distinction Awards. Ms. Sterritt has held several board
positions in the past, including Director for the Canadian Centre
for Arts and Technology (CANCAT), Governor for the British Columbia
Institute for Technology (BCIT) and Council Member on the Real
Estate Council of BC. Ms. Sterritt holds a Bachelor of Commerce
from the University of British Columbia and a Certificate in
Professional Fund Raising from the University of
Indiana.
Denison Board Details:
● Director since January 31,
2022
● Independent
● Member
of the Corporate Governance & Nominating Committee
● Member
of the Environmental, Health, Safety & Sustainability
Committee
● 2022
AGM Voting Results: 99.13% For Election (290,203,425
votes)
● Complies
with share ownership requirement for directors (see page
33)
Other Public Boards: None.
2023 DENISON MANAGEMENT INFORMATION CIRCULAR
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Jennifer
Traub, 51
Vancouver, BC
Canada
Shares:
Nil
Options:
263,000
Share Units:
158,000
Total
Value2:
$214,880
Jennifer Traub is
a partner in the Securities Group at Cassels Brock & Blackwell
LLP and serves as Co-Chair of the firm’s Mining Group. Ms.
Traub represents both issuers and investment dealers in connection
with public and private securities offerings, mergers and
acquisitions and other financing transactions. She has particular
expertise and experience in the resource sector and has played an
integral role in managing some of the largest and most complex
corporate finance and M&A deals in the mining industry in
Canada. In addition to transactional work, Ms. Traub regularly
advises public companies regarding general corporate and securities
law matters, including continuous disclosure, corporate governance
and Canadian stock exchange issues.
Ms. Traub has
completed the Osgoode Certificate in Mining Law and holds a
Bachelor of Laws degree from Osgoode Hall Law School. She is a
member of the Law Societies of BC and Ontario.
Denison Board Details:
● Director
since May 6, 2021
● Independent
● Member
of the Corporate Governance & Nominating Committee
● Member
of the Compensation Committee
● 2022
AGM Voting Results: 98.88% For Reelection (289,467,949
votes)
● Complies
with share ownership requirement for directors (see page
33)
Other Public Boards: None.
Patricia
M. Volker, 66
Burlington, ON
Canada
Shares:
190,550
Options:
263,000
Share Units:
179,334
Total
Value2:
$503,042
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 Director, Public Accounting and Special
Projects. 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 also on the board, and serves on
committees, for each of Ornge and Burlington Hydro
Inc.
Ms. Volker is a
CPA, CA and CMA, holds the ICD.D. designation and earned a B.Sc.
from the University of Toronto.
Denison Board Details:
● Director since August 9,
2018
● Independent
● Chair
of the Audit Committee
● Chair
of the Compensation Committee
● Sole
director on the Company’s SOX Steering Committee
● 2022
AGM Voting Results: 99.11% For Reelection (290,167,763
votes)
● Complies
with share ownership requirement for directors (see page
33)
Other Public Boards: The Empire Life
Insurance Company (TSX) and Labrador Iron Ore Royalty Corporation
(TSX)
Notes to
Profiles of the Nominated Directors:
1.
Each nominee has provided or
confirmed the information about the securities that he or she owns
or over which he or she exercises control or
direction.
2.
The “Total Value”
disclosed above has been calculated as the market value of the
Shares and share units (and excluding options) on March 27, 2023 of
$1.36 per share or underlying share.
3.
The calculated value of Mr.
Cates’ Share and full-value equity holdings as at March 27,
2023 was: Shares: $2,720,767; RSUs: $3,649,220; and PSUs:
$884,000.
2023 DENISON
MANAGEMENT INFORMATION CIRCULAR
- 11 -
6.
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.
Board Composition Guidelines
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
the size and composition of the Board enables effective
governance and oversight of a diversified and active company.
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
regulatory guidelines on governance.
When considering
the Board as a whole and assessing directors’ candidacy for
the Board, the CGN Committee follows established guidelines for the
Board’s composition set forth in the Company’s
“Guidelines for the
Composition of Denison’s Board” (the
“Composition
Guidelines”),
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
The CGN Committee
solicits feedback from each of the current directors and assesses
the needs and capabilities of the Board regularly and when there is
a vacancy. As a result of their efforts, the CGN Committee is
pleased to present Shareholders with candidates for appointment to
the Board who have a diversity of skills and experiences and form a
well-composed and highly effective Board of Directors for the
Company.
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 Mr. Cates and Ms. Volker in
2018, Mr. Neuburger and Ms. Traub in 2021, Ms. Sterritt in 2022 and
Mr. An in 2023.
The CGN Committee
also considers overboarding guidance, with respect to the maximum
number of public boards on which directors may serve in addition to
any officer positions they may hold. Of the director nominees, Mr.
Hochstein may be considered overboarded. However, the CGN Committee
considered Mr. Hochstein’s unique industry experience and
insights, his many valuable contributions as Chair of the Board and
member of the Environment, Health, Safety & Sustainability
(“EHSS”) and
Technical Committees, the feedback from the other directors through
the annual board assessment process, and his perfect attendance at
all Board and Board committee meetings. It was the recommendation
of the CGN Committee that Mr. Hochstein be nominated for
re-appointment to the Board, as his skills uniquely contribute to
the effective oversight of the Company and its
operations.
2023 DENISON MANAGEMENT INFORMATION CIRCULAR
-
12-
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 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 9, 2023.
The Board
currently has eight directors, six of whom are independent (75%
independent).
The following
table sets out the Board’s determination and reasoning with
respect to each director:
Name
Independent
Not Independent
Commentary on Non-Independence Determinations
Byeong Min
An
X
Mr. An 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 Energy Ltd. and Mr. An’s
position with its parent corporation, KHNP (see below for further
details).
David
Cates
X
As President and
Chief Executive Officer of the Company, Mr. Cates is not
independent.
Brian
Edgar
X
Ron
Hochstein
X
David
Neuburger
X
Laurie
Sterritt
X
Jennifer
Traub
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
Mr. Hochstein
serves as the independent Chair of the Board. 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.
● The
independent directors have an in camera at every
meeting
The Board meets
in camera without management, as well as without non-independent
directors, at every Board and committee meeting.
● The
Board has independent directors’ meetings
The independent
directors call special meetings, without the non-independent
directors, to discuss matters of interest.
There was 1
meeting of the independent directors in 2022.
● The
Board has an independent Lead Director
Mr. Edgar was
appointed independent Lead Director, to chair meetings of the
independent directors and to serve in any absence of the Chair of
the Board. The Lead Director works with the Chair to ensure the
Board functions independently of management in an effective and
efficient manner.
● The
Committees of the Board are entirely independent
The standing
committees of the Board are composed entirely of independent
directors.
● The
Board, a committee or an individual director may engage an
independent advisor
Committees, and
individual directors in appropriate circumstances and with the
authorization of the applicable committee or the Chair, may engage
independent advisors at the expense of the Company.
2023 DENISON MANAGEMENT INFORMATION CIRCULAR
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13-
The Board takes
steps to ensure directors exercise independent judgment if
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). There
were no instances of actual or potential conflict of interest
reported in 2022.
Skills and Experience
The CGN Committee
maintains a competency matrix, reviewed annually, to assess
composition of the Board and its committees and ensure it has an
appropriate mix of skills and experience to govern effectively and
be a strategic resource for the Company.
Each director
completes a self‐assessment of his or her
competencies. The CGN Committee reviews the results for consistency
and to be satisfied that the directors possess skills in these
areas. Certain key areas of expertise identified for each director
are highlighted with boxes below.
Skills and Experience
An
Cates
Edgar
Hochstein
Neuburger
Sterritt
Traub
Volker
Financial Accreditation &/or Literacy
Expertise on
financial statements and reporting matters, critical accounting
policies, issues related to internal and external audits, and
internal controls
✓
✓
✓
✓
✓
✓
✓
✓
Corporate Governance Experience
Sophisticated
understanding of corporate governance practices and governance risk
oversight
✓
✓
✓
✓
✓
✓
✓
Compensation Literacy
Direct experience
in compensation practices, talent management and retention, and
succession planning
✓
✓
✓
✓
✓
✓
✓
Operations &/or Technical Experience
Experience in
operations or business management
✓
✓
✓
✓
✓
Health, Safety & Environment
Direct experience
with environmental, health and/or safety policy, practices and
management
✓
✓
✓
✓
✓
✓
Sustainability Knowledge
Experience or
knowledge of ESG, climate change risk management, sustainability
and stakeholder engagement
✓
✓
✓
✓
✓
Mining Industry Experience
Industry-specific
knowledge of geology, exploration, development, etc., and related
risks.
✓
✓
✓
✓
✓
✓
✓
Uranium Industry Experience
Uranium
industry-specific knowledge of geology, exploration, development,
etc., and related risks.
✓
✓
✓
✓
✓
Government & Regulatory Relations
Experience or
knowledge of the broad regulatory environment in which Denison
operates
✓
✓
✓
✓
✓
✓
✓
✓
Financing & M&A Experience
Experience with
acquisitions, divestitures, joint ventures, M&A transactions,
and financings
✓
✓
✓
✓
✓
Risk Management
Experience
identifying, assessing, managing, and reporting on corporate
risk
✓
✓
✓
✓
✓
✓
✓
✓
2023 DENISON MANAGEMENT INFORMATION CIRCULAR
-
14-
2022
Director 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 video or tele-conference if they cannot attend in
person. The table below shows the number of Board and committee
meetings each director attended in 2022.
Name
Board
Audit Committee
Corporate Governance & Nominating Committee
Compensation Committee
Environment, Health, Safety & Sustainability
Committee
Technical Committee
%
Byeong Min
An3
n/a
n/a
David
Cates
7 of 7
100%
Robert
Dengler1
2 of 2
2 of
2
2 of
2
100%
Brian
Edgar
7 of 7
4 of
4
3 of
3
100%
Ron
Hochstein
7 of 7
4 of
4
4 of
4
2 of
2
100%
Yun Chang
Jeong2
7 of 7
100%
Jun Gon
Kim2
n/a
n/a
David
Neuburger
7 of 7
4 of
4
4 of
4
2 of
2
100%
Jennifer
Traub
7 of 7
3 of
3
4 of
4
100%
Patricia
Volker
6 of 7
4 of
4
4 of
4
93%
Laurie
Sterritt4
7 of 7
1 of
1
3 of
3
100%
Notes:
1.
Mr. Dengler did not stand for
re-election, and ceased to be a director effective May 4,
2022.
2.
Mr. Kim resigned from the
Board on February 28, 2022, prior to which no 2022 meetings were
held. Mr. Jeong resigned from the Board on February 17,
2023.
3.
Mr. An was appointed to the
Board on March 9, 2023.
4.
Ms. Sterritt was appointed to
the Board effective March 3, 2022.
Meetings of Independent Directors
At every Board
and committee meeting, including those held by video and/or
tele-conference, directors meet in camera without management
present and, if the meeting is not entirely composed of independent
directors, the independent directors meet without the
non-independent directors. The independent directors also have
dedicated independent directors’ meetings at least
annually.
In 2022, there
was one dedicated meeting of the independent directors, and all
independent directors were in attendance at that
meeting.
2023 DENISON MANAGEMENT INFORMATION CIRCULAR
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-
Information about Denison’s Relationship with KEPCO &
KHNP
When determining nominees for election, the
Board also considers the strategic relationship agreement with KHNP
Canada Energy Ltd. (“KHNP
Canada”),
which sets forth the terms of a long-term collaborative business
relationship first established in 2009 (the “KHNP SRA”). Under the KHNP SRA, so long
as KHNP Canada or an affiliate holds more than 5% of the 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.
KHNP Canada has designated Mr. An as
its nominee. As General Manager of
the Nuclear Fuel Supply Section of Korea Hydro Nuclear Power
(“KHNP”), a subsidiary of the Korea Electric
Power Corporation (“KEPCO”) and the parent company of
KHNP Canada, Mr. An brings to the
Board substantial industry-specific experience. KEPCO is the
primary electric utility in South Korea and KHNP operates all of
its nuclear generation. To the knowledge of Denison, KEPCO holds at
least 6.98% of the Shares of Denison as at March 27, 2023, through
its indirect corporate holdings.
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.
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 April 3,
2023.
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).
The Company has
held annual advisory votes on executive compensation (say on pay)
at its annual shareholder meetings since 2017. In 2022, the
advisory vote was approved by 97.79% of the votes received at the
meeting.
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.
2023 DENISON MANAGEMENT INFORMATION CIRCULAR
- 16
-
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 and territories of Canada
and is classified as a foreign private issuer by the SEC. The
Shares trade on the Toronto Stock Exchange (TSX: DML) and the NYSE
American (NYSE American: DNN). As such, Denison adheres to Canadian
corporate governance requirements and also complies with the
requirements of the 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.
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 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,
decisions relating to matters that are not in the ordinary course
or involve material expenditures or commitments on the part of the
Company require prior approval of the Board. Any responsibility
which is not delegated to management or a Board committee remains
with the Board.
The Role of the Chair
In order to delineate the roles and
responsibilities of the Chair of the Board, the Board has adopted a
written position description. 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. 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,
overseeing the development and implementation of, and compliance
with, key corporate policies and practices, regarding corporate
governance, ESG, climate and sustainability, risk identification
and management and financial reporting, as well as compliance with
applicable legal and regulatory requirements and developing and
recommending to the Board annual operating budgets.
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Each year, the
CEO develops annual objectives which are reviewed by the
Compensation Committee and then approved by 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 five standing
committees (the Audit Committee, the Compensation Committee, the
CGN Committee, the Environment, Health, Safety & Sustainability
Committee (the “EHSS Committee”) and the 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.
The Audit Committee
The Audit
Committee has three members:
●
Patricia Volker
(Chair)
●
Brian Edgar
●
David Neuburger
Each of the Board’s
standing 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.
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 the NYSE American, and Ms. Volker has been
designated as the member with financial expertise within the
meaning of the Sarbanes Oxley Act
of 2002. 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 serves on the audit committee of two other public
companies (including one as chair) and chairs the finance and audit
committee of a private organization board. Mr. Edgar has a law
degree and practiced for 16 years in corporate finance law, 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. Mr. Neuburger holds a Master of Business Administration
degree from the University of Saskatchewan, in addition to his
Bachelor of Engineering degree in Mining and a Bachelor of Science
degree in Biology from McGill University.
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.
The Audit
Committee is responsible for considering any risks associated with
the Company’s financial reporting, financial compliance and
cyber security risks and the oversight of the identification and
mitigation of such risks. 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.
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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 its independent
auditors during the last two fiscal years.
Financial
Year
Audit-Related
Ending (1)
Audit Fees (2)
Fees (3)
Tax Fees (4)
All Other Fees(5)
December 31,
2021
$475,700
$27,820
$28,750
Nil
December 31,
2022
$472,630
$27,820
$46,580
Nil
Notes:
1.
These amounts include
accruals for fees billed outside the period to which the services
related.
2.
The aggregate fees billed for
audit services of the Company’s consolidated financial
statements, including services normally provided by an auditor for
statutory or regulatory filings or engagements and other services
only the auditor can reasonably provide. The Audit Fees in 2021 and
2022 include fees related to reviews of interim consolidated
financial statements (2021: $80,250; 2022: $95,230) and the
extensive work required of the auditor to support, and conduct
consent procedures in connection with, the Company’s various
equity issuances (2021: $181,900; 2022: $80,250).
3.
The aggregate fees billed for
specified audit procedures, 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. Audit-related fees in 2021 and 2022 were billed
for certain specified procedures engagements and the audit of
certain subsidiary financial statements.
4.
The aggregate fees billed for
tax compliance, tax advice, and tax planning services, such as
transfer pricing and tax return preparation.
5.
The aggregate fees billed for
professional services other than those listed in the other three
columns.
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 formally four times in 2022. At every meeting it held an
in-camera discussion with the external auditor without management
present.
The Compensation Committee
The Compensation
Committee currently has two members, each of whom is independent
for the purposes of section 1.4 of NI 52-110:
●
Patricia Volker
(Chair)
●
Jennifer Traub
In accordance
with its mandate, members of the Compensation Committee must be
independent and have experience and skills relevant to executive
compensation. Ms. Volker draws on the skills and knowledge of
executive compensation and related disclosure issues acquired
during her varied career as a Chartered Professional Accountant,
Chartered Accountant and a Certified Management Accountant. Ms.
Volker also sits on the compensation committees of two other public
company boards. Ms. Traub is a partner in the Securities Group of
Cassels Brock & Blackwell LLP, and is well versed in
compensation governance matters and disclosure for public
companies.
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.
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.
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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 is 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.
In 2022, the
members of the Compensation Committee were Ms. Volker (Chair), Mr.
Hochstein and Ms. Traub. The Compensation Committee met four times
during 2022.
The Corporate Governance and Nominating Committee
The CGN Committee
currently has three members, each of whom is independent for the
purposes of section 1.4 of NI 52-110:
●
Brian Edgar
(Chair)
●
Laurie Sterritt
●
Jennifer Traub
The CGN 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 and 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, when necessary and with the assistance of
management, 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, as applicable. 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. In addition, the CGN Committee reviews the
Company’s disclosure of its corporate governance practices in
the Company’s Circular each year.
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The CGN is
responsible for oversight of risks related to its mandate,
including talent and succession risk. In particular, the CGN
Committee has been delegated certain responsibilities under the
Company’s Executive Officer Succession Policy, including the
review 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 three times during 2022.
The Environment, Health, Safety & Sustainability
Committee
The EHSS
Committee currently has three members:
●
Ron Hochstein
(Chair)
●
David Neuburger
●
Laurie Sterritt
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 in 2021 renewed the EHSS
Committee’s mandate to oversee the Company’s commitment
to safety, sustainability and responsible and environmentally sound
mineral exploration and development business practices. The mandate
also specifically assigns it responsibility for the oversight of
risks related to its mandate.
The EHSS
Committee met four times during 2022.
The Technical Committee
The Technical
Committee currently has two members:
●
David Neuburger
(Chair)
●
Ron Hochstein
The Technical
Committee has been formed to assist in fulfilling the Board’s
oversight responsibilities for significant technical and
operational matters, policies and programs of the Company. The
Technical Committee does not have regularly scheduled meetings. 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 its
mandate.
The Technical
Committee met twice during 2022.
Denison’s Core Policies
As part of its
commitment to best practices, the Board has implemented core
policies within its corporate governance framework. Each of the
policies are available on the Company’s website at
www.denisonmines.com and the
Code of Ethics and the Disclosure Policy have been filed on and are
accessible through SEDAR under the Company’s profile at
www.sedar.com.
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:
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●
compliance with applicable
laws
●
conflicts of
interest
●
quality of disclosure and
accountability
●
reporting illegal or
unethical behavior
●
human rights
●
compliance with anti-bribery
and corruption laws in Canada and other jurisdictions
●
insider trading
●
confidentiality and corporate
opportunity
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 of the Company or to the Chair of the Audit
Committee. Following receipt of any complaints, the Corporate
Secretary 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.
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.
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.
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.
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.
Denison has also adopted a guide for employees on the use of social
media in compliance with the Disclosure Policy.
Indigenous Peoples Policy
Denison adopted
an Indigenous Peoples Policy in 2021 (the “IPP”), to reflect Denison’s
recognition of the important role of Canadian business in the
process of reconciliation with Indigenous peoples in Canada and
outlines the Company's commitment to take action towards advancing
reconciliation.
Denison received
feedback and guidance from Indigenous communities with whom the
Company is actively engaged, which helped inform the development of
the IPP. This approach was designed to ensure the IPP appropriately
captures a mutual vision for reconciliation. The IPP is available
in English, French, Cree and Déne languages on Denison’s
website.
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Denison operates
in various locations across Canada, on lands that are in the
traditional territory of Indigenous peoples, including its
exploration and evaluation operations in Saskatchewan, which are in
regions covered by Treaty 6, Treaty 8 and Treaty 10 encompassing
the traditional lands of the Cree, Dakota, Déne, Lakota,
Nakota, Saulteaux, and within the homeland of the Métis. As
such, Denison's relations with Indigenous People are unique and
varied. Denison’s flagship Wheeler River project is located
within the boundaries of Treaty 10, in the traditional territory of
English River First Nation (“ERFN”), in the homeland of the
Métis and within Nuhenéné. The means and
methods by which Denison engages with Indigenous people sets the
foundation for the development of long-term and mutually respectful
relationships.
In accordance
with the IPP, Denison intends to promote reconciliation through a
continuously evolving Reconciliation Action Plan based upon the
following principles: Engagement, Empowerment, Environment,
Employment and Education. The Reconciliation Action Plan, in part,
reflects Denison’s aim to be a leader in engagement with
Indigenous people and communities.
As of 2022,
Denison has made notable progress in relation to the key areas
identified in its Reconciliation Action Plan, including the
following highlights:
Engagement
Denison’s
engagement practices with northern Saskatchewan Indigenous
communities continue to evolve and reflect the mutually agreed
frameworks for information sharing and project permitting set out
in three exploration agreements signed with (1) ERFN, (2) Kineepik
Métis Local #9 (“KML”) and (3) Ya’thi
Néné Lands and Resources Office, Hatchet Lake
Denesułiné First Nation, Black Lake
Denesułiné First Nation, Fond du Lac
Denesułiné First Nation (collectively, the
“Athabasca
Nations”) and the Northern Hamlet of Stony Rapids, the
Northern Settlement of Uranium City, the Northern Settlement of
Wollaston Lake and the Northern Settlement of Camsell Portage
(collectively, the “Athabasca
Communities”).
Denison’s
engagement practices have been identified as ‘best in
class’ by the Province of Saskatchewan.
Empowerment
In Saskatchewan,
Denison has strong procurement processes in place that ensure
decision-making includes consideration of Indigenous-owned
businesses. A significant portion of Saskatchewan evaluation and
exploration expenditures incurred in 2022 were with Indigenous or
Northern Saskatchewan vendors.
The impact of
Denison’s empowerment of, and negotiations with, northern
Saskatchewan Indigenous communities goes beyond Denison’s
operations, with the exploration agreements acting as a catalyst
for the communities to sign agreements with other companies.
Denison has also entered into funding agreements that support the
full and meaningful participation of Indigenous groups to negotiate
Impact Benefit type agreements for the Wheeler River
project.
Environment
Denison continues
to maintain high-standards of environmental compliance across all
of its operations.
Denison has
entered into funding agreements with each of ERFN, the KML, the
YNLRO (with and for the Athabasca Nations and Athabasca
Communities), and the Métis Nation – Saskatchewan, to
support significantly enhanced participation in the environmental
assessment process for the Wheeler River Project.
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Employment
In Saskatchewan,
Denison has developed hiring practices and processes that provide
early notice to Indigenous communities as part of Denison’s
commitment to employment of Indigenous People.
In 2022, 75% of
operations staff for the historic Feasibility Field Test conducted
at Wheeler River self-identified as Indigenous.
Education
Denison has
created an environment which encourages participation, and provides
supporting resources, with respect to Indigenous educational
initiatives.
Staff were
encouraged to take time on September 30, 2022 to explore resources
curated for them, focused on learning about and reflecting on the
significance of the National Day for Truth and
Reconciliation.
Diversity within Denison
Denison’s
Board recognizes that diversity enriches the decision-making
process and is important to the Company’s good governance.
The Board and management 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
The Board,
through its Diversity Policy and the Composition Guidelines, by
which the CGN Committee considers the composition of the Board and
evaluates candidates, is committed to gender diversity on the Board
and its committees and ensuring the consideration of qualified
female candidates for nomination to the Board.
For example, when
Board turnover was being addressed in 2018, 2021 and 2022, the
Board made a concerted effort to ensure qualified female candidates
were represented amongst the candidates, and the Board was very
pleased to have join the team each of: Patricia Volker in 2018,
with her rich accounting and finance background; Jennifer Traub in
2021, with her extensive and relevant legal expertise; and Laurie
Sterritt in 2022, with her significant contributions to Indigenous,
government and community relations and experience in strategy,
leadership and executive search.
The CGN Committee
reported Denison’s female Board representation:
● 37.5%
(3 of 8 directors)
● Female
Chair of each of the Audit Committee and Compensation
Committee.
Diversity of Senior Officers and Management
Similarly, the
Diversity Policy expresses the Company’s commitment to
seeking to include women, having the necessary skills, knowledge
and experience, as potential candidates for senior officer and
other positions at the Company.
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As at December
31, 2022, the female senior officer representation was 33.3% (two
female senior officers out of six senior officers). As at the date hereof, the female senior
officer representation is 40% (two female senior officers out of
five senior officers).
Denison’s
team has continued to grow in recent years, with the Company
advancing its flagship Wheeler River project in Northern
Saskatchewan. Many of the new and important portfolios and key
technical positions associated with the advancement of the Wheeler
River project are led by women, in part 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
2022, Denison’s management team beyond the senior officer
level was comprised of 21 “directors” and
“managers” with responsibilities over various areas
including the Company’s Closed Mines operations, Human
Resources, Wheeler River Project matters, Exploration, Technical
matters, Corporate Social Responsibility, the Environment, Finance
and Financial Reporting. 9 (or 43%) of those directors and managers
were women.
Diversity Beyond Gender
Denison values
diversity across its operations, and diversity is always a
consideration for director nominees and employee candidates
throughout the organization. The Company also has commitments,
including those expressed in the Company’s IPP, to providing
equitable access to jobs and training and creating a work
environment that promotes inclusivity and diversity, such that all
are welcome and employees have an opportunity to contribute to
reconciliation.
The Company has
not set specific objectives for persons with disabilities,
Indigenous peoples and members of visible minorities on the Board
or within the organization. However, the Company ensures its
recruitment methods seek diversity amongst its candidates whenever
possible, to ensure Denison’s team is comprised of the best
candidates without exclusion of candidates based on age, gender,
sexual orientation, national origin, race, creed, ethnicity, or
disability. Such principles are also enshrined in the Board’s
Composition Guidelines.
At the Board
level, one of the Board director nominees (12.5% of the nominees)
is Indigenous, a member of the Kispiox Band of the Gitxsan Nation
in British Columbia.
Throughout the
Company, based on voluntary and anonymous self-identification by 58
individuals at Denison completed by operational staff throughout
2022 and by anonymous survey conducted in February 2023: (a) 36% of
respondents were women; (b) 5% of respondents self-identify as
LGBTQ2S+ or other; (c) 24% of respondents self-identify as
Indigenous; (d) 22% of respondents self-identify as a member of
another visible minority in Canada; and (e) 5% of respondents
self-identify as a person with a disability.
To better
understand the diversity at Denison, directors and staff have been
encouraged to voluntarily disclose how they self-identify with
respect to gender and sexual orientation and whether they
self‐identify as
Indigenous, members of visible minorities and/or persons with a
disability.
Corporate Social Responsibility & Sustainability
The Board places
a high value on governance, corporate social responsibility and
sustainability, recognizing the importance of understanding the
impact of the Company’s strategies on its stakeholders, and
how such understanding can contribute to the long-term
sustainability of the corporation’s business, help identify
and manage risk and lead to transformative
opportunities.
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An issue of great
importance for Denison and the Board is its desire to operate its
business in a progressive and sustainable manner that respects
Indigenous rights and advances reconciliation with Indigenous
peoples. The Board obtains specific reporting from management on
its corporate social responsibility and sustainability goals and
efforts, particularly the Company’s efforts at strengthening
its relationships with Indigenous peoples interested in our current
and proposed operations.
Denison also
developed and implemented its IPP, expressing a vision for
Denison’s role in reconciliation, based on Denison's
experiences with, as well as feedback and guidance received from,
Indigenous communities with whom the Company is actively engaged.
See “Indigenous Peoples Policy”, above.
Risk Governance & Oversight
The Board
oversees the Company’s approach to risk management which is
designed to support the achievement of organizational objectives,
improve long‐term
performance and enhance Shareholder value. Denison’s Board is
responsible for overseeing the Company’s risk identification,
management and mitigation strategies and the risk assessment
process. In discharging this responsibility, the
Board:
●
understands the principal
risks of the Company’s business;
●
satisfies itself that systems
are in place which are designed to effectively monitor and manage
those risks;
●
reviews the Company’s
risk management framework;
●
receives reports from
management and Board committees with respect to the identification,
assessment and management of existing and new material risks;
and
●
reviews and discusses with
management significant risk exposures and the processes and
procedures with respect to risk assessment and risk
management.
The Board has
delegated greater oversight responsibilities to appropriate Board
committees, as reflected in updated Board and committee mandates.
Each committee oversees material risks within its functional area
and will report to the Board on these matters and associated
mitigation strategies on a periodic, and at least annual,
basis.
Committee Risk Oversight Responsibilities
Audit
CGN
Comp
EHSS
Technical
Oversee financial
reporting, financial compliance and cyber security
risks.
Oversee
compliance, governance and succession risks
Oversee
compensation related risks
Oversee health
& safety, environment and sustainability risks
Oversee
operational performance risks
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, employees and other stakeholders 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 (“Succession Policy”) to help
Denison plan for and address a change in leadership, planned or
unplanned, to ensure stability.
The Succession
Policy provides for detailed contingency planning for an unplanned
departure of the Company’s CEO, such as the appointment of an
interim CEO, assessment of the Company’s needs and priorities
to assist with candidate qualifications, and recruitment and
appointment of a new CEO.
In addition, each
of the executive officers of the Company, including the CEO,
annually review and update a Succession and Contingency Plan, which
describes the internal resources being developed to support, and
potentially succeed to, each of the executive officer positions.
The Plan also details the processes in place, and steps to be
taken, to manage an unplanned departure of other members of the
Company’s executive team. Each of the Succession Policy and
the Plan are presented to the CGN Committee for their review at
least annually, the results of which are reported to the
Board.
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Related Party Transactions
The
Company’s officers and employees are required to avoid
situations in which their personal interest conflict or might
conflict with their duties to the Company or with the economic
interest of the Company. Denison’s annual directors and
officers questionnaires also include questions regarding related
party transactions and any affirmative responses would be forwarded
to the Board for consideration.
In the case of
any transaction or agreement in respect of which a director or
executive officer of the Company has a material interest, the
director or officer is required to disclose his or her interest.
Where applicable, he or she is also generally required to exclude
himself or herself from any deliberations or votes relating to that
transaction or agreement.
The Audit
Committee is responsible for reviewing any proposed related party
transactions and situations with a potential conflict of interest
involving a director or executive officer of the Company. Any
matters reviewed are then to be presented to the Board, subject to
requirements under applicable corporate or securities
laws.
There were no
material conflicts of interest, related party transactions or
waivers under the Code of Business Conduct reported by or granted
in favour of any of Denison’s directors, CEO or other
executive officers in 2022.
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.
Climate & Risk Governance
Denison’s
Board recognizes climate change is, and will continue to be, a
significant factor in the strategic development of Denison and the
industries in which it operates. Denison’s objective is to
supply uranium for emission-free nuclear energy production. Denison
is working to de-risk the application of in-situ recovery
(“ISR”) mining
for application at its flagship Wheeler River project, which has
the potential to offer significant operational and environmental
advantages over other conventional mining methods. Denison has
sought to integrate the mitigation of environmental impacts in its
project design. With a sustainable method of production in
compliance with strict regulatory regimes, Denison would be
supporting nuclear energy production, which is a low/zero-carbon
emitting source of reliable baseload energy that is widely
understood to be required to support countries in meeting their
“net-zero” commitments.
The Company has
also taken steps to enhance its climate governance in accordance
with the recommendations of the Task Force on Climate‐related Financial Disclosures
(“TCFD”) and
enhance its communication with reference to various standards
including those published by the Global Reporting Initiative
(“GRI”). Denison
publishes an annual ESG Report, which will be available on its
website at www.denisonmines.com.
In connection
therewith, the Board amended the Board Mandate in 2022, to
recognize the Board’s responsibility for oversight of climate
change opportunities and risks. In addition, the EHSS Committee has
been given the responsibility, as set forth in its updated mandate,
to oversee the Company’s effective management of
climate‐related
opportunities and risks and to monitor environmental performance.
The EHSS Committee meets, and reports to the Board, on a quarterly
basis.
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Along with
ensuring alignment of Board governance with TCFD recommendations,
additional changes were made to ensure that Denison’s
executive team is accountable for climate change risk and
opportunity management. The Board amended its mandate and the
CEO’s job description to explicitly charge the CEO with the
management of Denison’s ESG and climate change related risks
and opportunities. The CEO job description is included in the Board
Mandate (see Appendix A). An enterprise risk management working
group, comprised of Denison’s Executive Vice President &
CFO, Vice President Legal & Corporate Secretary and Director of
Internal Audit & Risk and in consultation with other members of
the management team, is responsible for facilitating the assessment
and management of risks and opportunities (including
climate‐related risks
and opportunities), integrating those risks and opportunities into
a risk management framework, and reporting on material risks to the
applicable Committees and the Board of the Company.
Cyber
Given the focus
and scope of Denison’s operations, the varied elements of
cyber security have not currently been identified as a material
risk to Denison. Notwithstanding that, continuity of information
technology is beneficial to any organization, including Denison,
and the Company applies technical and process controls in line with
industry-accepted standards to protect information, assets and
systems, and is always considering initiatives to enhance its cyber
and data security. The Audit Committee is responsible for broad
oversight of any such mitigation initiatives, and is reported to
quarterly with respect to things within its mandate and at least
annually with respect to cyber security matters.
The Company is
observing a greater number and increasing sophistication of
phishing scams attempts. To date the Company has not experienced
any material breaches or direct losses relating to
cyber-attacks.
One of the most
important things a company can do to prevent information security
breaches is to ensure its people understand the importance of
protecting its data and systems. In light of that, the Company has
an Information Technology Acceptable Use Policy for its employees,
for which it seeks annual review and affirmation of compliance,
with procedures and practices in place designed to protect
Denison’s information technology infrastructure. Denison also
regularly deploys company-wide information technology and
cyber-security training, to ensure familiarity with the risks and
mitigation strategies, with mandatory training modules last
launched in 2019 and again in early 2022.
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.
Director
education is implemented in the following ways at
Denison:
● Third-Party
Presentations for the Board
Annually,
industry or legal speakers have provided 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 and/or legal advisors
provide director education when requested and
warranted.
In 2022, all of
the directors were in attendance for a director education
presentation by representatives of Willson Advisory and OMNIA
Advisors on the topic of enterprise risk management.
● 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 VP Legal provides updates regarding applicable
corporate governance or related developments
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● 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 2022, the
Board Portal was updated with various information, including,
memoranda on corporate governance updates and director educational
session materials.
● 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
$40,000,000, subject to a deductible of $2,500,000 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, 2022 to October 31, 2023. The premium paid by the
Company in 2022 for its directors’ and officer’s
liability insurance was approximately $534,000. No amounts were
paid by individual directors and officers for this
coverage.
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.
Cognizant of
current market trends in directors’ compensation, and its
broader commitment to enhance governance practices, the Board
revised the director compensation structure in 2018 and included
grants of Restricted Share Units (“RSUs”) under the Company’s
Share Unit Plan. In 2019 and 2020, no further changes were made,
respectful of the Company’s operations and financial
resources.
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DENISON MANAGEMENT INFORMATION CIRCULAR
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In late 2020, the
Compensation Committee initiated a fulsome review of the
Company’s director and executive compensation programs,
including the engagement of Global Governance Advisors
(“GGA”) to
analyze the compensation of the Company’s directors and
executives relative to its peers. As a result of the Compensation
Committee’s review, modifications to the director and
executive compensation arrangements were approved for 2021, to
create alignment with the compensation structures of
Denison’s peers, which changes were maintained in
2022.
Cash
Compensation
In 2022,
Denison’s director cash compensation included an annual
retainer, 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, 2022.
Annual Retainer1
CAD$
Chair of the
Board
75,000
Non-employee
Directors
50,000
Committee / Chair Fees
CAD$
Audit Committee
Chair
15,000
Other Committee
Chair
10,000
Committee
membership
5,000
Note to Cash
Compensation:
1.
No retainer is payable to any
director who attends less than 50% of Board meetings.
Denison also
reimburses directors for any reasonable travel and out-of-pocket
expenses relating to their duties as directors.
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 2022, Denison
compensated its directors through the grant of RSUs under the
Company’s Share Unit Plan and options under the
Company’s Share Option Plan (the “Option Plan”).
The intent of the
equity compensation approved for the directors was to award RSUs
and options with an equivalent value of $50,000 each for all
non-employee directors. In the case of a non-employee director
(excluding the Board Chair) this would represent total
compensation, including annual cash retainer (as described above,
but excluding committee fees), of approximately $150,000 in three
equal parts of cash, RSUs, and stock options.
To align the
administration of the director equity grants with the approach used
for employee equity grants, the number of RSUs and stock options
granted are determined based on an estimated value of each RSU and
stock option derived from the value of the Company’s Shares
as at December 31st. Accordingly, in
the case where the Company’s Share price increases subsequent
to December 31st, the fair value of
the equity grants at the time of grant (normally March) will exceed
the targeted levels. Similarly, where the Company’s Share
price decreases subsequent to December 31st, the fair value of
the equity grants at the time of grant will be lower than the
targeted levels.
In 2022, 56,000
options were granted to each Denison director. In 2021, each
director received a grant of 147,000 options. Options were not
granted to directors in 2019 or 2020.
In 2022, 38,000
RSUs were granted to each Denison director. In 2021, 2020 and 2019,
78,000 RSUs, 38,000 RSUs and 32,000 RSUs, respectively, were issued
to each director.
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2022
Director Compensation
The table below
sets out what Denison paid to non-employee directors in retainers
and fees for 2022.
Name
Retainer and Fees Earned
Share-based Awards
Option-based Awards
All Other Compensation
Total
($)
($)1
($)
($)
($)
Robert
Dengler2
31,250
79,040
53,704
Nil
163,994
Brian
Edgar
65,000
79,040
53,704
Nil
197,744
Ron
Hochstein
92,917
79,040
53,704
Nil
225,661
Yun Chang
Jeong3
50,000
79,040
53,704
182,744
Jun Gon
Kim2,3
Nil
David
Neuburger
67,917
79,040
53,704
Nil
200,661
Laurie
Sterritt
51,667
79,040
53,704
184,441
Jennifer
Traub4
64,200
79,040
53,704
Nil
196,944
Patricia
Volker5
79,167
79,040
53,704
Nil
211,911
Notes to 2022
Director Compensation:
1.
Represents the fair value at
date of grant of awards made under the Share Unit Plan and Option
Plan determined using the closing price of the Shares on the TSX on
the trading day prior to the grant date.
2.
Mr. Dengler and Mr. Kim
resigned from the Board during 2022, as a result of which certain
share-based and option-based awards expired unvested during
2022.
3.
Directors fees for Mr. Kim
and Mr. Jeong were paid to KHNP Canada Energy Ltd.
4.
Directors fees for Ms. Traub
were paid to Cassels Brock & Blackwell LLP, and included BC
PST.
5.
Includes additional fees of
$6,800 earned by Ms. Volker for attendance at SOX meetings in
2022:
Directors’
Outstanding Option-Based Awards
As at the end of
2022, each non-employee director’s option-based awards
outstanding are as follows:
Name
Number of
Shares underlying unexercised options (#)1
Option
exercise price ($)
Option
expiration date
Value of
unexercised in-the- money options ($)2
Brian
Edgar
147,000
1.26
March 8,
2026
$42,630
56,000
1.84
March 7,
2027
Nil
Total
203,000
$42,630
Ron
Hochstein
147,000
1.26
March 8,
2026
$42,630
56,000
1.84
March 7,
2027
Nil
Total
203,000
$42,630
Yun Chang
Jeong3
56,000
1.84
March 7,
2027
Nil
Total
56,000
David
Neuburger
147,000
1.43
May 10,
2026
$17,640
56,000
1.84
March 7,
2027
Nil
Total
203,000
$17,640
Laurie
Sterritt
56,000
1.84
March 7,
2027
Nil
Total
56,000
Jennifer
Traub
147,000
1.43
May 10,
2026
$17,640
56,000
1.84
March 7,
2027
Nil
Total
203,000
$17,640
Patricia
Volker
147,000
1.26
March 8,
2026
$42,630
56,000
1.84
March 7,
2027
Nil
Total
203,000
$42,630
Notes to
Directors’ Outstanding Option-Based Awards:
1.
All options with an expiry
date of March 7, 2027 were unvested as at December 31,
2022.
2.
Option values have been
calculated using the closing price of the Shares on the TSX on the
last trading date of 2022 of $1.55, less the applicable exercise
price of the options.
3.
Mr. Jeong resigned from the
Board effective February 17, 2023, at which time all unvested
equity expired.
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DENISON MANAGEMENT INFORMATION CIRCULAR
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Directors’
Outstanding Share-Based Awards
As at the end of
2022, each non-employee director’s share-based awards
outstanding are as follows:
Name
UnvestedShare Units
(#)
Market or
payout value of Unvested Share Units2
($)
Vested but Unpaid Share
Units1
(#)
Market or
payout value of Vested but Unpaid Share Units2
($)
Brian
Edgar
102,666
159,132
116,336
180,318
Ron
Hochstein
102,666
159,132
-
-
Yun Chang
Jeong3
38,000
58,900
-
-
David
Neuburger
90,000
139,500
-
-
Laurie
Sterritt
38,000
58,900
-
-
Jennifer
Traub
90,000
139,500
26,000
40,300
Patricia
Volker
102,666
159,132
72,668
112,635
Notes to
Directors’ Outstanding Share-Based Awards:
1.
As share units have vested,
some directors have deferred and others have elected for share
settlement.
2.
Share units granted in 2019
(32,000 RSUs), 2020 (38,000 RSUs), 2021 (78,000 RSUs) and 2022
(38,000 RSUs) vest equally over three years. Share unit values have
been calculated using the closing price of the Shares on the TSX on
the last trading date of 2022 of $1.55.
3.
Mr. Jeong resigned from the
Board effective February 17, 2023, at which time all unvested
equity expired.
Value Vested or Earned in 2022
The following
table sets out for each non-employee director the value of the
Company’s equity plan compensation vested or earned during
the financial year ended December 31, 2022. The Company had no
non-equity incentive plan compensation for directors at December
31, 2022.
Name
Option-based awards
Value vested during the year1
($)
Share-based awards
Value vested during the year2
($)
Robert
Dengler
57,330
101,252
Brian
Edgar
57,330
101,252
Ron
Hochstein
57,330
101,252
Yun Chang
Jeong3
-
-
Jun Gon
Kim3
-
-
David
Neuburger4
-
36,400
Laurie
Sterritt3
-
-
Jennifer
Traub4
-
36,400
Patricia
Volker
57,330
101,252
Notes to
Value Vested or Earned in 2022:
1.
The value vested during the
year reflects the aggregate dollar value that would have been
realized if the options that vested in 2022 were exercised on their
vesting dates.
2.
The value vested during the
year reflects the aggregate dollar value that would have been
realized if the share units that vested in 2022 were exercised on
their vesting dates. Share units have a Nil exercise
price.
3.
Mr. Kim resigned from the
Board in February 2022, and no equity had vested prior to that date
in 2022. Mr. Jeong and Ms. Sterritt joined the Board in 2022 and
did not have vested equity in 2022.
4.
The options vesting in 2022
for Mr. Neuburger and Ms. Traub were out of the money on the day
they vested.
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Director Share Ownership Requirement
The Board has a
Share Ownership Requirement, which requires all non-employee
directors to own Shares (including RSUs) with a cost of acquisition
(or deemed cost at time of grant) equal to three times the value of
their annual cash retainer within five years of becoming a
non-employee director or an increase in their cash retainer. Where
a nominee director’s annual cash retainer is paid to his or
her employer, he or she is exempted from the
requirement.
For the purposes
of assessing compliance, the Share Ownership Requirement provides
that Denison’s securities are valued in the following
manner:
●
Common Shares: The value
of the Shares is equal to the actual purchase price. For Shares
acquired through the exercise of stock options, the Shares issued
upon exercise will be valued at the closing price of the Shares on
the TSX on the day before exercise. For Shares acquired through the
vesting of RSUs, the value of these Shares shall be calculated as
the greater of the market value of the RSUs under the Share Unit
Plan at the date of grant and the closing price of the Shares on
the day before issue.
●
RSUs (and other full
value equity awards): The value of the RSUs shall be equal to the
closing price of the Shares on the TSX on the day before
grant.
●
Equity Owned Prior to Joining
the Board: Notwithstanding the foregoing, the value of
Shares an individual owned prior to becoming subject to the Share
Ownership Requirement shall be equal to the greater of their cost
of acquisition or the value of the holdings using the closing price
of the Shares on the TSX on the day before the individual becomes
subject to the requirement.
Denison’s
non-employee directors are 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).
The approximate share ownership values for the directors are as
follows:
Name
Cash Retainer1
“Share Ownership” Value2
Status
Byeong Min
An
$50,000
Shares:
$Nil
RSUs:
$62,580
Compliant3
Brian
Edgar
$50,000
Shares:
$260,690
RSUs:
$307,990
Compliant
Ron
Hochstein
$75,000
Shares:
$1,161,640
RSUs:
$219,570
Compliant
David
Neuburger
$50,000
Shares:
$39,780
RSUs:
$210,440
Compliant
Laurie
Sterritt
$50,000
Shares:
$Nil
RSUs:
$141,620
Compliant
Jennifer
Traub
$50,000
Shares:
$Nil
RSUs:
$253,160
Compliant
Patricia
Volker
$50,000
Shares:
$152,506
RSUs:
$283,290
Compliant
Notes:
1.
Cash retainer as Board member
and/or Board Chair for the year ended December 31,
2022.
2.
Calculated in accordance with
the Share Ownership Requirement as of March 27, 2023.
3.
Exempt from Share Ownership
Requirement: nominee director for whom cash retainer is paid to
employer.
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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 (as defined in applicable securities laws, collectively,
the “NEOs”). The
NEOs in 2022 were:
NEO
Position(s)
during 2022
David
Cates
President &
Chief Executive Officer
Mac
McDonald
Executive Vice
President & Chief Financial Officer
Kevin
Himbeault
Vice President
Plant Operations & Regulatory Affairs
Elizabeth
Sidle
Vice President
Finance
Amanda
Willett
Vice President
Legal & Corporate Secretary
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: (A) annual performance incentives,
which are awarded based on success against pre-established
short-term corporate and individual goals, with (B) 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, excessive risk taking or
illegal behaviour.
The Compensation
Committee uses a number of strategies to reduce the risk associated
with compensation, including:
●
Overseeing a structured
annual compensation process, to align management’s objectives
with the strategy of the Company and minimize discretion in the
award of bonuses, by:
o
Reviewing and approving
annual individual objectives of executives and then assessing
performance against these objectives when: (a) awarding the
individual performance component of the annual bonus, and (b)
determining the quantum of any equity grants;
o
Considering the
Company’s performance relative to its peers when reviewing
the corporate performance component of the NEO’s annual
bonus;
o
Not guaranteeing the payment
of an annual bonus (as a result of which, the NEO’s could
receive no annual bonus under the annual compensation
structure);
●
Engaging compensation
consultants, to review and provide recommendations with respect to
compensation matters, including compensation relative to
peers;
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DENISON MANAGEMENT INFORMATION CIRCULAR
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●
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;
●
Setting equity compensation
granting policies, including setting standard vesting and/or
settlement terms for share unit and stock option grants, which
align equity holders’ interests with the longer term growth
of the Company;
●
Aligning the measurement date
for the assessment of corporate performance with the date used to
approximate the value of stock-based compensation instruments, so
as to eliminate the risk of timing bias amongst significant company
news and developments;
●
Instituting a Share Ownership
Requirement for executive officers;
●
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 awards are reviewed by the Compensation
Committee prior to recommendation 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
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.
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In 2017, Denison
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. The results of the 2017 benchmarking review by GGA
illustrated that the Company’s then-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.
In late 2020, the
Compensation Committee initiated a fulsome review of the
Company’s director and executive compensation programs,
including the engagement of GGA to analyze the compensation of the
Company’s directors and executives. GGA conducted industry
research, peer benchmarking and confidential one-on-one interviews
with Board members and select executives at Denison to discuss
Denison’s business strategy, compensation philosophy,
compensation structure and key performance indicators. Based on
GGA’s recommendations, the Compensation Committee and the
Board, as applicable, approved various adjustments to the
Company’s compensation arrangements for 2021 and beyond
– including (a) modifications to base compensation for
certain executives; (b) adjustments to the formulation of the
elements in the Bonus Plan, and (c) the introduction of an
executive share ownership requirement.
The Compensation
Committee will continue to evaluate the overall appropriateness of
the Company’s NEO compensation.
Benchmarking
Denison’s
target compensation position is the median against a selected peer
group of similar type and size of Canadian mining companies. Part
of GGA’s mandate in each of 2017 and 2020 was the review the
Company’s peer group.
The following
criteria were used in creating the Company’s 2022 peer group:
a focus on 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 (0.25x
to 4x) 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., Altius
Minerals Corporation, Americas Gold and Silver Corporation,
Bluestone Resources Inc., Calibre Mining Corp., Energy Fuels Inc.,
Fission Uranium Corp., Lucara Diamond Corp., Largo Resources Inc.,
NexGen Energy Ltd., Paladin Energy Limited, Polymet Mining Corp.,
Premier Gold Mines Limited, Sabina Gold & Silver Corp., Uranium
Energy Corp. and UR-Energy Inc.
Executive
Compensation-Related Fees
Fees of (a)
$13,808 were payable to GGA for services rendered to the Company in
2017; and (b) $46,815 were payable to GGA for services rendered to
the Company in 2020.
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
or her responsibilities and to ensure that Denison’s
compensation stays competitive.
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Annual Performance Incentives
Denison’s
annual performance incentive is a short-term variable element of
compensation, typically in the form of a cash bonus, administered
in accordance with the Bonus Plan approved and reviewed annually by
the Compensation Committee.
The CEO’s
awards under the Bonus Plan are approved by the Board, upon
recommendation of the Compensation Committee. The Compensation
Committee reviews and approves the CEO’s recommendations for
awards under the Bonus Plan for the CFO and Vice Presidents of the
Company.
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
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 primary performance measures into its bonus
calculations, which are each a blend of pre-defined qualitative and
quantitative measures:
1. Corporate
performance
2. Individual
performance
Corporate Performance Measures:
For 2022, the Compensation Committee measured corporate performance
using a combination of a shareholder return measure and strategic
corporate objectives:
Shareholder Return Relative to
Industry (SRI): a
measure of Denison’s Share price performance relative to a peer group of companies in the
uranium mining industry over the 12-month period ended on
the last day of the fiscal year.
Corporate Objectives:
objectives identified by the Committee
and the Board, as being the strategic focus of the Company and
management in the year.
In 2022,
Corporate Performance was assessed based on the following
weighting:
Corporate Performance
Weighting
SRI
30%
Advancement of
Wheeler River project Permitting Process
20%
Advancement of
Wheeler River project Technical Studies
20%
Community Support
and Community Agreements for Wheeler
20%
Maintain
standards of EHSS
10%
TOTAL
100%
This allocation
is intended to ensure alignment of Bonus Plan compensation with
shareholder return, with an incentive for management to (a) drive
shareholder returns beyond those of the Company’s peers even
in times when market conditions are challenging, while (b)
remaining heavily focused on achievement of key short-term
objectives linked to the long-term and/or strategic success of the
Company.
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For example, in
support of the Company’s strategic prioritization of
Environment-Social-Governance objectives, if in any year the
Company suffers a fatality at any of its operations, the health,
safety, environment & sustainability component of the Corporate
Performance measurement will be assessed at 0% for all executives
under the plan.
The calculation of SRI under the Executive
Incentive Bonus Plan is based upon an annual selection of a peer
group of five directly comparable companies (selected at the
beginning of the year), which are 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 2022,
the SRI Peer Group was comprised of NexGen Energy Ltd., Paladin
Energy Ltd., Energy Fuels Inc., Uranium Energy Corp. and Boss
Energy Limited.
The
Company’s performance against the SRI measure is 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 SRI will generally be
the single day volume weighted average on the last trading day of
the year.
Individual Performance
Measures: A variety of individual objectives are set for
each participant in the Bonus Plan with a focus on aligning their
respective areas of responsibility with the Company’s annual
business objectives.
Each year, the
CEO meets with the executives participating in the Bonus Plan to
develop a set of individual objectives and performance measures for
the year, which are then presented to and approved by the
Compensation Committee. The CEO also presents his individual
objectives and proposed performance measurement criteria to the
Compensation Committee for recommendation to the Board for
approval.
Bonus Weighting and Proportions
The following are
the performance measure categories, and their weighting, for each
executive in 2022.
Corporate
(%)
Individual
(%)
CEO
70
30
CFO
60
40
VP
50
50
Based on the
maximum bonus level for the applicable participant in the Bonus
Plan (as outlined above), Corporate and Individual performance
measures are assessed against three levels of achievement, with the
following associated aggregate bonus award amounts expressed as a
percentage of base salary:
Base
Target
Stretch
Target
Breakthrough
Target
CEO
Up to
50%
60%
80%
CFO
Up to
30%
40%
50%
VP
Up to
20%
30%
40%
For example, the
CEO’s bonus award is based on 70% corporate performance, of
which 30% is weighted to the SRI measure of performance. If
performance against the SRI measure is assessed as Breakthrough,
then it would contribute 16.8% of base salary towards the
CEO’s bonus award for the year (70% Corporate x 30% Weighting
for SRI measure x 80% Breakthrough performance =
16.8%).
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.
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Equity
compensation rewards long-term growth and an appreciation in Share
price, thus promoting the creation of 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 long-term incentive pay (“LTIP”) program 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 52 of this Circular.
All options granted pursuant to the Grant Policy have a five-year
term. Until the end of 2021, the Grant Policy provided that options
vested over 2 years, on the first and second anniversaries of the
grant. The Grant Policy was amended effective March 2022, to
provide that subsequent grants of options will vest, in equal
parts, over 3 years, on the first, second and third anniversaries
of the grant.
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 53 of this Circular.
The magnitude of
an equity compensation grant for an employee is determined with
consideration of:
(a)
Individual
and Corporate Performance: the assessment of individual and
corporate performance (as detailed above), linking the magnitude of
equity-based compensation to the objectives and achievements of
each executive officer.
(b)
Scope of
Role & Responsibility: an employee’s level of
responsibility and ability to impact the Company’s results.
For example, the following target rates, as a percentage of base
salary, have been set for long-term incentive grants for high
performing executives:
Total Base
LTIP Target
Stock
Option LTIP Target
Share Unit
LTIP Target
CEO
120%
60%
60%
CFO
90%
45%
45%
VP
60%
30%
30%
The number of
stock options and restricted share units to be granted pursuant to
the LTIP program are determined based on an estimated value of each
stock option and restricted share unit derived from the value of
the Company’s Shares as at December 31st of the immediately
preceding year. This is an important feature of the Company’s
compensation scheme as it aligns the date used to approximate the
value of stock-based compensation instruments with the measurement
date used for the assessment of corporate performance for the Bonus
Plan (as described above).
This alignment
eliminates the risk of timing bias for the release of significant
Company news and developments amongst Denison’s senior
management.
The timing of the
grants of the actual stock options and share units awarded under
the LTIP plan, however, occurs following the assessment of annual
performance and the completion of the audit and approval of the
year-end financial statements (and financial results) of the
Corporation, which typically occurs in March of the subsequent
year.
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Accordingly, in
the case where the Company’s Share price increases after
December 31st, the fair value of
the equity grants at the
time of grant (i.e., March) will typically exceed the
targeted levels in the LTIP program. Similarly, where the
Company’s Share price decreases after December 31st, the fair value of
the equity grants at the
time of grant will typically be lower than the targeted
levels. For example, given the increase in the Company’s
Share price during the first part of 2021 from the December 31,
2020 values used to determine the 2021 grant, the accounting
valuation of these awards, reported below, exceed the targeted
levels used by the Compensation Committee and the Board for
awarding stock-based compensation under the LTIP
program.
The Summary
Compensation Table below reflects the accounting fair value of the
stock-based compensation awards determined using the closing price
of the Shares on the trading day prior to the accounting grant date
in March of each year.
Compensation of Named Executive Officers
The table below
is a summary of base salary, incentive-based awards and other
compensation awarded to the current NEOs in the last three
financial years. 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.
Summary Compensation Table
Name and
PrincipalPosition
Year
Salary($)
Share-based
awards1,6($)
Option-based
awards2,6($)
Non-equity
Annual Incentive Plans3($)
All other compensation4
($)
Total compensation
($)
David
Cates
President and
CEO
2022
2021
2020
2019
2018
467,100
450,000
318,370
313,040
306,300
557,120
599,240
159,153
321,115
627,900
302,085
467,666
124,068
167,025
130,251
247,680
719,500
183,460
134,920
147,630
35,456
28,530
25,412
24,295
25,343
1,609,444
2,264,936
810,463
960,395
1,237,424
Mac
McDonald
Executive Vice
President & CFO
2022
2021
2020
300,000
285,000
271,210
281,440
284,000
124,028
145,768
222,053
96,726
102,150
380,220
105,110
31,685
23,780
24,913
861,043
1,195,053
621,987
Kevin
Himbeault5
Vice President
Plant Operations & Regulatory Affairs
2022
2021
2020
206,195
n/a
n/a
230,880
n/a
n/a
72,884
n/a
n/a
62,940
n/a
n/a
15,311
n/a
n/a
588,210
n/a
n/a
Elizabeth
Sidle5
Vice President
Finance
2022
2021
2020
203,800
169,765
155,910
244,960
25,560
7,350
66,171
20,026
7,056
77,030
140,100
43,500
12,957
9,092
8,309
604,918
364,543
222,125
Amanda
Willett5
Vice President
Legal & Corp. Secretary
2022
2021
2020
227,000
215,000
186,570
130,560
143,420
48,300
73,843
111,910
22,197
58,630
156,540
61,920
19,884
14,568
9,783
509,917
641,438
328,770
Notes to
Summary Compensation Table:
1.
Granted pursuant to the Share
Unit Plan. The fair value was determined using the closing price of
the Shares on the trading day prior to the accounting grant
date.
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3.
4.
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.
5.
The non-equity annual
incentive plan awards were earned in the fiscal year noted and were
paid in the following fiscal year. For 2022, NEO bonuses were
approved in March 2023. In 2021, these amounts include certain
special grants of equity made, in the following year, in lieu of
cash bonuses: $200,000 for Mr. Cates; $120,000 for Mr. McDonald;
$40,000 for Ms. Sidle and $40,000 for Ms. Willett.
6.
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 2021, 2021 and
2020, respectively as applicable, as follows (i) for Mr. Cates:
$24,912, $22,500, $15,388; (ii) for Mr. McDonald: $15,000, $12,944,
$10,849; (iii) for Mr. Himbeault: $10,496; (iv) for Ms. Sidle:
$8,152, $6,791, 6,236; and (v) for Ms. Willett: $9,364, $8,600,
$7,463.
7.
Mr. Himbeault joined Denison
in January 2022; Ms. Sidle was promoted to Vice President Finance
in September 2021; and Ms. Willett was promoted to Vice President
Legal in June 2020.
8.
Where special grants of
equity were made in lieu of cash bonuses, the equity grants are
made in the following year (see note 3 for more details) and the
fair value of the awards granted in such year, shown in the table,
has been reduced by the amount that was recorded under
“Non-Equity Annual Incentive Plan” in the prior year,
to ensure bonus compensation is not double-counted when settled
with equity instead of cash.
Five-Year Trend Discussion
The annual
compensation in the graphs below reflect total compensation for the
CEO and the other NEOs disclosed each year, rather than
compensation from 2018 to 2023 for the current NEOs who may not
have been NEOs in prior years. For example, Ms. Sidle, Ms. Willett
and Mr. Himbeault were not NEOs in 2018, and thus their
compensation for that year is not included in “Other NEO
Pay” in 2018, and instead it reflects the compensation of the
individuals who were NEOs in that year.
Base Salaries:
In light of
market conditions in 2018, 2019 and 2020, the Compensation
Committee approved only cost-of-living adjustments
(“COLA”) for
each NEO base salary. The COLA to salaries and related compensation
is prepared using the 12-month rolling change in the Canadian
Consumer Price Index for each of the Company’s operating
locations.
After
consultation with GGA on NEO Compensation in the latter part of
2020, the Compensation Committee approved increases in salary
compensation for the NEOs for 2021 to create better executive
salary alignment with Denison’s peer group. See
“Executive Compensation – Benchmarking” on page
36 for details of Denison’s peer group for compensation
benchmarking.
Mr. Cates’s
salary as President & CEO was $306,300 for 2018, $313,040 for
2019 and $318,370 for 2020. In 2021, as a result of the
Compensation Committee’s review of benchmarked salary
information, Mr. Cates’ salary was set at $450,000. In 2022,
Mr. Cates’ salary, after COLA, was $467,100.
Mr.
McDonald’s salary in 2018 and 2019, for his role as Vice
President Finance and Chief Financial Officer, was $253,210 and
$258,790 respectively. In 2020, Mr. McDonald received a small
increase to $271,210 reflecting COLA and his promotion to Executive
Vice President and Chief Financial Officer. In 2021, Mr.
McDonald’s salary was set at $285,000 as a reflection of
industry benchmarking. In 2022, Mr. McDonald’s salary, after
COLA, was $300,000.
Mr. Himbeault
joined the Company in January 2022, as Vice President Plant
Operations & Regulatory Affairs, at which point his salary was
set at $224,000.
Ms. Sidle was
appointed an officer of the Company in September 2021, at which
point her salary was set at $200,000. In 2022, Ms. Sidle’s
salary, after COLA, was $203,800.
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Ms. Willett was
appointed an officer of the Company in June 2020, as Vice President
Legal, at which point her salary was set at $187,320. Ms. Willett
received an increase to her salary, in response to the GGA
benchmarking in 2021, to $215,000. In 2022, Ms. Willett’s
salary, after COLA, was $227,000.
Equity Compensation:
Equity
compensation, in the form of options and Share Units, represents a
significant portion of the reported value of the Company’s
NEO compensation. As discussed above, in 2020 GGA completed a
fulsome review of executive compensation leading to the
Compensation Committee adopting changes to several components of
Denison’s executive compensation arrangements to better align
Denison’s incentive compensation with its peers. An element
of that change was to adjust the target thresholds for option and
share unit grants, as a percentage of base salary, under the LTIP
program.
The Board also
approved the implementation of a share ownership requirement for
executives (see page 48 for further details).
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.
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 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.
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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 2017 through
2022 on the same basis as is currently disclosed in the
“Summary Compensation Table” above, using the fiscal
year 2017 as a base amount for comparing changes in compensation
over time.
Denison Share data supplied by the TSX.
The chart above
reflects the impact of equity-linked compensation for the
Company’s NEOs. For 2018, the chart is impacted by a one-time
special grant to increase NEO equity holdings, in response to
investor feedback about the level of equity holdings by the
Company’s NEOs (many of whom, at that time, had a relatively
short tenure with the Company). The Company’s Share Unit
Plan, providing for the issuance of Restricted Share Units and
Performance Share Units, was adopted in March 2018 and, with
reference to a report prepared by GGA, equity compensation saw a
larger than typical increase in 2018 with each NEO receiving a
grant of both Performance Share Units, intended to be a one-time
special grant to increase NEO equity holdings, and RSUs, as part of
the annual LTIP assessment.
For 2021, the
chart reflects adjustments to executive compensation approved by
the Compensation Committee after review of recommendations from GGA
that: (a) resulted in an increase in executive salaries, to better
align with peer benchmarking; and (b) adjustments to the LTIP
targets within the Bonus Plan.
See
“Compensation of Named Executive Officers – Five Year
Trend Discussion” for more details.
Annual Performance Incentives
Denison’s
NEOs were eligible to receive a bonus for the year ended December
31, 2022, in accordance with the Company’s Bonus Plan. As
previously discussed, computation of bonuses is based on
assessments of corporate and individual performance.
2022
Corporate Performance
As explained
starting on page 37 of the Circular, Corporate Performance Measures
for 2022 were assessed with reference to Shareholder Return
Relative to Industry (SRI) and Corporate Objectives.
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Corporate
Performance - SRI
For SRI, the
performance of the Company’s selected SRI Peer Group is used
as the benchmark for measuring industry performance:
½
Base
(-5%)
Base
(
- )
Stretch
(+10%)
Breakthrough
(+20%)
Peers –
5%
Peer
Group
Peers +
10%
Peers +
20%
In 2022, 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 2021 against 2022) was -2.20%. On this basis,
Denison’s performance of -12.42% represents a “no
base” achievement.
The Compensation
Committee also considered the performance of each peer within the
SRI Peer Group, noting that the Company performed within the range
of the SRI Peer Group (if the Company was included in the SRI Peer
Group, it would have been positioned as fourth of six). On that
basis, an SRI achievement of “¼ Base” was assessed
for the Corporate Performance Measures for 2022.
Corporate
Performance – Corporate Objectives
The second
element of corporate performance is the assessment of performance
against specified corporate objectives identified by the Committee
and the Board as being the strategic focus of the Company and
management in the year. The Compensation Committee assessed the
2022 performance against corporate objectives, the highlights of
which are as follows:
Corporate Performance Objectives
Weighting
Assessment
1. SRI
30%
● See above.
2. Advance
the Wheeler River permitting process
20%
● Successfully advancing the
permitting of the Wheeler River project was identified as an
important business objective for 2022.
● A key milestone in the
permitting process was achieved during 2022 with the submission of
the draft Environmental Impact Statement in October.
3. Progress
the technical development of the Wheeler River project
20%
● Successfully progressed the
technical development of the Wheeler River project, on schedule
against key milestones for 2022, including the permitting and
completion of the leaching and neutralization phases of the 2022
Feasibility Field Test (“FFT”).
4. Secure
Community Support and Advance Agreement Negotiations
20%
● Discussions and negotiations
held with multiple communities on key agreements progressed during
2022.
5. Maintain
high standards of compliance against regulatory and EHS&S
targets
10%
● No fatalities, no lost-time
injuries and no material fines imposed.
● Most notable for the year was
the Company’s EHS&S performance during the construction,
commissioning and operation of the FFT. Our Saskatchewan evaluation
team and contractors completed the 2022 FFT program without any
recordable incidents.
2022
Individual Performance
In 2022, the
Board of Directors approved individual objectives for Mr. Cates
upon the recommendation of the Compensation Committee. In March
2023, the Compensation Committee assessed Mr. Cates’
performance against these objectives in making their recommendation
to the Board of Directors as to Mr. Cates’ 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:
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Objective
Weighting
Assessment
1. Dynamically
manage the Company’s asset base – including evaluating
corporate development opportunities to upgrade or enhance the
Company’s exploration and development project
portfolio.
25%
● This objective was assessed
as achieved, in part based upon the considerable effort on
corporate development activities during the year and demonstrated
discipline.
2. Emphasize
the importance of Indigenous Relations in Canada, and in
Saskatchewan in particular, building on the Company’s
industry leadership amongst mid-cap peers.
20%
● The Company has been
identified as ‘best in class’ in relation to engagement
with communities by the Province of Saskatchewan.
● A highlight from the year
included working with Indigenous and Northern Saskatchewan vendors
to procure goods and services, representing a significant portion
of the Company’s evaluation and exploration
expenditures.
● Additional exploration
agreements were executed during the year, which are foundational to
the Company’s Indigenous relations strategy.
3. Develop
a refreshed strategy for the Company’s
“Commercial” function.
15%
● Recruited and hired a
Director Commercial & Corporate Development, with whom a
detailed commercial strategy is being developed.
4. Drive
the exploration team to create value through the discovery and/or
delineation of additional mineral resources.
15%
● The exploration team
supported Wheeler River project evaluation efforts and the review
of corporate development opportunities, while executing on a 2022
exploration program.
5. Steer
the corporate human resources function to support evolving
corporate needs and objectives.
15%
● The human resources function
was very active during 2022, supporting the rapid growth in the
Company’s technical teams in all locations.
6. Oversee
continued evolution of the Closed Mines group.
5%
● The Closed Mines team has
executed on the Company’s strategic focus of delivering
excellent post-closure mine care and maintenance services at
certain third-party projects, in addition to the responsible and
proactive management of the Company’s closed mine
sites.
7. Oversee
commercial and investor relations (IR) functions to align with the
Company’s long-term objectives.
5%
● The Company remained active
with investor engagement throughout 2022, including ramping up
marketing efforts as conferences and other marketing platforms
resumed normal operations with COVID-19 restrictions lifted in most
jurisdictions.
Each of the other
NEOs eligible for a bonus for 2022 had individual performance
objectives for 2022 approved by the Compensation Committee, and the
Compensation Committee assessed their performance against these
objectives in determining an award under the Bonus
Plan.
In looking at Mr.
McDonald’s performance over 2022, the Compensation Committee
determined that Mr. McDonald met or exceeded his bonus targets on
all of his objectives, highlighted by the highly successful
implementation of: (a) an enterprise resource planning
(“ERP”) system,
and (b) a new Enterprise Risk Management program.
The Compensation
Committee approved the assessment that Mr. Himbeault’s
performance in 2022 had met or exceeded objectives, including (a)
completion of the successful ISR FFT, achieving a considerable
degree of de-risking for the technical elements of the Wheeler
River project; (b) providing oversight of the regulatory matters
connected to the completion of the FFT and supporting the
environmental assessment processes for the Wheeler River project;
and (c) overseeing elements of the feasibility study being prepared
for the Wheeler River project.
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The Compensation
Committee approved the assessment that Ms. Sidle had exceeded her
objectives for 2022, which included (a) leadership of the ERP
system implementation, (b) completion of a management reporting
improvement process, and (c) active support of key business
initiatives during the year.
Ms. Willett was
assessed as having met or exceeded expectations during 2022,
including by (a) being a key contributor to corporate development,
legal and other strategic activities during the year; (b) providing
leadership of the Company’s Enterprise Risk Management
program; and (c) providing cross-functional legal support for key
business activities.
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
34.1% /
56.0%
18.9% /
24.0%
53.0% /
80.0%
$159,400
$88,280
$247,680
Mac
McDonald
18.5% /
30.0%
15.6% /
20.0%
34.1% /
50.0%
$55,350
$46,800
$102,150
Kevin
Himbeault
11.5% /
20.0%
16.6% /
20.0%
28.1% /
40.0%
$25,760
$37,180
$62,940
Elizabeth
Sidle
13.8% /
20.0%
24.0% /
20.0%
37.8% /
40.0%
$28,120
$48,910
$77,030
Amanda
Willett
11.5% /
20.0%
14.3% /
20.0%
25.8% /
40.0%
$26,110
$32,520
$58,630
Long Term Incentive Plan Awards
The Company
employs three forms of incentive plans to award its employees for
individual and Company performance, namely option-based awards,
share-based awards and non-equity-based awards in the form of cash
bonuses. See “Equity Compensation Plans” below, for
more information.
Value Vested or Earned during 2022
The table below
sets out information concerning the value of incentive plan awards,
including option-based, share-based and non-equity incentive plan
compensation, vested or earned during the financial year ended
December 31, 2022 for each NEO.
Name
Option-based awards Value vested during year($)1
Share-based awardsValue vested during year($)2
Non-equity incentive plan compensation – Value earned during
the year($)
David
Cates
1,048,160
1,422,489
247,680
Mac
McDonald
722,780
939,201
102,150
Kevin
Himbeault
-
-
62,940
Elizabeth
Sidle
55,260
56,520
77,030
Amanda
Willett
76,535
284,429
58,630
Note for
Value Vested or Earned During 2022:
1.
The option value vested
during the year reflects the aggregate dollar value that would have
been realized if the options that vested in 2022 were exercised on
their 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.
3.
Mr. Himbeault joined Denison
in January 2022, so he had no equity vesting in 2022.
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Outstanding Share-Based Awards
The following
table sets out for each NEO the number and value of their share
units outstanding on December 31, 2022.
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
907,751
RSUs
1,407,014
1,522,499
RSUs
2,359,873
130,000
PSUs
201,500
520,000
PSUs
806,000
Total
1,608,514
3,165,873
Mac
McDonald
513,917
RSUs
796,571
1,072,833
RSUs
1,662,891
90,000
PSUs
139,500
360,000
PSUs
558,000
Total
936,071
2,220,891
Kevin
Himbeault
51,000
RSUs
79,050
Nil
RSUs
Nil
60,000
PSUs
93,000
Nil
PSUs
Nil
Total
172,050
Nil
Elizabeth
Sidle
107,500
RSUs
166,625
Nil
RSUs
Nil
60,000
PSUs
93,000
Nil
PSUs
Nil
Total
259,625
Nil
Amanda
Willett
201,749
RSUs
312,711
180,501
RSUs
279,777
50,000
PSUs
77,500
200,000
PSUs
310,000
Total
390,211
413,106
Notes for
Outstanding Share-Based Awards:
1.
PSUs were received as special
grant in 2018, as approved by Shareholders on May 3, 2018, to
address investor feedback and increase NEOs’ equity stake in
the Company. Each of Ms. Sidle and Mr. Himbeault received pro-rated
grants of PSUs after their promotion in 2021 and appointment in
2022, respectively.
2.
Share unit values have been
calculated using the closing price of the Shares on the TSX on
December 31, 2022 of $1.55.
3.
In 2020, 100% of 2019 bonus
entitlements to executive officers were paid with equity
compensation (grant of restricted share units), to provide for
further equity investment in the Company and to allow for
conservation of the Company’s cash for investment in the
Company’s 2020 objectives: Cates, 335,250 RSUs; McDonald,
209,750 RSUs; and Willett, 76,250.
Outstanding Option-Based Awards
The following
table sets out for each NEO the number and value of their options
outstanding on December 31, 2022.
Name
Shares underlying unexercised options (#)
Option
exercise price ($)
Option
expiration date
Value of unexercised in-the- money options ($)1
David
Cates
389,214
0.60
March 12,
2023
369,754
655,000
0.68
March 11,
2024
569,850
844,000
0.46
March 9,
2025
919,960
794,000
1.26
March 8,
2026
230,260
315,000
1.84
March 7,
2027
Nil
Total
2,997,214
2,089,824
Mac
McDonald
484,000
0.68
March 11,
2024
421,080
658,000
0.46
March 9,
2025
717,220
377,000
1.26
March 8,
2026
109,330
152,000
1.84
March 7,
2027
Nil
Total
1,671,000
1,247,630
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Name
Shares underlying unexercised options (#)
Option
exercise price ($)
Option
expiration date
Value of unexercised in-the- money options ($)1
Kevin
Himbeault
76,000
1.84
March 7,
2027
Nil
Total
76,000
Nil
Elizabeth
Sidle
34,000
1.26
March 8,
2026
9,680
69,000
1.84
March 7,
2027
Nil
Total
109,000
9,680
Amanda
Willett
95,000
1.26
March 8,
2026
27,550
77,000
1.84
March 7,
2027
Nil
Total
384,000
27,550
Notes for
Outstanding Option-Based Awards:
1.
Option values have been
calculated using the closing price of the Shares on the TSX on the
last trading day of 2022 of $1.55, less the applicable exercise
price of the outstanding options. As at December 31, 2022, 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.
Executive Share Ownership Requirement
The
Company’s executive officers are subject to the Share
Ownership Requirement, requiring them to hold Shares (including
RSUs and PSUs) at the following levels, within five years of
becoming subject to the requirement.
Executive
Share
Ownership Requirement
Chief Executive
Officer
1x base
salary
Other
Officers
0.5x base
salary
For the purposes
of assessing compliance for Denison’s executive officers, the
Share Ownership Requirement provides that Denison’s
securities are valued in the following manner:
●
Common Shares: The value
of the Shares is equal to the actual purchase price. For Shares
acquired through the exercise of stock options, the Shares issued
upon exercise will be valued at the closing price of the Shares on
the TSX on the day before exercise. For Shares acquired through the
vesting of PSUs or RSUs, the value of these Shares shall be
calculated as the greater of the market value of the PSUs or RSUs
under the Share Unit Plan at the date of grant and the closing
price of the Shares on the day before issue.
●
RSUs: The value of the
RSUs shall be equal to the closing price of the Shares on the TSX
on the day before grant.
●
PSUs: The value of
unvested PSUs shall be equal to half of their market value at the
time of grant as determined using the closing price of the Shares
on the TSX on the day before grant. The value of vested PSUs shall
be equal to the closing price of the Shares on the TSX on the day
before grant.
●
Equity Owned Prior to
Requirement: Notwithstanding the foregoing, the value of
equity an individual owned prior to becoming subject to the Share
Ownership Requirement shall be equal to the greater of their cost
of acquisition or the value of the holdings using the closing price
of the Shares on the TSX on the day before the individual becomes
subject to the requirement.
If an executive
officer’s share ownership requirement is increased due a
change in their position or an increase in base salary, the
executive officer will have an additional five‐year period from the date of the
increase to meet the additional share ownership.
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The Share
Ownership Requirement for Denison’s executive officers was
instituted on March 3, 2022. As of March 27, 2023, the approximate
share ownership values for the NEOs are as follows:
Name of Current Officers
Base Salary1
Equity Value2
Status
David
Cates
$467,100
$10,202,470
Compliant
(approx. 22x base salary)
Mac
McDonald
$300,000
$4,517,590
Compliant
(approx. 15x base salary)
Kevin
Himbeault
$224,000
$335,180
Compliant
(approx. 1.5x base salary)
Elizabeth
Sidle
$203,800
$449,410
Compliant
(approx. 2.2x base salary)
Amanda
Willett
$227,000
$1,669,360
Compliant
(approx. 7.4x base salary)
Notes for
Share Ownership Requirement:
1.
The base salary for each NEO
disclosed above is as at December 31, 2022.
2.
The equity values of Shares,
PSUs and RSUs held by the NEOs have been calculated in accordance
with the Share Ownership Requirement as of March 27,
2023.
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
and Himbeault and Mses. Sidle and Willett 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 such NEO (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 – except as described
below, 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 awarded to
such NEO for the fiscal year ending immediately prior to the
effective date of termination. For Mr. Himbeault, in the event that
the NEO’s employment was terminated by the Company prior to
January 30, 2023 for a reason other than just cause, he would have
been entitled to a payment equal to 6 months’ salary and a
bonus payment in an amount equal to the bonus payment awarded to
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;
2023
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●
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, 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”.
Pursuant to the
employment agreements for each of Messrs. Cates, McDonald and
Himbeault and Mses. Sidle and Willett, 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, 2022, which
includes situations of termination without cause and termination
without cause in the event of a change of control.
Name
Separation Pay($)
Bonus Payment($)
Value of In-the- Money Equity
Awards1($)
Payment in lieu of Benefits ($)
Total($)
David
Cates
934,200
319,500
6,494,458
177,498
7,925,656
Mac
McDonald
450,000
140,220
4,404,593
Nil
4,994,813
Kevin
Himbeault
112,000
Nil
172,050
284,050
Elizabeth
Sidle
305,700
60,100
269,485
Nil
635,285
Amanda
Willett
340,500
76,540
1,007,538
Nil
1,424,578
Notes to
Termination Payouts:
1.
The amount shown represents
the incremental value of the NEOs’ unexercised in-the-money
equity as at December 31, 2022, based on the closing price of the
Shares on the TSX on December 31, 2022 of $1.55 and 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.
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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 4.8% of the Company’s
issued and outstanding Shares as at December 31, 2022. 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 have been 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.
As at December
31, 2022, there were an aggregate of 8,539,214 options, 6,416,089
RSUs and 1,470,000 PSUs granted and outstanding under their
respective plans. For the fiscal years ended December 31, 2020,
2021 and 2022 (a) the annual burn rate for all of Denison’s
equity compensation arrangements is 1.15%, 0.98% and 0.37%,
respectively; (b) the annual burn rate for securities issued under
the Option Plan is 0.58%, 0.53% and 0.20%, respectively; and (c)
the annual burn rate for securities issued under the Share Unit
Plan was 0.56%, 0.25% and 0.17%, respectively.
As at December
31, 2022, 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
8,539,214
7,886,089
1.03%
0.95%
$1.09
N/A4
12,184,9072
4,796,2973
1.63%
0.58%
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.
2.
The maximum number of Shares
issuable under the Option Plan is 39,670,000. As at December 31,
2022, 27,485,093 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, 2022, 10,203,703 share units had been granted (less
cancellations) 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, 2022, the granted and outstanding share units had a fair value
of $1.55 per unit, based on the closing price of the Shares on the
TSX on December 30, 2022 (the last trading date prior to December
31, 2022).
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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 and, for grants
prior to 2022, vesting of options in two equal parts on each of the
first and second anniversaries of the grant date. In March 2022,
the Board adopted a practice of vesting options over three years
for subsequent grants.
●
Grants are typically done
annually. The Compensation Committee takes into account previous
grants when it considers recommending to the Board new grants of
options.
●
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 49 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-based 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
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●
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 the addition of 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. 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, as at December 31, 2022 a maximum of 7,113,911
Shares remained authorized for issuance on settlement of share
units, representing 0.86% of the Company’s then issued and
outstanding Shares.
●
Participants may be granted
restricted share units (RSUs) or performance share units (PSUs) or
any combination of the foregoing. The vesting of PSUs is
conditional upon achievement by the holder of defined performance
objectives.
●
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.
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●
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 Board has adopted a practice
of granting RSUs with vesting in three equal parts on each of the
first, second and third anniversaries of the grant
date.
●
Share units are eligible to
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.
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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 a 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.
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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.
●
PSUs granted to-date, to
certain executive officers of the Company, vest in tranches
provided the holder satisfies the performance conditions to vesting
(an overall base level of achievement as assessed pursuant to the
Bonus Plan, as described above, or similar assessment). If those
vesting conditions are not satisfied, such PSUs would expire
unvested.
●
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.
Additional Information
Shareholder Engagement
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.
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.
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-
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 Company can
also be contacted:
Online:
www.denisonmines.com and https://denisonmines.com/agm2023
Email:
info@denisonmines.com
Regular
Mail:
1100 - 40
University Avenue, Toronto, Ontario M5J 1T1
Phone:
416-979-1991 or
1-888-260-4455
Additional Disclosure
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 2022
Annual Report, containing the Company’s consolidated
financial statements and related MD&A for its year ended
December 31, 2022;
●
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,
Ron
Hochstein
Chair of the
Board
2023 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, or the appointment is otherwise recommended by the
Corporate Governance and Nominating Committee, the Board will
appoint from among the independent directors, upon a recommendation
of the Corporate Governance and Nominating Committee, 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 (or
Lead Director, in the Chair’s absence or if the Chair is not
independent) 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)
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;
(iii)
ensure that the Board has an
opportunity to meet without members of management, regularly, and
without non-independent directors at least once per
year;
(iv)
determine, in consultation
with the Board and management, the time and places of the meetings
of the Board;
(v)
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.
(vi)
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;
(vii)
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;
(viii)
preside as chair of each
meeting of the Board;
(ix)
communicate with all members
of the Board to co-ordinate their input, ensure their
accountability and provide for the effectiveness of the
Board;
(x)
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)
In addition to any other
duties he or she may perform, the Lead Director will provide
leadership for the Board’s independent
directors.
(d)
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;
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(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;
(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.
(e)
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: (i) providing leadership and vision
for the Company for it to grow in a sustainable manner; (ii)
developing a strategic plan for the Board’s approval, and
ensuring implementation of that plan; (iii) overseeing the
development and implementation of, and compliance with, key
corporate policies and practices, regarding corporate governance,
ESG, climate and sustainability, risk identification and management
and financial reporting, as well as compliance with applicable
legal and regulatory requirements; and (iv) 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)(vii) 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
